Day on Torts
Where a Florida general contractor allegedly used a fraudulent invoice to defraud a Tennessee company, the Court of Appeals ruled that Tennessee could exercise personal jurisdiction over the general contractor for the plaintiffs’ tort claims.
In Hannah Development, LLC v. Maverick General Contractors, LLC, No. M2024-01592-COA-R3-CV (Tenn. Ct. App. July 21, 2025), the plaintiff, a Tennessee company, had worked with the defendants, a Florida general contractor and its principal, on two homebuilding projects. The homes were built in Florida. During the construction of the homes, the defendants sent an invoice to the plaintiff that included a charge for the painting of the defendant principal’s residential fence. The expense was “fraudulently disguised…as a legitimate business expense” for the home building project. The invoice was sent to the Tennessee company, and it was paid with a Tennessee account.
When the plaintiff later learned of the fraudulent expense, it brought this tort action in Tennessee. The defendants moved to dismiss for lack of personal jurisdiction. In response, the plaintiff responded with voluminous exhibits including emails, invoices, text messages, money transfers, and other documents purportedly showing that the defendants “knowingly and intentionally engaged in tortious conduct aimed at Tennessee and that they injured a Tennessee domiciliary in the State of Tennessee.” The circuit court granted dismissal, finding a lack of personal jurisdiction, but the Court of Appeals reversed.
On appeal, the plaintiff argued that the Court should find specific jurisdiction here, meaning that the “defendant has minimum contacts with the forum state and the cause of action arises out of or relates to those contacts.” (internal citation and quotations omitted). In analyzing whether the defendants in this case had sufficient minimum contacts with Tennessee to exercise personal jurisdiction, the Court noted that the defendants were doing business with the plaintiff, a Tennessee company, as well as a Tennessee couple for whom the house was being built and at least one Tennessee-based vendor of appliance and fixtures. Materials, designs, and funding were therefore coming directly from Tennessee to the defendants. The contract signed by the defendants clearly identified the plaintiff as a Tennessee company, and every email from the plaintiff identified its headquarters as Tennessee in the signature block.
In addition, the Court stated that the defendants “made at least two contacts with Tennessee that bear a central causal connection with [the plaintiff’s lawsuit.” The defendants allegedly sent a fraudulent invoice to Tennessee, then procured a $10,000 wire from a Tennessee bank account. The Court wrote that “the Tennessee Supreme Court has held that a qualifying tortious injury suffered within the borders of Tennessee can create specific personal jurisdiction in a tort case.” The Court noted that, in the context of personal jurisdiction, there is a “different emphasis in tort as opposed to contract when considering purposeful availment,” and that failing to find personal jurisdiction when intentional torts have been aimed at Tennesseans would “render Tennesseans more vulnerable to acts of intentional fraud or scams[.]” The Court found sufficient minimum contacts to exercise personal jurisdiction in this case because the defendants “engaged in actions that were directed into Tennessee, caused injury there, and were calculated to do so[.]”
Having found sufficient minimum contacts, the Court next considered “whether it would be otherwise fair and reasonable to hale [the defendants] into a Tennessee court.” It considered the five fairness factors outlined by the Tennessee Supreme Court: “(1) the burden on the defendant; (2) the interests of the forum state; (3) the plaintiff’s interest in obtaining relief; (4) the interstate judicial system’s interest in obtaining the most efficient resolution of controversies; and (5) the shared interest of the several states in furthering fundamental substantive social policies.” (internal citation omitted). The Court found that the burden to the defendants was “not particularly unwieldy,” and that the defendants had not “presented an argument that Tennessee has no interest in this suit[.]” Regarding the fourth and fifth factors, the Court found that the defendants had not presented evidence that weighed heavily in either direction, and thus ultimately ruled that the defendants had not “carried their burden of demonstrating that exercising personal jurisdiction here would be unfair or unreasonable.” (internal citation omitted).
Dismissal based on a lack of personal jurisdiction was therefore reversed.
This opinion was released 2.5 months after oral arguments in this case.