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?

 

Elements of Negligent Misrepresentation in Tennessee

Disclaimer: As much as I love educating blog readers about the law, sometimes, I use this site as a notepad for myself on legal issues.

Frankly, I can’t tell you how many times I think to myself–in court–“I’ve blogged about that,” and then use the “Search” box on this blog to look a citation/issue up.

So, real quick, here’s a good guide to the elements of “negligent misrepresentation” in Tennessee, as stated in a recent Tennessee Court of Appeals case,  Jerry Faerber, et. al. v. Troutman & Troutman, P.C., et. al., No. E2016-01378-COA-R3-CV, May 23, 2017.

In order to state a claim for negligent misrepresentation, the plaintiff must establish by a preponderance of the evidence that:

  • the defendant supplied information to the plaintiff;
  • the information was false;
  • the defendant did not exercise reasonable care in obtaining or communicating the information; and
  • the plaintiff justifiably relied on the information.

See Morrison v. Allen, 338 S.W.3d 417, 437 (Tenn. 2011).

Negligent misrepresentation occurs when:

  • a defendant, acting in the course of his or her business, profession, or employment, or in a transaction in which she has a pecuniary interest, supplies faulty information meant to guide another in his or her business transaction;
  • the defendant fails to exercise reasonable care in obtaining or  communicating information; and
  • the plaintiff justifiably relies upon the information provided by the defendant.

See Robinson v. Omer, 952 S.W.2d 423 (Tenn. 1997)

“Justifiable reliance in [the] context [of negligent misrepresentation] is not blind faith.” McNeil v. Nofal, 185 S.W.3d 402, 408 (Tenn. Ct. App. 2005). The defendant is liable “only to those, whether in contractual privity or not, for whose benefit and guidance the information is supplied.” The information may be either direct or indirect. In that regard, the foreseeability of use is critical to liability. John Martin Co., Inc. v. Morse/Diesel, Inc., 819 S.W.2d 428, 431 (Tenn. 1991)

“[T]he usual measure of damages in a negligent misrepresentation action is the benefit of the bargain rule, that is, the difference between the actual value of the property received at the time of the making of the contract as compared to the value if the representations had been true.” Cary v. Evans, 1986 WL 6642, at *3 (Tenn. Ct. App. June 12, 2986) (citations omitted).

Ok, so this isn’t the most interesting blog post I’ve ever done, but, trust me, I’m going to search for “negligent misrepresentation” at least ten times.

 

 

 

Read The Rules. Know The Rules. Start with Tenn. R. Civ. P. 54.02

When I first started practicing law, my mentor was a procedure savant. He knew the Rules of Procedure inside and out. In turn, I eventually learned the Rules.

That’s my single biggest piece of advice for any litigation attorney: Know the Rules of Procedure. If you’re in state court, read the Tennessee Rules of Civil Procedure. Before you go to court, read that county’s Local Rules.

The key to success at anything is knowing the rules. Sports. Checkers. The practice of law. A strong, working knowledge of the rules of procedure puts you ahead of 85% of your fellow lawyers.

Recently, while reading a  Tennessee Court of Appeals opinion about final judgments and appeals, I was reminded of a lesson my old boss taught me about Tenn. R. Civ. P. 54.02.

Rule 54.02 applies in cases where are multiple parties and multiple claims for relief, but a party is able to resolve its claims as to part of the litigation. In that circumstance, Rule 54.02 allows the trial court deem the judgment as to that part of the case “final,” which means that the party’s appeal deadlines start to run and, more importantly, the plaintiff can proceed with collection on the judgment as to that party.

But, you don’t get Rule 54.02 relief unless you think to ask for it. Under the Rule, you have to (1) specifically request that the judgment be “final” and (2) use magic language by which the Court makes an “express determination that there is no just reason for delay” and an “express direction for the entry of judgment.”

The case I cite above is interesting, because the Judgment that was appealed included the Rule 54.02 magic language, but the Court of Appeals denied the appeal as premature, because there was still one loose end (the assessment of attorney fees). It’s interesting (and re-assuring) to see the appellate court look at substance over form.

Even though Rule 54.02 led this attorney astray, don’t forget to include that text in your Judgments. It’s most powerful when you have the chance to take a judgment against one liable party early in the case, but one of the other defendants shows up and contests his own liability. In that scenario, while you’re litigating the matter against one defendant, you can commence execution and collections on the other, without waiting until getting all the claims resolved.

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.

Attorneys Fees Can be Recovered in a Tennessee Lawsuit, but only if the contract or statute allows them

I always tell clients that Tennessee is a creditor friendly state, and it is. But, just because it’s fair to creditors, that doesn’t mean a Tennessee Court will give a plaintiff everything.

I’m talking today about attorney fees. The general rule in Tennessee is that, unless you have an agreement in writing that you are entitled to recover your attorney fees, a court will not award those fees to you.

Here’s why: Tennessee follows the “American Rule” on awarding attorney’s fees which states that “a party in a civil action may recover attorney fees only if: (1) a contractual or statutory provision creates a right to recover attorney fees; or (2) some other recognized exception” applies. Cracker Barrel Old Country Store, Inc. v. Epperson, 284 S.W.3d 303, 308 (Tenn. 2009).

The contract provision allowing attorney fees to be recovered has to be very specific. In the Cracker Barrel case, the contract at issue provided that the prevailing party should recover “all costs and expenses of any suit or proceeding.” The Tennessee Supreme Court held that this language was not specific enough to award attorney fees (instead, it allowed recovery of court costs and litigation expenses).

This is an important issue, as the ability to recover your expenses and costs as part of your action will be a big consideration in any decision to file a lawsuit. Lawyers are expensive. Keep that in mind on the front end, when you’re preparing a contract or agreement, and get very specific text allowing for recovery of attorney fees.