Court Opinion

ID: 1075154
Source: CourtListenerOpinion
Date Created: 2013-10-09 20:13:49.284043+00
Date Added: 2024-06-11T12:36:17.932807
License: Public Domain

IN THE COURT OF APPEALS OF TENNESSEE
                          WESTERN SECTION AT JACKSON
                  ______________________________________________                FILED
UNITED AGRICULTURAL SERVICES,
                                                                                September 3, 1999
INC.,
                                                                            Cecil Crowson, Jr.
       Plaintiff-Appellee,
                                                                          Appellate Court Clerk
                                                       Shelby Chancery No. 110127-3
Vs.                                                    C.A. No. 02A01-9812-CH-00353

JOHN W. SCHERER, JR.,

      Defendant-Apellant.
____________________________________________________________________________

                 FROM THE SHELBY COUNTY CHANCERY COURT
              THE HONORABLE D. J. ALISSANDRATOS, CHANCELLOR

                                  Lenard Hackel of Memphis
                                        For Appellee

                                Richard F. Vaughn of Memphis
                                        For Appellant

                               AFFIRMED AND REMANDED

                                         Opinion filed:

                                                               W. FRANK CRAWFORD,
                                                               PRESIDING JUDGE, W.S.

CONCUR:

ALAN E. HIGHERS, JUDGE

HOLLY KIRBY LILLARD, JUDGE

       This appeal involves jurisdiction under the long-arm statute. Defendant/appellant, John

W. Scherer, Jr. (Scherer), appeals the order of the trial court awarding plaintiff/appellee, United

Agricultural Services, Inc. (Ag Services), damages for breach of contract.
       Ag Services is a Tennessee corporation based in Memphis that performs environmental

site assessments and related activities. Scherer, a resident of Michigan, is the president of

Michigan Apple Corporation, Inc. (Michigan Apple), a foreign corporation doing business in

Michigan.

       In 1994, Michigan Apple attempted to obtain a loan from American Farm Mortgage

Company for the purpose of buying property in Michigan. American Farm Mortgage in turn

wanted to sell Michigan Apple’s note to Prudential. Prudential required a Phase I environmental

site assessment on the property prior to going through with the deal. Ag Services was one of

several companies that the involved mortgage companies used for environmental inspection

purposes. A member of Prudential’s mortgage department in Chicago contacted Ag Services in

regard to performing a site inspection on the land Michigan Apple wished to purchase.

       Ag Services then contacted American Farm Mortgage in Kentucky and was advised that

environmental services were needed by Michigan Apple in order to obtain a loan, and that Ag

Services should contact Michigan Apple. The president of Ag Services, Roger Hanes (Hanes),

then contacted Scherer in Michigan by telephone.1 Arrangements were made and employees

from Ag Services traveled to Michigan to inspect the property on three separate occasions. On

each occasion, the Ag Services employees returned to Memphis where they did the analysis,

compilation, interpretation, and preparation of a report for use by Michigan Apple in obtaining

its loan. The report on the property was completed in September 1994 and specified that clean

up of the property was required. Ag Services again traveled to Michigan and performed the

clean-up operation, completing it in the spring of 1995.

       After clean-up, Ag Services presented a final report, the loan from American Farm

Mortgages came through, and Michigan Apple purchased the property. At the time of closing,

Ag Services was not paid for the work it had provided. Hanes testified that it is customary for

the purchaser of the land to pay the fees for inspection, and at the time of doing the work, he and

Scherer, on behalf of Michigan Apple, discussed the fees for the various phases of work. The

parties later agreed to a payment plan, and Ag Services mailed Scherer a promissory note which

       1
        It was disputed whether Scherer contacted Ag Services first or vice-versa. However,
Scherer by affidavit stated that Ag Services initially contacted him. Roger Hanes, president of
Ag Services, testified at trial that he was unsure whether he contacted Scherer first or not.

                                                2
he signed as president of Michigan Apple and personally guaranteed. The note stated in

pertinent part:

                                      PROMISSORY NOTE

                  $36,816.00                                     MARCH 4, 1996

                                                                 Memphis, Tennessee

                          FOR VALUE RECEIVED, the undersigned, Michigan
                  Apple Corp. Inc. . . . promises to pay to the order of United
                  Agricultural Services, Inc., . . . the principal sum of Thirty six
                  thousand, eight hundred sixteen dollars ($36,816.00), together
                  with interest thereon from date hereof until paid, at the rate of
                  twelve percent (12%) per annum. Payment to be paid in six
                  monthly installments, ($6,136.00) first payment to be due and
                  payable on March 25, 1996 and final payment due August 25,
                  1996 . . . .

                                 *               *               *

                          John Scherer, Jr., General Manager and Part-Owner, so
                  warrants that he is duly authorized by Michigan Apple Corp., Inc.
                  to sign this note on behalf of the Corporation. This note, also, is
                  secured by the personal guarantee of John Scherer, Jr.

                                 *               *               *

                         This note is made and executed under, and is in all
                  respects governed by, the laws of the State of Tennessee.

       Scherer and Michigan Apple failed to make timely payments on the note, and on October

28, 1997, Ag Services filed suit against Scherer in Shelby County Chancery Court for breach of

contract. Scherer filed a motion to dismiss based on lack of in personam jurisdiction by the

courts of Tennessee. The motion to dismiss was denied but the chancellor granted Scherer an

interlocutory appeal. However, this Court denied the application.

       On October 6, 1998, Scherer filed an answer to the complaint, again asserting lack of

jurisdiction. After a nonjury trial, the chancellor entered an order on October 28, 1998 awarding

a judgment to Ag Services in the amount of $43,416.00 in damages and $4,000.00 in attorneys’

fees. The chancellor found in pertinent part:

                  That initially there were contacts made in such a fashion for the
                  underlying contract that would not give rise to jurisdiction to this
                  Court. However, the Court finds that, after the parties continued
                  their discussion about the disagreement on the payment of that
                  underlying contract, the Defendant had communications with the
                  Plaintiff in this cause knowing that the Plaintiff was here in
                  Tennessee, and the Defendant asked the Plaintiff, who was here
                  in Tennessee, to prepare the underlying document that is before
                  the Court today, the promissory note. He knew that that

                                                   3
                              document would be prepared in Tennessee, and it would be sent
                              to him for his signature, which he did.

                                       He, therefore, in this Court’s opinion, had such contact
                              with the state of Tennessee under those circumstances that were
                              at least minimal contacts such that would reasonably place him on
                              notice that by taking that extra act of creating this document to be
                              in the free flow of commerce that it was one that would
                              reasonably cause it to be haled into the state of Tennessee.

                                      Accordingly, therefore, the Court finds that this Court has
                              jurisdiction over this matter.

               Scherer has appealed, and the only issue for review is whether the Shelby County

Chancery Court had in personam jurisdiction over him under the Tennessee Long-Arm Statute.

               Since this case was tried by the trial court sitting without a jury, we review the case de

novo upon the record with a presumption of correctness of the findings of fact by the trial court.

Unless the evidence preponderates against the findings, we must affirm, absent error of law.

T.R.A.P. 13(d).

               S c h e r e r , a s a n o n r e s id e n t o f T e n n e s s e e , i s s u e d p u r s u a n t to t h e p r o v i s i o n s o f T . C . A . § 2 0 - 2 - 2 1 4 ( a ) ( 1 9 9 4 ) ,

w h i c h p r o v i d e in p e r tin e n t p a r t:

                              20-2-214. Jurisdiction of persons unavailable to personal
                              service in state--Classes of action to which applicable.- - ( a )
                              P e r s o n s w h o a re n o n re s id e n ts o f T e n n e s se e a n d r e s id e n ts o f T e n n e s s e e w h o a r e
                              o u t s id e t h e s t a t e a n d c a n n o t b e p e r s o n a l ly s e r v e d w i t h p r o c e s s w i t h i n t h e s t a t e a r e
                              s u b j e c t to th e ju ris d ic tio n o f th e c o u rts o f th is s ta te a s to a n y a c tio n o r c la im f o r
                              relief a rising fro m :

                              ( 1 ) T h e tr a n sa c tio n o f a n y b u s in e s s w ith in th e s ta te ;

                                                                                                 * * *

                              ( 6 ) A n y b a s i s n o t i n c o n s i s te n t w i t h t h e c o n s t i t u t i o n o f t h i s s t a t e o r o f t h e U n i t e d
                              S t a te s ;

               I n a d d i t i o n , T . C . A . § 2 0 - 2 - 2 2 3 ( S u p p . 1 9 9 8 ) p r o v i d e s in p e r t i n e n t p a r t :

                              20-2-223. Personal jurisdiction based on conduct. - ( a ) A c o u r t
                              m a y e x e r c i s e p e r s o n a l j u r i s d ic t i o n o v e r a p e r s o n , w h o a c ts d ir e c tl y o r i n d i r e c tl y ,
                              a s t o a c l a i m f o r r e l ie f a r i s in g f r o m t h e p e r s o n ’ s :
                              ( 1 ) T r a n s a c t i n g a n y b u s in e s s in t h i s s t a t e ;
                              ( 2 ) C o n t ra c tin g t o s u p p ly s e rv ic e s o r th in g s in th is sta te ;

                                                                *                                *                                *

                               ( b ) W h e n j u r i s d ic t i o n o v e r a p e r s o n is b a s e d s o le l y u p o n t h i s s e c t i o n , o n l y a c l a i m
                               f o r r e l i e f a r is i n g f r o m a c t s e n u m e r a t e d i n t h i s s e c t i o n m a y b e a s s e r t e d a g a i n s t t h a t
                               p e rs o n .

                                                                                                     4
                 T h e T e n n e s s e e l o n g - a r m s ta t u t e c o n f e r s ju r i s d ic t i o n t o t h e f u l l e x t e n t a l lo w a b l e u n d e r t h e D u e P r o c e s s C l a u s e

o f t h e F o u r t e e n t h A m e n d m e n t t o t h e C o n s t i t u t i o n o f t h e U n i t e d S t a t e s . Southland Express, Inc. v. Scrap

Metal Buyers of Tampa, Inc., 8 9 5 S . W . 2 d 3 3 5 , 3 3 8 ( T e n n . A p p . 1 9 9 4 ) .

                 I n d e t e r m i n i n g w h e t h e r a c o u r t m a y a s s e r t in personam j u r i s d i c t i o n o v e r a n o n r e s i d e n t d e f e n d a n t , d u e

p r o c e s s re q u ir e s t h a t t h e d e f e n d a n t h a v e c e r t a i n " m i n i m u m c o n t a c ts " w i t h t h e f o r u m s ta t e " s u c h t h a t t h e m a i n t e n a n c e

o f t h e s u i t d o e s n o t o f f e n d t r a d i t i o n a l n o t i o n s o f f a i r p l a y a n d s u b s t a n t i a l j u s t i c e . " International Shoe Co. v.

Washington, 3 2 6 U . S . 3 1 0 , 3 1 6 , 6 6 S . C t . 1 5 4 , 1 5 8 , 9 0 L . E d . 9 5 ( 1 9 4 5 ) ; J.I. Case Corp. v. Williams, 8 3 2

S .W .2 d 5 3 0 , 5 3 1 - 3 2 ( T e n n . 1 9 9 2 ) . T h e D u e P r o c e s s C l a u s e r e q u i re s " fa i r w a r n in g t h a t a p a r ti c u l a r a c t i v i t y m a y s u b j e c t

[ t h e d e f e n d a n t ] t o t h e j u r i s d i c t i o n o f a f o r e i g n s o v e r e i g n . " Burger King Corp. v. Rudzewicz, 4 7 1 U . S . 4 6 2 , 4 7 2 ,

1 0 5 S . C t . 2 1 7 4 , 2 1 8 2 , 8 5 L . E d . 2 d 5 2 8 ( 1 9 8 5 ) ( q u o t i n g Shaffer v. Heitner, 4 3 3 U . S . 1 8 6 , 2 1 8 , 9 7 S . C t . 2 5 6 9 , 2 5 8 7 ,

5 3 L . E d . 2 d 6 8 3 ( 1 9 7 7 ) ( S t e v e n s, J . c o n c u rr in g ) ) .

                 C o u r t s r e c o g n i z e t w o t y p e s o f i n p e r s o n a m j u r i s d i c t i o n : g e n e r a l j u r i s d i c t i o n a n d s p e c i f i c j u r i s d i c t i o n . Third

Nat'l Bank in Nashville v. Wedge Group Inc., 8 8 2 F . 2 d 1 0 8 7 , 1 0 8 9 ( 6 t h C i r . 1 9 8 9 ) ; Shoney's Inc. v.

Chic Can Enter., 9 2 2 S . W . 2 d 5 3 0 , 5 3 7 ( T e n n . A p p . 1 9 9 5 ) . W h e n a s t a t e e x e r c i s e s p e r s o n a l j u r i s d i c t i o n o v e r a

d e f e n d a n t i n a s u i t n o t a r i s in g o u t o f o r r e l a t e d t o t h e d e f e n d a n t 's c o n t a c t s w i th t h e f o r u m , t h e s t a t e i s e x e r c i s i n g " g e n e r a l

j u r i s d i c t i o n " o v e r t h e d e f e n d a n t . Helicopteros Nacionales De Columbia, S.A. v. Hall, 4 6 6 U . S . 4 0 8 , 4 1 4

n . 9 , 1 0 4 S . C t . 1 8 6 8 , 1 8 7 2 n . 9 , 8 0 L . E d . 2 d 4 0 4 ( 1 9 8 4 ) . W h e n a s t a t e e x e r c is e s p e r s o n a l ju r is d i c t i o n o v e r a d e fe n d a n t

i n a s u i t a r i s in g o u t o f o r r e l a t e d t o t h e d e f e n d a n t's c o n t a c ts w i th t h e f o r u m , t h e s t a t e i s e x e r c i s in g " s p e c i f i c j u r i s d i c t i o n "

o v e r t h e d e f e n d a n t . Id. a t 4 1 4 n . 8 , 1 0 4 S . C t . a t 1 8 7 2 n . 8 .

                 F o r a c o u r t t o e x e r c i s e g e n e r a l in personam j u r i s d i c t i o n o v e r a n o n r e s i d e n t d e f e n d a n t w i t h o u t v i o l a t i n g t h e

r e q u ir e m e n ts o f th e D u e P r o c e s s C l a u s e , th e p ro o f m u s t s h o w th a t th e d e f e n d a n t m a in t a in s " c o n t in u o u s a n d s y s te m a tic "

c o n t a c t s w i t h t h e f o r e i g n s t a t e . International Shoe Co., 3 2 6 U . S . a t 3 1 7 , 6 6 S . C t . a t 1 5 9 ; J.I. Case Corp.,

8 3 2 S . W .2 d a t 5 3 2 . " W h i le it h a s b e e n h e ld i n c a s e s . . . th a t c o n tin u o u s a c tiv ity o f s o m e s o r t w ith in a s ta te is n o t e n o u g h

t o s u p p o r t t h e d e m a n d t h a t t h e c o r p o r a t i o n b e a m e n a b l e to s u i t s u n r e la t e d t o t h a t a c t iv i t y , t h e r e h a v e b e e n i n s t a n c e s i n

w h i c h t h e c o n ti n u o u s c o r p o r a t e o p e r a t i o n s w i th i n a s t a t e w e r e t h o u g h t t o b e s o s u b s t a n t ia l a n d o f s u c h a n a t u r e a s t o

j u s t i f y s u i t a g a i n s t i t o n c a u s e s o f a c t i o n a r i s i n g f r o m d e a l i n g s e n t i r e l y d i s t i n c t f r o m t h o s e a c t i v i t i e s . " International

Shoe Co., 3 2 6 U . S . a t 3 1 8 , 6 6 S . C t . a t 1 5 9 . T h e r e i s n o b a s i s f o r g e n e r a l p e r s o n a l j u r i s d i c t i o n i n t h i s c a s e .

                  H o w e v e r , i n t h e a b s e n c e o f g e n e r a l j u r i s d ic t i o n r e s u l t i n g f r o m c o n t i n u o u s a n d s y s t e m a t i c c o n ta c ts w i th t h e

f o r u m s t a t e , s p e c i f i c in personam j u r i s d i c t i o n s t i l l m a y b e f o u n d w h e n a c o m m e r c i a l a c t o r p u r p o s e l y d i r e c t s h i s

a c t i v i t i e s t o w a r d c i t i z e n s o f t h e f o r u m s t a t e a n d l it ig a t io n r e s u l ts f r o m i n j u r i e s a r i s in g o u t o f o r r e l a t i n g t o t h o s e a c t i v i t i e s .

                                                                                                           5
Burger King Corp., 4 7 1 U . S . a t 4 7 2 , 1 0 5 S . C t . a t 2 1 8 2 ; J.I. Case Corp., 8 3 2 S . W . 2 d a t 5 3 2 . I n s u c h a c a s e ,

" t h e d e f e n d a n t 's c o n d u c t a n d c o n n e c t i o n w i t h t h e f o r u m S t a t e a r e s u c h t h a t h e s h o u l d r e a s o n a b l y a n t i c i p a t e b e i n g h a l e d

i n t o c o u r t t h e r e . " World-Wide Volkswagen Corp., 4 4 4 U . S . a t 2 9 7 , 1 0 0 S . C t . a t 5 6 7 ; Shoney's, Inc., 9 2 2

S .W .2 d a t 5 3 6 .

                W h e n a c o n t r o v e r s y i s r e l a t e d t o o r " a r i s e s o u t o f " a d e f e n d a n t 's c o n t a c t s w i t h t h e f o r u m , t h e U n i t e d S t a t e s

S u p r e m e C o u r t h a s s a i d t h a t a " r e l a t i o n s h ip a m o n g t h e d e f e n d a n t, t h e f o r u m , a n d t h e l i t i g a t i o n " i s th e e s s e n t i a l

f o u n d a t i o n o f in personam j u r i s d i c t i o n . Helicopteros Nacionales, 4 6 6 U . S . a t 4 1 4 , 1 0 4 S . C t . a t 1 8 7 2 ( q u o t i n g

Shaffer v. Heitner, 4 3 3 U . S . 1 8 6 , 2 0 4 , 9 7 S . C t . 2 5 6 9 , 2 5 7 9 , 5 3 L . E d . 2 d 6 8 3 ( 1 9 7 7 ) ) .

                I n Masada Inv. Corp. v. Allen, 6 9 7 S . W . 2 d 3 3 2 ( T e n n . 1 9 8 5 ) , t h e T e n n e s s e e S u p r e m e C o u r t f a c e d t h e

q u e s t i o n o f ju r is d i c t i o n o f a m a l p r a c ti c e s u i t a g a i n s t a T e x a s l a w y e r w h o h a d p r e p a r e d a n i n a c c u r a t e d e e d f o r th e t r a n s f e r

o f r e a l e s t a t e i n M e m p h i s , T e n n e s s e e a t t h e r e q u e s t o f a T e n n e s s e e r e s i d e n t . Id. a t 3 3 3 . T h e C o u r t s t a t e d :

                                A t h r e e - p r o n g e d t e s t h a d b e e n d e v e l o p e d t o d e t e r m i n e t h e o u t e r li m i t s o f p e r s o n a l
                                j u r i s d i c t i o n b a s e d o n a s i n g l e a c t : t h e d e f e n d a n t m u s t p u r p o s e f u ll y a v a i l h i m s e lf
                                o f t h e p r i v i l e g e o f a c ti n g i n o r c a u s i n g a c o n s e q u e n c e in t h e f o r u m S t a te ; t h e
                                c a u s e o f a c t i o n m u s t a r is e f r o m t h e d e f e n d a n t 's a c t i v i t i e s t h e r e ; a n d d e f e n d a n t's
                                a c ts o r c o n s e q u e n c e s m u s t h a v e a s u b sta n tia l c o n n e c tio n w ith th e fo r u m to m a k e
                                t h e e x e r c i s e o f j u r i s d i c t i o n r e a s o n a b l e . Southern Machine Co. v.
                                Mohasco Industries, Inc., 4 0 1 F . 2 d 3 7 4 , 3 8 1 ( 6 t h C i r . 1 9 6 8 ) . S u b s e c t i o n
                                ( 6 ) [ o f t h e T e n n e s s e e l o n g - a r m s ta t u t e ] c h a n g e d t h e l o n g - a r m s ta t u t e f r o m a
                                " s i n g l e a c t " s ta t u t e t o a " m i n i m u m c o n t a c ts " s ta t u t e w h i c h e x p a n d e d t h e
                                j u r i s d i c t i o n o f T e n n e s s e e c o u r t s t o t h e f u l l l i m i t a l l o w e d b y d u e p r o c e s s . Shelby
                                Mutual Ins. Co. v. Moore, 6 4 5 S . W . 2 d 2 4 2 , 2 4 5 ( T e n n . A p p . 1 9 8 1 ) . T h a t
                                d e c i s i o n , q u o t i n g e x t e n s i v e l y f r o m Gullett v. Qantas Airways Ltd., 4 1 7
                                F . S u p p . 4 9 0 ( M . D . T e n n . 1 9 7 5 ) , n o t e d t h a t t h e Mohasco t e s t w a s n o w t o o
                                r e s t r i c t i v e . T h e Moore c o u r t n o t e d t h a t t h r e e p r i m a r y f a c t o r s a r e t o b e
                                 c o n s i d e r e d i n d e t e r m i n i n g w h e t h e r th e r e q u i s it e m i n i m u m c o n t a c ts w e r e p r e s e n t:
                                 t h e q u a n ti t y o f t h e c o n ta c ts , t h e ir n a tu r e a n d q u a l i t y , a n d th e s o u r c e a n d
                                 c o n n e c ti o n o f t h e c a u s e o f a c t i o n w i th t h o s e c o n t a c t s . T w o l e s s e r f a c t o r s t o b e
                                 c o n s i d e r e d a r e t h e i n t e r e s t o f t h e f o r u m S t a t e a n d c o n v e n i e n c e . T h e Moore
                                 c o u r t c o n c lu d e d :

                                                                  T h e p h r a s e " f a ir p la y a n d s u b s t a n t i a l j u s ti c e " m u s t b e
                                                v i e w e d i n t e r m s o f w h e t h e r it i s f a i r a n d s u b s t a n t ia l l y j u s t t o
                                                b o t h p a r t i e s t o h a v e t h e c a s e t r ie d i n t h e s t a t e w h e r e t h e
                                                p l a i n t if f h a s c h o s e n t o b r i n g t h e a c t i o n . I n e a c h c a s e , t h e
                                                q u a l it y a n d n a tu r e o f t h o s e a c ti v i t i e s i n r e la ti o n t o t h e f a ir a n d
                                                o r d e r l y a d m i n i s t r a ti o n o f th e l a w m u s t b e w e i g h e d . A s s t a t e d
                                                a b o v e i n Qantas, t h i s m u s t i n v o l v e s o m e s u b j e c t i v e v a l u e
                                                ju d g m e n t b y th e c o u rts .

                                6 4 5 S .W .2 d a t 2 4 6 .

Masada Inv. Corp. , 6 9 7 S . W . 2 d a t 3 3 4 - 3 5 . T h e Masada C o u r t c o n c l u d e d t h a t " [ b ] y w i l l f u l l y a n d k n o w i n g l y

c h o o s in g to p r e p a re le g a l d o c u m e n ts w h i c h w o u ld b e file d in T e n n e s se e a n d b e o f g r e a t c o n s e q u e n c e h e r e , A lle n

p u r p o s e l y a v a i l e d h i m s e l f o f t h e p r i v i l e g e o f d o i n g b u s i n e s s w i t h i n t h i s s t a t e . " Id. a t 3 3 5 . T h e C o u r t s t a t e d t h a t

                                                                                                    6
" T e n n e s s e e h a s s u b s t a n t i a l i n t e r e s t i n t h e o u t c o m e o f t h i s l i t i g a t i o n a n d i s t h e m o s t c o n v e n ie n t f o r u m s in c e th i s a c t i o n

i n v o l v e s a T e n n e s s e e d e f e n d a n t , W T F F , T e n n e s s e e p r o p e r t y , a n d i s c o n t r o l l e d b y T e n n e s s e e l a w . " Id.

                I n Burger King Corp., t h e U n i t e d S t a t e s S u p r e m e C o u r t s t a t e d :

                                                    W h e r e a f o r u m s e e k s to a s s e r t s p e c i f ic j u r i s d i c t i o n o v e r a n o u t - o f - s t a t e
                                d e f e n d a n t w h o h a s n o t c o n s e n t e d t o s u it t h e r e , t h i s " f a i r w a r n i n g " r e q u i r e m e n t i s
                                s a t i s f i e d i f th e d e f e n d a n t h a s " p u r p o s e f u l l y d i r e c te d " h i s a c ti v i t i e s a t r e s i d e n t s o f
                                t h e f o r u m , Keeton v. Hustler Magazine, Inc., 4 6 5 U . S . 7 7 0 , 7 7 4 , 1 0 4 S .
                                C t. 1 4 7 3 , 1 4 7 8 , 7 9 L . E d . 2 d 7 9 0 ( 1 9 8 4 ) , a n d th e litig a t io n r e s u lts fr o m a lle g e d
                                i n j u r i e s t h a t " a r i s e o u t o f o r r e l a t e t o " t h o s e a c t i v i t i e s , Helicopteros
                                Nacionales de Colombia, S.A. v. Hall, 4 6 6 U . S . 4 0 8 , 4 1 4 , 1 0 4 S . C t .
                                1 8 6 8 , 1 8 7 2 , 8 0 L . E d . 2 d 4 0 4 (1 9 8 4 ). . . . A n d w ith re sp e c t to in te r s ta te
                                c o n t ra c t u a l o b l i g a ti o n s , w e h a v e e m p h a s i z e d t h a t p a r ti e s w h o " r e a c h o u t b e y o n d
                                 o n e s ta t e a n d c r e a te c o n ti n u i n g r e l a t i o n s h ip s a n d o b l i g a t i o n s w i th c i t i z e n s o f
                                 a n o t h e r s t a t e " a r e s u b j e c t to r e g u l a t i o n a n d s a n c t i o n s i n t h e o t h e r S t a t e f o r t h e
                                 c o n s e q u e n c e s o f t h e i r a c t i v i t i e s . Travelers Health Assn. v. Virginia, 3 3 9
                                 U . S . 6 4 3 , 6 4 7 , 7 0 S . C t . 9 2 7 , 9 2 9 , 9 4 L . E d . 1 1 5 4 ( 1 9 5 0 ) . S e e a l s o McGee v.
                                 International Life Insurance Co., 3 5 5 U . S . 2 2 0 , 2 2 2 - 2 2 3 , 7 8 S . C t . 1 9 9 ,
                                 2 0 0 -2 0 1 , 2 L . E d .2 d 2 2 3 (1 9 5 7 ).

                                                                  *                                *                                 *

                                I n d e f in i n g w h e n i t i s th a t a p o t e n ti a l d e f e n d a n t s h o u l d " r e a s o n a b l y a n t ic i p a t e "
                                o u t - o f - s t a t e l it ig a t i o n , th e C o u r t f r e q u e n tl y h a s d r a w n f r o m t h e r e a s o n i n g o f
                                Hanson v. Denckla, 3 5 7 U . S . 2 3 5 , 2 5 3 , 7 8 S . C t . 1 2 2 8 , 1 2 3 9 - 1 2 4 0 , 2 L .
                                E d .2 d 1 2 8 3 (1 9 5 8 ):

                                                 " T h e u n i la t e r a l a c t iv i t y o f t h o s e w h o c l a im s o m e r e l a t i o n s h ip
                                                 w i t h a n o n r e s i d e n t d e f e n d a n t c a n n o t s a t is f y t h e r e q u ir e m e n t o f
                                                 c o n t a c t w i t h t h e f o r u m S t a te . T h e a p p li c a ti o n o f t h a t r u l e w i l l
                                                 v a r y w i t h t h e q u a li t y a n d n a tu r e o f t h e d e f e n d a n t's a c ti v i t y , b u t
                                                 it is e ss e n tia l in e a c h c a s e th a t th e r e b e s o m e a c t b y w h ic h th e
                                                 d e f e n d a n t p u r p o s e f u l l y a v a il s it s e l f o f t h e p r i v i l e g e o f
                                                  c o n d u c ti n g a c ti v i t i e s w i t h i n t h e f o r u m S t a t e , t h u s in v o k i n g t h e
                                                  b e n e f it s a n d p r o t e c t i o n s o f it s la w s ."

                                                     T h i s " p u rp o s e f u l a v a i lm e n t " re q u i re m e n t e n s u r e s th a t a d e fe n d a n t w ill
                                n o t b e h a l e d i n t o a j u r i s d i c t io n s o l e l y a s a r e s u l t o f " r a n d o m , " " f o r tu i t o u s , " o r
                                " a t t e n u a t e d " c o n t a c t s , Keeton v. Hustler Magazine, Inc., 4 6 5 U . S . a t 7 7 4 ,
                                1 0 4 S . C t . a t 1 4 7 8 ; World-Wide Volkswagen Corp. v. Woodson,
                                supra, 4 4 4 U . S . a t 2 9 9 , 1 0 0 S . C t . a t 5 6 8 , o r o f t h e " u n i l a t e r a l a c t i v i t y o f a n o t h e r
                                p a r t y o r a t h i r d p e r s o n , " Helicopteros Nacionales de Colombia, S.A.
                                v. Hall, supra, 4 6 6 U . S . a t 4 1 7 , 1 0 4 S . C t . a t 1 8 7 3 . J u r i s d i c t i o n i s p r o p e r ,
                                h o w e v e r , w h e r e t h e c o n ta c ts p r o x i m a t e l y r e s u l t f r o m a c ti o n s b y th e d e f e n d a n t
                                 himself t h a t c r e a t e a " s u b s t a n t i a l c o n n e c t i o n " w i t h t h e f o r u m S t a t e . McGee
                                 v. International Life Insurance Co., supra, 3 5 5 U . S . a t 2 2 3 , 7 8 S . C t .
                                 a t 2 0 1 ; s e e a l s o Kulko v. California Superior Court, supra, 4 3 6 U . S .
                                 a t 9 4 , n . 7 , 9 8 S . C t . a t 1 6 9 8 , n . 7 . T h u s w h e r e th e d e f e n d a n t " d e l i b e r a te ly " h a s
                                 e n g a g e d i n s i g n i f i c a n t a c t i v i t i e s w i t h i n a S t a t e , Keeton v. Hustler
                                 Magazine, Inc., supra, 4 6 5 U . S . a t 7 8 1 , 1 0 4 S . C t . a t 1 4 8 1 , o r h a s c r e a t e d
                                 " c o n t i n u i n g o b l i g a t i o n s " b e t w e e n h i m s e l f a n d r e s i d e n t s o f t h e f o r u m , Travelers
                                Health Assn. v. Virginia, 3 3 9 U . S . a t 6 4 8 , 7 0 S . C t . a t 9 2 9 , h e m a n i f e s t l y
                                 h a s a v a il e d h i m s e l f o f t h e p r i v i l e g e o f c o n d u c ti n g b u s in e s s th e r e , a n d b e c a u s e h i s
                                 a c t i v i t i e s a r e s h i e l d e d b y " t h e b e n e f i ts a n d p r o t e c t i o n s " o f t h e f o r u m 's l a w s i t i s
                                 p r e s u m p t iv e l y n o t u n r e a s o n a b le to r e q u ir e h im to s u b m it to th e b u r d e n s o f
                                 litig a tio n in th a t fo ru m a s w e ll.

                                                                                                       7
                                                                   *                                 *                                 *

Burger King Corp., 4 7 1 U . S . a t 4 7 2 - 7 6 , 1 0 5 S . C t . a t 2 1 8 2 - 8 4 .

                I n t h e p r e s e n t c a s e , t h e t r i a l c o u r t f o u n d t h a t t h e i n i t i a l i n t e r a c t i o n b e tw e e n th e p a r t i e s t o t h i s s u i t i n v o l v i n g t h e

l a n d a s s e s s m e n t r e p o r t a n d s u b s e q u e n t c l e a n u p d id n o t m e e t t h e r e q u i r e m e n t s f o r m i n i m u m c o n t a c ts to a l l o w t h e c o u r t s

o f T e n n e s s e e ju r i s d ic t i o n . H o w e v e r , t h e t r ia l c o u r t a l s o f o u n d t h a t s u b s e q u e n t t o t h e i n i t i a l i n t e r a c t i o n , th e p a r t i e s

e n t e r e d i n t o a c o n t r a c t w h e r e b y S c h e r e r k n e w A g S e r v ic e s w a s lo c a t e d i n T e n n e s s e e , a n d k n e w t h e p r o m i s s o r y n o t e

w o u l d b e p r e p a r e d i n T e n n e s s e e . T h e s e f a c t o r s , t h e t r ia l c o u r t f o u n d , w e r e s u f f ic i e n t t o s a t i s f y t h e m i n i m u m c o n t a c ts

r e q u ir e m e n t , a n d g i v e T e n n e s s e e c o u r ts ju r is d ic t i o n o v e r S c h e r e r .

                T e c h n i c a ll y , w e a g r e e w i t h t h e t r i a l c o u r t ’ s f i n d i n g a s i t p e r t a i n s to S c h e r e r i n r e g a r d t o i n i t i a l i n t e r a c ti o n s o f

t h e p a r t i e s . T h e p r o o f i n t h i s c a s e i s th a t A g S e r v i c e s a n d M i c h i g a n A p p l e , a c ti n g t h r o u g h S c h e r e r , m a d e a n a r r a n g e m e n t

w h e r e b y A g S e r v i c e s w o u l d p e r f o r m a s e r v i c e in c o n n e c t i o n w i t h t h e e n v ir o n m e n ta l r e q u ir e m e n ts n e c e s s a r y f o r a l o a n

t h a t S c h e r e r ’ s c o r p o r a t i o n w a s t r y i n g t o o b t a i n . T h e w o r k c o n t r a c te d f o r r e q u i r e d v i s it s to M i c h i g a n b u t m o r e

i m p o r t a n t l y A g S e r v i c e s d i d t h e f i e l d w o r k i n M i c h i g a n t h e n r e t u r n e d t o i t s o f f ic e i n M e m p h i s t o p e r f o r m n e c e s s a r y

a n a l y s e s , c o m p i la t io n s , i n te r p r e t a ti o n s , a n d o t h e r w o r k i n o r d e r t o p r e p a r e a n d s u b m i t t h e n e c e s s a r y r e p o r t s . I t is

u n d i s p u t e d t h a t t h i s w o r k w a s a ll d o n e i n t h e M e m p h i s o f f i c e . T h i s c a s e i s s o m e w h a t a n a lo g o u s to t h e f a c tu a l s it u a t i o n

i n Bond v. Montego Bay Dev. Corp., 4 0 5 F . S u p p . 2 5 6 ( W . D . T e n n . 1 9 7 5 ) . I n t h a t c a s e , B o n d , a n a r c h i t e c t ,

c o n t r a c t e d t o p e r f o r m a r c h i t e c tu r a l s e r v i c e s f o r t h e d e f e n d a n t. T h e c o n t r a c t w a s s ig n e d b y t h e d e f e n d a n ts in M a r y l a n d ,

a n d t h e a r c h i t e c t w e n t t o M a r y l a n d f o r th e o n - s i t e w o r k . H o w e v e r , t h e a r c h i t e c t r e tu r n e d t o h i s M e m p h i s o f f i c e t o

p r e p a r e t h e p l a n s a n d s p e c i f ic a t i o n s f o r t h i s o u t - o f - s t a t e p r o j e c t. A l t h o u g h n o r e p r e s e n t a t i v e o f t h e d e f e n d a n t s e v e r c a m e

t o t h e S t a t e o f T e n n e s s e e , t h e C o u r t n o t e d t h a t i t w a s f o r e s e e a b l e b y t h e p a r ti e s th a t a t l e a s t a s u b s t a n t ia l p a r t o f t h e w o r k

w o u ld b e p e rf o r m e d in th e M e m p h is o ff ic e . T h e C o u r t s a id :

                                 T h a t n o r e p r e s e n t a t i v e o f t h e d e f e n d a n ts w a s e v e r p h y s ic a ll y i n T e n n e s s e e is n o t
                                 a c o n t r o l l i n g c o n s i d e r a t i o n . Mohasco, supra a t 3 8 2 . A s s t a t e d i n
                                 Mohasco, supra a t 3 8 2 - 3 8 3 : ‘ . . . b u s i n e s s i s t r a n s a c t e d i n a s t a t e w h e n
                                 o b l ig a t i o n s c r e a te d b y t h e d e f e n d a n t o r b u s i n e s s o p e r a ti o n s s e t i n m o t i o n b y t h e
                                 d e f e n d a n t h a v e a r e a li s ti c i m p a c t o n t h e c o m m e r c e o f t h e s t a t e ; a n d t h e d e f e n d a n t
                                 h a s p u r p o s e f u l l y a v a il e d h im s e l f o f t h e o p p o r t u n i t y o f a c ti n g t h e r e if h e s h o u l d
                                  h a v e r e as o n a b l y fo r e se e n th a t th e tr a n sa c tio n w o u l d h a v e c o n s e q u e n c e s in th a t
                                  s ta t e . ’ H e r e , a b u s i n e s s tr a n s a c t i o n s e t i n m o t i o n b y d e f e n d a n t s h a d a r e a li s ti c ,
                                  f o r e s e e a b le a n d c o n sid e ra b le im p a c t o n c o m m e r c e i n T e n n e s s e e . T h u s , t h e f i r s t
                                  c r i t e r i o n o f Mohasco i s m e t , t h a t d e f e n d a n t s h a v e p u r p o s e f u l l y a v a i l e d
                                  t h e m s e lv e s o f t h e p r i v i l e g e o f a c ti n g o r c a u s i n g a c o n s e q u e n c e in t h e f o r u m s ta t e .

4 0 5 F . S u p p . a t 2 5 9 -2 6 0 .

                 A d m i t t e d l y , i n t h e i n s ta n t c a s e th e c o n t r a c t w a s b e tw e e n t h e f o r e ig n c o r p o r a t i o n a n d A g S e r v i c e s , b u t t h e

d e f e n d a n t, S c h e r e r , w a s p a r t a n d p a r c e l o f th e n e g o t i a t i o n s a n d a c t i v i t i e s le a d i n g t o t h e c o n t r a c t . S c h e r e r a c te d a s a g e n t

                                                                                                         8
f o r t h e c o r p o r a ti o n a n d h i s a c t i o n c r e a t e d a c o n s e q u e n c e i n T e n n e s s e e . A l t h o u g h S c h e r e r c o u l d n o t b e s u b j e c te d t o t h i s

j u r i s d i c t i o n f o r h i s a c t i v i t y i n n e g o t i a t i n g t h e c o n t r a c t a s a g e n t, t h e c o r p o r a t io n w o u l d m e e t th e m i n i m u m c o n t a c t s te s t .

                  H o w e v e r , t h e r e is a m o r e c o m p e l l i n g r e a s o n f o r e s ta b l i s h i n g p e r s o n a l ju r is d i c t i o n o v e r S c h e r e r . M i c h i g a n

A p p l e ’ s n o t e p a id f o r t h e s e r v i c e s u n d e r t h e c o n t r a c t a n d w a s g u a r a n t e e d b y t h e d e f e n d a n t S c h e r e r . T h e n o t e s p e c i f ic a l l y

p r o v i d e d f o r p a y m e n t i n t h e S t a te o f T e n n e s s e e . T h u s , S c h e r e r g u a r a n t e e d t h e p a y m e n t o f s u m s to b e p a id i n T e n n e s s e e

b y v i r t u e o f t h e n o te . T h i s c o m e s w i t h i n t h e p r o v i s io n s o f T .C .A . § 2 0 - 2 -2 2 3 ( a )( 2 ) a s a c o n t r a c t t o s u p p l y “ t h i n g s ” i n

th is s ta te .

                  T h e c l a i m f o r r e l i e f b y A g S e r v i c e s a r i s e s f r o m t h e d e f a u l t i n t h e p a y m e n t o f t h i s n o t e . See T . C . A . § 2 0 - 2 -

2 2 3 ( b ) . T h e n o te w a s p r e p a r e d in T e n n e s s e e , is g o v e r n e d b y T e n n e s s e e la w b y t h e t e r m s th e r e o f , a n d p a y m e n t s w e r e

t o b e m a d e i n T e n n e s s e e . W e b e l i e v e t h i s s a t is f i e s t h e r e q u i r e m e n t o f T . C . A . § 2 0 - 2 - 2 2 3 .

                  T h e j u d g m e n t o f t h e t r i a l c o u r t i s a f f i r m e d . C o s t s o f t h e a p p e a l a r e a s s e s s e d a g a i n s t t h e a p p e l la n t . T h e c a s e

i s r e m a n d e d t o t h e t r ia l c o u r t f o r s u c h f u r t h e r p r o c e e d i n g s a s m a y b e n e c e s s a r y .

                                                                                                                  _________________________________
                                                                                                                  W. FRANK CRAWFORD,
                                                                                                                  PRESIDING JUDGE, W.S.

CONCUR:

____________________________________
ALAN E. HIGHERS, JUDGE

____________________________________
HOLLY KIRBY LILLARD, JUDGE

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