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.
Creditors Rights 101 