Crouch Ry. Consulting, LLC v. LS Energy Fabrication, LLC, No. M2017-02540-SC-R11-CV

CourtSupreme Court of Tennessee
Writing for the CourtJeffrey S. Bivins, C.J.
Citation610 S.W.3d 460
Parties CROUCH RAILWAY CONSULTING, LLC v. LS ENERGY FABRICATION, LLC
Decision Date06 October 2020
Docket NumberNo. M2017-02540-SC-R11-CV

610 S.W.3d 460

CROUCH RAILWAY CONSULTING, LLC
v.
LS ENERGY FABRICATION, LLC

No. M2017-02540-SC-R11-CV

Supreme Court of Tennessee, AT NASHVILLE.

February 11, 2020 Session
FILED October 6, 2020


Michael F. Rafferty and Emily Hamm Huseth, Memphis, Tennessee, and Benjamin D. West, Oxford, Mississippi, for the appellant, LS Energy Fabrication, LLC.

M. Clark Spoden and Payton M. Bradford, Nashville, Tennessee, for the appellee, Crouch Railway Consulting, LLC.

Jeffrey S. Bivins, C.J., delivered the opinion of the Court, in which Cornelia A. Clark, Sharon G. Lee, Holly Kirby, and Roger A. Page, JJ., joined.

Jeffrey S. Bivins, C.J.

The issue in this appeal is whether a Tennessee court may exercise specific personal jurisdiction over a Texas corporate defendant involved in a contractual dispute with a Tennessee company it chose to perform specialized professional services. A Texas oil-drilling company elected to contract with a Tennessee civil engineering company for custom design and consulting services related to the potential construction of a railcar repair facility in Texas. The Tennessee company performed the services primarily out of its principal place of business in Tennessee. When the Texas company failed to pay in full, the Tennessee company filed a civil action in Tennessee for breach of contract and unjust enrichment. The Texas company moved to dismiss the complaint for lack of personal jurisdiction. See Tenn. R. Civ. P. 12.02(2). The Williamson County Chancery Court granted the motion, finding (1) that the Texas company lacked the "minimum contacts" necessary for the exercise of specific personal jurisdiction, and (2) that requiring the Texas company to litigate in Tennessee would be unreasonable and unfair. The Court of Appeals reversed, relying primarily on Nicholstone Book Bindery, Inc. v. Chelsea House Publishers, 621 S.W.2d 560 (Tenn. 1981), cert. denied, 455 U.S. 994, 102 S.Ct. 1623, 71 L.Ed.2d 856 (1982). Although we find Nicholstone to be consistent with our opinion today, we base our review on contemporary jurisprudence in this area of the law. We hold that, consistent with the Due Process Clause of the Fourteenth Amendment, the Tennessee company established a prima facie case for the valid exercise of personal jurisdiction over the Texas company. Additionally, the exercise of jurisdiction would not be unfair or unreasonable. Therefore, we affirm the decision of the Court of Appeals and remand this case to the trial court for further proceedings.

I. FACTUAL AND PROCEDURAL BACKGROUND

This case arises from a dispute between two companies from different states that entered into a contract for the provision of custom engineering services.1 The plaintiff, Crouch Railway Consulting, LLC ("Crouch"), is a Tennessee limited liability company with its principal place of business in Brentwood, Tennessee. Crouch is a civil engineering firm that specializes in railway-related engineering services. It has considerable expertise and has served clients nationwide. The defendant, LS Energy Fabrication, LLC d/b/a Lonestar Energy

610 S.W.3d 465

Fabrication ("Lonestar"), is a Texas limited liability company with its principal place of business in Baytown, Texas. Lonestar is in the business of fabricating oil field components, offshore rigs, and offshore quarters buildings.

On January 12, 2016, representatives from Crouch met with representatives from Lonestar in Baytown, Texas. The record does not reveal exactly how this meeting came to occur, but it does reflect that Crouch approached Lonestar to make a business proposal. Lonestar was considering constructing a railcar repair facility in Texas. This enterprise represented a new line of business for Lonestar, and the facility was to be designed to allow for growth of the business. Crouch proposed to provide preliminary planning and consulting services related to construction of the potential facility.

Returning to Tennessee after the January 12 meeting, Crouch prepared a twenty-one-page "Proposal for Preliminary Consulting and Planning" specific to Lonestar's objectives. Crouch emailed the proposal, signed in Tennessee by Senior Project Manager Scott Vick, to Lonestar on January 15, 2016. The proposal plainly displayed Crouch's Tennessee address, as did the cover letter that accompanied the proposal. In addition, the proposal explicitly stated that Crouch was located in Brentwood, Tennessee.2 Crouch offered its professional services for a fixed fee of $55,450.00. Lonestar reviewed the proposal, and Brian Shanklin signed it on behalf of Lonestar in Texas. Terry Gazaw of Lonestar emailed the signature page to Crouch on January 22, 2016. The contract contained neither a forum selection clause nor a choice of law provision.

The contract called for Crouch to perform preliminary planning and engineering work to develop an overall facility plan, including a cost estimate and a timeline for completion of project design and construction. Under the contract, Crouch ultimately was to provide as a deliverable a preliminary engineering report detailing layouts for a shop and railroad infrastructure, as well as the railcar repair process and a design for a clean-in-place railcar wash system. Lonestar was obligated to pay a flat fee of $55,450.00 for the services.

The contract, however, did not leave Crouch entirely to its own devices. Instead, the contract expressly required Lonestar to designate a person with whom Crouch would communicate and anticipated continuing interaction between Crouch and Lonestar during the period of performance. For example, Lonestar was expected to play a role in developing a needs list for various aspects of the facility—shop offices, spare parts storage, valve shop, communications, break areas, locker facilities—and to be responsive to questions and clarifications sent via email. Likewise, Lonestar was expected to play a role with decisions for appropriate requirements for the scope of work regarding utilization of space, quality of construction, function of space, and type of equipment to be used. Additionally, Lonestar was expected to develop the scope and cost estimate for providing grading, construction, utilities, and telecommunications to the site, which details would be incorporated into Crouch's report.

The contract repeatedly indicated that Crouch would be working with Lonestar to complete performance. To that end, the contract referenced availability for three consultation meetings—held through a remote platform that offered computer screen sharing—to discuss requirements for the facility and any questions. Over the

610 S.W.3d 466

course of work on the contract, Crouch anticipated providing a recommended facility layout, a revised layout based on Lonestar's input, and a final report. Crouch further anticipated adjusting the cost estimate with each iteration.

After the parties executed the contract, Crouch proceeded to perform the custom professional services called for, almost exclusively out of its office in Tennessee. For instance, Crouch:

1) completed preliminary planning and engineering to develop the facility plan for the proposed railcar repair operation;

2) confirmed the work process, identified the process equipment required, and ensured that the proposed facility was properly sized;

3) prepared a detailed layout of the feeder track, transfer tables, and clean-in-place wash system;

4) prepared a civil site drawing related to site grading, drainage, access roads, utilities, track layout, and new track construction;

5) prepared a detailed cost estimate for railroad design, complete repair process flow, railroad track work, rail construction, design and installation of the clean-in-place wash system, and process equipment; and

6) prepared a timeline for project design and construction completion.

Ultimately, on March 8, 2016, Crouch emailed Lonestar a fifty-two-page Preliminary Consulting and Planning Report. Like the contract, the report identified that it was prepared by Crouch and listed Crouch's address and telephone numbers in Tennessee. The proposed project was a significant one, with Crouch estimating that it would take nearly a year to complete, even utilizing a six-day work week, with a total project cost of nearly $14,000,000.00.

The only activities Crouch performed outside of Tennessee entailed four site visits to Texas, one each in January through April,3 in furtherance of the design and consulting services provided under the contract. Representatives from Lonestar attended these visits, as did, on occasion, representatives from an interested third party. Aside from these site visits, both Crouch and Lonestar remained physically in their respective home states during the course of the contractual relationship.

Crouch and Lonestar, however, did communicate "multiple times via email ... throughout the course of the work performed pursuant to the Agreement."4 Lonestar's communications were, on occasion, substantive in nature. For instance, Crouch emailed Lonestar on January 29, 2016, a day after a site visit, to ask about dimensions for certain buildings on the site, and Lonestar replied specifying the dimensions so that Crouch could plan accordingly. Likewise, on February 25, 2016, Crouch and Lonestar traded emails about finalizing the choice of equipment inside the repair shop. The...

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1 practice notes
  • N. Sails Grp. v. Bds. & More GmbH, SC 20338
    • United States
    • Supreme Court of Connecticut
    • August 20, 2021
    ...overall negotiation process." (Internal quotation marks omitted.)); Crouch Railway Consulting, LLC v. LS Energy Fabrication, LLC, 610 S.W.3d 460, 478 (Tenn. 2020) (fact that defendant ultimately chose to contract with plaintiff was deemed more important than who approached whom); Willb......
1 cases
  • N. Sails Grp. v. Bds. & More GmbH, SC 20338
    • United States
    • Supreme Court of Connecticut
    • August 20, 2021
    ...overall negotiation process." (Internal quotation marks omitted.)); Crouch Railway Consulting, LLC v. LS Energy Fabrication, LLC, 610 S.W.3d 460, 478 (Tenn. 2020) (fact that defendant ultimately chose to contract with plaintiff was deemed more important than who approached whom); Willb......

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