Mitchell v. White Motor Credit Corp.

• Decision Date: 27 January 1986
• Docket Number: No. 3-83-0036.,3-83-0036.
• Citation: 627 F. Supp. 1241
• Parties: Frank MITCHELL v. The WHITE MOTOR CREDIT CORPORATION and Nortran, Inc., d/b/a El Dorado Trucks.
• Court: U.S. District Court — Middle District of Tennessee

627 F. Supp. 1241

Frank MITCHELL v. The WHITE MOTOR CREDIT CORPORATION and Nortran, Inc., d/b/a El Dorado Trucks.

No. 3-83-0036.

United States District Court, M.D. Tennessee, Nashville Division.

January 27, 1986.

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Don R. Ash and Richard L. Cummings, Murfreesboro, Tenn., Burger, Fly & McFarlin, for plaintiff.

Gary M. Brown, Trabue, Sturdivant & Dewitt, Nashville, Tenn., Gerald G. Patterson, for defendant.

Michael R. Landers, El Dorado, Ariz., for defendants Nortran dba El Dorado Trucks.

MEMORANDUM

WISEMAN, Chief Judge.

This case arises under 15 U.S.C. § 1989, and involves claims arising from the sale of a used truck by White Motor Credit Corporation ("White Motor") to Frank Mitchell. Defendants White Motor Credit Corporation and Nortran, Inc., d/b/a El Dorado Trucks ("Nortran") move for summary judgment on the plaintiff's claims against them, asserting (1) that the odometer disclosure requirements contained in section 408 of the Motor Vehicle Information and Cost Savings Act, 15 U.S.C. § 1988, and section 3 of the Arkansas Odometer Regulation Act, Ark.Stat.Ann. § 75-2403, are applicable to the transfer of this truck and (2) that plaintiff may not recover against White Motor or Nortran under a theory of breach of warranty or fraudulent misrepresentation. For the reasons set out below, the Court grants defendants' motion for summary judgment on the issues of federal and Arkansas odometer disclosure claims, and denies their motion on the issues of breach of warranty and fraudulent misrepresentation.

I. Factual Background

In 1982, plaintiff Mitchell received a notice from defendant White Motor which listed several used vehicles for sale, including the truck which is the subject of this litigation. This notice gave the truck's model and serial number, and described the condition of the truck as "excellent." The truck was being kept in El Dorado, Arkansas, on the lot of defendant Nortran, an independent dealership. After conversations with White Motor's regional finance manager, plaintiff decided to buy the truck, and traveled to Arkansas to inspect it. At this time, the truck's odometer showed 105,981 miles. Plaintiff alleges that, in the course of making the sale, the defendants made representations as to the truck's mileage, condition, and appearance. Within a few months after the purchase, plaintiff allegedly experienced serious problems with the truck. While the truck was being repaired, a mechanic discovered that the odometer had been reset or replaced, and that the truck apparently had significantly more mileage than the odometer reflected. Some dispute exists as to whether White Motor or Nortran knew of any such tampering. Plaintiff asked to rescind the purchase agreement, and defendant White Motor agreed, but the parties were unable to reach an agreement as to the terms of recision. Plaintiff failed to make any payments on the truck other than the initial down payment; consequently, White Motor repossessed the truck.

II. Jurisdiction

The Court first must determine whether it may exercise jurisdiction over this action. Plaintiff claims that the action arises under this Court's diversity jurisdiction and federal question jurisdiction. The complaint alleges that plaintiff is a resident of Tennessee, that White Motor is a Nebraska corporation having its principal place of business in a state other than Nebraska, and that Nortran is a "truck dealer in ... Arkansas." It cannot be determined from those allegations whether there is complete diversity of citizenship between the plaintiff and each of the defendants. See, e.g., Health Group Management Co. v. Walker County Medical Center, Inc., 595 F.Supp. 381, 382 (M.D.Tenn.1984); Estep & Associates, Inc. v. Leonard Hill & Sons, 543 F.Supp. 124, 125-26 (M.D.Tenn.1982).¹ Congress, however, has granted federal district courts jurisdiction over actions arising under Subchapter IV of the Motor Vehicle Information and Cost Savings Act.² Accordingly, this Court exercises its federal question jurisdiction over the suit.

Defendants challenge the in personam jurisdiction of this Court only on the issue concerning the Arkansas odometer disclosure requirements; however, their jurisdictional argument is applicable to the entire case, and the Court shall consider it as such. Defendants argue that § 20-2-201(a) of the Tennessee Code Annotated, a state long-arm statute, precludes this Court from adjudicating the claim because, although both defendants are foreign corporations arguably doing business in Tennessee,³ the claim arises wholly outside Tennessee and has no connection with the state. See Turner v. Nationwide Auto Transporters, Inc., 507 F.Supp. 396 (E.D. Tenn.1980) (citing Gillis v. Clark Equipment Co., 579 S.W.2d 869 (Tenn.Ct.App. 1978) (recognizing T.C.A. § 20-2-201 as a jurisdictional statute and applying it in determining in personam jurisdiction in a diversity action)); see also Williams v. Williams, 621 S.W.2d 567, 569 (Tenn.Ct. App.1981) (stating that T.C.A. § 20-20-201 imposes a jurisdictional limitation upon suits against foreign corporations). Based upon the reasons stated herein, the Court finds that this statute is merely a procedural limitation on acquiring jurisdiction over foreign corporations doing business in Tennessee, and not a jurisdictional limitation.

Since the Court exercises federal question jurisdiction over this case, the Court must determine what standard to apply in determining whether it also has in personam jurisdiction over the case.⁴ This standard differs somewhat from a diversity action. The jurisdictional reach of a federal district court in a diversity case is determined by the law of the state where the court is located. See, e.g., Pickens v. Hess, 573 F.2d 380, 385 (6th Cir.1978); Southern Machine Co. v. Mohasco Industries, Inc., 401 F.2d 374, 376 n. 2 (6th Cir.1968); Milan Express, Inc. v. Missie, Inc., 575 F.Supp. 931, 933 (W.D.Tenn.1983); Chattanooga Corp. v. Klingler, 528 F.Supp. 372, 375 (E.D.Tenn.1981), reversed on other grounds, 704 F.2d 903 (6th Cir.1983); Gullett v. Qantas Airways Ltd., 417 F.Supp. 490, 492 (M.D.Tenn.1975). In a federal question case, the district court's power to exercise in personam jurisdiction is limited to that provided by the Federal Rules of Civil Procedure, and because it was necessary to utilize state long-arm provisions to obtain service of process on the two foreign corporate defendants in this case, in personam jurisdiction is also limited by two Tennessee long-arm statutes, T.C.A. §§ 20-2-201 & 202 (1980). Chattanooga Corp., 528 F.Supp. at 375; see Wells Fargo & Co. v. Wells Fargo Express Co., 556 F.2d 406, 416-19 (9th Cir.1977); Navarro v. Sedco, Inc., 449 F.Supp. 1355, 1357 n. 1 (S.D. Tex.1978), overruled on other grounds, Prejean v. Sonatrack, Inc., 652 F.2d 1260, 1267 (5th Cir.1981). Thus, Tennessee long-arm statutes are applicable in this action even though a federal question is involved.

Federal courts have faced the question before of whether T.C.A. § 20-2-201 is the exclusive means of acquiring jurisdiction over foreign corporations doing business in Tennessee.⁵ Almost uniformly, they have held that T.C.A. § 20-2-201 is only a procedural alternative to Tennessee Rule of Civil Procedure 4.04(4).⁶See, e.g., Milan Express, 575 F.Supp. at 934 n. 1; Gullett, 417 F.Supp. at 497-98; Gallaher v. Chemical Leaman Tank Lines, Inc., 367 F.Supp. 1063 (E.D.Tenn.1973); see also W.D. Lawson & Co. v. Penn Central Co., 456 F.2d 419 (6th Cir.1972) (the court held that T.C.A. § 20-220 (recodified at § 20-2-201) was merely a procedural limitation and that a foreign corporation could be sued in Tennessee for a cause of action arising elsewhere on the basis of T.C.A. § 20-218; Judge Wilson in Gallaher followed the Lawson result, stating that although T.C.A. § 20-218 was repealed shortly after the decision in Lawson, the legislative intent behind repeal was to remove laws inconsistent with the recently-enacted Tennessee Rules of Civil Procedure). But see Turner v. Nationwide Auto Transporters, Inc., 507 F.Supp. 396 (E.D.Tenn.1980); Gillis v. Clark Equipment Co., 579 S.W.2d 869 (Tenn.Ct.App.1978). These courts reason that application of T.C.A. § 20-2-201 as a jurisdictional limit on the exercise of personal jurisdiction over a foreign corporation is inconsistent with the clear intent of the legislature in enacting § 20-2-214(a)(6) to expand the personal jurisdiction of the Tennessee courts to the limits of the Due Process Clause.⁷See generally W.G. Bush & Co. v. Sioux City & New Orleans Barge Lines, Inc., 474 F.Supp. 537, 541-43 (M.D.Tenn.1977) (description of the history and purpose of T.C.A. § 20-235(f) (now T.C.A. § 20-2-214(a)(6)). The Court is persuaded by this reasoning, and holds that T.C.A. § 20-2-201 is not the exclusive means of acquiring jurisdiction or serving process upon foreign corporations doing business in Tennessee.

It is well-established that a court in a federal question case may exercise jurisdiction in its discretion over state law claims, under the doctrine of pendent jurisdiction, where a substantial federal claim is presented, and the federal and state claims "derive from a common nucleus of operative fact." United Mine Workers v. Gibbs, 383 U.S. 715, 725, 86 S.Ct. 1130, 1138, 16 L.Ed.2d 218, 228 (1966). See, e.g., Melamed v. Lake County National Bank, 727 F.2d 1399, 1403-04 (6th Cir.1984). This Court has pendent jurisdiction over this case because the federal and state claims derive from a single transaction, and the grant of jurisdiction to this Court in Section 409 of the federal statute, 15 U.S.C. § 1989, indicates Congress' finding that a substantial federal claim is involved.

In summary, the Court concludes that it has in personam jurisdiction over this action and that pendent jurisdiction exists over the breach of warranty and fraudulent misrepresentation claims governed by Tennessee law and the Arkansas...