Service of Process via Registered Agents can be Hard, where There is no Registered Agent

As strange as it seems, but some businesses go to great lengths to set up a proper corporate entity (i.e. a corporation, LLC, etc.) for their business, but they don’t appoint a registered agent for process.

As you all know, a corporate entity must designate a person or entity to serve as a registered agent (i.e. to provide a public “face”) for service of process.

Before filing any lawsuits, I’ll research a corporation on the Tennessee Secretary of State business information search to get the name of its registered agent (i.e. the person/entity that I have to serve with service of process), and they simply don’t have one listed (or they just have the corporate name listed).

This may be dumb, or it may be dumb like a fox. I mean, if they don’t list an agent to accept service of legal documents, then is there a chance that plaintiffs simply can’t serve legal documents on them?

The short answer is “Of course not.” The longer answer is at
Tenn. Code Ann. § 48-15-104 (b), which provides:

(b) Whenever a domestic or foreign corporation authorized to do business in this state fails to appoint or maintain a registered agent in this state, whenever its registered agent cannot be found with reasonable diligence, whenever a foreign corporation shall transact business or conduct affairs in this state without first procuring a certificate of authority to do so from the secretary of state, or whenever the certificate of authority of a foreign corporation shall have been withdrawn or revoked, then the secretary of state shall be an agent of such corporation upon whom any such process, notice or demand may be served.

So, in that situation, you serve the Secretary of State. In the past, what I’ve frequently done is serve the managing corporate actor, such as the president, owner, or other suitable person in a management capacity. Per
Tenn. Code Ann. § 48-15-104 (d), that appears to also be allowed (that statute provides that “[t]his section does not prescribe the only means, or necessarily the required means, of serving a corporation.”

Take Care in Drafting Proposed Orders: Otherwise, You’ll Have to Go Back to Court

Nothing beats a legal victory that summarily wipes out and dismisses all of the other side’s claims and causes of action as a matter of law, under Rule 56, right? But, don’t be too quick to draft your proposed order and leave out the critical details.

My advice to the victor is to make sure that you get your judge to clearly articulate his or her ruling on the record or in open court (which you’ll transcribe with your notes or even record with your i-phone). Then, if you’re preparing the Order, be sure to include those specific findings of fact and detailed conclusions of law in your Order.

Otherwise, you’ll be faced with a situation similar to what the Tennessee Court of Appeals was faced with in this opinion issued yesterday, in Bertuccelli v. Haehner, E2017-02068-COA-R3-CV, (Tenn. App. Nov. 28, 2018).

In that case, the trial court’s summary judgment and final order simply stated that defendant’s “supplemental motion for summary judgment and motion for summary judgment are hereby granted and thus all claims and causes of action set forth in the complaint are hereby dismissed with prejudice.” There were no findings of fact or conclusions of law. Just that.

As a result, the Court of Appeals wrote:

there is nothing in the trial court’s “final order” that explains its decision to
grant Appellees’ motion for summary judgment as to all claims and causes, and the order does not state the legal grounds for the grant of such summary judgment. … The trial court does not recite any evidence or argument it considered in making the decision to grant the final order on summary judgment, and, therefore, fails to comply with Rule 56.04. Accordingly, “[w]e cannot proceed with a review, speculating on the legal theories upon which the trial court may have ruled and the legal conclusions the trial court may have made.” Potter’s Shopping Ctr., Inc. v. Szekely, 461 S.W.3d 68, 72 (Tenn. Ct. App. 2014) (quoting Winn 2010 WL 2265451, at *6).

So, again, if you want your big victory to stand up to appellate review, put some effort into your proposed Orders. When drafting your proposed Orders, be sure to clearly state the grounds for the judgment.

 

 

 

New Court of Appeals Case Shows that Courts Will Use Common Sense in Construing a Contract

In this new Nashville we live in, landlords are motivated more than ever to get out of old leases, so that they can get into new leases for the astronomical “new Nashville” rental rates.

Or, at least, that’s what some tenants argue when their landlords assert a breach claim related to nominal  or technical breaches under a lease.

Based on a ruling filed this week by the Tennessee Court of Appeals, a Tennessee Chancery Court will consider whether a breach is a “material breach” before allowing the landlord to proceed.

That case is Bailey Cooper, et. al. v. Pete Patel, W201702319COAR3CV, 2018 WL 6068856 (Tenn. App. Nov. 19, 2018), and the opinion is a useful reminder that a court will apply the letter of the law, as well as common sense, in construing a lease.

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.