SHONEY'S, INC., and SHONEY'S OF )
CANADA, INC., )
)
Plaintiffs/Appellants, )
) Davidson Chancery
) No. 95-366-III
VS. )
) Appeal No.
) 01-A-01-9506-CH-00278
CHIC CAN ENTERPRISES, LTD., an )
Alberta Corporation, CHIC CAN )
ENTERPRISES, LTD., an Alberta Limited )
Partnership, LITTLE CAESARS PIZZA OF )
ALBERTA, INC., and GEN GROUP )
FILED
Dec. 8, 1995
INCORPORATED, )
) Cecil Crowson, Jr.
Defendants/Appellees. ) Appellate Court Clerk
IN THE COURT OF APPEALS OF TENNESSEE
MIDDLE SECTION AT NASHVILLE
APPEAL FROM THE CHANCERY COURT OF DAVIDSON COUNTY
AT NASHVILLE, TENNESSEE
HONORABLE ROBERT S. BRANDT, CHANCELLOR
Robb S. Harvey
Kathryn A. Stephenson
TUKE, YOPP & SWEENEY
Seventeenth Floor
Third National Bank Building
201 Fourth Avenue, North
Nashville, Tennessee 37219-2040
ATTORNEYS FOR PLAINTIFFS/APPELLANTS
John W. Lewis
Andrew B. Campbell
WYATT, TARRANT & COMBS
511 Union Street, Suite 1500
Nashville, Tennessee 37219
ATTORNEYS FOR DEFENDANTS/APPELLEES
AFFIRMED AND REMANDED
HENRY F. TODD
PRESIDING JUDGE, MIDDLE SECTION
CONCUR:
SAMUEL L. LEWIS, JUDGE
BEN H. CANTRELL, JUDGE
SHONEY'S, INC., and SHONEY'S OF )
CANADA, INC., )
)
Plaintiffs/Appellants, )
) Davidson Chancery
) No. 95-366-III
VS. )
) Appeal No.
) 01-A-01-9506-CH-00278
CHIC CAN ENTERPRISES, LTD., an )
Alberta Corporation, CHIC CAN )
ENTERPRISES, LTD., an Alberta Limited )
Partnership, LITTLE CAESARS PIZZA OF )
ALBERTA, INC., and GEN GROUP )
INCORPORATED, )
)
Defendants/Appellees. )
OPINION
The plaintiffs, Shoney's Inc., and Shoney's of Canada, Inc., have appealed from the
judgment of the Trial Court dismissing their suit against the defendants, Chic Can
Enterprises, Ltd., Little Caesars Pizza of Alberta, Inc., and Gen Group, Incorporated for lack
of personal jurisdiction of said defendants.
The plaintiff, Shoney's, Inc. is a Tennessee corporation with principal office in
Nashville. The only interest of Shoney's, Inc., in this lawsuit is that it is a guarantor of the
obligations of Shoney's of Canada, Inc., under two of three contracts between Shoney's of
Canada, Inc. and the defendant, and the complaint requests a declaratory judgment as to such
obligations.
The complaint states that Shoney's of Canada, Inc., is a Canadian corporation with
principal place of business in Toronto, Ontario, Canada.
The complaint states that all of the defendants are domiciled in the province of
Alberta, Canada.
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The complaint seeks a declaratory judgment regarding and damages for breach of
contracts between Shoney's of Canada, Inc., and the defendants. Said contracts are described
in the complaint as:
1. "Lee's Famous Recipe Market Development Agreement," (The Marketing
Agreement) executed on May 5, 1992, in Nashville, Tennessee with Shoney's
Inc., as guarantor of the obligations of Shoney's of Canada, Inc.
2. "Training Agreement" executed on May 5, 1992. (Not guaranteed by
Shoney's, Inc.)
3. "Lee's Famous Recipe Restaurant License Agreement" (The License
Agreement) executed on June 22, 1992, with Shoney's, Inc. as guarantor of
obligations of Shoney's of Canada, Inc.
4. A "Letter of Clarification" executed by Shoney's of Canada and defendants
on July 2, 1992.
The Marketing Agreement states in part:
This Agreement made and entered into this 5th day of May,
1992 in Nashville, Tennessee, U.S.A. by and between Shoney's
of Canada, Inc., a Canadian corporation with its principal office
at Suite 6200, Scotia Plaza, 40 King Street West, Toronto,
Canada M5H 3Z7 ("Licensor"), and CHIC CAN
ENTERPRISES, LTD., limited partnership, with its principal
office at Suite 200, 9711-45 Avenue, Edmonton, Alberta T6E
5V8 ("Developer").
....
21. Costs and Attorney's Fees. The law regarding franchise
registration, employment, covenants not to compete and other
matters of local concern shall be governed by and construed in
accordance with the laws of the Province of Alberta; however,
as to contractual and all other matters, this Agreement and all
other provisions of this instrument will be and remain subject
to the application, construction, enforcement and interpretation
under the laws of the State of Tennessee. To the extent,
however, that the laws of the State of Tennessee differ from the
Alberta Franchise Act and the regulations promulgated
thereunder, such Alberta laws and regulations shall supersede
and control. The Licensor hereby accepts and submits to the
jurisdiction of the courts of the Province of Alberta with regard
to any disputes arising under this Agreement. Nothing herein
shall affect the right of Licensor to commence legal
proceedings or otherwise proceed against Developer in any
other jurisdiction in which personal jurisdiction over Developer
may be found. . . .
....
-3-
26. Guaranty of Shoney's, Inc. For value received, Shoney's
Inc., located at 1727 Elm Hill Pike, Nashville, Tennessee
37210 ("Guarantor"), absolutely and unconditionally
guarantees the performance by Licensor of all obligations under
the Alberta Franchises Act and the regulations promulgated
thereunder, and of all of the obligations of Licensor to furnish
goods and services necessary to establish and open the business
of the Developer, pursuant to the Licensor's Franchise
Prospectus, the registration of Licensor to sell franchises in the
Province of Alberta and the terms and conditions of this
Agreement, . . . . Guarantor hereby accepts and submits to the
jurisdiction of the courts of the Province of Alberta with regard
to the enforcement of this guaranty.
....
SHONEY'S OF CANADA, INC.
By: /s/ F. E. McDaniel
Title: Secretary
By: /s/ Russell L. Cooper
Title: Vice President
Date: May 4, 1992
GUARANTOR:
SHONEY'S, INC.
By: Russell L. Cooper
Title: Vice President
Date: May 4, 1992
The Training Agreement states in part:
This Training Agreement (the "Agreement") is made this 5th
day of May, 1992, by and between CHIC CAN
ENTERPRISES, LTD., with its address at Suite 200, 9711 - 45
Avenue, Edmonton, Alberta T6E 5V8 (the "Licensee"), and
SHONEY'S OF CANADA, INC., a Canadian corporation, with
its address at Suite 6200, Scotia Plaza, 40 King Street West,
Toronto, Ontario M5H 3Z7 ("Shoney's of Canada").
The License Agreement states in part:
This Agreement, made and entered into this 22nd day of June,
1992 by and between Shoney's of Canada, Inc., a Canadian
corporation, Suite 6200, Scotia Plaza, 40 King Street West,
Toronto, Canada M5H 3Z7, hereinafter referred to as
"Licensor," and CHIC CAN ENTERPRISES, LTD., hereinafter
referred to as "Licensee."
-4-
....
3. Franchised Site. The rights granted to Licensee hereunder
shall be nonexclusive and shall be restricted to the operation of
a single Famous Recipe restaurant to be located on the real
property at #307 101 Granada Blvd., Sherwood Park, Alberta
T8A 4W2 . . . .
....
31. Applicable Law. The law regarding franchise
registration, employment, covenants not to compete and other
matters of local concern shall be governed by and construed in
accordance with the laws of the Province of Alberta; however,
as to contractual and all other matters, this Agreement and all
other provisions of this instrument will be and remain subject
to the application, construction, enforcement and interpretation
under the laws of the State of Tennessee. To differ from the
Alberta Franchise Act and the regulations promulgated
thereunder, such Alberta laws and regulations shall supersede
and control. The Licensor hereby accepts and submits to the
jurisdiction of the courts of the Province of Alberta with regard
to any disputes arising under this Agreement. . . .
4. The Letter of Clarification is unremarkable except that it is written under the
printed letterhead of Shoney's, Inc., 1727 Elm Hill Pike, Nashville, Tennessee, with the typed
addition of "Shoney's of Canada, Inc."
Upon consideration of defendants' motion to dismiss, the Trial Court filed a
memorandum containing the following:
The plaintiff Shoney's of Canada, Inc. is a Canadian
corporation with its principal place of business in Toronto.
Chic Can Enterprises, Ltd., is a limited partnership with its
principal place of business in Edmonton, Alberta. Shoney's of
Canada and Chic Can entered into a Market Development
Agreement whereby Shoney's of Canada granted Chic Can the
right to open and operate Lee's Famous Recipe chicken
restaurants around Edmonton, Alberta. . . .
....
While the complaint has all three agreements attached to it
and refers to all three agreements, the suit is for breach of the
License Agreement. Shoney's of Canada alleges that Chic Can
"defaulted under the License Agreement by failing to make
payments when due" and specifies amounts owed under the
License Agreement.
-5-
The License Agreement does not provide where the
franchisee, Chic Can, is to make payment to Shoney's of
Canada. Shoney's of Canada has the authority to inspect Chic
Can's books and records that are presumably located in Canada.
Paragraph 7 of the License Agreement specifies a long list of
standards for the operation of the restaurant, all of which are to
be performed on site in Canada. Shoney's of Canada has the
right to inspect the restaurant in Canada. Chic Can is required
to spend a minimum amount of money on advertising in the
local area around the restaurant in Alberta. Shoney's of Canada
is required to send an "opening team" to Alberta to assist in
opening the Sherwood Park restaurant. Chic Can is required to
keep the Canadian restaurant insured. If the franchisee defaults
and the agreement is terminated, the franchisor has the right to
buy the Sherwood Park, Alberta property.
The License Agreement does not have a forum selection
clause. It does, however, have a consent to jurisdiction clause
and a choice of law clause. Shoney's of Canada consented to
the jurisdiction of the Alberta courts. . . .
In short, this is a suit by one Canadian entity against another
Canadian entity arising out of a contract about a restaurant in
Canada that requires performance of the contract in Canada.
Moreover, because the License Agreement requires that some
aspects of the parties' dispute is governed by Alberta law,
Shoney's of Canada apparently intends to file a second suit in
Alberta, thus requiring two trials of the same case.
....
One way it seeks to give Tennessee jurisdiction is by adding
Shoney's Inc., the Tennessee corporation, as a plaintiff. But, as
noted, Shoney's Inc. is not a party to the License Agreement -
or the other two agreements either for that matter. . . .
Shoney's, Inc. is merely a guarantor of Shoney's of Canada's
obligation under the agreement.
Another way Shoney's of Canada seeks to give Tennessee
jurisdiction is by asserting in response to the motion to dismiss
that its office is really in Tennessee. It makes this assertion
notwithstanding its allegation in its complaint and the provision
in the contract that its principal place of business is in Toronto,
and notwithstanding that until Chic Can filed its motion to
dismiss, Shoney's of Canada was not even qualified to do
business in Tennessee. Shoney's of Canada qualified to do
business in Tennessee one week before it filed its response to
the motion to dismiss.
....
As previously pointed out, according the License Agreement
itself, everything that was to be done under the contract was to
be done in Canada. There is nothing in the contract that
requires Chic Can to do anything in Tennessee. Likewise,
Shoney's of Canada is required to perform in Canada. The
-6-
consent to jurisdiction clause in the agreement subjects
Shoney's of Canada to jurisdiction in Alberta's courts.
Tennessee's courts are not mentioned. Likewise, Alberta law
governs the construction of the agreement for the most part.
Chic Can did have some contacts with Tennessee. But, they
were minimal. Chic Can's representatives visited Nashville
only twice and that was to negotiate the contract. Negotiations
took place in Canada, too. Chic Can mailed royalty checks to
Tennessee. And it ordered material from Tennessee.
This Court cannot perceive of any interest Tennessee has in
expending its judicial resources to resolve this dispute between
two Canadian business entities over the operation of a
restaurant in Canada. As far as convenience is concerned, this
Court cannot decide the whole dispute between the parties.
Indeed, Shoney's of Canada goes so far as to cite in its
complaint that it is not seeking to enforce its rights under
Canadian service mark and trademark laws. There will be
another suit in Alberta. In the License Agreement, Shoney's of
Canada is required to perform certain tasks at the site in
Alberta and permitted to perform others, such as auditing and
inspecting. Shoney's of Canada obtained approval from the
Alberta securities regulators. Given these facts, Tennessee
hardly seems a more convenient place to litigate, or partially
litigate, this dispute than Alberta.
....
Considering the totality of the circumstances, the Court
concludes that to subject this Canadian defendant to
jurisdiction in Tennessee in this suit by a Canadian plaintiff
arising out of a restaurant in Canada would "offend traditional
notions of fair play and substantial justice." J.I. Case at 532.
The defendants' counsel should submit the judgment
dismissing the case. Costs are taxed to the plaintiffs.
An order was entered accordingly.
On appeal, plaintiffs present two arguments of which the first is:
Tennessee Courts have personal jurisdiction over Chic Can
because of the Forum Selection Clauses in the invoices for
Equipment and Supplies.
The affidavit of Dianna Booher, Director of Accounts Receivable of Shoney's, Inc.,
(the Tennessee corporation) states:
6. According to records available to me, since opening the
restaurant the franchisee has made numerous purchases of
-7-
equipment and supplies from Shoney's commissary in
Nashville, Tennessee. The equipment and supplies were
shipped from Nashville to the restaurant in Edmonton, Alberta,
Canada. All such orders were invoiced in Nashville.
Payments, when made by the franchisee, were sent to Nashville
and deposited here. A sample of some of the orders placed by
the franchisee is attached as Exhibit C.
It is doubtful that the foregoing qualifies the invoices for consideration under TRE
Rule 803(6).
Exhibit C to the affidavit consists of duplicate copies of two invoices indicating sales
by Shoney's, Inc. to Famous Recipe Chicken, Edmonton for $5,994.50 and $53.35, both dated
7/03/92 and containing on their face the script notation:
J. Worken A/P
Nothing is cited or found in the record to indicate the identity or authority of the person who
placed the notation on the invoices.
The supplemental affidavit of Garner Worken, an official of defendants, denies that
he placed his name on either invoice and denies any information as to who signed the
invoices. Both invoices have the following printed heading:
Eugenia Distribution Center
Shoney's, Inc.
Commissary Operations, Inc.
A Subsidiary of Shoney's, Inc.
P.O. Box 1433
Nashville, Tennessee 37202
Both of said invoices contain the printed notation,
Acknowledgement
Signing or initialing above (buyer or buyer's authorized
representative) hereby acknowledges receipt of the goods listed
above and acknowledges and agrees to all the terms and
conditions hereof, including those on the reverse side hereof.
The "reverse side hereof" is completely filled by ten "additional terms and conditions"
of which numbers two and three are as follows:
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2. Governing Law. Except as expressly inconsistent
therewith, this agreement, as described in paragraph 1 above,
shall be governed by and construed in accordance with the
provisions of the Tennessee Uniform Commercial Code,
T.C.A. §§47-1-101, et seq. Including all definitions contained
therein.
3. Remedies. In the event of buyer's breach of any obligation
hereunder, seller shall, in addition to those remedies contained
in the Tennessee Uniform Commercial Code, recover all costs
and expenses incurred in attempting to remedy said breach,
including its reasonable attorneys fees, which buyer agrees to
pay. Any action brought either by buyer or seller to enforce
any remedy under this contract shall be brought in the State or
Federal Courts in Davidson County, Tennessee, and buyer
hereby consents to the jurisdiction of said Courts.
Even if it be shown that the above notation on the invoices was made by an employee
of defendants authorized to sign for the receipt of merchandise, such showing would not
establish that such employee had authority to subject his employers to the Courts of
Tennessee in a country different from that in which the goods were sold and delivered.
Even if it be shown that the notation was made by an agent of defendants with such
broad authority, the effect would be limited to an action for collection of the amount due
upon the particular invoices upon which the notation appears.
The record does not show that either of the invoices is any part of the subject matter
of this suit.
Plaintiffs cite an impressive array of authorities on forum selection but no evidence is
cited or found in the record which would render such authorities applicable to the present
case, i.e. evidence that a forum selection has been made by an authorized representative of
defendants in regard to any part of the present controversy.
It is argued that said two invoices are included in an item of "$4,268.42 in past due
trade balances," but the complaint specifically states that this amount is due Shoney's of
-9-
Canada, and not the Shoney's, Inc. which appears at the top of the invoice. The complaint
contains no demand by Shoney's, Inc. for this or any other amount.
The invoices do not establish personal jurisdiction of defendants in the present case.
Plaintiffs second argument is that Tennessee Courts have personal jurisdiction of
defendants because of defendants' "substantial contacts with Tennessee."
Plaintiffs' vehement criticism of the reasoning of the Trial Court is of little value to
this Court which must review the decision de novo upon the record, although findings of fact,
(but not rulings of law) of the Trial Judge are presumed correct unless the evidence
preponderates otherwise. T.R.A.P. Rule 13(d), Kelly v. Johnson, Tenn. App. 1990, 796
S.W.2d 155.
Tennessee Courts have jurisdiction over non residents in respect to any action or
claim for relief arising out of the transaction of any business within the state on "any basis not
inconsistent with the constitution of this state or of the United States." T.C.A. §20-2-214.
In Masada Investment Corp. v. Allen, Tenn. 1985, 697 S.W.2d 332, the question on
appeal was jurisdiction of a malpractice suit against a Texas lawyer who had prepared an
inaccurate deed for the transfer of real estate in Memphis, Tennessee at the request of a
Tennessee resident. The Supreme Court quoted T.C.A. §20-2-214 and said:
In determining whether or not a state can assert long-arm
jurisdiction, due process requires that a non-resident defendant
be subjected to a judgment in personam only if he has
minimum contacts with the forum 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, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945).
However, the absence of physical contacts will not defeat in
personam jurisdiction where a commercial actor purposefully
directs his activities toward citizens of the forum State and
litigation results from injuries arising out of or relating to those
activities. Burger King Corp. v. Rudzewicz, ____ U.S. ____,
-10-
105 S.Ct. 2174, 2182, 85 L.Ed.2d 528 (1985). In such a case,
"the defendant's conduct and connection with the forum State
are such that he should reasonably anticipate being haled into
court there." World-Wide Volkswagen Corp. v. Woodson, 444
U.S. 286, 297, 100 S.Ct. 559, 567, 62 L.Ed.2d 490 (1980).
. . . A three-pronged test had been developed to determine the
outer limits of personal jurisdiction based on a single act: the
defendant must purposefully avail himself of the privilege of
acting in or causing a consequence in the forum State; the
cause of action must arise from the defendant's activities there;
and defendant's acts or consequences must have a substantial
connection with the forum to make the exercise of jurisdiction
reasonable. Southern Machine Co. v. Mohasco Industries, Inc.,
401 F.2d 374, 381 (6th Cir. 1968). Subsection (6) changed the
long-arm statute from a "single act" statute to a "minimum
contacts" statute which expanded the jurisdiction of Tennessee
courts to the full limit allowed by due process. Shelby Mutual
Ins. Co. v. Moore, 645 S.W.2d 242, 245 (Tenn.App.1981).
That decision, quoting extensively from Gullett v. Qantas
Airways Ltd., 417 F.Supp. 490 (M.D. Tenn. 1975), noted that
the Mohasco test was now too restrictive. The Moore court
noted that three 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 lesser factors to be considered are the interest of
the forum State and convenience. The Moore court concluded:
The phrase "fair play and substantial justice"
must be viewed in terms of whether it is fair and
substantially just to both parties to have the case
tried in the state where the plaintiff has chosen
to bring the action. In each case, the quality
and nature of those activities in relation to the
fair and orderly administration of the law must
be weighed. As stated above in Qantas, this
must involve some subjective value judgment
by the courts.
645 S.W.2d at 246.
After applying these considerations to the facts of this case,
we hold that Allen had sufficient minimum contacts with
Tennessee to justify jurisdiction here. While Allen never
entered Tennessee and had no direct financial interest in the
sale of the UAB Building, his work was a vital component of
that transaction. At his client's request, Allen prepared the
legal documents controlling the transfer of ownership of the
UAB Building. Allen did not merely record what Hockert
instructed him to, but took independent action in fulfilling his
obligations. This included conversing with WTFF's attorney in
Knoxville on several occasions, drafting the documents to be in
accord with Tennessee law, sending the completed documents
into Tennessee for execution, and then holding these same
documents until closing in his office. Allen knew that his legal
work would control the sale of several million dollars of
-11-
Tennessee realty which was being sold by a Tennessee limited
partnership subject to the laws of Tennessee. These documents
were to be recorded and given full legal effect in Tennessee.
By wilfully and knowingly choosing to prepare legal
documents which would be filed in Tennessee and be of great
consequence here, Allen purposely availed himself of the
privilege of doing business within this state. This litigation
itself serves to highlight the importance of Allen's work
product. While Allen had limited physical contact with this
forum, he purposefully directed his activities toward the
citizens of this state and his negligent actions resulted in injury
here. Allen should have reasonably anticipated having to
defend his actions in a Tennessee court. It follows that the
nature and quality of Allen's contacts with Tennessee support
the assertion of jurisdiction by this state, and that the litigation
arose directly out of Allen's contacts with Tennessee. In
addition, Tennessee has substantial interest in the outcome of
this litigation and is the most convenient forum since this
action involves a Tennessee defendant, WTFF, Tennessee
property, and is controlled by Tennessee law.
Masada, 697 S.W.2d at 334-35.
Personal jurisdiction may be "general" or "specific," that is it may exist for all
purposes, or it may be limited to the particular activity which gives rise to the jurisdiction.
Third National Bank in Nashville v. Wedge Group, Inc., 6th Cir. 1989, 882 F.2d 1087. There
is no evidence of any activity of defendants in Tennessee except in connection with the
subject transactions, hence jurisdiction of defendants, if such exists, must be "specific."
In Masada, the Texas lawyer "purposely directed his activity" toward a vital part of a
transfer of Tennessee real estate at the request of a Tennessean.
Plaintiffs assert that:
Chic Can purposefully directed its activities toward
Tennessee. Knowing full well that Shoney's/Canada was
operated by officers and employees of Shoney's in Nashville,
that the franchising operations of Shoney's/Canada were
directed out of Nashville, that reports were to be made to
Shoney's/Canada in Nashville, that payments were to be made
in U.S. dollars to Nashville, that purchases would be made
from Nashville, that all books and records of Shoney's/Canada
were maintained in Nashville, and that all corporate and
franchising decisions were made in Nashville, Chic Can
representatives travelled to Nashville to enter into a long-term
franchising relationship with Shoney's/Canada. Chic Can
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regularly made payments to Shoney's/Canada, addressed to
Nashville. Chic Can ordered supplies and equipment from
Shoney's/Canada and its affiliates in Nashville. These contacts
with Tennessee were not "tenuous" or "fortuitous."
No evidence is cited or found that, prior to the execution of the subject agreements,
defendants "knew full well" that all operations of Shoney's of Canada was conducted or
controlled in Tennessee. The contracts represent that the principal office of Shoney's of
Canada was in Canada. There is adequate evidence that representatives of Shoney's of
Canada conducted negotiations with defendants in Canada and that Shoney's of Canada had a
distribution center in Alberta, Canada. It is true that one or more of the contracts was signed
in Nashville, but no provision is found in any of the contracts requiring performance in
Tennessee. It is true that, after the contracts were signed, defendants were notified that
reports and remittances must be sent to Nashville, and that this was done. The unilateral
demand, unsupported by contract obligation, and acquiescence in the demand by defendants
is not "purposely directing activity" by defendants toward property or residents of Tennessee
such as occurred in Masada.
Shoney's of Canada, Inc., insists that its principal place of business was in Nashville,
Tennessee, but the evidence is uncontroverted that, as of March 22, 1995, Shoney's of
Canada, Inc. was not domesticated and authorized to do business in Tennessee.
T.C.A. §45-25-102(a) provides:
(a) A foreign corporation transacting business in this state
without a certificate of authority may not maintain a proceeding
in any court in this state until it obtains a certificate of
authority.
In Burger King Corp. v. Rudzewicz, 471 U.S. 462, 105 S.W.2d 174, 85 L.Ed.2d 528
(1985), the franchisor was domiciled in Florida. Franchisees in Michigan dealt with a
regional office of franchisor in Michigan and executed an agreement which stated that all
disputes must be resolved under Florida law, but that choice of law did not require all suits to
-13-
be in Florida Courts. The Supreme Court held that the franchisees had "purposely availed
themselves of the privilege of doing business in Florida" because they reached out beyond
Michigan and negotiated with a Florida corporation for the benefits of a long term franchise
in a nationwide organization and upheld the jurisdiction of Florida Courts over the Michigan
residents. However, the Supreme Court said:
[W]e do not mean to suggest that the jurisdictional outcome
will always be the same in franchise cases. Some franchises
may . . . involve different decision making structures, such that
a franchisee should not reasonably anticipate out-of-state
litigation. Id. at 485 n.28, 105 S.Ct. 2174, 85 L.Ed.2d at 549
n.28.
. . ."'[T]he facts of each case must [always] be weighed' in
determining whether personal jurisdiction would comport with
'fair play and substantial justice.'" . . .
The present case is distinguishable from Burger King by at least two facts: (1)
defendants did not contract primarily with a Tennessee citizen or corporation, and (2) the
contracts did not provide that all disputes would be resolved under Tennessee law.
In. J.I. Case Corp. v. Williams, Tenn. 1992, 832 S.W.2d 530, the Supreme Court
upheld jurisdiction of a Memphis, Tennessee Court over an Arkansas farmer about 50 miles
from Memphis under the following circumstances:
. . . The initial contact between the parties occurred at Case's
equipment exhibit at the fair in Tennessee; the instruments
controlling the transaction between the parties were prepared
and executed by Case in Tennessee; financing for the balance
due under the agreement was furnished by a company located
in Tennessee; the agreement executed by the parties
contemplated that payments due under the agreement would be
made in Tennessee; and parts and labor for the repair and
maintenance of the equipment under the warranty agreement
were to be furnished in or from Tennessee. . . .
Case, 832 S.W.2d at 533.
The facts of the present case are not sufficiently similar to the cited case to render its
disposition determinative in the present case.
-14-
Finally, plaintiffs insist that there is no evidence that a trial in Tennessee would
subject defendants to a severe disadvantage. The element of severe disadvantage is obvious
from and inherent in the admitted facts. By virtue of overlapping personnel, the officials for
Shoney's of Canada are also officials of Shoney's, Inc., and reside in Tennessee. All
defendants are domiciled in Canada, at a great distance from Tennessee. Most if not all of
the activities out of which this dispute arises occurred in Canada.
Courts of general jurisdiction in Tennessee have inherent power to apply the doctrine
of forum non conveniens as ground for refusal to exercise jurisdiction over a cause of action
arising beyond the bounds of Tennessee. The application of such doctrine is a matter of
discretion of the Trial Court. When the forum chosen by plaintiff would require the
defendant at great expense and inconvenience to transport himself and his witnesses a long
distance, non residency is a factor to be considered. Zwick v. Inman, 221 Tenn. 393, 426
S.W.2d 767, (1968).
The memorandum of the Trial Judge, quoted above, indicated that his decision was
based upon the doctrines of "forum non conveniens" (forum not convenient) and unfairness.
Both are amply supported by the record. The findings of fact are supported by a
preponderance of the evidence, and the conclusions of law are supported by the authorities
discussed above.
The judgment of the Trial Court dismissing the plaintiffs' suit is affirmed. Costs of
this appeal are taxed against the plaintiffs. The cause is remanded to the Trial Court for any
necessary further proceedings.
Affirmed and Remanded.
_______________________________________
HENRY F. TODD
PRESIDING JUDGE, MIDDLE SECTION
CONCUR:
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_____________________________________
SAMUEL L. LEWIS, JUDGE
_____________________________________
BEN H. CANTRELL, JUDGE
-16-
Shoney's, Inc. and Shoney's of Canada, Inc. v. Chic Can Enterprises, LTD., an Alberta Corporation, Chic Can Enterprises, an Alberta LTD Ptrshp
Combined Opinion