Appeal from the Circuit Court for Giles County No. CC-11161 Jim T. Hamilton, Judge.
We agreed to hear this extraordinary appeal in order to decide whether the proper venue for a case involving the breach of a construction contract is in the county named in the forum selection clause of the contract, or in the county where the realty is located upon which the construction took place. We hold that the forum selection clause determines the proper venue, because the underlying action cannot fairly be characterized as an action for injury to real property and is, thus, a transitory action.
Tenn. R. App. P. 10 Extraordinary Appeal; Judgment of the Circuit Court Reversed.
The opinion of the court was delivered by: Patricia J. Cottrell, Judge
PATRICIA J. COTTRELL, P.J., M.S., delivered the opinion of the Court, in which ANDY D. BENNETT and RICHARD H. DINKINS, JJ., joined.
Theo and Ruth Kampert operate a dairy farm, Kampert Dairy, LLC, in Giles County, Tennessee. This case arose from a contract Kampert Dairy entered into on May 19, 2008 with Valley Farmers Cooperative ("VFC"), whereby VFC was to construct an operational dairy facility on the Kamperts' farm, including barns, sheds, and milking facilities. VFC is a Tennessee Corporation located in McMinn County, Tennessee. Central to this appeal is a clause in the contract which states that "[t]his Agreement shall be construed and interpreted under Tennessee Law and venue for any litigation shall lie in the Circuit or Chancery Court for McMinn County, Tennessee."
On April 8, 2009, the Kamperts filed a complaint in the Circuit Court of Giles County, naming as defendants VFC and two of its officers, both of whom are residents of McMinn County. The plaintiffs alleged that the defendants had breached their contract by performing shoddy workmanship, incurring cost overruns, and using inferior materials. They accordingly claimed that the defendants were guilty of breach of contract, negligence, civil fraud, intentional infliction of emotional distress, and violation of the Consumer Protection Act, Tenn. Code Ann. § 47-18-101 et seq.
On April 23, 2009, the defendants filed a motion to dismiss for improper venue. They contended that because of the venue clause in the contract, suit could only be brought in McMinn County. They also noted that they had not contracted with Theo and Ruth Kampert individually, but with Kampert Dairy, L.L.C. The plaintiffs subsequently amended their complaint to add Kampert Dairy as plaintiff and to adopt all the allegations of the complaint on its behalf with regard to the breach of contract claim.
The plaintiffs responded to the motion to dismiss by arguing that the venue selection clause in the contract was void. They cited the case of Hall v. Southall Brothers, 240 S.W.298 (Tenn. 1921), in which our Supreme Court declared that under Tennessee law any action involving injury to real estate is a local action, which may only be brought in the county in which the real estate is located. The trial court agreed with the plaintiffs' argument. In its order of June 4, 2009, the court stated,
This action is brought in the correct county. This is an action seeking damages for injury to land and when one speaks of injury to land, they are saying the land is injured because its value has diminished because of the negligence of the defendant. This action seeks damages for negligence.
The trial court then dismissed the defendants' motion to dismiss for improper venue.
The defendants filed a timely motion for an interlocutory appeal in the trial court, pursuant to Rule 9 of the Tennessee Rules of Appellate Procedure. On November 6, 2009, the trial court denied the motion for interlocutory appeal. The defendants then filed a motion for extraordinary appeal with the Court of Appeals, pursuant to Rule 10 of the Tennessee Rules of Appellate Procedure. On December 4, 2009, this court granted ...