Indiana University Health Southern Indiana Physicians, Inc. v. Charlene Noel

FILED

Nov 07 2018, 8:59 am

CLERK

Indiana Supreme Court

Court of Appeals

and Tax Court

ATTORNEYS FOR APPELLANTS ATTORNEYS FOR APPELLEE

James L. Whitlatch Sara A. Langer

Kathryn DeWeese Steven L. Langer

Bloomington, Indiana Valparaiso, Indiana

ATTORNEYS FOR AMICUS CURIAE ATTORNEY FOR AMICUS CURIAE

DEFENSE TRIAL COUNSEL OF INDIANA INDIANA TRIAL LAWYERS

Robert J. Palmer ASSOCIATION

Mishawaka, Indiana David L. Farnbauch

Fort Wayne, Indiana

Lucy R. Dollens

Indianapolis, Indiana Diana C. Bauer

Fort Wayne, Indiana

IN THE

COURT OF APPEALS OF INDIANA

Indiana University Health November 7, 2018

Southern Indiana Physicians, Court of Appeals Case No.

Inc., Sarah Whiteman, NP, and 18A-CT-1299

Carlito D. Sabandal, M.D., Appeal from the

Appellants-Defendants, Marion Superior Court

The Honorable

Rafi Siddiqi, M.D., Indiana Michael D. Keele, Judge

University Health Bedford, Inc., Trial Court Cause No.

d/b/a Indiana University 49D07-1802-CT-7520

Health Bedford Hospital,

Defendants,

Court of Appeals of Indiana | Opinion 18A-CT-1299 | November 7, 2018 Page 1 of 17

v.

Charlene Noel,

Appellee-Plaintiff.

Altice, Judge.

Case Summary

[1] In February 2018, Charlene Noel filed a medical malpractice complaint in

Marion Superior Court against several defendants, including Indiana University

Health Southern Indiana Physicians, Inc. (IU Health SIP), Sarah Whiteman,

NP, and Carlito Sabandal, M.D. (collectively, Appellants). Appellants filed a

motion to transfer venue, alleging that Marion County was not a preferred

venue under Ind. Trial Rule 75 and requesting that the case be transferred to

Lawrence County. The trial court denied the motion. Appellants appeal from

the denial of their motion to transfer venue. Amicus curiae briefs have been

filed by Defense Trial Counsel of Indiana (DTCI) and Indiana Trial Lawyers

Association (ITLA), aligned with Appellants and Noel, respectively.

[2] The only connection that any of the defendants have to Marion County is the

Indianapolis address of the registered agent for IU Heath SIP and Indiana

University Health Bedford, Inc., d/b/a Indiana University Health Bedford

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Hospital (IU Bedford Hospital) (collectively, IU Health Entities). Based on this

connection, Noel contends that Marion County is a preferred venue under T.R.

75(A)(4) and our Supreme Court’s interpretation of this rule in American Family

Ins. Co. v. Ford Motor Co., 857 N.E.2d 971 (Ind. 2006) (American Family).

Appellants, however, direct us to Ind. Code § 23-0.5-4-12 that went into effect

January 1, 2018. This statute provides in part: “The address of the [registered]

agent does not determine venue in an action or a proceeding involving the

entity.” Noel responds that the statute is a nullity because it conflicts with T.R.

75(A)(4) as interpreted by the Court in American Family.

[3] We affirm.1

Facts & Procedural History

[4] On February 23, 2018, Noel filed her medical malpractice action in Marion

Superior Court against IU Bedford Hospital, Rafi Siddiqi, M.D., and

Appellants. The alleged malpractice took place at IU Bedford Hospital, which

is in Lawrence County. Noel is also a resident of Lawrence County. IU Health

Entities share the same registered agent, Mary Beth Claus, located at an address

in Marion County. Based on the location of the registered agent of these

1

We held oral argument at Ivy Tech Community College in Indianapolis on October 16, 2018. We thank

counsel for their outstanding written and oral advocacy and extend our appreciation to the faculty, staff, and

students of Ivy Tech for their exceptional hospitality.

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defendants, Noel filed the action in Marion County, asserting that it was a

preferred venue pursuant to T.R. 75(A)(4).

[5] On April 23, 2018, Appellants filed, along with their answer, a motion to

transfer venue, alleging that Marion County is not a preferred venue in this

case. Appellants requested that the case be transferred to Lawrence County.

Appellants filed with their motion certified copies of documents from the

Indiana Secretary of State’s records for the IU Health Entities. These

documents confirmed that the registered agent for these entities is Mary Beth

Claus at an address in Indianapolis, Indiana. The documents, however,

separately provided different addresses for the principal office. In this regard,

the document related to IU Bedford Hospital provided an address in Bedford,

Indiana, and the one related to IU Health SIP listed an address in Bloomington,

Indiana (that is, Lawrence County and Monroe County, respectively). Relying

on the newly enacted statute, I.C. § 23-0.5-4-12, Appellants argued that the

Marion County address of the IU Health Entities’ registered agent does not

make Marion County a county of preferred venue.

[6] Noel responded to the motion to transfer venue on May 8, 2018. Relying on

Indiana Supreme Court precedent, American Family, she argued that the term

“principal office”, as used in T.R. 75(A)(4), means the county where

corporations maintain their resident agent for service of process. Noel argued

that the new statute conflicts with T.R. 75, making the statute a nullity.

Appellants responded and argued that the two do not conflict and can be read

in harmony.

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[7] On May 11, 2018, the trial court issued an order summarily denying the motion

to transfer venue. Appellants now bring this interlocutory appeal pursuant to

Ind. Appellate Rule 14(A)(8).

Standard of Review

[8] The trial court made no factual findings in its order denying the motion to

transfer venue. Accordingly, we review the matter de novo. See Arkla Indus.,

Inc. v. Columbia St. Partners, Inc., 95 N.E.3d 194, 196 (Ind. Ct. App. 2018), trans.

denied.

Discussion & Decision

[9] T.R. 75(A) allows a case to be filed in any county in Indiana. The rule,

however, sets forth criteria for establishing preferred venue under ten separate

subsections. The rule does not create a priority among the subsections, and

there may be multiple preferred venues in a given case. If the action is

commenced in a preferred venue, a motion to transfer venue to another

preferred venue is not proper and must be denied by the trial court. Arkla

Indus., 95 N.E.2d at 197. On the other hand, if the complaint is not filed in a

preferred venue, the trial court is required to transfer the case to a preferred

venue upon proper request from a party. Id.

[10] T.R. 75(A)(4) is the subsection at issue here and provides in relevant part that

preferred venue lies in “the county where … the principal office of a defendant

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organization is located….” In this case, the parties dispute whether Marion

County is the county where the IU Health Entities’ principal offices are located.

[11] In 2006, in the case of American Family, 857 N.E.2d 971, the Indiana Supreme

Court interpreted and defined the term “principal office” as used in T.R. 75(A). 2

The Court held that “the term ‘principal office’ as used in subsections (4) and

(10) of Trial Rule 75(A) refers to a domestic or foreign corporation’s registered

office in Indiana.” American Family, 857 N.E.2d at 972. The Court observed

that the currently effective Indiana Rules of Trial Procedure, including T.R. 75,

were adopted in 1970. The Court interpreted the meaning of “principal office”

as the term was understood in 1970 and expressly refused to apply the

definition of “principal office” from Ind. Code § 23-1-20-19,3 a statute that was

enacted more than fifteen years after the adoption of T.R. 75. The Court

explained:

At the time Indiana’s corporation law required that both foreign

and domestic corporations maintain a “principal office in this

state” where a designated resident agent for service of process

could be found. Ind. Code § 25-204, 25-306 (Burns Code Ed.

Repl. 1969). It is that office to which Trial Rule 75 referred by

using the same phrase to provide in subsection (4) that preferred

venue lies in “the county where ... the principal office of a

defendant organization is located.” When the Business

2

The defendant, Ford Motor Company, did not have an office in Indiana but maintained a registered office

and agent in Marion County for service of process in the state.

3

I.C. § 23-1-20-19 defines “principal office” for purposes of the Business Corporation Act as “the office (in or

out of Indiana) so designated in the annual or biennial report where the principal executive offices of a

domestic or foreign corporation are located.”

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Corporation Act was adopted in 1986, what had formerly been

called the “principal office in this state” was designated the

“registered office.” I.C. § 23-1-24-1 (2004). This avoided the

confusion between “principal place of business,” which means

the corporate headquarters for purposes of federal diversity

jurisdiction under 28 U.S.C. section 1332, and “principal office,”

which means the place in Indiana where one serves the corporate

registered agent. By adopting the term “registered office,” the

Business Corporation Act did not intend to change the venue

rules for foreign corporations. Indeed, foreign corporations

qualified to do business under other laws, for example, the

Financial Institutions Act, to this day are required to have a

“principal office in this state.” See, e.g., I.C. § 28-1-22-12. In

short, at the time the current Rules of Trial Procedure were

proposed, the phrase “principal office” referred to what is

currently known as the “registered office” of a foreign

corporation qualified to do business in Indiana. Thus, if a

foreign corporation is qualified to do business in Indiana under

the Business Corporation Act, it will necessarily have a

“principal office in the state” – now called a “registered office” –

irrespective of where its corporate headquarters may be.

Accordingly, subsection (4) of Trial Rule 75 establishes preferred

venue in the county of the defendant organization’s registered

office.

American Family, 857 N.E.2d at 974-75 (footnotes omitted).

[12] Because the defendant in American Family had designated CT Corporation,

located in Marion County, as its registered office and agent, the Court

concluded that Marion County was the defendant’s principal office in the state

for venue purposes. Id. at 975. Accordingly, the Court determined that the

complaint was properly filed in Marion County, a preferred venue, and the trial

court erred in transferring the case to another county of preferred venue. Id.

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[13] The Court’s definition of “principal office” was recently applied in CTB, Inc. v.

Tunis, 95 N.E.3d 185, 189 (Ind. Ct. App. 2018), trans. denied. There, the

defendant was a domestic corporation with a registered office and agent in

Kosciusko County. Relying on American Family, this court stated that

“principal office” in the context of T.R. 75 is “the registered office according to

Section 23-1-24-1.” CTB, 95 N.E.3d at 189. This statute, which had just been

repealed,4 “required corporations to maintain a continuous ‘registered office’

and ‘registered agent’ in Indiana and that the address of the ‘registered agent’

must be the same as the ‘registered office.’” Id. at 189. Although CTB had

designated agents for service of process in Marion County pursuant to a federal

regulation, this court found that fact “completely irrelevant to the question of

venue under Trial Rule 75(A)(4).” Id. What mattered was the location of the

office of CTB’s registered agent under Indiana’s corporation law. Id.

[14] Extensive revisions to Indiana’s corporation law took effect on January 1, 2018,

with the repeal of numerous statutes and the adoption of new ones. Relevant

here is the adoption of I.C. § 23-0.5-4-12, which provides:

The designation or maintenance in Indiana of a registered agent

does not by itself create the basis for personal jurisdiction over

the represented entity in Indiana. The address of the agent does not

determine venue in an action or a proceeding involving the entity.

4

Because neither party had argued that the revisions to Indiana’s corporation law were relevant, the court

expressly indicated that it would not address the effect of the revisions. Id. at 187.

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(Emphasis supplied).5

[15] On appeal, Appellants and DTCI argue that Marion County is not a preferred

venue in this case and, therefore, the motion to transfer venue to Lawrence

County6 should have been granted by the trial court. First, Appellants argue

that American Family is not controlling authority in this case because its holding

should be limited to foreign companies. Unlike a foreign corporation, as in

American Family, Appellants observe that a domestic corporation is physically

located in Indiana. Thus, according to Appellants, a domestic corporation can

have both a principal office and a registered office/agent.

[16] This argument is a nonstarter and was not raised below. Although American

Family dealt with a foreign corporation, the Court’s analysis and interpretation

of T.R. 75(A)(4) was not dependent on whether the corporation was foreign or

domestic. In fact, the first sentence of the opinion states: “We hold that the

term ‘principal office’ as used in subsections (4) and (10) of Trial Rule 75(A)

refers to a domestic or foreign corporation’s registered office in Indiana.” Id. at

972. The holding’s application to domestic corporations, as well as foreign,

5

As part of the 2018 revisions, the legislature elected to enact a version of the Uniform Law Commission’s

Model Registered Agents Act, which recognizes the use by many corporations of commercial registered

agents with addresses “divorced from any real connection with the business activities of the represented

entity.” Model Registered Agents Act (amended 2011), prefatory note. I.C. § 23-0.5-4-12 is modeled after

Section 15 of the Model Registered Agents Act.

6

None of the parties disputes that Lawrence County is a county of preferred venue under T.R. 75(A).

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could not be more clear. Further, our court has applied the holding in the

context of a domestic corporation. See CTB, 95 N.E.3d at 189.

[17] Appellant’s most compelling argument, which DTCI also asserts, is that I.C. §

23-0.5-4-12 makes the address of a corporation’s registered agent irrelevant in

determining preferred venue. As set forth above, the statute provides in

relevant part: “The address of the agent does not determine venue in an action

or a proceeding involving the entity.”

[18] In addition to I.C. § 23-0.5-4-12, the newly adopted Uniform Business

Organizations Code sets out separate definitions for “registered agent” and

“principal office”. “Registered agent” is defined as “an agent of an entity

which is authorized to receive service of any process, notice, or demand

required or permitted by law to be served on the entity. The term includes a

commercial registered agent and a noncommercial registered agent.” I.C. § 23-

0.5-1.5-36. “Principal office” is defined as “the principal executive office of an

entity, whether or not the office is located in Indiana.”7 I.C. § 23-0.5-1.5-29.

Although foreign and domestic corporations are still required to “designate and

maintain a registered agent in this state”, I.C. § 23-0.5-4-1, corporations are no

longer statutorily required to “maintain in Indiana … [a] registered office”, as

previously required by I.C. § 23-1-24-1.

7

“Principal office” is similarly defined in I.C. § 23-1-20-19, which was not repealed. See footnote 3, supra.

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[19] Appellants argue that this new statutory scheme recognizes the important

distinction between the location of a corporation’s principal office and its

registered agent, as well as the reality that corporations now often use

commercial registered agents that are not otherwise associated with the

corporation. Appellants note that the Indiana Secretary of State requires that

each biennial report filed by a corporation include both the address of the

corporation’s principal office and the name and address of its registered agent.

According to DTCI, “[t]he Indiana legislature not only eliminated the legal

basis for the Supreme Court’s ruling in American Family, it also affirmatively

and unambiguously determined that the location of the resident agent was not a

basis for preferred venue.” DTCI Brief at 7.

[20] In response, Noel and ITLA do not dispute that I.C. § 23-0.5-4-12 is clear and

that if it is applicable here, Marion County would not be a county of preferred

venue. They argue, however, that the statute is a nullity because it directly

conflicts with T.R. 75 as the rule has been interpreted by our Supreme Court.

[21] It is a fundamental rule of law in our state that if a conflict exists between a

procedural statute and a rule adopted by the Supreme Court, the rule takes

precedence. Ind. Code § 34-8-1-3 provides:

The supreme court has authority to adopt, amend, and rescind

rules of court that govern and control practice and procedure in

all the courts of Indiana. These rules must be promulgated and

take effect under the rules adopted by the supreme court, and

thereafter all laws in conflict with the supreme court’s rules have

no further force or effect.

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See also Humbert v. Smith, 664 N.E.2d 356, 357 (Ind. 1996) (generally when a

statute conflicts with the Court’s rules, the statute is null and void; the Court,

however, decided to “assent to provisions the General Assembly has placed in

the paternity statute, treating them as an exception to the requirements of Rule

803(6)”); Bowyer v. Ind. Dep’t of Nat. Res., 798 N.E.2d 912, 917 (Ind. Ct. App.

2003) (“When a statute conflicts with the Indiana rules of trial procedure, the

rules of procedure govern, and phrases in statutes which are contrary to the

rules of procedure are considered a nullity.”) (quoting Jackson v. City of

Jeffersonville, 771 N.E.2d 703, 706 (Ind. Ct. App. 2002), trans. denied). Direct

conflict is not required. Rather,

[t]he rule and the statute need only be incompatible to the extent

that both could not apply in a given situation. A procedural

statute may not operate as an exception to a procedural rule

having general application. A procedural statute that does not

conflict with any of the trial rules may be held operative.

However, any statute conflicting with procedural rules enacted

by our supreme court shall have no force or effect.

Id. (citations omitted).

[22] In this same vein, T.R. 75(D) provides:

Other venue statutes superseded by this rule. Any provision of

these rules and any special or general statute relating to venue,

the place of trial or the authority of the court to hear the case

shall be subject to this rule, and the provisions of any statute

fixing more stringent rules thereon shall be ineffective. No

statute or rule fixing the place of trial shall be deemed a

requirement of jurisdiction.

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[23] Appellants and DTCI argue that there is no conflict between I.C. § 23-0.5-4-12

and T.R. 75 and that the statute does not fix more stringent rules regarding

venue than T.R. 75(A). They observe that the plain language of T.R. 75(A)(4)

makes no mention of the phrase “registered office,” only “principal office.”

They assert that the location of the registered office became relevant in the

context of T.R. 75(A)(4) only after American Family’s interpretation of the

phrase “principal office” based on a statute (I.C. § 23-1-24-1) that no longer

exists. According to Appellants, the new statute “merely provides guidance on

the interpretation of what is not a ‘principal office’ for purposes of T.R.75

(A)(4).” Appellants’ Brief at 15 (emphasis in original). That is, contrary to

American Family, the address of the registered agent does not establish preferred

venue.8

[24] Another panel of this court recently determined that I.C. § 23-0.5-4-12 is not

ineffective under T.R. 75(D). Morrison v. Vasquez, 107 N.E.3d 1103, 1109-10

(Ind. Ct. App. 2018) (rehearing denied October 22, 2018). The court stated:

Trial Rule 75(A)(4) provides that preferred venue lies in the

county where “the principal office of a defendant organization”

is located, and Ind. Code § 23-0.5-4-12 provides that the address

of the registered agent does not determine venue. Thus, Ind.

Code § 23-0.5-4-12 does not, by its express terms, fix more

8

In determining the “principal office” in the context of T.R. 75, Appellants would have courts look to the

statutory definitions of “principal office.” See I.C. § 23-0.5-1.5-29 (“the principal executive office of an entity,

whether or not the office is located in Indiana”); see also I.C. § 23-1-20-19 (similar definition application of

which American Family expressly rejected).

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stringent rules related to venue than the terms of Trial Rule

75(A)(4).

Id. at 1109 The court observed that the holding in American Family was

“premised on Indiana corporation law which has since been considerably

amended.” Id. The Morrison court explained:

Specifically, the Court in [American Family] observed that, at the

time Rule 75 was adopted in 1970, Indiana’s corporation law

required that corporations maintain a “principal office in this

state” where an agent for service of process could be found and

that, “[w]hen the Business Corporation Act was adopted in 1986,

what had formerly been called the ‘principal office in this state’

was designated the ‘registered office.’ I.C. § 23-1-24-1 (2004).”

857 N.E.2d at 974-975. The Court expressly found that, “[b]y

adopting the term ‘registered office,’ the Business Corporation

Act did not intend to change the venue rules for foreign

corporations.” Id. at 975 (emphasis added). Thus [American

Family] was based on the corporation law adopted in 1986 and

the fact the statutory provisions added by the legislature at that

time did not intend to change the venue rules. However,

Indiana’s corporation law was significantly amended by Pub.

Law No. 118-2017 (eff. Jan. 1, 2018). Among other changes, the

law repealed all of Ind. Code §§ 23-1-24, including Ind. Code §

23-1-24-1 upon which [American Family] depended, and added

the new article of Ind. Code §§ 23-0.5 which contains §§ 23-0.5-4

governing the designation and maintenance of registered agents,

including Ind. Code § 23-0.5-4-12 which, unlike the provisions

adopted in 1986, expressly intends a change to the venue rules.

See Pub. Law No. 118-2017, § 5 (enacting Ind. Code §§ 23-0.5), §

11 (repealing Ind. Code §§ 23-1-24). Thus the Indiana

corporation law upon which [American Family] was centered has

been extensively amended, and the specific statutory provision

relied upon in that case has been repealed and Ind. Code § 23-

0.5-4-12 has been added. We decline to find that Ind. Code § 23-

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0.5-4-12’s provision that the address of a registered agent does

not determine venue fixes a more stringent rule related to venue

than Trial Rule 75 or is ineffective pursuant to Trial Rule 75(D).

Id. at 1109-10 (footnotes omitted). We cannot agree with our colleagues’

determination regarding the effectiveness of the statute.

[25] I.C. § 23-0.5-4-12 clearly conflicts with T.R. 75(A)(4) as the rule has been

interpreted by our Supreme Court.9 As set forth above, in American Family, the

Court was concerned with the meaning of “principal office” as it was

understood at the time T.R. 75 was adopted in 1970. The Court determined

that this phrase, as used in the rule, referred to “the place in Indiana where one

serves the corporate registered agent.” American Family, 857 N.E.2d at 975. In

light of the 1986 amendments to our state’s corporation law, the Court

determined that this place was now statutorily referred to as “registered office”

rather than “principal office”. Despite the changed nomenclature, the Court

stayed true to the original meaning of the term “principal office” in the rule.

[26] Indiana corporation law has been substantially amended once again and in

apparent recognition of the use of commercial registered agents, corporations

are no longer required to maintain a “registered office” in the state, as

previously mandated by I.C. § 23-1-24-1 (now repealed). Corporations,

9

The Comment to Section 15 of the Model Registered Agents Act, after which I.C. § 23-0.5-4-12 is based,

warns: “This section may be inconsistent with other law or procedural rules in a state, and thus existing law

on venue should be reviewed when this act is considered for adoption in a state.”

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however, must “designate and maintain a registered agent in this state”. I.C. §

23-0.5-4-1(a). “Registered agent” is statutorily defined as “an agent of an entity

which is authorized to receive service of any process, notice, or demand

required or permitted by law to be served on the entity. The term includes a

commercial registered agent and a noncommercial registered agent.” I.C. § 23-

0.5-1.5-36. Thus, although the statutes have changed, a corporation still must

have a registered agent in Indiana authorized to receive service of process. The

address of the corporation’s registered agent more closely comports with the

meaning of “principal office” as the term was understood in 1970 than the

current statutory definitions of “principal office,” one of which was expressly

rejected in American Family.

[27] We reiterate that the Supreme Court has the “authority to adopt, amend, and

rescind rules of court that govern and control practice and procedure in all the

courts of Indiana.” I.C. § 34-8-1-3. Laws in conflict with rules promulgated by

the Court “have no further force or effect.” Id. Further, procedural rules

adopted by the Court are regularly interpreted by the Court, and these cases

also “take precedence over any conflicting statutes.” Augustine v. First Fed. Sav.

& Loan Ass’n of Gary, 384 N.E.2d 1018, 1020 (Ind. 1979) (“The procedural rules

and cases decided by this Court take precedence over any conflicting statutes”).

We hold that I.C. § 23-0.5-4-12 conflicts with T.R. 75(A)(4) as interpreted by

the Indiana Supreme Court and that the statute is, therefore, a nullity.

[28] American Family remains controlling law in Indiana. If the Indiana corporate

community is dissatisfied with the Court’s interpretation of the rule, recourse

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lies with the Indiana Supreme Court Committee on Rules of Practice and

Procedure,10 not the legislature. See Ind. Trial Rule 80 (establishing the

committee and setting forth procedures for amending Indiana Rules of Court).

[29] Affirmed.

Bradford, J. and Tavitas, J., concur.

10

Appellants and DTCI observe that registered agents are now commonly business entities with no

connection to the corporation other than accepting service of process. We acknowledge the tenuous

connection that often exists today, but such does not allow us to invade the exclusive province of our

Supreme Court and tinker with T.R. 75(A)(4). Further, it is well established that convenience alone is not a

sufficient reason to transfer venue in Indiana. See Lake Holiday Conservancy v. Davidson, 808 N.E.2d 119, 124

(Ind. Ct. App. 2004) (“Any complaint about the equity … of Rule 75(A)(5) must be directed to the Supreme

Court Committee on Rules of Practice and Procedure…. We will not impose a strained construction upon a

clear rule in order to reach what Lake Holiday believes is the more reasonable result.”); see also Meridian Mut.

Ins. Co. v. Harter, 671 N.E.2d 861, 864 (Ind. 1996) (“The balance of convenience…is not sufficient to disturb

the plaintiffs’ selection of a forum that meets preferred venue requirements.”).

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