Month: May 2019

Constructive Service of Process: Not as Good as the Real Thing

One of the most frustrating parts of a lawsuit can be service of process. I know exactly (generally) how long it takes to prepare and to file a Complaint, but, after it’s in the Sheriff’s or private process server’s hands for service, who knows how long that part will take?

And, under current Tennessee law, valid and effective service of process is critical to getting an enforceable judgment.

Last week, the Tennessee Court of Appeals issued an opinion that emphasizes these issues. The case is Theophilus Ebulueme v. Fred E. Onoh (M2018-00742-COA-R3-CV, Tenn. Ct. App., May 24, 2019), and it has some great analysis on jurisdictional issues.

What is the standard of review for a trial court’s decision on relief from a final judgment under Tenn. R. Civ. P. 60.02(3) (i.e. the judgment is “void” due to lack of personal jurisdiction)? Tennessee Courts follow an “abuse of discretion standard” that will be reviewed de novo with no presumption of correctness. Discover Bank v. Morgan, 363 S.W.3d 479, 487 (Tenn. 2012).

A judgment rendered without proper and valid personal jurisdiction is void. “The lawful authority of a court to adjudicate a controversy brought before it depends upon that court having jurisdiction of the subject matter and jurisdiction of the parties.” Turner v. Turner, 473 S.W.3d 257, 268-69 (Tenn. 2015). “Personal jurisdiction refers to the power of a court over the parties to the controversy to render a binding judgment.” Id.

If you don’t have good personal service, then you can’t get a valid judgment. “A court obtains personal jurisdiction over a party defendant by service of process.” Turner, 473 S.W.3d at 271. “A judgment rendered by a court lacking either personal or subject matter jurisdiction is void.” Id.

What about personal service by “constructive service”? Tenn. R. Civ. P. 4.08 provides a limited exception to the requirements of actual, personal service of process, but be careful in dealing with those less favored methods.

For instance, in today’s case, Plaintiff relied on Tenn. Code Ann. § 21-1-203 and § 21-1-204 to obtain service by publication. If you’re going to follow the exception to the general rule, however, you had better strictly comply. (Here, the plaintiff didn’t–those statutes apparently apply only to chancery court disputes and, going a step further, plaintiff published the notices in Montgomery County to serve a defendant who lived in Davidson County.)

The Court of Appeals went on to discuss service by publication generally, noting that “constructive service by publication is permissible only if it is accomplished in a manner reasonably calculated to give a party defendant adequate notice of the pending judicial proceedings” Turner, 473 S.W.3d at 272.

Long story short, if you’re going to rely on the constructive notice provisions: (1) You’d better follow the statutes to the letter; (2) You should have a valid, legal reason for resorting to the disfavored method; and (3) Your constructive notice should be reasonably calculated to give your defendant notice of the suit.

Tennessee’s Non-Judicial Foreclosure Process Can be Intimidating

Tennessee is a non-judicial foreclosure state.

What that means is that, when conducting a foreclosure, there is no need to file a lawsuit or get a court involved. Instead, the foreclosure attorney can do it all via a variety of paperwork, without any court involvement.

As a lender or foreclosing creditor, that’s pretty awesome, since you may be able to avoid legal expense and, in some cases, third party scrutinty. (Well, I mean, I only enforce liens that are 100% valid, so I have no issues with this, but some might.)

As a foreclosure attorney, however, a non-judicial process can be a little scary, since the success of the process rises or falls based entirely on your compliance with the statutes, relevant provisions of the deed of trust, and your own paperwork.

In fact, on the first foreclosure I ever handled all on my own, I was terrified by the process. I was so uncertain about the process that I actually talked the client into the benefits of conducting a judicial foreclosure (both because the facts were a little weird, and also because it sure felt reassuring to have a Judge “bless” my process via a court order).

Since then, I’ve done hundreds more foreclosures, but I still remember that initial uncertainty about doing such a significant legal process, all without any court or third party involvement.

The point of today’s post is to: (1) remind you that Tennessee is a non-judicial foreclosure state; and (2) note that, despite that, a creditor always has the ability to file a Complaint for Judicial Foreclosure where the law or facts present a weird issue.

In the end, the real test of your compliance with all the requirements of the Deed of Trust and Tennessee statutes will the title company in the sale transaction when you go to sell the property to a later buyer. If you don’t get the process right, you’ll end up with a defective title and an unmarketable mess.

Good luck, new foreclosure attorneys.