It may be time to start filing Davidson County evictions in Circuit Court.

The new 25 case limit on the civil dockets in Davidson County General Sessions has been the problem we thought it would be.

As of last Thursday, the next available civil hearing date for new and pending cases was December 9, 2020.

Since last Thursday, 357 new cases have been filed in Sessions Court.

Given the usual holiday court schedule, I’d bet that–as of this blog post— there are no more open civil dockets in 2020.

The Nashville Bar Association hosted a General Sessions Court Town Hall today to talk about these issues, but, given the unprecedented nature of this problem, nobody knows what’s next and how to solve it. Will there be afternoon dockets? Staggered morning dockets? Video appearances?

I’ve received a handful of calls from local lawyers, for advice on how to navigate all this. In some cases, the best move is to file the matter and just get a date locked down before things get worse (even if it’s in mid-January).

Another option, though, if you aren’t going to get into Court until January or February, is to file your commercial eviction lawsuits in Circuit Court (which has jurisdiction, per Tenn. Code Ann. § 29-18-108).

If you file an eviction action in Circuit, today, and get it served this week, you may be able to get a judgment by early December (or early January).

And, yes, I know I’ve criticized lawyers for filing Sessions-sized and eviction matters in Circuit Court (a move that generally presents no tangible strategic advantage, other than the lawyers get more billable hours).

But these unprecedented times call for novel ideas.

After a judgment for possession, does res judicata prevent a landlord from taking a money judgment?

I represent a lot of commercial landlords, and, when there’s a payment default and they want to evict a tenant, there’s an early strategy question that they all face: (1) Do we sue for possession only; or (2) Do we sue for money and unpaid rent (through the date of the court hearing)?

It’s a nuanced question. Most landlords choose # 2, especially since detainer lawsuits are filed in General Sessions Court and, due to a little-known exception, you can take a huge money judgment in “small” claims court.

But, they’ll generally say, what about the unpaid rent for time periods after we get a judgment and evict them from the property? That’s a second lawsuit. Isn’t there a rule against two lawsuits on the same issues?

Yes, it’s called res judicata, which we talked about last year.

So, can you sue a tenant two times on the same lease agreement?

Yes, you can. The Tennessee Court of Appeals reaffirmed this answer yesterday, in BOP, LLC, et al. v. Plastic Surgery of Nashville, P.C., et al., No. M2019-00588-COA-R3-CV (Oct. 8, 2020).

In that case, the landlord won an eviction judgment for possession and for money in 2005 , which the tenant later paid in full. Then, apparently, the landlord filed more lawsuits (5 more, actually), over other damages. This last part did not make sense to me, so I’ll stick to the part I care about, the law.

The Court wrote that “[t]he law on successive actions states that ‘[s]uccessive actions may be maintained on the same contract or transaction whenever, after the former action, a new cause of action arises therefrom’.” Tenn. Code Ann. § 20-6-201.

From there, the Court reasoned that each and every installment default under a contract for long term payments creates a new default, since a “suit may be brought in successive actions upon each default in an installment for
the amount of that defaulted installment.” Farmers & Merchants Bank v. Templeton, 646 S.W.2d 920, 923 (Tenn. Ct. App. 1982) (citing Barnes v. Black Diamond Coal Co., 47 S.W. 498, 499–500 (Tenn. 1898) (holding that “[i]nstallments of rent are subject to the same rule as installments of money due, and an action may be brought as each installment falls due” and that “[a] new cause of action arises and becomes enforceable with every successive installment”).

Therefore, a later suit to recover rents that “had not accrued” at the time of the first judgment constituted a new cause of action.

While the outcome in this particular case turned on really specific facts, this opinion, generally, supports the legal conclusion that, if there had been post-judgment amounts owed, the landlord would have a new cause of action to collect those and would not have been barred by res judicata.

So, to go back to the early fork-in-the road: Is it worth it to sue for unpaid rent when you don’t yet know all your damages?

I think it is. Getting possession is only “step one” of a landlord trying to establish its ultimate damages. Then, it must clean, repair, and market the premises. Once a tenant gets into the space and starts paying rent, then, the landlord will have mitigated its damages and will have the ability to calculate what its true and total damages are. But, that process could take six months to a year.

If you’re already filing a lawsuit, why not go ahead and get a judgment for at least a partial amount now (since, in many cases, the landlord doesn’t go back to sue a second time).

Davidson County General Sessions Caps Dockets at 25 Cases: This is a Big Problem

Last week, the Davidson County General Sessions Court entered an Administrative Order that limited the number of cases that can be set on the civil dockets in Courtrooms 1A & 1B, with a cap of 25 cases per day (effective October 5, 2020).

That sounds like a lot of cases. It is not.

A typical General Sessions civil docket might have 50 to 100 cases on the docket. Davidson County has civil dockets every day of the week.

By my math, this represents a minimum 75% cut in capacity.

Granted, when I first heard about the 25 case limit, it didn’t sound like too much of a problem, since I don’t have a high volume consumer or residential eviction practice. The high volume lawyers who routinely have 25 of their own cases on each docket would be the ones with the problem, right?

Then, I got a call from a commercial landlord whose tenant hasn’t paid rent since March and has “gone dark.” The landlord asked me to get a judgment for possession as soon as possible.

Spoiler-alert: The 25 case limit is a problem.

Continue reading “Davidson County General Sessions Caps Dockets at 25 Cases: This is a Big Problem”

CLE You Can Use: The TBA’s Creditor Practice Annual Forum is this Wednesday

If you need CLE credit and want to learn more about creditors’ issues, the Tennessee Bar Association has a great course coming up this week: This year’s Creditors Practice Annual Forum is this Wednesday, September 30, 2020.

This is generally an in-person event at the TBA headquarters in downtown Nashville, but, this year, it’ll be entirely online (for obvious reasons).

I’m the Chair of the TBA’s Creditors Section for 2020, and it was my job to recruit all the speakers and create the sessions. The online format really made for some fun choices, including finding speakers who otherwise wouldn’t be available to speak at a live event in Nashville.

We’ve got a Judge from Shelby County. A digital media specialist from Atlanta. A bankruptcy debtor’s lawyer from Jackson. A former creditor lawyer turned tech guru from Memphis. And, to everybody’s surprise–a creditor lawyer from California! (Note: Nobody even knew that California had creditor lawyers; we all assumed that they only had different levels of debtor focused lawyers.)

In all seriousness, it’ll be a great program. Topics include:

“A Creditor’s Rights: Top Issues and Common Mistakes From the Judge’s Perspective” by Hon. Phyllis Gardner, Hon. Lynda Jones and moderated by Kara Reese.

“The Future of Collections and Bankruptcy in the New Recession” by Monique Jewett-Brewster, Tracy L. Schweitzer and Jerome Teel, Jr.

“Legal Technology Update: Zoom, Slack, and Other Things You Never Realized You Need” by Zack Glaser, Lori Gonzalez and Kim Bennett.

And, remember, your Tennessee Bar Association membership includes 3 free CLE credits, so, basically, this will be free for you all. Thank me later!

How your registered agent’s address could get you sued in their county.

Earlier this week, a lawsuit was filed in Davidson County Chancery Court by a landlord to collect $130,697.44 in unpaid rent from a Romano’s Macaroni Grill located in Rutherford County. There was no allegation that any of the facts of the case occurred in Davidson County or that the parties contractually agreed that the venue for any disputes would be in Nashville.

Should this lawsuit be dismissed for improper venue, where the business, all operations, and the leased premises were all in Rutherford County?

Not necessarily. Here’s why: All of the Defendants use corporate registered agents whose offices are based in Davidson County, and that subjects them to venue in Davidson County.

When analyzing venue for causes of action under Tenn. Code Ann. § 20-4-101(a), a defendant can be “found” in “any county wherein it has an office for the furtherance of its business activities.”

Tennessee courts have said that a registered agent’s address is an office for the furtherance of the defendant’s business activities, and it doesn’t matter that the defendant doesn’t actually operate a business out of that address or doesn’t otherwise have any other connection to that county. See Fed. Exp. v. The Am. Bicycle Grp., LLC, No. E200701483COAR9CV, 2008 WL 565687, at *3 (Tenn. Ct. App. Mar. 4, 2008).

Maybe this isn’t a big deal–most of these corporate agents are located in Davidson County, and Nashville uniformly has very strong courts and judges.

But, Tennessee is a very, very long state. It’s definitely something to keep in mind when you’re a company in Greenville or Memphis, and you’re selecting a registered agent.

The Palm and the Nashville Hilton’s litigation over unpaid COVID rent has touched almost every trial court in Davidson County.

As you all know, The Palm restaurant in Nashville sued the Nashville Hilton in July. At the time, The Palm was four months in arrears in its payment of rent.

But, despite being in payment default, The Palm went on the offensive and premptively filed the first lawsuit, arguing that the landlord’s (i.e. the Nashville Hilton) own shut-down in response to COVID was a breach that excused The Palm’s payment of its rent.

At the time, I marveled at the audacity of the tenant in making the first move. Today, however, I’ve discovered that this dispute has gone absolutely bonkers, and it’s has been (or is being) litigated in nearly every trial court in Davidson County.

First, there was the Chancery Court lawsuit filed by The Palm on July 9, 2020.

Then, after the Hilton declared The Palm to be in breach on July 13, 2020, the Hilton filed a Davidson County General Sessions evictions lawsuit on July 14, 2020.

In response, The Palm filed a Notice of Removal of the detainer action to the District Court for the Middle District of Tennessee on August 7, 2020. This prompted the Hilton to file a notice of voluntary dismissal on August 10, 2020.

Then, the Hilton filed a second detainer action in General Sessions Court on August 13, 2020. On August 26, 2020, The Palm filed an Application for Removal of the matter to Davidson County Circuit Court, which was granted.

So, what courts did they miss? Criminal Court? Bankruptcy? Environmental Court?

This dispute involves two mega-law firms, so it’s fun to see big-time lawyers fighting over eviction issues in small claims court.

Still, though, I have to wonder if the Hilton could have opposed The Palm’s request to remove the matter to Circuit Court, which was–possibly–an attempt to get the matter moved to the slower-paced Circuit Court, but without having to post the detainer possessory bond pursuant to Tenn. Code Ann. § 29-18-130(b)(2), which requires a tenant that loses in sessions court to post one year’s worth of rent in order to remain in possession of the property.

Sessions Judges don’t like to waste valuable docket time on complex commercial matters, so they are generally happy to allow complicated, discovery-heavy trials to be removed to Circuit Court pursuant to Tenn. Code Ann. § 16-15-732.

But, at the same time, it’s a move that Sessions judges see all the time, and the Judges will sometimes ask tenant’s counsel “Is the rent paid current?” and, depending on the answer, grant a judgment for possession, and tell the tenant’s counsel to appeal and sort it out in Circuit Court.

I don’t want to ruin the developing story, so I will remain quiet about the Landlord’s options in Circuit Court to force payment of rent. But they have a few.

Whatever direction this goes, in the age of COVID, this qualifies as entertainment (for law nerds).

341 Stories: Law Firm Pay-Cut Shaming; I bought a boat; Wear Pants to your Zoom Hearings

I wanted to get a blog post out before everybody went home for the long weekend, but then I remembered that everybody is already at home…

My beef with the TBA Today’s COVID Coverage. I love the Tennessee Bar Association and the TBA Today daily email. You know this, because I talked about it 7 years ago. This email is an awesome resource that provides daily updates about legal news, career moves, awards, events, and new and notable Tennessee and Sixth Circuit appellate opinions.

But, early in the COVID crisis, the email started running stories about law firm pay cuts in Tennessee, with mentions of specific law firms. Yeah, it’s legal news, but it also felt like it was none of my business.

Plus, it led to two things: (1) Local lawyers started gossiping about other law firms’ financial stability (which was a terrible look, considering people lost jobs); and (2) Other law firms who really, really needed to take a hard look at their financial decisions and consider smart cuts may have elected to do nothing, in order to stay out of the news. Lose / Lose, right?

This is probably the Bankruptcy Lawyer in me talking, but a few financial adjustments made on the precipice of the biggest economic crisis of our era shouldn’t be considered a bad thing. Trust me, the law firms I’d be most worried about right now are the ones who haven’t changed their financial model at all.

But, as Kermit the Frog likes to say, that’s really none of my business either, and I’d rather it all be left out of my daily news. Especially as more layoffs, hiring freezes, and pay cuts are on the horizon.

In other questionable financial planning news… During the COVID crisis, I bought a boat.

My debtor bankruptcy lawyer friends tell me that an ill-advised boat purchase is Step 3 in a five-step process for a potential bankruptcy filing. Great news for the Anthony household, right?

Well, it made national news, when a reporter from USA Today called to talk about my purchase for his story, “Everyone is buying boats” during the pandemic, and it’s causing a short supply.

It was a funny, half-hour long conversation about boat ownership, with the final article coming across a bit more complain-ey than I actually feel.

“I absolutely regret purchasing it.”

In truth, I am merely luke-warm about boat ownership. See you out on the water this Labor Day weekend!

Zoom Hearing Advice. In actual legal news, here’s a great twitter thread with tips and advice from a Judge for your Zoom video court hearings.

All of these are spot on. In the past month, I’ve participated in 2 – 3 video hearings, and I’ve seen pant-less people and also background art that I would describe as “tasteful nude ballerina” art.

Don’t do any of that, say the Judges.

341: Judicial Retirements, Vacancies, and What we need to do to support diversity in the judiciary

Memphis Bankruptcy Judge David Kennedy is retiring after nearly 40 years on the bench. Yes, 40 years.

Way back in 2010, I wrote about Judge Kennedy as he approached his 30th anniversary on the bench, telling the story about how he graciously hosted me in his Court when I was a 1L law student and, in a way, set me on a course that has led to my 20 years (and counting) in bankruptcy law.

It’s a great reminder: Sometimes the smallest kindness and gift of your time and encouragement can make a meaningful impact on somebody.

In related news, there’s a Judicial Vacancy for a Bankruptcy Judge in Memphis! Yes, I know this, and I’ve had at least 5 people email me this United States Bankruptcy Judgeship Notice of Vacancy.

Yes, I dreamed of being a judge. Yes, I’m from Memphis and love Memphis. Yes, I’m an award winning Best of Bar, Super Lawyer, Best Lawyers in America Bankruptcy Lawyer.

That would be an awesome job, in a community that has an incredibly large volume of financially distressed consumer debtors who really, really need a smart, progressive, creative judge. Talk about a place where a civic- and policy-minded judge can really make a difference and change lives…

But, it’s not going to be me.

Some of you may know this, but I was invited to interview in December 2019 with the Merit Selection Panel in Memphis for Judge Paulette Delk’s recent bankruptcy judgeship vacancy. The interview–to put it lightly–discouraged me from submitting my name for another vacancy so soon. (And, side note, I’ve already switched jobs recently.)

Judicial Diversity Matters. There were probably dozens and dozens of reasons I didn’t make the final round (and the ultimate pick was an absolute home run). But, based on the content and vigor of the questions to me, I discerned that, maybe, a white male (and, also, from Nashville) wasn’t their first choice (or choices 2 through 5, either, for that matter).

And, if true, they were absolutely correct (though I still question the “vigor” with which the questions were presented to me–yikes). Long before my interview, I’d been talking about the lack of judicial diversity.

We live in a time of monumental awareness of these issues, but our judiciary doesn’t always reflect the diversity of the communities that it serves. If we’re going to seize this moment and truly work for equality and true representation, isn’t this something that we should always factor into decisions?

When people have the power to hire, grant partnership, or appoint to a position, isn’t that a better consideration than “His dad is friends with _______” or “He goes to the same church that I do” or “He is an ‘opportunistic’ hire”? That’s called “affinity” hiring. Don’t do that.

Clients, we need your help. I put the call out, last year, to clients as well. I said:

I’ll go one step further: I think law firm clients need to think about this as well. When a client hires a law firm, are clients asking about diversity? Are clients challenging law firms to take a hard look at their internal policies?  Do clients care about diversity and, if so, how are they expressing that to law firms?

I don’t perceive this to be a trend in our local legal community. Don’t get me wrong; everybody talks about diversity, but, in the end, lawyers and law firms focus mostly on the bottom line, traditional ways of doing things/hiring, and a social/cultural network that tends to promote the status quo. How can we change this?

Real change in the legal profession will not happen until clients start pushing these issues as well.  Clients can vote with their dollars. If these issues are important to clients–and they should be–clients can force this discussion and impact the profession. If you’re a potential client and you care about this, ask prospective law firms what they do to promote diversity, whether in hiring or in the community.

This is a way to get more people of color into judicial spots. Clients, demand diversity in staffing your work. Make it a priority. Law firms will listen. With more opportunities for meaningful legal work and assignments, lawyers from under-represented backgrounds will gain experience that will change the trajectory of their career. Law firms are full of talk when it comes to diversity; real change requires that clients make it a priority.

To quote a tweet from Tiffany Graves:

New Associates: These recent Tennessee Appellate Opinions can save you some research time.

Over the past few weeks, the Tennessee appellate courts have issued some really useful opinions on creditor-specific issues of law.

As you’ll remember from this post (from 2013!), these opinions have great recaps of the law and can save valuable research time. I’ve literally been sitting at counsel table, furiously researching this site for a citation (this one, about slow pay motions. And also this one about Rule 69.02.)

Some quick hits from the past week:

Statute of Limitations; when a breach of contract cause of action accrues; and the standard of review for a 12.02(6) motion. This case from yesterday, In re Estate of Donald Cowan, No. M2019-01597-COA-R3-CV (Tenn. Ct. App. Aug. 25, 2020) has a great statement of the law on statutes of limitation, when the clock starts ticking on a claim, and a good recap of the standards in granting a motion to dismiss for failure to state a claim upon which relief can be granted under Tennessee Rule of Civil Procedure 12.02(6).

It’s a well written opinion, and a litigant with those issues can literally cut and paste those sections into a brief.

Motions to Intervene under Tenn. Riv. Civ. P. 24. Regions Bank v. The Blumberg Trust, et. al., No. E202000051COAR3CV, 2020 WL 4919783 (Tenn. Ct. App. Aug. 21, 2020). This opinion, issued on Friday, has a great summary of the statutes and case law on Intervention as of Right and Permissive Intervention in Tennessee under Rule 24.

In that case, the party seeking to intervene was an assignee of the debt and was really only trying to substitute itself as a party, so it’s strange that intervention was even an issue.

In an even stranger twist, the prevailing party (appellee) most definitely submitted the Order Denying the Motion, and the submitted (and entered) trial court order was entirely devoid of factual or legal analysis. As a result, the Court of Appeals refused to rule on the issues on appeal and remanded the case for further proceedings.

My question is this: It was clearly a deficient bare-bones trial court order, but doesn’t the appellant share the responsibility of curating the record? Shouldn’t the appellant have submitted a competing order that had enough substantive details to properly present the issue on appeal?

Just a strange case.

Prejudgment Interest under Tenn. Code Ann. § 47-14-123. The Court of Appeals revisited the case of 101 Constr. Co. v. Hammet, No. M201801321COAR3CV, 2019 WL 5606610, at *7 (Tenn. Ct. App. Oct. 30, 2019), appeal denied (Mar. 26, 2020), and I can’t tell exactly why, but I appreciated the reminder about this case’s very detailed lesson about the importance of detailed communication in legal fee arrangements.

Also, it has a nearly “cut and paste” perfect discussion of the standards in Tennessee for awarding prejudgment interest under Tenn. Code Ann. § 47-14-123.

Spoiler: Tennessee Courts should always be awarding pre-judgment interest.

Elements to Determine Value of Damages under Quantum Meruit Claims (and who can testify). This is an issue that doesn’t show up in appellate cases often: what type of proof is required to establish the amount of damages in a quantum meruit claim.

The Court of Appeals provided a really good road map last Tuesday, in Blount Mem’l Hosp. v. Glasgow, No. E201900776COAR3CV, 2020 WL 4809951, at *2 (Tenn. Ct. App. Aug. 18, 2020).

The Plaintiff had an awful contract, so it had to rely on unjust enrichment/quantum meruit to recover the value of the hospital services provided to the Defendant. The Plaintiff presented proof from the “hospital’s financial representative” (not a doctor or service provider) that “she was familiar with the customary charges in the medical industry and that the hospital’s charges for the services were reasonable and customary.”

This knowledge wasn’t gleaned from a survey of the industry or by first hand knowledge of what other hospitals were charging; instead, it was based solely on what Medicare allowed hospitals to pay. (As an added note, though, the Court mentioned that the mere fact that “this is what the hospital usually charges” isn’t good enough proof.)

But, because the proof presented, i.e. that the “medical services were comparable to all hospitals in the area that accepted Medicare patients…,” was presented by a “hospital representative who is familiar with what is reasonable and customary,” the Court found that it was “sufficient to make [a] prima facie case for the reasonable value of the services rendered.” Id. at *3.

Keep this case for those situations where your witness is the controller / bookkeeper, but has no idea how to perform the underlying services. This comes up alot.

Last One: Setting Aside a Judgment Under Rule 60.03. Reese v. Amari, No. M201900329COAR3CV, 2020 WL 4342734 (Tenn. Ct. App. July 28, 2020).

This one is really interesting. A judgment debtor attacked a decades old judgment, arguing that it was a default judgment.

In denying the attack, the Court noted that, even though it was called a “default” judgment, the trial court actually entered the judgment at a trial, which the defendant didn’t attend. So, it wasn’t technically a default judgment, as that is defined under Tenn. R. Civ. P. 55, and wasn’t entitled to the more generous standards to set aside default judgments.

Separately, though, Judge Dinkins’ opinion has a very precise presentation of when a court will set aside a final judgment under Rule 60.02(3).

And, new associates, this comes up far more than you’d imagine.

Tennessee Court of Appeals issues opinion that resolves another obscure issue under Foreign Judgment Act.

Last year, I wrote a post called Judgment Creditors are Limited to the terms of their Foreign Judgments, which cited a Tennessee Court of Appeals case styled The Wolf Organization, Inc. v. TNG Contractors, LLC.

The point of that opinion was that a judgment creditor seeking to domesticate a foreign judgment under the Uniform Enforcement of Foreign Judgments Act (Tenn. Code Ann. §§ 26-6-101 to-108) would be limited to the actual amount of the foreign judgment. In Wolf, the issue was that the creditor was asking for the judgment amount plus more post-judgment attorney fees to be allowed. The Wolf Court said that the claim for additional attorney’s fees was a separate claim.

I appreciated this case, since it provided resolution of an obscure, but common, issue under the Tennessee Foreign Judgment Act.

Well, a little more than a year later, the Wolf litigants are back at it, with another interesting issue. The latest is Friday’s opinion, The Wolf Organization, Inc. v. TNG Contractors, LLC, M202000093COAR3CV (Tenn. App. Aug. 21, 2020).

The new issue? If the foreign judgment provides for a specific post-judgment rate of interest, but the Order enrolling the foreign judgment doesn’t mention interest, what happens?

The Court makes two useful observations:

  1. Regardless of whether the new Order says anything about post-judgment interest, all judgments are automatically entitled to post-judgment interest.
  2. But, in the absence of a specific statement or order about the amount of post-judgment interest in the enrollment Order, the rate of interest is just the Tennessee statutory rate, found at Tenn. Code Ann. § 47-14-121.

My take-aways from this opinion:

  1. Details matter. If you think you will need it in the future, include it in the text of the Order. An order from a court will always be the most important pleading you’ll draft, and a smart lawyer will think about all the things she will need from this order and work backwards.
  2. Are Orders always required? Under the Foreign Judgment statute, an order is not expressly required. Instead, under Tenn. R. Civ. P. 3A.04, the Clerk simply “enrolls” the original judgment after 30 days after service.

Sure, the Wolf creditor could have avoided all of this with a more detailed Order; could they have avoided all this by not filing any order? Maybe.

Also, following the first Wolf opinion, the creditor needed to go back to the other state to get an award of attorneys fees. Couldn’t the creditor also get a judgment for post-petition interest at the higher rate and then come back to Tennessee?

Either way, it’s an interesting case on a rarely litigated statutory scheme.