Walker v. Nationwide Ins. Co.

• Decision Date: 17 October 1990
• Docket Number: 01-A-01-9003-CV00109,Nos. 89C-3241,s. 89C-3241
• Citation: 813 S.W.2d 135
• Parties: Marijka Ann WALKER, Plaintiff/Appellant, v. NATIONWIDE INSURANCE COMPANY, Defendant/Appellee. 813 S.W.2d 135
• Court: Tennessee Court of Appeals

Page 135

813 S.W.2d 135

Marijka Ann WALKER, Plaintiff/Appellant, v. NATIONWIDE INSURANCE COMPANY, Defendant/Appellee.

Nos. 89C-3241, 01-A-01-9003-CV00109.

813 S.W.2d 135

Court of Appeals of Tennessee,

Western Section, at

Nashville.

Oct. 17, 1990.

Application for Permission to Appeal

Denied by Supreme Court

April 8, 1991.

Douglas S. Johnston, Jr., Nashville, for plaintiff/appellant.

Thomas M. Donnell, Jr., Nancy L. Childress, Stewart, Estes & Donnell, for defendant/appellee.

FARMER, Judge.

The instant appeal stems from the dismissal of the appellant's action on the basis of lack of in personam jurisdiction, insufficient service of process, and improper venue.

On July 4, 1987, Marijka Walker (plaintiff/appellant) was involved in an auto accident while driving through Campbell County, Tennessee. Donna Johnson, the driver of the other automobile involved in the accident, was an insured of Nationwide Insurance Company (defendant/appellee). Donna Johnson was a resident of New York at the time of the accident and had obtained her automobile insurance from Nationwide in New York.

Nationwide is an Ohio corporation with its principal place of business in Ohio. Nationwide has qualified to do business and is, in fact, doing business in Tennessee. Nationwide has appointed the Commissioner of Insurance as its agent for service of process pursuant to T.C.A. Sec. 56-2-103(a)(3).

According to the complaint, after the accident Nationwide began negotiations with Ms. Walker on Donna Johnson's behalf. The parties reached an agreement on the property damage owed the plaintiff, but allegedly engaged in further settlement negotiations regarding personal injury damages. Ms. Walker alleges that Nationwide fraudulently induced her to forego her right to bring suit against Donna Johnson within Tennessee's statute of limitations. Nationwide allegedly promised Ms. Walker that they would continue settlement negotiations and assured her that the passing of the statutory period would not preclude a settlement. After the action was time barred, however, the defendant refused to undergo further negotiations.

Thereafter, the plaintiff filed suit in Circuit Court for Davidson County, Tennessee contending that Nationwide was guilty of bad faith negotiations of a claim, fraud, constructive fraud, intentional infliction of emotional distress, outrageous conduct, breach of express and implied contract, breach of quasi contract, and negligent supervision of its employees. All conversations that gave rise to this action occurred while the plaintiff was either in Michigan, Ohio, or Kentucky and the defendant's representative was in New York.

I.

The issue, as we perceive it, now before this Court is:

Whether the trial court properly dismissed the plaintiff's action on the basis of (a) lack of in personam jurisdiction, (b) insufficient service of process, and (c) improper venue.

A.

Nationwide contends that an assertion of in personam jurisdiction over them would violate their "due process rights" as provided for in the Fourteenth Amendment to the United States Constitution. ¹ Defendant argues that since both parties to this litigation are non-residents and the cause of action did not arise here, nor does it have any connection to Nationwide's contacts here, then this forum cannot exercise personal jurisdiction over them for purposes of this litigation.

It is uncontroverted that Ms. Walker is a non-resident of Tennessee and Nationwide is a foreign corporation ² that has qualified to do and is doing business in Tennessee. Additionally, it is apparent that this cause of action did not arise in Tennessee and the action does not have any connection to Nationwide's contacts here.

Before the adoption of the "minimum contacts standard," International Shoe v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945), the assertion of personal jurisdiction over foreign corporations was accomplished under the "consent theory." (See Davenport v. State Farm Mutual Automobile Insurance Company, 756 S.W.2d 678, 679 (Tenn.1988), for a discussion of the adoption of the consent theory.)

Tennessee requires foreign corporations doing business in Tennessee to appoint an agent for service of process. Under the consent theory, a foreign corporation was deemed to have consented to in personam jurisdiction if that agent was served in Tennessee. See e.g., Peters v. Neely, 84 Tenn. (16 Lea) 275 (1886); Chicago & Alton Railroad Co. v. Walker, 77 Tenn. (9 Lea) 475 (1882); See also St. Claire v. Cox, 106 U.S. 350, 1 S.Ct. 354, 27 L.Ed. 222 (1882).

Initially, a court's jurisdiction over foreign corporations was limited to causes of action which occurred in the forum state. Neely, 84 Tenn. at 281. However, in light of the increase in corporations and the scope of their business, the Tennessee Supreme Court modified this limitation and enunciated the following principles as being applicable to foreign corporations "doing business" in Tennessee.

"Where the jurisdiction is not limited to business done within the state, either by statutory provisions relating to the mode of service, or those relating to the jurisdiction of the subject-matter." ... 21 R.C.L. 1345....

"[A] foreign corporation may be sued on a transitory cause of action in any state it is doing business and can be served with process regardless of whether the cause of action arose within or without the jurisdiction, and regardless of whether plaintiff resides within or without the state." [14a C.J. 1383.] (Emphasis added)

Alwood and Green v. Buffalo Hardware Lumber Company, 152 Tenn. (25 Thompson) 544, 548, 279 S.W. 795, 797 (1925). ³

Nationwide is a foreign corporation qualified and doing business in Tennessee with offices located in Tennessee. It admits being served by certified mail at its Davidson County office. It is apparent under the principles set forth in Alwood that Nationwide would be subject to jurisdiction here. The statute providing for service of process in this case ⁴ does not limit such service to business done within the state, and after Davenport, ⁵ with regard to a foreign corporation that has qualified to do business in Tennessee and has appointed a resident agent for service of process, a court's jurisdiction is not limited either. Therefore, according to Alwood it is immaterial in this case "whether the cause of action arose within or without the jurisdiction ... [or] whether plaintiff resides within or without the state." 279 S.W. at 797.

In International Shoe, 326 U.S. at 316, 66 S.Ct. at 158, the United States Supreme Court discarded the "consent" and "doing business" theories and adopted the "minimum contacts" standard. It was the court's intention in International Shoe to further expand long arm jurisdiction by the adoption of this minimum contacts standard. The minimum contacts test was to be a more flexible test which would require less corporate activity in the forum in order to confer personal jurisdiction upon a foreign corporation. ⁶ Burnham v. Superior Court of California, ⁷ --- U.S. ----, 110 S.Ct. 2105, 109 L.Ed.2d 631 (1990).

The court held in International Shoe that:

[D]ue process requires only that in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend "traditional notions of fair play and substantial justice." Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 343, 85 L.Ed. 278 [ (1940) ].

326 U.S. at 316, 66 S.Ct. at 158; See also Masada Investment Corp., 697 S.W.2d 332 (Tenn.1985).

Nationwide contends that the assertion of jurisdiction, if at all, is enumerated in Tennessee's long arm statute, Sec. 20-2-214(a)(6) which provides:

Jurisdiction of persons unavailable to personal service in state--Classes of actions to which applicable.--(a) Persons who are nonresidents 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 courts of this state as to any action or claim for relief arising from:....

(6) Any basis not inconsistent with the constitution of this state or of the United States;....

It was not until 1972 that subsection (a)(6) of T.C.A. Sec. 20-2-214 was added to the long arm statute. This amendment has been interpreted to comprehend the full jurisdiction allowable under the 14th amendment due process clause. Shelby Mutual Insurance Company v. Moore, 645 S.W.2d 242 (Tenn.Ct.App.1981); Davenport, 756 S.W.2d 678. The litmus test for determining the maximum extent permitted by the due process clause is the "minimum contacts" test. Masada, 697 S.W.2d 332.

The Tennessee Supreme Court in Masada stated the requisite factors which determine the existence or absence of minimum contacts:

[T]hree primary factors are to be considered in determining whether the requisite minimum contacts were present: the quantity of the contacts, their nature and quality, and the source and connection of the cause of action with those contacts. Two lesser factors to be considered are the interest of the forum State and convenience.

697 S.W.2d at 334, citing Shelby Mutual Insurance Company v. Moore, 645 S.W.2d at 246. Under Tennessee's "minimum contacts" test the cause of action need not arise in this forum, Masada, 697 S.W.2d at 334; Davenport, 756 S.W.2d 678, and all five factors set forth in Masada need not be present for the exercise of in personam jurisdiction to be proper. Shelby Mutual Insurance Company v. Moore, 645 S.W.2d at 246.

Despite case history and the expansive concept behind the adoption of the International Shoe doctrine, the defendant still insists that the exercise of in personam jurisdiction is in violation of the due process clause. Nationwide contends that the requirements set forth in the Masada test cannot be satisfied, therefore, an exercise of personal jurisdiction over them...