Tennessee Judge Dismisses Two Defendants in $100M Marine Dispute for Lack of Jurisdiction

KNOXVILLE (LN) — U.S. District Judge Charles E. Atchley Jr. on Monday dismissed two defendants in a $100 million breach-of-contract lawsuit filed by Blue Sky Marine, LLC, ruling that their contacts with Tennessee were insufficient to satisfy due process requirements for personal jurisdiction.

Blue Sky Marine alleged that Axial Drive Systems, LLC, and its subcontractors, Mark McKinney and Pleasurecraft Marine Engine Co., failed to develop and market a "Pod Drive System" for marine vessels as required by a 2021 Asset Purchase Agreement. The suit sought at least $50 million in compensatory damages and $50 million in punitive damages from each defendant.

The court granted the motions to dismiss filed by McKinney and Pleasurecraft under Federal Rule of Civil Procedure 12(b)(2), finding that neither defendant had purposefully availed themselves of the privilege of conducting activities in Tennessee.

McKinney, a South Carolina resident, and Pleasurecraft, an Ohio corporation with its principal office in South Carolina, had traveled to Tennessee only three times in relation to the plaintiff. McKinney’s declaration stated he visited Blue Sky’s office in Knox County on June 3, 2020, and March 22, 2021, to discuss the propulsion system, and again on January 31, 2022, as a representative of Axial.

"At the request of a Pleasurecraft customer," McKinney visited the plaintiff in Tennessee on June 3, 2020, "to meet with Mr. Robert Nutt, discuss the pod drive propulsion system, and see Mr. Nutt demonstrate it," his declaration stated.

Atchley rejected Blue Sky’s argument that the defendants’ alleged tortious conduct, which caused damages in Tennessee, was sufficient to establish jurisdiction. The judge noted that under the Supreme Court’s decision in Walden v. Fiore, "mere injury to a forum resident is not a sufficient connection to the forum."

"The proper question is not where the plaintiff experienced a particular injury or effect but whether the defendant’s conduct connects him to the forum in a meaningful way," Atchley wrote, quoting Walden.

The court found that McKinney and Pleasurecraft did not purposefully direct their actions into Tennessee, advertise in the state, or maintain a substantive, ongoing relationship with it. Their contacts were "too random and fortuitous to support a finding of purposeful availment."

"Plaintiff cannot be the only link between the defendant and the forum," Atchley wrote, citing Sixth Circuit precedent.

The judge did not reach the defendants’ alternative argument that the complaint failed to state a claim, as the jurisdictional ruling was dispositive.

Claims against remaining defendant Axial Drive Systems, LLC, will proceed after the plaintiff files a revised complaint. Axial did not oppose Blue Sky’s motion to file a Second Amended Complaint and conceded that venue was proper in the Eastern District of Tennessee if the amendment removed references to the Independent Contractor Agreement.

Atchley granted the motion to amend in part, ordering Blue Sky to file a revised Second Amended Complaint by May 21, 2026, that omits claims against McKinney and Pleasurecraft. The court also lifted a previously imposed stay of discovery.

Blue Sky Marine’s attorney did not immediately return a request for comment.