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The Tennessee Supreme Court recently examined whether a Tennessee resident may sue an Alabama corporation in a Tennessee court for alleged breach of contract and breach of warranty pertaining to a construction project in Alabama.
Roger Baskin, a Tennessee resident, hired Pierce & Allred Construction, an Alabama corporation with its principal place of business in Alabama, to build a lake house in north Alabama.
Baskin supplied the architectural plans, drawn by a Tennessee architect, and some of the materials, which he sourced from Tennessee. The parties communicated by email and telephone from their respective states. However, Pierce & Allred never travelled to Tennessee on the project, and all of its activities took place in Alabama.
Baskin ultimately became dissatisfied with the construction, complaining of price overruns and poor workmanship. He sued in Davidson County, Tennessee.
Pierce & Allred moved to dismiss the complaint for lack of personal jurisdiction, arguing that the court lacked specific jurisdiction over it. The trial court granted the motion, finding that the events relevant to the claims occurred in Alabama and that the corporation’s contacts with Tennessee were minor and attenuated. The Court of Appeals reversed, based primarily on the Tennessee Supreme Court’s 2020 decision in another breach of contract case, Crouch Ry. Consulting, LLC v. LS Energy Fabrication, LLC, 610 S.W.3d 460 (Tenn. 2020), and the U.S. Supreme Court’s opinion in Ford Motor Co. v. Mont. Eighth Jud. Dist. Ct., 141 S. Ct. 1017 (2021).
On appeal, the Tennessee Supreme Court held that Pierce & Allred’s contacts with Tennessee were not such that Pierce & Allred reasonably should have anticipated being hauled into a Tennessee court to answer this complaint.
Despite Pierce & Allred’s rather substantial contacts with Tennessee on two separate and unrelated construction projects, the court concluded that those contacts with Tennessee did not reflect that Pierce & Allred purposefully availed itself of the privilege of conducting business activities in Tennessee and were not sufficiently related to Baskin’s claims to support the exercise of specific personal jurisdiction.
The court distinguished its holding in Crouch, noting that the two cases differed in breadth and depth of the contractual relationship as well as the quality of the acts associated with the relationship.
It found the actions of the defendant in Crouch to be deliberate and purposeful toward Tennessee, with knowledge that the contract would be substantially performed in Tennessee. In contrast, Pierce & Allred’s contacts with Tennessee were the result of unilateral acts of the plaintiff, or were random, fortuitous, and attenuated, while all of its work under the contract occurred in Alabama. The Tennessee Supreme Court thus held that Baskin failed to establish a prima facie case of the minimum contacts necessary for a Tennessee court to exercise specific personal jurisdiction over the Alabama corporation. The court reversed the Court of Appeals and reinstated the trial court’s judgment dismissing the complaint.
M2021-00144-SC-R11-CV
Authoring Judge: Justice Jeffrey S. Bivins
Trial Court Judge: Chancellor Russell T. Perkins