Progeny Marketing v. Farmers & Merchants Bank, No. M2003-02011-COA-R3-CV (TN 4/7/2005), M2003-02011-COA-R3-CV.

• Decision Date: 07 April 2005
• Docket Number: No. M2003-02011-COA-R3-CV.,M2003-02011-COA-R3-CV.
• Parties: PROGENY MARKETING v. FARMERS & MERCHANTS BANK.
• Court: Tennessee Supreme Court

Page 1

Unpublished Opinion

PROGENY MARKETING v. FARMERS & MERCHANTS BANK.

No. M2003-02011-COA-R3-CV.

Court of Appeals of Tennessee, at Nashville.

September 7, 2004 Session.

Filed April 7, 2005.

Appeal from the Chancery Court for Williamson County; No. 29602; Donald P. Harris, Chancellor.

Judgment of the Chancery Court Reversed.

Alexandra Coulter Cross, Anne-Marie Moyes, Nashville, Tennessee, attorneys for the appellant, Progeny Marketing Innovations, Inc.

P. Edward Schell, Franklin, Tennessee, attorney for the appellee, Farmers & Merchants Bank of Eatonton, Georgia.

William B. Cain, J., delivered the opinion of the court, in which William C. Koch, JR., P.J., M.S., and Patricia J. Cottrell, J., joined.

OPINION

WILLIAM B. CAIN, Judge.

This case involves a dispute regarding whether Tennessee courts have personal jurisdiction over a Georgia bank regarding a contract for business services provided by a Tennessee business. The trial court found no personal jurisdiction over the Georgia bank and dismissed Plaintiff's Complaint for lack of personal jurisdiction. We find that the Tennessee Long Arm Statute does give Tennessee courts personal jurisdiction over the Georgia bank; therefore, we reverse this case and remand it for further proceedings.

I.

Plaintiff, Progeny Marketing Innovation, Inc., ("Progeny") is a Delaware corporation with its principal place of business in Franklin, Tennessee. Defendant, Farmers and Merchants Bank of Eatonton, Georgia, ("Bank") is a financial institution headquartered in Georgia, with no offices in Tennessee. The Bank hired Progeny to create, market and administer a package of services to its customers in Georgia. These services included such things as insurance, discounts, travel benefits, and credit card protection services and were offered to bank customers for a fee based on the level of services requested and the minimum monthly balance in their account.

The parties signed a contract for Progeny's services on June 26, 1992 to run through April 1, 2001. Later, an additional five-year contract was signed to run from April 1, 2001 to April 1, 2006 (collectively, the "Contract"). In March of 2003, the Bank decided to terminate Progeny's services and sent a letter to Progeny stating that its services would terminate effective July 1, 2003. At that time, there was still three years remaining on the Contract.

Progeny filed suit on this Contract in the state of Tennessee requesting declaratory judgment and injunctive relief. The Bank filed a Motion to Dismiss for Lack of Personal Jurisdiction, which was granted by the chancery court. Progeny then filed a Motion to Alter or Amend, which was denied by the chancery court. This appeal by Progeny ensued.

This appeal involves a review of the trial court's grant of the Bank's Motion to Dismiss for Lack of Personal Jurisdiction. In reviewing the trial court's decision to grant the Motion to Dismiss, we take Plaintiff's allegations of fact as true and review the decision of the lower court de novo with no presumption of correctness to determine if Plaintiff presented a prima facie case for personal jurisdiction. Tenn. R. App. P. 13(d); Bell v. Icard, Merrill, Cullis, Timm, Furen and Ginsburg, P.A., 986 S.W.2d 550, 554 (Tenn. 1999); United Agric. Servs., Inc. v. Scherer, 17 S.W.3d 252, 255 (Tenn.Ct.App. 1999); Chase Cavett Servs., Inc. v. Brandon Apparel Group, Inc., No. 02A01-9803-CH-00055, 1998 WL 846708, at *1 (Tenn.Ct.App. Dec. 7, 1998).

The plaintiff in an action bears the burden of establishing a prima facie case that exercising personal jurisdiction over the defendant is proper. Davis Kidd Booksellers, Inc. v. Day-Impex, Ltd., 832 S.W.2d 572, 577 (Tenn.Ct.App. 1992); accord CompuServe, Inc. v. Patterson, 89 F.3d 1257, 1261-62 (6^th Cir.1996); Market/Medica Research, Inc. v. Union-Tribune Publ'g Co., 951 F.2d 102, 104 (6^th Cir. 1991), cert. denied, 506 U.S. 824, 113 S.Ct. 79, 121 L.Ed.2d 43 (1992); Theunissen v. Matthews, 935 F.2d 1454, 1458 (6^th Cir.1991); Serras v. First Tennessee Bank Nat'l Ass'n, 875 F.2d 1212, 1214 (6^th Cir.1989). If the defendant challenges the trial court's personal jurisdiction over him by filing a properly supported motion to dismiss, "the plaintiff may not stand on his pleadings but must, by affidavit or otherwise, set forth specific facts showing that the court has jurisdiction." Theunissen, 935 F.2d at 1458; accord Serras, 875 F.2d at 1214.

In ruling on the defendant's motion to dismiss for lack of personal jurisdiction, however, the trial court is required to construe the pleadings and affidavits in the light most favorable to the plaintiff. Chase Cavett Servs., Inc. v. Brandon Apparel Group, Inc., No. 02A01-9803-CH-00055, 1998 WL 846708, at *1 (Tenn.Ct.App. Dec. 7, 1998) (no perm. app. filed); accord CompuServe, 89 F.3d at 1262; Market/Media Research, 951 F.2d at 104; Theunissen, 935 F.2d at 1459; Serras, 874 F.2d at 1214. Under this standard, dismissal is proper only if all of the specific facts alleged by the plaintiff collectively fail to state a prima facie case for jurisdiction. CompuServe, 89 F.3d at 1262; Market/Media Research, 951 F.2d at 105; Theunissen, 935 F.2d at 1459.

Mfrs. Consolidation Serv., Inc. v. Rodell, 42 S.W.3d 846, 854-55 (Tenn.Ct.App. 2000).

The sole issue on appeal is whether the chancellor erred in granting Brandon's motion to dismiss Chase's claim for lack of personal jurisdiction. When considering a motion to dismiss, the trial court will give a liberal construction to the plaintiff's complaint and will assume that the averments contained in the complaint are true. See Lewis v. Allen, 698 S.W.2d 58,59 (Tenn.1985); Holloway v. Putnam County, 534 S.W.2d 292, 296 (Tenn.1976). The trial court is not required to make findings of fact but must only determine whether the plaintiff's complaint has alleged facts sufficient to survive the motion to dismiss. See S & S Screw Mach. Co. v. Cosa Corp., 647 F.Supp. 600, 605 (M.D.Tenn.1986). Because the issue presented on appeal is a question of law, our review of the chancellor's ruling is de novo with no presumption of correctness. See Lucius v. City of Memphis, 925 S.W.2d 522, 524 (Tenn.1996); T.R.A.P. 13(d).

Brandon Apparel, 1998 WL 846708 , at *1.

II.

The Bank filed two affidavits in support of its Motion to Dismiss. One was the affidavit of Joseph P. Hudson, a bank officer and director. In this affidavit, he stated:

During my years of service with the bank, we have done business with a customer service company formerly known as FISI Madison and presently known as Progeny Marketing Innovations, Inc. The bank's marketing representative, Patricia Gibson, has worked primarily with this company, but from time to time I have also talked with various company representatives about particular services that our customers were receiving or not receiving satisfactorily. The customers that should be served are located primarily in Eatonton and other areas in the State of Georgia.

All written contracts were signed in our bank here in Eatonton, Georgia. Progeny Marketing Innovations, Inc. promised to provide the following services/benefits for our bank's customers:

(1) Provide discount booklets to customers for such things including but not limited to restaurants, motels, etc.;

(2) Provide eye wear discounts;

(3) Provide $100,000.00 or $150,000.00 in Common Carrier Accidental Death Insurance;

(4) Provide $10,000.00 24-hour Accidental Death Insurance;

(5) Provide credit card registration;

(6) Provide key ring registration;

(7) Provide discount prescription plan;

(8) Provide medical emergency data card;

(9) Register child's photo and description with ID Network Safety Service; and

(10) Receive monthly cards noting important dates to remember.

The second affidavit was from Patricia Gibson, a bank employee who handled marketing, advertising and public relations. This affidavit stated as follows:

We have contracted with the services of FISI Madison, now Progeny Marketing Innovations, Inc. since 1992. To my knowledge all documents were signed here at the Farmers and Merchants Bank in Eatonton, Georgia and all services were to be for our customers in Georgia.

I personally dealt with the Progeny representative. These meetings were at our offices here in Eatonton, Georgia. The contracts were signed at our offices here in Eatonton, Georgia. The services promised by Progeny were to be performed here in Georgia.

In response to the Bank's Motion to Dismiss, Progeny filed the affidavit of Michael Perna, vice president of sales for Progeny. In this affidavit, Mr. Perna stated:

2. The Tiered Senior Package Services Agreement dated June 26, 1992 (the "Agreement") between Progeny and Farmers & Merchants Bank of Eatonton, Georgia (the "Bank"), and the April 25, 1995 and January 19, 1998 amendment to the Agreement, state that it is binding upon the parties" when executed by an authorized officer of FISI-Madison in Nashville, Tennessee." The November 30, 1999 and the April 1, 2001 amendments to the Agreement state that such amendments are binding upon the parties "when executed by an authorized officer of FISI-Madison in Brentwood, Tennessee." A copy of the Agreement, as amended, is attached to the Verified Complaint as Exhibit A.

3. It is my practice, and the practice of other Progeny officers, to review and approve or reject, at Progeny's executive offices, proposed contracts submitted by Progeny's account executives. Prior to the current location of Progeny's executive offices in Franklin, Tennessee, Progeny's executive offices were located in Nashville, Tennessee and Brentwood, Tennessee. The Progeny sales staff who visit client financial institutions such as the Bank lack the authority to bind Progeny to a contract such as the one at issue. As the Agreement and the amendments state, the review, approval and acceptance of the contract by Progeny's officers is performed at Progeny's offices in Tennessee.

4. The Bank has had a business...