Month: July 2021

Two More Sheriffs Sales set for August: Williamson County Commercial Properties

Last week, I wrote about a pending Sheriff’s Sale that I have scheduled for August 3, 2021 on 2137 Maricourt Street, Old Hickory, Tennessee.

A number of you reached out for information on any other sales that I may have pending. Here is information on two Williamson County commercial properties that will be sold at the end of August.

This will be via a Sheriff’s Sale set for August 31, 2021, at 12pm, at the Williamson County Judicial Center, 135 South 4th Avenue, Franklin.

(1) Approximately 2.43 acres, South Carothers Road, Franklin, Tennessee, Map/Parcel No. 079-082.00. This is a wooded lot, immediately next to the Soar Adventure Tower ropes course.

This is an image of the property available from the Williamson County GIS mapping site.

Per the Sale Order, bidding for this tract will start at $51,500.00. The 2020 tax appraisal for this property is $103,000.

(2) Approximately 4.29 acres, Royal Oaks Boulevard, Franklin, Tennessee Map/Parcel 079-023.00. This is also a wooded lot, right off Highway 96, on Royal Oaks Boulevard.

The neighboring property to lot was in the news recently, in the Nashville Post article titled “Franklin apartment property sells for $100M.” In case you’re not a subscriber, my interpretation of the article is that a Los Angeles-based real estate group bought the property immediately next this 4.29 acre lot for One Hundred Million Dollars.

This is an image of the property available from the Williamson County GIS mapping site.

I am not suggesting that this property is worth $100,000,000 (or anywhere close to that number), but, per the Court Order, the opening bid will be $100,000.

Please let me know if you would like additional information on either of these two properties. I am the attorney for the creditor, and, as a result, I will be limited in what information and guidance that I can provide, but I am available to answer questions about the Sheriff’s Sale and the Sheriff’s Sale process. Nothing in this post, of course, is designed to give you legal or factual advice about these sales.

As with all distressed real estate sales, buyer beware, and hire a lawyer.

Tennessee Court of Appeals issues a “must read” opinion on General Sessions appeals

As long-time readers know, some plaintiffs elect to file their lawsuits in General Sessions Court, even if their claims exceed the $25,000 jurisdictional limit. Of course, they’ll ask for damages right up to the max amount of $24,999, which means they’ve shaved off some amount of their claim, in order to get all the other advantages offered in small claims court.

When the plaintiffs voluntarily reduce their claim to satisfy the Sessions jurisdiction limit, they’ll often use that as part of their bargaining leverage, i.e. “if you appeal my judgment, I’ll ask for the higher amount of all my claims in Circuit Court.”

Back in 2014, I talked about that strategy, which is allowed under Tenn. Code Ann. § 16-15-729. That statute says the Circuit Court “shall allow all amendments in the form of action, the parties thereto, or the statement of the cause of action, necessary to reach the merits, upon such terms as may be deemed just and proper. The trial shall be de novo, including damages.”

As noted back then, an actual Amended Complaint under Tenn. R. Civ. P. 15 must be filed in order to assert the new claims. No big deal, right?

Well, this brand new case from the Tennessee Court of Appeals makes this maneuver drastically more risky. The opinion was published yesterday, at Chimneyhill Condominium Association v. King Chow, No. W2020-00873-COA-R3-CV (Tenn. Ct. Apps., July 20, 2021).

In that case, when the defendant appealed the Sessions judgment against it, the plaintiff asserted new and increased claims in Circuit Court against the defendant. Here, the plaintiff did everything procedurally correct: it obtained a Circuit Court Order allowing the filing of an amended complaint; and then filed the claims in an Amended Complaint. Regardless, the trial court allowed the defendant to dismiss its appeal of the Sessions judgment and found, as a result of the dismissal of the appeal, that Plaintiff’s claims in the Amended Complaint must be dismissed.

The Court of Appeals agreed, stating that “new claims asserted by a plaintiff who did not appeal a general sessions court judgment will be dismissed upon dismissal of the appeal of the opposing party…” The plaintiff is “the master of his or her complaint” and will be expected to bring all of its claims in the original proceeding.

If certain claims are omitted or the sessions court fails to grant all the relief, then the remedy is for the plaintiff to file its own appeal. In dismissing the new claims, the Court wrote that “it was therefore [plaintiff’s] own decisions that resulted in [plaintiff’s] additional claims being dismissed when [defendant] chose to dismiss his appeal.”

This case is important for several reasons. It’s contrary to long-standing practice and procedure. It appears to divert from the precepts of Tenn. Code Ann. § 16-15-729 and also the concept of a “de novo” review (i.e. if everything starts anew on appeal, without regard to what happened in the lower court, why shouldn’t the plaintiff get to restate her claim).

In the end, however, this is a procedural strategy that will greatly benefit judgment defendants and catch many judgment creditors by surprise. What’s the fix? I guess a plaintiff with significant additional claims may consider voluntarily dismissing its own claims during the appeal, and then re-filing those claims as a new Complaint.

I know this blog has a creditor-friendly bent, but, regardless, I don’t like the reasoning behind this opinion. I understand what the Court is doing, but it also seems too procedurally clever and doesn’t consider the practical implications that are facing parties on a de novo review in Circuit Court.

The Law is Back! (and pretty much the same as it ever was)

Remember, back in the spring of 2020, when we embraced all the radical changes to the way we practiced law?

All across the country, law firms were closing their offices, sending the staff to work from home, and figuring out how to practice using a laptop, a phone, and really strong wi-fi. No more 4-hour dockets, just to announce an agreed order. Instead, we were doing hearings (and trials!) by Zoom, sitting at hot desks (or in our front bedroom), and figuring out ways to use technology to speed up the legal process for clients.

But lawyers, as a group, aren’t always looking for ways to innovate and “speed up” the legal process. This is an industry where “they way things have always been done” sets a direct course for the ways things will be done.

And so, sure, those early pandemic puff pieces about all the law firm Zoom happy hours made for great fodder in the local business journal in July 2020, but this is July 2021, and it’s time for attorneys and staff to get back to the office. Lawyers are logging off of Zoom and dusting off those old suits. The two hour drive to Court to make a five minute announcement is back.

I love this quote because it’s so true: We are discarding so many of our advances from the past year–things that made perfect sense and saved so much time and legal fees for clients–only to go back “to the way law was practiced when people rode horses to court.”

Why? National legal writer David Lat writes about this in his column about the “Five-Day Office Week.” Lat cites several factors, not the least of which is the sunk cost of long term leases and other hard costs built into the typical law firm. If the firm is paying for all that space, why not make people use it? And, yes, the traditional way of doing things is one of those factors.

Because I live and practice law in Nashville, my frustration about reverting back to the old-timey ways is influenced by, frankly, how much of a mess downtown Nashville can be to conduct business in. E-filing in Davidson County Chancery, Circuit, and General Sessions Courts cuts down on 90% of my trips downtown, but, for that 10%, it literally doesn’t matter what time of day you go: Downtown Nashville is a 24-hour madhouse of construction, beer delivery trucks, parties, and congestion.

In the end, common sense and efficiency may not be the deciding factors. If the Judges, the Court Clerks, and the Administrative Office of the Courts want lawyers to practice law in person, lawyers will have no choice. If law firm managing partners want staff, associates, and partners to physically come downtown, that’s what they’ll do (unless it results in a talent exodus, as predicted by David Lat).

If you want an early clue on where this is heading, though, look at the law firm screenshots showing their recent Zoom meetings and happy hours. In those, the younger associates tend to be working remotely. But, notice the older lawyers’ pictures. They’re generally wearing ties and doing the Zoom calls from their law firm offices.

My take-away? The five day work week is already back. They just haven’t sent you the memo yet.

Homebuyer Beware: Some of the property listings on Zillow are Foreclosures and Sheriff’s Sales

Last year, I had a foreclosure scheduled for a Williamson County property in an “in demand” neighborhood and, somehow, Zillow picked up my Foreclosure Sale Notice and listed my sale on the property’s Zillow page. In April, I wrote a post about the 500 phone calls and emails I received from all over the world, asking about the property.

In fact, I got one today from Detroit.

But, a few minutes later, I got a call about another Zillow listing, this time on a Sheriff’s Sale I’m conducting in August on 2137 Maricourt Street, Old Hickory, Tennessee 37138.

The full Notice of Sheriff’s Sale of Real Property can be found on The Wilson Post’s Public Announcements page. I have no idea how it ended up on Zillow, but anything that generates more potential bidders is good.

As indicated in the Sheriff’s Sale Notice, the property is scheduled for auction at 11:00AM, on August 3, 2021. The Sale Notice contains the terms of sale, including opening bid and the bidding process.

I post here in order provide a quick link to the Notice of Sale, which I’m planning to forward to potential bidders. This should present a great opportunity to a bidder.

In this strong real estate market, there are limited opportunities to find good deals on Middle Tennessee real property. The investors have long figured out foreclosure sales, then they figured out tax sales, and, now, Sheriff’s Sales are the next frontier. Sheriff’s Sales used to be rare–given that the process is fairly complex and confusing (even to lawyers)–but these are becoming more common, given the rise in property values and the unyielding demand for residential real estate.

As Zillow continues to grow into a trusted resource, though, I worry that a typical homebuyer may be lulled into seeing only the upsides of the potential deals listed on Zillow, without fully exploring the risks that distressed asset sales present.

I’m not suggesting that a buyer shouldn’t consider participating in a sheriff’s sale (seriously, please come on August 3), but I am encouraging every caller to educate themselves on the process and to consult with a real estate lawyer in advance.

Bankers: Tennessee Court of Appeals issues opinion on safe practices on handling bank levies.

A few weeks ago, I went to Chancery Court on a conditional judgment motion and part of my presentation to the Judge was to acknowledge how rare it is to be in court on conditional judgment proceedings.

Under Tennessee law, a creditor can get a “conditional judgment” against a non-debtor garnishee (usually an employer or a bank) when the creditor issues a garnishment and the garnishee fails to respond. This conditional judgment is then made a final judgment if the garnishee never responds.

As you can imagine, asking that a bank or an employer be made 100% liable for a debtor’s judgment (regardless of whether the debtor actually works or banks there) tends to get the garnishee’s attention, thus eliminating the need for a hearing. In practice, most banks instantly respond to a conditional judgment.

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A few weeks ago, the Tennessee Court of Appeals issued an opinion detailing a conditional judgment fight between a judgment creditor and a garnishee bank over an allegedly inaccurate response, at Tullahoma Industries, LLC v. Navajo Air, LLC (No. M2019-02036-COA-R3-CV)(Tenn. Crt. Apps., June 29, 2021).

In that case, US Bank was served with a garnishment and immediately froze all accounts that might be relevant, including accounts in the name of a non-debtor entity, but that was clearly related (same principals, same address) to the debtor and with a very similar name. While the accounts were frozen, the third party’s lawyer sent a demand that the funds be released, pointing out the different entities’ names and different EINs.

After verifying that the debtor and the account holder entity had different tax identification numbers, US Bank released the funds back into the account and answered “no accounts.” In response, the judgment creditor challenged US Bank’s response by filing a Motion to Show Cause (i.e. asking for a conditional judgment for failure to provide an accurate/correct response). The trial court agreed with US Bank, and the Court of Appeals upheld the ruling.

A recap of the analysis:

  • A judgment creditor’s remedy in response to an inaccurate garnishment response will be to examine the garnishee under Tenn. Code Ann. § 26-2-204.
  • There is some suggestion that moving directly into a “Show Cause” / conditional judgment proceeding is procedurally improper.
  • Instead, the creditor starts with an examination (i.e. discovery) to vet the garnishee’s answer, with the purpose to determine whether the garnishee actually holds (or held) money or property of the judgment debtor.
  • The judgment creditor has the burden of proof that the garnishee holds the debtor’s property.
  • As to bank accounts, a court will not go beyond an analysis of account ownership (i.e. the account name, the tax identification number of the owner). The Bank does not need to inquire into the source of the funds or equitable ownership claims.
  • Even though the Court questioned the procedural path, it appears that the conditional judgment process is appropriate, but only after the examination takes place.

I note that this opinion was authored by Judge Neal McBrayer, a former debtor/creditor lawyer, who does a great job on commercial and real property cases.

This case provides important guidance to all parties. To creditors, it shows the value in naming the correct party-defendant, as well as any related entities, in your original proceeding.

To banks, it provides a great outline in how to process bank levies, including what to do when it’s not entirely clear that the judgment debtor is your account customer. That’s why I get all those calls asking for social security or tax id numbers, dates of birth, and other information like that. Smart banks avoid conditional judgments.

Welcome to Nashville: Property Developers, Bachelorettes, and National Law Firms

The Nashville Post ran a story on Tuesday about the “shifts in the local legal market” and all these national law firms moving to town and scooping up lawyers to create local offices.

It’s a topic that local lawyers have been talking about for a few years, generally in the form of complaints about the out-of-towners coming in, planting a flag (albeit a very fancy flag), and changing the local market in ways that don’t necessarily change it for the better.

And, yes, I fully acknowledge that this is, basically, the “lawyer” equivalent of when long-timer Nashvillians complain about the people from California moving to their neighborhood and running up the home prices.

Last fall, I had a commercial real estate matter with one of these new law firms. The lawyer I dealt with was based out of Phoenix (but, weirdly, always called me from a Miami area code). It was a small deal, but also the most difficult project I worked on last year. Literally, every thing that could be argued about was argued about. To this day, if you are calling from the 305, you are getting my voice-mail (sorry, J-Lo).

For good or bad, it was definitely a different experience, and I worry whether this is what the next 10 years looks like.

I know I sound like those traditionalist lawyers who refuse to acknowledge change and who, last year, probably refused to do Zoom hearings or, years ago, refused to use e-mails.

But, it is going to change the local legal profession.

Lawyers at mega-firms have to bill more to pay for those mega-offices (both in Nashville, but also in NYC, LA, and all of those other “national” cities) and the mega-salaries being offered. More issues get nit-picked, more calls get scheduled, and, slowly, the way you do a deal in Nashville feels more like how you do it in NYC, Chicago, or whatever other of the 20 cities the lawyer you’re dealing with is based out of.

In the end, you have to wonder whether this results in more costs to the client and, if it does, is it worth it? (And, disclaimer, if a huge law firm wants to buy my firm, I will instantly delete this post.)

I had drinks with a couple of local lawyers from other firms a few weeks ago. We talked about office space (still expensive!), some local gossip, and these issues. (Recap: Many of our well-respected-lawyer-friends work at these firms; they are awesome and do good work; we’re just jealous; who is next, etc.)

In the end, one of the other lawyers wrapped it all up with a sly grin: Sure, it’s going to change the Nashville legal market, but there’s a silver-lining. Over the next 3-5 years, it’s going to artificially raise the standard hourly rate for legal work by 33%to 50% for all of us. (And, sure, this was said as a joke, but also as a statement of fact. This is a very good prediction.)

If you’ve lived in Nashville more than 5 years, you’ve heard complaints just like what I’ve said in this post. You’ve also heard the typical response, which points out that the complaining neighbor’s own property value has sky-rocketed due to the hot market. Same goes for lawyers.

We live in interesting times in Nashville.

Don’t Forget This Blog Post (I did): A local court can order an out of county Sheriff to conduct a sheriff’s sale of real property.

I need to pay more attention to this blog. (And not just posting to it.)

A few weeks ago, I had a pretty deep legal discussion with a lawyer for a nearby county on a complex creditor rights question. And, after a few days of comparing research, she sent me a link to my own blog post on the exact same topic.

The bad news is that I spent many hours re-researching the issue. The good news is that I came to the same conclusion.

The issue was whether a Chancery Court in County A can issue an order and a levy to the Sheriff in County B to sell real property located in County B. And this wasn’t just a theoretical discussion–this was my own levy seeking to collect on a judgment.

The issue doesn’t come up much, and my concern was a lingering recollection that, in fact, some actions related to real property *are* limited to the county where the real property is located. That’s the “local action rule,” which requires those actions with a direct and undeniable connection to the land to be brought in that county (examples: title dispute / quiet title actions; detainer actions affecting possession of land; actions seeking money damages for trespass or injury to land). The way that Tennessee cases apply it, however, the local action rule speaks more to a “cause of action” that relates to the specific land at issue, not a general execution against the land.

In the end, here’s why Sheriff B can do it: 

(1)          Execution Sales of Realty are governed by Rule 69.07 and Tenn. Code Ann. § 26-5-101, and neither contains any county limitations.  My review of Tenn. Code Ann. § 26-1-101 (and all around those statutes) did not reveal any limitation of the Sheriff’s ability to sell real property. We know that a local sheriff can enforce an out-of-county judgment on all other assets (wages/personal property like cars/bank accounts)—if there were a distinction as to real property, wouldn’t it be in those same statutes?

In fact, not only does Rule 69 not contain any exclusions, but it lumps real property in there with the other categories. For instance, in setting what can be levied against, Rule 69.05(1) says that “Property includes a judgment debtor’s realty, personalty, money, wages, corporate stock, choses in action (whether due or not), and court judgments.” (Note that there’s no distinction between the different types of assets.)

For personal property (which we know an out of county Sheriff can do), Rule 69.06 makes no distinction or exception as to the sheriff’s powers (or identification of which county’s sheriff can act).

For real property, Rule 69.07 (the separate rule for “Execution on Realty”) makes no distinction or exception related to which sheriff can take action. Instead, that Rule creates a system by which the creditor “may move” for an order of sale and then, “the sheriff” conducts the sale.

(2)          The Jones v. Helms I wrote about last year remains valid.

In Jones, the creditor held a judgment from Gibson County and filed a Rule 69.07 motion in Gibson County for a sale order, and the Gibson County Court granted the request and ordered the Weakley County Sheriff to sell the land to pay the Sessions judgment.  Rather than recite all the opinion, I’ll just direct you to last year’s post. (And, also, check out: Jones v. Helms, 2020 Tenn. App. LEXIS 517, *8-12, 2020 WL 6806372.)

One of the reasons that I maintain this blog to curate a list of useful opinions for my own practice. Next time, I’ll be sure to check in here first.