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.

Judicial Estoppel Prevents Litigants from Contradicting Themselves

When I’m involved in litigation, I always look for recent cases involving my opposing party, to mine those cases for similar issues, useful facts, and relevant admissions to use in my case.

The Tennessee Court of Appeals issued a recent opinion, at Polly Spann Kershaw v. Jeffrey Levy  (Tenn. Ct. Apps, Mar. 28, 2018, No. M2017-01129-COA-R3-CV), that reminds me that this is a good idea.

In that case, a former client sued her lawyer, alleging that, as a result of his alleged bad advice and malpractice, she entered into an unfair and generally bad divorce settlement after he withdrew from the case.

But, as part of her divorce settlement, she signed a sworn Marital Dissolution Agreement, which included the affirmation that “the Agreement is fair and equitable and that it is being entered into voluntarily…”

In response to the client’s claims that she was forced into an “unfair” divorce settlement, the lawyer filed for summary judgment, citing those sworn statements in the divorce pleadings and arguing, under the concept of “judicial estoppel,” that she can’t change her position.

The Court of Appeals agreed, saying that “[t]he sworn statement is not merely evidence against the litigant, but (unless explained) precludes him from denying its truth. It is not merely an admission but an absolute bar.” Further, judicial estoppel “seeks to ensure that parties do not ‘play fast and loose with the courts’ by contradicting a previous sworn statement or testimony.”

A litigant may have different incentives in front of different courts, and this is certainly useful when an opposing party has filed Bankruptcy or divorce–both settings where it may be beneficial to understate their income or the value of their assets.  I’ve specifically used it where a litigant affirms a debt or lien in Bankruptcy Schedules, which are signed under oath, and then, later in state court, tries to contest my bank’s claims.

New Opinion Provides Clear Summary of the Unpredictable Enforceability of Non-Compete Agreements

This is how competitive the market for tourist entertainment dollars in Nashville is right now: our horse-drawn carriage companies are suing each other for poaching each other’s drivers, with those disputes going all the way to the Tennessee Court of Appeals.

All kidding (and weird facts) aside, this opinion (Sugar Creek Carriages v. Hat Creek Carriages, et. al.;, Feb. 13, 2018) has a really good analysis of issues on the enforceability of non-compete agreements in Tennessee.

The opinion cites extensively from the Tennessee Supreme Court in Murfreesboro Medical Clinic, P.A. v. Udom, 166 S.W.3d 674, 678 (Tenn. 2005), which states:

In general, covenants not to compete are disfavored in Tennessee. These covenants are viewed as a restraint of trade, and as such, are construed strictly in favor of the employee. However, if there is a legitimate business interest to be protected and the time and territorial limitations are reasonable then non-compete agreements are enforceable.  Factors relevant to whether a covenant is reasonable include: (1) the consideration supporting the covenant; (2) the threatened danger to the employer in the absence of the covenant; (3) the economic hardship imposed on the employee by the covenant; and (4) whether the covenant is inimical to the public interest. Also, the time and territorial limits must be no greater than necessary to protect the business interest of the employer.

Where the employee receives “specialized training,” the Court will look to see if the employer conferred a “protectable business interest.” Two big factors in this analysis are:

1. Whether the employee is given access to trade or business secrets or other confidential information; and

2. Whether the employer’s customers tend to associate the employer’s business with the employee due to the employee’s repeated contacts with the customers on behalf of the employer.

Where “specialized training” is claimed, that training had better be really unique and confer advanced skills that would be unfair for the employee to use elsewhere. In pondering all this, the Court notes that there is “no simple rule” and the analysis is “fact-driven.”

So, in the end, this new opinion presents a clear, concise statement of the law related to non-compete agreements, but, rest assured, there’s no easy way to predict how a trial courts will apply this law to actual disputes.

The best answer you’ll get out of a lawyer will be “It depends.”

To Recover Attorney’s Fees in Tennessee, You Have to Be Express and Exact in Your Contract

We’ve talked about this before: Tennessee is a great, creditor-friendly state, but, if you want to recover your attorney’s fees in Tennessee, you’d better have some very specific language in your contract.

The Tennessee Court of Appeals filed an opinion last week as a reminder, at Nyrstar Tennessee Mines-Strawberry Plains, LLC v. Claiborne Hauing, LLC, Tenn. Ct. Apps, No. E2017-00155-COA-R3-CV.

Here is the contract provision the Court considered:

The Customer must pay Nyrstar all costs and expenses incurred by Nyrstar in connection with enforcing its rights against the Customer under an Agreement including legal expenses and other costs incurred in recovering monies owed by the Customer to Nyrstar.

By my read, “all costs and expenses,” along with “including legal expenses,” should be good enough.

The Nystar Court disagreed. That text does not say “including reasonable attorney’s fees.”

As a result, “The provision at issue does not specifically or expressly create a right to ‘fees,’ ‘attorney’s fees,’ or ‘reasonable attorney’s fees.'” Further, ““the term ‘expenses,’ without more, . . . does not include an award of attorney fees.”

As a result, “[t]he language in the contract before us is not sufficient for Nyrstar to be  entitled to recover its attorney’s fees. The provision at issue does not expressly or  specifically create a right for Nyrstar to recover its attorney’s fees.”

So, if you want to recover attorney’s fees in Tennessee, you’d better say exactly that in your contract–that the prevailing party shall be entitled to recover its attorney’s fees.

General Sessions Court is Weird, and Also Awesome

In General Sessions  today, I saw two funny things. One lawyer was walking around with a half-empty bottle of Mountain Dew in his suit jacket. Another lawyer had a can of snuf in his back-pocket as he made an argument to the Judge.

(Disclaimer: I love Mountain Dew, and I’ve praised  the A.A. Birch courthouse and others for keeping it fully stocked.)(Second Disclaimer: I’ve talked about Mountain Dew a lot on twitter.)

What I’m saying is that Davidson County General Sessions Court is a little bit different than the stuffy and formal proceedings in District Court.

That’s why a lot of the larger Nashville law firms don’t file anything in small claims court.  It can be a weird, fly-by-the-seat of your pants exercise in justice. Big firms and “fly-by-your-seat” don’t mix well.

But the following timeline shows how General Sessions Court is awesome:

  • October 18, 2017:   Filed Civil Warrant for $24,999.00.
  • October 19, 2017:  Obtained Personal Service on Defendant.
  • October 26, 2017:  Took a Judgment for $33,500.00 (base amount, but remember this old post–you can exceed that amount with attorney fees, expenses, etc.).

So, to be clear, after the 10 day appeal period expires on Monday, November 6, 2017, I’ll have a final judgment for $33,500.00 and can execute on it–in less than three weeks after filing the lawsuit.

If your creditor lawyers are filing collection lawsuits in Circuit Court or Chancery to collect debts that are less than $25,000.00, you’re paying too much and waiting too long for your Judgments.

Don’t Lose Your Next Default Judgment Hearing: Why Some Judges Ask for an Affidavit

Under Tenn. R. Civ. P 55 (governing “Default”), if a defendant does not answer or defend a lawsuit, then the plaintiff can take a default judgment against the defendant. If they don’t answer, the court grants the motion and enters a judgment. Easy, right?

Yes, but, sometimes, some courts make it more complicated than that.

In some counties, even when the defendant hasn’t responded and doesn’t appear at the hearing, the Judge will: (1) ask if I filed an Affidavit; or (2) set the matter for a “damages hearing,” which can be months in the future and could require a witness to attend.

Having seen this happen, I’ve scoured Rule 55 and the various counties’ Local Rules, but have no idea where this idiosyncrasy comes from. But, over time, I started filing affidavits along with my motion for default in non-Davidson County counties.

But, recently, I saw a Davidson County Chancellor ask about an affidavit as part of an uncontested motion for default. When the plaintiff didn’t have one, the judge set a damages hearing to occur in 90 days.

I never, ever want a non-responding defendant to get an extra 90 judgment-free days, so I now carry around this recent opinion from the Court of Appeals, Judith Husk v. Brandon Thompson, No. M2016-01481-COA-R3-CV (Tenn. Ct. Apps. Aug. 10, 2017).

That opinion covers a lot of ground, including bases to set aside a default judgment, but I want to focus on the “damages” analysis. The opinion lays out the law as follows:

Generally, the rule in Tennessee ‘is that the defendant, by suffering a default judgment to be entered against him, impliedly confesses all of the material allegations of fact contained in his complaint, except the amount of the plaintiff’s unliquidated damages.’ …Thus, a default judgment establishes the non-defaulting party’s right to maintain the action and recover some damages, but the amount of damages remains an open question to be determined by proof. … If the amount of the plaintiff’s damages is liquidated, however, a trial court may immediately enter a final judgment without a determination by proof.

(Citations Omitted/emphasis added).

So, the issue comes down to whether the claim is for “liquidated” or “unliquidated” damages.

The Court noted that unliquidated damages are uncertain and the type that require a “determination by proof” and are “damages that cannot be determined by a fixed formula…”

“Liquidated damages” are the type that are for “a set amount of money, or a or a certain formula, expressly stipulated in a contract as the amount of damages to be paid by a party that breaches the agreement. Liquidated damages can also be defined as the amount which has been ascertained by judgment or by specific agreement of the parties or which are susceptible of being made certain by mathematical calculation from known factors…”

Long story short, a lawsuit alleging breach of contract for amounts due under a promissory note plus interest using the “math” laid out in the note? Liquidated.

A lawsuit alleging damages “in an amount to be determined at trial” as a result of an auto accident? Unliquidated.

In the Davidson County matter I saw, the Chancellor expressly referenced the Husk opinion, even though the Court was faced with a breach of contract action with liquidated damages.

Having seen that happen, then, I think it’s a good practice to always include an affidavit in support of your motions for default, just so there’s no question. Plus, it’s probably good to get the facts supporting the existence of the contract, the damages, and showing the “math” into the record.

 

Collections in Probate: Some Pointers

Earlier this month, I taught a CLE seminar for the Probate & Estate Planning Section of the Memphis Bar Association.  The seminar was called “Collection After Death: Common Roadblocks and Strategies in Collection Before, After, and During Probate.”

As you probably know, Probate Law isn’t my focus, so I spent a good amount of time brushing up in preparation for this presentation in Memphis.  Over the next few weeks, I’m going to share some of the info I learned.

Here’s a starter: Did you know that there’s an absolute bar to filing claims against a deceased person 12 months after the date of their death? Look at Tenn. Code Ann. § 30-2-310.

So, notwithstanding the Notice to Creditor requirements of Tenn. Code Ann. § 30-2-306 and the associated deadlines imposed under the Code, this absolute 12 month statute of limitation still applies and can bar a creditor’s claim, even if the the creditor didn’t know the debtor was dead and even if the creditor didn’t receive any sort of notice of death or notice to file claims.

In fact, as a result of this strict 12 month statute of limitations on the filing of claims, if the probate case isn’t actually filed in that 12 month period, the creditor is simply out of luck. To be clear, as an example, if the probate case isn’t filed until 13 months after the date of death, there is no reason to issue a notice to creditors, as all of the creditors’ claims are barred.

The law says that the remedy for a creditor dealing with a deceased borrower is to commence their own probate case for the borrower during that 12 month period and, in that case, file a claim. Yikes. Who knew probate law was so tricky?