David

Want to Avoid Garnishment of Your Wages? Find a Job Where You are Paid in Cash Tips

Judgment debtors with non-traditional employment are always a headache to collect from. This includes self-employed people, independent contractors, and people who work for tips.

Here, I’m talking about waiters, valets, and anybody else who may earn a nominal hourly rate, but the bulk of their income comes from tips or gratuities. How do you garnish $5 in cash handed to a valet?

In Tennessee, you can’t. The Tennessee Court of Appeals recently considered the issue of whether tips reported by the Garnishee’s employees are to be included in the calculation of disposable earnings for the purposes of garnishment in determining the withholding under the garnishment statute, Tenn.Code Ann. § 26–2–106.

This case was Erlanger Med. Ctr. v. Strong, 382 S.W.3d 349, 351 (Tenn. Ct. App. 2012). In that case, the judgment debtor was a server at Shoney’s. In deciding whether tips could be garnished, the Court looked at how “wages” was defined in Tenn.Code Ann. § 26–2–102 (which suggested that tips are included), but the Court went on to note that federal law excludes tips from garnishment because tips “do not pass to the employer.”

This makes sense, because how can an employer withhold 25% of funds that it never has control over?

As a result, a judgment debtor whose primary income comes from tips and gratuities (that do not pass through the employer’s hands) may be able to escape garnishment.

But, where the tips are paid via the employer, there’s still a chance that those funds can be captured. Since at least 75% of restaurant transactions are paid via credit card (including payment of tips), there’s a strong argument that such tips could be garnished if the employer disbursed those tips in the form of a paycheck.

Advice for New Lawyers: Always be Prepared, Even for the Easy Arguments

I’m not going to use this post to complain about millennials. Instead, I’m going to complain a little bit about lawyers who are lazy and don’t think for themselves. But, sometimes, this means younger lawyers who happen to be born in the “millennial footprint” (defined as being born from 1982 to 2004).

In the not so recent past, another lawyer agreed to announce a foreclosure continuance for me. This is one of the easiest tasks a degreed lawyer can handle. In fact, some firms send people in Harley Davidson t-shirts to do this, so it’s not quite rocket science.

So, I told the lawyer that the sale was at the Register of Deeds and started to walk away. Then, he asked, “where is that?” I’ll save you the annoying details, but it involved ten minutes of my time showing him how awesome google is for answering questions.

So, recently, I was headed to General Sessions Court with the intent of asking for a “free” continuance in a matter that was set for the first time. If you read this blog, you know that I got to Sessions Court all the time. And, without a doubt, the Court will grant you a free continuance on the first setting of a matter.

But, instead of just going to court and citing “this is what you Judges always do,” I thought I’d be prepared with, you know, the actual legal authority for this. So, I followed my own advice and looked at the Local Rules for General Sessions Court. And, I made the request with complete confidence that it would be granted.

Of course, when I asked for the continuance, the Judge gave it to me without question, but I was prepared for the worst case scenario.

Ok, this blog post doesn’t have a specific point, other than to note that I–having appeared in Sessions Court at least 500 times–took the time to be prepared with legal authority for a very routine request.

So, maybe that’s the point. Lawyering is hard, and so is being a Judge. Always be prepared for the worst case scenario, and take the time on your own initiative to be prepared.

Interpleaders: The Only Time People Like to Hear from Me

When people ask me what kind of law that I do, I always end my answer with “Generally, it’s bad news if you’re hearing from me.” In fact, if you’re reading this right now on a computer, look at my bio over to the right.

If you’re on a phone, I’ll help. It says: “It’s probably bad news if you’re hearing from him.”

Recently, though, I’ve been spreading good news, because I’m filing a bunch of interpleader lawsuits.

Interpleader actions are filed by plaintiffs who are asking for court direction as to who to send cash or other property to. The typical situation arises after a foreclosure, when the foreclosure attorney sells the property for more than the debt owed, and there are multiple parties who can make a claim for those excess proceeds.

Generally, the deed of trust is pretty clear as to who gets the money, but, sometimes, it’s not clear or the situation is contentious. To be safe, you file an Complaint for Interpleader under Rule 22, name all the parties who have, or may have, a claim to the proceeds, and ask the Court to decide. This way, the judge gets to make the hard decision, and the foreclosure attorney (often the substitute trustee) isn’t exposed to future lawsuits alleging he paid the money to the wrong party.

Under Tenn. R. Civ. P. 22.02, the attorney files the lawsuit, later deposits the money with the Court, and, then, the filing attorney can be dismissed while the remaining parties fight over the money.

So, back to my phone calls this week. I was calling my “Defendants” to tell them that I was getting ready to sue them, but, “don’t worry, it’s a good lawsuit.”

The Law is All Paperwork: An Improperly Authenticated Judgment may Result in Dismissal of Foreign Judgment Action

On my Facebook page, I describe myself as “The Garth Brooks of Paperwork.” Which is a way of poking fun at lots of things about me and my job.

But, law students, please know that success as a lawyer is basically 65% being really good at paperwork.

Thankfully, for the other 35% of us, you can generally amend pleadings to correct mistakes or errors. I’ve recently found a situation where you can’t amend a court filing, such that the entire case might be dismissed.

It’s when there’s an error in your initial filing of a Notice of a Foreign Judgment under the the Uniform Enforcement of Foreign Judgments Act (the “Act”), found in Tennessee at Tenn. Code Ann. § 26-6-101 et.seq.

If a judgment creditor fails to attach a proper exhibit, i.e. a properly authenticated copy of the out-of-state judgment to be enforced, there is a line of cases in Tennessee that say the entire lawsuit is defective because the failure to follow the statutory procedure for authenticating a foreign judgment is fatal as a matter of law.

What’s scary about this line of cases is that there appears to be no ability to file a Motion to Amend Pleadings under Rule 15. Those types of requests are generally granted and would usually allow the plaintiff to correct the error and move on.

Not in proceedings under the Act, Tennessee Courts have said. A recent trial court decision found that a Notice of Filing was not one of the expressly provided list of “pleadings” in Rule 7.01 and, therefore, not subject to amendment under Rule 15.01.

Tenn. R. Civ. P. 15.01 allows parties to amend their pleadings, and leave to amend pleadings is freely granted by the courts when justice demands. Tenn. Rule 7.01 defines “pleading” as a complaint, answer, counter-complaint, answer to a cross-claim, a third-party complaint and third-party answer and states that “no other pleading shall be allowed.’ The Notice of Filing required by Tenn. Code Ann. § 26-6-104 is not one of the pleadings listed in Rule 7.01.

Apparently, then, the judgment creditor’s only recourse when the foreign judgment notice is defective is to dismiss the domestication action, and then re-file a corrected, new proceeding. Yikes.

Attorneys Fees Can be Recovered in a Tennessee Lawsuit, but only if the contract or statute allows them

I always tell clients that Tennessee is a creditor friendly state, and it is.

But, just because it’s fair to creditors, doesn’t mean a Tennessee Court will give a plaintiff everything. I’m talking today about attorney fees. The rule in Tennessee is that, unless you have an agreement in writing that you are entitled to recover your attorney fees, a court will not award those fees to you.

Here’s why: Tennessee follows the “American Rule” on awarding attorney’s fees which states that “a party in a civil action may recover attorney fees only if: (1) a contractual or statutory provision creates a right to recover attorney fees; or (2) some other recognized exception” applies. Cracker Barrel Old Country Store, Inc. v. Epperson, 284 S.W.3d 303, 308 (Tenn. 2009).

The contract provision allowing attorney fees to be recovered has to be very specific. In the Cracker Barrel case, the contract at issue provided that the prevailing party should recover “all costs and expenses of any suit or proceeding.” The Tennessee Supreme Court held that this language was not specific enough to award attorney fees (instead, it allowed recovery of court costs and litigation expenses).

This is an important issue, as the ability to recover your expenses and costs as part of your action will be a big consideration in any decision to file a lawsuit. Lawyers are expensive. Keep that in mind on the front end, when you’re preparing a contract or agreement, and get very specific text allowing for recovery of attorney fees.

Attend the Creditors Practice Annual Forum 2016, Learn Foreclosure in an Hour!

On September 28, 2016, some of the greatest creditor minds in Nashville will gather for the Creditors Practice Annual Forum 2016. Yes, I’m talking about foreclosures again.

Topics to be covered include:

Perfection and Enforcement of Liens for Prime and Remote Contractors
Non-Judicial Foreclosures in Tennessee
Ethical Issues Related to the Consumer Financial Protection Bureau
TBA Special Committee on the Evolving Legal Market Report

I’ll be presenting the Foreclosures portion of the seminar, which will give a one-hour overview all the laws, defenses, and issues facing lenders conducting foreclosures in Tennessee.

This should be a good seminar, so be sure to sign up to attend the live presentation, or use some of your free CLE credits from your Tennessee Bar Association membership to watch it online.

Multiple Bankruptcy Filings: Debtors are Ineligible for New Discharges for 8 Years Between Chapter 7 Bankruptcy Cases

How quickly can an individual who has received a Chapter 7 discharge obtain a new Chapter 7 discharge?

The answer is in 11 U.S.C.A. § 727(a)(8), which provides that the Bankruptcy Court shall grant a discharge, unless:

(8) the debtor has been granted a discharge under this section, under section 1141 of this title, or under section 14, 371, or 476 of the Bankruptcy Act, in a case commenced within 8 years before the date of the filing of the petition;

So, the quick answer is that you count out 8 years from the date that the individual filed the first case in which he or she received a Discharge. Note: You don’t count the 8 years from the last discharge, but, instead, from the date that the earlier case was filed.

This is why you see what some people refer to as “Chapter 20” bankruptcy cases, in which a debtor receives a discharge in Chapter 7 and then immediately (or soon thereafter) files a subsequent Chapter 13 case. The debtor doesn’t get a discharge in the Chapter 13, but can get the other benefits of Chapter 13, like stretching out the amortization of a debt that was reaffirmed in Chapter 7 or obtaining a stay from collection on liens or reaffirmed debts.

This is a change from earlier law, which set the time period between discharges using a 6 year period.

Another side issue to consider: under 11 U.S.C.A. § 1328(f)(1), the debtor in a subsequent Chapter 13 will not receive a discharge in that Chapter 13 if he or she received a discharge under 7 or 11 in a case filed under 7 or 11 during the 4 year period preceding the Chapter 13 filing.

Ex-Tennessee Titan Sued by Former Landlords for Property Damage

Real Estate is hot in Nashville. That’s not a news flash. In fact, unless you were burned in the economic downtown, you’ve probably always thought that real estate is a safe investment, either has an appreciating asset or as an income producing asset.

With high-end real estate, the income possibilities in this current market are endless. Short term rentals to tourists on AirBNB. Long term leases to health care executives. Leases to country music stars or professional athletes.

Well, one Nashville couple has learned the hard way that leases to star football players may require a greater security deposit.

In a lawsuit filed against former Tennessee Titan running back Zach Brown, a landlord for rental property has sued in Nashville’s Davidson Chancery Court (Rental Lawsuit), alleging failure to pay rent. After they were awarded a judgment in a prior detainer action, they were surprised to find the property in terrible condition, the lawsuit alleges.

The $59,286.85 in damages alleged includes claims of: animal teeth marks on staircases and doors; stains on carpet; “damage to the walls by what appears to be repeated throws of footballs and darts;” holes in the wall; and door frame damage “from where it appears a locked door was forced open.”

These are just allegations, but, long story short, a property owner opens the door to deterioration and damage when he or she rents to a stranger. There’s no such thing as easy money, and the landlord / tenant model has its fair share of risks.

The Doctrine of Prior Suit Pending is What it Sounds Like

Sometimes, legal concepts have names that make no sense. “Qui Tam” Actions. “Quiet Title” Complaints. “Res Judicata.” “Equitable Subrogation.”

In other cases, the concepts have straight-forward names. Like “prior suit pending,” which is a concept that I’ve never specifically researched, but always felt like I understood–based solely on its name.

Yesterday, the Tennessee Court of Appeals issued an opinion in Rafia Khan v. Regions Bank, et. al., No. E2015-01891-COA-R3-CV, May 25, 2016, that explains the elements of this concept.

And, you’ll be pleased to know, it’s as simple as it sounds: “The doctrine of prior suit pending is well-established in Tennessee law and provides that a lawsuit is subject to dismissal where a prior lawsuit involves the same parties and subject matter.” See West v. Vought Aircraft Indus., Inc., 256 S.W.3d 618, 620 (Tenn. 2008).

There are four elements:

the lawsuits must involve identical subject matter;
the lawsuits must be between the same parties;
the former lawsuit must be pending in a court having subject matter jurisdiction over the dispute; and
the former lawsuit must be pending in a court having personal jurisdiction over the parties.

When considering whether the subject matter is the same, the Court wrote, this analysis “applies not only to issues actually raised in the first suit, but also to issues that could have been raised regarding the same subject matter.”

In short, the defense is as simple as it sounds: Where a prior lawsuit exists on the same factual and legal issues, a litigant may be able to dismiss any subsequent lawsuit on those same issues (or closely related issues that could have been raised).

Keep in mind, however, that lawyers tend to give simple concepts complex names, but this one must have just slipped past.