Auto Masters files Large Bankruptcy Case in Middle District

Bankruptcy filings are down in the Middle District of Tennessee Bankruptcy Courts. In the busy years, this district could expect anywhere from 13,000 to 15,000 cases to be filed annually under Chapter 7, 11, and 13. So far for 2017, only 7,000 cases have been filed. It’s a slow time for Bankruptcy, both because the economy in middle Tennessee continues to hum along strong–and because most people who were going to file Bankruptcy did over the last 4-5 years.

Our case filings got a big boost last night, as local car dealer and financier, Auto Masters, LLC,  filed for Chapter 11 Bankruptcy, along with 7 of their related entities.  This includes: Auto Masters of Franklin, LLC; Auto Masters of Clarksville, LLC; Auto Masters of Hermitage, LLC; Auto Masters of Madison, LLC; Auto Masters of Nashville, LLC; Auto Masters of Smyrna, LLC; and Auto Masters of West Nashville, LLC.

This is one of the largest debtor cases filed this year, and it’s no surprise to see the debtor is represented by Griffin Dunham, of Dunham Hildebrand, PLLC, one of Nashville’s more sophisticated (and litigious) debtor/creditor attorneys.

These filings closely follow the filing of a receivership lawsuit filed on Wednesday, October 11, 2017, by Capital One, NA, alleging default and requesting court review of Auto Masters’ business operations.

Expect a flurry of activity on these cases, since this case involves so many financial lenders, creditors, and impacted customers. This will be a big one.

 

 

Davidson County Circuit Court Judges Enter Order to Review Writs of Restitution in Detainer Appeals

I posted a few years ago that a losing defendant in a detainer action isn’t required to post the “possessory” bond provided at Tenn. Code Ann. § 29-18-130(b)(2) in order to have a valid appeal.

While courts were split for years on this issue, the Tennessee Supreme Court’s December 2013 decision in Johnson v. Hopkins answered this question for good.  In short, the defendant who fails to post the possessory bond still has a valid appeal, but the defendant has no protection from a Writ of Restitution while the appeal is pending.

In Davidson County Circuit Court, if a general sessions detainer judgment was appealed without that bond, the Court Clerk’s website actually had a form that would allow the landlord to immediately issue a Writ, no matter if the appeal was still under consideration.

And, as you might suspect, that’s a big deal, since what’s the point of fighting the landlord’s eviction if you’re not going to stay in the premises? My guess is that it wasn’t a matter of strategy, but, instead, an issue of ignorance by the litigants about how detainer appeals work.

I also know, from my experience, that it’s a quite a surprise when an appealing defendant discovers this mistake…which used to happen when the Sheriff showed up to execute on the Writ with movers in tow.

Potentially in response to this, the Judges of the Circuit Court recently entered an Order entered on February 24, 2017 that, for any Writ of Restitution filed with the Clerk while an appeal is pending, the Clerk must set a review hearing on the Writ before issuance of the Writ.

This is an interesting practice, that’s not based on the statutes or rules of procedure. I’d bet it’s based on the Judges getting sick of dealing with the frantic motions to quash filed after the Sheriff shows up at somebody’s door. All in all, it’s a good, practical procedure.

 

 

 

Tennessee Post-Judgment Rate is at (New) All Time High

More than four years ago, I complained about the (then) new post-judgment interest rates in Tennessee. Long story short, the interest rate on judgments in Tennessee used to be a clean, easy 10%. Under the new version of Tenn. Code Ann. § 47-14-121, judgments accrue interest at a variable rate, that could change every 6 months.

One of my complaints was that it’s so difficult to figure out what the rate is at any time, but, luckily, the statute requires the administrative office of the courts to publish the applicable rate.

So, today’s post is to notify you of this: As of July 1, 2017, the rate is as high as it’s ever been, at a whopping 6.25%.

Grabbing a Tiger by the Tail: How the Taylor Swift Litigation Shows that Some Lawsuits Aren’t Worth Filing

Sometimes, it makes sense not to file a lawsuit, even if you have good claims, where there’s no easy victory and the lawsuit will ultimately cost more in time, legal fees, and distraction than you’ll ever recover.

We’re seeing a possible example of this with the lawsuit filed by Radio DJ David Mueller against Taylor Swift.  Mueller alleges that a false accusation by Taylor Swift to his bosses led to him getting fired. In the lawsuit, Taylor Swift quickly filed a counterclaim, alleging assault and battery while they posed for this picture.

If you’ll pardon the pun, this plaintiff has grabbed a tiger by the tail.

By filing this lawsuit, he stepped into near-certain litigation involving a motivated, deep-pocketed opponent who will put up a relentless fight in a lawsuit with no clear facts. In this case, there’s no easy victory and, worse, there’s no easy middle ground.  It’s his word versus her word, a fight over principle, and litigation like that is always expensive and impossible to settle without a jury (or judge) deciding who is right.

I recently had a very good client come to my office, with a new lawsuit for me to pursue. The facts were messy, with emotional claims on each side, with no clear facts showing either side was clearly right, and with no way to recover the attorneys fees if we won.

In the end, my best advice was to avoid the stress, expense, and distraction of waging this fight over a fairly small amount of money, even though I was confident we’d win in the end. In discussing emotional disputes, one my most respected law partners, Ed Yarbrough, once said, “If the client says it’s all about the principle, then I have no interest.”

Sometimes, the best way to win a fight is to know which ones aren’t worth fighting.

Why I Volunteer at Legal Aid

Last year, I spent all day on a Sunday in the outer reaches of Nashville, building a house for Habitat for Humanity. I don’t know much about building a house, roofing a roof, or using a nail gun. In fact, what I know about nail guns, I learned from a Bruce Willis action movie. Needless to say, I was not having a good time that day.

Even though it felt good to be volunteering and doing good in a general sense, it felt weird to be wasting time and destroying construction supplies on a table saw.

So, on that hot Sunday, I decided to not volunteer at any more construction jobs, and, instead, devote my time in a way that emphasizes my most valuable assets–my legal knowledge.

Since then, I’ve routinely volunteered at the Legal Aid Society of Middle Tennessee and the Upper Cumberlands.  I’m lucky to be really busy at work, and so I don’t volunteer as much as I could.

But, Legal Aid makes it easy: They offer free legal aid clinics at various times, days, and locations every month, and the commitment for volunteer lawyers is generally only a few hours at a time.

I know, I know–I’m basically telling you about the easiest, lease time-intensive way to help, but that’s a also good thing. A little bit of help goes so far. They need help staffing these clinics, and, in two hours, a lawyer can help 3-5 people who had been hopelessly lost in the legal system.

So, if you’re reading this blog and I’ve saved you any time researching a legal question, I have one request: Take that time saved and denote your time to your local legal aid clinic.

Elements of Negligent Misrepresentation in Tennessee

Disclaimer: As much as I love educating blog readers about the law, sometimes, I use this site as a notepad for myself on legal issues.

Frankly, I can’t tell you how many times I think to myself–in court–“I’ve blogged about that,” and then use the “Search” box on this blog to look a citation/issue up.

So, real quick, here’s a good guide to the elements of “negligent misrepresentation” in Tennessee, as stated in a recent Tennessee Court of Appeals case,  Jerry Faerber, et. al. v. Troutman & Troutman, P.C., et. al., No. E2016-01378-COA-R3-CV, May 23, 2017.

In order to state a claim for negligent misrepresentation, the plaintiff must establish by a preponderance of the evidence that:

  • the defendant supplied information to the plaintiff;
  • the information was false;
  • the defendant did not exercise reasonable care in obtaining or communicating the information; and
  • the plaintiff justifiably relied on the information.

See Morrison v. Allen, 338 S.W.3d 417, 437 (Tenn. 2011).

Negligent misrepresentation occurs when:

  • a defendant, acting in the course of his or her business, profession, or employment, or in a transaction in which she has a pecuniary interest, supplies faulty information meant to guide another in his or her business transaction;
  • the defendant fails to exercise reasonable care in obtaining or  communicating information; and
  • the plaintiff justifiably relies upon the information provided by the defendant.

See Robinson v. Omer, 952 S.W.2d 423 (Tenn. 1997)

“Justifiable reliance in [the] context [of negligent misrepresentation] is not blind faith.” McNeil v. Nofal, 185 S.W.3d 402, 408 (Tenn. Ct. App. 2005). The defendant is liable “only to those, whether in contractual privity or not, for whose benefit and guidance the information is supplied.” The information may be either direct or indirect. In that regard, the foreseeability of use is critical to liability. John Martin Co., Inc. v. Morse/Diesel, Inc., 819 S.W.2d 428, 431 (Tenn. 1991)

“[T]he usual measure of damages in a negligent misrepresentation action is the benefit of the bargain rule, that is, the difference between the actual value of the property received at the time of the making of the contract as compared to the value if the representations had been true.” Cary v. Evans, 1986 WL 6642, at *3 (Tenn. Ct. App. June 12, 2986) (citations omitted).

Ok, so this isn’t the most interesting blog post I’ve ever done, but, trust me, I’m going to search for “negligent misrepresentation” at least ten times.

 

 

 

To Renew a Tennessee Judgment, the Motion Must be Filed Within the Ten Year Period

A quick follow-up to my discussion of Rule 69.04 and renewal of judgments in Tennessee.

A few of you e-mailed me to ask about the timing of filing a motion to extend the judgment for another ten years. Specifically, does the motion have to be granted in the ten year period, or is it enough to simply file the motion during the ten year period?

The answer is contained in Rule 69.04.

As long as a motion to extend is filed “[w]ithin ten years from entry of a judgment,”  a judgment creditor may “avoid having the judgment become unenforceable by operation of Tenn. Code Ann. § 28-3-110(a)(2).” See Tenn. R. Civ. P. 69.04 Advisory Comm. cmt. to 2016 revision.

Also, look at In re Hunt, 323 B.R. 665, 669 (Bankr. W.D. Tenn. 2005), which says “it is not essential that the debtor receive these pleadings within the ten-year period, only that the renewal pleading be filed within that time.”

To be clear, it’s my interpretation that Tenn. R. Civ. P. 69.04 does not require the order extending the judgment for the additional ten-year period to be entered within ten years from the entry of the old judgment. But you have to file that Motion to Renew before the ten years expires.