The Tennessee Court of Appeals recently tackled an interesting issue of when a client “discovers” a lawyer’s malpractice.

The opinion is Mark Thomas v. Richard Myers, No. W2016-02581-COA-R3-CV (Tenn. Ct. Apps., Oct. 19, 2017).

The most interesting aspect of the case is that the lawyer’s defense, basically, admitted malpractice:

Q: And you were aware that you had lost, for lack of a better term, big
time, a lot of money.
A: A great deal of money, yes.
Q: And you were aware that the evaluation by Richard Myers was
wrong.
A: Yes.
Q: And you were aware that Richard Myers’ deceptions as to what a
great case this was was wrong.
A: Yes. Yes.
Q: And you were aware that Richard Myers’ negligence and
misrepresenting to you what the law was, what the facts could be
presented as, and your great position in this lawsuit was wrong.
A: Yes.
Q: And you were aware on that day that he was not being truthful about
the odds of winning.
A: Yes.
Q: And you were aware on the day that whatever risk outline he had
given you, be it little, small, or none, was wrong, because the reality
was you’d had a judgment rendered against you, so you knew he had
misled you and deceived you.

A: Yes.

But, as a legal matter, the defense relied on the “discovery rule” to argue that, despite the lawyer “explaining away the loss” and saying that they’d ultimately win on appeal, the client “discovered” that he suffered an injury on the day that the adverse judgment was rendered at the trial court.

So, again, despite continued assurances from the lawyer that they’d win on appeal, the one-year statute of limitations for malpractice actions starts on the day of the adverse judgment. “At that point, the client is aware of the fact of injury.” Yikes.

This is an interesting decision, that clients will hate, but lawyers will love.

Judgment debtors with non-traditional employment are always a headache to collect from. This includes self-employed people, independent contractors, and people who work for tips.

Here, I’m talking about waiters, valets, and anybody else who may earn a nominal hourly rate, but the bulk of their income comes from tips or gratuities. How do you garnish $5 in cash handed to a valet?

In Tennessee, you can’t. The Tennessee Court of Appeals recently considered the issue of whether tips reported by the Garnishee’s employees are to be included in the calculation of disposable earnings for the purposes of garnishment in determining the withholding under the garnishment statute, Tenn.Code Ann. § 26–2–106.

This case was Erlanger Med. Ctr. v. Strong, 382 S.W.3d 349, 351 (Tenn. Ct. App. 2012). In that case, the judgment debtor was a server at Shoney’s.  In deciding whether tips could be garnished, the Court looked at how “wages” was defined in Tenn.Code Ann. § 26–2–102 (which suggested that tips are included), but the Court went on to note that federal law excludes tips from garnishment because tips “do  not pass to the employer.”

This makes sense, because how can an employer withhold 25% of funds that it never has control over?

As a result, a judgment debtor whose primary income comes from tips and gratuities (that do not pass through the employer’s hands) may be able to escape garnishment.

But, where the tips are paid via the employer, there’s still a chance that those funds can be captured. Since at least 75% of restaurant transactions are paid via credit card (including payment of tips), there’s a strong argument that such tips could be garnished if the employer disbursed those tips in the form of a paycheck.

On September 28, 2016, some of the greatest creditor minds in Nashville will gather for the Creditors Practice Annual Forum 2016. Yes, I’m talking about foreclosures again.

Topics to be covered include:

• Perfection and Enforcement of Liens for Prime and Remote Contractors
• Non-Judicial Foreclosures in Tennessee
• Ethical Issues Related to the Consumer Financial Protection Bureau
• TBA Special Committee on the Evolving Legal Market Report

I’ll be presenting the Foreclosures portion of the seminar, which will give a one-hour overview all the laws, defenses, and issues facing lenders conducting foreclosures in Tennessee.

This should be a good seminar, so be sure to sign up to attend the live presentation, or use some of your free CLE credits from your Tennessee Bar Association membership to watch it online.

Sometimes, legal concepts have names that make no sense. “Qui Tam” Actions. “Quiet Title” Complaints. “Res Judicata.” “Equitable Subrogation.”

In other cases, the concepts have straight-forward names. Like “prior suit pending,” which is a concept that I’ve never specifically researched, but always felt like I understood–based solely on its name.

Yesterday, the Tennessee Court of Appeals issued an opinion in Rafia Khan v. Regions Bank, et. al., No. E2015-01891-COA-R3-CV, May 25, 2016,  that explains the elements of this concept.

And, you’ll be pleased to know, it’s as simple as it sounds: “The doctrine of prior suit pending is well-established in Tennessee law and provides that a lawsuit is subject to dismissal where a prior lawsuit involves the same parties and subject matter.” See West v. Vought Aircraft Indus., Inc., 256 S.W.3d 618, 620 (Tenn. 2008).

There are four elements:

1. the lawsuits must involve identical subject matter;
2. the lawsuits must be between the same parties;
3. the former lawsuit must be pending in a court having subject matter jurisdiction over the dispute; and
4. the former lawsuit must be pending in a court having personal jurisdiction over the parties.

When considering whether the subject matter is the same, the Court wrote, this analysis “applies not only to issues actually raised in the first suit, but also to issues that could have been raised regarding the same subject matter.”

In short, the defense is as simple as it sounds: Where a prior lawsuit exists on the same factual and legal issues, a litigant may be able to dismiss any subsequent lawsuit on those same issues (or closely related issues that could have been raised).

Keep in mind, however, that lawyers tend to give simple concepts complex names, but this one must have just slipped past.