What Happens to Stale, Unserved General Sessions Lawsuits? Some Get Dismissed.

I was doing some general sessions legal research today. And, no, that isn’t a mis-print.

There are some really interesting legal issues that come up in small claims court.

Today, I found a corollary to Tenn. R. Civ. P. 3, which I blogged about a few years back. Rule 3 says that un-issued and un-served Summonses may not preserve the statute of limitations.

The similar rule in sessions court is Tenn. Code Ann. § 16-15-710, which provides:

The suing out of a warrant is the commencement of a civil action within the meaning of this title, whether it is served or not; but if the process is returned unserved, plaintiff, if plaintiff wishes to rely on the original commencement as a bar to the running of a statute of limitations, must either prosecute and continue the action by applying for and obtaining new process from time to time, each new process to be obtained within nine (9) months from return unserved of the previous process, or plaintiff must recommence the action within one (1) year after the return of the initial process not served.

So, in short, if you want to rely on the date you filed your lawsuit, then you have to make sure you get a new Alias Summons issued within 9 months of your last, unserved warrant.

If you don’t, you may have to re-file your entire lawsuit. Yikes.

Small Interpleader Actions are Allowed in General Sessions Court

A few years ago, I said that Interpleader lawsuits are the only times people like to hear from me. My lawyer marketing materials, literally, say “It’s bad news if you’re hearing from David Anthony.”

In that blog post, I talked about why interpleader lawsuits are good news. Well, sort of good news. I mean, it’s still a lawsuit and still a hassle to deal with.

Here’s a little bit better news. There’s a statute that allows a party to file an interpleader lawsuit in General Sessions Court, which means that the parties will: (a) get the money quicker; and (b) with less legal fees.

The statute, Tenn. Code Ann. § 16-15-731(a), provides in part that:

Notwithstanding any rule of court or any law to the contrary, actions in the nature of interpleader, in which the value of the money that is the subject of the action does not exceed the jurisdictional limit of the general sessions court, may be filed in general sessions court under this part. …

So, if the amount is less than $25,000, and the matter is filed in General Sessions Court, you should be really happy to hear from me.

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.

 

 

Quantum Meruit: How You (Sort of) Sue for Breach of Contract in Tennessee, When There’s No Written Contract

When you’re buying, selling, lending, or anything else in between, take the time to prepare a written agreement, spelling out the terms of what you’re agreeing to do and of what the other side is agreeing to do in exchange.  Get it in writing and get it signed.

Everybody knows this, but, regardless, sometimes you don’t get it in writing. Maybe the deal is rushed. Maybe you think it’s such a clean transaction that it doesn’t need to be complicated by a written agreement. (By the way, this advice applies for lawyers and engagement letters–oh boy, have I learned that lesson.)

Where there’s not a written agreement, you don’t have a “contract” claim against the other side; you have what is called a “quasi-contract” claim. Instead of suing under a contract, you’re suing under equity–it’s not fair for the other side to benefit from your performance.

The theory is referred to as “quantum meruit” or “unjust enrichment.” The Tennessee Court of Appeals very recently revisited the elements of a Tennessee quantum meruit claim. The Court stated:

Under a quantum meruit theory, a party may recover the reasonable value of goods and services provided to another if it demonstrates that:

(1) There is no existing, enforceable contract between the parties covering the same subject matter;

(2) The party seeking recovery proves that it provided valuable goods or services;

(3) The party to be charged received the goods or services;

(4) The circumstances indicate that the parties to the transaction should have reasonably understood that the person providing the goods or services expected to be compensated; and

(5) The circumstances demonstrate that it would be unjust for a party to retain the goods or services without payment.

In the end, even without a written agreement, equity will dictate that a party should recover the value of the goods or services from a non-paying party.

Because there’s no contract, however, you lose the typical “contract” protections, like attorney fees, interest, and, frankly, the certainty of being in control over the terms of your deal. Take the time on the front end to document your deals; as a result, you’ll save time and money on the back end, arguing over what each party claims the terms of the deal were.

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.

Post-Judgment Interest Rates in Tennessee Have Finally Increased (by .25%)

Back in July 2012, the Tennessee legislature passed a new “post-judgment” interest statute, which can be found at Tenn. Code Ann. § 47-14-121. As I said back then, it was a big change: Instead of a blanket “10%” rate, Tennessee would be using a variable rate, tied to the “formula rate published by the commissioner of financial institutions.”

Long story short: I hate it when the law replaces something simple with something complicated.

Since the enactment of the statute, the post-judgment interest rate has been 5.25%, until January 1, 2016, when it jumped up to 5.5%.

The sky has not yet fallen, however, like I said it would. My biggest concern was: “[t]here appears to be an obligation to research and modify the rate every six months. Payoffs just got a lot more difficult.” I don’t like math.

After a few years with the statute, I’m of the opinion that the interest rate on a judgment is set at the date of the judgment and then doesn’t change. As a result, there’s no need to track the ups and downs of the statutory rate.

But, to be entirely safe, I always recite the exact post-judgment rate in effect at the time of my judgment in my judgment, to save any confusion and subsequent research.