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.

Why Are Lawyers So Expensive?

A few nights ago, I suddenly woke up from a deep sleep at 3 a.m., and my mind instantly recalled some obscure procedural issue that I had overlooked on a case that was set for Bankruptcy Court at 9 a.m. that day.

This, law students, is what you have to look forward to.

Being a lawyer isn’t one of those “Hey, my shift ended at 5 p.m., so you need to call __________ to deal with that problem.”

In many cases, I take on a care and concern over my clients’ problems that is greater than my own clients’ cares and concerns over their problems.

I’ve wasted concerts, parties, movies, and spent countless hours of family time being physically present, but, on some level, worrying about my clients’ problems.

All that having been said, that’s Why are lawyers so expensive.

Side note, for the potential clients out there: don’t hire a lawyer unless they care this much.

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.”

Advice from a Creditor Rights Lawyer

My law firm doesn’t have associate attorneys. We’re all “Members,” meaning that the typical angry partner/terrified associate relationship doesn’t really exist.

That is great for many reasons, but it stinks for a few others. For instance, I don’t always have a set of hands ready, willing, and waiting to do my overflow legal work. Also, I don’t really have a mentee or protege.

At this point in my career, I really expected to have a mentee.

So, blog readers, over the next few weeks, I’ll be sharing my wisdom on the practice of law here.  Follow along if you’d like to learn from my 18 years of hassling debtors, opposing counsel, and court clerks.

It’s a Bird, It’s a Plane, It’s a Super Lawyer

I’m generally pretty skeptical of awards and law-honors. Except, you know, when I receive them.

Accordingly, I’m super proud to let you know that I’ve been named a Mid-South Super Lawyer for Creditor-Debtor Rights, Business Litigation, Banking, and Real Estate.

According to Super Lawyers, Mid-South Super Lawyers are selected through a multi-phased process, which includes independent research, peer nominations and peer evaluations. The list is produced by Super Lawyers, a national rating service that includes more than 70 practice areas.

They also name “Rising Stars,” which is an honor for younger attorneys who have the best years of their career ahead of them.

Honestly, while it’s great to receive any honor, I sort of which I still qualified for the young lawyer awards. Oh well. Up, up and away to the Courthouse.

 

Small Interpleader Actions are Allowed in General Sessions Court

A few years ago, I said that Interpleader lawsuits are the only times people like to hear from me. My lawyer marketing materials, literally, say “It’s bad news if you’re hearing from David Anthony.”

In that blog post, I talked about why interpleader lawsuits are good news. Well, sort of good news. I mean, it’s still a lawsuit and still a hassle to deal with.

Here’s a little bit better news. There’s a statute that allows a party to file an interpleader lawsuit in General Sessions Court, which means that the parties will: (a) get the money quicker; and (b) with less legal fees.

The statute, Tenn. Code Ann. § 16-15-731(a), provides in part that:

Notwithstanding any rule of court or any law to the contrary, actions in the nature of interpleader, in which the value of the money that is the subject of the action does not exceed the jurisdictional limit of the general sessions court, may be filed in general sessions court under this part. …

So, if the amount is less than $25,000, and the matter is filed in General Sessions Court, you should be really happy to hear from me.

How to Conduct a Sheriff’s Sale of Real Property in Tennessee: It Depends on Who You Ask

Many years ago, the Tennessee Bar Journal ran an article by Knoxville legal luminary Don Paine called “Practical Advice for Collecting a Judgment.”  Clearly, this article got my attention.

In it, Paine outlines how to obtain a judgment lien on real property and how to ultimately sell the property pursuant to that lien. His analysis begins and ends with Tenn. R. Civ. P. 69, which provides that a judgment lien creditor shall file a motion requesting that the court order a sale. In fact, Rule 69.07(4) specifically says “[a]s long as a judgment lien is effective, no levy is necessary”–just file a Motion.

Rule 67.04 provides a specific procedure for a Sheriff’s Sale of real property (i.e. 30 days advance notice; 3 total publications; distribution of proceeds).

But, elsewhere in Tennessee statutes, there’s a different procedure for sheriff’s execution sales of real property. Tenn. Code Ann. § 26-5-101 lays out its own set of rules and requirements, which are differ in minor ways to Rule 69 (i.e. 20 days advance notice).

And, having done my own Sheriff’s Sale earlier this summer, I chuckled when I saw Paine’s article. After I had a Rule 69.07 Motion granted and asked the Clerk to initiate the sale process, the Clerk and Master on my case ignored my Order Granting Motion for Sale, telling me, instead, I need to accomplish the sale by levy and execution.

Side note: One of the things that makes collections interesting is that you’re not just dealing with a Judge anymore, you’re dealing with a Clerk, who may have their own opinions about how things are done.

So, how do you reconcile these differing procedures? And, trust me, these mechanical / procedural issues come up all the time.

Paine’s answer is simple: Under Tenn. Code Ann. § 16-3-406, when a Rule is in conflict with any other law, the Rule prevails.

But, as a practical matter, try telling that to the Clerk, when they say “You need to file a Levy.”

On my sale, here’s what I did: I did both. I had an Order and then issued a Levy on the real property, pursuant to my Order. When the requirements differed, I used the procedure that complied with both.

Sometimes, being right is less important than getting the job done.

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!

Holding a Car Pursuant to a Mechanic’s Lien Doesn’t Violate the Automatic Stay

Generally, if you’re a creditor and you have possession of a bankrupt debtor’s possessions, you have to give it back when they file bankruptcy. But not always.

Today, I’m talking about mechanic’s liens.

As you’ll remember in Tennessee, Tenn. Code Ann. § 66-19-101 allows a mechanic to assert a lien for repairs performed on a vehicle, and, in order to preserve the super-priority perfection in the vehicle, the mechanic has to retain actual, physical possession of the car.

But, what about when the customer files bankruptcy, and the demand to turnover the vehicle comes from a Bankruptcy Attorney, alleging a violation of the automatic stay?

Bankruptcy Courts say that the mechanic can still hold on to the car.

Certain actions are excepted from the automatic stay, including “any act to perfect, or to maintain or continue the perfection of an interest in property to the extent that the trustee’s rights and powers are subject to such perfection under section 546(b)”  11 U.S.C.A. § 362(b)(3). Section 546(b) limits a trustee’s avoidance powers under 11 U.S.C.A. § 549 with respect to “the maintenance or continuation of perfection of an interest in property … [i]f a law … requires seizure of such property … to accomplish such perfection, or maintenance or continuation of perfection of an interest in property[.]” 11 U.S.C.A. § 546(b). Statutory liens such as mechanics liens fall within the scope of this exception.

That’s a lot of legal citations, so here’s the take away: if the repairman holds a statutory mechanics lien upon the vehicle for the repairs done, then the retention of the vehicle–even after the Bankruptcy Case is filed–does not violate the automatic stay.

In that case, the Debtor must either propose to pay the lien, fight it,  or give up the car. Good news for mechanics.

Get Your Law School Applications In: Welcome to the Profession

It’s that time of year when English, Philosophy, and History majors start wondering what they’re going to do after graduation.

If you’re thinking about going to law school, you’re welcome to read the entirety of this New York Times article, The Lawyer, the Addict,  on substance abuse in the legal profession.

Or, you can read just this part, under the heading, “Rewarded for Being Hostile.” After noting that lawyers “have the highest rate of depression of any occupational group in the country,” there’s this:

Yes, there are other stressful professions…Being a surgeon is stressful, for instance — but not in the same way. It would be like having another surgeon across the table from you trying to undo your operation. In law, you are financially rewarded for being hostile.

I love that image. I mean, I also hate it, as a lawyer who has to deal with lawyers all day long.

The law is a strange profession. Look at the ads in the Yellow Pages, and there they are: “Hostile”; “Aggressive”; “Take No Prisoners”; “Bulldog.”

Aggressive

Here is a law firm using, literally, an angry gorilla to advertise their services. (I found another one with a lawyer holding a ninja sword, but I didn’t post that.)

This isn’t the part where I say that I hate my job, but it’s a note that the legal profession is a strange one.

The next ten years will be interesting, as more of the “old school” attorneys retire and make way for the millennials, who, if we believe the news stories, value quality of life and collaboration. Maybe, we’ll see a decrease in this “law is war” mentality.

But, with a generation raised on social media snark, I wonder whether we’ll see a continuation of the broader cultural shift to a lack of civil behavior, particularly with the wide-spread use of e-mail communication as the primary means of lawyer to lawyer communication and long-distance / remote practice.

What I’m saying, in the end, is: Welcome to the Jungle, new lawyers.