                     IN THE COURT OF APPEALS OF TENNESSEE
                                 AT NASHVILLE
                                           August 5, 2003 Session

        ALBERT GREGUREK, ET AL. v. SWOPE MOTORS, INC., ET AL.

                      Direct Appeal from the Circuit Court for Marion County
                                No. 14252    J. Curtis Smith, Judge



                      No. M2002-02854-COA-R3-CV - Filed September 5, 2003


This case involves an interlocutory appeal from the trial court’s denial of the Defendant’s Motion
to Dismiss on grounds of lack of personal jurisdiction and/or Motion for Summary Judgment. We
reverse.

    Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Reversed; and
                                        Remanded

DAVID R. FARMER , J., delivered the opinion of the court, in which W. FRANK CRAWFORD , P.J., W.S.,
and HOLLY M. KIRBY, J., joined.

Roane Waring, III, Memphis, Tennessee, for the appellant, Swope Motors, Inc.

James B. M. Hooper, Chattanooga, Tennessee, for the appellees, Albert Gregurek and Sari Gregurek.

                                                     OPINION

        As alleged in the amended complaint, the Appellees, Texas residents Albert Gregurek
(“Mr. Gregurek”) and Sari Gregurek (“Ms. Gregurek”), traveled from Indiana to Kentucky in
route to Atlanta, Georgia on June 22, 1998. The Gregureks exited Interstate 65 in Elizabethton,
Kentucky and drove to Appellant’s, Swope Motors, Inc. (“Swope Motors”), repair shop for
replacement of their truck’s transmission line. While at Swope Motors, Ms. Gregurek told the
service foreman that she and Mr. Gregurek would be stopping in Murfreesboro, Tennessee before
continuing to Atlanta. On June 23, 1998, Ms. Gregurek picked up the repaired truck and began
traveling through Tennessee.1 As Ms. Gregurek was traveling down Interstate 24 on the eastern
side of Monteagle Mountain, she began smelling smoke and pulled the truck and the trailer it was
towing to the shoulder of the road. When she got out of the truck, she noticed that a fire had



         1
            Because of the delay in their travel, M r. Gre gurek took a plane to Atlanta on the night of June 22 enabling
him to attend work the next day.
started underneath the vehicle that eventually engulfed the truck and spread to the trailer causing
a total loss of the attached vehicles.

         Following the fiery incident, the Gregureks filed suit against Swope Motors in the Circuit
Court of Marion County, Tennessee for negligence or in the alternative for breach of contract. In
their answer, Swope Motors moved to dismiss the action or, in the alternative, for summary
judgment for lack of personal jurisdiction. An affidavit of Swope Motors’ president, Carl
Swope, was filed along with the motion to dismiss. In the affidavit, Mr. Swope stated that
Swope Motors does not have any offices in Tennessee, does not advertise in Tennessee, and does
not direct service or products to Tennessee. The only contact with Tennessee that Mr. Swope
mentioned was the occasional attendance of its employees at automobile auctions in Nashville.
Additionally, in response to one of the Gregureks’ interrogatories, Swope Motors answered that
its repair records for 1998 contained seventeen customers with Tennessee addresses, and that for
1997 and 1998 combined, Swope Motors had 29,500 total customers. Based on this information,
the trial court denied Swope Motors’ motion. The trial court inferred from the fact that since
seventeen customers were from Tennessee, Swope Motors derived substantial revenue and
regularly solicited and performed services for Tennessee residents. As a result, the trial court
held that personal jurisdiction over Swope Motors was proper under Tennessee’s long-arm
statute, specifically, Tenn. Code Ann. § 20-2-214 (1994) and § 20-2-223 (Supp. 2002).
Subsequent to the denial of Swope Motors’ motion, the trial court and this Court granted Swope
Motors’ motion to appeal by permission pursuant to rule 9 of the Tennessee Rules of Appellate
Procedure.

                                               Issue

       The sole issue for this interlocutory appeal is whether Tennessee has personal jurisdiction
over Swope Motors for the cause of action that the Gregureks brought against them.

                                             Analysis

         The trial court found jurisdiction over Swope Motors based on Tennessee’s long-arm
statute, Tenn. Code Ann. §§ 20-2-214, 20-2-223. Tennessee Code Annotated § 20-2-214 (1994)
provides in pertinent part:

       (a)     Persons who are non-residents of Tennessee . . . are subject to the
       jurisdiction of the courts of this state as to any action or claim for relief arising
       from:
               (1)     The transaction of any business within the state;
               (2)     Any tortious act or omission within this state;
               ...
               (6)     Any basis not inconsistent with the constitution of this state or of
       the United States;
               ...


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       (b)   “Person,” as used herein, includes corporations and all other entities which
       would be subject to service of process if present in this state.

Tennessee Code Annotated § 20-2-223 (Supp. 2002) provides in pertinent part:

       (a)     A court may exercise personal jurisdiction over a person, who acts directly
       or indirectly, as to a claim for relief arising from the person’s:
               ...
               (4)     Causing tortious in this state by an act or omission outside this
       state of the person who regularly does or solicits business, or engages in any other
       persistent course of conduct, or derives substantial revenue from goods used or
       consumed or services rendered, in this state; . . . . (emphasis added)

       Tennessee’s long-arm statute permits in personam jurisdiction so long as the Due Process
Clause of the Fourteenth Amendment is satisfied. J.I. Case Corp. v. Williams, 832 S.W.2d 530,
532 (Tenn. 1992) (citing Helicopteros Nacionales de Columbia, S.A. v. Hall, 466 U.S. 408,
413–14 (1984)). Due Process requires that a nonresident defendant have sufficient “minimum
contacts” with the forum state “such that the maintenance of the suit does not offend traditional
notions of fair play and substantial justice.” International Shoe Co. v. Washington, 326 U.S. 310,
316 (1945); J.I. Case, 832 S.W.2d at 532.

        Personal jurisdiction over a nonresident defendant may be exercised by either general or
specific jurisdiction. See Helicopteros, 466 U.S. at 414; Shoney’s, Inc. v. Chic Can Enter., 922
S.W.2d 530, 537 (Tenn. Ct. App. 1995) (citing Third Nat’l Bank in Nashville v. WEDGE Group,
Inc. 882 F.2d 1087, 1089 (6th Cir. 1989)). General jurisdiction is exercised over a nonresident
defendant in a suit that does not arise out of or relate to the contacts with the forum state but
rather the defendant’s contacts with the forum state are so “continuous and systematic” that
jurisdiction is proper. Helicopteros 466 U.S. at 414 n.9; International Shoe, 326 U.S. at 317; see
also Shoney’s 922 S.W.2d at 537. Specific Jurisdiction is exercised over a defendant in a suit
that directly arises out of or relates to one or more contacts that the defendant has with the forum.
Helicopteros, 466 U.S. at 414 n.8.

        In this case, the only contacts that Kentucky resident, Swope Motors, has with the forum
state, Tennessee, are the seventeen customers that have Tennessee addresses and the occasional
attendance of its employees at automobile auctions in Nashville. These contacts do not amount
to the “continuous and systematic” contacts required to confer general jurisdiction over Swope
Motors. See Helicopteros, 466 U.S. at 414 n.9; International Shoe, 326 U.S. at 317. If
jurisdiction is to exist in this case, it must be specific. See Shoney’s, 922 S.W.2d at 537.

        The trial court found specific jurisdiction based on Tennessee’s long-arm statute,
specifically subsection (4) of Tennessee Code Annotated § 20-2-223. The order of the trial court
states “Defendant was in the business of repairing vehicles and repaired seventeen vehicles in
1998 for individuals with Tennessee addresses. Based on these facts, this court infers that


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defendant derived substantial income for services rendered to Tennessee residents and regularly
solicited and performed services for Tennessee residents.” The facts are undisputed in that the
only contacts that Swope Motors had with Tennessee for 1998 was the occasional attendance of
its employees to automobile auctions and the listing of seventeen customers with Tennessee
addresses in Swope Motors’ records. First, there are no facts to support a finding that Swope
Motors regularly solicited business in Tennessee. Second, the fact that Swope Motors had
seventeen Tennessee customers in 1998 out of Swope Motors’ 29,500 customers for 1998 and
the year prior or occasionally buying a car at a Tennessee auction cannot support a finding of
regularly doing business in Tennessee. Finally, seventeen Tennessee customers in 1998 out of
29,500 for the same year and year prior cannot support a finding that Swope Motors derives
substantial revenue from goods sold or services rendered in Tennessee.2 As to the findings of the
trial court that Swope Motors derived substantial revenue, regularly solicited services, and
regularly performed services for residents of Tennessee, the evidence does not support a finding
of any one of these three forms of contact required to confer personal jurisdiction.




         2
            Subsection (4) of Tenn. Code A nn. § 20-2-223 was adop ted in 1997. W e have found no Tennessee decisions
that define nor discuss what constitutes “substantial revenue.” However, other jurisdictions have identical statutes as
subsection (4 ) of T enn. C ode Ann. § 20-2 -223 and p rovid e examples of definition and application.
           A federal district court add ressing O hio’s equivalent of subsection (4) of Tenn. Code Ann. § 20-2-223 stated
that “[t]he meaning of the word sub stantial ‘is to be gaug ed by all the circumstances surrounding the transaction to which
it has be en used.’ Varying with each non-resident business, the word ‘substantial revenue’ would not involve nor intend
any fixed minimum.” Busch v. Serv. Plastics, Inc., 261 F. Supp. 136, 142 (N.D. Ohio 1966) (finding that annual sales
between $100,000 and $200,000 constituted ‘substantial revenue’ for a given year) (citing 83 C.J.S. Sub stantia l at p. 762
(1953)); see also Kobill Airways Ltd. v. National Flight Services, Inc., 92 F.2d 68 9, 693 (N.D . Ohio 2000 ) (“The Court
finds that the $475,000 sale price constitutes ‘substantial revenue.’”); Hoover Co. v. Robeson Indus. Corp., 904 F. Supp.
671, 674 (N.D . Ohio 199 5) (finding that nearly $2,000 in commissions or 5% of the total com mission s did not constitute
‘substan tial revenue’); Mead Corp. v. Allendale Mut. Ins. Co., 465 F. Sup p. 35 5,
360 (N.D . Ohio 197 9) (finding $4 ,000 ,000 to $5 ,000 ,000 in sales as ‘substantial revenue’); Stewa rt v. Bus and Car Co.,
293 F. Supp. 577, 583 (N.D. Ohio 1968) (sale of two businesses for $90,000 found to be ‘sub stantial revenue’); Sherry
v. Ge issler U. Pehr GmbH , 651 N.E.2d 1383, 13 87–88 (Ohio Ct. App. 199 5) (finding that the sale of one winding
machine did not constitute ‘substantial revenue.’); Pha rmed Corp . v. Biologics, Inc., 646 N.E .2d 1 167 , 117 1 (O hio Ct.
App. 199 4) (finding that sales con tract with an Ohio corpo ration for $13,500 constituted transacting business in Ohio,
but was not ‘substantial revenue’); Ross v. Spiegel, Inc., 373 N.E.2d 1288, 1292–93 (Ohio Ct. App. 1977) (O hio's
proportionate share of $30,000,000 to $74,000,000 in national sales found to be ‘substantial revenue’); McHu gh v.
Prestodia l, Inc., 241 N.E.2d 102, 104 (Ohio Ct. Com. Pl. 1968) ($4,475 sale plus $135 shipping found not to be
‘substan tial revenue’)
           The D istrict of Columbia has an identical statute and a Fed eral district court ado pted a qualitative test, that is
a “comparison of the revenue relating to the locally used article and the total revenue is required.” Liberty Mut. Ins. Co.
v. Am . Pecco Corp ., 334 F. Supp. 522, 524 (D.D.C. 1971) (finding that the sale of one out of eighteen cranes constituted
‘substantial revenue.’). The United States Court of Appeals for the District of Columbia agree d with the use of the
qualitative test in construing the ‘substantial revenue’ provisio n of the District of Columbia code but added that
“[a]lthough percentage of total sales may be a factor to be considered, it cannot be dispositive, for a small percentage
of the sales of a corporate giant may indeed prove substantial in an absolute sense. On the other hand, it is difficult to
identify an absolute amount which ipso fa cto must be dee med ‘substa ntial.’” Founding Church of Scientology of
Washington, D.C. v. Verlag, 536 F.2d 429, 432–33 (D.C. Cir. 1976) (finding that 26,000 or one percent of annual sales
constituted ‘substantial revenue’) (quoting Ajax Realty Corp. v. J. F. Zook, Inc., 493 F.2d 818 , 822 (4th C ir. 197 2).

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                                          Conclusion

       In light of the foregoing, we hold that Tennessee does not have personal jurisdiction over
the Appellant, Swope Motors. Accordingly, the order of the trial court denying Defendant’s
motion is reversed. Costs of this appeal are taxed to the Appellees, Albert Gregurek and Sari
Gregurek.



                                                     ___________________________________

                                                     DAVID R. FARMER, JUDGE




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