Tennessee Supreme Court Holds Brentwood Business Established Personal Jurisdiction As To Texas Company

October 6, 2020

In an opinion released today, the Tennessee Supreme Court affirmed a holding of the Court of Appeals that Crouch Railway Consulting, LLC (“Crouch”), a Tennessee company, met its burden of establishing personal jurisdiction to sue LS Energy Fabrication, LLC (“LS Energy”), a Texas company, in Tennessee.

This case arose from a breach of contract and unjust enrichment action filed by Crouch Railway Consulting, LLC, after LS Energy Fabrication, LLC, failed to pay what Crouch claimed it was owed for performing custom design and consulting services.  LS Energy filed a motion to dismiss Crouch’s complaint, arguing that Tennessee lacked personal jurisdiction over LS Energy.  Personal jurisdiction is the authority of a certain court over a particular party, and the Fourteenth Amendment to our United States Constitution limits a state court’s exercise of that authority as it pertains to a defendant who is not a resident of that state.   The trial court granted LS Energy’s motion to dismiss, determining that LS Energy lacked the requisite minimum contacts with Tennessee and that it would be unreasonable and unfair to require this out-of-state defendant to litigate this case in Tennessee. 

Crouch appealed the trial court’s decision, and the Court of Appeals overturned the dismissal.  The Court of Appeals held that LS Energy’s contacts with Tennessee were sufficient to establish specific personal jurisdiction in this case, based on its contract with Crouch “for a customized, specialized service to be performed in Tennessee.”  LS Energy then filed an application for permission to appeal to the Tennessee Supreme Court, which the Court granted.

In its unanimous opinion, the Supreme Court determined that LS Energy voluntarily chose to contract with a Tennessee company for custom planning and design services and that LS Energy knew that Crouch’s office was in Tennessee and that Crouch would perform its work primarily in Tennessee.  Although the Court acknowledged that LS Energy never was physically present in the state and only had limited communications with Crouch, the quality of LS Energy’s contacts was sufficient to meet the “minimum contacts” standard.  Moreover, the Court held that LS Energy had not established that the exercise of personal jurisdiction over it in this case would be unreasonable or unfair.  Therefore, the Court held that, under the facts and circumstances of this case, the Tennessee court’s exercise of specific personal jurisdiction over LS Energy in this case is constitutionally permissible. 

To read the Supreme Court’s opinion in Crouch Railway Consulting, LLC v. LS Energy Fabrication, LLC, authored by Chief Justice Jeff Bivins, go to the opinions section of TNCourts.gov.