The Tennessee Supreme Court today reversed a decision of the Court of Appeals that had allowed a lawsuit against an Alabama homebuilder for alleged construction defects in a house built in Alabama to proceed in Tennessee. At issue in the case was the concept of personal jurisdiction, which deals with the authority of a court to enter a judgment against a particular defendant. Constitutional protections require that for a Tennessee court to have that authority, there must be a sufficient connection between the defendant and Tennessee to make it fair to require the defendant to defend the legal action in Tennessee.
The case arose from a breach of contract and breach of warranty lawsuit filed by Roger Baskin, a Tennessee resident. Mr. Baskin contracted with Pierce & Allred Construction, Inc. (“Pierce”), an Alabama corporation, for the construction of a custom lake house in Muscle Shoals, Alabama. Mr. Baskin became dissatisfied with the construction work and eventually filed suit in the Davidson County Chancery Court. The trial court granted Pierce’s motion to dismiss the lawsuit at a preliminary stage for lack of personal jurisdiction, finding that all events relevant to Mr. Baskin’s claims occurred in Alabama and that Pierce’s business activities in Tennessee were unrelated to the lawsuit.
Mr. Baskin appealed the trial court’s decision, and the Court of Appeals overturned the dismissal of the lawsuit. The Court of Appeals noted that the construction plans and some of the construction materials originated in Tennessee, and also noted that Pierce registered to do business in Tennessee and obtained a Tennessee contractor’s license as part of a different construction project. Based on these circumstances, the Court of Appeals concluded that Pierce’s contacts with Tennessee were substantial enough to support personal jurisdiction in Tennessee.
In its unanimous opinion, the Supreme Court disagreed. The Court determined that the sourcing of plans and materials from Tennessee was not Pierce’s decision, but rather the result of Mr. Baskin’s Tennessee connections. Thus, Pierce did not purposefully avail itself of the privilege of conducting business activities in Tennessee with respect to construction of the house in Muscle Shoals. Furthermore, although Pierce registered as a foreign corporation doing business in Tennessee and obtained a Tennessee contractor’s license, those activities were aimed at a wholly separate project located in Tennessee that occurred as the project in Alabama was winding down. Accordingly, the Court concluded that Mr. Baskin’s legal claims were not sufficiently related to Pierce’s business activities in Tennessee to support the exercise of personal jurisdiction by a Tennessee court in a lawsuit directed at the Muscle Shoals project.