Flint v. Gust
180 Ga.App. 904, 351 S.E. 2d 95 (1986)
Gust v. Flint
257 Ga.App. 129, 356 S.E. 2d 513 (1987)

  • Flint, who lived in Georgia, responded to an ad in a magazine (published in Nebraska) for a customized truck made by Gust in Wisconsin.  Flint sent $6k to Gust as a deposit for a special truck.  Gust was unable to deliver the truck and offered a substitute.  Flint refused the substitute, Gust refused to return the deposit, Flint sued in Georgia under a long-arm statute.
    • Flint sued for both breach of contract and fraud.
    • Gust moved to dismiss on the ground that there was no personal jurisdiction.
    • Gust had never conducted any business in Georgia prior to the deal with Flint.
  • The Trial Court found that there was no jurisdiction.
  • The Appellate Court affirmed for breach of contract and reversed for fraud.
    • According to Georgia’s long arm statute, jurisdiction over a nonresident defendant for breach of contract can be exercised if the nonresident defendant, “transacted any business in the State,” which Gust did.
    • On the other hand, there are two theories for establishing jurisdiction for torts like fraud:
      • The New York Rule is that a tort is only deemed to have been committed in a State if the tortuous act is deemed to have been committed there, and not merely the injury resulting therefrom occurred therein.
      • Conversely, the Illinois Rule says that a tort resulting in damage inside the State is deemed to have occurred in the State regardless of where the tortuous act took place (see Gray v. American Radiator (176 N.E.2d 761 (Ill. 1961))).
    • In this case, the Appellate Court decided to use the Illinois Rule and found that by not giving back the deposit, Gust purposely, intentionally, and specifically directed his actions towards a Georgia resident.  That meets the minimum contact standards of due process.
  • Gust countersued to get the fraud charge dismissed.
  • The Appellate Court threw out the fraud charge.
    • The Court found that regardless of whether you use the New York Rule or the Illinois Rule, the Georgia Statute requires that an out-of-state defendant must do certain acts within Georgia before he can be subjected to personal jurisdiction.  Gust did none of those things.
      • Georgia’s laws restrict Georgia’s personal jurisdiction to a narrower definition than would be defendable under the Constitution.
  • Btw, Georgia’s long arm statute has an exception for defamation torts.  This dates back to the civil rights era in the 1960s.  An Alabama official sued for defamation against the NY Times for publishing photos of him beating protestors.  Back then, the jury was going to be all white.  The Federal Appellate Court ruled that when there are 1st Amendment issues, there must be more than minimal contacts (New York Times v. Sullivan (376 U.S. 254 (1964))).  They did this to ensure that these cases would not be heard by biased juries.
    • The US Supreme Court rejected this argument in Calder v. Jones (465 U.S. 783 (1984)).