William W. Bond, Jr. & A., Inc. v. Montego Bay Dev. Corp.

• Decision Date: 17 December 1975
• Docket Number: No. C-75-299.,C-75-299.
• Citation: 405 F. Supp. 256
• Parties: WILLIAM W. BOND, JR. & ASSOCIATES, INC. v. MONTEGO BAY DEVELOPMENT CORPORATION et al.
• Court: U.S. District Court — Western District of Tennessee

405 F. Supp. 256

WILLIAM W. BOND, JR. & ASSOCIATES, INC. v. MONTEGO BAY DEVELOPMENT CORPORATION et al.

No. C-75-299.

United States District Court, W. D. Tennessee, W. D.

December 17, 1975.

John S. Richbourg, Memphis, Tenn., for plaintiff.

Lee L. Piovarcy, Memphis, Tenn. for defendants.

MEMORANDUM OPINION AND ORDER

WELLFORD, District Judge.

This diversity action arose out of a contract between William W. Bond, Jr. and Associates, Inc. (hereinafter "Bond, Inc." or "plaintiff"), a Tennessee corporation, and Montego Bay Development Corp., Wisterco Investments, Inc., both Maryland corporations, and William R. Bloxom, a Maryland resident (hereinafter "defendants"). The contract, attached as Exhibit A to the complaint, provided that Bond, Inc. was to prepare architectural, mechanical, electrical and structural plans for a Holiday Inn to be constructed in Ocean City, Maryland, on behalf of the defendants. The complaint alleges that although Bond, Inc. has performed its obligations under the contract, the defendants have failed or refused to pay the full amount owed Bond, Inc. for its services, for the recovery of which this action was brought.¹

The complaint alleges that the Court has in personam jurisdiction over defendants under the provisions of Tenn. Code Ann. § 20-235 et seq., (Supp. 1974), the so-called "Long-Arm Statute." Specifically, plaintiff relies upon two subsections of § 20-235, to-wit:

20-235. Persons who are nonresidents of Tennessee . . . are subject to the jurisdiction of the courts of this state as to any action or claim for relief arising from:

(a) The transaction of any business within the state;

. . . . . .

(e) Entering into a contract for services to be rendered or for materials to be furnished in this state.

The defendants deny this Court's power to bind them by a judgment in personam and have filed a motion to dismiss or, in the alternative, to quash service of process, along with affidavits in support thereof. The defendants deny that they have the minimum contracts with the forum state required by due process as interpreted by the courts. Defendants rely upon International Shoe Company v. State of Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945) and its progeny of decisions from the United States Supreme Court, Darby v. Superior Supply Company, 224 Tenn. 540, 458 S.W.2d 423 (1970), Dunavant v. Perkins, 498 S.W. 2d 905 (Tenn.1973), and two unreported (insofar as ascertained to date) decisions of the Tennessee Court of Appeals, Perkins Foods, Inc. v. Motor Inn Management, Inc., et al., W.S., June 18, 1975, and Howard S. Patton, d/b/a W. J. Smith & Sons v. Royal Scotsman Inns, Corp., E.S., June 24, 1975.

The plaintiff, on the other hand, contends that jurisdiction properly obtains under the Long-Arm Statute, and relies mainly upon Southern Machine Company v. Mohasco Industries, Inc., 401 F.2d 374 (6th Cir. 1968), In-Flight Devices Corp. v. Van Dusen Air, Inc., 466 F.2d 220 (6th Cir. 1972), and a decision of the Shelby County Circuit Court, Bond Investments, Inc. v. South Hills, Inc., Docket No. 42380, April 9, 1970.

The Court would note that, in the words of one recent writer, "the present status of jurisdiction over foreign corporations in Tennessee is most aptly described as confused." Comment, "Jurisdiction Over Foreign Corporations in Tennessee," 42 Tenn.L.Rev. 325, 352 (1975). The United States Supreme Court has observed:

Due 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.'

International Shoe Co. v. State of Washington, supra, 326 U.S. at 316, 66 S.Ct. at 158, (citations omitted) The application of the minimum contact rule will vary with the quality and nature of the defendant's activity, but 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.

Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1240, 2 L.Ed.2d 1283 (1958)

This Court also has the guidance of the Sixth Circuit Court of Appeals from Southern Machine Company v. Mohasco Industries, Inc., supra at 381:²

. . . three criteria emerge for determining the present outerlimits of in personam jurisdiction based on a single act. First, the defendant must purposefully avail himself of the privilege of acting in the forum state or causing a consequence in the forum state. Second, the cause of action must arise from the defendant's activities there. Finally, the acts of the defendant or consequences caused by the defendant must have a substantial enough connection with the forum state to make the exercise of jurisdiction over the defendant reasonable.

There is no rigid yardstick by which a court can determine whether the assertion of in personam jurisdiction over a non-resident comports with due process. Are there "minimum contacts" with the state of Tennessee under the facts and circumstances here present?

The contract in question, dated February 22, 1974, is in the form of a letter from plaintiff to Dr. Rufus C. Johnson of Salisbury, Maryland, whereby plaintiff offered to perform architectural services for a specified consideration. It provided (in part):

This agreement has been negotiated and executed in the State of Tennessee and shall be construed and interpreted in accordance with the laws of that State. If this agreement is acceptable to you, please indicate your acceptance by executing below in the appropriate space.

The `letter' was signed as "Accepted" by Montego Bay Development Corp./James B. Caine, Pres./Wisterco Investments, Inc./Rufus C. Johnson, Pres./William R. Bloxom, and below said signatures is the date "2-28-74." These individuals signing have, however, filed affidavits denying that either of the corporate defendants at any time transacted business in Tennessee, denying ever being physically present in Tennessee, and asserting that the negotiations leading up to the execution of the contract occurred with plaintiff's then vice president (now president), Jack N. Schaffer, in Maryland. All affiants say they signed the document in Maryland, and affiants Caine and Johnson state their belief and recollection to be that Schaffer also signed the document in Maryland on behalf of Bond, Inc.

Jack N. Schaffer, on the other hand, in an affidavit, states that the services of Bond, Inc. were initially solicited by defendants through a telephone conversation, and that he went to Maryland to visit proposed construction sites and met with the principals of defendants to discuss the "general requirements" for the particular project. Schaffer further asserts that upon his return to Memphis, he supervised preparations of "preliminary plans" for the project, during the course of which correspondence and telephone conversations ensued between the parties. Preliminary plans were mailed to defendants and, following approval, working drawings were prepared, also approved by defendants. Affiant, Schaffer, also asserts that substantially all of the services performed by plaintiff under the contract were performed at the Memphis offices of Bond, Inc.

It does not conclusively appear whether Schaffer signed the letter contract on behalf of Bond, Inc. in Memphis or in Maryland, but apparently the contract was not finally `executed' until defendants affixed their signatures to it in Maryland. Plaintiff emphasizes the fairness of asserting jurisdiction over nonresident defendants who entered a contract, such as here, with the foreseeable consequence that substantial services would be performed in the forum state. See Bond Investments, Inc. v. South Hills, Inc., supra.³

Although Darby v. Superior Supply Co., supra, is probably the leading decision of the Tennessee Supreme Court regarding Tenn.Code Ann....