Court Opinion

ID: 1045353
Source: CourtListenerOpinion
Date Created: 2013-10-08 02:25:42.110012+00
Date Added: 2024-06-11T12:50:57.443694
License: Public Domain

IN THE COURT OF APPEALS OF TENNESSEE
                            AT NASHVILLE
                                January 24, 2013 Session

WILLIAM H. RICHARDSON ET AL. v. BATES SHOW SALES STAFF, INC.
                D/B/A BATES RV EXCHANGE

                  Appeal from the Circuit Court for Davidson County
                   No. 11C3650     Hamilton V. Gayden, Jr., Judge

                 No. M2012-01598-COA-R3-CV - Filed March 6, 2013

Plaintiffs appeal the dismissal of their action for breach of contract, breach of express
warranty, breach of implied warranty, violation of the Tennessee Consumer Protection Act,
and fraudulent misrepresentation arising out of the purchase of a recreational vehicle from
Defendant, a business located and incorporated in the State of Florida. The trial court
dismissed the action on the finding that the court lacked personal jurisdiction over Defendant
because the corporation had not purposely availed itself of doing business in Tennessee and
did not have sufficient contacts with Tennessee. The trial court further found that the choice
of venue clause in the purchase contract between the parties was enforceable and, thus, the
proper venue for the action was Florida. Plaintiffs appealed arguing that the court may
exercise personal jurisdiction over Defendant. We affirm the finding that the trial court lacks
personal jurisdiction over Defendant as Plaintiffs did not establish the prima facie case of
jurisdiction.

  Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Affirmed

F RANK G. C LEMENT, J R., J., delivered the opinion of the Court, in which P ATRICIA J.
C OTTRELL, P.J., M.S., and A NDY D. B ENNETT, J., joined.

Philip D. Irwin and Stephen M. Montgomery, Nashville, Tennessee, for the appellants,
William H. Richardson and Donna L. Richardson.

William A. Blue, Jr., Nashville, Tennessee, for the appellee, Bates Show Sales Staff, Inc.
d/b/a Bates RV Exchange
                                          OPINION

       This action arises from the purchase of a recreational vehicle (“RV”) by William and
Donna Richardson, residents of Nashville, Tennessee, from Bates Show Sales Staff, Inc.
d/b/a Bates RV Exchange, a Florida corporation located in Hillsborough County, Florida.

        In June 2011, Mr. and Mrs. Richardson (“Plaintiffs”) began searching for a 2011
Airstream Interstate Travel Coach, which they wished to purchase. Plaintiffs first visited the
Airstream website, which listed, inter alia, Bates Show Sales Staff, Inc. d/b/a Bates RV
Exchange (“Defendant”) as a retailer of the particular RV model they wished to acquire.
Plaintiffs then visited Defendant’s website; thereafter, Plaintiffs placed a telephone call to
Defendant’s Hillsborough, County, Florida office and spoke with Michael Dautel, a
salesperson employed by Defendant. Plaintiffs assert that Mr. Dautel represented that
Defendant had a “new” model of the 2011 Airstream RV for sale. Following the phone call,
and in response to Plaintiffs’ inquiry, Mr. Dautel emailed to Plaintiffs a specifications list of
the RV, a proposed purchase agreement, and a credit card authorization form for their review
and execution should they wish to purchase the RV. Mrs. Richardson signed the purchase
agreement on behalf of Plaintiffs and returned the executed contract and credit card
authorization to Defendant at its Florida office. Pursuant to their authorization, Defendant
charged $5,000 to Plaintiffs’ credit card as the deposit. Plaintiff subsequently wired the
balance of the purchase price, $103,638.34, to Defendant. Thereafter, an independent
transporter drove the RV from Defendant’s Florida office and delivered the RV to Plaintiffs’
Nashville residence on June 11, 2011. Upon delivery, Plaintiffs signed a second copy of the
purchase agreement.

       Following the delivery of the RV, Plaintiffs noticed numerous problems with the RV,
including items missing that had been listed on the specifications list and damage to the
vehicle. Plaintiffs then contacted Defendant at which time they learned the RV was not
“new,” but had been used as a demonstration model.

       On September 14, 2011, Plaintiffs commenced this action in the Circuit Court for
Davidson County asserting claims for breach of contract, breach of express warranty, breach
of implied warranty, violation of the Tennessee Consumer Protection Act, and fraudulent
misrepresentation. Defendant filed an answer followed by a Motion to Dismiss, in which it
moved for dismissal on the grounds that the trial court lacked personal jurisdiction or in the
alternative that the court was the improper venue based upon a forum selection clause in the
purchase contract designating Florida as the appropriate venue.

        Following a hearing, the trial court issued an order dismissing Plaintiffs’ claim for
lack of personal jurisdiction upon the finding that Defendant had not purposely availed itself

                                               -2-
of the privilege of doing business in Tennessee and that there were insufficient contacts
between Defendant and the State of Tennessee. The court further found that the choice of
venue clause in the contract was fully enforceable and therefore the appropriate venue for
the cause of action was Hillsborough County, Florida.1 Plaintiffs filed a motion to alter or
amend, which Defendant did not oppose, in order to correct a finding by the court on an issue
that was not raised by the parties. The trial court granted the motion to alter or amend and an
Amended Order was entered on June 19, 2012. Plaintiffs filed a timely appeal.

                                              A NALYSIS

        On appeal, Plaintiffs contend that the trial court erred in finding it lacked personal
jurisdiction over Defendant. Plaintiffs further contend that the trial court erred in finding that
the forum selection clause in the contract was enforceable. Lastly, Plaintiffs contend that
their claim under the Tennessee Consumer Protection Act should be brought in Tennessee
pursuant to Tennessee Code Annotated § 47-18-113(b).

         We shall first address the issue of personal jurisdiction as it would be dispositive of
any remaining issues. The burden is on the plaintiff to demonstrate that the trial court may
properly exercise personal jurisdiction over the defendant. Gordon v. Greenview Hosp., Inc.,
300 S.W.3d 635, 644 (citing Chenault v. Walker, 36 S.W.3d 45, 56 (Tenn. 2001)); Davis
Kidd Booksellers, Inc. v. Day–Impex, Ltd., 832 S.W.2d 572, 577 (Tenn. Ct. App.1992)). This
burden, however, is ordinarily not a heavy one because the plaintiff need only demonstrate
personal jurisdiction by a preponderance of the evidence. Id. If a defendant raises the defense
of lack of personal jurisdiction by a motion to dismiss, the defendant, may, but is not
required, to support the motion with affidavits or other evidentiary materials. Id. (citing
Humphreys v. Selvey 154 S.W.3d 544, 550 n.5 (Tenn. Ct. App. 2004)). If the defendant
supports its motion with affidavits, the plaintiff must establish its prima facie showing of
personal jurisdiction over the defendant by filing its own affidavits or other written evidence.
Id. (citing Chenault, 36 S.W.3d at 56; Mfrs. Consolidation Servs., Inc. v. Rodell, 42 S.W.3d
846, 854-55 (Tenn. Ct. App. 2000)).

        A trial court’s decision to grant or deny a motion to dismiss for lack of personal
jurisdiction under Rule 12.02(2) of the Tennessee Rules of Civil Procedure presents a
question of law. Id. Thus our review of the trial court’s decision is de novo with no
presumption of correctness, for the purpose of determining whether the plaintiff established
a prima facie showing of personal jurisdiction over the defendant. Id. at 645.

       1
         Plaintiffs testified that they never received the second page of the purchase agreement, which
contained the forum selection clause, however, the agreement they signed referenced terms and conditions
on the second page of the agreement.

                                                  -3-
                                 I. P ERSONAL JURISDICTION

        The long-arm statutes enacted by the Tennessee General Assembly define the outer
limits of the Tennessee courts’ ability to exercise jurisdiction over nonresident defendants.
State ex rel. Cooper v. NV Sumatra Tobacco Trading Co., No. M2010-01955-COA-R3-CV,
2011 WL 2571851, at *10 (Tenn. Ct. App. June 28, 2011). These statutes are codified at
Tennessee Code Annotated § 20-2-223(a), § 20-2-214(a)(6), and § 20-2-225. Pursuant to
these statutes, the courts of this state may “exercise jurisdiction upon . . . any basis not
inconsistent with the constitution of this state or of the United States.” Gordon, 300 S.W.3d
at 646 (quoting Mfrs. Consolidation Serv., 42 S.W.3d at 855).

         “The authority of courts to exercise personal jurisdiction over nonresident defendants
is circumscribed by the Due Process Clause of the Fourteenth Amendment.” Id. at 647. In
the context of personal jurisdiction, “due process obligates the courts to ascertain 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.’” Id. (quoting Masada v. Inv. Corp. v. Allen, 697
S.W.2d 332, 335 (Tenn. 1985)). In Tennessee, our courts have held that the due process
requirements of the Tennessee Constitution are co-extensive with those of the United States
Constitution. Id. (citing Gallaher v. Elam, 104 S.W.3d 455, 463 (Tenn. 2003); Newton v.
Cox, 878 S.W.2d 105, 110 (Tenn. 1994)).

       The United States Supreme Court has held that personal jurisdiction over a
nonresident defendant can only be exercised if that defendant has “certain minimum contacts
with [the forum 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. 316
(1945) (quoting Milliken v. Meyer, 311 U.S. 457, 43 (1940)). This is a two-part test which
requires evaluating whether the requisite minimum contacts are present and whether the
exercise of jurisdiction is fair. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476 (1985);
Davis-Kidd Booksellers, Inc., 832 S.W.2d at 575.

       Federal and state courts recognize two types of personal jurisdiction, specific
jurisdiction and general jurisdiction. Gordon, 300 S.W.3d at 647 (citing Helicopteros
Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408 (1984) (distinguishing between specific
and general jurisdiction)). Our Supreme Court explained this distinction in Gordon v.
Greenview Hospital:

       Specific jurisdiction may be asserted when the plaintiff’s cause of action arises
       from or is related to the nonresident defendant’s activities in or contacts with
       the forum state. To invoke specific jurisdiction, a plaintiff must show (1) that
       the nonresident defendant has purposely established significant contact with

                                              -4-
the forum state and (2) that the plaintiff’s cause of action arises out of or is
related to these activities or contacts. Burger King Corp. v. Rudzewicz, 471
U.S. at 472, 105 S. Ct. 2174. The nonresident defendant’s contacts with the
forum state must be sufficient to enable a court to conclude that the defendant
“should reasonably anticipate being hauled into court [in the forum state].”
Lindsey v. Trinity Commc’ns, Inc., 275 S.W.3d 411, 418 (Tenn. 2009) (quoting
World-Wide Volkswagen Corp. v. Woodson, 444 U.S. at 297, 100 S. Ct. 559).
If the plaintiff can make that showing, the defendant will have the burden of
showing that the exercise of specific jurisdiction would be unfair. Burger King
Corp. v. Rudzewicz, 471 U.S. at 477, 105 S. Ct. 2174; 16 Moore’s Federal
Practice §§ 108.42[1], at 108–54, 108.42[6], at 108–77.

In contrast to specific jurisdiction, general jurisdiction may be asserted when
the plaintiff’s cause of action does not arise out of and is not related to the
nonresident defendant’s activities in the forum state. The threshold for
satisfying the requirements for general jurisdiction is substantially higher than
the requirements for establishing specific jurisdiction. 4 Charles Alan Wright
& Arthur R. Miller Federal Practice and Procedure § 1067.5, at 517. An
assertion of general jurisdiction must be predicated on substantial forum-
related activity on the part of the defendant. The nonresident defendant’s
contacts with the forum state must be sufficiently continuous and systematic
to justify asserting jurisdiction over the defendant based on activities that did
not occur in the forum state. Helicopteros Nacionales de Colombia, S.A. v.
Hall, 466 U.S. at 416, 104 S. Ct. 1868; Perkins v. Benguet Consol. Mining Co.,
342 U.S. at 448, 72 S. Ct. 413; Lindsey v. Trinity Commc’ns, Inc., 275 S.W.3d
at 417; see also 4 Federal Practice and Procedure § 1067.5, at 507.

The general jurisdiction inquiry is very different from the specific jurisdiction
inquiry. The United States Court of Appeals for the Fifth Circuit has pointed
out that “[u]nlike the specific jurisdiction analysis, which focuses on the cause
of action, the defendant and the forum, a general jurisdiction inquiry is dispute
blind, the sole focus being on whether there are continuous and systematic
contact between the defendant and the forum.” Dickson Marine, Inc. v.
Panalpina, Inc., 179 F.3d 331, 339 (5th Cir.1999). In order to warrant the
exercise of general jurisdiction over a nonresident defendant, “the defendant
must be engaged in longstanding business in the forum state, such as
marketing or shipping products, or performing services or maintaining one or
more offices there; activities that are less extensive than that will not qualify
for general in personam jurisdiction.” 4 Federal Practice and Procedure §
1067.5, at 507.

                                       -5-
       The proper analysis for determining whether a defendant’s contacts are
       “continuous and systematic” enough to warrant an assertion of general
       jurisdiction requires ascertaining whether “the continuous corporate operations
       within a state [are] so substantial and of such a nature as to justify suit against
       it on causes of action arising from dealings entirely distinct from those
       activities.” Lindsey v. Trinity Commc’ns, Inc., 275 S.W.3d at 417 (quoting Int'l
       Shoe Co. v. Washington, 326 U.S. at 318, 66 S. Ct. 154).

Gordon, 300 S.W.3d at 647-48 (footnotes omitted).

        In this action, Plaintiffs did not specify whether they were asserting that Defendant
was subject to general jurisdiction or specific jurisdiction. As discussed above, general
jurisdiction is a broader form of jurisdiction based on a defendant’s substantial forum-related
activity. Id. at 647. This activity must be “sufficiently continuous and systematic to justify
asserting jurisdiction over the defendant based on activities that did not occur in the forum
state.” Id. at 648 (citing Helicopteros, 466 U.S. at 416). We find that Plaintiffs failed to
establish the prima facie showing that Defendant was subject to general jurisdiction of the
courts of this state. Defendant is an entity incorporated in Florida and does not maintain any
officers or agents in Tennessee. Defendant does not advertise in Tennessee or directly market
to Tennessee residents. The website of Defendant is a passive website, in that it allows
persons the opportunity to initiate contact with the company, but it does not allow the direct
purchase of items over the Internet. The only evidence in the record regarding any contact
by Defendant with Tennessee was a statement contained in the affidavit of Frank Bates, the
owner of Defendant, that 2.3% of Defendant’s overall business was sales to customers who
listed their address of residence as Tennessee. In that same affidavit, Mr. Bates stated that
the sale to Plaintiffs was the only sale in which the vehicle was purchased over the internet
and subsequently delivered to Tennessee. Based upon the foregoing evidence, it is evident
that Plaintiffs failed to prove any substantial forum-related activity necessary to establish
general jurisdiction over Defendant. Therefore, we turn our attention to the issue of specific
jurisdiction.

        Specific jurisdiction requires a showing by the plaintiff that the nonresident defendant
has purposely established significant contacts with the forum state and that the plaintiff’s
cause of action arises out of or is related to these activities or contacts. Gordon, 300 S.W.3d
at 647 (citing Burger King, 471 U.S. at 472). Stated another way, to establish specific
jurisdiction, the defendant’s contacts with Tennessee must have been sufficient to enable our
courts to conclude that the nonresident defendant “should reasonably anticipate being hauled
into court [in the forum state-here, Tennessee].” State ex rel Cooper, 2011 WL 2571851, at

                                               -6-
*12 (quoting Lindsey, 275 S.W.3d at 418). The factors for determining the existence or
absence of minimum contacts was set forth by our Supreme Court in Masada Inv. Corp. v.
Allen:

       [T]hree 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 are to be considered are the interest of the
       forum State and convenience.

Masada, 697 S.W.2d at 334 (citing Shelby Mut. Ins. Co. v. Moore, 645 S.W.2d 242, 246
(Tenn. Ct. App. 1981)). Under this “minimum contacts” test, the cause of action need not
arise in this State. Id. at 332. Further, all five factors need not be present in order for our
courts to exercise personal jurisdiction. State ex rel Cooper, 2011 WL 2571851, at *12
(citing Walker v. Nationwide Ins. Co., 813 S.W.2d 135, 138 (Tenn. Ct. App. 1990)). In
determining the reasonableness of exercising jurisdiction, the court “must consider the
burden on the defendant, the interests of the forum State, and the plaintiff’s interest in
obtaining relief.” Id. (citing Asahi, 480 U.S. at 113).

       The first step is to determine whether the defendant had sufficient minimum contacts
with the forum state. Id. “The second step is to evaluate those contacts ‘in light of other
factors to determine whether the assertion of personal jurisdiction would comport with ‘fair
play and substantial justice.”’ Id. (quoting Burger King, 471 U.S. at 475 (quoting
International Shoe, 326 U.S. at 320))).

        The United States Supreme Court recently held that a defendant is not subject to
personal jurisdiction merely by placing a product into the stream of commerce; personal
jurisdiction is only permitted when a defendant “targeted the forum” and “it is not enough
that the defendant might have predicted that its good will reach the forum State.” Conner v.
Disney Destinations, LLC, No. 3:12-CV-54, 2012 WL 1205637, at *4 (E.D. Tenn. Apr. 11,
2012) (quoting J. McIntyre Mach., Ltd. v. Nicastro, – U.S. – , 131 S. Ct. 2780, 2788-89, 180
L. Ed. 2d 765 (June 27, 2011)). Thus, “for specific personal jurisdiction to be established it
must be shown that a defendant purposefully directed it[s] activities toward the citizens of
the forum state and that such activities resulted in injuries arising out of or related to those
activities.” Id. (citing Lindsey, 275 S.W.3d at 417-18 (citing Burger King, 471 U.S. at 472-
73)).

       In this action the trial court found that Defendant had not purposefully availed itself
of doing business in Tennessee and that there were insufficient contacts between Defendant
and Tennessee to justify exerting specific jurisdiction over Defendant in this action. We

                                              -7-
agree, noting that Defendant directed no action towards Tennessee, Defendant did not
advertise in Tennessee, and Defendant did not directly market to Tennessee residents. To the
contrary, it was Plaintiffs who initiated contact with Defendant following a visit to the
Airstream website and the initial contact was via Defendant’s passive website. A passive
website is one that only offers information for the user to access, while an active website is
one that transacts business. Invisible Fence, Inc. v. Fido’s Fences, Inc., 687 F. Supp. 2d 726,
736 (E.D. Tenn. 2009).

        Federal courts in the Sixth Circuit have held that “the maintenance of [a] website, in
and of itself, does not constitute . . . purposeful availment.” Id. (quoting Neogen Corp. v. Neo
Gen Screening, Inc., 282 F.3d 883, 890 (6th Cir. 2002)). These same courts, however, have
held that “[t]he operation of an Internet website can constitute the purposeful availment of
the privilege of acting in a forum state ... ‘if the website is interactive to a degree that reveals
specifically intended interaction with residents of the state.’” Id. (quoting Bird v. Parsons,
289 F.3d 865, 874 (6th Cir. 2002) (quoting Neogen Corp., 282 F.3d at 890)). As described
in Frank Bates’s affidavit, Defendant’s website only allows an internet user to initiate contact
with Defendant; the website does not allow for the direct purchase over the Internet. Thus,
Defendant’s operation of a passive website did not constitute “purposeful availment” of the
privilege of acting in Tennessee and it did not constitute targeting or purposefully directing
its activities toward the citizens of Tennessee.

       While our courts have held that a single contract for the sale of goods, personally
delivered in Tennessee, could support a finding of minimum contacts sufficient to exercise
personal jurisdiction, a plaintiff is still required to produce evidence to satisfy a prima facie
case under Masada. See Noles v. Michigan Powersports, Inc., No. M2005-00420-COA-R9-
CV, 2005 WL 2989614 (Nov. 7, 2005) (citing Humphreys, 154 S.W.3d at 552). The primary
factors for consideration under Masada are the quantity of the contacts, their nature and
quality, and the source and connection of the cause of action with those contacts. State ex rel
Cooper, 2011 WL 2571851, at *23 (citing Masada, 697 S.W.2d at 334). In this action, there
was limited interaction between the parties leading up to the purchase of the RV. Plaintiffs
contacted Defendant on June 4, 2011, and spoke to a salesperson expressing interest in the
particular model that they had viewed on the website. Following this inquiry, the purchase
contract and credit card authorization form were sent via email to Plaintiffs. Plaintiffs sent
the credit card authorization form back to Defendant in Florida with the appropriate
information, the credit card was charged for the purchase in Florida, and Plaintiffs wired the
remaining balance of the purchase price to Defendant in Florida. Plaintiffs hired an
independent contractor (“the transporter”) to transport the RV to Plaintiffs’ residence in
Tennessee and they received delivery of the vehicle on June 11, 2011.

                                                -8-
       We acknowledge Plaintiffs’ assertion that the transporter was arranged by Defendant;
however, in his affidavit, the transporter, Henry Dupuis, states that he is not an employee of
Defendant, that he is an independent contractor, that his customers were Plaintiffs, and that
Plaintiffs paid him for transporting the RV from Florida to their home in Tennessee.
Therefore, the first two Masada factors weigh heavily in favor of Defendant. The third and
fourth factors under Masada weigh in favor of Plaintiffs because the contacts between
Defendant and Plaintiffs leading up to the sale of the RV are directly related to the cause of
action and Tennessee has an interest in the dispute as Plaintiffs are Tennessee residents. See
Noles, 2005 WL 2989614, at *4 (citing S. Mach. Co. v. Mohasco Indus., Inc., 401 F.2d 374,
385 (6th Cir. 1968)) (stating “when the contract is with a resident of Tennessee, the State’s
interest in resolving a suit based on the contract and brought by that resident cannot be
doubted”). The fifth Masada factor, the convenience of the forum, weighs in favor of
Defendant because Defendant is a Florida company and it did not maintain a registered agent
or office in Tennessee. Further, the purchase agreement contains a forum selection clause
that designates Florida as the venue.

        Having considered the entire record, including specifically the factors set forth in
Masada, we have determined, as the trial court did, that Plaintiffs failed to establish a prima
facie case to afford Tennessee personal jurisdiction over Defendant. We, therefore, we affirm
the grant of Defendant’s motion to dismiss for lack of personal jurisdiction. As we have
concluded that the trial court lacked personal jurisdiction over Defendant, the remaining
issues on appeal are moot.

                                      I N C ONCLUSION

       The judgment of the trial court is affirmed, and this matter is remanded with costs of
appeal assessed against the Appellants, William and Donna Richardson.

                                                       ______________________________
                                                       FRANK G. CLEMENT, JR., JUDGE

                                              -9-