Home / Fulltext Opinions / Supreme Court of Virginia / BANK v. D.C. DIAMOND CORP, et al.

BANK v. D.C. DIAMOND CORP, et al.



NOTICE: The opinions posted here are
subject to formal revision. If you find a typographical error or
other formal error, please notify the Supreme Court of Virginia.


BANK

v.

D.C. DIAMOND CORP, et
al.


March 3, 2000

Record No. 991042

GLUMINA BANK d.d.

v.

D. C. DIAMOND CORPORATION, ET AL.

FROM THE CIRCUIT COURT OF PRINCE WILLIAM COUNTY

Frank A. Hoss, Jr., Judge

Present: Carrico, C.J., Compton,[1] Lacy, Hassell, Keenan, Koontz, and Kinser, JJ.

OPINION BY JUSTICE A. CHRISTIAN COMPTON


In this appeal of a default judgment in a
contract action against a nonresident defendant, we must
determine whether the trial court properly entered the judgment.

On October 7, 1998, appellees D. C. Diamond
Corporation and Karlo Milic filed in the clerk’s office of the
court below a motion for judgment against appellant Glumina Bank
d.d., for breach of contract. The plaintiffs sought recovery of
$460,000 plus attorney’s fees and interest.

The plaintiffs alleged that Diamond is a
Virginia corporation engaged in the business of real estate
development and that Milic is an alien resident of the
Commonwealth but a citizen of Croatia. The plaintiff further
alleged that defendant is a bank located in Zagreb, Croatia.

The plaintiffs also alleged that on two
occasions in June 1998, acting through Milic, they contracted
with defendant "to transfer, deliver, and supply" to
the corporation’s bank account in Manassas a total of $460,000
from cash funds delivered in American dollars to defendant from
the sale of real estate. The plaintiffs further alleged that
defendant "failed to transfer, deliver, and supply the funds
as promised."

The plaintiffs also alleged that on
"several occasions prior to" June 1998, "pursuant
to contracts" between the plaintiffs and defendant, the
defendant "had transferred, delivered, and supplied" to
the corporation’s Manassas bank account funds received in Croatia
from Milic.

Additionally, plaintiffs alleged that when the
contracts were entered into on June 19 and 29, 1998, Milic and
defendant "clearly and definitely intended" that the
corporation be "a direct beneficiary of those
contracts," and that the corporation "was and is both a
direct beneficiary and a third party beneficiary of those
contracts."

Also, plaintiffs alleged that they had made
demand upon defendant "to honor its contractual obligations
to supply the funds" to the corporation in Virginia but
defendant "has failed to do so and has refused to refund the
funds to Milic."

Finally, plaintiffs alleged that the trial
court could exercise personal jurisdiction over defendant
pursuant to Code ? 8.01-328.1(A)(2) ("court may
exercise personal jurisdiction over a person, who acts directly
or by an agent, as to a cause of action arising from the person’s
. . . [c]ontracting to supply services or things in
this Commonwealth . . . .").

The plaintiffs filed with the motion for
judgment an affidavit for service of process on the Secretary of
the Commonwealth as statutory agent for the nonresident
defendant, as authorized by Code ? 8.01-329(B). As
required, the affidavit set forth the last known address of the
defendant in Croatia.

In a Certificate of Compliance, the Secretary
of the Commonwealth reported to the trial court that service of
the notice of motion for judgment was made on her on October 13,
1998, and that the suit papers were forwarded by registered mail
to defendant at the Croatian address on November 2, 1998. Service
was effective on November 10, 1998, when the Certificate of
Compliance was filed in the circuit court. Code
? 8.01-329(C).

The defendant failed to file a pleading in
response within 21 days after service of process; therefore, it
was in default. Rule 3:5; Rule 3:17.

On December 14, 1998, a paper labeled
"Pleading on Motion for Judgement" was lodged with the
clerk of the trial court. It was signed "Glumina Bank by
Attorney . . . Mladen Simundic," giving a Croatian
address. Defendant’s counsel of record on appeal correctly admits
that this "responsive pleading" was not filed by an
attorney authorized to practice law in Virginia and, as such, is
a "nullity and should be stricken."

On December 22, 1998, another Certificate of
Compliance was filed in the trial court by the Secretary of the
Commonwealth dated five days earlier. That document included
another affidavit executed by plaintiffs’ attorney to support
service of process of a "Praecipe" upon the nonresident
defendant. The Certificate reported: "On Dec 17 1998, papers
described in the Affidavit were forwarded by Fed Ex mail, return
receipt requested, to the party designated to be served with
process in the Affidavit." The praecipe served on defendant
through the Secretary of the Commonwealth was a notice and motion
filed in the clerk’s office below on December 7, 1998, returnable
December 18, 1998, for entry of a default judgment.

The hearing on the motion for default judgment
was continued to February 19, 1999. On that day, counsel for the
plaintiffs appeared in support of the motion. There was no
appearance by or on behalf of the defendant. After a brief
hearing, at which only an interpreter testified, the court
entered a default judgment against the defendant in the amount of
$460,000 plus interest and attorney’s fees.

Three days later, on February 22, 1999,
defendant, through a Virginia attorney, filed a "Special
Appearance, Motion to Quash Service and Objection to
Jurisdiction," as well as a "Notice and Motion to Set
Aside Default Judgment." Following a March 5, 1999 hearing
on the several motions, at which counsel for the plaintiffs and
counsel for the defendant appeared, the court denied the motions.

The defendant appeals and contends the trial
court erred in entering the default judgment. It argues that the
trial court lacked personal jurisdiction over defendant, and that
the service of process of the notice of motion for judgment and
the praecipe through the Secretary of the Commonwealth was
improper because none of the bases for personal jurisdiction
under Code ? 8.01-328.1 "have been alleged or
proven." These contentions are meritless.

Of course, any money judgment rendered without
personal jurisdiction over the defendant is void. Finkel
Outdoor Prods., Inc. v. Bell
, 205 Va. 927, 931, 140 S.E.2d
695, 698 (1965). But as we already have said, Code
? 8.01-328.1(A)(2), a part of Virginia’s long-arm statute
dealing with the exercise of in personam jurisdiction over
nonresidents, permits courts of the Commonwealth to
"exercise personal jurisdiction over a person, who acts
directly or by an agent, as to a cause of action arising from the
person’s . . . [c]ontracting to supply services or
things in this Commonwealth."

A "person," as used in the foregoing
statute, includes a "commercial entity, whether or not a
citizen or domiciliary of this Commonwealth and whether or not
organized under the laws of this Commonwealth." Code
? 8.01-328. Thus, nonresident defendant Glumina Bank
qualifies as a "person" under the statute.

"The function of our long-arm statute is
to assert jurisdiction over nonresidents who engage in some
purposeful activity in Virginia, to the extent permissible under
the Due Process Clause of the Constitution of the United
States." Nan Ya Plastics Corp. U.S.A. v. DeSantis,
237 Va. 255, 259, 377 S.E.2d 388, 391, cert. denied,
492 U.S. 921 (1989). Accord Peninsula Cruise, Inc. v.
New River Yacht Sales, Inc.
, 257 Va. 315, 319, 512 S.E.2d
560, 562 (1999). The Due Process Clause, however, protects a
person’s liberty interest in not being subject to the binding
judgment of a forum unless the person has "certain minimum
contacts" within the territory of the forum so that
maintenance of the action does not offend "traditional
notions of fair play and substantial justice." DeSantis,
237 Va. at 259, 377 S.E.2d at 391 (quoting International Shoe
Co. v. Washington
, 326 U.S. 310, 316 (1945)). Accord Peninsula
Cruise
, 257 Va. at 319, 512 S.E.2d at 562.

To determine whether this nonresident defendant
engaged in some purposeful activity in Virginia and whether it
had sufficient minimum contacts within the Commonwealth, we must
examine the facts. In this case, because the defendant was in
default under our rules of procedure, the trial court properly
could find the factual allegations of the motion for judgment
accurate, as those allegations related to personal jurisdiction. See
Landcraft Co. v. Kincaid, 220 Va. 865, 874, 263 S.E.2d
419, 425 (1980).

Those jurisdictional facts establish that
defendant, pursuant to contracts between the plaintiffs and
defendant entered into before June 19, 1998, had transferred to
the Diamond Corporation’s Manassas bank account funds received in
Croatia from Milic. In accord with this prior course of dealing,
the defendant entered into two more contracts in June 1998 in
which it promised again to transfer to the corporation’s Manassas
bank account a total of $460,000 delivered in cash by Milic to
defendant. According to the facts, the defendant breached both of
the June contracts by failing to honor its obligations to supply
the funds to the corporation’s Virginia account or to refund the
money to Milic.

Consequently, the plaintiffs’ cause of action
for breach of contract clearly arises from the defendant’s
"[c]ontracting to supply services or things in this
Commonwealth," in the language of the long-arm statute.
Manifestly, the nonresident defendant has engaged in purposeful
activity in Virginia, and there are sufficient minimum contacts
within Virginia so that maintenance of this action here does not
offend traditional notions of fair play and substantial justice. See
Elefteriou v. Tanker Archontissa, 443 F.2d 185, 188 (4th
Cir. 1971) (failure to make payment to seaman under contract made
outside United States by ship owner for payment within Virginia
provides basis for assertion of personal jurisdiction for owner’s
supplying services or things in Virginia within meaning of
long-arm statute). Compare Promotions, Ltd. v. Brooklyn
Bridge Centennial Comm’n
, 763 F.2d 173, 175 (4th Cir. 1985)
(seeking to enforce its right to sell the Brooklyn Bridge,
entrepreneur plaintiff, a Virginia corporation, failed to
establish personal jurisdiction over New York defendants in
Virginia under portion of long-arm statute at issue here because
"any contract between plaintiff and defendants was made and
was to be carried out in New York. The long arm of ? 8.01
does not extend to a contract formed and performed outside
Virginia").

The defendant’s second contention that service
of the notice of motion for judgment and the praecipe through the
Secretary of the Commonwealth was improper because none of the
bases for personal jurisdiction under Code ? 8.01-328.1
"have been alleged or proven" is but a rehash of its
first contention. Code ? 8.01-329 plainly provides for
service of process to be made upon the Secretary of the
Commonwealth as statutory agent of a person against whom
"the exercise of personal jurisdiction is authorized"
under Code ? 8.01-328.1. This nonresident defendant is such
a person, as we have just demonstrated.

In sum, there was full compliance by the
plaintiffs with each procedural requirement leading to the
judgment by default. See Landcraft Co., 220 Va. at
872-73, 263 S.E.2d at 424. Accordingly, we hold that the trial
court properly entered the default judgment, and it will be

Affirmed.

 

FOOTNOTES:

[1] Justice Compton participated in
the hearing and decision of this case prior to the effective date
of his retirement on February 2, 2000.

 

Scroll To Top