Shelby Mut. Ins. Co. v. Moore

• Decision Date: 23 December 1981
• Citation: 645 S.W.2d 242
• Parties: SHELBY MUTUAL INSURANCE COMPANY, Appellant, v. William MOORE and Evelyn Janice Moore, Appellees. 645 S.W.2d 242
• Court: Tennessee Court of Appeals

Page 242

645 S.W.2d 242

SHELBY MUTUAL INSURANCE COMPANY, Appellant, v. William MOORE and Evelyn Janice Moore, Appellees.

645 S.W.2d 242

Court of Appeals of Tennessee,

Western Section.

Dec. 23, 1981.

Permission to Appeal Denied by

Supreme Court March 8, 1982.

Waring, Cox, Sklar, Allen, Chafetz & Watson, Memphis, for appellant.

Ralph D. Golden, Memphis, for appellees.

OPINION

BROOKS McLEMORE, Special Judge.

This case involves the application of our Long Arm Statute. ¹

Plaintiff-appellant, Shelby Mutual Insurance Company, a Tennessee corporation, issued a policy of liability and property insurance to Southland Flyers, Inc., a Tennessee corporation doing business in Shelby County. The policy insured Southland against property loss resulting from damage to its aircraft. At the time, Southland was in the business of renting aircraft to the public at its location in Memphis.

Defendants-appellees, William and Janice Moore, rented various airplanes from Southland at its Memphis office on numerous occasions between December, 1975 and July, 1979. On or about July 20, 1979, Defendants rented a Cessna airplane, registration # N53097, from Southland. They executed a written lease agreement or "trip ticket" in connection with this rental providing for a flight from Memphis to Sac City, Iowa and return flight. On the return flight to Memphis, the plane crashed in Missouri. Plaintiff instituted this action on July 3, 1980 against the defendants to collect for its subrogation interests, claiming that the Defendants' negligent operation of the Cessna in failing to have an adequate fuel supply on board the airplane caused the accident.

The jurisdictional question arises because the Defendants resided in Shelby County when the cause of action arose, and when the Complaint was filed on July 3, 1980. After the Complaint was filed, but before service was effected, the Defendants moved from Shelby County on July 9, 1980 where they had resided for the previous three years. Since the original service of process came back "not to be found," Plaintiff prepared an alias summons which it forwarded to the Secretary of State pursuant to T.C.A. Sec. 20-2-214. The Defendants received this alias summons at their address in Odebolt, Iowa, on September 15, 1980.

Upon motion of the Defendants, the Trial Court dismissed the cause of action for lack of jurisdiction.

Plaintiff appeals from the action of the Trial Court.

The issues presented are: (1) whether in personam jurisdiction over the Defendants can be predicated upon T.C.A. Sec. 20-2-214(a)(1) and (5) regardless of the legal theories upon which recovery is sought? (2) Whether there are minimum contacts sufficient to allow Tennessee courts to properly extend jurisdiction over the Defendants by the operation of the provisions of T.C.A. Sec. 20-2-214(a)(6).

Defendants contend, and the Trial Court apparently agreed, that since Plaintiff's cause of action is for the alleged negligent operation of an aircraft and nowhere in the Complaint has the Plaintiff alleged a breach of contract or set out the elements of such a cause of action, subsections (1) and (5) of our Long Arm Statute are not a sufficient basis for Tennessee Courts to assert jurisdiction, and that the minimum contacts necessary for a finding of jurisdiction are not present under subsection (6). We note at the outset that no allegation is made in the complaint, and the Plaintiff has not argued here that any tortious act or omission occurred in this state and therefore, subsection (2) is not applicable.

Under the facts stated there can be no doubt that the defendants transacted business in this state and that they entered into a contract for services to be rendered and for materials to be furnished in this state and that Tennessee has an interest in resolving this litigation.

We are of the opinion that defendants' contacts with Tennessee at the time the cause of action arose were so pervasive that the exercise of in personam jurisdiction does not offend traditional notions of fair play and substantial justice and that the Circuit Court of Shelby County, Tennessee, has jurisdiction of the defendants under the provisions of subsection (6) of our Long Arm Statute and we therefore reverse and remand for appropriate proceedings not inconsistent with this opinion.

The effect of the addition of subsection (6) to our statute is dealt with at length in the case of Gullett v. Qantas Airways Ltd., 417 F.Supp. 490 (M.D.Tenn.1975). Judge Morton in a well reasoned analysis dealing with that subject and also the limits the Due Process Clause imposes on the exercise of jurisdiction of state courts over non-resident defendants, said:

"Defendant contends that under the above statute, it is required that the cause of action arise out of an activity in Tennessee. The court does not agree with this interpretation of the Tennessee long arm statute.

T.C.A. Sec. 20-235 was amended by the addition of subsection (f) in April of 1972. It is the position of the defendant that subsection (f) did virtually nothing to change the meaning of the long arm statute; that it was '... solely a legislative reaffirmation of the holding in Southern Machine Co. v. Mahasco Industries, Inc., 401 F.2d 374 (6th Cir.1968) that:

' "[F]or causes of action arising out of a non-resident defendant's business activities in the State, the Tennessee legislature intended to extend the jurisdiction of Tennessee courts over a non-resident to the full extent permitted by the Fourteenth Amendment." 401 F.2d at 377.' (Defendant's Reply Memorandum Brief in Support of Motion to Dismiss, p. 20.)

The court rejects this contention. At the time Mohasco was decided, the above quote from that case was a valid interpretation of the Tennessee long arm statute. Subsection (f) had not been added to the statute, and subsections (a) through (e) all contain the limitation 'within this state' or 'in this state.'

However, with the addition of subsection (f), the legislature expanded the jurisdiction of the courts of this state to "any action or claim for relief arising from ... (f) any basis not inconsistent with the constitution of this state or of the United States." The language of the statute is clear. There is no mention of any "within the state" limitation in subsection (f), and one can only assume that it was the intent of the legislature not to include such a restriction in that subsection.

The available legislative history on subsection (f) is scanty. ¹ The bill adding subsection (f) to T.C.A. Sec. 20-235 (Senate Bill No. 1640, Public Acts Ch. 689, Sec. 1) was apparently passed in the Senate without discussion. Representative Burnett, in introducing the bill in the House, stated:

'... primarily what this bill does is expand the right of our Tennessee citizens to bring suit under our long arm statute against non-residents outside of the state. As you know, we have a long arm statute in Tennessee, and some of our local court decisions have somewhat thwarted the effect of that by limiting the use of that particular section. This bill will do no more than give the Tennessee citizens--the people of our state--the right to additional process and additional reasons for service of process in accordance with the Constitution of the United States.' (Tennessee Archives, Legislative Recordings, April 4, 1972, H-195) (emphasis supplied.)

Additionally, T.C.A. Sec. 20-240 provides that the long arm statute is remedial in nature and is to be liberally construed. Thus, the clear language of the statute, its legislative history, and T.C.A. Sec. 20-240 convince this court that subsection (f) expands the jurisdiction of Tennessee courts under T.C.A. Sec. 20-235 to the full constitutionally permissible limits. This conviction is supported by the Tennessee Supreme Court's language in W.B. Dunavant & Co. v. Perkins, 498 S.W.2d 905 (Sup.Ct.1973), to the effect that:

'... under paragraph (f), the courts of this state have jurisdiction to the full extent constitutionally permitted.' at 909

Federal courts have likewise interpreted subsection (f) as expanding the long arm statute to its constitutional limits. In Walker v. Kawasaki Motors Corporation, 62 F.R.D. 607, 610 (E.D.Tenn.1973), Judge Taylor noted: 'This addition, therefore, made clear the legislative intention to extend the Tennessee Act, for all purposes, to the limits of the Due Process Clause.'

The court does not propose to discuss the cases pertaining to T.C.A. Sec. 20-235 which were decided before the addition of subsection (f) to the statute, as this subsection changes the statute so substantially that a discussion of prior cases would not be of any particular assistance.

Having determined that the Tennessee long arm statute confers jurisdiction to the full extent allowable under the Due Process Clause of the Fourteenth Amendment, we now turn to the question of what limits the Due Process Clause imposes on the exercise of jurisdiction by state courts over non-resident defendants.

The Supreme Court of the United States has decided five cases which are of significance in delineating the limits placed upon in personam jurisdiction by the Due Process Clause. These cases, sometimes referred to as 'the long arm quintet' (see Gelineau v. New York University Hospital, 375 F.Supp. 661 (D.N.J.1974) include: International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945); Perkins v. Benguet Consolidated Mining Co., 342 U.S. 437, 72 S.Ct. 413, 96 L.Ed. 485 (1952); Travelers Health Asso. v. Virginia, 339 U.S. 643, 70 S.Ct. 927, 94 L.Ed. 1154 (1950); McGee v. International Life Insurance Co., 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223 (1957); and Hanson v. Denckla, 357 U.S. 235, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958).

International Shoe Co., supra, is the leading case in establishing the boundaries within which states may exercise jurisdiction over non-resident defendants. In this case, the Supreme Court set forth the 'minimum...