# Advanced Security Services Evaluation And Training, LLC v. OHR Partners LTD.

> Court of Appeals of Tennessee · March 20, 2018

URL: https://www.frixlaw.com/law-library/cases/4256399

## Case

- **Court:** Court of Appeals of Tennessee
- **Decided:** March 20, 2018
- **Precedential status:** Published
- **Opinion:** Opinion
- **Judges:** Presiding Judge Frank G. Clement, Jr.
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

03/20/2018
IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
November 8, 2017 Session

ADVANCED SECURITY SERVICES EVALUATION AND TRAINING,
LLC V. OHR PARTNERS LTD., ET AL.

Appeal from the Chancery Court for Davidson County
No. 16-1222-I Claudia Bonnyman, Chancellor

No. M2017-00249-COA-R3-CV

The dispositive issue in this case is whether Tennessee may exercise specific personal
jurisdiction over the defendants. The plaintiff, a Tennessee company, filed this action
against the defendants in Davidson County Chancery Court for breach of contract and
unjust enrichment arising from security services it provided to facilitate the transfer of
gold worth millions of dollars from Africa to Hong Kong. The defendants filed a motion
to dismiss for, inter alia, lack of personal jurisdiction, contending a Tennessee court
could not exercise personal jurisdiction over them because their contacts with the forum
were too attenuated. The trial court granted the motion and dismissed the case. The
plaintiff appealed, arguing the defendants’ apparent agent had numerous and substantial
contacts with the forum sufficient to establish specific personal jurisdiction in Tennessee.
The defendants assert the individual with whom the plaintiff entered into a contract was
an independent contractor, not an agent of the defendants, and that the defendants have
not had sufficient contacts with Tennessee to subject them to the jurisdiction of a
Tennessee court. The defendants also raise a separate issue, contending the trial court
erred in denying their motion to dismiss the complaint for failure to state a claim. We
have determined that the individual with whom the plaintiff principally communicated
regarding the contract and services rendered by the plaintiff was an apparent agent of the
defendants. Having applied the two-step analysis enunciated in State v. NV Sumatra
Tobacco Trading Co., 403 S.W.3d 726 (Tenn. 2013), we have also determined that the
nature and quality of the apparent agent’s contacts, along with those of an officer of the
defendant entities, were purposeful and of sufficient quantity with Tennessee to satisfy
the minimum contacts requirement. Furthermore, the defendants failed to establish that it
would be unreasonable or unfair for Tennessee to exercise specific personal jurisdiction
over them as it pertains to issues deriving from or connected with the controversy that
established jurisdiction. Accordingly, we reverse the trial court’s ruling that Tennessee
does not have specific personal jurisdiction over the defendants. We affirm the trial court
in its denial of the defendants’ motion to dismiss for failure to state a claim for breach of
contract. Accordingly, we reverse in part, affirm in part and remand for further
proceedings consistent with this opinion.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court
Reversed in part; Affirmed in part; and Remanded.

FRANK G. CLEMENT JR., P.J., M.S. delivered the opinion of the Court, in which ANDY D.
BENNETT and W. NEAL MCBRAYER, JJ., joined.

Phillip B. Jones, Nashville, Tennessee, for the appellant, Advanced Security Services
Evaluation and Training, LLC.

Joy Longnecker, Nashville, Tennessee, for the appellees, OHR Partners, Ltd., OHR
Strategic Investment Fund, Ltd., and Seth Bogner.

OPINION

Plaintiff, Advanced Security Services Evaluation & Training, LLC (“ASSET”) is a
limited liability company formed under the laws of Tennessee with its principal place of
business in Tennessee. There are three defendants (collectively, “Defendants”). Two of
the defendants, OHR Partners Limited (“OHR Partners”) and OHR Strategic Investment
Fund (“OHR Strategic”), (collectively “OHR”), are related entities and each of them were
formed under the laws of the Republic of Mauritius (“Mauritius”) and have their
principal place of business in Mauritius. The third defendant, Seth Bogner, serves as the
managing director of OHR Partners and is a member of the board for OHR Strategic.
Although Mr. Bogner has resided in both New York and Italy, his principal residence has
been Florence, Italy since 2012.

In the fall of 2015, Mr. Bogner retained the services of William Fantozzi, a
security consultant, to provide asset recovery services for OHR.1 Specifically, OHR
retained Mr. Fantozzi to conduct an investigation into the disappearance of company
assets, in this case, gold bars, that were to be transported from Africa to Hong Kong and
to provide security services to facilitate the transfer of the assets.

OHR Partners furnished Mr. Fantozzi with a password that gave him access to
OHR Partners’ email server and an OHR email address. Mr. Fantozzi used this OHR
email to contact Scott Whitaker, president of ASSET, to procure ASSET’s services as a
subcontractor on the project. Before Mr. Fantozzi confirmed the engagement of ASSET,
the corporate resume of ASSET was provided to OHR for Mr. Bogner’s review. After

1
The record does not contain a written agreement between Mr. Fantozzi and OHR or Mr.
Bogner.

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viewing ASSET’s resume, Mr. Bogner voiced no objection to the engagement of ASSET
by Mr. Fantozzi. Thereafter, through phone conversations and emails, Mr. Fantozzi
contracted with ASSET to provide security for the transfer of gold from Nairobi, the
capital of Kenya, to Hong Kong; however, the parties never executed a written contract.

Neither Mr. Fantozzi nor Mr. Bogner ever traveled to Tennessee to meet with
ASSET. Instead, they both communicated with ASSET, specifically with Mr. Whitaker,
by phone or email. Mr. Whitaker stated in the verified complaint and in his affidavit that
he spoke with Mr. Fantozzi on the phone approximately sixty times in connection with
the project, and he spoke with Mr. Bogner on the phone eight times in connection with
the project.

In furtherance of the contract, Mr. Whitaker and one ASSET employee travelled to
Nairobi to secure and transfer the gold. When the security team was preparing to transfer
the gold, Mr. Fantozzi’s main contact in Nairobi, Jared Otieno,2 informed Mr. Whitaker
that OHR owed 1.8 million dollars in duties and taxes, which would have to be paid
before the gold could be moved. After Mr. Otieno asked Mr. Whitaker to sign an escrow
agreement, OHR gave Mr. Whitaker permission to sign it on OHR’s behalf. Soon
thereafter, OHR’s attorney contacted Mr. Whitaker and instructed him to execute a
revised escrow agreement on behalf of OHR, and Mr. Whitaker did as instructed.3

ASSET was to complete the project in two phases.4 After ASSET completed
Phase I, and Mr. Whittaker and his associate returned to the United States, Mr. Whitaker
began to have concerns about payment for the job. He relayed those concerns directly to
Mr. Bogner and explained that ASSET needed to be paid in full for Phase I and paid a
partial advance for Phase II before it would render any future services. Mr. Bogner told
Mr. Whitaker that he would arrange for payment to be made to ASSET through Mr.
Fantozzi. After receiving the agreed upon payment, ASSET dispatched a team
internationally to perform Phase II of the project. Upon completion of Phase II, however,
ASSET was not paid the remaining balance of $37,247.82.

ASSET then filed a verified complaint against OHR and Mr. Bogner in Davidson
County Chancery Court to recover the outstanding balance, alleging breach of contract

2
Mr. Otieno also went by the name “Smith Mackenzie,” and claimed to have important
government connections. When Mr. Whitaker became suspicious of Mr. Otieno, Mr. Fantozzi told him
not to worry. A subsequent third party investigation revealed that OHR was subject to an “Advanced Fee
Scam.”
3
Mr. Otieno later informed Mr. Whitaker that the gold had been seized by the Congolese Mafia,
and they would have to negotiate the release. The group demanded over five million dollars.
4
It is unclear from the record what Phases I and II entailed.

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and unjust enrichment. Defendants filed a Tenn. R. Civ. P. 12.02(2), 12.02(3), and
12.02(6) motion to dismiss for lack of personal jurisdiction, improper venue, and failure
to state a claim upon which relief can be granted, respectively.

Defendants primarily argued that OHR had no contract with ASSET; instead,
OHR’s only contract was with Mr. Fantozzi, who was as an independent contractor.
Defendants asserted that OHR paid Mr. Fantozzi in full for the security services pursuant
to its contract with Mr. Fantozzi, and it was Mr. Fantozzi’s sole responsibility to pay
ASSET. For these reasons, OHR contended it could not be liable to ASSET for breach of
contract or unjust enrichment. Moreover, because OHR and Mr. Bogner did not have a
contract with ASSET and had never conducted business in Tennessee, they lacked the
minimum contacts necessary for personal jurisdiction in Tennessee.

ASSET argued that Mr. Fantozzi negotiated the contract with ASSET as an agent
for and on behalf of OHR; thus, ASSET’s contract was with OHR. When OHR failed to
pay for services rendered, OHR breached its contract with ASSET. Further, ASSET
argued that OHR’s contacts with Tennessee were sufficient to support personal
jurisdiction.

The trial court ruled that, while ASSET properly stated a claim against OHR for
breach of contract and unjust enrichment, OHR’s contacts with Tennessee were
insufficient to establish personal jurisdiction. Specifically, the court found that “[t]he
actions and events took place in another country and the contacts [between Mr. Bogner
and ASSET] were minimal . . . there is Tennessee case law . . . holding that telephone
calls into the state of Tennessee will not be sufficient to establish personal jurisdiction.”
The court further concluded that no “party could reasonably think that the protections and
benefits in this state would apply to oral contracts causing events taking place off the
coast of Africa. . . .” This appeal followed.

ANALYSIS

In this appeal, ASSET asks us to consider whether the trial court erred by finding
that Defendants lacked the minimum contacts necessary to support the court’s exercise of
personal jurisdiction. OHR and Mr. Bogner ask us to determine whether the trial court
erred by ruling that ASSET stated a claim upon which relief could be granted.

I. PERSONAL JURISDICTION

Motions to dismiss for lack of personal jurisdiction challenge the trial court’s
ability to proceed with the claims against a defendant. State v. NV Sumatra Tobacco
Trading Co., 403 S.W.3d 726, 739 (Tenn. 2013). Questions regarding personal
jurisdiction must be raised and decided using the procedures applicable to Tenn. R. Civ.
P. 12.02(2). Id. Unlike motions to dismiss for failure to state a claim, motions challenging

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personal jurisdiction are not converted into motions for summary judgment when one or
both of the parties submit matters outside the pleadings. Id.

If a defendant challenges personal jurisdiction with affidavits, the plaintiff must
respond with its own affidavits and, if useful, other written evidence. Id. In particularly
complex cases, the trial court may decide to allow limited discovery, hold an evidentiary
hearing, or hold the motion in abeyance pending a trial on the merits. Id. The court will
assume that the nonmoving party’s allegations are true and resolve all factual disputes in
its favor. Id. However, courts are “not obligated to accept as true factual allegations . . .
that are controverted by more reliable evidence or plainly lack credibility.” Id. at 735.

The court must determine whether “the factual allegations in the plaintiff’s
complaint . . . establish sufficient contacts between the defendant and this state with
reasonable particularity.” First Community Bank, N.A. v. First Tennessee Bank, N.A., 489
S.W.3d 369, 383 (Tenn. 2015). Dismissal is appropriate only when all “the specific facts
alleged by the plaintiff collectively fail to establish a prima facie case for personal
jurisdiction.” Sumatra, 403 S.W.3d at 769 (quoting Gordon v. Greenview Hosp., Inc.,
300 S.W.3d 635, 644 (Tenn. 2009)). Decisions regarding the exercise of personal
jurisdiction over a defendant involve questions of law, which we review de novo without
a presumption of correctness. First Community Bank, 489 S.W.3d at 382.

Because the personal jurisdiction analysis centers on the defendant’s contacts with
the forum, as a preliminary matter, we must determine whose contacts to consider.
Specifically, we must first determine whether Mr. Fantozzi’s contacts with the forum are
attributable to OHR.

Defendants contend that OHR hired Mr. Fantozzi as an independent contractor and
that Mr. Fantozzi acted solely on his own behalf in his dealings with ASSET. While
acknowledging that Mr. Bogner was an authorized agent of OHR, OHR argues his
contacts are attenuated at best, and are insufficient to satisfy the minimum contacts
threshold. Conversely, ASSET asserts that Mr. Fantozzi acted as an agent of OHR at all
times material to this action; thus, Mr. Fantozzi’s acts are attributable to OHR.

A. Apparent Agency

“For purposes of personal jurisdiction, the actions of an agent may be attributed to
the principal.” Daynard v. Ness, Motley, Loadholt, Richardson & Poole, P.A., 290 F.3d
42, 55 (1st Cir. 2002); see also Lea Brilmayer & Kathleen Paisley, Personal Jurisdiction
& Substantive Legal Relations: Corporations, Conspiracies, & Agency, 74 Cal. L. Rev.
1, 17 (1986) (“It is widely accepted that attribution of an agent’s behavior is appropriate
in jurisdictional analysis.”). The record does not contain a written agreement or emails
that identify the relationship between Mr. Fantozzi and OHR. Moreover, OHR insists that
Mr. Fantozzi was an independent contractor while ASSET contends he was an apparent

-5-
agent of OHR. Therefore, we must determine whether Mr. Fantozzi was an apparent
agent of OHR.

Apparent agency is agency by estoppel. White v. Methodist Hosp. South, 844
S.W.2d 642, 646 (Tenn. Ct. App. 1992). Thus, a finding of apparent agency does not
hinge on any actual agency agreement. See Id. Rather, it arises when the principal gives
the impression to a third party that another is acting on the principal’s behalf such that the
third party detrimentally and justifiably relies on the ostensible agency relationship. Id.

A finding of apparent agency requires proof on three elements. Id. First, the
principal must “either actually or negligently acquiesce in the agent’s exercise of
authority.” Id. The first element focuses on the acts of the principal and not on the acts of
the agent. Southern Ry. Co. v. Pickle, 197 S.W. 675, 677 (Tenn. 1917). “[A] principal is
responsible for the acts of an agent…only where the principal himself by his acts or
conduct has clothed the agent with the appearance of authority.” Id. (citations omitted).

The second element centers on the perception of the third party. See id.; see also
White, 844 S.W.2d at 646. The Tennessee Supreme Court has explained that the third
party must have a subjective, good faith belief that the apparent agent has the authority to
act on the principal’s behalf. Southern Ry. Co., 197 S.W. at 677; see also White, 844
S.W.2d at 646. Moreover, the third party’s belief must be objectively reasonable.
Southern Ry. Co., 197 S.W. at 677.

Because apparent agency is agency by estoppel, the third element requires proof
that the third party detrimentally relied on the apparent agency. White, 844 S.W.2d at
646.

As for the first element, the facts alleged by ASSET and those set forth in the
affidavits support a finding that OHR acquiesced to Mr. Fantozzi’s exercise of authority.
Significantly, OHR gave Mr. Fantozzi access to the company email server with a
company email address. Mr. Fantozzi states in his affidavit:

In connection with this project, OHR empowered me to communicate on its
behalf via an “OHR” e-mail. I was provided with a password that enabled
me access to OHR’s server and also a designated e-mail address of….I used
that OHR e-mail to communicate with [ASSET], when I selected and
retained [ASSET] to perform services as a subcontractor for OHR.

While we note that Mr. Fantozzi repeatedly refers to ASSET as a “subcontractor,”
we emphasize that it is not our task to determine the actual relationship between OHR
and Mr. Fantozzi. As previously stated, the apparent agency analysis focuses on
perception, not reality. Because OHR allowed Mr. Fantozzi to communicate with ASSET
through an OHR email address, OHR gave the impression to ASSET that Mr. Fantozzi

-6-
was authorized to communicate on behalf of OHR. However, this fact, without more, is
not sufficient to show that Mr. Fantozzi had the authority to negotiate a contract on
OHR’s behalf. In this case, the facts reveal that OHR acquiesced to Mr. Fantozzi acting
on OHR’s behalf in additional ways.

Mr. Whitaker, the president of ASSET, states in his affidavit that “[w]hen
communicating with Mr. Fantozzi, we received his emails from his ‘OHR’ email address,
some of which were copied (electronically) to the defendant, Mr. Bogner,” and at no time
did Mr. Bogner express any objection to the potential contract. Not only did OHR fail to
object, but OHR indicated that it approved of the contract when Mr. Bogner asked
ASSET for its corporate resume, and upon review, began communicating directly with
ASSET about the project. Thus, by giving Mr. Fantozzi a company email address and by
failing to object to Mr. Fantozzi’s communications with ASSET using that address, OHR
acquiesced in Mr. Fantozzi’s exercise of authority. Thus, the first element is met.

With regard to the second element, ASSET has presented sufficient facts showing
that Mr. Whitaker had the subjective, good faith belief that Mr. Fantozzi acted as a
representative of OHR. Moreover, ASSET has shown that Mr. Whitaker’s subjective
belief was objectively reasonable.

Mr. Whitaker states in his affidavit that based on OHR’s actions in connection
with the contract, he thought that ASSET’s contract was with OHR, rather than with Mr.
Fantozzi. This belief is based, in part, on the fact that when Mr. Fantozzi contacted Mr.
Whitaker using the OHR email address, Mr. Fantozzi would copy Mr. Bogner, and Mr.
Bogner never objected to the communication. Moreover, in one of the earliest emails, Mr.
Bogner requested ASSET’s company resume, and after receiving it, he initiated direct
communication with Mr. Whitaker. Because Mr. Bogner was aware of what Mr. Fantozzi
was doing and never objected, Mr. Whitaker was confident that OHR authorized Mr.
Fantozzi’s actions. Thus, we have determined that the second element is met.

Finally, we have determined that ASSET has alleged sufficient facts showing that
it detrimentally relied on the ostensible agency relationship.

In his affidavit, Mr. Whitaker states:

The work performed by ASSET was done in two phases. We performed
Phase I. Our team then returned to the United States. Thereafter, we were
asked to perform the second phase of the project. We had concerns about
being paid and as a result, I relayed those concerns to Mr. Bogner of OHR.
Specifically, I advised Mr. Bogner that we needed to be paid in full for the
work already performed on Phase I and also be paid a partial advance for
the work to be performed in connection with Phase II. Mr. Bogner made it
clear to me that he would initiate the transfer of funds through Mr.

-7-
Fantozzi’s company in order that payment for our services be received,
thereafter. Shortly thereafter, we received full payment for the work
performed in connection with Phase I and a partial payment (as an advance)
for the work to be performed on Phase II. Based upon those dealings with
Mr. Bogner, we agreed to dispatch our team internationally to perform the
work associated with Phase II. The fees we seek to recover are the balance
owed for Phase II.

As the above reveals, ASSET relied, to its detriment, on the belief that its contract
was with OHR, and it understood that OHR would follow through with its promise to pay
ASSET pursuant to their contractual agreement. These facts also support the finding that
ASSET thought its contract was with OHR, not with Mr. Fantozzi. Therefore, the third
element is met.

For the foregoing reasons, we have determined that Mr. Fantozzi was an apparent
agent of OHR. Accordingly, we will now consider Mr. Fantozzi’s contacts with
Tennessee, as well as those by Mr. Bogner, in our minimum contacts jurisdictional
analysis.

B. Minimum Contacts Analysis

The long-arm statutes enacted by the Tennessee General Assembly define the
outer limits of a Tennessee court’s ability to exercise jurisdiction over nonresident
defendants. Sumatra, 403 S.W.3d at 759. These statutes allow Tennessee courts to assert
personal jurisdiction “on any basis not inconsistent with the constitution of this state or of
the United States.” Tenn. Code Ann. § 20-2-225(2). The Due Process Clause of the
Fourteenth Amendment to the United States Constitution permits a state to exercise
jurisdiction over a nonresident defendant only when the defendant has such minimum
contacts with the state that the exercise of jurisdiction does not offend traditional notions
of fair play and substantial justice. Sumatra, 403 S.W.3d at 759 (citing International Shoe
Co. v. Washington, 326 U.S. 310, 316 (1945)).5

5
Federal and Tennessee courts recognize two types of personal jurisdiction—specific and
general. Sumatra, 403 S.W.3d at 744 (citing Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S.
408, 414 (1984)). “For a court to exercise personal jurisdiction of a general nature over a nonresident
defendant, the proof must show that the defendant maintains ‘continuous and systematic’ contacts with
the foreign state.” Law Offices of Hugo Harmatz v. Dorrough, 182 S.W.3d 326, 330 (Tenn. Ct. App.
2005) (citing United Agricultural Services, Inc. v. Scherer, 17 S.W.3d 252, 256 (Tenn. Ct. App. 1999);
International Shoe, 326 U.S. at 317). “[I]n the absence of general jurisdiction resulting from continuous
and systematic contacts with the forum state, specific personal jurisdiction exists when a commercial
actor purposely directs his activities toward citizens of the forum state and litigation results from injuries
arising out of or relating to those activities.” Id. (citing Chenault v. Walker, 36 S.W.3d 45, 53 (Tenn.
2001); Scherer, 17 S.W.3d at 256). This case is concerned only with specific personal jurisdiction.

-8-
The due process requirements of the Tennessee Constitution are co-extensive with
those of the United States Constitution. Sumatra, 403 S.W.2d at 751. Consequently, in
personal jurisdiction cases, our courts “have generally hewn closely to the United States
Supreme Court’s precedents.” Id. When determining whether the exercise of jurisdiction
over the defendant comports with due process, Tennessee courts have adopted the two-
part test employed by the United States Supreme Court in Burger King Corp. v.
Rudzewicz, 471 U.S. 462, 476 (1985). Id. at 759.

First, the plaintiff must show that the defendant’s contacts with the state support
the court’s exercise of jurisdiction. Id. at 759-60. Once the plaintiff has made the
requisite showing, the burden then shifts to the defendant to prove that the exercise of
jurisdiction would be unfair or unreasonable. Id. at 760.

1. Defendants’ Contacts

The first step requires the court to focus on “the defendant, the forum, and the
meaningful connections between them.” Id. at 763. Accordingly, our examination should
address the quantity, nature, and quality of the defendant’s contacts with Tennessee. Id. at
759-60. The contacts between the defendant and the forum are sufficiently meaningful
when they form a connection with the cause of action and “demonstrate that the
defendant has purposefully targeted Tennessee to the extent that the defendant should
reasonably anticipate being haled into court here.” Id. at 760.

The U.S. Supreme Court has explained that “the criteria by which we mark the
boundary line between those activities which justify the subjection of a corporation to
suit, and those which do not, cannot be simply mechanical or quantitative.” International
Shoe, 326 U.S. at 319. A single act by the defendant can establish jurisdiction as long as
the defendant has created a substantial connection with the forum. Burger King, 471 U.S.
at 475, n.18. Thus, the analysis will never be black and white; “the greys are dominant
and even among them the shades are innumerable.” Kulko v. Superior Court of
California, 436 U.S. 84, 92 (1978) (quoting Estin v. Estin, 334 U.S. 541, 545 (1948)).
While there are no bright-line rules, the touchstone of the minimum contacts analysis is
purposeful availment. Sumatra, 403 S.W.2d at 750 (citing Burger King, 471 U.S. at 474).
The defendant’s contacts cannot be random, fortuitous, or attenuated. Burger King, 471
U.S. at 475.

Burger King is particularly instructive in this case because Burger King also
involved a breach of contract action against a nonresident defendant. Id. at 468-69. In that
case, Burger King, a Florida corporation, filed a breach of contract action in a Florida
court against John Rudzewicz, a Michigan citizen, who owned and operated a Burger
King franchise in Michigan. Id. Mr. Rudzewicz fell behind on his monthly payments to
Burger King, and after repeated attempts to renegotiate the contract, Burger King

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terminated the franchise. Id. at 468. Despite being terminated, Mr. Rudzewicz continued
to operate his restaurant. Id.

Like Defendants in this case, Mr. Rudzewicz had never once been to Florida in
connection with the contract; rather, he negotiated his contract with Burger King
primarily through Burger King’s Michigan office. Id. at 466 and 479. Thereafter, he
communicated with the Florida office only through the mail and by telephone. Id. at 468
and 481. Moreover, and similar to this case, the contract was performed outside of the
forum state. Id. at 466.

The Court noted that “it is an inescapable fact of modern commercial life that a
substantial amount of business is transacted solely by mail and wire communications
across state lines, thus obviating the need for physical presence within a State in which
business is conducted.” Id. at 476. A lack of physical connections with the state, the
Court explained, will not defeat personal jurisdiction. Id. Nor will the plaintiff establish
jurisdiction with nothing more than a single contract with a nonresident defendant. Id. at
478. The court must examine “prior [contract] negotiations and contemplated future
consequences, along with the terms of the contract and the parties’ actual course of
dealing” to determine if the defendant has purposefully established a substantial
connection with the forum. Id. at 479.

The Court found it significant that Mr. Rudzewicz deliberately reached out beyond
the state of Michigan to negotiate a twenty-year contract with a Florida corporation,
expecting to reap the benefits associated with being affiliated with Burger King, a
nationwide organization. Id. at 479-80. Thereafter, Mr. Rudzewicz was subjected to
“exacting regulation of his business” from Burger King’s Miami headquarters. Id. at 480.
And, his actions in relation to the contract “caused foreseeable injuries to the corporation
in Florida.” Id. Accordingly, the Court ruled that Mr. Rudzewicz had the requisite
minimum contacts for a Florida court to assert jurisdiction over him. Id.

Like Mr. Rudzewicz, Defendants, here, never physically entered the forum state.
They formed their connection with Tennessee primarily through telephone calls and
email communications with a Tennessee company. The trial court determined, and
Defendants insist, that telephone calls into the state of Tennessee will not sufficiently
establish personal jurisdiction. Their assertion is correct, but somewhat misleading
without further explanation.

As previously stated, the minimum contacts analysis is not quantitative or
mechanical. International Shoe, 326 U.S. at 319. Consequently, the mere fact that a
nonresident defendant has made telephone calls into the state will not automatically
confer jurisdiction, nor will it automatically defeat jurisdiction. In order to make that
determination, the court must examine the substance of the communications. See Masada
Inv. Corp. v. Allen, 697 S.W.2d 332, 335 (Tenn. 1985); see also Southland Exp., Inc. v.

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Scrap Metal Buyers of Tampa, Inc., 895 S.W.2d 335, 340 (Tenn. Ct. App. 1994); Neal v.
Janssen, 270 F.3d 328, 332 (6th Cir. 2001); First Southern Mortg. Corp. of Tennessee v.
Weisser, No. M2007-01027-COA-R3-CV, 2008 WL 2557370, at *6 (Tenn. Ct. App. June
26, 2008); Wolff Ardis, P.C. v. Dailey, No. W2013-01127-COA-R3-CV, 2013 WL
5613373, at *6 (Tenn. Ct. App. Oct. 11, 2013). Our courts have consistently held that the
defendant’s physical presence in the state is not required to establish personal
jurisdiction. Id.; Southland Exp., Inc., 895 S.W.2d at 340; Neal, 270 F.3d at 332; First
Southern Mortg. Corp. of Tennessee, 2008 WL 2557370, at *6; Wolff Ardis, 2013 WL
5613373, at *6; Nicholstone Book Bindery, Inc. v. Chelsea House Publishers, 621
S.W.2d 560, 563 (Tenn. 1981).

For example, in Wolff Ardis, 2013 WL 5613373, at *1, a Memphis attorney sued a
Maryland attorney for breach of contract in Tennessee. The contract between the two
attorneys provided that the attorney in Memphis would lend his expertise to a product
liability action filed in Maryland. Id. The Maryland attorney contended that a Tennessee
court lacked personal jurisdiction over him because he had never been to Tennessee, the
communications between the two attorneys consisted of phone calls and emails, and the
contract was performed outside of the forum state. Id. at *2. The trial court agreed,
stating that the defendant “‘did not purposefully avail himself of the benefits and
protections offered by the State of Tennessee through the act of seeking legal advice from
[the Memphis attorney] regarding the Maryland litigation’ or ‘by sending emails or
making telephone calls to [the Memphis attorney].’”Id. at *3.

We reversed the trial court, holding that while it was true that the Maryland
defendant never physically entered the state of Tennessee, lack of physical presence
would not defeat jurisdiction. Id. at *6. Examining the content of the numerous phone
conversations and emails between the two attorneys, we found that the Maryland
defendant “purposefully directed his activity toward Tennessee to initiate a contractual
relationship with a Tennessee attorney.” Id. at *7. Moreover, we found a direct
connection between the Maryland attorney’s contacts with Tennessee and the claim for
breach of contract, because the Maryland attorney promised to pay for the services and
failed to do so. Id. We determined that the Maryland attorney formed a substantial
relationship with this state and thus could have foreseen being haled into a Tennessee
court in connection with it. Id.

The material facts in Wolff are not unlike the material facts in this case. Here,
Defendants contracted with a Tennessee company to provide a highly specialized service.
Like the defendant in Wolff, Defendants in this case argue that Tennessee lacks
jurisdiction over them because their contacts with the state consisted merely of emails
and phone calls to a Tennessee company. Furthermore, they contend that since the
plaintiff rendered performance in Africa, and not in this state, Tennessee would have very
little interest in the controversy. We respectfully disagree.

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According to ASSET’s complaint and affidavits, with OHR’s knowledge and
consent, Mr. Fantozzi reached out to Mr. Whitaker to negotiate an oral contract with
ASSET to provide security for the transfer of gold from Nairobi to Hong Kong. Mr.
Bogner was copied on several of Mr. Fantozzi’s email communications and was aware
that Mr. Fantozzi was negotiating a contract with ASSET. During the course of
negotiations, Mr. Whitaker, at Mr. Bogner’s request, sent OHR a copy of ASSET’s
corporate resume, which identified ASSET as a Tennessee company. Thus, Mr. Bogner
and Mr. Fantozzi were both aware that the contract would be with a Tennessee company.

After receiving ASSET’s corporate resume, Mr. Bogner initiated direct
communication with Mr. Whitaker to guide ASSET’s performance under the contract.
Mr. Whitaker claims that he spoke with Mr. Bogner on the phone eight times in
connection with the project, and he spoke with Mr. Fantozzi on the phone approximately
sixty times in connection with the project.

ASSET’s contract was short-term, but in no way insignificant. It apparently
required ASSET to dispatch a team of individuals to Africa with specialized military and
law enforcement experience. Those individuals provided security for the transfer of gold
from one country to another at considerable risk to themselves and at considerable
expense to the company. ASSET alleges in its complaint that its expenses in connection
with the project exceeded $100,000. Furthermore, while in Africa, OHR asked Mr.
Whitaker to sign an escrow agreement on OHR’s behalf for 1.8 million dollars, which is
no small request.

After completing Phase I of the project, Mr. Whitaker contacted Mr. Bogner via
telephone and, before embarking on Phase II, sought Mr. Bogner’s assurances that
ASSET would be paid for the job. Based on Mr. Bogner’s promise that ASSET would be
paid in full, ASSET initiated and completed Phase II. However, ASSET did not receive
the promised payment, and it seeks the remaining balance of $37,247.82 owed for its
performance of Phase II. Thus, the cause of action stems directly from OHR’s contacts
with Tennessee.

The contacts between OHR and ASSET were anything but random, attenuated, or
fortuitous. OHR knew that it was communicating with a Tennessee company regarding
the provision of a valuable and specialized service overseas. The alleged lack of payment
for ASSET’s services caused foreseeable injuries in this state, and OHR could have
reasonably foreseen being haled into a Tennessee court as a result. We agree with the
United States Supreme Court that “the Due Process Clause may not readily be wielded as
a territorial shield to avoid interstate obligations that have been voluntarily assumed.”
Burger King, 471 U.S. at 474.

Taking all factual allegations in ASSET’s complaint and affidavits as true, and
giving ASSET the benefit of all reasonable inferences, we find that ASSET established

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by a preponderance of the evidence that Defendants had the minimum contacts necessary
to support the court’s exercise of jurisdiction. This determination, however, does not
conclude the analysis. We must next decide if the exercise of jurisdiction is fair.

2. Fairness

At the second step in the analysis, the burden shifts to the defendant to show that
“despite the existence of minimum contacts, exercising jurisdiction would be
unreasonable or unfair.” Sumatra, 403 S.W.3d at 760. The court considers “the burden on
the defendant, the interests of the forum state, the plaintiff’s interest in obtaining relief,
the judicial system’s interest in obtaining the most efficient resolution of controversies,
and the state’s interest in furthering substantive social policies.” Id.

In Burger King, the Court opined that “because ‘modern transportation and
communications have made it much less burdensome for a party sued to defend himself
in a State where he engages in economic activity,’ it usually will not be unfair to subject
him to the burdens of litigating in another forum for disputes relating to such activity.”
Burger King, 471 U.S. at 474 (quoting McGee v. International Life Insurance Co., 355
U.S. 220, 223 (1957)). We recognize that, unlike the defendant in Burger King,
Defendants in this case are citizens of foreign nations, although, and as we discuss in
more detail below, Mr. Bogner and OHR have a presence in the United States. Thus, we
must be cognizant that “[t]he unique burdens placed upon one who must defend oneself
in a foreign legal system should have significant weight in assessing the reasonableness
of stretching the long arm of personal jurisdiction over national borders.” Asahi Metal
Industry Co., Ltd. v. Superior Court of California, 480 U.S. 102, 114 (1987).

However, when the plaintiff has established minimum contacts, “the interests of
the plaintiff and the forum . . . will justify even the serious burdens placed on an alien
defendant.” Id. Here, ASSET has sought relief in a Tennessee court, and this state has a
substantial interest in providing an effective means of redress for its citizens. See Burger
King, 471 U.S. at 473 (“A State generally has a ‘manifest interest’ in providing residents
with a convenient forum for redressing injuries inflicted by out-of-state actors.”)

Defendants allege that OHR is a citizen of Mauritius and Mr. Bogner resides in
Italy; however, Mr. Fantozzi states in his affidavit that, while Mr. Bogner currently
resides in Italy, he is a citizen of the United States and has lived a vast majority of his life
in New York. Furthermore, Mr. Fantozzi characterizes OHR as a global operation that
frequently employs companies and individuals worldwide, including the United States.
Significantly, Defendants do not dispute Mr. Fantozzi’s testimony.

Based on these facts, we have determined that it is highly unlikely that a global
operation with a presence in the United States such as OHR would be so unfamiliar with
the United States legal system and so burdened by the travel requirements that it would

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be unfair or unreasonable for it to account for its actions in Tennessee. Thus, we conclude
that the interests of the plaintiff and the interests of this state outweigh any burden placed
on Defendants.

We have also determined that a Tennessee court will provide the most efficient
resolution of the controversy. The primary witnesses in the case are the employees of
ASSET, who are located in Tennessee; Mr. Bogner, who is located in Italy; and Mr.
Fantozzi, who is currently located in Asia. There are two other possible forums—Nairobi,
where the contract was performed, and Mauritius, where OHR is domiciled. While none
of these witnesses are located in Nairobi or Mauritius, at least some of the witnesses are
located in Tennessee. Thus, Tennessee will be the most convenient forum.

Finally, since Defendants have not made us aware of any substantive policies of
Mauritius or Italy that would be affected by a Tennessee court’s exercise of jurisdiction
over them, we find that the exercise of jurisdiction is fair and reasonable.

Accordingly, we reverse the trial court’s decision to dismiss the case for lack of
personal jurisdiction and remand it for further proceedings.6

II. WHETHER ASSET STATED A CLAIM FOR WHICH RELIEF COULD BE GRANTED

Defendants argue that ASSET did not have a contract with OHR; therefore, OHR
cannot be held liable to ASSET for breach. Nor can OHR be held liable for unjust
enrichment because OHR paid Mr. Fantozzi in full for the security services. Construing
ASSET’s complaint liberally, and taking all of ASSET’s allegations of fact as true, we
have determined that ASSET has sufficiently stated a claim for breach of contract but not
for unjust enrichment.

The purpose of a Tenn. R. Civ. P. 12.02(6) motion to dismiss for failure to state a
claim upon which relief can be granted is to test the sufficiency of the complaint. Gore v.
Dep’t of Correction, 132 S.W.3d 369, 373 (Tenn. 2003) (citing Willis v. Tennessee Dept.
of Correction, 113 S.W.3d 706, 710 (Tenn. 2003)). In determining whether the pleadings
state a claim upon which relief can be granted, only the legal sufficiency of the complaint
is tested, not the strength of plaintiff’s proof. Stein v. Davidson Hotel Co., 945 S.W.2d
714, 716 (Tenn. 1997). Such a motion admits the truth of all relevant and material
averments contained in the complaint but asserts that such facts do not constitute a cause
of action. Id.

6
As explained by our Supreme Court, should new facts develop during the course of discovery
that cast doubt on the accuracy of ASSET’s claims in its complaint and affidavits, “nothing will preclude
the defendants from renewing their motion to dismiss for lack of personal jurisdiction.” Chenault, 36
S.W.3d at 58.

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In considering a motion to dismiss, courts should construe the complaint liberally
in favor of the plaintiff, taking all allegations of fact as true and deny the motion unless it
appears that the plaintiff can prove no set of facts in support of her claim that would
entitle her to relief. Id.; see Cook v. Spinnaker’s of Rivergate, Inc., 878 S.W.2d 934, 938
(Tenn. 1994). In considering this appeal, we take all allegations of fact in the plaintiff’s
complaint as true and review the lower courts’ legal conclusions de novo with no
presumption of correctness. Tenn. R. App. P. 13(d); Stein, 945 S.W.2d at 716; Owens v.
Truckstops of America, 915 S.W.2d 420, 424 (Tenn. 1996); Cook, 878 S.W.2d at 938.

A claim for breach of contract requires “(1) the existence of an enforceable
contract, (2) nonperformance amounting to a breach of the contract, and (3) damages
caused by the breach of the contract.” C & W Asset Acquisition, LLC v. Oggs, 230
S.W.3d 671, 676–77 (Tenn. Ct. App. 2007) (citing ARC LifeMed, Inc., v. AMC–
Tennessee, Inc., 183 S.W.3d 1, 26 (Tenn. Ct. App. 2005)).

ASSET alleges in its complaint:

10. In the fall of 2015, the Defendants (collectively), designated and
appointed William Fantozzi, of BTP Group Asia, to assist the Defendants
in providing security for the transfer of Defendants’ assets from Nairobi to
a location just off the coast of Africa.

11. With the Defendants’ knowledge, Mr. Fantozzi solicited the assistance
of ASSET to provide the actual services for or on behalf of Defendants.

. . .

13. ASSET dispatched a team of individuals (with both military and/or law
enforcement experience) to provide services to or for the benefit of the
Defendants and, in connection therewith, it incurred expenses, including
labor costs, airline tickets, hotel rooms, car and driver expenses, and related
expenses.

14. In all, ASSET’s invoices for the services rendered in connection with
the project referenced above exceeded $100,000.

15. Defendants routed payments to ASSET, via Mr. Fantozzi, in partial
payment for the charges. Those payments were received by ASSET here in
Nashville, Tennessee.

16. The final invoice for ASSET’s services totaled $74,159.22. ASSET has
been paid $36, 911.40 on that invoice. Thus, there is an outstanding balance
owed of $37,247.82.

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17. The Defendants have received the benefit of ASSET’s services without
rendering full payment. As a result, the Defendants have been unjustly
enriched at the expense of ASSET.
. . .

23. The Defendants have breached their express or implied contract with
ASSET. As a result, the Defendants are liable, jointly and severally, to
ASSET for $37,247.82, together with pre-judgment interest.

. . .

25. The Defendants have been unjustly enriched, to the financial detriment
of ASSET. Therefore, the Defendants are alternatively liable to ASSET for
the equitable theory of quantum meruit.

Considering the foregoing, and construing the complaint liberally, ASSET has
sufficiently alleged that it had a contract with OHR, that OHR breached its contract by
failing to pay for the services rendered, and that ASSET has subsequently suffered
damages in the amount of $37,247.82. Thus, ASSET has stated a claim for breach of
contract against the OHR defendants.

ASSET has not, however, stated a claim for unjust enrichment. A plaintiff may
assert a claim for unjust enrichment when the plaintiff does not have a contract with the
defendant, or the contract that the plaintiff has with the defendant is not enforceable or
invalid. Freeman Industries, LLC v. Eastman Chemical Co., 172 S.W.3d 512, 524-25
(Tenn. 2005). Furthermore, the Supreme Court has stated:

The elements of an unjust enrichment claim are: 1) “[a] benefit conferred
upon the defendant by the plaintiff”; 2) “appreciation by the defendant of
such benefit”; and 3) “acceptance of such benefit under such circumstances
that it would be inequitable for him to retain the benefit without payment of
the value thereof.” Paschall’s, Inc., 407 S.W.2d at 155. The most
significant requirement of an unjust enrichment claim is that the benefit to
the defendant be unjust. Id.; Whitehaven Cmty. Baptist Church, 973 S.W.2d
at 596. The plaintiff must further demonstrate that he or she has exhausted
-
all remedies against the person with whom the plaintiff enjoyed privity of
contract. Paschall’s, Inc., 407 S.W.2d at 155; Whitehaven Cmty. Baptist
Church, 973 S.W.2d at 596.

Id. at 525.

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ASSET alleges that it had a contract with OHR but does not allege, in the
alternative, that its contract was unenforceable or invalid. Therefore, ASSET has failed to
state a claim for unjust enrichment.

IN CONCLUSION

The judgment of the trial court is reversed in part and affirmed in part, and this
matter is remanded for further proceedings consistent with this opinion. Costs of appeal
are assessed against OHR Partners, Ltd., OHR Strategic Investment Fund, Ltd., and Seth
Bogner.

________________________________
FRANK G. CLEMENT JR., P.J., M.S.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/4256399. Public record. Not legal advice.