Samuel Humphreys, a Tennessee resident, filed a complaint in the Shelby County Circuit Court against South Carolina seller Richard Selvey, alleging fraudulent and tortious conduct related to a contract for the purchase of antique soda dispensers. Selvey moved to dismiss the case, claiming lack of personal jurisdiction and improper venue, which the trial court granted. Humphreys appealed, challenging the trial court’s finding of insufficient contacts to establish personal jurisdiction over Selvey. The Court of Appeals reversed the trial court's decision and remanded the case.
The dispute arose from a contract where Humphreys, through intermediary Fred Hawkins and later antiques dealer Mark Kennedy, agreed to purchase 115 dispensers for $300,000. Selvey initiated the sale by contacting Hawkins, leading to negotiations and a formal contract. Kennedy traveled to South Carolina to pick up a sample lot of dispensers and deliver a $100,000 down payment. Following this, he accepted the full delivery of dispensers in Jackson, Tennessee, paying the remaining $200,000. Although Humphreys initially accepted the dispensers without noticing any issues, he later discovered significant nonconformities that affected their value.
The dispensers provided by the defendant did not meet the quality and value representations made to the plaintiff. Following the discovery of this nonconformity, the plaintiff attempted to revoke acceptance of the dispensers in accordance with T.C.A. 47-2-608 through multiple communications: a certified letter dated October 31, 2001, a facsimile on November 16, 2001, and another certified letter on December 14, 2001. All these attempts were unsuccessful, as the letters were returned as "unclaimed" or "no such number." The plaintiff then engaged a private process server, who successfully delivered the revocation notice to the defendant on January 14, 2002, demanding a refund of the $300,000 purchase price within ten days. The plaintiff agreed to return the dispensers upon receipt of the refund. As of the filing of the complaint, the defendant had not acknowledged the revocation or issued the refund. Subsequently, on February 18, 2002, the plaintiff filed a six-count complaint against the defendant in the Circuit Court of Memphis, claiming jurisdiction under T.C.A. 16-10-101 for subject matter and T.C.A. 20-2-223 for personal jurisdiction based on the defendant's business activities in Tennessee. The venue was established as appropriate under T.C.A. 20-4-101, as the cause of action arose in Shelby County. In response, the defendant filed a motion to dismiss based on lack of personal jurisdiction and improper venue, arguing that all relevant actions occurred in South Carolina and asserting that any contact with Tennessee was limited to Madison County, not Shelby County.
Selvey submitted a memorandum of law in support of his motion, which was not included in the appeal record. A hearing on this motion took place on June 7, 2002, and the trial court issued an order on June 28, 2002, granting the defendant’s motion to dismiss based on lack of personal jurisdiction under Rule 12.02(2) and improper venue under Rule 12.02(3). The court concluded that the cause of action arose from a contract formed in South Carolina, and the defendant's delivery of goods to Jackson, Tennessee, did not establish sufficient contacts for Tennessee to exercise personal jurisdiction. Moreover, even if Tennessee had sufficient contacts, proper venue would be in Madison County, not Shelby County.
The court ordered that the defendant's motion to dismiss was granted for both lack of personal jurisdiction and improper venue, with all costs assessed against the plaintiff. Following this, Humphreys filed a motion to alter or amend the judgment, which was denied on November 12, 2002, leading to a timely notice of appeal. Humphreys's appeal focuses solely on whether the trial court erred in granting Selvey's motion to dismiss for lack of personal jurisdiction, emphasizing the plaintiff's burden to establish a prima facie case for jurisdiction. The court noted that when a defendant challenges personal jurisdiction, the plaintiff must provide specific facts to demonstrate jurisdiction, and the trial court must view these facts favorably towards the plaintiff. Dismissal is only warranted if the plaintiff's allegations collectively fail to establish a prima facie case for jurisdiction. Guidelines for such motions are informed by precedents, including *Chenault v. Walker*.
Under Tennessee law, a motion to dismiss can be based on eight grounds, including lack of personal jurisdiction and failure to state a claim, as outlined in Tenn. R. Civ. P. 12.02. Courts may decide such motions based solely on pleadings or, if external matters like affidavits are introduced, treat the motion as one for summary judgment under Tenn. R. Civ. P. 56. However, Rule 12.03 does not apply to motions for dismissal based on lack of personal jurisdiction unless the evidence is conclusive enough to resolve the issue fully at that stage. It is often infeasible to fully resolve jurisdictional issues early in litigation, as sufficient evidence may not be available before discovery. Plaintiffs bear the burden of proving jurisdiction exists, and if defendants challenge this with affidavits, plaintiffs must provide counter-affidavits and other evidence. Courts will accept the nonmoving party's allegations as true and resolve factual disputes in their favor, but they will not credit conclusory statements or implausible inferences. The procedure for evaluating motions to dismiss for lack of personal jurisdiction under Tenn. R. Civ. P. 12.02(2) is deemed reasonable and consistent with Tennessee law. In the case discussed, the trial court's decision to grant a motion to dismiss was based on comprehensive review of the record, including affidavits, and the applicability of Tennessee’s long-arm statute allows for jurisdiction as permitted by the Fourteenth Amendment.
T.C.A. 20-2-214 establishes that Tennessee courts can exercise jurisdiction over nonresidents and residents outside the state who cannot be personally served, for claims arising from specific activities, including business transactions, tortious acts, property interests in Tennessee, insurance contracts, service agreements, and divorce-related matters. The statute applies to individuals and entities, with jurisdiction conferred through actions taken via agents or representatives.
To assess if exercising personal jurisdiction over Selvey complies with the Due Process Clause, courts use a five-part "minimum contacts" test from the International Shoe decision, which evaluates: 1) the quantity of contacts with the forum state; 2) the nature and quality of those contacts; 3) the connection between the contacts and the cause of action; 4) the forum state's interest in resolving the dispute; and 5) the convenience for the parties involved.
In this case, the facts indicate that in August 2001, Selvey initiated contact with Hawkins in North Carolina regarding the sale of antique soda dispensers. Hawkins later communicated this intent to Humphreys in Tennessee, who directed Hawkins to contact Selvey. Selvey was not informed that Hawkins was representing a Tennessee resident at this time. By late August, Humphreys authorized Kennedy to negotiate with Selvey, leading to a sale contract in September 2001. Kennedy subsequently collected a sample lot of dispensers in South Carolina and made a down payment sourced from a Memphis bank, with Selvey delivering the remaining dispensers to Kennedy in Jackson, Tennessee.
Selvey completed the delivery of antique soda dispensers and received the remaining $200,000 balance, which was financed through a Tennessee bank. The case does not dispute the basic facts but focuses on whether Selvey had sufficient minimum contacts with Tennessee to establish personal jurisdiction. Tennessee law (T.C.A. 20-2-214(a)(5)) allows courts to assert jurisdiction over non-residents for contracts involving services or materials in the state. In this instance, the contract for the dispensers included delivery in Jackson, Tennessee. Additionally, T.C.A. 20-2-214(a)(2) supports jurisdiction for tortious acts occurring within the state, with Humphreys alleging fraud and misrepresentation by Selvey.
The Sixth Circuit's interpretation in Neal v. Janssen supports that even a single act directed toward Tennessee can establish sufficient minimum contacts for jurisdiction. The court agrees that the contract between Humphreys and Selvey, formed through various communications, could support jurisdiction under T.C.A. 20-2-214(a)(2) and (5), contingent upon the plaintiff presenting a prima facie case according to the Masada factors.
The Masada factors indicate that the contract arose from multiple telephone calls and written communications, which may establish jurisdiction if they form the basis for the action. Humphreys' complaint includes allegations of breach of express and implied warranties, fraud, negligent misrepresentation, and violations of the Tennessee Consumer Protection Act, based on Selvey's alleged misrepresentations regarding the dispensers.
Selvey directed alleged misrepresentations to Humphreys and/or his agents, initially communicating with Hawkins but later recognizing he was dealing with a Tennessee buyer before the contract formation. Kennedy testified that he discussed the sale contract terms with Selvey, which included the delivery of dispensers to a location specified by the plaintiff in Jackson, Tennessee. Selvey’s communications regarding the dispensers' quality, value, and condition were foreseeably directed at a Tennessee resident. Although the communications alone may not establish minimum contacts, Selvey's personal delivery of dispensers to Tennessee, alongside his extensive communications, constitutes sufficient minimum contacts for personal jurisdiction in Tennessee.
Selvey purposefully engaged in business within Tennessee, having contracted with a Tennessee resident, collecting $300,000, and delivering dispensers in Jackson. These contacts are directly related to Humphreys’s claims, stemming from the sale contract. The court also noted Tennessee's strong interest in resolving disputes involving contracts with its residents, as established in precedent cases. Although there is no evidence regarding the inconvenience Selvey might face litigating in Tennessee, the nature of the contractual agreement reasonably suggests he could anticipate being sued in the state. The court ultimately determined that exercising personal jurisdiction over Selvey aligns with traditional notions of fair play and substantial justice.
In contrast, the court distinguished this case from Darby v. Superior Supply Co., where the defendant, an Alabama resident, purchased lumber for personal use without entering Tennessee, underscoring that Selvey's situation involved direct business interactions and obligations in Tennessee.
Lumber was delivered to Darby’s agent at Superior’s plant in Chattanooga and transported to Florence, Alabama. Darby could only use part of the lumber due to its dimensions, paid for the usable portion, and notified Superior of his inability to use the rest, which he agreed to hold for them. Superior subsequently sued Darby for the unpaid balance of $3,639.48, serving process in Alabama using Tennessee’s long arm statute.
On appeal, the court examined whether it had personal jurisdiction over Darby, a nonresident who never entered Tennessee but engaged in a retail purchase of lumber via interstate mail and telephone. The court found that Darby’s only act in Tennessee was accepting the lumber delivery through an agent, concluding that this did not constitute a purposeful availing of Tennessee's privileges or protections. The court emphasized that the case did not solely hinge on Darby’s physical absence from Tennessee but failed to meet established jurisdictional standards from prior cases (International Shoe, McGee, Hanson).
In contrasting the case with Selvey’s circumstances, the court noted that Selvey personally delivered goods to Tennessee and accepted payment there, thus actively engaging in Tennessee business. The contract at issue had a significant value of $300,000, suggesting substantial economic implications for Tennessee. As a result, the court reversed the trial court’s dismissal of Selvey’s case, asserting that it did have personal jurisdiction, and also rejected Selvey’s venue dismissal motion.
The court determined that even if the State of Tennessee had sufficient contacts for in personam jurisdiction over the Defendant, the appropriate venue is Madison County due to the delivery of goods in Jackson, Tennessee. Humphreys did not appeal the trial court's venue decision, leaving the question of the trial court's dismissal for improper venue unreviewable by this court. The court is tasked with deciding whether to transfer the case to Madison County rather than affirming the dismissal.
According to T.C.A. 20-4-101(a), civil actions of a transitory nature can be initiated in the county where the cause of action arose or where the defendant resides. The Tennessee Supreme Court's ruling in Five Star Express, Inc. v. Davis defined transitory actions as those where the injury can occur anywhere, typically in tort or contract cases. The court found that the cause of action arose in Madison County since significant events related to the contract occurred there, despite communications being initiated in Shelby County. The court concluded that the consequences of the alleged misconduct primarily impacted Madison County.
Having established Madison County as the correct venue, the court considered its ability to transfer the case under T.C.A. 16-1-116, which allows for the transfer of actions to a proper court if it serves the interest of justice, treating the case as if it were originally filed in the new court.
The Court reversed the trial court's ruling that the plaintiff's cause of action was transitory and should have been filed in Dyer County, determining instead that the case should have been brought in Gibson County. However, in the interest of justice, the Court decided to transfer the lawsuit to Madison County rather than dismiss it. Key factors included the completion of a significant number of dispenser deliveries in Madison County, payment of a $200,000 balance due under the contract in that county, and the significant economic impact of the alleged wrongful conduct occurring there. The trial court's dismissal based on improper venue was reversed, and the case was remanded for transfer to the appropriate court in Madison County. Costs of the appeal were charged to the appellee, Richard Selvey.
