Last week, I had to go to the Davidson County Courthouse to file some garnishment pleadings. With the adoption of e-filing and suspension of in-person court proceedings, filing garnishments is really the only reason I set foot in the building.
Once upon a time–well, about a year ago–I’d spend nearly every Friday morning there, on the fourth floor, checking in on all of the Chancery Court dockets.
Some days, I’d have a case in every courtroom, carefully timing my arrivals so that I could cover all four. On other days, I might just have one case, but I’d linger and roam the halls to see who was there and what cases they had. It was a great way to catch up with other lawyers, talk about our cases, watch interesting hearings, observe how the judges handled issues, and, really, just stay connected to what was going on (i.e. gossip).
But, last week, it was so strange, to be back in that building and it all be so quiet.
In fact, after I filed my pleadings in Chancery Court, I roamed the building, hoping to find a familiar face. Maybe somebody had an emergency injunction hearing. Or a custody battle. It would have been nice, honestly, to see another lawyer and simply say “This is really weird, isn’t it? How is your office handling all this?”
So, yes, please invent a geography-based App that tracks other lawyers and lets me know when they’re in the courthouse arguing interesting cases. Maybe include features that tell me how far away they are, what courtroom they’re in, and what legal issue they are arguing.
I miss the courthouse and seeing all my friends.
That’s one of the most common things I’ve heard from other lawyers during all of this. Back in July, a local bankruptcy lawyer said to me on the phone “I miss seeing everybody on Tuesdays.”
It’s even doubly strange to not see co-workers. Before I left Bone McAllester, the legal assistant outside my office asked me “Where will everybody go to ask their legal questions?” During my time there, my office tended to be the place where lost lawyers came looking for answers to their strangest and most obscure legal questions.
I didn’t always have the answers, but it was always fun talking through the issues and coming up with a strategy–something–to get their case moving forward.
Along with all the terrible other aspects, COVID has been isolating, especially in a profession that values civility, interaction, and communication. And, in a profession that, on its worst day, weaponizes incivility, hostility, and paranoia–both inside a firm and in the bar–the value of face-to-face interaction can’t be overstated.
So, when I say I miss seeing lawyers, I’m not just talking about the bar association happy hours or the networking mixers.
I’m not just talking about the spontaneity of running into that lawyer you haven’t seen in 3 years, or gossiping about how Lawyer X was taking her practice group to Law Firm Y, or just cornering a lawyer in court to run a weird legal issue past them.
I’m also talking about the value of sitting down in court next to your opposing counsel, who maybe sends you those e-mails with a tone that’s a bit too sharp, and seeing that he’s not that bad and maybe he just hits “send” before re-reading his e-mails.
Judgment enforcement is automatically stayed for thirty days after entry pursuant to Tenn. R. Civ. P. 62.01. But, here’s the key: The filing of an appeal and posting that initial “cost bond” do not automatically stay enforcement of a creditor’s rights under a judgment.
You’ve got a valid appeal, but you don’t have any stay on enforcement.
In order to obtain a stay of collections after the appeal is filed, the appellant must file a motion with the trial court. Ultimately, this is done by filing a “stay bond,” but, until the trial court grants such a motion and approves the amount of the bond, there is no stay of judgment enforcement. See Tenn. R. Civ. P. 62.04. Tenn. R. Civ. P. 62.05 requires that the bond be in an amount sufficient to pay “the judgment in full, interest, damages for delay, and costs on appeal.”
In short, just filing an appeal and posting a cost bond does not stay the enforcement of a judgment. Bank levies, wage garnishments, all of that can still happen.
And, if you’re a litigant or attorney who doesn’t understand this issue, then there’s a good chance that you’re in for an unpleasant surprise during your appeal. Don’t be that lawyer.
My plan had been to throw all of this stuff away, but I just couldn’t. Instead, I strolled down memory lane, looking at all the faces of the people who I’d assumed would be part of my professional life forever, as opposing counsel, judges, and law partners.
Twenty years ago, though, I looked at those faces with less sentimentality. Back then, I looked at those people and their prestigious backgrounds, mainly, as competition. Competition for grades. For law review. Moot Court. Summer Jobs. Clerkships. Associate positions.
Lawyers, do you remember how much you agonized over your first semester 1L law school grades? I mean, it felt like everything in your life depended on Criminal Law, Contracts, Civil Procedure, Legal Writing, and Torts.
Law school grades just absolutely consumed our lives.
Based on what I’m seeing this week on Twitter, today’s law students are still freaking out.
What a stressful time. It definitely was for me.
I don’t have any lawyers in my family. I was the first generation in my family to go to college. My mother was a grocery store check-out clerk at my hometown Piggly Wiggly, and my dad was an assembly line worker at an elevator factory.
If our family ever had to deal with lawyers, well, that wasn’t something we would have talked about at the dinner table. If we had, it probably would have been very bad news.
Even though I got a full scholarship to college, my parents still didn’t understand why I would go to college, when I was smart and could have, otherwise, just gotten a job after high school. You can imagine their confusion when, in college, I studied English Literature (19th century American writers were my specialty).
When I graduated, I went to law school because, for me, college wasn’t just an education–it was a path to a profession. A master’s degree in literature wasn’t that path. I needed a path that ended with good pay.
My success in the English Department, though, didn’t fully prepare me for a legal education. When I arrived at the law school campus, other than knowing that speeding and murder were against the law, I didn’t know much–if anything else–about the law.
When they handed me that Lawyers of the Future during orientation, all I saw were the faces of the people who were going to do better than I was.
That first semester was harder for me than I expected. The transition from William James’ philosophical texts to federal civil procedure was a big jump. About a month in, I seriously considered quitting law school and taking the GRE for grad school. Not much in that first semester made sense to me.
So, when they posted those first year grades on the wall, I was a little surprised to see that my first year grades ended up being pretty much average. In fact, I was sort of relieved to have achieved “average.” Not bad enough to chase me away to the English department; good enough to keep on with law school.
But, in the hyper-competitive world of law school, “average” doesn’t get you any on-campus interviews. And none of my classmates seemed excited to get average grades.
The grades you make in your first semester feel like the only objective measure of you as a law student. They will be, if that’s all you have to offer. If you are interviewing at a big law firm and they don’t know anything else about you, then, yes, grades are the only thing that matter.
It’s your task to find other ways to show your potential. You can volunteer at legal clinics. You can get active in a law student organization. You can show sincere interest to an area of law far beyond making an “A” in the class. You can attend bar association CLE for free and meet lawyers who practice law in the areas you hope to work in.
As a lawyer with 20 years experience who is always looking for prospective hires and mentees, law school grades are part of the conversation, but I’m generally looking for more. I’m looking for hustle, drive, commitment, and fuerte.
Great grades are just one of the many ways to tell if a student is going to be a good lawyer. If your grades don’t show it, then you need to figure out how else to show it.
In the real world, your grades help get you in the door, but your success depends on everything else.
For me, my one shining grade was Criminal Law. I made an A in it. (Years of watching Law and Order paid off.)
For my summer clerkship, I networked and cajoled my way into a $4.25 an hour clerkship with the Shelby County District Attorney’s Office, where I worked my tail off. It led to a job offer a few years later, which I didn’t take (that’s a story for another day).
But that summer also showed me that I belonged. That I could do this. That I wasn’t average.
That I was going to be a very good lawyer.
In the end, I got a little lucky too.
I ended up getting the hang of law school that second semester. Some of the things that made no sense to me at first started to click.
Don’t get me wrong, I didn’t turn into Elena Kagan overnight (spoiler alert: She made a single B- and then overcame that by making all As). (Side note, geesh, New York Times, thanks for the encouragement.) But, I did make Dean’s List second semester. And every semester after that.
In the end, that first semester taught me that there’s so much more to my eventual success than grades. Grades were big, but they weren’t everything.
Doing good, real work in the legal profession mattered. Impressing practicing lawyers with my work and passion, that mattered just as much as my transcript.
A few years ago, a professional reference described a potential hire to me as “an adult.” Well, of course, the attorney is an adult, but what he was suggesting was that she was responsible, trust-worthy, mature. And that really spoke to me.
Because, no matter how good your grades are, you’ll be a terrible hire (for me) if you aren’t those other things.
If you are all those other things that go into “adult,” honestly, I may never ask you about your grades.
The hardest part about being disappointed with law school grades was the secrecy. Back then, they’d assign you a random number, and, when the grades were publicly posted on the wall, you’d find your grade in a class via your anonymous number.
Nobody knew anybody else’s grades, which, in a way, created its own paranoia and isolation. Nobody talked about the disappointment. I never told anybody that I was considering dropping out of law school. If other people were scared, they didn’t tell me.
So, if you’ve found this post by googling “first semester law school bad grades,” I hope something I’ve said helps. If I can offer advice or answer any questions, feel free to email me.
First year, first semester law school grades only matter if you let them define you.
So, with that grain of salt, here are my predictions for 2021:
The Bankruptcies are coming. Maybe in February, but maybe not. All the local bankruptcy lawyers have been confused by the lack of new filings.
The reasoning behind my analysis was partly correct, though: The stay on evictions and in-person court proceedings (coupled with a general reluctance by banks to attract negative attention through aggressive collections) has kept direct pressure off many consumer debtors.
And, strangely, the discovery of the coronavirus vaccine will lead to more filings. But, in May, I was just more optimistic about the timing:
As strange as it sounds, it’s likely that bankruptcy filings will not spike until the economy starts to recover, when businesses start to reopen and people begin to go back to work. That’ll be when people can stop worrying about survival and start worrying about digging themselves out a financial hole.
I stand by this prediction. Even in a typical “economic boom” year, the filings were always steady (and higher than the national average) in Nashville; with what our economy went through in 2020, we would have reasonably expected double the filings.
The financial and other relief we saw in 2021 didn’t offer cures or solutions; instead, they only delayed the inevitable (which was still a good thing for borrowers). But, having said that, all of those cases will get filed at some point in 2021. I’m just done guessing “when.”
Note: This reasoning also applies to divorce filings, which are way down.
The Nashville real estate market will continue to grow. I’ll leave the stories about all the new companies and people moving into the city in record numbers for the Nashville Post.
Instead, for this post, I’ll tell you about how my foreclosures over the past 6 months compare to my sales during the Great Recession.
Back in 2009, I’d get zero calls on my pending foreclosure sales. Inevitably, nobody would show up at the sale, and my bank client would be the high-bidder, with a new problem to deal with in their REO department.
In the last six months, though, I’ve been deluged with calls. Then, I’ll have 6-7 people show up at the sales. And, in the last six months, a third party buyer has been the winning bidder at every single one of my foreclosures.
For 2021, there’s enough money in town to keep the highs-high and to keep the lows from falling anywhere near the bottom.
(As an aside, I hate this for our city and our most at-risk residents, and I write all this in a way that can acknowledge how big and grand the flames are, even though it’s my house burning down.)
Nashville Commercial Real Estate. As a lawyer who recently started his own firm and who has not signed a long-term (or any other sort of lease), I’ve been waiting patiently for the economic crisis to hit the CRE market.
Part of that is timing. Not many projects came online over the past 4-6 months and, of those, many were fully (or mostly) leased. The other part of that is the amount of new money surging into Nashville from all over the country (see above), and, for most existing businesses, a sincere reluctance to change how they work. In short, people still want big, shiny office space.
At worst, I think 2020 and early-2021 will be a blip on the CRE profit-loss statement, but it will not bring any fundamental or long-term impact on the Nashville market.
We’re seeing this in the commercial litigation realm. In March and April, we all predicted dozens of commercial landlord eviction and debt collection lawsuits, but, aside from a few noteworthy cases here and there, there just haven’t been that many COVID-related lawsuits filed.
All of this is a developing story, but these are my totally watered-down predictions as we start our first business day of 2021.
But, what about other types of long-term service contracts? Is the service-provider entitled to compensation for both past-due amounts and future contract payments coming due, regardless of whether they can find a “replacement” customer?
This exact issue is presented in three new lawsuits that were filed in mid-December in Davidson County. In the lawsuits, a commercial linen company (i.e. napkins, aprons, bar towels, mats, etc.) sued three Nashville restaurants for breach of the linen rental agreement. In all, the actual past due amount wasn’t that much–instead, the lions share of the requested judgment was for damages for the remaining months of the contract, which this particular agreement. Under this agreement, the provider could recover “60% of the weekly service charge for the unexpired term” as its future damages.
For instance, in the lawsuit against Woolworths on 5th, the restaurant had an actual overdue balance of just $1,430.11. But, after applying the damages clause, the rental company is asking for a total of $77,440.60, which includes 60% of the not-yet-due amounts owed over the 60 month service agreement.
This seems a bit unfair, right?
These types of damages are known as “liquidated damages.” When the actual amount of damages under a contract are uncertain and difficult to calculate, these provisions are agreed to by the parties at the time the contract is signed to provide certainty and establish a method for calculating those damages.
With real estate, it’s really easy to calculate damages —how long was the property vacant after the breach? With longer-term service contracts, it’s more difficult–what expenses and costs did the service provider not incur by not having to provide the linen?
In Tennessee, a liquidated damages clause will be generally be allowed unless the challenging party proves that the provision is really just a penalty and/or designed to punish the breaching party. Tennessee law does not favor penalties, and, if it’s a close call, Tennessee Courts will be inclined to disallow the penalty. Testerman v. Home Beneficial Life Insurance Co., 524 S.W.2d 664 (Tenn.App.1974). In short, a liquidated damages provision should be somewhat reasonable in relation to the possible injury suffered and not unconscionable or excessive.
More recent Tennessee cases tend to favor allowing parties to a contract the freedom to agree to whatever business deal they want, even it’s an awful deal with a fairly onerous damages provision. See Guiliano v. Cleo, Inc., 995 S.W.2d 88, 101 (Tenn.,1999). “‘The bargain may be an unfortunate one for the delinquent party, [but] it is not the duty of courts of common law to relieve parties from the consequences of their own improvidence.’” Id.
This will be interesting to watch. Sure, damages at 60% of the remaining term sounds really high, but maybe that’s representative of the expected profits in the linen rental industry. If it’s close, a Tennessee court will allow this.
Some background: A confession of judgment is a provision in a loan or an entirely separate loan document that grants, at the time the loan is signed, the lender an unequivocal right to take a judgment for the debt under that note in the event of a breach, sometimes without the right to notice of the suit, a hearing, or any defenses. In short, when you sign the loan documents, you also sign an agreed judgment for the unpaid debt in advance. This is a device that is sometimes used by predatory lenders–lenders “of last resort,” who serve desperate borrowers and expect the loans to go bad.
Tennessee law expressly prohibits judgments based on confessions of judgment. Tenn. Code Ann. § 25-2-101(a) says:
Any power of attorney or authority to confess judgment which is given before an action is instituted and before the service of process in such action, is declared void; and any judgment based on such power of attorney or authority is likewise declared void.
Couldn’t be more clear, right? Well, what happens when a New York creditor takes a judgment in New York (where it’s valid) based on a confession of judgment and asks a Tennessee court (where it’s not) to recognize it as valid and enforceable, under the Uniform Enforcement of Foreign Judgments Act?
Doesn’t the statute say “any judgment” based on a confession of judgment is “declared void”?
The opinion provides a great background on defenses to the UEFJA and goes on to note that, under the Full Faith and Credit Clause of the United States Constitution, every state must respect the judgments and sovereignty of its sister states, and that a state would be “reluctant” to question another state’s judgments on public policy concerns and only after the defendant satisfies a “stern and heavy burden.”
In order to deny another state’s judgment, then, it’s got to be a really, really big deal, and the words the Court used was “repugnant to the Federal Constitution.”
When discussing a judgment based on a confession of judgment or cognovit note, the Tennessee courts will look to whether the loan document “denies the debtor due process of law.” A question is whether there was a “voluntary and knowing waiver of the fundamental due process notice and a hearing.”
In the end, the Court wrote that “a foreign money judgment resulting from a cognovit note or clause that was entered into with a knowing, voluntary waiver of the right to notice and an opportunity to be heard must enjoy full faith and credit in Tennessee.” So, a small-print provision hidden in a loan note will not satisfy this test, but a separate document that clearly and prominent states the purpose of the document and the rights being waived will suffice.
Again, to be clear, this doesn’t mean that the Tennessee court will enter a judgment based on the out-of-state confession of judgment. Tenn. Code Ann. § 25-2-101(a) doesn’t allow that.
Instead, this case says that, if a creditor has a confession of judgment and is smart, the creditor will take a judgment in the other state (where these types of judgments are allowed), and then hire a Tennessee creditors rights attorney to enroll and domesticate this foreign judgment.
In a post from last month, I mentioned that, when a commercial tenant defaults and leaves a leased property, the landlord is faced with a hard decision: File the lawsuit for unpaid rent now, or do you wait 6-9 months until a replacement tenant can be found?
One thing we know for sure: A landlord can’t just file a lawsuit for all the rent due for the remainder of the term. Instead, the landlord has a duty to mitigate its losses, which means–in this situation–to try to find a replacement tenant.
I represent a lot of commercial landlords, and, when there’s a payment default and they want to evict a tenant, there’s an early strategy question that they all face: (1) Do we sue for possession only; or (2) Do we sue for money and unpaid rent (through the date of the court hearing)?
It’s a nuanced question. Most landlords choose # 2, especially since detainer lawsuits are filed in General Sessions Court and, due to a little-known exception, you can take a huge money judgment in “small” claims court.
But, they’ll generally say, what about the unpaid rent for time periods after we get a judgment and evict them from the property? That’s a second lawsuit. Isn’t there a rule against two lawsuits on the same issues?
Earlier this week, a lawsuit was filed in Davidson County Chancery Court by a landlord to collect $130,697.44 in unpaid rent from a Romano’s Macaroni Grill located in Rutherford County. There was no allegation that any of the facts of the case occurred in Davidson County or that the parties contractually agreed that the venue for any disputes would be in Nashville.
Should this lawsuit be dismissed for improper venue, where the business, all operations, and the leased premises were all in Rutherford County?
Not necessarily. Here’s why: All of the Defendants use corporate registered agents whose offices are based in Davidson County, and that subjects them to venue in Davidson County.
When analyzing venue for causes of action under Tenn. Code Ann. § 20-4-101(a), a defendant can be “found” in “any county wherein it has an office for the furtherance of its business activities.”
Tennessee courts have said that a registered agent’s address is an office for the furtherance of the defendant’s business activities, and it doesn’t matter that the defendant doesn’t actually operate a business out of that address or doesn’t otherwise have any other connection to that county. See Fed. Exp. v. The Am. Bicycle Grp., LLC, No. E200701483COAR9CV, 2008 WL 565687, at *3 (Tenn. Ct. App. Mar. 4, 2008).
Maybe this isn’t a big deal–most of these corporate agents are located in Davidson County, and Nashville uniformly has very strong courts and judges.
But, Tennessee is a very, very long state. It’s definitely something to keep in mind when you’re a company in Greenville or Memphis, and you’re selecting a registered agent.
But, despite being in payment default, The Palm went on the offensive and premptively filed the first lawsuit, arguing that the landlord’s (i.e. the Nashville Hilton) own shut-down in response to COVID was a breach that excused The Palm’s payment of its rent.
At the time, I marveled at the audacity of the tenant in making the first move. Today, however, I’ve discovered that this dispute has gone absolutely bonkers, and it’s has been (or is being) litigated in nearly every trial court in Davidson County.
First, there was the Chancery Court lawsuit filed by The Palm on July 9, 2020.
Then, after the Hilton declared The Palm to be in breach on July 13, 2020, the Hilton filed a Davidson County General Sessions evictions lawsuit on July 14, 2020.
In response, The Palm filed a Notice of Removal of the detainer action to the District Court for the Middle District of Tennessee on August 7, 2020. This prompted the Hilton to file a notice of voluntary dismissal on August 10, 2020.
Then, the Hilton filed a second detainer action in General Sessions Court on August 13, 2020. On August 26, 2020, The Palm filed an Application for Removal of the matter to Davidson County Circuit Court, which was granted.
So, what courts did they miss? Criminal Court? Bankruptcy? Environmental Court?
This dispute involves two mega-law firms, so it’s fun to see big-time lawyers fighting over eviction issues in small claims court.
Still, though, I have to wonder if the Hilton could have opposed The Palm’s request to remove the matter to Circuit Court, which was–possibly–an attempt to get the matter moved to the slower-paced Circuit Court, but without having to post the detainer possessory bond pursuant to Tenn. Code Ann. § 29-18-130(b)(2), which requires a tenant that loses in sessions court to post one year’s worth of rent in order to remain in possession of the property.
Sessions Judges don’t like to waste valuable docket time on complex commercial matters, so they are generally happy to allow complicated, discovery-heavy trials to be removed to Circuit Court pursuant to Tenn. Code Ann. § 16-15-732.
But, at the same time, it’s a move that Sessions judges see all the time, and the Judges will sometimes ask tenant’s counsel “Is the rent paid current?” and, depending on the answer, grant a judgment for possession, and tell the tenant’s counsel to appeal and sort it out in Circuit Court.
I don’t want to ruin the developing story, so I will remain quiet about the Landlord’s options in Circuit Court to force payment of rent. But they have a few.
Whatever direction this goes, in the age of COVID, this qualifies as entertainment (for law nerds).