Court Opinion

ID: 4657244
Source: CourtListenerOpinion
Date Created: 2021-02-03 21:12:47.60348+00
Date Added: 2024-06-11T08:01:13.074450
License: Public Domain

02/03/2021
                  IN THE COURT OF APPEALS OF TENNESSEE
                               AT JACKSON
                                    January 19, 2021 Session

  JOSEPH CHECKAN v. SOUTHERN TOWING COMPANY LLC ET AL.

                     Appeal from the Circuit Court for Shelby County
                       No. CT-003024-18 Rhynette N. Hurd, Judge
                        ___________________________________

                               No. W2020-00636-COA-R3-CV
                           ___________________________________

This is a defamation case that was dismissed by the trial court on a motion to dismiss.
Plaintiff, a former riverboat captain, predicated his defamation claim on a letter sent by a
lawyer for the owner of a drawbridge to the riverboat captain’s former employer. The
purpose of the letter was to put the employer on notice that damage had been caused to the
drawbridge by one of the employer’s towboats. In its oral ruling, which was incorporated
into its dismissal order, the trial court identified several grounds which it concluded
supported dismissal. Not addressed by the trial court were several procedural defenses
raised by the defendant, including a defense based on an alleged lack of personal
jurisdiction. Notably, the defendant has not waived its personal jurisdiction defense on
appeal. Because jurisdiction is a prerequisite to an adjudication on the merits of the case,
we vacate the trial court’s dismissal order and remand the matter for a consideration of the
defendant’s personal jurisdiction defense.

   Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Vacated
                                  and Remanded

ARNOLD B. GOLDIN, J., delivered the opinion of the Court, in which J. STEVEN STAFFORD,
P.J., W.S., and CARMA DENNIS MCGEE, J., joined.

Michael M. Thomas and W. Neil Thomas III1, Chattanooga, Tennessee, for the appellant,
Joseph Checkan.

S. Camille Reifers, Memphis, Tennessee, Daniel Oberdorfer2 and Nicole L. Faulkner,
Minneapolis, Minnesota, for the appellee, Canadian Pacific Railway.

        1
           Attorney W. Neil Thomas, III is listed as co-counsel on the Appellant’s brief, but he did not
participate at oral argument.
         2
           Attorneys Reifers and Oberdorfer are listed as co-counsel on the Appellee’s brief, but they did
not participate at oral argument.
                                        OPINION

                 BACKGROUND AND PROCEDURAL HISTORY

        Although the controversy on appeal concerns the Shelby County Circuit Court’s
dismissal of a libel claim asserted against the Appellee “Canadian Pacific Railway” (“the
Appellee”), the underlying case began in the Hamilton County Circuit Court when the
Appellant Joseph Checkan (“Mr. Checkan”), a riverboat captain, filed a complaint against
his former employer, Southern Towing Company, LLC (“Southern Towing”). Among
other alleged claims, Mr. Checkan asserted that he had been wrongfully terminated by
Southern Towing. The case was later transferred to the Shelby County Circuit Court (“the
trial court”) by way of an agreed order.

        Subsequent to the transfer of the case, Mr. Checkan filed an “Amended Complaint”
detailing the bases for his action against Southern Towing and naming the Appellee as an
additional defendant. In relevant part, the “Amended Complaint” alleged the following:

              5. On Thursday, August 10, 2017, Checkan began a two-week shift
      with hi[s] boat, M/V Mary Elizabeth, on the Mississippi River.
              6. On August 12, 2017, while approaching a bridge near [La Crosse],
      Wisconsin, he was told to stop to wait for a train to cross the bridge, which
      was owned by the Canadian-Pacific Railway Company. After that train
      crossed, he was told to wait for another train to cross, even though at the time
      under maritime rules he had the right of way.
              7. While waiting for the second train to cross the bridge, Checkan
      performed a controlled landing, during which he caused his barge system to
      come to rest next to a piling okf the bridge with no damage either to the barge
      or the bridge.
              8. After reporting the controlled landing to the bridge operator, the
      bridge Operator confirmed that there had been no damage, and Checkan’s
      posting pilot, Tom Hinton, witnessed the all-clear given by the bridge
      operator.
              9. Checkan completed his run on the Mississippi and returned home
      on August 24, 2017.
              10. On September 7, 2017, Checkan was to start his next run and
      called Southern Towing to confirm his rental car with Enterprise Rent-A-Car
      to use to go to the site of the start of the run. At that time, he was told by
      Bobby Jones in the Human Resources Department of Southern Towing not
      to report and that an investigation had been commenced in connection with
      his last run.
              11. Unknown to Checkan, Canadian Pacific sent to Southern Towing
      a letter, dated August 29, 2017, complaining that the Mary Elizabeth had
      caused property damage to a drawbridge near [La Crosse], Wisconsin[.]
                                             -2-
              12. Checkan waited for approximately two weeks with no
       notifications from Southern Towing until September 26, 2017, when he was
       told he had been terminated for failure to report an accident. Although
       Checkan requested a letter which stated the grounds for termination, none
       was given, although he was told informally that Southern Towing had
       received a bill from Canadian Pacific for $175,000, purportedly for damage
       done at the time of the controlled landing. Because there had been no such
       damage to the bridge, Checkan was wrongfully terminated.

       ....

              14. Southern Towing and Canadian Pacific have published the fact
       that Checkan caused an accident with the Mary Elizabeth which he did not
       cause and was terminated for cause. He has been unable to be gainfully
       employed as a River Boat captain. As a result of the libelous statement and
       his wrongful termination Southern Towing and Canadian Pacific have
       defamed his reputation as a boat captain.

        The lawsuit against Southern Towing was ultimately nonsuited by Mr. Checkan. As
for the Appellee, it filed a motion to dismiss raising a host of issues. Among other things,
it argued that “Canadian Pacific Railway” is not a legal entity, that there was a lack of
personal jurisdiction, and that Mr. Checkan had failed to state a claim. Concerning the
substantive merits of Mr. Checkan’s libel claim, the Appellee primarily contended in an
accompanying memorandum that the August 29 letter referred to by Mr. Checkan was
protected by the litigation privilege and that Mr. Checkan had failed to sufficiently plead
that any defamatory statement was made about or concerning him. Mr. Checkan later
moved for an order permitting him to amend his complaint, but the trial court denied the
request by written order. In its order denying Mr. Checkan’s motion to amend, the trial
court also granted the Appellee’s motion to dismiss. Notably, the order of dismissal stated
that it granted the motion “without ruling on the . . . other procedural bases for dismissal.”
Among other things, the trial court concluded that the letter relied upon by Mr. Checkan to
support his libel claim was a “prelitigation letter and . . . [was] entitled to . . . privilege.”
This appeal eventually followed.3

                                            ISSUES PRESENTED

    Mr. Checkan’s brief presents three issues for this Court’s review, restated verbatim as
follows:

   (1) Whether it was error for the Court below to consider matters outside the
       allegations of the Amended Complaint and make incorrect assumptions

       3
           Alleged actions of Southern Towing are not at issue in this appeal.
                                                    -3-
       about the facts of the case in granting a motion to dismiss under Rule
       12.02(6) of the Tennessee Rules of Civil Procedure?

   (2) Whether it was error for the court below to dismiss the Amended Complaint
       by shielding a defamatory statement through the use of the litigation privilege
       where the statement was made against a person not a party to the litigation
       by a person not a party to the litigation.

   (3) Whether the subject of a libelous statement must be actually named in the
       statement where his identity is otherwise known or easily capable of being
       known.

For its part, the Appellee does not raise any independent issues. It casts the three issues
raised by Mr. Checkan in the following terms:

   1. Whether the absolute litigation privilege applies to a pre-litigation letter
      providing notice of proposed litigation.

   2. Whether the letter forming the basis of Plaintiff’s defamation claim was “of
      and concerning” the Plaintiff when the letter does not mention, refer to, or
      concern Plaintiff, even by implication or reasonable inference, as a matter of
      law.

   3. Whether the Circuit Court properly referred to the express language of the
      letter at issue, which was required to be attached as an exhibit to the
      Complaint, when it granted Defendant’s Motion to Dismiss.

The Appellee’s brief also states that it “expressly reserves” the right to make its raised
procedural defenses which were unaddressed by the trial court if the matter should be
remanded on those grounds, but it nonetheless requests that dismissal be affirmed on the
merits by this Court.

                                            DISCUSSION

       Although the parties’ arguments on appeal have primarily focused on the propriety
of the substantive rulings made by the trial court when it dismissed Mr. Checkan’s
complaint, we are of the opinion that the merits of the case should not have been ruled upon
by the trial court without first assessing the personal jurisdiction defense invoked by the
Appellee. We addressed the same issue in another case over a decade ago. See Sutton v.
Stolt-Nielsen Transp. Grp., Ltd., No. E2008-01033-COA-R3-CV, 2009 WL 499521 (Tenn.
Ct. App. Feb. 27, 2009).4 In Sutton, a class action lawsuit involving allegations of a price-

       4
           Notably, we observe that the Appellee specifically referenced Sutton in a memorandum filed in
                                                  -4-
fixing conspiracy, the defendants filed a motion to dismiss on two bases: lack of personal
jurisdiction and failure to state a claim. Id. at *1. The trial court in Sutton granted the
motion for failure to state a claim, but it explicitly declined to rule on the jurisdictional
issue. Id.

       When the case was later appealed to this Court, we confronted what we regarded as
a question of timing, namely, “when facing a motion to dismiss pursuant to both 12.02(2)
and 12.02(6), must the trial court address the 12.02(2) defense first?” Id. at *2. Although
we could not locate any Tennessee authority then-existing on the question, we noted that
the matter had been considered by federal courts under the federal counterparts to our own
rules of civil procedure. In surveying this law, we pointed favorably to a decision of Judge
Friendly’s, as well as other federal court holdings:

        In Arrowsmith v. United Press Int’l, 320 F.2d 219 (2d Cir. 1963), the district
        court dismissed plaintiff’s action for failure to state a claim without
        addressing defendant’s personal jurisdiction defense. Id. at 221. Judge
        Friendly, writing for the appellate court, remanded, finding that the district
        court must first decide the jurisdictional question:

           Not only does logic compel initial consideration of the issue of
           jurisdiction over the defendant—a court without such jurisdiction lacks
           power to dismiss a complaint for failure to state a claim—but the
           functional difference that flows from the ground selected for dismissal
           likewise compels considering jurisdiction and venue questions first. A
           dismissal for lack of jurisdiction or improper venue does not preclude
           a subsequent action in an appropriate forum, whereas a dismissal for
           failure to state a claim upon which relief can be granted is with
           prejudice. We shall therefore vacate the judgment dismissing the
           complaint for failure to state a claim on which relief can be granted and
           remand the case for consideration of the issue of jurisdiction over the
           person of the defendant and, in the event that this be found, the issue of
           venue, prior to consideration of the merits.

        Id.; see also, OMI Holdings, Inc. v. Royal Ins. Co. of Canada, 149 F.3d 1086,
        1089 (10th Cir. 1998) (“Because a court without jurisdiction over the parties
        cannot render a valid judgment, we must address Defendants’ personal
        jurisdiction argument before reaching the merits of the case.”); Nw. Nat’l
        Cas. Co. v. Global Moving & Storage, Inc., 533 F.2d 320, 323 (6th Cir. 1976)

support of its motion to dismiss, stating in a footnote that Sutton “analyz[es] the order in which a court must
address alternative substantive and procedural arguments on a motion to dismiss.”

                                                    -5-
       (holding that the trial court erred by entering a judgment in favor of a
       defendant before determining that it had the requisite personal
       jurisdiction); Bruce v. Fairchild Indus., Inc., 413 F.Supp. 914, 916 (D.C.
       Okl. 1975) (“When a Motion to Dismiss is urged based on lack of personal
       jurisdiction, such Motion must be passed on by the Court prior to considering
       any Motions going to the merits of the case....”); 5B Charles Alan Wright &
       Arthur R. Miller, Federal Practice and Procedure § 1351 (2008).

Id. Although we acknowledged certain exceptions had been carved out against this general
rule and noted that defendants had an option of waiving a personal jurisdiction defense so
that a defense for failure to state a claim could be considered, we pointed out that the
defendants before us in Sutton had not agreed to waive their 12.02(2) defense. Id. at *3.
In explaining our decision to follow the general rule from the federal courts and thereby
vacate the trial court’s dismissal order and remand for consideration of the jurisdictional
question, we stated:

       [W]e are concerned about the validity of an order affecting a defendant over
       which the court may not have jurisdiction. For a future claim to be precluded
       by res judicata, the court entering the initial order of dismissal must have
       been of competent jurisdiction. Lee v. Hall, 790 S.W.2d 293, 294 (Tenn. Ct.
       App. 1990). Accordingly, the adjudication in the present case might not
       operate as a bar to future claims because the jurisdictional question was never
       resolved. Second, for the sake of judicial economy, we think that the trial
       court should determine jurisdiction first so that we, as a reviewing court, can
       consider the full range of issues at the same time. We understand the parties’
       desire for an authoritative answer on the substantive question, but decline to
       render an advisory opinion on this issue. Were a subsequent court to find that
       jurisdiction over these defendants is lacking, any opinion by this Court on
       the substantive issue would be of dubious authority.

Id.

         As we have already noted, the briefing from the Appellee in this appeal indicates
that it “expressly reserves” the jurisdictional defense, and when we inquired into the matter
further at oral argument, counsel for the Appellee reiterated this position regarding the
defense, stating that “it has not been waived.” In light of this fact and the trial court’s
failure to address the jurisdictional issue before entertaining the merits, we act here as we
did in Sutton and vacate the trial court’s dismissal order and remand the case for
consideration of the Appellee’s personal jurisdiction defense.

                                            -6-
                                  CONCLUSION

      For the reasons stated above, we vacate the trial court’s order of dismissal and
remand for consideration of the Appellee’s personal jurisdiction defense.

                                                  s/ Arnold B. Goldin
                                                ARNOLD B. GOLDIN, JUDGE

                                        -7-