Category: Litigation

New Court of Appeals Opinion Reminds Litigants to Plead Facts by Affidavit under Rule 56.06

Disclaimer: I read a lot of appellate opinions that might be, but aren’t always, relevant to something I’m working on. Sometimes, I’ll find a blurb on an issue of law that’s useful.

And, then, as you’ve seen before, I’ll post that blurb here, for my later use. (And, I guess, yours.)

I’ve just read yesterday’s opinion in Bank of America v. Calvin Dee Aycock, issued by the Tennessee Court of Appeals on a detainer action that followed an eviction. The pro se defendants lost in Shelby County General Sessions Court, and then appealed the possessory judgment to Circuit Court. The bank filed a Motion for Summary Judgment under Rule 56.

Ultimately, the Court noted the lee-way that pro se litigants get in proceedings, but the Court found their responses to the bank’s properly supported motion to be deficiency. In short, the defendants didn’t specify and demonstrate material facts in opposition to the bank’s motion.

The Court wrote that:

When a properly supported motion for summary judgment is made, “the nonmoving party ‘may not rest upon the mere allegations or denials of [its] pleading,’ but must respond, and by affidavits or one of the other means provided in [Rule 56 of the Tennessee Rules of Civil Procedure], ‘set forth specific facts’ at the summary judgment stage ‘showing that there is a genuine issue for trial.’” [Rye v. Women’s Care Center of Memphis, MPLLC, 477 S.W.3d 235, 265 (Tenn. 2015)] (quoting Tenn. R. Civ. P. 56.06). Summary judgment “shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Tenn. R. Civ. P. 56.04.

That’s the blurb.

When you oppose a Rule 56 motion for summary judgment, you have limited options in response to the moving party’s facts, under Tenn. R. Civ. P. 56.03. One of those is to “demonstrate that the fact is disputed.” Under Rule 56.06, that means you have to provide those facts via affidavit or some other admissible testimony.

Highlights from the Creditors Practice Annual Forum 2018: Stay Relief Violations

Last month, I taught a session at the Tennessee Bar Association’s Creditors Practice Annual Forum 2018.  My section was called “Litigating Stay Violations.”

The CLE was on September 26, 2018, so, sorry, you missed it. But, to get more mileage out of the materials I prepared, I’m going to post some of the info here.

First off, the automatic stay at 11 U.S.C. § 362 operates as a stay of most collection activity against the debtor in bankruptcy.

When the stay is violated, 11 U.S.C. § 362(k) comes into play, which provides in part that “an individual injured by any willful violation of a stay provided by this section shall recover actual damages, including costs and attorneys’ fees, and, in appropriate circumstances, may recover punitive damages.”

And, no, a violation doesn’t have to mean that the creditor had bad intent.

Actually, a willful violation of the automatic stay requires only that: (i) the creditor knew of the stay and (ii) acted intentionally in violation of the stay. TranSouth Financial Corp. v. Sharon (In re  Sharon), 234 B.R. 676, 687 (B.A.P. 6th Cir. 1999). “[P]roof of a specific intent to violate the stay” is not required, but instead only “an intentional violation by a party aware of the bankruptcy filing.” Id.

Basically, the debtor has to prove that the creditor had notice of the Bankruptcy and took intentional action that violated the stay. Long story short, it’s not a high bar to prove those factors.

Courts Revisit, and Affirm, Requirement of Possessory Bond in Eviction Appeals

Here’s a  quick reminder about appeals of detainer and eviction judgments in Tennessee.

Remember, a tenant who loses in General Sessions  has the right to appeal that detainer judgment. But, in order to retain the property, that tenant has to post a bond equal to one year’s rental value of the real property.

But, what if the tenant files an appeal and doesn’t post that giant bond (or otherwise find a dummy to sign off on the bond as surety)?

The Tennessee Supreme Court waded into these waters in an opinion from December 2013 and said that a detainer appeal without the “one year rent” bond is still an effective appeal, but it doesn’t help the defendant in any way in keeping the property.

Earlier in the summer, the Tennessee Court of Appeals issued another opinion on that issue. In that opinion, the Court noted that the appeal bond requirement to retain possession applies to appeals as noted under Tenn. Code Ann. § 29-18-130(b)(2), as well as petitions for writs of certiorari under Tenn. Code Ann. § 29-18-129.

This is an obscure part of the law, but lots of Courts are covering this ground and reaching the same conclusion.

Last note: If the tenant is only appealing the monetary part of the judgment, no possessory bond is needed to have an effective appeal.

If a Tennessee Plaintiff Fails to State a Valid Claim, a Defendant may be Awarded Attorney Fees

Way back in April 2011, I previewed a new law being considered by the Tennessee legislature, which would provide for recovery of attorney fees to a party who could quickly get its opponent’s lawsuit dismissed for failure to state a claim, notwithstanding the lack of a written contract between the parties that provided for that relief.

I guess this is old news at this point, but here’s the full citation.

As enacted in July 2012, the law can be found at Tenn. Code Ann. § 20-12-119(c)(1), which provides in part that:

Notwithstanding subsection (a) or (b), in a civil proceeding, where a trial court grants a motion to dismiss pursuant to Rule 12 of the Tennessee Rules of Civil Procedure for failure to state a claim upon which relief may be granted, the court shall award the party or parties against whom the dismissed claims were pending at the time the successful motion to dismiss was granted the costs and reasonable and necessary attorney’s fees incurred in the proceedings as a consequence of the dismissed claims by that party or parties. The awarded costs and fees shall be paid by the party or parties whose claim or claims were dismissed as a result of the granted motion to dismiss.

This, obviously, is a powerful tool to attack meritless claims that fail to state a cause of action under Tennessee law. But, a party seeking relief under this statute must act fast. The statute requires that the motion seeking this relief be filed within sixty (60) days after the moving party received service of the latest complaint, counter-complaint or cross-complaint in which that dismissed claim was made.

Beware of the 2018 Changes to the Bankruptcy Proof of Claim Bar Date

One of the biggest, most irreversible, mistakes a creditor lawyer can make is to miss the deadline for filing a Proof of Claim in Bankruptcy Court.

I’ve represented creditors who have done that, and I’ve researched excusable neglect, failure of notice, and every other legal theory out there, and, honestly, the creditor is toast.

So, my advice is: File your claims by the Claims Bar Date. Easy advice, right?

Well, a few days ago, I got a jolt of shock, remembering (the hard way) that they’ve changed the Bankruptcy rules related to filing of claims to shorten the deadline. I thought I had time, because the case was relatively new.

Effective December 1, 2017, in voluntary Chapter 7, 12 or 13 cases, pursuant to Federal Rule of Bankruptcy Procedure 3002(c), a proof of claim must be filed no later than 70 days after the bankruptcy filing date.

Under the prior version of Rule 3002(c), the creditor’s claim had to be filed no longer than 90 days after the first date set for the meeting of creditors. So, essentially, under the old law, you had about 130 days to file the Proof of Claim in bankruptcy cases.

In the past, my creditor and bank clients would receive a Notice of Bankruptcy Case Filing, process it internally, and then aim to refer the case to me in advance of the debtor’s Meeting of Creditors or, worst case, before the case was confirmed.

Now, I’m telling all my clients (and you, reader) file your claim or hire your attorney (me) as fast as possible.

 

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.”

Don’t Let Your Post-Foreclosure Rights Expire: Tenn. Code Ann. § 35-5-118(d) Imposes a Two Year Statute of Limitations on Deficiency Lawsuits

Last week, a local collections lawyer conceded, in open court, that collection cases rarely have interesting issues involved. This case was different, the lawyer argued, because it involved interpretation of Tenn. Code Ann. § 35-5-118(d), which has not yet been discussed in any Tennessee opinion.

This is the new foreclosure deficiency statute, and I’ve dealt with this law a few different times. Here’s a blog post about the first judicial opinion defining what constitutes a reasonable bid price at foreclosure under the statute.

I’ve also noted that the statute shortens the statute of limitations on pursuing post-foreclosure deficiency lawsuits. Specifically, the statute says:

(d)(1) Any action for a deficiency judgment under this section shall be brought not later than the earlier of:

(A) Two (2) years after the date of the trustee’s or foreclosure sale, exclusive of any period of time in which a petition for bankruptcy is pending; or

(B) The time for enforcing the indebtedness as provided for under §§ 28-1-102 and 28-2-111.

So, to collect your debt after a foreclosure, you have to act fast in Tennessee. While two years doesn’t sound like a short time frame, it can be, where the creditor spends time on eviction, selling the property, or even selling the deficiency debt to a third party.

The statute has a September 1, 2010 effective date, so the courts may still be dealing with deficiencies from both the pre-statute and post-statute time periods.

Always be on the look-out for this issue. In the “interesting” case that I mentioned above, the foreclosure occurred in February 2011, with the lawsuit filed in February 2014. In response to this issue, Plaintiff’s counsel confidently cited the general six year statute of limitations on breach of contracts (Tenn. Code Ann. § 28-3-109). The Court rightfully held that the more specific timelines of the foreclosure deficiency statute controlled and dismissed the action.

Who says collection cases aren’t interesting? We made law that day!

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.