Litigation – Creditors Rights 101

A Final General Sessions Judgment Can Be Enforced in Other States as a Foreign Judgment

When it’s an option, I always encourage clients to file lawsuits in Tennessee’s General Sessions Courts. Justice moves fast, efficiently, and cheap. The lawsuit you file today could be set for hearing next week; executions on the judgment could go out by the end of the month. Zip zap.

Nevertheless, lawyers often express uncertainty about whether a judgment from General Sessions Court–not a “court of record”–is enforceable in another state under under that state’s version of the Uniform Enforcement of Foreign Judgments Act (UEFJA).

I think they are. Here’s why.

If your General Sessions judgment is final and enforceable in Tennessee, why can’t you take to another state? “Foreign judgment” means “any judgment, decree, or order of a court of the United States or of any other court which is entitled to full faith and credit.” See Tenn. Code Ann. § 26-6-103.

In layman terms, it’s a judgment from another U.S. state court. Based on that, a Tennessee General Sessions judgment qualifies so long as the rendering court had jurisdiction and the judgment is valid and final, right?

“Final” in General Sessions Court is determined under Tenn. Code Ann. § 27-5-108, which says generally that any judgment that isn’t appealed within ten days. If you can garnish a bank account and wages on the judgment, why can’t you take it to another state?

So, yes, maybe small claims court has a more “vibrant” cast of characters than your typical courtroom, but that doesn’t mean the judgements granted there have any less legal impact.

New Tennessee Foreclosure Statute Doesn’t Change Lender’s Obligations under Deed of Trust

The changes to Tennessee’s foreclosure laws went into effect on July 1, 2025, and, as you can imagine, Tennessee banks and foreclosure lawyers have had lots of questions on how to navigate them.

This post isn’t going to answer all of them (for that, tune in to my upcoming presentation to the Knoxville Bar Association).

Today, let’s discuss one specific issue that keeps coming up: Now that new Tenn. Code Ann. § 35-5-101(a)(1) only requires publication “two (2) times in a newspaper,” does that preempt what my deed of trust says?

Many deeds of trust don’t have specific requirements; they just make a passing reference to “applicable law.” With those, you follow the statute and (now) do two publications.

Be careful, though: Lots of deeds of trust contain more specific requirements.

A few weeks ago (and after July 1), I prepared to foreclose under a $57,000,000 deed of trust. Naturally, I read every word of that deed of trust. (Many, many, many times.)

That deed of trust required the trustee to “advertise the time, place, and terms of sale at least three (3) different times in some newspaper published in the county where the Land is located…”

Remember, Tennessee is a “two track” foreclosure state, meaning that a foreclosing lender must satisfy the requirements of both the Tennessee foreclosure statutes and the requirements agreed to by the parties in the Deed of Trust.

So, in short: Yay, they have reduced the number of times a foreclosing lender must publish the foreclosure sale notice in the newspaper! Also, be sure to check your deed of trust to make sure you haven’t agreed otherwise.

I went to Hawaii for Two Weeks (and the Law Firm Survived)

The last time I went to Hawaii was in 2008, and I was on my honeymoon. I had just started work at a Big(ish) Nashville Law Firm, and I was nervous about taking a full week off, only six weeks in. (I was sort of worried that they’d deny my request to take a vacation.)

Fast-forward to this summer, 17 years later. Five years ago, I started my own law firm, and, as we planned another trip to Hawaii (with a 14 and 12 year old in tow), I began to worry about being away for two weeks and all the possible things that can come up.

Spoiler-alert: It was pretty easy.

My old law firm was run by folks in their late 60s and early 70s, and things like remote practice and cutting edge technology was never a priority (though our leather bound Martindale Hubbell collection was pristine).

When I started my own firm, I saw the rapid advances in technology made during the COVID pandemic and incorporated as much as I could.

The technology and systems that I use every day made the vacation so much easier than the one I took in 2008. For this trip, I leaned heavily on a few core tools:

Cloud-Based Practice Management: My firm uses Clio. All case files, deadlines, and client communications are accessible online. My firm bills via Clio, and, on the 12 hour flight, I was able to get all of my May 2025 bills generated, approved, and delivered to clients…from the airplane.
Microsoft Office: We are a Microsoft Office law firm. Microsoft is slowly pushing users to use the very secure online portal for Outlook, Word, and all the other applications. This is useful for remote work, obviously. I was able to access my entire law firm, easily, using a Microsoft Surface tablet.
Zoom & Microsoft Teams: Client meetings ran as usual. Other than the random and exotic bird noises they could hear.
NetDocuments with secure access: I use NetDocuments, an online document management system, so every document I needed was instantly available, but also secure. My paralegal could draft documents that I could easily access and respond to.
VOIP Phone System: I use Dialpad (but am not a huge fan). Regardless, when a client called my office, they got me (in Hawaii) or my staff (not on vacation with me).
E-Filing and Online Dockets: Lawyers violently oppose most technological advances, but the e-filing of pleadings (and new lawsuits) is so useful that even the most stubborn lawyers don’t fight this. In a pinch, I prepared and filed a lawsuit from a beach chair, and coordinated service of process via Proof Process Servers.
Calendar & Time Zone Discipline: Hawaii is 5–6 hours behind most of my clients and courts. That meant early mornings — I typically started work at 4:30 or 5:00 AM Hawaii time to stay in sync with the mainland. This worked pretty well; instead of emails “trickling” in during the morning, I had a full plate of emails to power through with coffee, and I’d check in again at lunch by the beach (when my banker clients had gone home for the day).

What I Learned

Time zone planning is everything: Build your schedule around your clients’ time zones, not your own. Having said that, to keep my family happy, I had to close the laptop by 8am in Hawaii…which was 1pm Nashville time. The time difference actually worked in my favor, as I had ample time to work, and then have guilt and distraction free days at the beach.
A tight schedule keeps you focused: Being away from the day-to-day distractions of the office actually helped me focus. With a solid daily routine (coffee, sunrise, email triage), I found my time blocks more productive.
Clients don’t care where you are, as long as you’re responsive: Big law firms cling too tightly to the old vestiges of tradition — fancy offices; suits and ties; strict hierarchies. For me, no clients cared that I was working remotely, because every call and email was answered promptly.

Final Thoughts

There are different mindsets when talking about running a law firm remotely. Some lawyers (the ones that may not have school age children) have the flexibility to run a truly remote firm, working in a new and exciting city and without being bound to a single location or your law partners’ judgey faces.

For me, I just needed to have a reliable tech-stack that would allow me to service my clients effectively while I was away. I had spent months preparing, blocking my calendar during that time, and warning clients about my limited availability.

It’s never easy to take a long vacation, especially if you are a busy solo lawyer, but it can be done–and fairly easily.

The Next Frontier of Foreclosure Litigation could be over “irregular” sales.

When Tenn. Code Ann. § 35-5-117 (originally § 35-5-118) was enacted in 2010, foreclosure lawyers were terrified.

This was the first time that the Tennessee legislature limited a creditor’s collection rights after a foreclosure. And the text was pretty ambiguous.

The statute created two general scenarios where a debtor could fight efforts by a creditor to obtain a deficiency judgment after a foreclosure:

Where the debtor can make “a showing of fraud, collusion, misconduct, or irregularity in the sale process” (see Tenn. Code Ann. § 35-5-117(b)); or
Where the debtor can “prove by a preponderance of the evidence that the property sold for an amount materially less than the fair market value of property at the time of the foreclosure sale” (see Tenn. Code Ann. § 35-5-117(c)).

At the time, foreclosure attorneys focused on what “materially less” than “fair market value” meant. The legislative history of the statute revealed that the lawmakers pulled that phrase from divorce law, where a “material change in circumstances” could impact child custody decisions. (Not much guidance on foreclosure cases.)

Ultimately, the appellate courts found that 88%-90% of the last known appraisal was sufficient, with later opinions approving 80% bids. With this “mathematical” clarity, foreclosing lenders had some guidance to avoid traps under 117(c).

But what about the part we all overlooked, Tenn. Code Ann. § 35-5-117(b)? We took that part for granted because, seriously, does any lender or foreclosure attorney commit fraud, collusion, misconduct, or irregularity in the sale process?

I don’t ask this in a rhetorical way. It’s an interesting question, and, in light of customary foreclosure practices in Tennessee, I think it’s ripe for litigation.

Here’s an example, which you can try at home. Grab your local newspaper (assuming one still exists in your area), and look for the foreclosure notices. Pick the first one you see, and call the foreclosure attorney and see what happens.

In my experience, it’s likely that:

The attorney/staff will never answer your call/email.
The attorney/staff will not call/email you back.
If you do hear back, you will not be provided with any information other than what is in the sale notice.
In many situations, you will not even get confirmation whether the sale is proceeding or not.
There will be sale terms announced in the minutes before the sale, but those are only rarely shared with interested parties in advance. Things like: Whether buyers need to bring cash. If so, how much. When will closing happen. Whether buyers need be pre-qualified.

These are fundamental questions that any reasonable bidder would expect to be provided. If an interested party doesn’t get these answers in advance, then they simply will not show up or, if they do, will be unprepared to bid. This uncertainty and failure to communicate leaves foreclosure bidding to the low-ball bidders, who make their money by exploiting the ambiguity (and low bid prices).

The failure to respond to interested parties’ reasonable questions will chill interest in a sale and will reduce the number of potential bidders. This could rise to the level of a violation of the foreclosure trustee’s duties under the Deed of Trust and could, possibly, render the sale “irregular.”

Foreclosing lenders in Tennessee should consider subpart 117(b) and how they or their counsel handle sales. Sure, no lender thinks their sale is “irregular,” but, on the right facts, you never know how a court will rule.

Recording a judgment lien during appeal period is not an “execution,” says Tennessee Court of Appeals

In March 2024, the Davidson County Chancery Court offered an answer to a longstanding collections legal question: Can a judgment creditor record a copy of its judgment as soon as it is signed by the Judge, or must the creditor wait 30 days?

In that case, the Chancery Court allowed the lien to stand, drawing the mechanical distinction between the processes of recording a judgment and enforcing that lien via execution sale. The answer didn’t end the debate, since the reasoning wasn’t fleshed out in a memorandum opinion and never considered at an appellate level.

As a creditor lawyer who knows the immense value of getting a judgment lien recorded as soon as possible, I saw the case as a good first step, but have been eager to see an appellate court discuss this issue.

In June 2024, the Tennessee Court of Appeals took that next step, in Justice v. Nelson, No. E2023-00407-COA-R3-CV, 2024 WL 3172263 (Tenn. Ct. App. June 26, 2024).

There, the Judgment Debtor posted a supersedeas / appeal bond after entry of the judgment, but the Judgment Creditor nevertheless recorded the judgment as a lien. Debtor demanded that the lien be removed as a “wrongful execution” because it was recorded while a bond was in place, and Creditor refused.

The Court of Appeals found in favor of the creditor, in fairly short order. “[F]iling a judgment lien does not constitute execution of a judgment.” Id. at *11. “Recordation of a judgment lien precedes execution.” Id.

Similar to the Davidson County Chancery Court’s reasoning, the appellate court drew a distinction between the processes of recording a lien and enforcing a lien, citing with approval the creditor’s analogy that “recording a judgment is ‘no more an execution than recording a deed of trust is a foreclosure’.” Id.

It’s a fine distinction, and one that I think deserved more attention from the appellate court. (I mean, “execution” is in the name of the rule of procedure that allows for recording a judgment as a lien.)

Recording a judgment as a lien is one of the most powerful collection tools in a creditor’s arsenal. It gives the creditor a lien on all property owned by the debtor in that county. The debtor can’t then transfer, refinance, or otherwise do anything with the property, unless the lien is paid or the creditor consents.

In considering whether the judgment debtor’s appeal was “baseless,” the Court notes the debtor “cites no Tennessee law to explain why it is a debatable question.” Id. at *11. The Court then cites text from ATS, Inc. v. Kent, 27 S.W.3d 923, 924 (Tenn. Ct. App. 1998), to support its conclusion, but that case didn’t consider this exact issue (the judgment in ATS was recorded about 46 days after entry).

With all due respect, I’ve practiced creditor rights law for more than 25 years, and lawyers ask me this exact question more than any other. That ATS decision offers hardly any guidance on this issue. In short, the creditor lawyer in me supports the outcome, but I’m disappointed with the reasoning.

Having said all that, there’s the answer: You absolutely can record your judgment as soon possible after entry.

Tennessee’s New Squatter Law Solves a Problem We Didn’t Have, and Maybe Creates a New One

Sometimes, when the Tennessee Legislature tries to solve a problem, they inadvertently create one or two other problems.

They might have done that with the “squatters” statute that took effect on July 1, 2024.

In common parlance, a “squatter” is a person who takes possession of property without any rightful claim. In my mind’s eye, I picture a modern-day pirate, moving into your home and declaring “This is MY house now!”

In my 25 years of eviction and property litigation, I’ve actually never dealt with a squatter. I’ve certainly never perceived it to be a problem that justified special legislative attention.

Effective July 1, 2024, we now have Tenn. Code Ann. § 29-18-135, titled “Limited alternative remedy to remove unauthorized persons from residential real property.” This statute is added to the end of Title 29, Chapter 18, which are the eviction and detainer statutes.

This new statute creates a process by which a property owner can, by filling out a checklist form, direct the Sheriff to remove an “unauthorized person” from the property, without a court proceeding.

By its clear text, “a property owner…may request from the sheriff of the county in which the property is located the immediate removal of any person unlawfully occupying a residential dwelling pursuant to this section if…[a]n unauthorized person has unlawfully entered and remains on the property owner’s [residential] property” and “[t]he unauthorized person is not a current or former tenant…” (this is heavily paraphrased, so be sure to look at subpart (d) in full).

The word “squatter” isn’t in this statute. Instead, the statute deals with “any person unlawfully occupying a residential dwelling” who “has unlawfully entered and remains or continues to reside” on the property and who “is not a current or former tenant…” and “is not an immediate family member of the property owner.”

That’s a pretty broad definition, and it seems to include persons not routinely labelled “squatters.” For instance, wouldn’t a foreclosed homeowner be subject to this statute? They are no longer the “owner,” they aren’t a “current or former tenant,” and if they stay at the property after the foreclosure deed is recorded, the possession is “unlawful.”

In my experience, “squatters” simply haven’t been a bane to Tennessee property owners’ existence. I’m not saying it never happens (and I’m sure that all it takes is one years’ long fight with a squatter to change my mind), but it seems like the existing statutes provide a good remedy, and, at best, this statute puts an awkward amount of judicial discretion into the hands of the local sheriff (who probably would rather all this be decided by a judge).

Law Firms: To avoid Malpractice Claims, Remember that Tennessee Judgments Expire in Ten Years

Tennessee judgments expire after ten years.

As a creditor lawyer, one of my greatest fears is that one of the many judgments that I’ve taken over the past 10 years is set to expire and I have forgotten about it.

It is so easy to renew judgments under Tenn. R. Civ. P. 69.04, but it’s also easy to forget about those old files. If a law firm forgets, it could get sued for malpractice. It’s a big deal.

Earlier this week, the Tennessee Court of Appeals touched on this issue. See John Doe Corp. v. Kennerly, Montgomery & Finley, P.C., E2023-00236-COA-R3-CV (Tenn. Ct. App. May 28, 2024).

In the case, after the 10 year period expired on an old judgment, the judgment creditor client sued its former lawyers, alleging that the law firm “had failed to inform Plaintiff that the judgment would expire after ten years or that it needed to seek to extend the judgment prior to its expiration.”

The trial court dismissed the claims against the law firm, because the client failed to have filed the lawsuit within the one-year attorney malpractice statute of limitations. The opinion doesn’t really focus on the renewal issue; the real analysis is on issues of recusal and the different standards under Tenn. R. Civ. P. 59.04 and 60.02.

But, back to creditor rights. Is this is victory for the law firm? Not really, because lawyers don’t like being sued for malpractice in the first place.

Since starting my firm nearly 4 years ago, I’ve opened 639 new cases. Before that, I handled a similarly busy caseload at my old firm. In the past 10 years, I’ve taken 100s of judgments.

It would be a cold comfort to me to know that, if my client sues me for malpractice, I could possibly defend the case on a technicality.

Having said that, how can lawyers mitigate that risk? The answer is in a Court of Appeals decision I wrote about in 2019. There, the malpractice claims turned on whether the law firm warned the client, at any point, that the judgment needed to be renewed in ten years. Because the law firm had previously warned the client about the 10 year expiration, the client had knowledge of the possible malpractice claims that accrued at the time of non-renewal (and not a later date).

Look at the text of the John Doe case: the client alleged that the law firm “had failed to inform Plaintiff that the judgment would expire after ten years or that it needed to seek to extend the judgment prior to its expiration.”

If you’re like me, a busy lawyer with many judgments, remember my advice from 2019: “A good practice is to make sure that the client understands that it has a responsibility in ten years to notify you that it wants you to take this action.”

In a perfect world, my advice is to calendar judgments and simply avoid this issue altogether.

A separate safeguard could be, in that initial congratulatory email, sending a copy of the judgment to the client, to always include text that clearly discusses the validity and expiration of the Judgment in terms that the client can understand.

Nevermind the Kombucha Jokes: WeWork Bankruptcy shows the power of 11 USC § 365

When WeWork filed bankruptcy last year, the reactions fell into two general buckets.

On a business level, the commercial real estate folks brought a “told you so” energy, calling this the end of flexible office space. On twitter, it was mostly jokes about former CEO/guru-preneur, Adam Neumann, poking fun at the company’s unchecked growth, sustained by freely flowing investor money, and boozy office vibes.

The bankruptcy lawyers had a different take. If current operations were struggling with past bad decisions, there was an obvious path for the company to right-size, by selective assumption and rejection of leases under 11 U.S.C. § 365.

That’s exactly what happened, as WeWork expects to emerge from the chapter 11 having negotiated approximately $8 billion (more than 40%) in reductions in rent obligations.

In a typical bankruptcy, a tenant usually is presented a “take it or leave it” choice on leases. Not WeWork. Whether it was a function of a bad CRE market or the scope of their leases, WeWork used chapter 11 to negotiate lots of concessions from its landlords.

A survey of recent “assumption” orders shows rent reductions, premise and term reductions, conversions to “gross” lease terms, and modifications to guarantees.

Sure, landlords can say “no” to changes like this, but these landlords aren’t.

It’s a smart move, and an indication that serious business people are in charge.

As a tenant of WeWork, I can confirm that the days of booze and debauchery are long gone. In fact, I’d say that they’ve over-corrected. (Ask me about the short-lived decision a few years ago to remove trash cans from individual offices.)

What is in store for the Nashville locations? We don’t know yet. My review of the Bankruptcy Court docket suggests that the debtor has taken no action on the four locations in Nashville.

Pursuant to an Order signed by the Bankruptcy Court on April 29, 2024, the current deadline for these decisions is June 3, 2024. So far, they’ve dealt with only a fraction of the landlords, but I expect lots of activity over the next month.

We’ll know the future of the Nashville locations soon.

Levy Involving Deja Vu (Yes, that Deja Vu) Highlights Tennessee’s Conditional Judgment Process

A recent case involving Deja Vu Showgirls Nashville (warning: do not click that link) offers a useful map for a judgment creditor to follow where a garnishee fails to answer a wage garnishment.

In the case, One Main Financial Group, LLC v. Edward Hackney, Jr. (Davidson Co. General Sessions Docket No. 23GC8323), the Plaintiff served a wage garnishment on “Deja Vu Showgirls, Attn: Payroll.”

As you know, employers must respond to wage garnishments in Tennessee within 10 days; if they don’t, the employer risks being held liable for the entire Judgment debt.

In the Sessions case, there was no answer filed, and Plaintiff filed a Conditional Judgment, asking that the full $14,000.56 judgment against Hackney be made a judgment against Deja Vu. Once a conditional judgment is signed, the court then sets a final hearing on whether to enter a final judgment against the non-responsive party.

When Deja Vu failed to respond in any way to the wage garnishment or the conditional judgment, the Court granted a final judgment against it for the underlying debt.

Unsure of where Deja Vu banks or holds assets, the Plaintiff issued a levy instructing the Sheriff to seize the “Cash Box.”

Plaintiff’s logic was sound. A few weeks later, the Sheriff went to the establishment (on a Saturday!), seized all available cash (well, the cash up to $14,634.00, the amount owed under the Judgment), and paid the funds to the Court Clerk.

Some thoughts?

Don’t ignore wage garnishments. Ever. Who knows if Edward Hackney works at Deja Vu or, even if he did, would he have been paid $14,000 during the garnishment. Due to Deja Vu’s failure to respond, the actual facts are irrelevant; Deja Vu became liable for the full debt simply because it never responded.

It’s rarely too late to answer (until it is). A conditional judgment is a “warning shot” to a non-responsive employer/garnishee, and, if a response is filed before the final hearing, the conditional judgment is vacated.

Was the cash levy valid? A judgment creditor can levy against personal property of the judgment debtor, including cash. This is often called a “till tap,” and it’s a smart move anytime you’ve got a judgment against a debtor with cash in their pockets, in their possession, or in their cash register.

In the end, the best test of collections process is whether it works. Here, Plaintiff got a little bit lucky. The Sheriff served this levy on a Saturday, presumably when the business had ample cash on hand (I actually didn’t realize the civil process unit served process on weekends).

And whoever was manning the cash box didn’t raise any issues related to service or the accuracy of the corporate name issue at any point–whether at the time of the levy or before the money was disbursed. (Looking at the corporate records at the Tennessee Secretary of State, an argument could have been made about some things.)

Sometimes, a little bit of luck makes all the difference.

My advice is to always take as much care in issuing levies as you would when filing a lawsuit. That means getting business name exactly correct. A judgment in this situation is like any other judgment–you have to get valid service of process and party’s name correct.

341 Recaps: Recording Judgments, Getting the Checks Right, and the very small advantage of Small Law

The Race is On. On Friday, I wrote about the Chancery Court opinion that “blesses” the common practice of recording your judgments as a lien, even though the Tenn. R. Civ. P. 62.01 “30 day stay” was still in effect.

I’ve heard from a number of lawyers that it’s what they’ve always done, but, nevertheless, it’s nice to have a bit of judicial reassurance.

Back in September 2023, immediately after a trial in Sumner County, I was racing to get the new judgment recorded on land that the judgment debtor had under contract for sale.

As soon as the Judge signed my order, I asked to make a certified copy. Cautiously, because I’ve had judges and court clerks admonish me in the past for even asking for a certified copy of a brand new judgment.

In my case, I had no time to spare.

My Register of Deeds visit was where the real fun started. Within minutes of being handed my certified copy, I was at the Register of Deeds’ front counter.

While I was sitting in the Register’s waiting area, I overheard them discussing a problem they had to deal with.

A Big Law Firm had mailed in a document for recording for the third time, and, once again, the “payee” name on the check was wrong. I don’t know what was written on the check, but it did not say “Sumner County Register of Deeds” (or, I assume, anything close to that).

Twice already, the Register of Deeds had rejected the filing and mailed it back.

As I was sitting there, they were discussing what to do about this third time.

How on Earth does this happen three times? As it turns out, the year before, this AmLaw 200 Big Law Firm had purchased (or, as the marketing people say, “combined with”) a local law firm and checks were no longer written in Nashville or anywhere in Tennessee.

Instead, the checks were written 600 miles away by someone who has probably never heard of “Sumner County” or a “Register of Deeds Office,” and who probably has never met the lawyer (or client) who desperately wanted whatever was being rejected to be recorded.

I have no idea if the third recording got accepted that day, or if the Clerks ever just called the Big Firm to sort it out. I got my recorded judgment lien on the property and left; the rest was not my problem.

So what’s the point of the story? To be clear, I was very amused by it all.

Sometimes, when I am writing my own checks or driving to record my own documents, I miss the old law firm days when I had a person who did all that for me. But, I’m also a control freak who takes his job very seriously, and I would have lost my mind if I had lost weeks trying to record something that kept getting rejected.

Most articles about law firm acquisitions /combinations have the narrative that “bigger is better,” and usually mention “broader reach,” “expanded networks” and “new markets.”

Sitting there that day, with sweaty palms, watching the clock, hoping to get my document recorded before the land could be sold…I was glad to be the guy writing my own checks.