Court Opinion

ID: 9900993
Source: CourtListenerOpinion
Date Created: 2023-11-20 22:08:07.206592+00
Date Added: 2024-06-11T09:21:23.850054
License: Public Domain

11/20/2023
               IN THE COURT OF APPEALS OF TENNESSEE
                           AT NASHVILLE
                          Assigned on Briefs October 2, 2023

         VICTOR WILLIAMS ET AL. v. CALVIN COLLINS ET AL.

                Appeal from the Chancery Court for Davidson County
                  No. 22-1497-II     Anne C. Martin, Chancellor
                      ___________________________________

                           No. M2023-00452-COA-R3-CV
                       ___________________________________

This is a contract dispute. The trial court granted non-resident Appellees’ Tennessee Rule
of Civil Procedure 12.02(2) motion to dismiss for lack of personal jurisdiction. After
conducting a de novo review, we agree with the trial court that Appellees did not have
minimum contacts with Tennessee that would permit the exercise of personal jurisdiction
over them. Discerning no error, we affirm.

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

KENNY ARMSTRONG, J., delivered the opinion of the court, in which FRANK G. CLEMENT,
JR., P.J., M.S., and THOMAS R. FRIERSON, J., joined.

Christian Barker and Jacob T. Clabo, Nashville, Tennessee, for the appellants, VWillz,
LLC, and Victor Williams.

John J. Griffin, Jr., Michael A. Johnson, and Casey R. Malloy, Nashville, Tennessee, for
the appellees, Calvin Collins, and PoweredbyCMG, LLC.

                                        OPINION

                        I. Background and Procedural History

       The relevant facts are not disputed. Victor Williams is a hip-hop and rap artist, who
is professionally known as VWillz. Calvin Collins is a resident of Texas and the sole
member of PoweredbyCMG, LLC, a Texas limited liability company (“PoweredbyCMG,”
and together with Mr. Collins, “Appellees”). In March 2020, Mr. Williams, who was then
a resident of Colorado, executed a recording and management agreement with
PoweredbyCMG. The agreement provided that it was executed in Texas, was to be
“wholly performed” in Texas, and was governed by Texas law.
       In April 2021, VWillz, LLC (“VWillz,” and together with Mr. Williams,
“Appellants”) was organized as a Tennessee limited liability company. Mr. Williams is
the company’s sole member. VWillz’s Articles of Organization name Barry N. Shrum of
the law firm Shrum Hicks & Associates, PC, Franklin, Tennessee, as its initial registered
agent. An address in Colorado Springs, Colorado, was listed as VWillz’s complete and
principal executive office address and mailing address. According to Mr. Williams, the
“sole function [of VWillz] is to loan out Mr. Williams’ services and intellectual property
to record labels, publishers, and other entities in the entertainment industry with whom Mr.
Williams conducts business.”

       In October 2021, VWillz filed a petition for declaratory relief against
PoweredbyCMG in the Chancery Court for Davidson County (“trial court”). In its petition,
VWillz sought a judgment declaring the 2020 agreement void on the ground of lack of
mutual assent. PoweredbyCMG moved to dismiss the action on a number of grounds,
including the lack of personal jurisdiction and standing.

        While the 2021 action was pending, in January 2022, PoweredbyCMG and VWillz,
acting f/s/o Mr. Williams, entered into an exclusive licensing and management agreement.
The 2022 agreement stated that the 2020 agreement was “void ab initio and terminated in
its entirety such that it has no legal effect.” Like the 2020 agreement, the 2022 agreement
provided that it was executed in Texas and governed by Texas law. It also provided that it
was to be performed wholly in Texas and that the territory encompassed by the terms was
“[the] world.” Mr. Williams signed the 2022 agreement in the capacity of the “authorized
representative” of VWillz, and Mr. Collins signed it as the “authorized representative” of
PoweredbyCMG. Mr. Williams remained a resident of Colorado, and VWillz’s principal
office was located in Colorado when the 2022 agreement was executed. In February 2022,
the trial court entered an agreed order of compromise, settlement, and dismissal in the 2021
declaratory judgment action.1

         In April 2022, Mr. Williams relocated from Colorado to Tennessee. In November
2022, Appellants filed the current action against the Appellees in the trial court. In their
complaint, Appellants sought a declaratory judgment that: (1) the parties’ 2020 and 2022
agreements are unconscionable, unenforceable, and void; (2) Appellants own all rights and
title to the intellectual property subject to the agreements; (3) Appellants owe no royalties

1
   The trial court’s February 2022 order in the 2021 action is styled “Agreed Order of Compromise,
Settlement, and Dismissal with Prejudice.” However, the body of the order states that the matter was
dismissed without prejudice. In the current action, the trial court found: “[O]n February 4, 2022, VWillz
filed a notice of dismissal pursuant to Tenn. R. Civ. P. 41.01, and on February 28, 2022, the Court entered
an Agreed Order of Dismissal with Prejudice.” The parties dispute whether the 2021 lawsuit was dismissed
with or without prejudice. However, the trial court dismissed the current action on the ground of personal
jurisdiction and, accordingly, did not adjudicate the issues of mootness or whether claims arising from the
2020 agreement are barred by the doctrine of res judicata.

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or “other obligations” to Appellees; and (4) Appellees wrongfully issued takedown notices
under the Digital Millennium Copyright Act for Mr. Williams’ new music. Appellants also
sought rescission and/or reformation of the agreements and asserted causes of action for
breach of fiduciary duty, tortious interference with prospective business relationships, and
unjust enrichment. They prayed for an accounting, compensatory and punitive damages,
restitution, and temporary and permanent restraining orders.

        In December 2022, Appellees filed a motion to dismiss pursuant to Rules 12.02(2)
and 12.02(6) of the Tennessee Rules of Civil Procedure. In their motion, Appellees
asserted that the trial court lacked general and specific personal jurisdiction over them.
They also asserted, in the alternative, that: (1) Appellants’ claims were barred by the
doctrine of res judicata and mootness; and (2) under Texas law, Appellants failed to state
a claim for tortious interference or breach of fiduciary duty. Appellees attached numerous
exhibits in support of their motion, including: (1) Mr. Collins’ declaration regarding
Appellees’ lack of contacts with Tennessee; (2) VWillz’s 2021 Articles of Organization;
and (3) Tennessee Department of State, Division of Business Services filing information
indicating that VWillz’s registered agent was changed to Mr. Williams in Nashville,
Tennessee, after Mr. Williams relocated, but Colorado Springs, Colorado, continued to be
listed as its principal address.

        On February 6, 2023, Appellants filed their response to Appellees’ motion and
attached Mr. Williams’ declarations and a number of exhibits in support of their assertion
that Appellees had sufficient contacts in Tennessee such that the exercise of personal
jurisdiction was fair. Following a hearing on February 10, 2023, the trial court granted
Appellees’ motion to dismiss on the ground that it lacked personal jurisdiction over
Appellees. Accordingly, the trial court did not adjudicate Appellees’ alternative defenses.
The trial court entered final judgment in the matter on February 27, 2023, and Appellants
filed a timely notice of appeal.

                                         II. Issues

       Appellants raise the issue of whether the trial court erred by dismissing this action
on the ground that it lacked personal jurisdiction over Appellees.

       Appellees raise five additional issues, which we restate as follows:

       (1) Whether Appellants’ claims are barred by the doctrine of res judicata;
       (2) Whether Mr. Williams lacks standing because he is not a party to the
       agreement;
       (3) Whether claims arising from the parties’ 2020 agreement are moot
       because the parties agreed that the agreement was void ab initio;
       (4) Whether, under Texas law, Appellants failed to state a claim for tortious
       interference;
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       (5) Whether, under Texas law, Appellants failed to state a claim for breach
       of fiduciary duty.

                                  III. Standard of Review

        “‘A trial court’s decision regarding the exercise of personal jurisdiction over a
defendant presents a question of law, which we review de novo with no presumption of
correctness.’” Baskin v. Pierce & Allred Constr., Inc., – S.W.3d –, No. M2021-00144-
SCR-11CV, 2023 WL 6304872, at *5 (Tenn. Sept. 28, 2023) (quoting First Cmty. Bank,
N.A. v. First Tenn. Bank, N.A., 489 S.W.3d 369, 382 (Tenn. 2015)) (internal citations
omitted). Under Tennessee law, the plaintiff carries the burden of demonstrating that the
trial court’s exercise of personal jurisdiction over the defendant is proper. Id. at *16
(citation omitted). When, as in this case, a defendant challenges the exercise of personal
jurisdiction through a Tennessee Rules of Civil Procedure Rule 12.02 motion to dismiss
and supports the motion with an affidavit and other materials, “the plaintiff may not rely
solely on the allegations in the complaint” to carry its burden. Rather, the plaintiff “must
submit affidavits or other materials” to establish a prima facie case that the court may
exercise personal jurisdiction over the defendant. Id. at *5 (citations omitted). “To make
a prima facie showing of personal jurisdiction under Tennessee law, the factual allegations
in the plaintiff’s complaint, affidavits, and other evidentiary materials must establish
sufficient contacts between the defendant and Tennessee with reasonable particularity.”
Crouch Ry. Consulting, LLC v. LS Energy Fabrication, LLC, 610 S.W.3d 460, 470
(Tenn. 2020) (citation omitted).

        When evaluating a Tennessee Rule of Civil Procedure 12.02 motion to dismiss for
lack of jurisdiction, the trial court must accept the plaintiff’s factual allegations as true and
resolve factual disputes in the plaintiff’s favor. Id. (citation omitted). Although the court
must be careful “to avoid improperly depriving the plaintiff of its right to have its claim
adjudicated on the merits[,]” it “is not obligated to accept as true allegations that are
controverted by more reliable evidence and plainly lack credibility, conclusory allegations,
or farfetched inferences.” Id. (citations omitted). On appeal, our evaluation is the same as
the trial court’s. Id.

                                         IV. Analysis

       Under Tennessee’s long-arm statutes, the jurisdictional reach of the Tennessee
courts extends ‘“as far as constitutionally permissible[]”” under the Due Process Clause of
the Fourteenth Amendment to the United States Constitution. Crouch, 610 S.W.3d at 471
(quoting First Cmty. Bank, 489 S.W.3d at 384 (quoting State v. NV Sumatra Tobacco
Trading Co., 403 S.W.3d 726, 740 (Tenn. 2013))) (footnote omitted). As the Tennessee
Supreme Court recently reiterated:

       [T]he general formulation of what due process requires is that a nonresident
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       defendant have “certain minimum contacts” with a state “such that the
       maintenance of the suit does not offend ‘traditional notions of fair play and
       substantial justice.’” Int’l Shoe Co. v. Washington, 326 U.S. 310, 316, 66
       S.Ct. 154 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct.
       339 (1940)). The analysis of whether the defendant’s contacts with the state
       satisfy due process “cannot be simply mechanical or quantitative.” Id. at 319.
       Instead, courts must look to “the quality and nature” of the defendant’s
       activities. Id. Furthermore, this inquiry focuses not on the relationship
       between the defendant and the plaintiff or other persons residing in the forum
       state, but rather on the defendant’s relationship to the forum state itself.
       Bristol-Myers Squibb Co. v. Super. Ct., 582 U.S. 255, 262, 137 S.Ct. 1773,
       198 L.Ed.2d 395 (2017); First Cmty. Bank, 489 S.W.3d at 394. The
       approach long has been that “[i]n judging minimum contacts, a court
       properly focuses on ‘the relationship among the defendant, the forum, and
       the litigation.’” Keeton v. Hustler Mag., Inc., 465 U.S. 770, 775, 104 S.Ct.
       1473, 79 L.Ed.2d 790 (1984) (quoting Shaffer v. Heitner, 433 U.S. 186, 204,
       97 S.Ct. 2569, 53 L.Ed.2d 683 (1977)).

Baskin, – S.W.3d –, 2003 WL 6304872, at *6. This “focus on the relationship among the
defendant, the forum state, and the litigation has led to the recognition of two subtypes of
personal jurisdiction: general jurisdiction and specific jurisdiction.” Id. (citations omitted).
Further, “[t]he nature and extent of the defendant’s contacts with the forum state generally
determine which subtype applies, and the subtype, in turn, determines the breadth of
potential legal claims that may be brought against the defendant in that forum.” Id.
(citation omitted).

        The jurisdictional question in this case is one of specific jurisdiction. “In order for
a state court to exercise specific jurisdiction, ‘the suit’ must ‘aris[e] out of or relat[e] to the
defendant’s contacts with the forum.’” Baskin, – S.W.3d –, 2003 WL 6304872, at *6
(quoting Bristol-Myers Squibb Co. v. Superior Court of California, San Francisco Cnty.,
582 U.S. 255, 262, 137 S.Ct. 1773 (2017) (alterations in original) (quoting Daimler AG v.
Bauman, 571 U.S. 117, 127, 134 S.Ct. 746 (2014))). Additionally, the minimum contacts
analysis requires the defendant to take “some act by which [it] purposefully avails itself of
the privilege of conducting activities within the forum [s]tate” for that state to exercise
specific jurisdiction over the defendant. Id. at *7 (quoting Hanson v. Denckla, 357 U.S.
235, 253, 78 S.Ct. 1228 (1958) (emphasis added)). Further, as the Baskin court reiterated:

       Contacts with a forum state caused by the “unilateral activity of another party
       or a third person” are insufficient. Burger King Corp. v Rudzewicz, 471 U.S.
       462, 475, 105 S.Ct. 2174 (1985) (quoting Helicopteros Nacionales de
       Colom., S.A. v. Hall, 466 U.S. 408, 417, 104 S.Ct. 1868, 80 L.Ed.2d 404
       (1984)). Likewise, a nonresident defendant’s “random,” “fortuitous,” or
       “attenuated” contacts are insufficiently deliberate to support specific
                                             -5-
       jurisdiction. Id. (quoting Keeton, 465 U.S. at 774, 104 S.Ct. 1473; World-
       Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 299, 100 S.Ct. 580, 62
       L.Ed.2d 490 (1980). Moreover, courts must bear in mind that “the
       defendant’s suit-related conduct must create a substantial connection with
       the forum [s]tate” to enable the exercise of specific jurisdiction. Walden v.
       Fiore, 571 U.S. 277, 284, 134 S.Ct. 1115, 188 L.Ed.2d 12 (2014) (emphasis
       added); see also Burger King, 471 U.S. at 475, 105 S.Ct. 2174. To that end,
       the purposeful availment concept ultimately requires that the defendant’s
       conduct and connection with the forum state must be such that the defendant
       reasonably should anticipate being haled into court in that state. See, e.g.,
       Burger King, 471 U.S. at 474–75, 105 S.Ct. 2174; see also Crouch, 610
       S.W.3d at 473.

Id. at *7. Moreover, “the existence of purposeful minimum contacts does not end the
jurisdictional inquiry.” Id. at *8. Even if the plaintiff has made a prima facia showing of
minimum contacts, “the defendant may nevertheless ‘present a compelling case’ that the
exercise of specific jurisdiction would be unfair or unreasonable.” Id. (quoting Burger
King, 471 U.S. at 477, 105 S.Ct. 2174 (additional citation omitted).

       Appellants argue that Appellees are subject to specific jurisdiction in Tennessee
because the parties had a longstanding artist-manager relationship, which continued after
Mr. Willliams relocated to Tennessee. Appellants further assert that Mr. Collins was
“aware of [Mr. Williams’] relocation and . . . continued to act consistently with the parties’
agreement and as [Mr. Williams’] personal manager.” They additionally contend that
Appellees consented to personal jurisdiction by entering into the February 2022 agreed
order in VWillz’s 2021 declaratory judgment action,

        Appellees, on the other hand, argue that Mr. Williams’ unilateral decision to relocate
to Tennessee after the 2022 agreement was executed in Texas is not sufficient to establish
that Appellees had minimum contacts with Tennessee such that the exercise of personal
jurisdiction over them is fair. They also argue that Tennessee has no interest in adjudicating
this dispute because the contract was executed in Texas, is governed by Texas law, and
was intended to be performed in Texas.

       We agree with the trial court that the facts do not support a finding of minimum
contacts that would permit the exercise of specific personal jurisdiction over Appellees.
Mr. Collins’ declarations that he has never been to Tennessee or conducted business in
Tennessee are not disputed. It also is undisputed that Mr. Collins is the sole member of
PoweredbyCMG. Furthermore, PoweredbyCMG: (1) is not licensed to do business in
Tennessee; (2) does not have an agent for service of process in Tennessee; (3) has no
physical presence or bank account in Tennessee; and (4) has not advertised its services in
Tennessee. Moreover, when Appellees began their business relationship with Mr.
Williams in March 2020, Mr. Williams was not a resident of Tennessee. Although VWillz
                                           -6-
was organized as a Tennessee limited liability company in 2021, when the parties executed
their January 2022 agreement, Mr. Williams—VWillz’s sole member—was a Colorado
resident, and VWillz’s office was located in Colorado. The 2022 agreement specifically
provided that it was “deemed to have been made in the State of Texas” and governed by
Texas law. It further provided that it was to be “wholly performed” in Texas. It is not
disputed that Mr. Williams unilaterally decided to relocate to Tennessee in April 2022, and
we agree with the trial court’s conclusion that “there is nothing in the record to indicate
that [Appellees] should have foreseen [Mr.] Williams moving to Tennessee.” Appellees’
only contact with Tennessee was to respond to Mr. Williams’ communications and to
interact with Mr. Williams’ Tennessee legal counsel. Additionally, as noted above, our
inquiry focuses on Appellees’ relationship with Tennessee, not on Appellees’ relationship
with Appellants. See Baskin, – S.W.3d –, 2003 WL 6304872, at *6.

       Appellants’ argument that Appellees consented to the jurisdiction of Tennessee
courts by entering into the agreed order in VWillz’s 2021 declaratory judgment action is
without merit. Appellees filed a Rule 12.02(2) motion to dismiss the 2021 action for lack
of personal jurisdiction. The parties agreed to settle and dismiss the matter, and the trial
court found that VWillz filed a notice of voluntary non-suit in the action. A non-resident
defendant’s motion to dismiss for lack of jurisdiction is not sufficient to establish minimum
contacts such that the exercise of personal jurisdiction over the defendant is fair. See Doe
1 v. Woodland Presbyterian Church, 661 S.W.3d 87, 103 (Tenn. Ct. App. 2022). When
addressing whether a joint motion for continuance constitutes a waiver of the defense of
lack of personal jurisdiction, the Tennessee Supreme Court stated:

       Finally, and most importantly, as a matter of policy, we are simply unable to
       conclude that a joint motion for continuance constitutes a waiver of the right
       to raise personal jurisdiction, irrespective of whether the motion contains
       language which reserves defenses. Such a motion “in no way recognizes that
       the cause is properly pending or that the court has jurisdiction, and no
       affirmative action is sought from the court.” Patterson v. Rockwell
       International, 665 S.W.2d 96, 100 (Tenn.1984). In accordance with the
       modern trend, and Rule 12.02 of the Tennessee Rules of Civil Procedure, . .
       . courts should only find a general appearance that waives a defendant’s right
       to contest personal jurisdiction when the defendant has recognized the proper
       pendency of the cause by making a motion that goes to the merits or by filing
       an answer, without challenging personal jurisdiction. To the extent that prior
       judicial decisions can be read as requiring otherwise, they are overruled.

Landers v. Jones, 872 S.W.2d 674, 677 (Tenn. 1994); e.g., Assocs. Asset Mgmt., LLC v.
Smith, No. M2019-02217-COA-R3-CV, 2020 WL 6445019, at *1 (Tenn. Ct. App. Nov.
3, 2020) (citing See Landers v. Jones, 872 S.W.2d 674, 677 (Tenn. 1994))(“In Tennessee,
a party makes a general appearance for the purposes of waiver by seeking affirmative action
from the court on an issue related to the merits of the dispute.”). Additionally, in In re
                                            -7-
Frumkin, this Court held that, under Landers, a non-resident defendant does not make a
general appearance and thereby consent to personal jurisdiction by filing responses to
discovery requests before raising the issue in an initial filing. In re Frumkin, 912 S.W.2d
138, 140 (Tenn. Ct. App. 1995).

       In the 2021 declaratory judgment action, Appellees’ motion to dismiss on the
ground of personal jurisdiction was pending when the trial court dismissed the action.
Furthermore, there is nothing in the record to demonstrate that Appellees submitted to the
jurisdiction of the Tennessee courts on an issue related to the merits. It appears that the
only contact Appellees had with Tennessee is to communicate sporadically with Mr.
Williams, who unilaterally decided to relocate to Tennessee after the 2022 contract was
executed. We agree with the trial court that Appellees did not purposefully avail
themselves of the privilege of conducting activities within Tennessee for the purpose of
establishing the minimum contacts necessary for the exercise of personal jurisdiction over
them.

       Having determined that the trial court properly dismissed the lawsuit for lack of
personal jurisdiction over Appellees, the issues raised by Appellees are not necessary to
the disposition of this appeal. As such, they are pretermitted.

                                     V. Conclusion

       The judgment of the trial court dismissing this matter for lack of personal
jurisdiction over Appellees is affirmed. The case is remanded for such further proceedings
as may be necessary and are consistent with this opinion. Costs of the appeal are taxed to
the Appellants, VWillz, LLC, and Victor Williams, for which execution may issue if
necessary.

                                                  S/ Kenny Armstrong
                                                  KENNY ARMSTRONG, JUDGE

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