Court Opinion

ID: 1082230
Source: CourtListenerOpinion
Date Created: 2013-10-09 20:57:01.124831+00
Date Added: 2024-06-11T13:10:35.993912
License: Public Domain

SHONEY'S, INC., and SHONEY'S OF       )
CANADA, INC.,                         )
                                      )
       Plaintiffs/Appellants,         )
                                      )    Davidson Chancery
                                      )    No. 95-366-III
VS.                                   )
                                      )    Appeal No.
                                      )    01-A-01-9506-CH-00278
CHIC CAN ENTERPRISES, LTD., an        )
Alberta Corporation, CHIC CAN         )
ENTERPRISES, LTD., an Alberta Limited )
Partnership, LITTLE CAESARS PIZZA OF )
ALBERTA, INC., and GEN GROUP          )
                                                FILED
                                                  Dec. 8, 1995
INCORPORATED,                         )
                                      )         Cecil Crowson, Jr.
       Defendants/Appellees.          )          Appellate Court Clerk

                  IN THE COURT OF APPEALS OF TENNESSEE

                       MIDDLE SECTION AT NASHVILLE

        APPEAL FROM THE CHANCERY COURT OF DAVIDSON COUNTY

                         AT NASHVILLE, TENNESSEE

               HONORABLE ROBERT S. BRANDT, CHANCELLOR

Robb S. Harvey
Kathryn A. Stephenson
TUKE, YOPP & SWEENEY
Seventeenth Floor
Third National Bank Building
201 Fourth Avenue, North
Nashville, Tennessee 37219-2040
ATTORNEYS FOR PLAINTIFFS/APPELLANTS

John W. Lewis
Andrew B. Campbell
WYATT, TARRANT & COMBS
511 Union Street, Suite 1500
Nashville, Tennessee 37219
ATTORNEYS FOR DEFENDANTS/APPELLEES

AFFIRMED AND REMANDED

                                      HENRY F. TODD
                                      PRESIDING JUDGE, MIDDLE SECTION
CONCUR:
SAMUEL L. LEWIS, JUDGE
BEN H. CANTRELL, JUDGE
SHONEY'S, INC., and SHONEY'S OF       )
CANADA, INC.,                         )
                                      )
       Plaintiffs/Appellants,         )
                                      )                Davidson Chancery
                                      )                No. 95-366-III
VS.                                   )
                                      )                Appeal No.
                                      )                01-A-01-9506-CH-00278
CHIC CAN ENTERPRISES, LTD., an        )
Alberta Corporation, CHIC CAN         )
ENTERPRISES, LTD., an Alberta Limited )
Partnership, LITTLE CAESARS PIZZA OF )
ALBERTA, INC., and GEN GROUP          )
INCORPORATED,                         )
                                      )
       Defendants/Appellees.          )

                                          OPINION

       The plaintiffs, Shoney's Inc., and Shoney's of Canada, Inc., have appealed from the

judgment of the Trial Court dismissing their suit against the defendants, Chic Can

Enterprises, Ltd., Little Caesars Pizza of Alberta, Inc., and Gen Group, Incorporated for lack

of personal jurisdiction of said defendants.

       The plaintiff, Shoney's, Inc. is a Tennessee corporation with principal office in

Nashville. The only interest of Shoney's, Inc., in this lawsuit is that it is a guarantor of the

obligations of Shoney's of Canada, Inc., under two of three contracts between Shoney's of

Canada, Inc. and the defendant, and the complaint requests a declaratory judgment as to such

obligations.

        The complaint states that Shoney's of Canada, Inc., is a Canadian corporation 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.

                                                -2-
       The complaint seeks a declaratory judgment regarding and damages for breach of

contracts between Shoney's of Canada, Inc., and the defendants. Said contracts are described

in the complaint as:

       1. "Lee's Famous Recipe Market Development Agreement," (The Marketing
       Agreement) executed on May 5, 1992, in Nashville, Tennessee with Shoney's
       Inc., as guarantor of the obligations of Shoney's of Canada, Inc.

       2. "Training Agreement" executed on May 5, 1992. (Not guaranteed by
       Shoney's, Inc.)

       3. "Lee's Famous Recipe Restaurant License Agreement" (The License
       Agreement) executed on June 22, 1992, with Shoney's, Inc. as guarantor of
       obligations of Shoney's of Canada, Inc.

       4. A "Letter of Clarification" executed by Shoney's of Canada and defendants
       on July 2, 1992.

       The Marketing Agreement states in part:

                This Agreement made and entered into this 5th day of May,
               1992 in Nashville, Tennessee, U.S.A. by and between Shoney's
               of Canada, Inc., a Canadian corporation with its principal office
               at Suite 6200, Scotia Plaza, 40 King Street West, Toronto,
               Canada M5H 3Z7 ("Licensor"), 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 Attorney's Fees. The law regarding franchise
               registration, employment, covenants not to compete and other
               matters of local concern shall be governed by and construed in
               accordance with the laws of the Province of Alberta; however,
               as to contractual and all other matters, this Agreement and all
               other provisions of this instrument will be and remain subject
               to the application, construction, enforcement and interpretation
               under the laws of the State of Tennessee. To the extent,
               however, that the laws of the State of Tennessee differ from the
               Alberta Franchise Act and the regulations promulgated
               thereunder, such Alberta laws and regulations shall supersede
               and control. The Licensor hereby accepts and submits to the
               jurisdiction of the courts of the Province of Alberta with regard
               to any disputes arising under this Agreement. Nothing herein
               shall affect the right of Licensor to commence legal
               proceedings or otherwise proceed against Developer in any
               other jurisdiction in which personal jurisdiction over Developer
               may be found. . . .

                ....

                                              -3-
        26. Guaranty of Shoney's, Inc. For value received, Shoney's
       Inc., located at 1727 Elm Hill Pike, Nashville, Tennessee
       37210 ("Guarantor"), absolutely and unconditionally
       guarantees the performance by Licensor of all obligations under
       the Alberta Franchises Act and the regulations promulgated
       thereunder, and of all of the obligations of Licensor to furnish
       goods and services necessary to establish and open the business
       of the Developer, pursuant to the Licensor's Franchise
       Prospectus, the registration of Licensor to sell franchises in the
       Province of Alberta and the terms and conditions of this
       Agreement, . . . . Guarantor hereby accepts and submits to the
       jurisdiction of the courts of the Province of Alberta with regard
       to the enforcement of this guaranty.

       ....

              SHONEY'S OF CANADA, INC.

              By: /s/ F. E. McDaniel
              Title: Secretary

              By: /s/ Russell L. Cooper
              Title: Vice President

              Date: May 4, 1992

              GUARANTOR:

              SHONEY'S, INC.

              By: Russell L. Cooper
              Title: Vice President

              Date: May 4, 1992

The Training Agreement states in part:

         This Training Agreement (the "Agreement") is made this 5th
       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 "Licensee"), and
       SHONEY'S OF CANADA, INC., a Canadian corporation, with
       its address at Suite 6200, Scotia Plaza, 40 King Street West,
       Toronto, Ontario M5H 3Z7 ("Shoney's of Canada").

The License Agreement states in part:

        This Agreement, made and entered into this 22nd day of June,
       1992 by and between Shoney's of Canada, Inc., a Canadian
       corporation, Suite 6200, Scotia Plaza, 40 King Street West,
       Toronto, Canada M5H 3Z7, hereinafter referred to as
       "Licensor," and CHIC CAN ENTERPRISES, LTD., hereinafter
       referred to as "Licensee."

                                      -4-
               ....

                3. Franchised Site. The rights granted to Licensee hereunder
               shall be nonexclusive and shall be restricted to the operation of
               a single Famous Recipe restaurant to be located on the real
               property at #307 101 Granada Blvd., Sherwood Park, Alberta
               T8A 4W2 . . . .

                ....

                31. Applicable Law. The law regarding franchise
               registration, employment, covenants not to compete and other
               matters of local concern shall be governed by and construed in
               accordance with the laws of the Province of Alberta; however,
               as to contractual and all other matters, this Agreement and all
               other provisions of this instrument will be and remain subject
               to the application, construction, enforcement and interpretation
               under the laws of the State of Tennessee. To differ from the
               Alberta Franchise Act and the regulations promulgated
               thereunder, such Alberta laws and regulations shall supersede
               and control. The Licensor hereby accepts and submits to the
               jurisdiction of the courts of the Province of Alberta with regard
               to any disputes arising under this Agreement. . . .

       4. The Letter of Clarification 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

memorandum containing the following:

                 The plaintiff Shoney's of Canada, Inc. is a Canadian
               corporation with its principal place of business in Toronto.
               Chic Can Enterprises, Ltd., is a limited partnership with its
               principal place of business in Edmonton, Alberta. Shoney's of
               Canada and Chic Can entered into a Market Development
               Agreement whereby Shoney's of Canada granted Chic Can the
               right to open and operate Lee's Famous Recipe chicken
               restaurants around Edmonton, Alberta. . . .

                ....

                While the complaint has all three agreements attached to it
               and refers to all three agreements, the suit is for breach of the
               License Agreement. Shoney's of Canada alleges that Chic Can
               "defaulted under the License Agreement by failing to make
               payments when due" and specifies amounts owed under the
               License Agreement.

                                              -5-
  The License Agreement does not provide where the
franchisee, Chic Can, is to make payment to Shoney's of
Canada. Shoney's of Canada has the authority to inspect Chic
Can's books and records that are presumably located in Canada.
Paragraph 7 of the License Agreement specifies a long list of
standards for the operation of the restaurant, all of which 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 restaurant in Alberta. Shoney's of Canada
is required to send an "opening team" to Alberta to assist in
opening the Sherwood Park restaurant. Chic Can is required to
keep the Canadian restaurant insured. If the franchisee defaults
and the agreement is terminated, the franchisor has the right to
buy the Sherwood Park, Alberta property.

 The License Agreement does not have a forum selection
clause. It does, however, have a consent to jurisdiction clause
and a choice of law clause. Shoney's of Canada consented to
the jurisdiction of the Alberta courts. . . .

 In short, this is a suit by one Canadian entity against another
Canadian entity arising out of a contract about a restaurant in
Canada that requires performance of the contract in Canada.
Moreover, because the License Agreement requires that some
aspects of the parties' dispute is governed by Alberta law,
Shoney's of Canada apparently intends to file a second suit in
Alberta, thus requiring two trials of the same case.

 ....

 One way it seeks to give Tennessee jurisdiction is by adding
Shoney's Inc., the Tennessee corporation, as a plaintiff. But, as
noted, Shoney's Inc. is not a party to the License Agreement -
or the other two agreements either for that matter. . . .
Shoney's, Inc. is merely a guarantor of Shoney's of Canada's
obligation under the agreement.

 Another way Shoney's of Canada seeks to give Tennessee
jurisdiction is by asserting in response to the motion to dismiss
that its office is really in Tennessee. 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 notwithstanding that until 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 in Tennessee one week before it filed its response to
the motion to dismiss.

 ....

  As previously pointed out, according the License Agreement
itself, everything that was to be done under the contract was to
be done in Canada. There is nothing in the contract that
requires Chic Can to do anything in Tennessee. Likewise,
Shoney's of Canada is required to perform in Canada. The

                               -6-
               consent to jurisdiction clause in the agreement subjects
               Shoney's of Canada to jurisdiction in Alberta's courts.
               Tennessee's courts are not mentioned. Likewise, Alberta law
               governs the construction of the agreement for the most part.

                Chic Can did have some contacts with Tennessee. But, they
               were minimal. Chic Can's representatives visited Nashville
               only twice and that was to negotiate the contract. Negotiations
               took place in Canada, too. Chic Can mailed royalty checks to
               Tennessee. And it ordered material from Tennessee.

                 This Court cannot perceive of any interest Tennessee has in
               expending its judicial resources to resolve this dispute between
               two Canadian business entities over the operation of a
               restaurant in Canada. As far as convenience is concerned, this
               Court cannot decide the whole dispute between the parties.
               Indeed, Shoney's of Canada goes so far as to cite in its
               complaint that it is not seeking to enforce its rights under
               Canadian service mark and trademark laws. There will be
               another suit in Alberta. In the License Agreement, Shoney's of
               Canada is required to perform certain tasks at the site 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 more convenient place to litigate, or partially
               litigate, this dispute than Alberta.

                ....

                Considering the totality of the circumstances, the Court
               concludes that to subject this Canadian defendant to
               jurisdiction in Tennessee in this suit by a Canadian plaintiff
               arising out of a restaurant in Canada would "offend traditional
               notions of fair play and substantial justice." J.I. Case at 532.

                The defendants' counsel should submit the judgment
               dismissing the case. Costs are taxed to the plaintiffs.

       An order was entered accordingly.

       On appeal, plaintiffs present two arguments 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 Supplies.

       The affidavit of Dianna Booher, Director of Accounts Receivable of Shoney's, Inc.,

(the Tennessee corporation) states:

               6. According to records available to me, since opening the
               restaurant the franchisee has made numerous purchases of

                                              -7-
               equipment and supplies from Shoney's commissary 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, when made by the franchisee, were sent to Nashville
               and deposited here. A sample of some of the orders placed by
               the franchisee is attached as Exhibit C.

       It is doubtful that the foregoing qualifies the invoices for consideration under TRE

Rule 803(6).

       Exhibit C to the affidavit consists of duplicate copies of two invoices indicating sales

by Shoney's, Inc. to Famous 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 person who

placed the notation on the invoices.

       The supplemental affidavit of Garner Worken, an official of defendants, denies that

he placed his name on either invoice and denies any information as to who signed the

invoices. Both invoices have the following printed heading:

               Eugenia Distribution Center
               Shoney's, Inc.
               Commissary Operations, Inc.
               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 (buyer or buyer's authorized
               representative) hereby acknowledges receipt of the goods listed
               above and acknowledges and agrees to all the terms and
               conditions hereof, including those on the reverse side hereof.

       The "reverse side hereof" is completely filled by ten "additional terms and conditions"

of which numbers two and three are as follows:

                                                -8-
                2. Governing Law. Except as expressly inconsistent
                therewith, this agreement, as described 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 buyer's breach of any obligation
                hereunder, seller shall, in addition to those remedies contained
                in the Tennessee Uniform Commercial Code, recover all costs
                and expenses incurred in attempting to remedy said breach,
                including its reasonable attorneys fees, which buyer agrees to
                pay. Any action brought either by buyer or seller to enforce
                any remedy under this contract shall be brought in the State or
                Federal Courts in Davidson County, Tennessee, and buyer
                hereby consents to the jurisdiction of said Courts.

        Even if it be shown that the above notation on the invoices was made by an employee

of defendants authorized to sign for the receipt of merchandise, such showing would not

establish that such employee had authority to subject his employers 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 effect would be limited to an action for collection of the amount due

upon the particular invoices upon which the notation appears.

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

of this suit.

        Plaintiffs cite an impressive array of authorities on forum selection but no evidence 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

defendants in regard to any part of the present controversy.

        It is argued that said two invoices are included in an item of "$4,268.42 in past due

trade balances," but the complaint specifically states that this amount is due Shoney's of

                                               -9-
Canada, and not the Shoney's, Inc. which appears at the top of the invoice. The complaint

contains no demand by Shoney's, Inc. for this or any other amount.

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

       Plaintiffs second argument is that Tennessee Courts have personal jurisdiction of

defendants because of defendants' "substantial contacts with Tennessee."

       Plaintiffs' vehement criticism of the reasoning of the Trial Court is of little value to

this Court which must review the decision de novo upon the record, although findings of fact,

(but not rulings of law) of the Trial Judge are presumed 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 "any 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 against a Texas lawyer who had prepared an

inaccurate deed for the transfer of real estate in Memphis, Tennessee at the request of a

Tennessee resident. The Supreme Court quoted T.C.A. §20-2-214 and said:

                 In determining whether or not a state can assert long-arm
               jurisdiction, due process requires that a non-resident defendant
               be subjected to a judgment 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
               substantial justice.;'" International Shoe Co. v. Washington,
               326 U.S. 310, 316, 66 S. Ct. 154, 158, 90 L. Ed. 95 (1945).
               However, the absence of physical contacts will not defeat in
               personam jurisdiction where a commercial actor purposefully
               directs his activities toward citizens of the forum State and
               litigation results from injuries arising out of or relating to those
               activities. Burger King Corp. v. Rudzewicz, ____ U.S. ____,

                                               -10-
105 S. Ct. 2174, 2182, 85 L. Ed. 2d 528 (1985). In such a case,
"the defendant's conduct and connection with the forum State
are such that he should reasonably anticipate being haled into
court there." World-Wide 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 been 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 consequence in the forum State; the
cause of action must arise from the defendant's activities there;
and defendant's acts or consequences 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 process. Shelby Mutual
Ins. Co. v. Moore, 645 S.W.2d 242, 245 (Tenn.App.1981).
That decision, quoting extensively 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 that three primary factors are to be considered in
determining whether the requisite minimum contacts were
present: the quantity of the contacts, their nature and quality,
and the source and connection of the cause of action with those
contacts. Two lesser factors to be considered 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
         substantially just to both parties to have the case
         tried in the state where the plaintiff has chosen
         to bring the action. In each case, the quality
         and nature of those activities in relation to the
         fair and orderly administration of the law must
         be weighed. As stated above in Qantas, this
         must involve some subjective value judgment
         by the courts.

645 S.W.2d at 246.

 After applying these considerations to the facts of this case,
we hold that Allen had sufficient minimum contacts with
Tennessee to justify jurisdiction here. While Allen never
entered Tennessee and had no direct 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 independent action in fulfilling his
obligations. This included conversing with WTFF's attorney in
Knoxville on several occasions, drafting the documents to be in
accord with Tennessee law, sending the completed documents
into Tennessee for execution, and then holding these same
documents until closing in his office. Allen knew that his legal
work would control the sale of several million dollars of

                              -11-
               Tennessee realty which was being sold by a Tennessee limited
               partnership subject to the laws of Tennessee. These documents
               were to be recorded and given full legal effect in Tennessee.
               By wilfully and knowingly choosing to prepare legal
               documents which would be filed in Tennessee and be of great
               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 limited physical contact with this
               forum, he purposefully directed his activities toward the
               citizens of this state and his negligent actions resulted in injury
               here. Allen should have reasonably anticipated having to
               defend his actions in a Tennessee court. It follows that the
               nature and quality of Allen's contacts with Tennessee support
               the assertion of jurisdiction by this state, and that the litigation
               arose directly out of Allen's contacts with Tennessee. In
               addition, Tennessee has substantial interest in the outcome of
               this litigation and is the most convenient forum since this
               action involves a Tennessee defendant, WTFF, Tennessee
               property, and is controlled by Tennessee law.

Masada, 697 S.W.2d at 334-35.

       Personal jurisdiction may be "general" or "specific," that is it may exist for all

purposes, or it may be limited to the particular activity which gives 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 defendants 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" toward a vital part of a

transfer of Tennessee real estate at the request of a Tennessean.

       Plaintiffs assert that:

                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
               directed out of Nashville, that reports were to be made to
               Shoney's/Canada in Nashville, that payments were 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 and
               franchising decisions were made in Nashville, Chic Can
               representatives travelled to Nashville to enter into a long-term
               franchising relationship with Shoney's/Canada. Chic Can

                                               -12-
               regularly made payments to Shoney's/Canada, addressed to
               Nashville. Chic Can ordered supplies and equipment from
               Shoney's/Canada and its affiliates in Nashville. These contacts
               with Tennessee were not "tenuous" or "fortuitous."

       No evidence is cited or found that, prior to the execution of the subject agreements,

defendants "knew full well" that all operations of Shoney's of Canada was conducted or

controlled in Tennessee. The contracts represent that the principal office of Shoney's of

Canada was in Canada. There is adequate 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. It is true that one or more of the contracts was signed

in Nashville, but no provision is found in any of the contracts requiring performance in

Tennessee. It is true that, after the contracts were signed, defendants were notified that

reports and remittances must be sent to Nashville, and that this was done. The unilateral

demand, unsupported by contract obligation, and acquiescence in the demand by defendants

is not "purposely directing activity" by defendants toward property or residents of Tennessee

such as occurred in Masada.

       Shoney's of Canada, Inc., insists that its principal place of business was in Nashville,

Tennessee, but the evidence is uncontroverted that, as of March 22, 1995, Shoney's of

Canada, Inc. was not domesticated and authorized to do business in Tennessee.

       T.C.A. §45-25-102(a) provides:

               (a) A foreign corporation transacting business in this state
               without a certificate of authority may not maintain a proceeding
               in any court in this state until it obtains a certificate of
               authority.

       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. Franchisees in Michigan dealt with a

regional office of franchisor in Michigan and executed an agreement which stated that all

disputes must be resolved under Florida law, but that choice of law did not require all suits to

                                              -13-
be in Florida Courts. The Supreme Court held that the franchisees had "purposely availed

themselves of the privilege of doing business in Florida" because they reached out beyond

Michigan and negotiated with a Florida corporation for the benefits of a long term franchise

in a nationwide organization and upheld the jurisdiction of Florida Courts over the Michigan

residents. However, the Supreme Court said:

               [W]e do not mean to suggest that the jurisdictional outcome
               will always be the same in franchise cases. Some franchises
               may . . . involve different decision making structures, such that
               a franchisee should not reasonably anticipate out-of-state
               litigation. Id. at 485 n.28, 105 S. Ct. 2174, 85 L.Ed.2d at 549
               n.28.

               . . ."'[T]he facts of each case must [always] be weighed' in
               determining whether personal jurisdiction would comport with
               'fair play and substantial justice.'" . . .

       The present case is distinguishable from Burger King by at least two facts: (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 farmer about 50 miles

from Memphis under the following circumstances:

                . . . The initial contact between the parties occurred at Case's
               equipment exhibit at the fair in Tennessee; the instruments
               controlling the transaction between the parties were prepared
               and executed by Case in Tennessee; financing for the balance
               due under the agreement was furnished by a company located
               in Tennessee; the agreement executed by the parties
               contemplated that payments due under the agreement would be
               made in Tennessee; and parts and labor for the repair and
               maintenance of the equipment under the warranty agreement
               were to be furnished in or from Tennessee. . . .

Case, 832 S.W.2d at 533.

The facts of the present case are not sufficiently similar to the cited case to render its

disposition determinative in the present case.

                                               -14-
       Finally, plaintiffs insist that there is no evidence that a trial in Tennessee would

subject defendants to a severe disadvantage. The element of severe disadvantage is obvious

from and inherent in the admitted facts. By virtue of overlapping personnel, the officials for

Shoney's of Canada are also officials of Shoney's, Inc., and reside in Tennessee. All

defendants are domiciled in Canada, at a great 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 inherent power to apply the doctrine

of forum non conveniens as ground for refusal to exercise jurisdiction over a cause of action

arising beyond 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 inconvenience 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 decision was

based upon the doctrines of "forum non conveniens" (forum not convenient) and unfairness.

Both are amply supported by the record. The findings of fact are supported 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

necessary further proceedings.

       Affirmed and Remanded.

                                              _______________________________________
                                              HENRY F. TODD
                                              PRESIDING JUDGE, MIDDLE SECTION

CONCUR:

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_____________________________________
SAMUEL L. LEWIS, JUDGE

_____________________________________
BEN H. CANTRELL, JUDGE

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