Service of Process: Just Like in Hollywood (Part 2)

It’s a strange day when legal procedural issues get top billing on the Today Show

As you may have seen, Jason Sudeikis served his ex-Olivia Wilde with legal papers while she was, literally, on a public stage talking about her upcoming movie. The photos from the event show her, in real time, opening the packet and reading the custody papers. On stage.

It’s news-worthy because it seems like such a jerk thing to do, especially given the public persona of Sudeikis, who is famous for playing the nicest character on modern TV and, generally, regarded as a nice person in real life.

Seriously, Ted Lasso isn’t just nice, but inspirationally nice. I can’t count the number of showy LinkedIn posts talking about life lessons people have learned from Ted. One review called the show a “warm hug of nice.”

But, this? This seems like a big-time jerk move.

I’ve written about this frequently: Service of process can be the hardest part of litigation, and a party may be forced to go to great lengths to get somebody personally served with legal papers. It may be a little too “on the nose” to cite examples from Hollywood, but this sequence from Pineapple Express is hilarious and procedurally accurate. It’s also a huge deal: Ineffective service of process can ruin your entire lawsuit.

Personally, in trying serve an evasive defendant, I’ve researched social media, court dockets, or anything else that will help me locate where and when the defendant may be. My process server has shown up holding a bouquet of flowers, an empty cardboard box, and waited at the end of a bike race, looking for Racer # 3433 at the finish line.

So, did Sudeikis do something wrong? It depends. Was Olivia Wilde evading service, requiring them to go to this extra mile to “catch” her? We don’t know that.

But, we do know this: This move is inflammatory and is going to make this litigation more difficult. As lawyers, we are faced with all sorts of “allowed” procedural tactics that sound great on paper, but that can also skew litigation into scorched earth territories in real life. Part of a good lawyer’s job is to talk clients out of those tactics and focus on the bigger picture.

Here, Sudeikis has already disavowed the action, saying that neither he nor his lawyer approved this rogue decision by the process server.

But, looking at the big picture, the damage may already be done. This custody battle just got a lot more contentious. And, honestly, it’s going to be weird watching Ted Lasso manage his own divorce and custody issues knowing what I know about this messy real-life drama.

New Tennessee Court of Appeals Resolves Ten-Year Old Question about Post-Judgment Interest Rate

For nearly a decade, I’ve been writing about the Tennessee post-judgment interest statute, Tenn. Code Ann. § 47-14-121, which was amended in 2012 to change from the long-standing fixed rate of 10% to a variable rate that changes every 6 months.

I say “writing,” but others may say “complaining.” They’d probably cite this post: What I Don’t Like About the New Post-Judgment Interest Rate Statute In Tennessee (Everything).

My initial concern was one that many Tennessee lawyers shared: Because the interest rate is subject to change every six months, will the applicable rate on an existing judgment also change every six months?

Nobody knew. Not attorneys. Not court clerks. Not even the trial court judges.

In a very helpful comment to this 2020 post about the issue, Tennessee attorney Michelle Reynolds provided the best answer I’d seen (and one that I’ve since argued):

From the TNCourts.gov website: “Beginning July 1, 2012, any judgment entered will have the interest set at two percent below the formula rate published by the Tennessee Department of Financial Institutions as set in Public Chapter 1043. The rate does not fluctuate and remains in effect when judgment is entered.”

Of course, that’s not a case or a statute. It’s an “introductory paragraph on the Administrative Office of the Courts website.”

In an opinion issued last night, however, we have our answer!

In the case (Laura Coffey v. David L. Coffey, No. E2021-00433-COA-R3-CV (Tenn. Ct. App. Apr. 11, 2022), the Tennessee Court of Appeals notes this long-standing confusion and then immediately dispels it.

In its analysis, the Court notes that the rate to be applied under Tenn. Code Ann. § 47-14-121(a) is clear and unambiguous (it’s math), and it’s the entirely separate provision at Tenn. Code Ann. § 47-14-121(b) that introduces fluctuations in the general rate. Noting the clarity in (a), the Court finds that (b) does not create ambiguity as to existing judgments.

Under Tenn. Code Ann. § 47-14-121(a), the Court writes, the “applicable post-judgment interest rate does not fluctuate when applied to a particular judgment; instead, it remains the same for the entire period of time following entry of the judgment…until the judgment is paid.”

It’s always a great day when an unresolved issue gets clarity. Sometimes I make a joke that only “law nerds” will appreciate a legal development like this; for this one, though, I think all Tennessee lawyers will benefit from this opinion.

Tennessee Judgments Always Incur Post-Judgment Interest

A good rule of thumb for prevailing parties in litigation is this: If you want something, be sure to include that in the court order.

Well, duh. The Judge can’t give it to you if it’s not expressly written in the order.

A recent opinion from the Tennessee Court of Appeals (Hartigan v. Brush, No. E202001442COAR3CV, 2021 WL 4983075 (Tenn. Ct. App. Oct. 27, 2021)), however, makes clear that post-judgment interest applies on all monetary judgments in Tennessee, no matter if the order expressly says so.

There, the Court noted that, under Tenn. Code Ann. § 47-14-122, “Interest shall be computed on every judgment…,” and, as a result, post-judgment interest is “mandatory.”

It’s an issue that’s unlikely to come up often, partially because every prevailing party generally includes an express grant in their judgment. But, when the order doesn’t expressly say it, have this recent case ready to go.

Ukraine Fundraising: I raised $1,950 for World Central Kitchen

I’ll skip to the Tl;dr part: On March 10, I donated all of my 6.5 billable hours to support Ukraine and, at $300.00 an hour, I raised $1,950.00 for World Central Kitchen’s refugee relief efforts.

In the grand scheme of things, it’s not much, but, to my little firm, a day’s worth of revenues is a lot.

This has been a law firm fund-raising concept that I’ve pondered for a while.

With the demands and time constraints that so many lawyers face, it’s hard to make time to volunteer at Legal Aid. But, if lawyers are already sitting at our desks, why not cut out the transit time and simply donate an hour (or more) of billable time per month to a good cause?

Of course, this grand idea works best at a big firm, where one hour a month is just a blip on an individual lawyer’s hourly billables report but, at the same time, results a substantial amount of money each month when you’ve got 40-50 lawyers participating.

Get a few law firms doing this instead of the standard “sponsor a table at a dinner” contribution, and you’re talking real money going to local charities.

So, to put my money where my mouth is, I’ll continue to do this each month, supporting different charitable causes by direct cash payments representing a billable hour.

Next month, I will donate time on April 13 to support the International Rescue Committee’s work helping Syrian refugees. I’m open to suggestions for the month after that.

And, in the interim, I promise to get back to law blogging. Thanks for your support.

Foo Fighters’ Nashville Lawsuit provides important lesson on allocating risks in contracts

When COVID first hit, lawyers talked about how future contracts would evolve to anticipate the special challenges presented by a global pandemic.

Now, 19 months in, a new Davidson County Chancery lawsuit filed on behalf of the Foo Fighters shows that–even with all the planning in the world–COVID is still disrupting the best laid plans.

The plaintiff (the touring company that books gigs for the band) alleges that defendant hired the Foo Fighters to perform at an August 13, 2021 corporate event for payroll processing company ADP. The parties entered entered into a April 5, 2021 written agreement. Per the contract, the band would receive $3,000,000 for the performance, with half paid when the contract was signed, and the other half paid at (or before) the event.

But this contract was updated to take into account all the lessons learned during a global pandemic.

Per Paragraph 10 of the Complaint, if the defendant defaults or cancels the performance for any reason, the band would receive the full performance payment (regardless of whether the band actually plays the show).

Based on the allegations of the Complaint, it’s clear that concerns about COVID played a large role in the negotiations. In fact, the parties included a section called “COVID CANCELLATION,” which–as you’d guess–allocated the risk of a forced cancellation due to the pandemic.

And, boy-oh-boy, was that risk apportioned squarely onto the plaintiff:

In short, if the contracted for event were to be deemed unsafe and impossible due to the resurgence of COVID, this provision says that it does not matter. The band, in their “sole reasonable discretion,” can terminate the obligation and refuse to perform…and still get paid.

Was COVID a “force majuere” event? The band says that they expressly removed the reference to COVID in that paragraph, and further allege this:

There’s a bit more to the story, but, in short, COVID didn’t go away, and this August 2021 event at Mile High Stadium in Denver became less and less of a good idea for the ADP corporate event.

They discussed limited capacity, the band offered to do an exclusive live-stream concert, but, on August 4, 2021 (9 days before the event), the defendant decided to cancel the event. The lawsuit points out that “there was no local, state, or other governmental restriction that required the cancellation of the Event” and, helpfully, points out a number of other large concerts and events that happened that weekend in or near Denver.

The Foo Fighters have sued for the $1,500,000 owed under the Agreement. (And I tend to agree with their analysis of the contract.)

It’s an interesting case. On the most superficial level, it shows that, no matter how hard you try, it’s hard to contract around the unexpected.

In April 2021, my own family was so exuberant about the vaccines and a COVID-free summer (and fall) that we surprised our kids with shockingly expensive Jonas Brothers tickets to celebrate the end of the pandemic. In April, my wife and I believed we had weathered the storm and that a sold out concert in September 2021 was a totally safe and reasonable reward for our kids. We went, but we were terrified taking our vaccinated kids to the show.

I have to wonder if the defendants, here, suffered from a similar bit of vaccine optimism.

Nevertheless, the Foo Fighters’ lawyers did not share that optimism; or, if they did, they included sufficient terms in the contract to assign the burden of any risk squarely on the other party.

From what I’ve seen of it, it’s a good contract. Who knew we’d be learning some lessons about contract law from the Foo Fighters?

Can the failure to respond to Admissions be fixed? New Court of Appeals opinion says “Maybe.”

As a young lawyer, one of the worst tasks I was ever given was to cover a hearing on a motion to deem admissions admitted, where the other lawyer appeared to have simply overlooked the deadline to respond.

Requests for admission are, basically, what they sound like. One party in a lawsuit sends another party a written demand that they admit or deny a specific thing–generally a fact or that a document is authentic. Under Rule 36.01 of the Tennessee Rules of Procedure, if the other party doesn’t respond in 30 days, the fact is conclusively admitted for purposes of the lawsuit.

And, yes, a lawyer receiving these requests and ruin a client’s case if she is not good at calendaring or paperwork.

And many lawyers are not.

So, 20 years ago, as a brand new associate, I was sent down to Williamson County Chancery Court to argue a motion like this where the other lawyer–apparently–simply forgot to respond and, as a result, his client’s fate was at the mercy of a paperwork oversight.

And he was not happy to be arguing his side of the case.

For my side, it wasn’t a particularly hard argument. You tell the Judge the date of the Requests, add 30 days, tell the Judge that there was no response by that date, and cite Rule 36.01.

What made it hard is that the lawyer on the other side was a well-known, respected lawyer, and, generally, as a matter of courtesy, lawyers don’t play “gotcha” with each other on paperwork issues like this. And, even to me–a brand-new lawyer–it was a tough request.

Ultimately, Judge Easter stared at Rule 36.01 for a long time and decided to not hold the other lawyer to 30 days. He gave him more time. I was–frankly–happy to lose that day.

I was reminded of all that when I read the Court of Appeals opinion from yesterday, in Masterfit Medical Supply v. Samuel Bada, No. W2020-01709-COA-R3-CV (Tenn. Ct. Apps., Sept. 23, 2021). In that case, a party lost at the trial court level based on his failure to respond to admissions on unpaid invoices.

A critical component of the Court’s opinion, however, was that the complaining party never filed a motion under Rule 36.02 to have the admission withdrawn or amended.

Under Tenn. R. Civ. P. 36.02, “[a]ny matter admitted under this rule is conclusively established unless the court on motion permits withdrawal or amendment of the admission. Subject to the provisions of Rule 16 governing amendment of a pre-trial order, the court may permit withdrawal or amendment when the presentation of the merits of the action will be subserved thereby and the party who obtained the admission fails to satisfy the court that withdrawal or amendment will prejudice that party in maintaining the action or defense on the merits.”

Courts favor deciding cases on the merits and that’s why Rule 36.02 makes sense. As a matter of equity, all kinds of other sworn statements can be clarified, amended, and modified, so why should un-answered admissions be unassailable, where no particular prejudice results?

That day in Williamson County, the other lawyer didn’t argue this rule, but, based on Judge Easter’s clear desire to consider the merits (and not a technicality), it’s clear that the Judge would have welcomed such a request.

Can a party ask for Rule 60 relief on its own agreed judgment?

Yesterday, the Tennessee Court of Appeals issued an opinion on whether a party can ask that their own “agreed” judgment be set aside under Rule 60 of the Tennessee Rules of Civil Procedure. It’s an interesting factual scenario, and the opinion provides a good recap of the law regarding Rule 60.02 relief.

The case is City of Memphis, Tenn. v. Beale Street Development Corporation, No. W2020-00523-COA-R3-CV (Tenn. Ct. Apps., Sept. 21, 2021). In short, the defendant’s lawyer executed an agreed judgment that fully resolved the dispute, but, then, 364 days later, the defendant filed a Motion for Relief under Rule 60.02, arguing that its board never, in fact, properly approved the settlement agreement. As such, the lawyer should never have signed the judgment and the trial court should not have entered it.

In considering a party’s motion to set aside an agreed judgment that the attorney expressly agreed to, the Court spent some time with Rule 60.02, including on the following points.

A Rule 60.02 motion is reviewed under an “abuse of discretion standard.” Discover Bank v. Morgan, 363 S.W.3d 479, 487 (Tenn. 2012). This means that the appellate court will consider whether “the trial court applied incorrect legal standards, reached an illogical conclusion, based its decision on a clearly erroneous assessment of the evidence, or employed reasoning that cause[d] an injustice to the complaining party.” Id. The “trial court’s ruling ‘will be upheld as long as reasonable minds can disagree as to [the] propriety of the decision made.” Id.

That’s a pretty high standard, so much so that Rule 60.02 relief is called “an exceptional remedy.”

One of the bases to set aside a judgment under Tenn. R. Civ. P. 60.02 is for “fraud . . . , misrepresentation, or other misconduct of an adverse party.” This generally means that the other party or its counsel committed some fraud–like lying about the court date or forging a signature. But, the Court of Appeals says, this conduct must be committed by an adverse party (just like Rule 60 says). Action by a party’s own attorney will not support relief under Rule 60.02.

Finally, the Court noted that the motion was not timely. Of course, the rule expressly one year as an outer limit, but, here, the facts dictate that the defendants should have brought this motion sooner (maybe in response to the article on the front page of the Memphis newspaper the day after the settlement was announced).

“Rule 60.02 does not ‘permit a litigant to slumber on [its] claims and then belatedly attempt to relitigate issues long since laid to rest.’” Furlough v. Spherion Atl. Workforce, LLC, 397 S.W.3d 114, 127 (Tenn. 2013).

Motions brought under this rule are a hassle for the judgment creditor for obvious reasons: Who wants their hard work to be challenged years later? But, Tennessee Courts don’t look favorably on these motions and rarely grant them and, when they do, Rule 60.02 is strictly enforced on its terms.

Keep this case handy the next time you receive one of these motions.

Who knew Pineapple Express had such technically accurate legal scenes?

Service of process can drive me and my clients crazy. Before filing the lawsuit, I am in total control of all aspects of the timing of the case, from the initial review to filing the Complaint.

But, once I file the complaint and send it to be served on the defendant, we are sometimes at the mercy of luck and a little bit of good timing.

Nobody wants to be served with a lawsuit (for obvious reasons), and, until you get them served, they have no responsibility to answer and the case doesn’t move forward.

In many cases, a plaintiff has to employ creative tactics to get the process into the hands of the defendant.

You’ve probably seen this in a movie, where the process server hides in the bushes, hands somebody a piece of paper, and yells “You’ve been served!” as he runs away.

So, yes, I thought about the opening sequence from Pineapple Express, when I read a recent opinion by Davidson County Chancellor Ellen Lyle about an evading defendant and an irritated process server, in Joyce B. Martin v. Devon Lawrence, et. al., Davidson County Chancery Court Case No. 20-1091-III.

In that case, the process server was knocking on the defendant’s door, had confirmed that the defendant was inside the house, and, when the defendant refused to come to the door, attempted service pursuant to Rule 4.04(1) by “plac[ing] the summons and complaint into a clear plastic sleeve and tap[ing] it to the glass front door before leaving the [Defendant’s house].”

(The opinion was silent on whether the process server yelled “You’ve been served!” as he walked away, but I would bet money that he did.)

On these facts, however, Chancellor Lyle found the service ineffective. Rule 4.04(1) provides that if a defendant “evades or attempts to evade service,” then the process server may perfect service of process “by leaving copies thereof at the individual’s dwelling house or usual place of abode with some person of suitable age and discretion then residing therein, whose name shall appear on the proof of service, or by delivering the copies to an agent authorized by appointment or by law to receive service on behalf of the individual served.”

Citing this Rule’s plain language—which expressly imposes a requirement that the summons be left “with some person of suitable age and discretion then residing therein”—the Judge found that merely taping the summons to the outside of a home does not meet the statutory requirements, even under these circumstances.

(Note: You can read more analysis of this opinion (and see a full copy) by visiting the Nashville Bar Association’s Trial Court Opinion page, which will be updated soon with more notable decisions.)

In a surprise twist, then, Seth Rogen’s stoner private process server turns out to be a highly effective process server whose work would be approved even by Chancellor Lyle (though she may question other aspects about his…demeanor and tactics).

In each instance in the movie clip he, in fact, personally serves each person. We lawyers can be awful to watch movies with, since we love to nit-pick the accuracy of the Hollywood depictions of the job, but this sequence complies with the law (except the part when he’s driving and using illegal substances).

But, other than that–congratulations to Seth Rogen–this clip could be shown in a first-year Civil Procedure class. Who knew?

Tennessee Court of Appeals issues a “must read” opinion on General Sessions appeals

As long-time readers know, some plaintiffs elect to file their lawsuits in General Sessions Court, even if their claims exceed the $25,000 jurisdictional limit. Of course, they’ll ask for damages right up to the max amount of $24,999, which means they’ve shaved off some amount of their claim, in order to get all the other advantages offered in small claims court.

When the plaintiffs voluntarily reduce their claim to satisfy the Sessions jurisdiction limit, they’ll often use that as part of their bargaining leverage, i.e. “if you appeal my judgment, I’ll ask for the higher amount of all my claims in Circuit Court.”

Back in 2014, I talked about that strategy, which is allowed under Tenn. Code Ann. § 16-15-729. That statute says the Circuit Court “shall allow all amendments in the form of action, the parties thereto, or the statement of the cause of action, necessary to reach the merits, upon such terms as may be deemed just and proper. The trial shall be de novo, including damages.”

As noted back then, an actual Amended Complaint under Tenn. R. Civ. P. 15 must be filed in order to assert the new claims. No big deal, right?

Well, this brand new case from the Tennessee Court of Appeals makes this maneuver drastically more risky. The opinion was published yesterday, at Chimneyhill Condominium Association v. King Chow, No. W2020-00873-COA-R3-CV (Tenn. Ct. Apps., July 20, 2021).

In that case, when the defendant appealed the Sessions judgment against it, the plaintiff asserted new and increased claims in Circuit Court against the defendant. Here, the plaintiff did everything procedurally correct: it obtained a Circuit Court Order allowing the filing of an amended complaint; and then filed the claims in an Amended Complaint. Regardless, the trial court allowed the defendant to dismiss its appeal of the Sessions judgment and found, as a result of the dismissal of the appeal, that Plaintiff’s claims in the Amended Complaint must be dismissed.

The Court of Appeals agreed, stating that “new claims asserted by a plaintiff who did not appeal a general sessions court judgment will be dismissed upon dismissal of the appeal of the opposing party…” The plaintiff is “the master of his or her complaint” and will be expected to bring all of its claims in the original proceeding.

If certain claims are omitted or the sessions court fails to grant all the relief, then the remedy is for the plaintiff to file its own appeal. In dismissing the new claims, the Court wrote that “it was therefore [plaintiff’s] own decisions that resulted in [plaintiff’s] additional claims being dismissed when [defendant] chose to dismiss his appeal.”

This case is important for several reasons. It’s contrary to long-standing practice and procedure. It appears to divert from the precepts of Tenn. Code Ann. § 16-15-729 and also the concept of a “de novo” review (i.e. if everything starts anew on appeal, without regard to what happened in the lower court, why shouldn’t the plaintiff get to restate her claim).

In the end, however, this is a procedural strategy that will greatly benefit judgment defendants and catch many judgment creditors by surprise. What’s the fix? I guess a plaintiff with significant additional claims may consider voluntarily dismissing its own claims during the appeal, and then re-filing those claims as a new Complaint.

I know this blog has a creditor-friendly bent, but, regardless, I don’t like the reasoning behind this opinion. I understand what the Court is doing, but it also seems too procedurally clever and doesn’t consider the practical implications that are facing parties on a de novo review in Circuit Court.

Will Landlords’ Casualty Paragraphs be a hot issue for Second Avenue businesses? (It looks like they already are.)

The real estate market has been so hot in Nashville over the past 6-7 years that, any time an old building in an in-demand area burns down, I’ve wondered if the culprit was a crafty real estate developer looking to build a high-rise condo. (Kidding, of course.)

But, as matter of law, a disaster can provide a landlord a way out of a long-term lease (whether they’re happy to be out or not), where the premises are fully destroyed.

I thought of this today, when reading the Nashville Post article Old Spaghetti Factory loses lease after 40-year run. Per local news, after total destruction of the building on Second Avenue, the landlord “will be terminating the lease agreement, although the restaurant reportedly has 16 years remaining on that lease.” The article notes that the restaurant is offering to spend more than $1 million of its own money to help rehab the space.

Seems unfair, right? It may be, but it’s probably allowed under the Lease.

Most commercial leases have a “Casualty” section, which dictates what happens when rental premises are totally destroyed, whether by fire, earthquake, or some other huge event.

Those provisions generally require the Landlord to restore the premises to substantially the condition that existed prior to the disaster. If the Landlord does that, then the Tenant is most likely stuck in the Lease. (Yes, even if losing the use its rented space during the repair period kills the Tenant’s business.)

Having said that, the provisions also generally give the Landlord an “out,” if the destruction is so total that the premises can’t easily be restored. In making this determination, a number of factors are considered, including if the cost to restore the building exceeds the ultimate value (and/or insurance money), if the Landlord’s lenders scoop up all the insurance money, the lease is near the end of the term, or if would take too long to restore (180 days from the event is a common measure).

In most cases, the landlord is motivated to repair or rebuild quickly, hoping to get the tenant back in the space–and back paying rent–as soon as possible.

There is no indication in the story whether the landlord here is relying on a similar provision or what types of other issues exist.

It may be that the cost to restore this historic building is so high that the landlord can’t (or isn’t financially ready to) quickly go into rebuilding mode. If the lease uses a typical 180 day requirement, the owner may know that there’s no way to do it in that time with all the special challenges presented by this terrorist event and during a global pandemic.

A skeptic would wonder if this owner wants to renovate a building to a newer, better use (like condos, offices, etc.) or may want to get rid of a long term–possibly below market–lease.

Leases are just like any other contracts. The plain text of their terms control. But, casualty provisions are a rarely negotiated point. When I prepare leases for commercial real estate, it’s often a few paragraphs at the end that I review quickly and move on.

But, when they do apply, it’s a big deal. Just like COVID got every Nashville commercial real estate attorney talking about force majeure, maybe this situation will get us negotiating casualty paragraphs.

In the end, though, yes, this is probably allowed under the lease.