Georgia Gaming Investment, LLC v. Chicago Title and Trust Company

IN THE UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF TENNESSEE

WESTERN DIVISION

)

GEORGIA GAMING INVESTMENT, )

LLC, and TENNESSEE HOLDING )

INVESTMENTS, LLC, )

)

Plaintiffs, )

)

v. ) No. 20-cv-2882-SHM

)

CHICAGO TITLE AND TRUST )

COMPANY, )

)

Defendant, )

)

and )

)

CHICAGO TITLE AND TRUST )

COMPANY, )

)

Third-Party Plaintiff, )

)

v. )

)

THE PORTER CASINO RESORT, )

INC. )

)

Third-Party Defendant. )

ORDER GRANTING CHICAGO TITLE’S MOTION TO DISMISS

This is a third-party beneficiary action alleging breach of

contract. Before the Court is Defendant Chicago Title and Trust

Company’s (“Chicago Title”) December 15, 2020 Motion to Dismiss

for Lack of Personal Jurisdiction and Motion to Dismiss for

Failure to State a Claim (the “Motion”). (D.E. No. 9.)

Plaintiffs Georgia Gaming Investment, LLC and Tennessee Holding

Investments, LLC (“Plaintiffs”) responded on February 1, 2021.

(D.E. No. 17.) Chicago Title replied on February 15, 2021.

(D.E. No. 21.) For the following reasons, the Motion is GRANTED.

I. Background

This case arises from The Porter Casino Resort, Inc.’s,

(“Porter Casino”) attempt to purchase a casino in Mississippi

from The Majestic Star Casino, LLC (“Majestic Star”). Plaintiffs

assert a single claim of breach of contract, contending that

they are third-party beneficiaries of the Escrow Agreement among

Porter Casino, Majestic Star, and Chicago Title. (D.E. No. 1-

4, ¶ 15.)

Georgia Gaming Investment, LLC (“Georgia Gaming”) is a

Georgia limited liability company with its principal place of

business in Norcross, Georgia. (Id. ¶ 1.) Georgia Gaming’s two

members are Sandip Patel and Shiraz Saleem, both residents of

Georgia. (D.E. No. 1-1, ¶¶ 5-8.) Tennessee Holding Investments,

LLC (“Tennessee Holding”) is a Georgia limited liability company

with its principal place of business in Ringgold, Georgia. (D.E.

No. 1-4, ¶ 2.) The sole member of Tennessee Holding is Harshad

Patel, a resident of Georgia. (D.E. No. 1-3, ¶ 5-6.) Porter

Casino is a Tennessee corporation. (D.E. No. 10, 2.) Majestic

Star is an Indiana limited liability company. (Id.) Chicago

Title is an Illinois corporation. (D.E. No. 1-4, ¶ 3.) Its

principal place of business is in Florida. (D.E. No. 1-3, ¶ 6.)

Plaintiffs entered into an investment agreement with Porter

Casino to invest up to $3,000,000.00 in Porter Casino. (D.E.

No. 1-4, ¶ 6.) An Escrow Agreement was executed among Porter

Casino, Majestic Star, and Chicago Title. (Id. ¶ 9.) Plaintiffs

transferred $1,500,000.00 on behalf of Porter Casino to Chicago

Title on September 15, 2017. (D.E. No. 11, ¶ 8.) Plaintiffs

were not parties to the Escrow Agreement.

Plaintiffs became concerned about Porter Casino’s ability

to meet the conditions of the investment agreement and asked

that their money be refunded. (D.E. No. 1-4, ¶ 10.) On November

30, 2017, Porter Casino and Plaintiffs entered into a Termination

Agreement to refund Plaintiffs’ money. (Id. ¶ 11.) On February

9, 2018, Plaintiffs sent written notice to Chicago Title

requesting the refund of the money in escrow and objecting to

the money being paid to Porter Casino. (Id. ¶ 12.) Chicago

Title disbursed the funds to Porter Casino on February 20, 2018.

(Id. ¶ 13.)

Porter Casino is suing Plaintiffs in a separate case in

this Court. The Porter Casino Resort, Inc. v. Georgia Gaming

Investment, LLC, et al., Docket No. 18-cv-2231. Plaintiffs

initially filed a Third-Party Complaint against Chicago Title in

that case. (Id. at D.E. No. 51.) Chicago Title filed a Motion

to Dismiss because the Third-Party Complaint was not dependent

on the outcome of Porter Casino’s claims against Plaintiffs.

(Id. at D.E. No. 53.) The Court granted the Motion. (Id. at

D.E. No. 68.) Other claims in that case are pending before the

Court.

Plaintiffs then sued Chicago Title in state court in

Georgia. (See D.E. No. 10, 5.) Chicago Title removed the case

to the Northern District of Georgia. (Id.) Chicago Title filed

a Motion to Dismiss for lack of personal jurisdiction. (Id.)

Plaintiffs voluntarily dismissed the case without prejudice.

(Id.) Plaintiffs then filed suit in the Chancery Court of Shelby

County, Tennessee. (D.E. No. 1, ¶ 1.) Chicago Title removed to

this Court. (Id.)

II. Jurisdiction and Choice of Law

The Court has subject-matter jurisdiction under 28 U.S.C.

§ 1332. The parties are diverse. Chicago Title is an Illinois

corporation with its principal place of business in Florida.

Plaintiffs are Georgia entities. All of their members reside in

Georgia. Plaintiffs seek more than $75,000 in damages.

To determine personal jurisdiction, the Court applies the

substantive law of the forum state. CompuServe, Inc. v.

Patterson, 89 F.3d 1257, 1262 (6th Cir. 1996). Tennessee law

governs whether the Court has personal jurisdiction over Chicago

Title.

III. Standard of Review

Motions to dismiss for lack of personal jurisdiction are

considered under a “procedural scheme” that is “well-settled.”

Theunissen v. Matthews, 935 F.2d 1454, 1458 (6th Cir. 1991). The

plaintiff at all times bears the burden of establishing that the

court has personal jurisdiction over the defendant. Id. “[I]n

the face of a properly supported motion for dismissal, the

plaintiff may not stand on his pleadings but must, by affidavit

or otherwise, set forth specific facts showing that the court

has jurisdiction.” Id. (citation omitted). When a court bases

its decision on supporting and opposing affidavits without an

evidentiary hearing, “the plaintiff must make only a prima facie

showing that personal jurisdiction exists in order to defeat

dismissal.” Id. “[T]he court must . . . view affidavits,

pleadings, and documentary evidence in the light most favorable

to the plaintiff.” Kerry Steel v. Paragon Indus., Inc., 106

F.3d 147, 153 (6th Cir. 1997). This does not require the court

“to ignore undisputed factual representations of the defendant

which are consistent with the representations of the plaintiff.”

Id. The court “does not weigh the controverting assertions of

the party seeking dismissal.” Theunissen, 935 F.2d at 1459.

IV. Analysis

A. Personal Jurisdiction

Fourteenth Amendment due process determines whether a court

may exercise personal jurisdiction over a defendant. Goodyear

Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 923 (2011).

A court must have personal jurisdiction. Air Prod. & Controls,

Inc. v. Safetech Int’l, Inc., 503 F.3d 544, 549 (6th Cir. 2007).

There are two forms of personal jurisdiction, general and

specific. Id. at 549-550.

1. General Jurisdiction

A court has general jurisdiction over a defendant and may

hear all claims against it when the defendant’s connections to

the forum state are “continuous and systematic” so that it is

essentially “at home” in the state. Goodyear, 564 U.S. at 919.

A court ordinarily has general jurisdiction over a corporation

in the state of its incorporation or its principal place of

business. Daimler AG v. Bauman, 571 U.S. 117, 137 (2014). The

Supreme Court has left open the possibility that, in an

“exceptional case,” a corporation’s operations in another state

“may be so substantial and of such nature as to render the

corporation at home in the State.” Id. at 139 n.19. For example,

a company’s relocation to Ohio from the Philippines during the

Second World War was an “exceptional case.” See id.; Perkins v.

Benguet Consol. Min. Co., 342 U.S. 437, 447-449 (1952).

Plaintiffs’ argument that the Court has general

jurisdiction over Chicago Title is not well taken. Plaintiffs

argue that “[t]he fact that Chicago Title continuously and

systematically enters contracts with parties from multiple

states for pecuniary gain renders it essentially at home in such

states, including Tennessee.” (D.E. No. 17, 9.) A court has

general jurisdiction over a corporation in the state in which it

is incorporated or has its principal place of business. In an

“exceptional case,” its business operations in another forum

render the corporation at home in that state. Daimler, 517 U.S.

at 137-139. Chicago Title is incorporated in Illinois, and its

principal place of business is in Florida. (D.E. No. 1; D.E.

No. 1-3.) Plaintiffs’ conclusory argument that Chicago Title

enters into contracts with parties from multiple states,

including Tennessee, does not demonstrate an exceptional

circumstance that shows Chicago Title is at home in Tennessee.

The Court does not have general jurisdiction over Chicago Title.

2. Specific Jurisdiction

Federal courts decide specific personal jurisdiction based

on the law of the forum state and the limits of due process.

CompuServe, 89 F.3d at 1262. Under Tennessee’s long-arm statute,

personal jurisdiction extends to nonresident corporations “as to

any action or claim for relief arising from” “[t]he transaction

of any business within this state;” “[a]ny tortious act or

omission within this state;” “[e]ntering into any contract . .

. located within this state at the time of contracting;” and

“[a]ny basis not inconsistent with the constitution of this state

or the United States[.]” Tenn. Code Ann. § 20-2-214.

Tennessee’s long-arm statute is interpreted to extend to the

limits of the Due Process Clause of the United States

Constitution. Intera Corp. v Henderson, 428 F.3d 605, 616 (6th

Cir. 2005). The jurisdictional limits of Tennessee and the

United States Constitution “are identical.” Id.

The Sixth Circuit relies on the three Mohasco factors to

determine specific personal jurisdiction. See Intera, 428 F.3d

at 615. In Mohasco, the court said:

From these two cases, three criteria emerge for

determining the present outer limits of in personam

jurisdiction based on a single act. First, the

defendant must purposefully avail himself of the

privilege of acting in the forum state or causing a

consequence in the forum state. Second, the cause of

action must arise from the defendant's activities

there. Finally, the acts of the defendant or

consequences caused by the defendant must have a

substantial enough connection with the forum state to

make the exercise of jurisdiction over the defendant

reasonable.

S. Mach. Co. v. Mohasco Indus., Inc., 401 F.2d 374, 381 (6th

Cir. 1968).

All three requirements must be met for personal

jurisdiction to be proper. LAK, Inc. v. Deer Creek Enterprises,

885 F.2d 1293, 1303 (6th Cir. 1989). Purposeful availment is

“essential” to personal jurisdiction. Intera, 428 F.3d at 616.

This requirement protects defendants from “being hailed into a

jurisdiction by virtue of ‘random,’ ‘fortuitous,’ or

‘attenuated’ contacts.” Id. at 616, (quoting Calphalon Corp. v.

Rowlette, 228 F.3d 718, 722 (6th Cir. 2000)). Purposeful

availment is satisfied where a defendant “has created ‘continuing

obligations’ between himself and the residents of the forum . .

. .” Air Prod., 503 F.3d at 551 (quoting Burger King Corp. v.

Rudzewicz, 471 U.S. 462, 476 (1985)). Physical presence is not

required. Air Prod., 503 F.3d at 551.

The “mere existence” of a contract is not sufficient to

confer personal jurisdiction over a nonresident defendant.

Calphalon, 228 F.3d at 722. The court must consider the prior

negotiations, contemplated future consequences, terms of the

contract, and the actual course of dealings to determine whether

the defendant purposefully availed itself of the privilege of

acting in the forum state. Id. The focus is on the quality,

not the quantity, of contact between the defendant and the forum

state. Id. That one party to a contract is a Tennessee entity

does not establish purposeful availment under Tennessee law.

TopRx, Inc. v. Cedarburg Pharms., Inc., No. 08-2588, 2009 WL

10664425 (W.D. Tenn. June 10, 2009) (citing Burger King, 471

U.S. at 478; Calphalon, 227 F.3d at 722). In actions against

fiduciaries, the court considers whether the defendant fiduciary

initiated the fiduciary relationship. Compare Phillips Exeter

Acad. v. Howard Phillips Fund, 196 F.3d 284, 292 (1st Cir. 1999)

(finding no personal jurisdiction where the will of a third-

party created the fiduciary relationship) with In re Trade

Partners, Inc., Invs. Litig., 532 F. Supp. 2d 904, 913 (W.D.

Mich. 2007) (finding personal jurisdiction where the defendant

escrow agent participated in marketing within the forum).

In their response to Chicago Title’s Motion, Plaintiffs

argue that “Chicago Title purposefully availed itself of the

privilege of acting in Tennessee, or causing a consequence in

Tennessee, by entering into an Escrow Agreement with [Porter

Casino], a Tennessee company, accepting $1,500,000 from

Plaintiffs for the benefit of [Porter Casino], and directly

generating profit as a result.” (D.E. No. 17.) Although

Plaintiffs have attached exhibits to their response, those

exhibits fail to support Plaintiffs’ argument for specific

jurisdiction.1

1 Plaintiffs’ response includes the following exhibits: 1) Declaration

of Jaymen Chavda, Georgia Gaming’s attorney, stating that on September

15, 2017, he wired funds to Chicago Title to be held in escrow and

notified Thomas F. Fricke, Porter Casino’s attorney, about the

transaction (D.E. No. 17-1); 2) September 15, 2017 notification Chavda

sent to Fricke (D.E. No. 17-1); 3) Escrow Agreement among Porter

Casino, Majestic Star, and Chicago Title (D.E. No. 17-2); 4) February

9, 2018 letter from Chad Young, Georgia Gaming’s attorney, notifying

Chicago Title’s representative of Georgia Gaming’s claim to the

$1,500,000.00 held in escrow (D.E. No. 17-3).

Plaintiffs have failed to make a prima facie showing of

purposeful availment. That Porter Casino was a party to the

Escrow Agreement and that Chicago Title performed under the

Agreement are insufficient to establish purposeful availment

under Tennessee law. See TopRx, 2009 WL 10664425, at *5. The

request for the Escrow Agreement came from Majestic Star, an

Indiana limited liability company, through its attorney in

Illinois. (D.E. No. 11, ¶¶ 4-5.) Chicago Title did not initiate

the disputed fiduciary relationship. Chicago Title did not

negotiate the terms of the Escrow Agreement. (Id. ¶ 5.) The

property at issue was in Mississippi. (Id. ¶ 4.) Plaintiffs

transferred funds from their law firm’s trust account in Atlanta,

Georgia, to Chicago Title’s Bank of America account.2 (D.E. No.

17-1, ¶ 4.)

Chicago Title’s only direct contact with Porter Casino was

through Porter Casino’s counsel, Thomas F. Fricke. (D.E. No.

11, ¶ 10-17.) In an email sent on February 8, 2018, Fricke asked

Chicago Title to prepare a new escrow account, similar to the

account established by the Escrow Agreement. (Id. ¶ 10.) No

funds were placed in the new account, and there was no further

contact between Fricke or Porter Casino and Chicago Title. (Id.)

2 Chicago Title has no bank accounts in Tennessee. (D.E. No. 1-3, ¶

9.)

Chicago Title has submitted the affidavit of Madeline G. M.

Lovejoy, Corporate Legal Administrator, averring that Chicago

Title does not have any employees, facilities, real estate, or

personal property in Tennessee. (D.E. No. 1-3, ¶ 8.) Chicago

Title is not registered to do business in Tennessee, has no

registered agent in Tennessee, does not have any bank accounts

in Tennessee, and does not file taxes in Tennessee. (Id. at ¶¶

7-10.) Plaintiffs have not provided any affidavits or

documentary evidence supporting the proposition that Chicago

Title regularly does business in Tennessee.

ALTe, L.L.C. v. Quest Capital Investments is similar to the

present case. See ALTe, L.L.C. v. Quest Cap. Invs., Inc., No.

11-15077, 2012 WL 1893519 (E.D. Mich. May 23, 2012). There,

plaintiff, a Michigan corporation, brought suit in Michigan

against its lender and its escrow agent for breach of an escrow

agreement. Id. at *1. The escrow agent, a California

corporation, moved to dismiss for lack of personal jurisdiction.

Id. The court found no purposeful availment. Id. The lender

chose the escrow agent and drafted the terms of the escrow

agreement. Id. Although the plaintiff signed the agreement in

Michigan, the lender and the escrow agent signed in California.

Id. The escrow agent had no physical presence or property in

Michigan and did not advertise, solicit, or regularly conduct

business in Michigan. Id. The only communications between the

plaintiff and the escrow agent addressed deposit confirmations.

Id. at *5. The alleged breach occurred in California, when the

escrow agent released the held funds. Id. at *6.

In the present case, Majestic Star selected Chicago Title

as the escrow agent. (D.E. No. 10, ¶¶ 4,5.) Majestic Star and

Chicago Title both executed the Escrow Agreement in Illinois.

(D.E. No. 1-4). The terms of the Agreement were standard and

were not negotiated by any party. (Id. ¶ 5.) Chicago Title has

no physical presence or property in Tennessee and is not

registered to do business in Tennessee. (D.E. No. 1-3, ¶¶ 7,8.)

The communications between Chicago Title and Porter Casino were

de minimis. (D.E. No. 10, ¶¶ 10-17.) The alleged breach did

not occur in Tennessee.3

Chicago Title did not purposefully avail itself of the

privilege of acting in Tennessee. The Sixth Circuit has

described the first criterion for specific jurisdiction,

purposeful availment, as “the sine qua non for in personam

jurisdiction.” Mohasco, 401 F.2d at 381-82. “[E]ach [Mohasco]

criterion represents an independent requirement, and failure to

3 See Phillips Exeter, 196 F.3d at 291 (breach of a fiduciary duty

occurs in the forum where the fiduciary is located or where it fails

to perform); ALTe, 2012 WL 1893519, at *6 (“[T]he basis of this

lawsuit is the release of the deposit by Commercial Escrow to Quest,

which occurred in California, not Michigan. Accordingly, the Court

finds that Commercial Escrow has not purposefully availed itself of

acting within Michigan.”).

meet any one of the three means that personal jurisdiction may

not be invoked.” LAK, Inc., 885 F.2d at 1303. Because Plaintiffs

have failed to make a prima facie showing of purposeful availment

sufficient to satisfy the first criterion for specific

jurisdiction, the Court lacks personal jurisdiction over Chicago

Title.

B. Motion to Dismiss For Failure to State a Claim

Chicago Title’s Motion to Dismiss for Failure to State a

Claim is DENIED AS MOOT.

C. Third-Party Complaint

Chicago Title’s Third-Party Complaint asserts a claim

against Porter Casino for indemnity if Chicago Title is liable

to Plaintiffs. (D.E. No. 31, ¶ 10.) A third-party complaint is

dependent on the outcome of the main claim. Am. Zurich Ins. Co.

v. Cooper Tire & Rubber Co., 512 F.3d 800, 805 (6th Cir. 2008).

A court has the discretion to dismiss a third-party claim after

the original claims of the plaintiff are resolved. Id. at 805-

806 (“[I]t is rare that a court renders judgment in favor of the

defendant or dismisses the underlying action but nonetheless

chooses to address a third-party claim.”). Because Chicago

Title’s Third-Party Complaint is contingent on Chicago Title’s

liability to Plaintiffs and Plaintiffs’ claim against Chicago

Title is being dismissed, Chicago Title’s Third-Party Complaint

is DISMISSED.

V. Conclusion

Because the Court lacks personal jurisdiction over Chicago

Title, its Motion is GRANTED. Plaintiffs’ Complaint is

DISMISSED. Chicago Title’s Third-Party Complaint against Porter

Casino is also DISMISSED.

SO ORDERED this 22nd day of September, 2021.

/s/ Samuel H. Mays, Jr.

SAMUEL H. MAYS, JR.

UNITED STATES DISTRICT JUDGE