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National Bank of Tennessee v. McDonald

September 21, 2006

NATIONAL BANK OF TENNESSEE, PLAINTIFF/COUNTER DEFENDANT,
v.
FREDERICK L. MCDONALD, II, DEFENDANT/COUNTER PLAINTIFF/THIRD PARTY PLAINTIFF/COUNTER DEFENDANT,
v.
SCOTT WADE APPLEGATE, THIRD PARTY DEFENDANT/COUNTER PLAINTIFF.



The opinion of the court was delivered by: Leon Jordan United States District Judge

MEMORANDUM OPINION

This diversity action is now before the court on the motion to dismiss filed by defendant Frederick L. McDonald, II ("McDonald") [doc. 38] and the motion for summary judgment filed by plaintiff National Bank of Tennessee ("NBT") [doc. 39]. For the reasons that follow, each motion will be denied.

I.

Background At its core, this is a suit to recover an unpaid loan balance from a guarantor.

At present, however, the court does not have before it a copy of the promissory note at issue, nor does it have before it an authenticated copy of the guaranty admittedly signed by McDonald.*fn1

According to the complaint, NBT's principal place of business is in Tennessee. McDonald is a resident of Michigan. According to the complaint, the borrower on the note was Southeast Machining, LLC, which had a Greeneville, Tennessee address.

McDonald agrees that NBT required his guaranty in order to release an original guarantor. According to McDonald's counterclaim and own deposition testimony, the substitute guaranty was part of a broader scheme between McDonald (who is black) and third party defendant Scott Wade Applegate ("Applegate") (who is white) to take advantage of government minority contract opportunities "with all the appurtenant benefits thereof[.]"*fn2

McDonald signed the guaranty in Michigan. The guaranty provides in material part that "If there is a lawsuit, Guarantor agrees upon Lender's request to submit to the jurisdiction of the courts of COCKE County, State of Tennessee."

II.

McDonald's Motion to Dismiss McDonald seeks dismissal or, alternatively, transfer to a Michigan district court, arguing that this court: (a) lacks personal jurisdiction over him; and (b) is the incorrect venue. McDonald's arguments will be addressed and rejected in turn.

The general venue statute, 28 U.S.C. § 1391(a), provides in part that a diversity action may be brought in "a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred[.]" This case arises from McDonald's guaranty of a Greene County, Tennessee debt with a Cocke County, Tennessee bank. Both of those counties are within this judicial district. NBT therefore properly filed suit in this district under § 1391(a), and McDonald's venue argument is without merit.

Also without merit is McDonald's contention that the guaranty, through its reference to "the jurisdiction of the courts of COCKE County, State of Tennessee[,]" binds the parties to Tennessee state court litigation. First, the northeastern division of this district, where the complaint was filed, is a court serving Cocke County, Tennessee. Further, even adopting McDonald's position that the guaranty refers only to state court, McDonald agreed only to litigate in such court if NBT so requests. The cited provision is in no way mandatory or binding on NBT.*fn3

Lastly, the court finds that it has personal jurisdiction over McDonald. In a diversity case, a federal court "may assume jurisdiction over a nonresident defendant only to the extent permitted by the state's long-arm statute and by the Due Process Clause." Neal v. Janssen, 270 F.3d 328, 331 (6th Cir. 2001). Because the Tennessee long-arm statute extends to the constitutional limits of due process, Payne v. Motorists' Mutual Insurance Cos., 4 F.3d 452, 455 (6th Cir. 1993), these two inquiries are merged into the single determination of whether the assertion of personal jurisdiction in this district violates due process. Nationwide Mut. Ins. Co. v. Tryg Int'l Ins. Co., Ltd., 91 F.3d 790, 793 (6th Cir. 1996) (citing Third Nat'l Bank in Nashville v. WEDGE Group Inc., 882 F.2d 1087, 1089 (6th Cir. 1989)).

Personal jurisdiction is characterized as either "general" or "specific." Nationwide, 91 F.3d at 793-94. An assertion of general jurisdiction requires a showing of "continuous and systematic" contacts with the forum state. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 416 (1984). ...


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