# FILED Dec. 8, 1995 Cecil Crowson, Jr
. Appellate Court Clerk SHONEY'S, INC., and SHONEY 'S OF ) CANADA, INC., ) ) Plaintiff s/Appella nts, )

) Davidson Chancery ) No. 95- 366 -III VS. ) ) Appeal No. ) 01-A-01-9506-CH-00278 CHIC CAN ENTERPRISES, L TD., an ) Alberta Corporation, CHIC CAN ) ENTERPRISES, LTD., an Albe rta Limited ) Partnership, LI

TTLE CAESARS PIZ

ZA OF ) ALBERTA, I

NC., and GEN GROUP ) INCORPORATED, ) ) Defend ants/Appe

llees. )

IN THE COURT OF APPEALS OF TENNESSEE
MIDD LE S EC TION AT N AS HVILLE

APPEAL FROM THE CHANCERY COURT OF DAVI DSON COUNTY AT NASHVIL

LE, TENNESSEE

HONORABLE ROB ERT S. BRANDT, CHANCELL OR

Robb S. Harvey Kathryn A. Stephenson TUKE, YOPP & SWEENEY Seventeenth Floor Third National Bank Building 201 Four th Avenue , North Nashville, Tennessee 37219-2040 ATTORNEYS FOR PLAI NTIFFS/APPEL

LANTS

John W. Le

wis Andrew B . Campbell WYATT, TAR RANT & COMBS 511 Union Street, Suite 1500 Nashville, Tennessee 37219 ATTORNEYS FOR DEFENDANTS/APPELL EES

AFFIRMED AND

REMANDED HENRY F. TODD PRESIDING

JUDGE, MIDDL

E SECTION CONCUR: SAMUEL L . LEWIS, JUDGE BEN H. CANTRELL , JUDGE-2-

SHONEY'S, INC., and SHONEY 'S OF ) CANADA, INC., ) ) Plaintiff s/Appella nts, )

) Davidson Chancery ) No. 95- 366 -III VS. ) ) Appeal No. ) 01-A-01-9506-CH-00278 CHIC CAN ENTERPRISES, L TD., an ) Alberta Corporation, CHIC CAN ) ENTERPRISES, LTD., an Albe rta Limited ) Partnership, LI

TTLE CAESARS PIZ

ZA OF ) ALBERTA, I

NC., and GEN GROUP ) INCORPORATED, ) ) Defend ants/Appe

llees. )

O P I N I O N
The plaintiffs, Shoney' s Inc., and Shoney 's of Canada, I nc., have appealed from the judgment of the Trial Court dismissing their suit against the defenda nts, Chic Can Enterprises, Ltd., L

ittle Caesars Pizza of Alberta, Inc., and Gen G roup, Incorporate d for lack of perso nal jurisd

iction of s aid defe

ndants.

The plain tiff, Shoney 's, I

nc. is a Te

nnessee corpora tion with pr

incipal o ffice in Nashville. The only intere st of Shoney's, I nc., in this lawsuit is that it is a guarantor of the obligations of Shoney' s of Canada, Inc., unde r two of three contracts between Shoney 's of Canada, Inc. and the

defendant, and the complaint requests a declar atory judgment as to such obligat ions.

The comp laint stat

es that Sho ney 's of Ca

nada, I nc., is a C anadian

corpora tion with principal place of business in Toronto, Ontario, Canada.

The complaint states that all of the defendants are domiciled in the province of Alberta, Canada.-3- The complaint seeks a declaratory judgment regarding a

nd damages for breach of contracts between Shoney 's of Canada, I nc., and the defendants. Said contracts are de scribed in the com

plaint as: 1. "Lee's Fa mous Recip e Marke t Deve lopm ent Agr eement ," (The Market ing Agreeme nt) ex ecuted on May 5, 1 992, i n Nash vill e, Tenn essee w ith S honey's Inc., as gua

rantor of the obligations of Shoney 's of Canada, I nc. 2. "Training Agree

ment" executed on May

5, 1992. (Not guaranteed by Shoney's, I

nc.) 3. "L ee's F amous Rec ipe Resta urant L icense Agreem

ent" (T he Li cense Agreement) executed on June 22, 1992, with Shoney 's, Inc. as g uarantor of obligations of Shoney' s of Canada, Inc. 4. A "L etter of Clarific ation" e

xecuted by

Shoney 's of Ca

nada an d defend ants on July 2, 1992.

The Mark eting A greem

ent state s in part: Th is Ag re em en t m ad e a nd en te re d i nt o t hi s 5 th da y of Ma y, 1992 i n Nash vill e, Tenn essee, U.S. A. by and b etween Shon ey's of Canada, Inc., a

Canadian corporation with its principal office at Suite 6200, Scotia Plaza, 40 King Street West, Toronto, Canada M5H 3Z7 ("L

icensor"), and CHIC CAN ENTERPRISES, LTD., limited partnership, with its principal office at Suite 200, 9711-45 Avenue, Edmonton, Alberta T6E 5V8 ("Developer").

. . . . 21. Costs and A

ttorney 's Fee s. The law r

egard ing fra nchise registration, employ

ment, covenants not to compete and other matters o f local c oncern s hall be g overned by a nd constr ued in accordance with the laws of the Province of Alberta; however, as to cont ractua l and all o ther matt

ers, this Agreem

ent and a ll other provisions of this instrument will be and remain subject to the application, construction, enforcement and interpreta tion under the laws of th

e State of Tenness ee. To the extent, however, that the laws of the State of Tennessee dif fer from the Alberta Franchise Act and the re gulations promulgated thereunder, such Alberta laws and re gulations shall supersede and control. The Licensor he reby ac cepts and submits to the jurisdiction of the courts of the Province of Alberta with reg ard to any disputes a

rising u nder this Agree

ment. Noth

ing her ein shall affect the right of L

icensor to commence legal proceedings or otherwise proceed against Developer in any other jurisdiction in which personal jurisdiction over Developer may be found. . . .

. . . .-4- 26. Guaranty of

Shoney's, I

nc. For val ue recei ved, S honey's Inc., located at 1727 Elm Hill Pike, Nashville, Tennessee 37210 (" Guaran

tor"), absolutely a

nd uncond

itionally guarantees the performa

nce by L icensor of all obligations under the Alberta Franchises Act and the regulations promulgated thereunder, and

of all of t he oblig ations of

Lice nsor to fu rnish goods a nd servic es nece ssary

to establi sh and ope

n the business of the De veloper , pursuan

t to the L icensor 's Fra

nchise Prospectus, the registration of L icensor to sell franchises in the Province of Alber ta and the terms and

condition s of this Agreement, . . . . Guarantor her eby ac cepts and submits to the jurisdiction of the courts of the Province of Alberta with reg ard to th e e nf or ce me nt of

th is gu ar an ty.

. . . . SHONEY' S OF CANA DA, I NC. By : /s/ F. E. McDaniel Title: Secretary By : /s/ Russell L. Cooper Title: Vice President
Date: May 4, 1992 GUARANT OR: SHONEY' S, INC

. By : Russell L. Cooper Title: Vice President
Date: May 4, 1992

The Tra ining Ag reemen t states in part: This Training Ag

reemen t (the "Agreem

ent") ismade this 5 th day of May , 1992, by and between CHIC CAN ENTERPRISES, LTD., with its address at Suite 200, 9711 - 45 Avenue, Edmonton, Alberta T6E 5V8 (the "L icensee"), and SHONEY' S OF CANA

DA, I NC., a Can adian co

rporatio n, with its addre ss at Suite 6 200, Scotia Plaza, 40 K

ing Stre et West, Toronto, Ontario M5H 3Z7 ("Shoney 's of Canada").

The L icense Agreem

ent state s in part: This Agreement, made and entered into this 22nd day of June, 1992 by and between Shoney' s of Canada, Inc., a Canadian corpora tion, Suite

6200, Scot

ia Plaza, 4 0 King Str

eet West, Toronto, Canada M5H 3Z7, hereinafter referred to as "Licensor," and CHIC CAN ENTERPRI SES, LTD., hereinafter referred to as "L

icensee."-5- . . . . 3. Franchised Site. The rights granted to L icensee hereunder shall be nonexclusive and shall be restricted to the operation of a single Famous Recipe restaura nt to be located on the real propert y a t #307 101 G

ranada Blvd., She

rwood Par

k, Alber ta T8A 4W2 . . . .

. . . . 31. Applicable Law. The law r egard ing fra nchise registration, employ

ment, covenants not to compete and other matters o f local c oncern s hall be g overned by a nd constr ued in accordance with the laws of the Province of Alberta; however, as to cont ractua l and all o ther matt

ers, this Agreem

ent and a ll other provisions of this instrument will be and remain subject to the application, construction, enforcement and interpreta tion under the laws of the State of Tennessee. To diffe r from the Alberta Franchise Act and the re gulations promulgated thereunder, such Alberta laws and re gulations shall supersede and control. The Licensor he reby ac cepts and submits to the jurisdiction of the courts of the Province of Alberta with reg ard to any disputes arising

under this Agreement. . . .

4. The Letter of Clarifica tion is unremarkable except that it is written under the printed letterhead of Shoney 's, Inc., 1727 Elm Hill Pike, Nashville, Tennessee , with the typed addition of "Shoney' s of Canada, Inc."

Upon consideration of defendants' motion to dismiss, the Trial Court filed a

memor andum conta inin g the fo llow ing:

The plaintiff Shoney' s of Canada, Inc. is a Cana dian corporation with its principal place of business in Toronto. Chic Can En

terprise s, Ltd ., is a limited partne rship with

its principal place of business in Edmonton, Alberta. Shoney 's of Canada and Chic Can entered into a Market Deve lopment Agreement whereby

Shoney's of

Canada granted Chic Can the right to open and operate L ee's Famous Recipe chicken restaurants around Edmonton, Alberta. . . .

. . . . While the c omplaint ha s all thre e agre ements a ttached to it and refers to all three agr

eements, the suit is for breach of the License Ag

reement. Shoney' s of Canada alleges that Chic Can "defaulted under the L

icense Agreement by

failing to make payments when due " and specifies amounts owed under the Lice nse Agr eement.-6- The License Ag

reement does not provide where the franchisee, Chic Can, is to make pay ment to Shoney's of Canada. Shoney 's of Ca

nada ha s the auth ority

to inspec t Chic Can's books and records that are pre sumably located in Canada

. Paragraph 7 of the L

icense Agreement specifie s a long list of standar ds for the operati on of the r

estaura nt, all of w

hich are to be performed on site in Canada. Shoney 's of Canada has the right to inspect the restaurant in Canada. Chic Can is required to spend a minimum amount of money on advertising in the local area around the restaura nt in Alberta. Shoney' s of Canada is requir ed to send

an "ope ning tea m" to Albe

rta to ass ist in opening the Sherw ood Park r

estaura nt. Chic Ca

n is requi red to keep the Canadia n restau rant insu red. I f the fra nchisee default s and the a greem ent is ter minated, the fra

nchisor h as the rig

ht to bu y th e S he rw oo d P ar k, Al be rt a p ro pe rt y. The License Ag

reement does not have a forum selection clause. It doe s, howeve

r, have a consent t o jurisdic tion clau se and a ch oice of l aw clau se. Shone y' s of Cana

da conse nted to the jurisdiction of the Alberta courts. . . . In short, this is a suit by one Canadian entity a

gainst another Canadia n entity arising out of a c ontract

about a r estaura nt in Canada that requires performance of the contract in Canada. Moreove r, beca use the L icense Agreem

ent requ ires that some aspects of the parties' dispute is gover ned by Alberta

law, Shoney 's of Ca

nada ap parentl y in tends to f ile a sec ond suit in Alberta, thus requiring two trials of the same case

.

. . . . One way

it seeks to give Tennessee jurisdiction is by adding Shoney's I

nc., the Tennessee corporation, as a plaintiff. B ut, as noted, Sho ney 's I

nc. is not a

party to the L icense Agreem

ent - or the other two agreements either f or that matter. . . . Shon ey's, Inc. is merel y a guaranto r of Sh oney's of C anada's obligat ion under the agr eement. Another way

Shoney's of

Canada seeks to give Tennessee jurisdict ion is by asserting in res ponse to th e motion to d

ismiss that its office is really in Te nnessee. It makes this assertion notwithstanding its allegation in its complaint and the provision in the contract that its principal place of business is in Toronto, and notwithstandin g that un til Chic Can

filed its motion to dismiss, Shoney's of Canada was not even qualified to do business in Tennessee. Shoney 's of Canada qualified to do business i n Tennes see one w eek bef ore it fil ed its res ponse to the motion t

o dismiss.

. . . . As previously pointed out, acc ording the License Agreement itself, every

thing tha t was to be

done unde

r the con tract wa s to be done in Canada. There is nothing in the contract that requires Chic Can to do any thing in Tennessee. Like wise, Shoney's of

Canada is required to perform in Canada. The-7- consent t o jurisdic tion clau se in the a greem ent subjects Shoney's of

Canada to jurisdiction in Alberta's courts. Tennessee's courts are not mentioned. L ikewise, Alberta law gover ns the con struction

of the ag reemen t for the m

ost part. Chic Can did have some contacts with Tennessee. But, they were min imal. Chic

Can's r eprese ntatives v isited Na shville only twice and that wa s to negotiate the contract. Neg otiations took plac e in Cana

da, too. Ch

ic Can mai led royalty

checks t o Tennessee. And it ordered material from Te nnessee. This Court c annot per

ceive of any interest Tenness ee has in expending its judicial resources to resolve this dispute between two Canadian business entities over the operation of a restaur ant in Cana

da. As fa r as conv enience

is conce rned, thi s Court cannot decide the whole dispute between the parties. Indeed, Shone

y' s of Cana

da goe s so far a s to cite in its complaint that it is not seeking to enforce its rights under Canadian service mark and trademar k laws. There will be another suit in Alberta. In the L icense Agreement, Shoney 's of Canada i s requir

ed to per form ce rtain tas ks at the s ite in Alberta and permitted to perform others, such as auditing and inspecting. Shoney' s of Canada obtained approval from the Alberta securities regulators. Given these facts, Tennessee hardly seems a mo

re conve nient pla ce to litig ate, or p artially litigate, this dispute than Alberta.

. . . . Considering the totality of the c ircumstances, the Court conclude s that to sub

ject this Ca

nadian de fendant to jurisdiction in Tennessee in this suit by a Canadian plaintiff arising out of a restaurant in Canada would " offend traditional notions o f fair play and subst antial jus tice." J.I. Case at 532. The defendants' counsel should submit the judgment dismissing

the case . Costs are

taxed to the

plaintiff s.

An order was entered acc ordingly.

On appea l, plaintif fs prese nt two arg

uments of which the

first is: Tennessee Courts have personal jurisdiction over Chic Can because of the Forum Selection Clauses in the invoices for Equipment

and Supplie s.
The affidavit of Dianna Booher, Dire ctor of Accounts Receivable of Shoney 's, Inc., (the Ten nessee c orporat

ion) state s: 6. According to records available to me, since opening the restaurant the franchisee has made numerous purchases of-8- equipmen t and suppl

ies from Shoney 's commi ssary in Nashville, Tennessee. The equipment and supplies were shipped from Nashville to the restaurant in Edmonton, Alberta, Canada. All such orders were invoiced in Nashville. Payments, whe

n made by

the fra nchisee , were s ent to Nas hville and deposited here. A sample of some of the order s placed by the fra nchisee is attach ed as Exhibit C.

It is doubtful th at the fo

regoing qualif

ies the inv oices fo

r conside ration un der TRE Rule 803(6).

Exhibit C to the affidavit consists of duplicate copies of two invoices indicating sales by Shoney 's, Inc. to Fa

mous Recipe Chicken, Edmonton for $5,994.50 and $53.35, both dated 7/03/92 and containing on their face the script notation:

J. Worken A/P Nothing is cited or found in the record to indicate the identity or authority of the pe

rson who placed the notation on the invoices.

The supplemental affidavit of Garner Worken, an of ficial of defendants, denies that he placed his name on either invoice and denies any information as to who signed the invo ices. Both i nvoi ces hav e the fo llow ing pri nted h eadin g:

Eugenia Distribution Center Shoney's, I

nc. Commissary Operations, I nc. A Subsidiary of Shoney 's, Inc. P.O. Box 1433 Nashville, Tennessee 37202
Both of said invoices contain the printed notation, Acknowledgement Signing or initialing above (buy er or buye r's authorized representative) hereby

acknowledges receipt of the g oods listed above and acknowledges and a grees to all the terms and conditions hereof, including those on the reverse side he reof.

The "re verse si de here of" is c ompletely filled by ten "ad ditional te

rms and c onditions" of which numbers t

wo and thr

ee are as follow s:-9- 2. Governing Law. Except as expressly inconsistent therewith, this agreement, as describe d in paragraph 1 above, shall be governed by

and construed in accordance with the provisions of the Tennessee Uniform Commercial Code, T.C.A. §§47-1-101, et seq. Including all definitions contained therein. 3. Remedies. In the event of buy er's breach of any

obligation hereunder, seller shall, in addition to those remedies contained in the Ten

nessee U niform Com

mercial Code, re cover a

ll costs and expenses incurred in attempting to remedy said breach, including its reaso nable at

torney s fees, w

hich buy er agr ees to pay. Any action brought either by

buyer or se

ller to enforce any reme dy under this contract shall be brought in the State or Federal Courts in Davidson County , Tennessee, and buyer hereby consentsto the juri sdiction o f said Cour ts.
Even if it be shown that the above notation on the invoices was made by an employee of defendants authorized to sign for the rece ipt of merchandise, such showing would not establish that such employee ha d authority to subject his employ ers to the Courts of Tennessee in a country

different from that in which the goods were sold and delivered.

Even if it be shown that the notation was made by an agent of defendants with such broad authority, the e

ffect would be limited to an action for collection of the amount due upon the p articula

r invoice s upon whic

h the nota tion appe ars.

The record does not show that either of the invoices is any part of the subject matter of this suit

.

Plaintiff s cite an impressiv e arra

y of authoriti es on for

um selec tion but no e

vidence is cited or found in the record which would render such authorities applicable to the present case, i.e. evidence that a forum selection has been made by an authorized representative of de fe nd an ts in re ga rd to an y pa rt of th e p re se nt co nt ro ve rs y.

It is argued that sa

id two invoices are included in an item of "$4,268.42 in past due trade balances," but the complaint specifica lly states that this amount is due Shoney 's of-10-

Canada, and not the Shoney 's, Inc. which a ppears at the top of the invoice. The complaint containsno demand

by Shoney 's, I

nc. for t his or any other am ount.

The invoices do not establish personal jurisdiction of defendants in the present case

.

Plaintiffs second argument is that Tennessee Courts have pe rsonal jurisdiction of defendants because of defenda nts' "substantial contacts with Tennessee."

Plaintiff s' vehe ment crit icism of th

e reaso ning of t

he Trial Court is of

little valu e to this Court which must review the decision de novo upon the r ecord, a lthough f indings o f fact, (but not rulings of law) of the Trial Judge are pr esumed correct unless the evidence preponderates otherwise. T.R.A.P. Rule 13(d), Kelly v. Johnson, Tenn. App. 1990, 796 S.W.2d 155.

Tennessee Courts have jurisdiction over non residents in respect to any action or claim for relief arising out of the transaction of any business within the state on "a ny basis not inconsistent with the constitution of this state or of the United States." T.C.A. §20-2-214.

In Masada Investment Corp. v. Allen, Tenn. 1985, 697 S.W.2d 332, the question on appeal was jurisdiction of a malpractice suit ag ainst a Texas lawyer who had prepared an inaccurate deed for the transf er of real estate in Memphis, Tennessee at the r equest of a Tennessee resident. The Supreme Court quoted T.C.A. §20-2-214 and sa id: In determining whe

ther or not a state can assert long-a rm jurisdiction, due process requires that a non-resident defe ndant be subjected to a ju dgment in personam only if he has minimum contacts with the forum such that "the maintenance of the suit does not offend 'traditional notions of fair play and substant ial justi ce.;'" International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945). Howeve r, the ab sence of

phy sical co ntacts wi ll not defe at in personam jurisdict

ion wher e a comme

rcial actor purpo sefully directs his activities toward citizens of the forum State and litigati on result s from inju ries ari sing out o f or rela

ting to those activities. Burger King Corp. v. Rudzewicz, ____ U.S. ____,-11- 105 S.Ct. 2174, 2182, 85 L.Ed.2d 528 (1985). I n such a case, "the defendant 's cond

uct and c onnectio n with the f orum State are such that he s hould rea sonably anticipa te being haled int o court there." World-W

ide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 567, 62 L.Ed.2d 490 (1980). . . . A three-pronged test had bee n developed to determine the outer limits of personal jurisdiction based on a single act: the defendant must purposefully avail himself of the privilege of acting in or causing a conseque nce in the forum State; the cause of action must arise from the defenda nt's activities there; and defendant's acts or conseque nces must have a substantial connection with the forum to make the exercise of jurisdiction reasonable. Southern Machine Co. v. Mohasco Industries, Inc., 401 F.2d 374, 381 (6th Cir. 1968). Subsection (6) changed the long-arm statute from a "single act" statute to a "minimum contacts" statute which expanded the jurisdiction of Tennessee courts to the full limit allowed by due proce ss. Shelby Mutual Ins. Co. v. Moore, 645 S.W.2d 242, 245 (Tenn.App.1981). That dec ision, quot

ing exten sively

from Gullett v. Qantas Airways Ltd., 417 F.Supp. 490 (M.D. Tenn. 1975), noted that the Mohasco test was now too restrictive. The Moore court noted tha t three p rimary factor s are to b e conside

red in determining whether the requisite minimum contacts were pr es en t: th e q ua nt it y of

th e c on ta ct s, th ei r n at ur e a nd qu al it y, and the so

urce and connection of the cause of action wi th those contacts. Two lesser factors to be considere d are the interest of the forum State and convenience. The Moore court concluded: The phrase "fair play

and substantial justice" must be viewed in terms of whether it is fair and substantia lly j ust to both p arties to

have the case tried in the state where the plaintiff has chosen to br in g t he ac ti on . In ea ch ca se , t he qu al it y and nature of those activities in relation to the fair an d orderl

y a dministra tion of the

law must be weighed. As stated above in Qantas, this must involve some subjective value judgment by t he court s. 645 S.W.2d at 246. After apply

ing these considerations to the facts of this case, we hold th at Allen h ad suffi cient minimum conta cts with Tennessee to justify jurisdiction her e. While Allen never entered Tennessee and had no direc t financial interest in the sale of the UAB Building, his work was a vital component of that transaction. At his client's request, Allen prepared the legal documents controlling the transfer of ownership of the UAB Building. Allen did not merely record what Hockert instructed him to, but

took indep endent a

ction in fu

lfilling his obligat ions. This included c onversin g with WTF F's at torney in Knoxville on

severa l occasi ons, draf

ting the document s to be in accord with Tenn

essee la w, sendin g the co mpleted documents into Tenne ssee for

execution , and then

holding t hese sam e documents until closing in his office. Allen knew that his legal work would control the sale of several million dollars of-12- Tennessee realty

which was being sold by a Tennessee limited partner ship subje ct to the la ws of Ten nessee. These do cuments were to be recorded and g iven full legal effect in Tennessee

. By wilfully

and knowingly

choosing to prepare lega l documents which would be filed in Tennessee and be of g reat consequence here, Allen purposely availed himself of the privilege of doing business within this state. This litigation itself serves to highlight the importance of Allen' s work product. While Allen

had limite d phy sical co ntact wit h this forum, he purposefully

directed his activities toward the citizens of this state and his negligent actions resulted in injury here. A llen shoul d have re asonably anticipa ted havin g to defend his actions in a Tennessee court. I t follows that the nature and quality of

Allen's contacts with Tennessee support the assertion of jurisdiction by this state, and that the litig ation aro se d ire ctl y out of A ll en' s co nt act s wi th Ten nes see . In addition, Tennessee has substantial interest in the outcome of this litig ation and

is the most c onvenien

t forum since this action involves a Tennessee defendant, WTFF , Tennessee property, a

nd is controlled by Tennessee law. Masada , 697 S.W.2d at 334-35.

Personal jurisdict ion may be "g eneral " or "s pecific ," that isit may exist for a

ll purposes, or it may be limited to the particula r activity which g

ives rise to the jurisdiction. Third National Bank in Nashville v. Wedge Group, Inc., 6th Cir. 1989, 882 F.2d 1087. There is no evidence of any

activity of defe

ndants in Tennessee except in connection with the subject transactions, hence jurisdiction of defendants, if such exists, must be "specific ."

In Masada, the Texas lawyer " purposely directed his activity" towar d a vital part of a transfer of Tennessee rea

l estate at the request of a Tennessean.

Plaintiff s assert t hat: Chic Can purposefully directed its activities toward Tennessee. Knowing full well that Shoney 's/Canada was operated by

officers and employees of Shoney' s in Nashville, that the franchising operations of Shoney 's/Canada were directe d out of Na shville, th at repor ts were t o be made

to Shoney's/Cana

da in Nashville, that payments we re to be made in U.S. dollars to Nashville, that purchases would be made from Nashville, that all books and records of Shoney 's/Canada were maintained in Nashville, and that all corporate a nd franchising decisions were made in Na shville, Chic Can representatives travelled to Nashville to enter into a long -term franchising relationship with Shoney 's/Canada. Chic Can-13- regula rly made pay

ments to Sho ney 's/Cana

da, addr essed to Nashville. Chic Can ordered supplies and equipment from Shoney 's/Cana

da and itsaffilia

tes in Nas hville. Th

ese cont acts with Tennessee were not "tenuous" or "fortuitous."

No evide nce is cited or found that, p rior to the execution

of the sub

ject ag reemen ts, defendants "knew full well" that all oper ations of Shoney' s of Canada was conducted or controlled in Tennessee. The contracts repr esent that the principal office of Shoney 's of Canada was in Canada. There is adequa te evidence that representatives of Shoney 's of Canada conducted negotiations with defendants in Canada and that Shoney' s of Canada had a distribution center in Alberta, Canada. I t is true that one or more of the contracts was signe d in Nashville, but no p

rovision isfound in a

ny o f the con

tracts r equiring perfor mance in Tennessee. It is true that, a fter the contracts were signed, defendants were notified that reports and remittances must be sent to Nashville, and that this was done. The unilatera l demand, u

nsupported by

contract obliga

tion, and a

cquiesc ence in t

he demand by

defenda nts is not "purposely directing activity" by defenda nts toward property

or residents of Tennessee such as occurred in Masada.

Shoney's of

Canada, Inc., insists that its principal place of business wa s in Nashville, Tennessee, but the evidence is uncontroverted tha t, as of March 22, 1995, Shoney 's of Canada, Inc. wa s not domesticated and authorized to do business in Tennessee.

T.C.A. §45 -25-102( a) provi des: (a) A fo reign c orporat

ion trans acting

business i n this state without a certificate of authority may not maintain a proceeding in any court in this state until it obtains a certifica te of au th or it y.

In Burger King Corp. v. Rudzewicz, 471 U.S. 462, 105 S.W.2d 174, 85 L.Ed.2d 528 (1985), the franchisor was domiciled in Florida. Fr anchisees in Michigan dealt with a region al offic e of fra

nchisor i n Michig an and executed a n agre ement whi ch state d that all disputes mu st be res olved und er Flor ida law, but that ch oice of l aw did not require all suits to-14-

be in Florida Courts. The Supreme Court held that the franchisees ha d "purposely

availed themselves of the privilege of doing business in Florida" because they reached out beyond Michiga n and neg otiated w ith a Flor ida corp oration f

or the be nefits of a long te rm franc hise in a nationwide organization and upheld the jurisdiction of Florida Courts over the Michig an residents. However, the Supreme Court said:

[W]e do not mea

n to sugg est that th

e jurisdic tional outc ome will always be the sa

me in franchise cases. Some franchises may . . . involve differ

ent decision making structures, such that a franc hisee should not re asonably anticipa te out-of -state litigation. Id. at 485 n.28, 105 S.Ct. 2174, 85 L.Ed.2d at 549 n.28. . . ."' [T]he fac ts of eac

h case mu st [alway s] be weig hed' in determin ing whe ther per sonal jur

isdiction w ould compo

rt with 'fair play and substantial justice.'" . . .
The pre sent cas e is disting uishable from Burger King by at least two fa cts: (1) defendants did not contract primarily with a Tennessee citizen or corporation, and (2) the contracts did not provide that all disputes would be resolved under Tennessee law.

In. J.I. Case Corp. v. Williams, Tenn. 1992, 832 S.W.2d 530, the Supreme Court upheld jurisdiction of a Memphis, Tennessee Court over an Arkansas fa rmer about 50 miles from Memp

his under the following cir

cumstanc es: . . . Th e init ial co ntact betwe en the parti es occu rred at Case's equipmen t exhibit at th

e fair in Tenness ee; the in struments controlling the transaction between the parties we re prepared and executed by Case

in Tennessee; financing for the bala nce due under the agreement wa s furnished by a c ompany located in Tennessee; the agreement e xecuted by the parties contemplated that pay

ments due under the agreement would be made in Tennessee; and parts and labor for the repair and maintenance of the equipment under the warr anty ag reement were to be furnished in or from Tennessee

. . . . Case, 832 S.W.2d at 533. The fac ts of the p

resent c ase are

not sufficiently

similar to t

he cited case to r ender it s disposition determinative in the present case.-15- Finally , plaintif

fs insist th at there

is no evide

nce that a trial in Tenness ee would subject defendants to a severe disadvantag e. The element of severe disadvantag e is obvious from and inherent in the admitted facts. By virtue of overlapping personnel, the officia ls for Shoney 's of Ca

nada ar e also of ficials o f Shoney 's, I

nc., and reside in Tenness ee. All defendants are domiciled in Canada, at a g reat distance from Tennessee. Most if not all of the activities out of which this dispute arises occurred in Canada.

Courts of general jurisdiction in Tennessee have inhe rent power to apply

the doctrine of forum non conveniens as ground for refusal to exercise jurisdiction over a cause of action arising bey ond the bounds of Tennessee. The application of such doctrine is a matter of discretion of the Trial Court. When the forum chosen by plaintiff would require the defendant at great expense and inconve nience to transport himself and his witnesses a long distance, non residency

is a factor to be considered. Zwick v. Inman, 221 Tenn. 393, 426 S.W.2d 767, (1968).

The memorandum of the Trial Judge, quoted above, indicated that his dec ision was based upon the doctrines of " forum non convenie ns"

(forum not convenient) and unfairness.
Bo th ar e a mp ly s up po rt ed by t he re co rd . T he fi nd in gs of fa ct ar e s up po rt ed by a preponderance of the evidence , and the conclusions of law are supported by the authorities discussed above.

The judgment of the Trial Court dismissing the plaintiffs' suit is affirmed. Costs of this appeal are taxed against the plaintiffs. The cause is remanded to the Trial Court for any

necessa ry further procee dings. Affirmed and Remanded.

_______________________________________ HENRY F. TODD PRESIDING

JUDGE, MIDDL

E SECTION CONCUR:-16-

_____________________________________ SAMUEL L . LEWIS, JUDGE

_____________________________________ BEN H. CANTRELL , JUDGE