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.

New Version of Rule 69.04 Makes Renewing a Tennessee Judgment Easier

A few months ago, I warned you all that Tennessee judgments are only enforceable for ten years and, if you have a file of uncollected judgments, you might need to check your drawers.  If you do a lot of creditors rights law work (like me), then you have about ten drawers full of unpaid judgments, so this is a big deal.

The Tennessee legislature may saw this issue coming, because, in 2016, they simplified the process by which a judgment creditor can renew (extend) the life-span of a judgment. The revisions to Tenn. R. Civ. P. 69.04 provide that the creditor:

Within ten years from the entry of a judgment, the creditor whose judgment remains unsatisfied may file a motion to extend the judgment for another ten years. A copy of the motion shall be mailed by the judgment creditor to the last known address of the judgment debtor. If no response is filed by the judgment debtor within thirty days of the date the motion is filed with the clerk of court, the motion shall be granted without further notice or hearing, and an order extending the judgment shall be entered by the court. If a response is filed within thirty days of the filing date of the motion, the burden is on the judgment debtor to show why the judgment should not be extended for an additional ten years. The same procedure can be repeated within any additional ten-year period.

So, long story short, now, it’s done by Motion and without the prior “show cause” process used in the past (and, notably, in the same case docket as the original action).

The Tennessee Court of Appeals discussed this new process in a recent opinion, at Trina Scott v. Sharfyne L’Nell White, No. M2015-02488-COA-R3-CV, July 14, 2017).  You’ll note that the underlying matter in this case was decided prior to 2016, but Judge McBrayer (himself, once a well known debtor-creditor lawyer) discusses both the new and old laws in issuing the opinion.

 

 

 

Promises, Promises: Oral Promises to Pay Another’s Debt are not Enforceable in Tennessee

One of the most common collections questions I get is “I loaned X some money, but didn’t make them sign anything. Can I sue them?”  The simple answer is yes.

As long as the person making the promises is also the borrower, you’re safe. Issues arise, though, when you’re enforcing a promise by a third party to pay the debts of another. This is called a “Guaranty” (or, depending on how old a lawyer you are, a “Guarantee”).

However you spell it, a guaranty has to be in writing to be enforceable.

Under Tennessee’s version of the Statute of Frauds, no party may file a lawsuit “[t]o charge the defendant upon any special promise to answer for the debt, default, or miscarriage of another person….  unless the promise or agreement, upon which such action shall be brought, or some memorandum or note thereof, [is] in writing, and signed by the party to be charged therewith, or some other person lawfully authorized by such part  ” See Tenn. Code Ann. § 29-2-101(a)(2).

So, then the question becomes, how formal does a writing have to be? Can it be hand-written? Can it be an email?

Guaranty agreements are strictly construed and, in order find a guaranty, the language must contain the clear and unambiguous intent that the guarantor is agreeing to be liable. For more on guaranties (or guarantees), be sure to check out the Tennessee Supreme Court in 84 Lumber Co. v. Smith, 356 S.W.3d 380, 384 (Tenn. 2011).

In the case of an email, I’d ask “Is the email’s language clear and unambiguous in stating that Y is willing to pay the debts of X?” If so, I think it satisfies the Statute of Frauds.

Changes in Credit Reports May Soon Exclude Outstanding Judgments

The Consumer Data Industry Association is reporting that the three major credit reporting bureaus (i.e.  Equifax, Experian, and TransUnion) are updating how they report certain public record data on consumers’ credit reports.

One of these changes will be that the records must contain “a minimum of consumer personal identifying information (PII): (1) Name, (2) address, and (3) SSN and/or date of birth.”

These changes, which will take place on July 1, 2017, will result in most civil judgments no longer being report on credit reports, since court judgments rarely contain full social security numbers and/or dates of birth.

In fact, in most jurisdictions, personally identifying information like this can’t be allowed on judgments; instead, such information must be redacted.

What does this mean for a bank or other lenders? A loan applicant’s credit report will be less likely to contain all relevant information about debts and liabilities. That’s not good news, say banks.

What does this mean for a judgment debt collector? Not much, since a judgment creditor isn’t making a credit decision, and so negative information on a credit report provides less guidance. On the hand, seeing a list of judgments and liens is still useful, in that they provide a shapshot of a judgment debtor’s overall financial state.

 

 

 

Sure, the Debtor is Foreign, but Is his Bank?

I’ve talked about the process of domestication of judgments, which is basically the process by which you make a judgment from one state enforceable in another state. You see, a judgment awarded in Tennessee can only reach a debtor’s assets located inside the State of Tennessee. So, if you have a judgment against somebody who lives in Texas, you may have to file a second lawsuit in Texas to attach his assets.

But don’t go buy a pair of cowboy boots just yet.

I mean, sure, if he owns land in Texas,  owns a car that’s registered in Texas, or has a million dollars in cash under his Texas bed, then your Tennessee judgment is not going to be effective to execute on those assets. To get those things that are actually in Texas, you need to go through the domestication process, which results in your out of state judgment being recognized by that foreign state as a valid judgment for enforcement in that state.

But, here’s a trick: What if the debtor has all his assets in that foreign state, but he banks at a national bank with offices all over the country? And what if that bank has a branch in Tennessee? The answer is that you can levy on that bank account.

So, debtors with accounts at Wells Fargo Bank, National Association and Bank of America, watch out.

All Those Great Recession Judgments May be Expiring Soon

Depending on who you ask, the “Great Recession” resulting from the subprime mortgage crisis began in December 2007 and lasted about two years. So, about ten years ago, I was spending most of my work days working on loan documents for third, fourth, and sometimes fifth mortgages for a local bank who was really, really late to the mortgage boom.

Of course, the impact of this past recession was felt for years afterwards, meaning my spring 2007 HELOCS didn’t go bad until 2010 or 2012. As a result, just a few years later, I was suing and taking judgments against those same borrowers. From 2008 to 2014, I estimate that I obtained at least 500 judgments, ranging in amounts from $2,500 to $5,000,000.

As I like to say, if you were hearing from me, it was bad news.

So, with a drawer full of judgments, this is what keeps me up at night: Those judgments are only valid for ten years, and, if I haven’t collected on them, they expire.

I’m taking about Tenn. Code Ann. § 28-3-110(a)(2), which provides that actions on judgments are only valid for ten years.

So, a good rule of thumb is that, if you received a judgment against someone you haven’t been able to collect in the last ten years, go back and confirm when you were awarded that judgment. If you’re getting close to the ten year mark, you might be running out of time.

(But, not to be too dramatic, I’m going to talk about how to extend that time period soon.)

 

 

Tennessee Courts will give Pro Se Litigants “Some Leeway,” But Not Much

Some of the hardest trials to handle aren’t when there’s a good attorney on the other side. Instead, the toughest cases can be when there’s a non-attorney on the other side, meaning the other party is representing himself.  In the legal world, this is called “pro se” representation.

With a lawyer on the other side, there’s an expectation that they know the rules of civil procedure, the local rules, and the relevant law. As a result, you can expect that you will be able to cut to the chase and narrow the issues.

With a pro se litigant, everything could be at issue and, worse, a pro se party probably doesn’t know the rules of the court, meaning objection deadlines will be missed and all other types of procedural missteps can occur. This places the lawyer and the Judge in a strange situation–do you hold the pro se litigant to same standards as a party who goes to the trouble of hiring a lawyer? Shouldn’t they  be held to that standard?

A fairly recent Tennessee Court of Appeals case (click here to review) considered that issue in a dispute where a property owner was fighting a foreclosing creditor. The Court noted that “there are a multitude of problems with Defendant’s brief,” including a complete failure to comply with the Tennessee Rules of Appellate Procedure.  The Court called the pro se filing “a rambling and, at times, incoherent brief.”

The Court went on to say it “must not excuse pro se litigants from complying with the same substantive and procedural rules that represented parties are expected to observe.” Young v. Barrow, 130 S.W.3d 59, 63 (Tenn. Ct. App. 2003). “It is well-settled that, ‘[w]hile a party who chooses to represent himself or herself is entitled to the fair and equal treatment of the courts, [p]ro se litigants are not . . . entitled to shift the burden of litigating their case[s] to the courts.’” Chiozza v. Chiozza, 315 S.W.3d 482, 487 (Tenn. Ct. App. 2009). However, “[t]he courts give pro se litigants who are untrained in the law a certain amount of leeway in drafting their pleadings and briefs.” Young, 130 S.W.3d at 63.

This is good text to remember the next time a person appears on their own behalf in a matter. This frequently happens in debt collection cases for the obvious reason: if a person can’t pay their bills, then how can they afford to hire a lawyer.