CROUCH RAILWAY CONSULTING, LLC v. LS ENERGY FABRICATION, LLC M2017-02540-SC-R11-CV

Attorneys: Appellant/Defendant: Benjamin Dwyer West Emily Hamm Huseth Michael F. Rafferty Appellee/Plaintiff: M. Clark Spoden Payton McCurry Bradford Trial Court: Williamson County Chancery Court Trial Judge: Joseph A. Woodruff Argument Type: Oral Argument This contract dispute arose after LS Energy Fabrication, LLC (Lonestar) hired Crouch Railway Consulting (Crouch) for engineering and planning services related to the construction of a railcar repair facility in Texas. Lonestar is a Texas company, based out of Baytown Texas, and Crouch is a Tennessee company, based out of Brentwood, Tennessee. Months in to the performance of the contract, Lonestar failed to make payments for work completed in two separate months. Crouch filed a claim for breach of contract and unjust enrichment against Lonestar in Williamson County Chancery Court. Lonestar filed a motion to dismiss for lack of personal jurisdiction, arguing that simply contracting with a Tennessee company is not enough to confer personal jurisdiction on the Williamson County court. The trial court granted Lonestar’s motion to dismiss, but the Court of Appeals reversed. Relying on Nicholstone Book Bindery, Inc. v. Chelsea House Publishers,621 S.W.2d 560 (Tenn. 1981), the Court of Appeals held that Lonestar “purposefully directed its activity toward Tennessee by engaging a Tennessee engineering company to provide customized services, which were performed primarily in Tennessee.” Additionally, the Court of Appeals explained that the decision to require Lonestar to litigate in Tennessee was both “fair and reasonable.” On appeal to the Tennessee Supreme Court, Lonestar argues that the Tennessee and United States constitutions require the nonresident defendant to “create a substantial connection with the forum state, not merely foresee the possibility of one day being sued there.” Additionally, Lonestar argues that the Court’s focus should be on the company’s conduct and not simply foreseeability. Crouch argues that Lonestar has “more than sufficient minimum contacts with Tennessee” because it “intentionally engaged Crouch,” knowing it was a Tennessee company, in specialized design and consulting services. Additionally, Crouch argues that “subjecting Lonestar to personal jurisdiction in Tennessee is consistent with notions of fair play or substantial justice.”