                IN THE COURT OF APPEALS OF TENNESSEE
                            AT NASHVILLE
                                September 8, 2010 Session

                   FRANKLIN AMERICAN MORTGAGE
                                 v.
                DREAM HOUSE MORTGAGE CORPORATION
                       OF RHODE ISLAND, ET AL.
                                 v.
                   FIREMAN & ASSOCIATES, LLP, ET AL.

             Direct Appeal from the Circuit Court for Williamson County
                      No. 2008-08552     Robbie T. Beal, Judge


                No. M2009-01956-COA-R9-CV - Filed October 5, 2010


This appeal involves in personam jurisdiction over an out-of-state defendant. Plaintiff, a
Tennessee mortgage company, filed suit against the Appellee herein, a Rhode Island
mortgage company, after Plaintiff allegedly suffered injury from a breach of contract on the
part of Appellee, stemming from Plaintiff’s purchase of a loan from Appellee in the
secondary mortgage market. In the posture of plaintiff, Appellee filed a third-party
complaint against the Massachusetts lawyer and firm, the Appellants herein, who had
underwritten the loan that Appellee ultimately sold to the Tennessee Plaintiff. The lawyer
and firm filed a motion in the Tennessee court to dismiss the third-party complaint for lack
of personal jurisdiction. The trial court found that Tennessee had personal jurisdiction over
the third-party defendant law firm and lawyer, and denied their motion to dismiss. The
lawyer and firm appeal. Finding that there are not sufficient contacts with Tennessee, we
reverse the trial court’s finding of personal jurisdiction, and remand for further proceedings.

 Tenn. R. App. P. 9. Interlocutory Appeal; Judgment of the Circuit Court Reversed

J. S TEVEN S TAFFORD, J., delivered the opinion of the Court, in which A LAN E. H IGHERS, P.J.,
W.S., and D AVID R. F ARMER, J., joined.

Barry L. Howard, Nathaniel K. Cherry, Nashville, Tennessee, for the appellants, Fireman &
Associates, LLP and Robert N. Fireman, Individually and d/b/a Fireman & Associates, LLP.

Dream House Mortgage Corporation of Rhode Island, Pro Se.
                                              OPINION

       Franklin American Mortgage Company (“FAM”) is a Tennessee corporation, with its
principal place of business in Franklin, Tennessee. Dream House Mortgage Corporation
(“Dream House,” or “Appellee”) is a Rhode Island corporation, with its principal place of
business in Warwick, Rhode Island. Dream House is engaged in the business of mortgage
lending. In January, 2008, FAM and Dream House entered into a Correspondent Loan
Purchase Agreement (“Purchase Agreement”). This Purchase Agreement provided for the
sale of residential mortgage loans by Dream House (as the “Seller”) to FAM (as the
“Buyer”). Pursuant to the Purchase Agreement, Dream House originated a mortgage loan
to John Castodio of Dorchester, Massachusetts (the “Castodio Loan”). After purchasing the
Castodio Loan from Dream House, FAM discovered significant underwriting discrepancies,
including alleged misrepresentations of material information and errors and omissions in the
loan documentation that allegedly rendered the Castodio Loan ineligible for purchase by
FAM. Consequently, FAM demanded that Dream House repurchase the Castodio Loan from
FAM, pursuant to the terms of the Purchase Agreement. When Dream House refused FAM’s
request, FAM filed a Complaint for breach of contract against Dream House, on September
9, 2008, in the Circuit Court at Williamson County, Tennessee.

        On March 10, 2009, Dream House filed its Answer, admitting that it had certain
contractual obligations to FAM under the Purchase Agreement. Concurrent with its Answer,
Dream House filed a third-party complaint against Fireman & Associates, LLP, and Robert
N. Fireman, individually and d/b/a Fireman & Associates, LLP, (together, “Fireman,” or
“Appellants”), and First American Title Insurance Company (“First American”).1 Fireman
is a limited liability partnership located in Needham, Massachusetts and Mr. Fireman is an
attorney licensed in the state of Massachusetts. According to Dream House’s third-party
complaint, the Castodio Loan at issue was applied for by John Castodio, Jr., who fraudulently
submitted documentation for the loan application using his father, John Castodio, Sr.’s, social
security number. Dream House further averred that Rebecca Konsevic, a Fireman employee,
was aware of Mr. Castodio’s scheme and, in fact, acted in concert with him, thereby making
Fireman liable under the doctrine of respondeat superior. According to the third-party
complaint, First American issued a closing protection letter regarding the Castodio Loan,
wherein First American allegedly represented that it would reimburse Dream House for
actual loss incurred in connection with this closing. The third-party complaint further alleges
that all of the parties were aware that Dream House was selling the Castodio Loan to FAM.


        1
          According to the record, First American is licensed to do business in the State of Tennessee,
through the Tennessee Commissioner of Insurance, and is registered with the Tennessee Secretary of State.
Consequently, the issue of personal jurisdiction applies only to third-party defendants Fireman.

                                                  -2-
       On May 11, 2009, Fireman filed, by special appearance, a motion to dismiss Dream
House’s third-party complaint. Specifically, Fireman averred that the Circuit Court at
Williamson County, Tennessee lacked personal jurisdiction over Fireman, and asserted that
Dream House’s third-party complaint should be dismissed pursuant to Tenn. R. Civ. P.
12.02(2). Fireman’s motion was supported by the Affidavit of Mr. Fireman. On June 23,
2009, Dream House filed a response to Fireman’s motion to dismiss, along with the Affidavit
of John Ponte, the president of Dream House.2 The motion to dismiss was heard by the trial
court on July 29, 2009 at which time the trial court found that it had jurisdiction over
Fireman, and dismissed Fireman’s motion. Specifically, the court reasoned that:

                 In considering the quantity of the contacts between [Fireman]
                 and the forum State [i.e., Tennessee] and the nature and quality
                 of those contacts, the Court recognizes [that Fireman] had no
                 direct contact with the forum State. In considering the
                 relationship between [Fireman] and the forum State, the Court
                 finds [that Fireman] did know [] or should have known that
                 [Fireman’s] work product would be placed into the stream of
                 commerce outside the State of Massachusetts since any closing
                 attorney in today’s environment knows mortgages are apt to be
                 sold, that it is a normal course of business, and, therefore, any
                 negligent act that they may have [committed] may affect
                 business interest in other States.

       On August 3, 2009, Fireman filed a motion for interlocutory appeal, pursuant to Tenn.
R. App. P. 9. By Order of September 14, 2009, the trial court granted Fireman’s motion for
interlocutory appeal. On October 14, 2009, this Court granted Fireman’s application for
permission to appeal. The sole issue for review is:

                 Whether the trial court erred in ruling that the Appellants/Third-
                 Party Defendants Fireman & Associates, LLP, and Robert N.


        2
          Tenn. R. Civ. P. 12.03 provides that: “[i]f, on a motion [to dismiss], matters outside the pleadings
are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and
disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity to present all
material made pertinent to such a motion by Rule 56.” However, the Tennessee Supreme Court has
previously held, that this general rule is inapplicable when the motion is one involving jurisdictional issues.
See Nicholstone Book Bindery, Inc. v. Chelsea House Publishers, 621 S.W.2d 560, 561 n. 1
(Tenn.1981)(finding that the trial court committed harmless error in treating the defendant's motion to
dismiss for lack of personal jurisdiction as one for summary judgment). Although neither party raises this
as an issue, under the Nicholstone holding, the trial court correctly treated this as a motion to dismiss.


                                                     -3-
                Fireman, individually and d/b/a Fireman and Associates, LLP,
                are subject to personal jurisdiction in the State of Tennessee.

        A decision regarding the exercise of personal jurisdiction over a defendant involves
a question of law. Accordingly, the appellate courts will review a trial court's decision to
grant or deny a Tenn. R. Civ. P. 12.02(2) motion de novo, with no presumption of
correctness, for the purpose of determining whether the plaintiff has made out a prima facie
case for the exercise of personal jurisdiction over the defendant. Woodruff v. Anastasia
Int'l, Inc., No. E2007-00874-COA-R3CV, 2007 WL 4439677, at *3 (Tenn. Ct. App. Dec.
19, 2007), perm. app. withdrawn (Apr. 7, 2008); In re Clark, No.
W2005-01687-COA-R3-JV, 2007 WL 152537, at *10 (Tenn. Ct. App. Jan. 22, 2007) (No
Tenn. R. App. P. 11 application filed). In the instant case, Dream House bears the ultimate
burden of demonstrating that the trial court may properly exercise personal jurisdiction over
Fireman. Chenault v. Walker, 36 S.W.3d 45, 56 (Tenn. 2001); Davis Kidd Booksellers, Inc.
v. Day-Impex, Ltd., 823 S.W.2d 572, 577 (Tenn. Ct. App. 1992). However, this burden is
ordinarily not a heavy one, because personal jurisdiction need only be demonstrated by a
preponderance of the evidence. Gordon v. Greenview Hosp., Inc., 300 S.W.3d 635, 644
(Tenn., 2009).

        The United States Supreme Court has held that due process requires that personal
jurisdiction over a nonresident defendant can only be exercised if that defendant has “certain
minimum contacts with [the forum state] such that the maintenance of the suit does not
offend ‘traditional notions of fair play and substantial justice.’” Int'l Shoe Co. v.
Washington, 326 U.S. 310, 316 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463
(1940)). This is a two-part test, which requires evaluating whether the requisite minimum
contacts are present and whether the exercise of jurisdiction is fair. Burger King Corp. v.
Rudzewicz, 471 U.S. 462, 476 (1985); Davis Kidd Booksellers, 832 S.W.2d at 575.

      The outer limits of the ability of Tennessee's courts to exercise jurisdiction over
nonresident defendants are defined by statute. These “long-arm statutes” are found at Tenn.
Code Ann. §20-2-223(a),3 Tenn. Code Ann. §20-2-214(a)(6),4 and Tenn. Code Ann. §20-2-


       3
           Tenn. Code Ann. § 20-2-223. Personal jurisdiction based on conduct.

                (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:
                (1) Transacting any business in this state;
                (2) Contracting to supply services or things in this state;
                (3) Causing tortious injury by an act or omission in this state;
                (4) Causing tortious injury in this state by an act or omission outside this
                                                                                               (continued...)

                                                    -4-
3
    (...continued)
            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;
            (5) Having an interest in, using or possessing real property in this state;
            (6) Contracting to insure any person, property or risk located within this
            state at the time of contracting; or
            (7) Conduct as a director or officer of a domestic corporation or the
            conduct of a domestic corporation while the person held office as a director
            or officer.

           (b) When jurisdiction over a person is based solely upon this section, only
           a claim for relief arising from acts enumerated in this section may be
           asserted against that person.
4
    Tenn. Code Ann. § 20-2-214. Personal service; unavailability; jurisdiction

           (a) Persons who are nonresidents of this state and residents of this state
           who are outside the state and cannot be personally served with process
           within this state 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 this state;
           (2) Any tortious act or omission within this state;
           (3) The ownership or possession of any interest in property located within
           this state;
           (4) Entering into any contract of insurance, indemnity or guaranty covering
           any person, property or risk located within this state at the time of
           contracting;
           (5) Entering into a contract for services to be rendered or for materials to
           be furnished in this state;
           (6) Any basis not inconsistent with the constitution of this state or of the
           United States;
           (7) Any action of divorce, annulment or separate maintenance where the
           parties lived in the marital relationship within this state, notwithstanding
           one party's subsequent departure from this state, as to all obligations arising
           for alimony, custody, child support or marital dissolution
           agreement, if the other party to the marital relationship continues to reside
           in this state.

           (b) As used in this section, "person" includes corporations and all other
           entities that would be subject to service of process if present in this state.

           (c) Any such person shall be deemed to have submitted to the jurisdiction
           of this state who acts in the manner described in subsection (a) through an
           agent or personal representative.
                                                                                              (continued...)

                                                 -5-
225.5
        As noted by our Supreme Court in Gordon v. Greenview Hospital:
                      In 1972, the Tennessee General Assembly amended
              Tennessee's long-arm statute to provide that “[p]ersons who are
              nonresidents of this state ... are subject to the jurisdiction of the
              courts of this state as to any action or claim for relief arising
              from ... [a]ny basis not inconsistent with the constitution of this
              state or of the United States.” Tenn. Code Ann. § 20-2-214(a)
              (2009).

                           The intent of the 1972 amendment was to lengthen the
                   reach of the long-arm statute to the farthest extent permitted by
                   due process. Accordingly, Tennessee's courts later observed that
                   the addition of Tenn. Code Ann. § 20-2-214(a)(6) converted the
                   long-arm statute from a “single enumerated act” statute to a
                   “minimum contacts” statute that permitted Tennessee courts to
                   exercise personal jurisdiction over nonresident defendants to the
                   full limit permitted by due process. Masada Inv. Corp. v. Allen,
                   697 S.W.2d at 334; Shelby Mut. Ins. Co. v. Moore, 645 S.W.2d
                   242, 245-46 (Tenn. Ct. App.1981).

Gordon v. Greenview Hosp., 300 S.W.3d at 645 (footnote omitted).

        Federal and state courts now recognize two varieties of personal jurisdiction–specific
jurisdiction and general jurisdiction. The United States Supreme Court first distinguished
between specific and general jurisdiction in Helicopteros Nacionales de Colombia, S.A. v.
Hall, 466 U.S. 408 (1984). Tennessee adopted the distinction between specific and general
jurisdiction in the 1992 case, J.I. Case Corp. v. Williams, 832 S.W.2d 530, 532 (Tenn.


        4
            (...continued)


        5
                    Tenn. Code Ann. § 20-2-225. Other bases of jurisdiction unaffected;
                   jurisdiction whenever permitted by constitution.

                   A court of this state may exercise jurisdiction:

                   (1) On any other basis authorized by law; or
                   (2) On any basis not inconsistent with the constitution of this state or of the
                   United States.


                                                        -6-
1992), rev'd on other grounds, 300 S.W.3d 635 (Tenn. 2009). In Gordon v. Greenview
Hospital, our Supreme Court explained the distinction between specific and general
jurisdiction:

                    Specific jurisdiction may be asserted when the plaintiff's
            cause of action arises from, or is related to, the nonresident
            defendant's activities in or contacts with the forum state. To
            invoke specific jurisdiction, a plaintiff must show (1) that the
            nonresident defendant has purposely established significant
            contact with the forum state and (2) that the plaintiff's cause of
            action arises out of or is related to these activities or contacts.
            Burger King Corp. v. Rudzewicz, 471 U.S. at 472, 105 S.Ct.
            2174. The nonresident defendant's contacts with the forum state
            must be sufficient to enable a court to conclude that the
            defendant “should reasonably anticipate being haled into court
            [in the forum state].” Lindsey v. Trinity Commc'ns, Inc., 275
            S.W.3d 411, 418 (Tenn. 2009) (quoting World-Wide
            Volkswagen, 444 U.S. at 297, 100 S.Ct. 559). If the plaintiff
            can make that showing, the defendant will have the burden of
            showing that the exercise of specific jurisdiction would be
            unfair. Burger King Corp. v. Rudzewicz, 471 U.S. at 477, 105
            S.Ct. 2174; 16 Moore’s Federal Practice §§ 108.42[1], at 108-
            54, 108.42[6], at 108-77.

                    In contrast to specific jurisdiction, general jurisdiction
            may be asserted when the plaintiff's cause of action does not
            arise out of and is not related to the nonresident defendant's
            activities in the forum state. The threshold for satisfying the
            requirements for general jurisdiction is substantially higher than
            the requirements for establishing specific jurisdiction. 4 Charles
            Alan Wright & Arthur R. Miller Federal Practice and
            Procedure § 1067.5, at 517. An assertion of general jurisdiction
            must be predicated on substantial forum-related activity on the
            part of the defendant. The nonresident defendant's contacts with
            the forum state must be sufficiently continuous and systematic
            to justify asserting jurisdiction over the defendant based on
            activities that did not occur in the forum state. Helicopteros
            Nacionales de Colombia, S.A. v. Hall, 466 U.S. at 416, 104
            S.Ct. 1868; Perkins v. Benguet Consol. Mining Co., 342 U.S.
            at 448, 72 S.Ct. 413, Lindsey v. Trinity Commc’ns, Inc., 275

                                    -7-
S.W.3d at 417; see also 4 Federal Practice and Procedure §
1067.5, at 507.

        The general jurisdiction inquiry is very different from the
specific jurisdiction inquiry. The United States Court of Appeals
for the Fifth Circuit has pointed out that “[u]nlike the specific
jurisdiction analysis, which focuses on the cause of action, the
defendant and the forum, a general jurisdiction inquiry is dispute
blind, the sole focus being on whether there are continuous and
systematic contact between the defendant and the forum.”
Dickson Marine, Inc. V. Panalpina, Inc., 179 F.3d 331,339 (5 th
Cir. 1999). In order to warrant the exercise of general
jurisdiction over a nonresident defendant, “the defendant must
be engaged in longstanding business in the forum state, such as
marketing or shipping products, or performing services or
maintaining one or more offices there; activities that are less
extensive than that will not qualify for general in personam
jurisdiction.” 4 Federal Practice and Procedure § 1067.5, at
507.
       The    proper analysis       for determining whether a
defendant's contacts are “continuous and systematic” enough to
warrant an assertion of general jurisdiction requires ascertaining
whether “the continuous corporate operations within a state [are]
so substantial and of such a nature as to justify suit against it on
causes of action arising from dealings entirely distinct from
those activities.” Lindsey v. Trinity Commc’nc, Inc., 275. S.W.
3d at 417 (quoting Int’l Shoe Co. v. Washington, 326 U.S. at
318, 66 S. Ct. 154).
       Questions involving whether a nonresident's contacts
with the forum state are sufficient to warrant the exercise of
general jurisdiction are extremely fact dependent. 4A Charles
Alan Wright & Arthur R. Miller, Federal Practice and
Procedure § 1069.4, at 164, 185 (3d ed. 2002) . . . . Determining
whether it is appropriate to exercise jurisdiction entails a careful,
non-mechanical evaluation of the facts with particular focus on
the nonresident defendant's contacts with the forum state. Int’l
Shoe Co. v. Washington, 326 U.S. at 319, 66 S.Ct. 154.



                         -8-
                      Lest the distinction between the basis for specific
              jurisdiction and general jurisdiction be overlooked, we
              emphasize that the assertion of specific jurisdiction is
              appropriate only when the plaintiff's cause of action arises from
              or is related to the defendant's contacts with the forum state.
              However, general jurisdiction is appropriate when the plaintiff's
              cause of action does not arise from and is not related to the
              defendant's contacts with the forum state. Thus, when a
              plaintiff's cause of action is based on the defendant's activities
              in or contacts with the forum state, specific jurisdiction, as
              opposed to general jurisdiction, applies. Therefore, consistent
              with the due process requirements of the federal and state
              constitutions, when a nonresident defendant's contacts with a
              forum state are substantial, systematic, and continuous, and the
              exercise of general jurisdiction satisfies the fairness
              requirement, the cause of action need not arise out of or relate
              to those contacts.
Gordon v. Greenview Hosp., 300 S.W.3d at 647-49 (footnotes omitted).

        In the instant case, it is undisputed that neither Mr. Fireman, nor his law firm, had
direct contact with Tennessee–Mr. Fireman is not licensed to practice law here, nor has he
ever been admitted pro hoc vice. Fireman is a Massachusetts firm; Dream House is a Rhode
Island business, and the property at issue is located in Massachusetts. Because Fireman has
no “sufficiently continuous and systematic” contacts with Tennessee, any finding of personal
jurisdiction in this case must be predicated upon specific, as opposed to general, jurisdiction.
That being said, the question is whether Fireman’s actions in preparing and facilitating the
Castodio Loan in the state of Massachusetts can provide the basis for personal jurisdiction
in Tennessee. More specifically, the gravamen is whether Fireman’s contacts with Tennessee
are sufficient to enable our courts to conclude that Fireman “should reasonably anticipate
being haled into court [in the forum state–here, Tennessee].” Lindsey v. Trinity Commc'ns,
Inc., 275 S.W.3d at 418.

       In Masada Inv. Corp. v. Allen, 697 S.W.2d 332 (Tenn. 1985), our Supreme Court
discussed the requisite factors, which determine the existence or absence of minimum
contacts, stating:

              [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

                                              -9-
              lesser factors to be considered are the interest of the forum State
              and convenience.

Masada, 697 S.W.2d at 334 (relying upon Shelby Mut. Ins. Co. v. Moore, 645 S.W.2d 242,
246 (Tenn. Ct. App. 1981)). Under Tennessee’s “minimum contacts” test, the cause of action
need not arise in this State. Masada, 697 S.W.2d at 332; see also Walker v. Nationwide Ins.
Co., 813 S.W.2d 135, 138 (Tenn. Ct. App. 1990). Moreover, all five factors set out in
Masada need not be present in order for courts of this State to exercise personal jurisdiction.
Walker, 813 S.W.2d at 138. Furthermore, the defendant's contacts with the forum state need
not be physical, and the court will primarily examine the quantity of the contacts, their nature
and quality, and the relationship between the contacts and the cause of action. Masada Inv.
Corp. v. Allen, 697 S.W.2d at 334. As part of its evaluation of the reasonableness of
exercising jurisdiction, the court “must consider the burden on the defendant, the interests
of the forum State, and the plaintiff's interest in obtaining relief. It must also weigh in its
determination ‘the interstate judicial system's interest in obtaining the most efficient
resolution of controversies[,] and the shared interest of the several States in furthering
fundamental substantive social policies.’” Asahi Metal Indus. Co. v. Superior Court, 480
U.S. 102, 113 (1987) (quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286,
292 (1980)).

       In the instant case, Dream House contends that Fireman’s alleged negligence in failing
to properly identify Mr. Castodio, Jr. at the closing was both the cause in fact, and the legal
cause, of any damage allegedly suffered in Tennessee by FAM. Fireman contends that it had
no direct contact with Tennessee, that it did not produce anything that would trigger a stream
of commerce analysis, that Tennessee has no significant interest in adjudicating this dispute,
and that Tennessee is not a convenient forum.

        As discussed above, the fact that Fireman had no direct contact with Tennessee is not
dispositive to the question of personal jurisdiction. It is well settled that, where a defendant
commits a tortious act outside the State of Tennessee, which act proximately causes damages
to be sustained within the State, the tort is deemed to have occurred within the State, and the
Tennessee long-arm statutes are applicable.                 See Overton v. Raffone, No.
03A01-9305-CV-00192, 1994 WL 27618, *3 (Tenn. Ct. App. Feb. 3, 1994); McCombs v.
Cerco Rentals, 633 S.W.2d 822, 825 (Tenn. Ct. App. 1981); Jasper Aviation v. McCollum
Aviation, Inc., 497 S.W.2d 240 (Tenn. 1972). In short, even though the tortious act may
have occurred outside the State of Tennessee, if the resulting tortious injury is sustained
within the State, then the tortious act and the injuries flowing therefrom are inseparable and
jurisdiction lies in Tennessee. McCombs, 622 S.W.2d at 822; Jasper Aviation, 497 S.W.2d
240. However, merely placing something into the stream of commerce is not sufficient to
establish personal jurisdiction. Asahi, 480 US 102 at 112.

                                              -10-
       In Mullins v. Harley-Davidson Yamaha BMW of Memphis, Inc., 924 S.W.2d 907
(Tenn. Ct. App. 1996), the plaintiff's decedent was injured in a motorcycle accident. His
death was attributed to a defective helmet. The Korean manufacturer of the helmet was
named as a defendant. We held that Tennessee's exercise of personal jurisdiction over that
defendant would not comport with due process because the manufacturer established that it
maintained no office or place of business in the United States, and sold helmets to
distributors, who were “free to sell to any dealer of their choosing in the United States.” Id.
at 909. Furthermore, the manufacturer did not sell directly to dealers, did not sell motorcycle
helmets or any other products directly into Tennessee, and did not create or control the
distribution system that brought the helmets into the state. Id. Additionally, the
manufacturer neither advertised in Tennessee, nor solicited business in Tennessee. Id.

        In reaching its decision, the Mullins court principally relied upon two decisions,
Asahi Metal Industries Company v. Superior Court, 480 U.S. 102 (1987), and Davis Kidd
Booksellers, Inc. v. Day-Impex, Ltd., 832 S.W.2d 572 (Tenn. Ct. App. 1992). These cases
establish that simply placing a manufactured item into the “stream of commerce” does not
suffice to establish personal jurisdiction. As the Supreme Court stated: “[t]he placement of
a product into the stream of commerce, without more, is not an act of the defendant
purposefully directed toward the forum State.” Asahi, 480 U.S. at 112. The Mullins Court,
and the Davis Kidd court before it, concluded that Asahi did not represent an exception to
the traditional “minimum contacts” analysis, and held that the exercise of personal
jurisdiction in those cases would violate due process.

       The holding in Mullins is consistent with long recognized constitutional due process
jurisprudence. In World-Wide Volkswagen v. Woodson, 444 U.S. 286 (1980), the Supreme
Court rejected the notion that a seller of goods was subject to personal jurisdiction simply
because it was foreseeable that the seller's goods could be transported to a forum state. As
the Court noted, if that were so, “[e]very seller of chattels would in effect appoint the chattel
his agent for service of process.”

      This “stream of commerce” analysis is succinctly explained in 18 Fletcher’s
Cyclopedia on the Law of Private Corporations § 8640.40:

              Although it has been argued that foreseeability of causing injury
              in another state should be sufficient to establish minimum
              contacts when policy considerations so require, the mere
              foreseeability of injury in a foreign jurisdiction is not a
              sufficient benchmark for exercising personal jurisdiction.
              [Burger King Corp. v. Rudzewicz, 471 US 462, 85 L Ed 2d 528,
              105 S Ct 2174; World-Wide Volkswagen Corp. v. Woodson,

                                              -11-
444 US 286, 62 L Ed 2d 490, 100 S Ct 559; Yates v. Turzin,
786 F Supp 594 (SD Miss 1991) (applying Mississippi law)].
The foreseeability that is critical to the due process analysis is
that the defendant's conduct in connection with the forum state
are such that it should reasonably anticipate being haled into
court there. [Burger King, 471 US 462; World-Wide
Volkswagen, 444 US 286]. Jurisdiction cannot be imposed on
a foreign corporate defendant that has no contacts with the
forum state merely by reason of the fortuitous appearance of one
of the defendant's products [in the forum state]. [World-Wide
Volkswagen, 444 US 286].

        The "substantial connection" between the defendant and
the forum state necessary for a finding of minimum contacts
must come about by an action of the defendant purposefully
directed toward the forum state. [Asahi, 480 US 102]. However,
the placement of a product into the stream of commerce without
more is not an act of a defendant that is purposefully directed
toward the forum state.[Id.] In other words, the appropriate test
is not knowledge or awareness of the ultimate destination of the
product, but whether the manufacturer has purposely engaged in
forum activities so it can reasonably expect to be haled into
court there; and even if this is so, the minimum requirements of
fair play and substantial justice may yet defeat
jurisdiction.[Falkirk Min. Co. v. Japan Steel Works, Ltd., 906
F.2d 369 (CA8 1990) (merely bringing parts sold to American
corporation by Japanese manufacturer and its American
subsidiary into forum state insufficient); Halderman v.
Sanderson Forklifts Co., Ltd., 818 SW2d 270 (Ky. Ct. App
1991) (refusing to apply stream of commerce doctrine);
Dillaplain v. Lite Industries, Inc., 788 S.W.2d 530 (Mo. Ct.
App 1990) (holding placing of product into stream of commerce
plus knowledge of ultimate destination sufficient); Cox v.
Hozelock, Ltd., 411 S.E.2d 640 (N. Carolina Ct. App. 1992)].
Thus, personal jurisdiction may be asserted over a corporation
that delivers its products into the stream of commerce with the
expectation that they will be purchased by the consumer in the
forum state, but not where the product's presence in that state is
a single, isolated occurrence.[Falkirk, 906 F.2d 369]. In
comparison, a corporation may be subject to the jurisdiction of

                               -12-
               the courts of a particular state when it has purposefully injected
               its product into the stream of commerce without any indication
               that it desired to limit the area of distribution of its product so as
               to exclude that state. An example is where a foreign corporation
               has given an exclusive sales license to a licensee in the United
               States with no limits as to the forum state. The due process
               analysis is concerned with more than territory, otherwise, the
               presence of the defendant's product in the forum would be
               enough to justify the exercise of jurisdiction. However, the
               nature of the product may well have a bearing upon the nature
               and extent of the necessary minimum contacts.

Id. (some citations omitted).

        The recent case of Attea v. Eristoff, No. M2005-02834-COA-R3-CV, 2007 WL
1462206 (Tenn. Ct. App. May 18, 2007), involved a dispute between a Tennessee resident
and two taxing authorities of the State of New York, arising from the Tennessee resident's
business activities in New York. The Tennessee resident filed suit against the New York
taxing authorities in the Chancery Court for Cheatham County, alleging that their telephone
calls and letters attempting to collect the disputed taxes amounted to intentional infliction of
emotional distress. The taxing authorities moved to dismiss the complaint for lack of subject
matter jurisdiction, lack of personal jurisdiction, and failure to state a claim upon which relief
could be granted. The trial court granted the motion after concluding that it lacked personal
jurisdiction over the New York taxing authorities. The Tennessee resident appealed. This
Court determined that the trial court properly concluded that it lacked personal jurisdiction
and that the complaint should also be dismissed for both lack of subject matter jurisdiction
and failure to state a claim upon which relief could be granted. In reaching our decision, this
Court reasoned that:

                       The touchstone of the due process analysis is whether the
               non-resident defendant has purposefully established “minimum
               contacts” in the forum state. Burger King Corp. v. Rudzewicz,
               471 U.S. at 474, 105 S. Ct. at 2183; Int'l Shoe Co. v.
               Washington, 326 U.S. at 316, 66 S. Ct. at 158. Foreseeability
               of causing injury in the forum state alone is insufficient to
               satisfy the requirements of due process. Burger King Corp. v.
               Rudzewicz, 471 U.S. at 474, 105 S. Ct. at 2183; World-Wide
               Volkswagen Corp. v. Woodson, 444 U.S. 286, 295, 100 S. Ct.
               559, 566 (1980). Rather, the question is whether “the
               defendant's conduct and connection with the forum State are

                                               -13-
              such that he [or she] should reasonably anticipate being haled
              into court there.” Burger King Corp. v. Rudzewicz, 471 U.S. at
              474, 105 S. Ct. at 2183; World-Wide Volkswagen Corp. v.
              Woodson, 444 U.S. at 297, 105 S. Ct. at 567.

                      The United States Supreme Court has repeatedly
              emphasized that in making this determination, “[t]he unilateral
              activity of those who claim some relationship with a nonresident
              defendant cannot satisfy the requirement of contact with the
              forum State.” Burger King Corp. v. Rudzewicz, 471 U.S. at 474,
              105 S. Ct. at 2183; Kulko v. Superior Court of Cal. in and for
              City and County of San Francisco, 436 U.S. 84, 93-94, 98 S.
              Ct. 1690, 1698 (1978); Hanson v. Denckla, 357 U.S. 235, 253,
              78 S. Ct. 1228, 1239-40 (1958). To the contrary, 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.” Asahi Metal Ind. Co., Ltd. v. Superior
              Court of California, Solano County, 480 U.S. 102, 109, 107 S.
              Ct. 1026, 1030 (1987); Hanson v. Denckla, 357 U.S. at 253, 78
              S. Ct. at 1240.

                      The trial court determined that Mr. Attea failed to show
              that Messrs. Eristoff and Reyes had the “minimum contacts”
              with Tennessee necessary to satisfy the requirements of due
              process. We agree. The record is devoid of any indication that
              Messrs. Eristoff or Reyes “purposely derived benefit” from
              activities within Tennessee, Kulko v. Superior Court of Cal. in
              and for City and County of San Francisco, 436 U.S. at 94-96,
              98 S. Ct. at 1698-99, or “purposely directed” their activities
              toward any Tennessee residents other than Mr. Attea, Keeton v.
              Hustler Magazine, Inc., 465 U.S. at 774, 104 S. Ct. at 1478.

Attea v. Eristoff, 2007 WL 1462206, at *3.

        Turning to the record before us, and specifically from the undisputed Affidavit of
Dream House’s president John Ponte, Dream House informed Fireman prior to the January
18th closing that the mortgage would be sold and transferred out of state. Thereafter, Dream
House sold the mortgage to FAM, which has its principal place of business in Tennessee.
Once the mortgage arrived in Tennessee, FAM allegedly suffered damages when payments

                                             -14-
were not made on the indebtedness it purchased. Fireman’s brief argues that the product
produced by Fireman consists only of legal services. While we agree that Fireman provided
legal services in this case, those services included the production of legal documents,
including the mortgage, promissory note, deed, and other closing papers. These were the
documents upon which Dream House relied in agreeing to finance the sale. Fireman knew
that Dream House was in the business of making loans to consumers and selling its
mortgages in the secondary mortgage market.6 In its argument, Dream House relies heavily
upon the fact that Fireman had knowledge that the mortgage instruments it produced would
likely be sold and, by virtue of that fact, would likely end up in another jurisdiction.
However, this fact, standing alone, is insufficient to confer jurisdiction on the Tennessee
Court. Burger King Corp. v. Rudzewicz, 471 U.S. at 474 (holding that foreseeability of
causing injury in the forum state alone is insufficient to satisfy the requirements of due
process). Rather, there must 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." Asahi, 480 U.S. 102, at 109. As in the Attea case, here the
record is devoid of any indication that Fireman "purposely derived benefit" from activities
within Tennessee, Attea, 2007 WL 1462206, at *3 (citing Kulko, 436 U.S. at 94-96), or
"purposely directed" its activities toward any Tennessee resident. Id. (citing Keeton v.
Hustler Magazine, 465 U.S. at 774). Likewise, the facts of the instant appeal indicate that,
although Fireman can be charged with knowledge that its product would enter the stream of
commerce, it did nothing to direct its activity toward Tennessee, nor did Fireman purposely
avail itself of the privilege of doing business in Tennessee. Rather, it was only by the
unilateral action of Dream House that Fireman’s product came into our state. There is no
indication that Fireman had any control, whatsoever, over where its product would ultimately
be sold, nor is there any indication that Fireman either received a benefit from, or availed
itself of the privilege of, doing business in Tennessee. Therefore, we conclude that
Fireman’s contacts with Tennessee are simply too tenuous to satisfy the due process
requirements.

       For the foregoing reasons, we reverse the order of the trial court, and remand for such
further proceedings as may be necessary and consistent with this Opinion. Costs of this
appeal are assessed against the Appellee, Dream House Mortgage Corporation, for which
execution may issue if necessary.




       6
        As noted by Dream House in its brief, the “secondary mortgage market” is “‘the
national market in which existing mortgages are bought and sold’” (quoting Black’s Law
Dictionary (7th Edition, p. 825)).

                                             -15-
       _________________________________
       J. STEVEN STAFFORD, JUDGE




-16-
