Noles v. Michigan Powersports, Inc., No. M2005-00420-COA-R9-CV (TN 11/7/2005)
| Decision Date | 07 November 2005 |
| Docket Number | No. M2005-00420-COA-R9-CV.,M2005-00420-COA-R9-CV. |
| Court | Tennessee Supreme Court |
| Parties | TROY NOLES v. MICHIGAN POWERSPORTS, INC. d/b/a CHAMPION MOTORSPORTS & CHAMPION POWERSPORTS |
Appeal from the Circuit Court for Macon County; No. 5030; John D. Wootten, Jr., Judge.
Judgment of the Circuit Court Affirmed.
John Thomas Feeney and Shannon E. Poindexter, Nashville, Tennessee for the appellant, Michigan Powersports, Inc. d/b/a Champion Motorsports and Champion Powersports, Inc.
John M. Cannon, Goodlettsville, Tennessee, for the appellee, Troy Noles.
William B. Cain, J., delivered the opinion of the court, in which Patricia J. Cottrell and Frank G. Clement, Jr., JJ., joined.
This case involves a dispute over whether Tennessee courts have personal jurisdiction over two Michigan corporations regarding an alleged violation of the Tennessee Consumer Protection Act. The trial court found that Tennessee had personal jurisdiction over the Michigan corporations and the corporations filed an interlocutory appeal. We find that the Tennessee Long Arm Statute provides Tennessee with personal jurisdiction over the corporations and that the decision comports with the requirements of due process; therefore, we affirm the decision of the trial court and remand the case for further proceedings consistent herewith.
Troy Noles (Noles), a resident of Lafayette, Macon County, Tennessee, purchased the Ohio Valley Circle Trader in Indiana while traveling for his employment. Pages 122 and 123 of that publication contained an advertisement for a "2003 Yamaha Banshee Buddy Pack Deal" from Champion Powersports. The buddy pack included two Yamaha Banshee all-terrain-vehicles ("ATVs"), one trailer, and two helmets, for $39.00 per month, per vehicle, at 3.9% interest with zero down payment.
Upon returning to his home in Lafayette, Tennessee, Noles initiated contact with Champion Powersports by calling the toll-free number listed in the advertisement, in order to inquire about purchasing the advertised vehicles. Noles had never seen an advertisement for Champion Powersports or Michigan Powersports in a Tennessee publication nor did he access Champion Powersports' website. Noles had never conducted business with Champion Powersports or Michigan Powersports before that time, nor did he know anyone else who had.
During the telephone call to Champion Powersports, Noles spoke with sales representative, Kevin Lapp ("Lapp"). There were several conversations conducted during the sales transaction, including calls where Lapp contacted Noles at his home in Lafayette, Tennessee. During the course of these conversations, the parties discussed the magazine advertisement that led to the contract of sale for the ATVs. During one conversation, Lapp notified Noles that he did not qualify for the advertised financing but that Michigan Powersports might be able to reach an alternative arrangement.
Champion Powersports and Michigan Powersports are separate business entities, both located in the state of Michigan. Although the businesses rely on different financial institutions to obtain financing and credit for customers who require it, if one financial institution refuses to extend credit to a particular customer, the sales representative may submit the customer's financing application to the other business' lender. The alternative financing agreement is then drawn up on the documentation provided by whichever business' lender approved financing.
Instead of the advertised buddy pack financing, Lapp constructed an alternative agreement for Noles which provided for a buddy pack to include two ATVs and a trailer through financing institutions relied on by Michigan Powersports. Noles understood that the alternative arrangement required a $500.00 down payment and did not include the 3.9% financing rate provided for in the advertisement.
Noles accepted delivery of the ATVs and trailer from a Tora Corporation driver on or about March 13, 2003, in Lafayette, Tennessee. At the time of delivery, Noles inspected the equipment and signed the consumer credit paperwork from Michigan Powersports.
On October 9, 2003, Noles filed a Complaint in the Circuit Court for Macon County, Tennessee, against Champion Powersports and Michigan Powersports, alleging violations of the Tennessee Consumer Protection Act in relation to the purchase of the ATVs. Defendants filed an Answer on February 20, 2004, in which, Defendants specifically raised lack of personal jurisdiction as a defense, although the Answer was not denoted as a special appearance. On the same day, Defendants filed a Motion to Dismiss for Lack of Personal Jurisdiction.
The trial court denied Defendants' Motion on January 10, 2005. However, the trial court recommended that this would be an appropriate matter for interlocutory appeal. Defendants filed an Application for Permission to Appeal pursuant to Tennessee Rule of Appellate Procedure 9, which the Court granted on March 14, 2005.
The sole issue raised by Appellants on appeal concerns whether Tennessee courts have personal jurisdiction over Appellants. Because the determination of personal jurisdiction is purely a question of law, this Court reviews the record de novo with no presumption of correctness. Southwest Williamson County Cmty. Ass'n v. Saltsman, 66 S.W.3d 872, 876 (Tenn.Ct.App.2001).
The plaintiff has the burden of establishing a prima facie case that personal jurisdiction over a defendant is proper. Mfrs. Consolidation Serv., Inc. v. Rodell, 42 S.W.3d 846, 854 (Tenn.Ct.App.2000); Humphreys v. Selvey, 154 S.W.3d 544, 548 (Tenn.Ct.App.2004). In determining a defendant's motion to dismiss for lack of personal jurisdiction, the court is required to construe the pleadings and the affidavits in the light most favorable to the plaintiff. Rodell, 42 S.W.3d at 548. Dismissal is only proper if all the specific facts alleged by the plaintiff collectively fail to establish a prima facie case for jurisdiction. Rodell, 42 S.W.3d at 548-549.
The trial court found personal jurisdiction over Appellants based on Tennessee's Long Arm Statute, Tennessee Code Annotated, Section 20-2-214. Tennessee courts have interpreted Tennessee's Long Arm Statute liberally, S. Mach. Co. v. Mohasco Indus., Inc., 401 F.2d 374, 377 (6th Cir.1968), and thus, Tennessee courts may exercise jurisdiction to the extent that the Fourteenth Amendment of the United States Constitution allows. Rodell, 42 S.W.3d at 855. Tennessee Code Annotated, Section 20-2-214, provides in relevant part:
(a) Persons who are non-residents of Tennessee and residents of Tennessee who are outside the state and cannot be personally served with process within the state are subject to the jurisdiction of the Court of the state as to any action or claim for relief arising from:
(2) Any tortious act or omission within this state;
(5) Entering into a contract for services to be rendered or for materials to be furnished in this state;
(6) Any basis not inconsistent with the constitution of this state.
(c) Any such person shall be deemed to have submitted to the jurisdiction of this state who acts in the manner above described through an agent or personal representative.
http://web2.westlaw.com/find/default.wl?DB=4644&SerialNum=2001746890&FindType=Y&ReferencePositionType=S&ReferencePosition=876&AP=&mt=Tennessee&fn=_top&sv=Split&vr=2.0&rs=WLW5.10Tenn.Code Ann., Section 20-2-214.
Tennessee Code Annotated section 20-2-214(a)(5) allows Tennessee to exercise personal jurisdiction over a non-resident in any action arising from "a contract for services to be rendered or for materials to be furnished in this state." In this case, the dispute arises from a contract for the sale of two ATVs and a trailer, where the parties signed the contract and agreed that the goods would be delivered in Lafayette, Tennessee.
Furthermore, the Sixth Circuit noted that under Tennessee Code Annotated section 20-2-214(a)(2), "even a single act by defendant directed toward Tennessee that gives rise to cause of action can support a finding of minimum contacts sufficient to exercise personal jurisdiction without offending due process." Neal v. Janssen, 270 F.3d 328, 331 (6th Cir.2001). The Western Section of this Court agreed with the reasoning and interpretation of the Sixth Circuit, holding in Humphreys, 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, provided that the evidence presented by plaintiff created a prima facie case that personal jurisdiction over defendant was proper under the factors set forth in Masada Investment Corp. v. Allen, 697 S.W.2d 332, 334 (Tenn.1995). See...
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