1 Be cause of the d elay in their travel, M r. Gre gurek took a plan e to Atlanta on the night of June 22 enabling him to attend work the nex t day.



# IN THE COURT OF APPEALS OF TENNESSEE

AT NASHVILLE August 5, 2003 Session ALBERT GREGUREK, ET AL 

# . v. SWOPE MOTORS, INC., ET AL 

# .

Direct Appeal from the Circuit Court for Marion County

No. 14252 J. Curtis Smith, Judge

No. M2002-02854-COA-R3-CV - Filed Septem ber 5, 2003

This case involves an interlocutory a ppeal from

the trial court’s denial of the Defendant’s Motion to Dismiss on grounds of lack of personal jurisdiction and/or Motion for

Summa ry Judgm ent. We
reverse. Tenn. R. App.P. 3 Appeal as of Right ; Judgme nt of the Cir

cuit Cour

t Rever sed; and Remanded

D AV ID 

## R. F ARMER 

## , J., delivered the opinion of the court, in whichW. F RANK 

## C RAWFORD 

## , P.J., W.S., and H OLLY 

## M. K IRBY 

## , J., joined. Roane Waring, II

I, Memphis, Tennessee, for the appellant, Swope Motors, Inc.

James B. M. Hooper, Chattanooga, Tennessee, for the a ppellees, Albert Gregurek a nd Sari Gregurek.

OPINION As alleged in the amended complaint, the Appellees, Te xas residents Albert Gregurek (“Mr. Gr egure k”) and S ari Gre gurek

(“Ms. Gr egure k”), tra veled fr om Ind iana to Ke

ntucky in route to Atlanta, Georgia on June 22, 1998. The Greg ureks exited Interstate 65 in Elizabethton, Kentucky a

nd drove to Appellant’s, Swope Motors, Inc. ( “Swope Motors”), repair shop for replacement of their truck’s transmission line. While at Swope Motors, Ms. Gregur ek told the service foreman that she and Mr. Gregurek would be stopping in Murfreesbor o, Tennessee before continuing to Atlanta. On June 23, 1998, Ms. Gregurek picked up the re paired truck and began traveling through Tennessee. 1 

## As Ms. Gregurek was traveling down Interstate 24 on the ea stern side of Monteagle Mountain, she began sme lling smoke and pulled the truck and the trailer it was towing to the shoulder of the road. When she got out of the truck, she noticed that a fire had

## -2-

started underneath the vehicle that eventually engulfed the truck and spread to the tra iler causing a total loss of the attached vehicles.

Following the fi ery

incident , the Gregurek s filed sui t again st Swope Motors in the Circuit Co urt of M ari on C oun ty, T enn ess ee f or n egl ige nce or i n t he a lt ern ati ve f or b rea ch o f co nt rac t. In their answer, Swope Motors moved to dismiss the action or, in the alternative, for summary judgment for lack of personal jurisdiction. An affidavit of Swope Motors’ president, Carl Swope, was filed along with the motion to dismiss. In the affida vit, Mr. Swope stated that Swope Motors does not have any offices in Tennessee, does not advertise in Tenne ssee, and does not direct service or products to Tennessee. The only contact with Tenne ssee that Mr. Swope mentioned was the occasional attendance of its employ ees at automobile auctions in Nashville. Additionally, in response to one of the G regureks’ interrog atories, Swope Motors answered that its repair records for 1998 contained seventeen customers with Tennessee addresses, and that for 1997 and 1998 combined, Swope Motors had 29,500 total customers. Based on this information, the trial court denied Swope Motors’ motion. The trial court inferred fr om the fact that since seventeen customers were from Tenne ssee, Swope Motors derived substantial revenue and regularly solicited and performed services for Tenne ssee residents. As a result, the trial court held that personal jurisdiction over Swope Motors was proper under Tenne ssee’s long-arm statute, specifically, Tenn. Code Ann. § 20-2-214 (1994) and § 20-2-223 (Supp. 2002). Subsequent to the denial of Swope Motors’ motion, the trial court and this Court granted Swope Motors’ motion to app eal by permission pursuan

t to rule 9 o f the Ten

nessee R ules of Ap

pellate Procedure.

Issue The sole issue for this interlocutory appeal is whether Tennessee has personal jurisdiction over Swope Motors for the cause of action that the Gregureks brought aga inst them. Analysis The trial court found jurisdiction over Swope Motors based on Tennessee’ s long-arm statute, Tenn. Code Ann. §§ 20-2-214, 20-2-223. Tennessee Code Annotated § 20-2-214 (1994) providesin pertine

nt part: (a) Persons who are non-residents of Tennessee . . . a re subject to the jurisdiction of the courts of this state as to any a ction or claim for relief arising from: (1) The transaction of any business within the state; (2) Any tortious act or omission within this state;

. . . (6) Any basis not inconsistent with the constitution of this state or of the Unite d States;

. . .

## -3-

(b) “Person,” as used herein, includes corpora tions and all other entities which would be subject to service of process if present in this state.

Tenness ee Code A

nnotated § 20-2-22 3 (Supp. 20 02) provi des in per tinent pa rt: (a) A court ma

y e xercise p ersonal

jurisdict ion over a person, w

ho acts di rectly or indirectly , as to a c laim for r elief ar ising fr om the person’s:

. . . (4) Causing

tortious in

this state by a n act or omission outs ide this state of the person who regula rly does o r solicits b usiness , or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered, in this state; . . . . (emphasis added)

Tenness ee’s long-arm

statute pe

rmits in personam jurisdict ion so long

as the Du e Proces s Clause of the Fourteenth Amendment is satisfied. J.I. Case Corp. v. Williams , 832 S.W.2d 530, 532 (T enn. 1 992) ( citi ng Helicopt eros Nacionales de C

olumbia, S

.A. v. Ha ll , 466 U.S. 408, 413–14 (1984)). Due Process requires that a nonre sident defendant have sufficient “minimum contacts” with the forum state “such that the maintenance of the suit does not offend traditional notions of fair play a

nd substantial justice.” International Shoe Co. v. Washington , 326 U.S. 310, 316 (1945 ); J.I. Case , 832 S.W.2d at 532. Personal jurisdiction over a nonresident defendant may be exercised by e

ither general or specific jurisdiction. See Helicopteros , 466 U.S. a t 414; Shoney’s, Inc. v. Chic Can Enter ., 922 S.W. 2d 530 , 537 ( Tenn. Ct. A pp. 19 95) (ci ting Third Nat’l Bank in Nashville v. WEDGE Group, Inc. 882 F.2d 1087, 1089 (6th Cir. 1989)). General jurisdiction is exercised over a nonre sident defendant in a suit that does not arise out of or relate to the contacts with the forum state but rather the defendant’s contacts with the for um state are so “continuous and sy stematic” that jurisdiction is proper. Helicopteros 466 U.S. a t 414 n.9; International Shoe , 326 U.S. a t 317; see also Shone

y’s 922 S.W.2d a

t 537. Specific Jurisd

iction is e xercised over a de fendant in a suit that directly

arises out of or r

elates to one or mor

e contacts that the

defenda nt has with

the foru m. Helicopteros , 466 U.S. at 414 n.8. In this case, the only

contacts that Kentucky

resident, Swope Motors, has with the forum state, Tennessee, are the seventee n customers that have Tennessee addresses a nd the occasional attendance of its employees at automobile auctions in Nashville. These contacts do not amount to the “continuous and systematic”contacts required to confer ge neral jurisdiction over Swope Motors. See Helicopteros , 466 U.S. a t 414 n.9; International Shoe , 32 6 U. S. at 3 17. If jurisdiction is to exist in this case, it must be specific. See Shoney’s , 922 S.W.2d at 537. The trial court found specific jurisdiction based on Tennessee ’s long-arm statute, specifically subsection (4) of Tennessee Code Annotated § 20-2-223. The order of the trial court states “D efenda

nt was in th

e busines s of repa

iring ve hicles a nd repai red seve nteen ve hicles in 1998 for individuals with Tennessee addresses. Based on the se facts, this court infers that2 Subsec ti on (4) of Tenn. Code A nn. § 20-2-223 was adop ted in 1997. W e have found no Tennessee decisions

that define nor discuss what constitute s “su bstant

ial revenue. ” However, oth er juri sdictions hav e ident ical stat utes a s subse ction (4 ) of T enn. C ode Ann. § 20-2 -223 and p rovid e exa mple s of de finition and app lication. A fed eral d istrict cou rt add ressing O hio’s equi vale nt of subsection (4) of

Tenn. Code Ann. § 20-2- 223 state d that “ [t]he mea ning o f the wo rd sub stantial ‘is to b e gaug ed b y all the ci rcumsta nces su rroundin g the t ransact ion to wh ich it has be en use d.’ Va rying with each non-resident busines s, the word ‘subst antial r evenue’ would not involve nor intend any fix ed minimum. ” Busch v. Serv. Plasti cs, I nc. , 261 F. Su pp. 136, 142 (N.D. Ohi o 1966) (fi nding t hat ann ual sa les between $100,000 and $200,000 constit uted ‘ subst anti al rev enue’ f or a give n year) (c iting 83 C.J.S

. Sub stantia l at p. 762 (1953)); see als o Kobill Ai rways Ltd. v. Nat ional Fli ght Ser

vice s, Inc

. , 92 F.2d 68 9, 693 (N.D . Ohio 2000 ) (“The Court fi nds that

the $475,000 sal e price cons tit utes ‘substan tial reven ue.’”); Hoover Co. v. Robes on Indus. Corp. , 904 F. Supp. 671, 674 (N.D . Ohio 199 5) (find ing that ne arly $2,000 i n commis sion s or 5% of the to tal com mission s did n ot co nstitute ‘substan tial reven ue’); Mead Corp. v. All endale Mut. I ns. Co. , 465 F. Sup p. 35 5, 360 (N.D . Ohio 197 9) (find ing $4 ,000 ,000 to $5 ,000 ,000 in sales as ‘su bstan tial reven ue’); Stewa rt v. Bus and Car Co. , 293 F. Supp. 577, 583 ( N.D. Ohio 1968) (s ale of t wo busi ness es f or $90,000 found to be ‘sub stantial rev enue ’); Sherry

v. Ge is sle r U. Pehr

GmbH , 651 N.E.2d 1383, 13 87–88 (Ohio Ct. App. 199 5) (finding t hat the sal e of one wind in g machine did not constitut e ‘substantial revenue.’ ); Pha rmed Corp . v. Biologics, Inc. , 646 N.E .2d 1 167 , 117 1 (O hio C t. App. 199 4) (find ing that sa les con tract with an Ohio corpo ration for $13,500 constituted t ransacting business in Ohi o, but w as no t ‘substan tial reven ue’); Ross v. Spie gel, I nc. , 373 N.E. 2d 1288, 1292–93 ( Ohio Ct. App. 1977) (O hi o's pro por tionate share of

$30,000,000 to $74,000,000 in nat i onal sales f

ound to be ‘substantialrevenue’); McHu gh v. Pres todia l, Inc. , 241 N.E.2d 102, 104 (Ohio Ct. Com. Pl. 1968) ($4, 475 sal e plu s $135 sh ippi ng f ound not to be ‘substan tial reven ue’) The D istrict of Columbia ha s an ide ntical statute and a Fed eral d istrict cou rt ado pted a qua litative test, that is

a “comparison of the revenue r elat ing t o the l ocally used article and the t otal revenue i s requi red.” Liber ty Mut. Ins. Co.

v. Am . Pecco Corp ., 334 F. Su pp. 522, 524 (D. D.C. 1971) (fi nding t hat t he sal e of one out

of eig hteen cr anes const itu ted ‘subs tant ial revenue. ’). The United States Court of Appeals f

or the Dis tri ct of Col umbia agree d with the use of t he qualitati ve test in con struing the ‘substan tial reven ue’ p rovisio n of the District of Columbia code but added that “[a]l though per centage of tot al sal es may be a fa ctor to be c onsi dered, it cannot be disposit ive, for a s mall percentage of the sales of a corporate giant may indeed prove subs tant ial in a n absol ute sens e. On t he ot her h and, it is difficult to identify an absolute amount which ipso fa cto must b e dee med ‘s ubsta ntial.’” Founding Church of Sci entol ogy of Washingt

on, D.C. v. Verl ag , 536 F.2 d 429, 432–33 ( D.C. Cir. 1976) (f indi ng that 26,000 or one percent of annual

sales consti tut ed ‘substantial revenue’) (quoting Ajax Realty Corp. v. J. F. Zook, Inc. , 493 F.2d 818 , 822 (4th C ir. 197 2).


## -4- defenda nt derived substant

ial income

for ser vices re ndered t o Tennes see res idents and regularly solicited and performed services for Tenne ssee residents.” The facts are undisputed in that the only contacts that Swope Motors had with Tennessee for 1998 was the occasional attenda nce of its employees to automobile auctions and the listing of seventeen customers with Tennessee addresses in Swope Motors’ records. First, there a re no facts to support a finding that Swope Motors regularly

solicited business in Tennessee. Second, the fact that Swope Motors had seventeen Tennessee customers in 1998 out of Swope Motors’ 29,500 customers for 1998 and the year prior or occasionally

buying a car at a Tennessee auction ca nnot support a finding of regularly doing business in Tennessee. Finally , seventeen Tennessee customers in 1998 out of 29,500 for the same year and year prior cannot support a finding that Swope Motors der ives substantial revenue from goods sold or services re ndered in Tennessee. 2 

## As to the findings of the trial court that Swope Motors derived substantial revenue, reg ularly solicited service s, and regularly performed services for residents of Te nnessee, the evidence does not support a finding of any one of

these three forms of contact required to c onfer personal jurisdiction.

## -5- Conclusion In light of the foregoing, we hold that Tennessee does not ha ve personal jurisdiction over the Appellant, Swope Motors. Accordingly , the order of the trial court deny ing Defendant’s motion is reversed. Costs of this appeal are taxed to the Appellees, Albert Greg urek and Sari Gregurek.

___________________________________ DAVID R. FARMER, JUDGE