Pascarelli v. Koehler

• Decision Date: 27 June 2018
• Docket Number: A18A0198
• Court: Georgia Court of Appeals
• Parties: PASCARELLI et al. v. KOEHLER.

346 Ga.App. 591

816 S.E.2d 723

PASCARELLI et al.

v.KOEHLER.

A18A0198

Court of Appeals of Georgia.

June 27, 2018

Mills & Hoopes, Timothy S. Walls, Justyn D. Alioto, for appellants.

Drew Eckl & Farnham, Stevan A. Miller, Gwendolyn D. Havlik, James C. McLaughlin, Jr., for appellee.

Brown, Judge.

We granted the application for interlocutory review filed by Frank and Marina Pascarelli following the trial court's grant of James Koehler d/b/a TKO d/b/a Courtyard Casper's ("Koehler") motion to dismiss. They contend that the trial court should have concluded it had personal jurisdiction over Koehler, who independently owns and operates a Marriott International, Inc. franchise located in Casper, Wyoming. For the reasons explained below, we affirm.

In Georgia, a defendant filing a motion to dismiss based upon a lack of personal jurisdiction bears the burden of proof.

Home Depot Supply v. Hunter Mgmt. , 289 Ga. App. 286, 656 S.E.2d 898 (2008). And "to the extent that defendant's evidence controverts the allegations of the complaint, plaintiff may not rely on mere allegations, but must also submit supporting affidavits or documentary evidence." (Citations and punctuation omitted.) Drumm Corp. v. Wright , 326 Ga. App. 41, 755 S.E.2d 850 (2014).

Where as here, the motion was decided on the basis of written submissions alone, any disputes of fact in the written submissions supporting and opposing the motion to dismiss are resolved in favor of the party asserting the existence of personal jurisdiction, and the appellate standard of review is nondeferential.

(Citation and punctuation omitted.) Crossing Park Properties v. JDI Fort Lauderdale , 316 Ga. App. 471, 729 S.E.2d 605 (2012).

So construed, the record reflects that in April 2012, Frank Pascarelli, who resides in Marietta, Georgia, was traveling to Casper, Wyoming, on business for his employer, the Centers for Disease Control ("CDC"). While making arrangements for this trip, Pascarelli found the Marriott franchise owned by Koehler and made online reservations for his stay. According to Pascarelli, he selected the Marriott franchise owned by Koehler based on its status as a "preferred hotel" with the CDC and the amenities offered that were apparent from the website.

After checking into and spending the first night in the hotel, Pascarelli woke up to find "an enormous amount" of bed bug bites. Pascarelli sought treatment at an urgent care facility on two occasions while in Wyoming. Upon returning to Georgia, Pascarelli went to the hospital because his wounds

had become infected with MRSA, requiring surgery and a two-week hospital stay.

On March 24, 2014, Pascarelli and his wife filed the current negligence action in Cobb County Superior Court against Marriott International, Inc., Koehler, and various other entities associated with Koehler's hotel. All defendants collectively moved to dismiss on the ground of lack of personal jurisdiction. The trial court granted the motion as to all defendants except franchisor Marriott International, finding that Marriott International's continuous and systematic contacts in Georgia warranted the exercise of jurisdiction. The trial court concluded that Koehler's Internet activity in Georgia did not create the necessary minimum contacts to impose personal jurisdiction. Alternatively, the trial court concluded that even if Koehler's Internet activity amounted to sufficient contacts, it would offend the constitutional guarantee of due process to allow the Pascarellis to bring suit against Koehler in Georgia. The trial court certified its order for immediate review, and we granted the Pascarellis’ application for interlocutory review.¹

On appeal, the Pascarellis assert that the trial court erred by concluding it lacked personal jurisdiction over Koehler and by making negative inferences adverse to the finding of personal jurisdiction.

1. Georgia's Long Arm Statute, OCGA § 9–10–91, "delineate[s] the circumstances in which a court of this state may exercise personal jurisdiction over a nonresident. Paragraph (1) authorizes the exercise of such jurisdiction where the nonresident ‘transacts any business within this state.’ " (Punctuation omitted.) Aero Toy Store v. Grieves , 279 Ga. App. 515, 517 (1), 631 S.E.2d 734 (2006). The Supreme Court of Georgia has construed paragraph (1) "as reaching only to the maximum extent permitted by procedural due process." (Citations and punctuation omitted.) Innovative Clinical & Consulting Svcs. v. First Nat. Bank of Ames, Iowa , 279 Ga. 672, 675, 620 S.E.2d 352 (2005). In determining the boundaries of due process, we must apply the following three-part test:

[J]urisdiction exists on the basis of transacting business in this state if (1) the nonresident defendant has purposefully done some act or consummated some transaction in this state, (2) if the cause of action arises from or is connected with such act or transaction, and (3) if the exercise of jurisdiction by the courts of this state does not offend traditional fairness and substantial justice.

(Citations and punctuation omitted.) Amerireach.com v. Walker , 290 Ga. 261, 269 (2), 719 S.E.2d 489 (2011). We look to

the first two factors to determine whether a defendant has established the minimum contacts with the forum state necessary for the exercise of jurisdiction. If such minimum contacts are found, we move to the third prong of the test to consider whether the exercise of jurisdiction is reasonable—that is, to ensure that it does not result solely from random, fortuitous or attenuated contacts.

(Citations and punctuation omitted.)

Paxton v. Citizens Bank & Trust of West Georgia , 307 Ga. App. 112, 116 (1), 704 S.E.2d 215 (2010).

Our Supreme Court has explained that "nothing in [paragraph] (1) [of the Long Arm Statute] requires the physical presence of the nonresident in Georgia or minimizes the import of a nonresident's intangible contacts with the State." Innovative Clinical & Consulting Svcs. , supra, 279 Ga. at 675, 620 S.E.2d 352. And "Georgia allows the assertion of long-arm jurisdiction over nonresident defendants based on business conducted through postal, telephonic, and Internet contacts." (Citations and punctuation omitted.) Paxton , supra, 307 Ga. App. at 116 (1), 704 S.E.2d 215 ; accord American College Connection v. Berkowitz , 332 Ga. App. 867, 871, 775 S.E.2d 226 (2015). While

[t]he application of the minimum contacts rule will vary with the quality and nature of the defendant's activity, ... it is essential in each case that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.

(Citation and punctuation omitted.) Aero Toy Store , supra, 279 Ga. App. at 518 (1), 631 S.E.2d 734.

In this case, it is uncontroverted that Koehler, a resident of South Dakota, owned, operated, and managed the Marriott franchise hotel located in Casper, Wyoming. The record shows that Marriott International operates a website which allows franchisees such as Koehler to input information about their individual franchise hotels. Using this information, Marriott International maintains a website which advertises franchise hotels and allows a prospective traveler to peruse individual hotels and their offered amenities. The website also has a centralized reservation and booking system. Koehler does not maintain a website independent from Marriott International's website for his franchise hotel, and his independent advertising for the hotel focuses upon Wyoming and Colorado. Koehler's franchise agreement with Marriott International requires him to pay a percentage of room revenue into a marketing fund administered by Marriott International. The fund is used for television commercials and digital advertising of the various Marriott International brands and not of any specific Marriott franchise hotel. A representative of Koehler's hotel franchise testified that he did not know if the marketing fund was used to pay for Marriott International's central website for reservations. From 2010 to 2013, Georgia residents generated approximately $40,000 in revenue for Koehler's hotel, accounting for less than one percent of the total revenue for each year.

As grounds for personal jurisdiction in Georgia, the Pascarellis primarily rely on the listing for Koehler's franchise hotel on the Marriott International website and the ability of residents to book their hotel reservation on the website. The Pascarellis assert that Koehler is benefitting from Marriott International's "name, flagship, and infrastructure to maintain a website whereby Georgia guests book their ... reservations at [Koehler's hotel]. ..." Koehler argues that any Internet activity or Georgia advertising by Marriott International cannot be imputed to Koehler to support a finding of sufficient minimum contacts with Georgia. For purposes of our analysis, we assume, without deciding, that Marriott International's Internet activity can be used to determine the extent of Koehler's contacts with Georgia.

When analyzing specific² personal jurisdiction based on online interactions via an Internet website, many jurisdictions utilize the "sliding scale" first articulated in Zippo Mfg. Co. v. Zippo Dot Com , 952 F.Supp. 1119, 1124 (III) (A) (2) (W.D. Pa. 1997). See, e.g., Abdouch v. Lopez , 285 Neb. 718, 829 N.W.2d 662, 671 (V) (2) (a) (2013). The sliding scale represents a continuum in which "the likelihood that personal jurisdiction can be constitutionally exercised is directly proportionate to the nature and quality of commercial activity that an entity conducts over the Internet." Zippo , supra, 952 F.Supp. at 1124 (III) (A) (2). In Aero Toy Store , supra, 279 Ga. App. at 522 (1), 631 S.E.2d 734, this Court adopted that sliding-scale mode of analysis, explaining:

[A]t one end of the spectrum are situations where a defendant clearly does business over the Internet. If the defendant enters into

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