One of the reasons I have this blog is for people like you, potential client, to find me online and hire me for your Nashville and Tennessee legal needs. I cast a wide net and hope Google notices, and so it’s no surprise when I get calls from remote parts of the country–or world–asking me for help.
Many of the inquires I receive are not relevant–people looking to me to help them stop foreclosures. Many are potential scams from fake overseas clients. What I’ve noticed in the 5 years that I’ve kept this blog is the increasing sophistication of these scam client inquiries. No longer are they in broken English and as transparent as a glass of water.
Nowadays, the scammers are pretending to be part of real companies (or elaborately created fake companies), in deals that are designed to trick and trap lawyers into falling victim and processing forged cashiers checks.
If you think this can’t happen to you, as a simple Nashville lawyer, well, I’ve got just the CLE for you.
Working with OutkickCLE (the lawyer CLE arm of the Clay Travis sports media empire), I’ve presented a course called Most Distinguished Sir or Madam: This CLE Will Make You Rich! In the CLE, I discuss actual e-mail scam referrals that I’ve received, the red flags I’ve learned to look for in dealing with these scammer clients, and what to do when a suspicious client emails you.
It’s a fun CLE, discussing the history of these scams, but it’s also a dead serious CLE, discussing how these scammers have stepped up their game, to the point to where lawyers are increasingly falling for the tricks. This may be the most useful CLE you’ve listened to in years.
The Tennessee Court of Appeals issued a new opinion, Preston McNees Specialty Woodworking, Inc. v. The Daniel Co., Inc., on February 13, 2015, which I’m citing here because it includes a good review of the law of equitable estoppel.
In the case, a subcontractor alleged that a general contractor was equitably estopped from denying payment of various change orders, when the general contractor waiting until the work was completed to provide notice that the extra charges would be denied.
The Court held that doctrine of equitable estoppel requires evidence of the following elements with respect to the party against whom estoppel is asserted:
- Conduct which amounts to a false representation or concealment of material facts, or, at least, which is calculated to convey the impression that the facts are otherwise than, and inconsistent with, those which the party subsequently attempts to assert;
- Intention, or at least expectation that such conduct shall be acted upon by the other party; and
- Knowledge, actual or constructive of the real facts.
Consumer Credit Union v. Hite, 801 S.W.2d 822, 825 (Tenn. Ct. App. 1990).
Additionally, the Court held, equitable estoppel also requires the following elements with respect to the party asserting estoppel:
- Lack of knowledge and of the means of knowledge of the truth as to the facts in question;
- Reliance upon the conduct of the party estopped; and
- Action based thereon of such a character as to change his position prejudicially.
This is a great review of the law, as this issues comes up. Ultimately, this Court ruled that there was no reliance because the contract at issue was clear.
When a loan goes into default, the lender has many options. Sometimes, they go straight to foreclosure. Other times, they’ll file a lawsuit first. Maybe the collateral isn’t worth repossessing; maybe the secured creditor wants to be the first to get to a judgment, in order to execute on other assets or take a judgment lien.
When a bank files a collection lawsuit prior to foreclosing, the borrower always yells in defense: “But you haven’t sold the collateral yet!” and argues that the lawsuit is premature or that the borrower is entitled to some sort of credit or offset to the ultimate judgment.
The defendant is wrong, and the Tennessee Court of Appeals reminded us of that in an opinion issued yesterday in Eastman Credit Union v. Hodges. This was the exact argument the defendant made: “that the judgment of the trial court should be reversed because Eastman did not repossess a motorcycle that served as collateral for one of Hodges’ loan obligations [and that] the value of this motorcycle should have been deducted from the outstanding balance of his loan.”
The Court of Appeals’ response? “His position has no merit.”
The Court held that Tennessee Code Annotated § 47-9-601 does not require a lender to foreclose on its collateral prior to obtaining a judgment. That statute provides that a secured party “[m]ay reduce a claim to judgment, foreclose, or otherwise enforce the claim, security interest, or agricultural lien by any available judicial procedure[.]” Specifically, the Court wrote: “These rights, in addition to others provided by the section, are ‘cumulative[,]’ and the statute expressly allows them to be exercised simultaneously. The statute, however, does not require that a secured party foreclose on collateral prior to or simultaneous to seeking a judgment.”
It’s a good case to remember the next time a defendant raises these issues, and, trust me, they will.