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Tennessee Court Of Appeals Holds Alabama Based Contractor Must Litigate In Davidson County

The Tennessee Court of Appeals recently held Tennessee courts could exercise personal jurisdiction over Pierce & Allred Construction, Inc. (the “Defendant”), an Alabama-based company. Baskin v. Pierce & Allred Construction, Inc., No. M202100144COAR3CV, 2022 WL 258631 (Tenn. Ct. App. Jan. 28, 2022). The Court of Appeals also held Davidson County, Tennessee was a proper venue for the action, even though the allegedly defective construction took place in Alabama. This ruling reversed the trial court’s order granting the Defendant’s Motion to Dismiss for lack of personal jurisdiction and improper venue.

In the fall of 2016, Roger Baskin (the “Plaintiff”) hired the Defendant to perform some demolition work and construct a lake house on his property in Muscle Shoals, Alabama. The lake house designs were prepared in Tennessee by a Nashville-based company. The lake house was expected to be completed around January of 2018.

On September 3, 2020, Plaintiff filed his Complaint against the Defendant. Plaintiff alleged breach of contract and breach of warranty claims. Plaintiff alleged he had to hire another contractor to finish the Defendant’s work and make repairs on the defective construction.

Defendant moved to dismiss Plaintiff’s Complaint for lack of personal jurisdiction and improper venue. Defendant argued it did not have minimum contacts with Tennessee to establish personal jurisdiction. Plaintiff countered by arguing Defendant did have sufficient minimum contacts with the state. Plaintiff highlighted Defendant obtained a certificate of authority to transact business in Tennessee, successfully applied for a Tennessee contractor’s license, and built a large home in Savannah, Tennessee. The trial court ultimately granted the Defendant’s Motion to Dismiss as the contacts were not “continuous and systematic” and most of the events giving rise to the lawsuit occurred in Alabama.

The Tennessee Court of Appeals reversed. The Court of Appeals held Defendant was subject to specific personal jurisdiction in Tennessee because Defendant purposefully solicited and conducted business in the state. The Court of Appeals noted Defendant purchased lumber and supplies in Tennessee and used the plans designed by a Nashville company to construct the lake house. Defendant also sent regular communications and invoices to the Plaintiff, who was a Tennessee resident.

Tennessee’s venue statute for corporations states venue is proper in the county where the defendant’s registered agent for service of process is located or the county where the person designated by statute as the defendant’s agent is located. When the Defendant applied for a contractor’s license in Tennessee, it designated a Davidson County resident as its registered agent. That agent was served as was the Tennessee Secretary of State. When service was made, however, the contractor’s license had expired. Defendant argued venue was not proper as service on the registered agent was insufficient. The individual was no longer serving as Defendant’s registered agent due to the expired license.

The Court of Appeals rejected this argument, noting service on the Secretary of State was valid under the other Tennessee statute. Because service was proper on the Secretary of State, whose office is in Davidson County, the Court of Appeals held venue was also proper.