Month: July 2022

Moving Targets: Determining the Date of Default in a Breach of Contract case isn’t as easy as you’d think

The court cases where attorneys sue clients for unpaid legal fees always get my attention.

As an attorney who bills clients for my work and expects every client to pay every penny, I’m generally curious about what went wrong.

There are unhappy clients. Unhappy attorneys. Bills that are too high, or too late, or for work that made the client unhappy. When attorney-client relationships go bad, there’s always a lesson to be learned.

The Tennessee Court of Appeals issued an opinion yesterday that has a dozen of these lessons, at Luna Law Group, PLLC v. Richardson M. Roberts, M2021-00699-COA-R3-CV (Tenn. Ct. App. July 28, 2022).

I won’t cover them all, but I will discuss one creditor’s rights high-point: When does a breach of contract occur?

Per this opinion, the six-year statute of limitations at Tenn. Code Ann. 28-3-109(a)(3) is calculated from the “termination of the attorney-client relationship,” and not from the date of the unpaid individual invoices.

The Court wrote that contracts can be “severable” or “entire,” with the relevant statute of limitation depending on the nature of the contract. Since the work at issue related to the same general engagement and the attorney’s work “would be continuously rendered over a period of time,” then, the attorney’s work was “entire.” As a result, “the statute of limitations begins to run only on the completion of such legal services” (or upon termination of the attorney’s work).

Here, the attorney filed the lawsuit (barely) within 6 years from the termination, but only after $136,283 in unpaid invoices had accumulated in the preceding 10 months (with many or most of those invoices coming due and unpaid longer than 6 years prior).

Honestly, I’d have thought that the statute would have run on some of those early invoices, but that the creditor would have had valid claims on the invoices that had gone into default within 6 years. Under this case, I would have been wrong.

Breaches, defaults, and calculating the statute of limitations isn’t as easy as you’d think. Remember this 2019 post about a debtor who didn’t make a payment for 8.5 years, but the Court found that each installment missed was an independent cause of action, resulting in a new, later statute of limitations for each new installment? I was also wrong about that one, because (as I wrote back then) “you’d think a six year old, long defaulted debt would have expired, well, six years from the default.”

To refresh your memory, debtor entered into a mortgage (final maturity date: February 1, 2021), and defaulted in 2008, but bank waited until 2016 to declare default and until 2017 to file the lawsuit.

Using the reasoning of this new case, could the Bank simply have argued that: (i) the 15 year mortgage is one, continuous debt; (ii) thus, the individual installment payments are payments on that debt and not severable obligations; (iii) and, as a result, the real statute of limitations on the failure to pay the 2008 installment payments didn’t start to run until the final maturity date on February 1, 2021?

The answer is, most likely, that the attorney’s future performance of services is indefinite and any invoices are merely progress billings toward that larger “entire” engagement, which is unlike a bank debt, which has definite and exact terms for the repayment. Having said that, though, a smart lawyer will have ample case citations to argue either direction.

In the end, I have two take-aways: (a) determining the date of breach is harder than you’d think; and (b) when in doubt, file your lawsuit sooner, rather than later.

COVID in 2022 and how we’re missing a chance to make the courts safer

After 2.5 years of not catching COVID, I began to think I was special. That, maybe, I had a rare, super-human immunity. That, at some point, future scientists would ask to study my blood to cure unknown diseases.

But, last Sunday, I woke up feeling terrible. My Sunday morning COVID test was negative, so I assumed I’d caught a summer cold.

After 2.5 years of wearing masks, avoiding crowds, and, generally, being really safe, I had hardly gotten sick and, maybe, this is what a cold feels like.

Reality hit two days later, when–still sick–I took another COVID test. And then another. I was 2 for 2 positive.

And I knew that I caught COVID in court.

My last big, pre-COVID night out on the town was a Friday night, February 28, 2020, the week before COVID hit. We went to Cross-Eyed Critters, the best karaoke spot in Nashville. It was the unofficial after-party for our kids’ Parent-Teacher fundraiser, and it was a night for the ages. In retrospect, it was also a post-COVID nightmare, with close talking, jam-packed seating, and no ventilation.

It was also the last time we’ve been in that type of crowd in the past 2.5 years. Early COVID was no joke, and we took it seriously. No more football games, concerts, restaurants, or crowded karaoke for us.

If we didn’t have to leave our house, we didn’t. And, to this day, we still don’t.

The biggest COVID risk for our family has always been me. I’m a lawyer (as you know), and my schedule isn’t always up to me. Part of a lawyer’s job is doing whatever is needed to represent their client, and I take that responsibility very seriously.

Early on, when courts were shut down and virtual, I was fine. In fact, I posted on here all the time about how my job got easier. Lawyers weren’t setting unnecessary matters for hearing, and courts were incorporating new technologies like Zoom trials(!) and e-filing systems to reduce in-person work.

But, despite all the law articles about the Future of the Law, by July 2021, the future was trending back to “the way things have always been done.”

As Nashville lawyer Daniel Horwitz tweeted, “If you thought that we were at risk of staying in a quasi-21st century state of affairs—rather than instantly reverting back to the way law was practiced when people rode horses to court—I assure you, yours fears were never founded.”

And that’s, pretty much, where we find ourselves in July 2022.

It’s a shame, really, because so much of the technology, innovation, and streamlining that we did in response to COVID shouldn’t have been a stop-gap, it should have been permanent.

Those measures didn’t “work” simply because we all weren’t coming down with COVID; they worked because they they were keeping lawyers safe and, also, made the system faster, more efficient, and less expensive.

In a system based entirely on precedent, this wasn’t a surprise; I saw this all happening in November 2020: “8 months in, I haven’t yet seen the more comprehensive changes to court dockets and settings that I had expected. Instead, it’s been a little bit here, gauge the reaction, and then a little bit less in response. In the end, the court system seems to be only making minor tweaks to the ‘usual way of doing things,’ rather than embracing innovative models that could result in future improvements.”

Back then, it felt like we were missing a chance to really make things better. In retrospect, we absolutely did.

Going to court in modern downtown Nashville is a huge pain in the neck. Aside from the unbearable traffic, pedestrian congestion, beer trucks, and construction blockages, you also have to deal with expensive parking, onerous security, and, this time of year, southern heat.

Some matters and arguments may justify in-person hearings. “Bet the company” arguments? Custody battles? Life and liberty at stake? Sure.

The day I caught COVID, I was in court on a heavy docket, opposing a pro se hand-written nonsense Motion (seriously, a piece of paper with a frowny-face would have had more factual or legal basis than what I was dealing with). It was one of the busiest days in Davidson County that I’d seen in years, as I tweeted an hour into my wait:

An hour later, I was still waiting:

My pro se defendant never even showed up, so I ended up winning, but I also sat in a busy courtroom from 8:30 to about noon, just watching other cases (big and small) get argued and responding to emails.

I’m not mad at the Judge on my matter (who is awesome); in fact, when my case was called, he apologized and I assured him that “somebody is last on every docket.” It’s part of being a litigator, right? (Plus, I get to bill for all that.)

But, on a broader level, what’s keeping the court system from putting policies in place that separate cases on a mega-docket into “Will take 30 minutes” and “Will take 5 minutes” stacks and, then, “No hearing needed” or “Phone hearing” stacks?

The Judges can’t enjoy this present system, where 20-30 matters of varying complexity are randomly jumbled together on a Friday morning and the Judges are forced to play whack-a-mole, mixed with lightning-round legal analysis.

If this system is just out of habit and custom, let’s fix that right now. Even without a global pandemic, this can’t be the best way to handle cases.

In my personal life, I’ve valued health and safety over really fun things, like Grizzlies playoff games, exotic trips, and karaoke. But, in my professional life, it’s frustrating to take on so much risk, when it’s both unnecessary and unjustified.

Two years in, we have all this experience and technology, but, nevertheless, we are handling hearing dockets than the same way we did it 100 years ago.

My sharing this experience isn’t meant to complain or scold anybody, but to talk openly about my experience. I know so many lawyers and court staff who have caught COVID in court, but we don’t talk about it, because…it’s embarrassing or we don’t talk about being sick? I don’t know. But, if not talking about it means that we don’t realize it’s a problem, then I hope my story starts that conversation.

In the end, my COVID has passed pretty easily, but I also worry about the people who I came into contact with on Sunday and Monday, before I realized what I had.

What’s worse is, as I type this on Friday morning, my 9 year old daughter woke up with a fever. All because I sat in court last week for 3 plus hours on something that should have taken 3 minutes.

The biggest COVID risk for our family has always been me.

People are getting sick, and we have the ability to reduce the risk. Why aren’t we? What I can do to help?

New TN Court of Appeals Opinion: Even a defective foreclosure conveys good title

Tennessee is a non-judicial foreclosure state. In order to foreclose on somebody’s house or commercial property, all a lender must do is mail the proper paperwork to the proper parties. A lawsuit or other court involvement is not necessary.

That’s a drastic over-simplification, but, basically, it’s true.

In fact, when I did my first-ever foreclosure 20 years ago, I was so nervous about not having a court involved in such a complex and significant process that I filed a judicial foreclosure action. That way, at the end, I’d have a Judge’s blessing that “This was done correctly.”

What happens to a sale if the foreclosure attorney doesn’t do the paperwork correctly? Is it a valid sale? Can it be challenged?

Yesterday, the Tennessee Court of Appeals reminded us all that even a defective sale can convey good title, at Brady L. Daniels Et Al. v. Vince Trotter, E2020-01452-COA-R3-CV (Tenn. Ct. App. July 20, 2022).

In the case, it was alleged that the creditor did not provide proper notice of the sale, per Tenn. Code Ann. § 35-5-101(e). In the opinion, the Court discussed what, if any, impact of a failure to get the paperwork correct would have on the sale and cited two statutes.

The first, Tenn. Code Ann. § 35-5-106, provides that “[s]hould the officer, or other person making the sale, proceed to sell without pursuing the provisions of this chapter, the sale shall not, on that account, be either void or voidable.”

The second, Tenn. Code Ann. § 35-5-107, provides that the officer or other individual making the sale who fails to comply with the requirements in this chapter of conducting a private foreclosure sale is guilty of a class C misdemeanor and is liable for all damages incurred by the party injured due to his or her noncompliance.

These two statutes, the Court noted, are “intended to eliminate the uncertainty with land titles resulting from foreclosure sales.” Citing the Tennessee Supreme Court, the Court later wrote that a defect in a foreclosure process would not result in the sale being set aside but, instead, the damaged party would simply be entitled to compensatory damages.