The Tennessee Attorneys Memo recently hosted the 5th Annual Law Conference for Tennessee Practitioners, which is always a great and well attended event.
I spoke on Judgment Enforcement: Techniques, Common Roadblocks, and Advanced Strategies.
My favorite thing about this seminar is that, citing to the promotional materials, I can claim to be part of “an all-star cast of prominent Tennessee judges and attorneys.”
Not too long ago, even bad loans got repaid. With so much new money in the pipeline and refinance transactions always around the corner, errors in loan documents or lapses in lending oversight didn’t matter, because undiscovered issues never had time to blossom into problems. As a result, some lenders got lazy.
As this story from Memphis’ Commercial Appeal shows, Rusty Hyneman’s banker was really lazy. The worst part is the bank didn’t catch the issues until after approving the loans and, worse, advancing an incredible amount of money. When the bank did some basic post-transaction due diligence, the horses were already out of the barn.
After a customary review of active loans, the banker “hit the road to eyeball properties.” On this random visit to the construction site–11 months after loaning a total of $14 million–the banker must have been shocked to find that absolutely no work was being done on the project. Nothing.
That’s when the bank knew, obviously, there was a problem.
Here’s my advice to creditors: Take time to know your customers and know their projects. On a construction loan, occasionally drive past and make sure work is being done. Especially if you are actively advancing money to fund work at the site. Here, $4.9 million of the bank’s advances were to be used exclusively for construction at the project, and a quick drive-by could have saved millions of dollars.
The Tennessee Court of Appeals issued a recent opinion discussing the elements of legal malpractice claims. The case is Tucker v. Finch,No. E2010-01704-COA-R3-CV, Slip. Op. (Tenn. Ct. App., Aug. 30, 2011).
The case provides a good summary of the statute of limitations on legal malpractice actions, which must be “commenced within one (1) year after the cause of action accrued.” Tenn. Code Ann. § 28-3-104(a)(2). The one year clock starts ticking “pursuant to the discovery rule “when (1) the client suffers an actual or legally cognizable injury, and (2) the client knows, or in the exercise of reasonable diligence should know, that the injury was caused by the attorney’s negligence.”
How is this relevant to collections? According to the ABA, most attorney malpractice claims are filed in response to attorneys taking collection actions against clients. Once you sue or threaten to sue a client for unpaid bills, it’s exponentially more likely that that client is going to attack the value of your legal services.
But, don’t forget, the statute of limitations for collection on unpaid debt–including unpaid legal invoices–is six years in Tennessee. Malpractice actions must be filed in one year.
As I’ve written before, this is why lawyers wait at least a year to collect on unpaid invoices.
If the underlying lesson to aggrieved clients in the Tucker case is “don’t sit on your malpractice claim rights,” the flip side of the coin may be “let sleeping dogs lie, at least for a year.”
(Side-note: I’m not condoning malpractice or encouraging attorneys to avoid responsibility. But, I know from experience, you can provide world-class services and, faced with a bill for world-class services, some clients are going to allege you did something wrong. On those clients, wait a year.)
Davidson County General Sessions Court (also known as “small claims” court) is the wild, wild west of our local courts. Things move fast, many parties are not represented by lawyers, and there are dozens of cases on each docket. Because the jurisdiction of General Sessions goes up to $25,000 (sometimes more) and a creditor can get a judgment in as little as a month, I file a number of my Nashville creditor lawsuits there.
The prevailing party usually writes up his own judgment, and, in the rush of cases, the judgment may sometimes include a clerical error, either in the name of the parties, the computation of the amount of the judgment, or other terms. When there’s an error, the party has the right to appeal the whole thing under Tenn. Code Ann. § 27-5-108, but the best practice is to move to correct the “clerical error” in the judgment under Tenn. Code Ann. § 16-15-727.
The application of that statute was discussed in a Tennessee Attorney General Opinion (No. 04-090, May 10, 2044), applying Rule 60.01 of the Tennessee Rules of Civil Procedure applies in Sessions Courts.
Interestingly, the Opinion says that a litigant can only “correct” a “clerical error” in a judgment, and expressly stops short of any relief that a litigant might have under Rule 59 to “alter or amend” a judgment. This means that alleged errors on a point of law are not in the same category as clerical errors and cannot be changed.
So, if you get back to your office and realize you’ve written the wrong amount on the Judgment–or the wrong responsible party–you’ve got relief. Rule 60.01 does not contain a time limitation, and corrections may be made at any time upon the court’s initiative or upon motion of either party. Parties whose rights may be modified by the correction must be given notice of the Motion. Decisions to correct are within the discretion of the Judge. Obvious errors are usually corrected.
In Tennessee, you hear lots of talk of General Sessions Court, which is Tennessee’s version of small claims court. Of course, “small” is a relative term–General Sessions Courts in Tennessee have jurisdiction to hear civil cases with as much as $25,000.00 in controversy. See Tenn. Code Ann. § 16-15-501.
Trivia Time: In what three situations can a creditor obtain a judgment that exceeds the $25,000 jurisdictional limit in General Sessions Court? The Answer is after the jump.
Continue reading “How Small are the “Small Claims” in General Sessions Court in Tennessee?”
For a few years now, all of the Davidson County Circuit Court’s records have been online at the Davidson County Caselink (subs. req’d).
Now, the case records of the Davidson County Chancery Court are online on the Court’s website. Although it doesn’t provide scanned copies of pleadings (yet), the website contains party information and the dates of relevant pleadings.
As the world moves entirely online, it’s great to see this move from Chancery Court. Will electronic filing of Court pleadings be next?
The Tennessee Attorneys Memo is hosting the 5th Annual Law Conference for Tennessee Practitioners in Nashville on November 3 and 4, 2011.
They advertise it as “[f]eaturing an all-star cast of prominent Tennessee judges and attorneys and 15 hours of CLE credit, including 3 hours of DUAL credit.”
They’ve invited me to speak on issues surrounding Tennessee collections and Judgment Enforcement, and I always agree to anything where I can be described as an “all-star.”
I’ve spoken at this conference before, and it’s a good event, with tons of materials and smart presenters. I’m planning on jazzing up this year’s creditors rights presentation with a discussion of social media law and the interplay between social media and the Fair Debt Collections Practices act in collections.
You can sign up for one or both days here. I’ll be speaking on Friday.
I’m a creditor rights attorney, and, with the economy the way it is, I’m filing collection lawsuits left and right.
In most cases, the borrowers are too broke to hire a lawyer to respond, so they ignore the lawsuit and let a judgment be entered against them. In some cases, however, the borrowers are pro-active and call me to make a settlement proposal.
In the past, when property still had equity and people were just one loan application away from a $40,000 Home Equity Loan, creditors weren’t listening to low-ball offers. Even today, it’s still not true that banks will happily accept 10% of whatever they’re owed.
If you’re going to make a low-ball offer, support it with proof that you’re paying them the last pennies you have. You need to show the creditor:
Again, the rumors of debt settlements for pennies on the dollar are wildly exaggerated. Creditors will accept discounted payments, but they aren’t approaching these proposals blindly. When in doubt, they decline bad proposals.
If you want a steep discount, you have to work for it, and assembling the information listed above is step one in the process.
Law school exams are a strange creature. Generally, they present a crazy set of facts with a dozen twists and turns, all of which raise different legal issues. The student’s goal is to spot and discuss those issues.
I thought I was reading a law school exam question when I read this Commercial Appeal article about the Bankruptcy filing by Memphis developer Rusty Hyneman.
Hyneman is real estate developer, who has fallen on hard times, and his creditors are aggressively coming after him. Last week, one bank showed up with the sheriff to seize all personal possessions.
But, Hyneman was ready: he had documents showing that he didn’t own any of the stuff in his 12,000 square foot house free and clear. He had pledged it as security to another creditor…his dad.
Now, the banks are in issue spotting mode. They are alleging that the lien granted to the elder Hyneman is a fraudulent conveyance. They are attacking the priority of the father’s lien. They are attacking Hyneman’s proposed sale of his assets to repay his dad. Finally, they are arguing that the proposed purchaser of the assets is a sham entity.
Man-o-man, that’s four legal issues right there, and you can bet there will be a few more.
The best part about the story? The Judge handling this case is Judge Paulette Delk, my former Article 9 professor in law school. This Hyneman case will be a breeze for her, since she’s dealt with law school exams questions with more issues raised than this.
To creditors’ chagrin, judgments aren’t enforceable across state lines. Before a Tennessee judgment can be enforced against the debtor’s assets in Florida, the creditor has to “domesticate” that judgment, which requires that a second action be filed in the new state to recognize the out-of-state judgment.
Fortunately, this process is governed by a commonly adopted act, the Uniform Enforcement of Foreign Judgments Act (Tenn. Code Ann. § 26-6-101, et. seq.), which creates a stream-lined process for creditors to follow.
It’s generally just a two step process. The creditor must (1) file an authenticated copy of the judgment and (2) file a supporting Affidavit. In most cases, the judgment of the sister state will be entitled to “full faith and credit” by the new court.
There are limited grounds for attack on domestication. The defendant doesn’t get to re-litigate the case; instead, he or she can only contest procedural defects, like no service of process or fraud. These issues must be raised in the 30 days after service of the domestication action.
On June 30, 2011, the Tennessee Court of Appeals issued a new opinion, at Cadlerock, LLC v. Sheila R. Weber, which provides a good summary of the issues and law presented on foreign judgment enforcement actions. This Act isn’t often litigated, but this is a good case to have handy, just in case.
Creditors Rights 101 