15 Day Continuance Limit on Detainer Actions

A few weeks ago, I talked about detainer warrants and how fast a landlord can get an eviction hearing set (a minimum of six days from service of process).

A caveat, however, is that many courts will allow continuances, especially when a plaintiff has set a hearing on such short notice. Some courts, like Davidson County, have Local Rules that expressly allow some continuances.

But, the ability to get a continuance in detainer actions isn’t absolute. Tenn. Code Ann. § 29-18-118 provides that the “general sessions judge may, at the request of either party, and on good reason being assigned, postpone the trial to any time not exceeding fifteen (15) days.”

In eviction actions, a landlord isn’t getting paid, so the delay costs the landlord both time and money.

Detainer Warrants: When can I get them Out?

Tennessee’s General Sessions Courts provide the fastest justice in the state. There, a plaintiff can file a lawsuit and, potentially, have a judgment in as early as 2-3 weeks.

No plaintiffs, however, are as eager to get to court than landlords. A common question I get is: What is the quickest court date a landlord can get?

The answer is in Tenn. Code Ann. § 29-18-117, which provides: “The officer serving the warrant shall notify the defendant of the time and place of trial, the time not to be less than six (6) days from the date of service.”

So, in order to have a valid eviction lawsuit, you have to provide–at a minimum–six days notice from the date of service of process.

Note:  This timeline is for commercial property evictions. Residential evictions are governed by the Uniform Residential Landlord and Tenant Act , and that is it’s own blog post.

 

 

Post-Judgment Interest Rates in Tennessee Have Finally Increased (by .25%)

Back in July 2012, the Tennessee legislature passed a new “post-judgment” interest statute, which can be found at Tenn. Code Ann. § 47-14-121. As I said back then, it was a big change: Instead of a blanket “10%” rate, Tennessee would be using a variable rate, tied to the “formula rate published by the commissioner of financial institutions.”

Long story short: I hate it when the law replaces something simple with something complicated.

Since the enactment of the statute, the post-judgment interest rate has been 5.25%, until January 1, 2016, when it jumped up to 5.5%.

The sky has not yet fallen, however, like I said it would. My biggest concern was: “[t]here appears to be an obligation to research and modify the rate every six months. Payoffs just got a lot more difficult.” I don’t like math.

After a few years with the statute, I’m of the opinion that the interest rate on a judgment is set at the date of the judgment and then doesn’t change. As a result, there’s no need to track the ups and downs of the statutory rate.

But, to be entirely safe, I always recite the exact post-judgment rate in effect at the time of my judgment in my judgment, to save any confusion and subsequent research.

Erin Andrews Judgment May Not be Easy to Collect Against Hotel Defendants

After a stalker took authorized “peephole” footage in her Nashville hotel room, Erin Andrews filed a lawsuit in Nashville in 2011 against the the stalker and the hotel entities for invasion of privacy, negligence, and negligent infliction of emotional distress. Here’s my post about the initial lawsuit, with a link to the Complaint.

For the past two weeks, Nashville has had the attention of sports and legal fans, as Andrews’ case was tried in front of a local jury. I was in the courtroom on Friday, to watch the lawyers make their closing arguments to the jury. It’s not often you get to see a fight over $75 million dollars.

Yesterday, the jury announced their verdict: A judgment of $55 million, with the stalker responsible for 51 percent of the blame, and the two hotel companies responsible for 49 percent (Note: Tennessee is a “comparative negligence” state). By my math, the hotel defendants are liable for about $27 million of the judgment.

After the judgment was announced, a number of media outlets analyzed the judgment. Some said that it may be appealed as excessive. Others focused on how much the lawyers are going to profit from it.

Sports Illustrated ran a story on her ability to actually collect the money. The article makes a good point about the stalker–that he’s in prison and probably “judgment proof.” That means that, even though he’s obligated to pay the money, his ability to earn money is diminished and he’ll be broke for the rest of his life.

The hotel defendants, however, are a different story. They appear to have strong cash flow, and they’ll probably look to their insurance carriers for some funds. Corporate bankruptcy may be an option, given the amount of the award. Most likely, the article concludes, the corporate defendants may appeal the amount of the award and, at the same time, work on a settlement agreement.

Here is my sales pitch: I will collect this Judgment. If you’ve read this blog or attended any of my collection seminars, you know the first thing I’d do: Record a Judgment Lien.

The hotel property at 2555 West End Avenue is in the heart of Nashville’s hottest district, and the property has a tax appraisal of $36,477.600. If the Judgment is recorded, then the defendants can’t refinance, sell, or do anything with the property without paying the judgment.

So, that’s that, right? Not so fast.

West End Hotel Partners, LLC doesn’t own the property; Vanderbilt is owner and West End Hotel Partners operates the hotel on the land pursant to to a 40 year ground lease. This means that Vanderbilt owns the property, but that the hotel has a long-term right to use the property, including construction of improvements. At the end of the lease, the hotel may revert to the ownership of Vanderbilt.

Regardless, a judgment lien attaches to whatever interest in the land a defendant holds, including this ground lease. The creditor may not get everything, but the lien would attach to enough to get their attention and complicate any future transactions related to the property.

Here, as always, record a judgment lien as the first step in collecting on a judgment.

Tennessee Detainer Actions: Not Just for Tenants and Landlords

What if you own real property, but someone else has possession of the property, and you want them gone? You evict them. But, as you’ll see under Tennessee statutes, they don’t call it an “eviction” lawsuit; they call it a “detainer” lawsuit.

The statute in Tennessee is Tenn. Code Ann. § 29-18-104, titled “Unlawful Detainer.” That statute provides:

“Unlawful detainer is where the defendant enters by contract, either as tenant or as assignee of a tenant, or as personal representative of a tenant, or as subtenant, or by collusion with a tenant, and, in either case, willfully and without force, holds over the possession from the landlord, or the assignee of the remainder or reversion.”

These detainer actions are generally brought in general sessions court, where, as I’ve noted before, you can exceed the $25,000 jurisdictional limit. Also, even though general sessions appeals are very easy on most matters, they are complicated and expensive in general sessions court.

So, if you’re a landlord, you’re probably reading that statute and thinking it’s exactly what you need, right? But, what about if you’ve purchased the property, either by a typical sale or a foreclosure? In that case, you’re not a landlord, and the defendant isn’t entering by contract (i.e. lease). Does a different statute apply?

No, said the Tennessee Court of Appeals in Federal National Mortgage Association v. Danny O. Daniels, W2015-00999-COA-R3-CV (Dec. 21, 2015).  There, the Court noted that the Deed of Trust will create “a landlord/tenant relationship … between the foreclosure sale purchaser and the mortgagor in possession of the property,” and, as a result, “constructive possession is conferred on the foreclosure sale purchaser upon the passing of title; that constructive possession provides the basis for maintaining the unlawful detainer.”

In such a case, a plaintiff must prove: (1) its constructive possession of the property (i.e. ownership of the property); and (2) its loss of possession by the other party’s act of unlawful detainer.

In short, the detainer statutes in Tennessee aren’t well crafted. Sometimes they reference landlords and tenants; sometimes they don’t. Courts have a tendency to construe statutes as written and to assume that the legislature means what it says when it uses specific words. That’s bad news for the foreclosure sale purchaser, who isn’t a landlord and who isn’t dealing with a tenant.

Here, however, it’s clear that the legislature should have proofread the statutes a few more times. Fortunately, Tennessee courts have applied the statutes in a broader sense.

 

Exaggeration of Lien Rights Can Lead to a Counter-Claim for Attorney Fees in Tennessee

The ability to record a lien on a debtor’s property is one of the strongest tools in the creditor’s arsenal. I mean, I am always talking about judgment liens. Liens get creditors paid.

That’s part of the reason why materialman/mechanic’s liens are such a great tool for contractors supplying labor and materials to real property.

But, there’s one note of caution in Tennessee: Don’t be so eager to claim lien rights that you exaggerate or overstate your rights.

I’m talking about Tenn. Code Ann. § 66-11-139, which provides the following remedy to a property owner who is facing a defective and/or fraudulent lien claim. That statute says:

If, in any action to enforce the lien provided by this chapter, the court finds that any lienor has willfully and grossly exaggerated the amount for which that person claims a lien, as stated in that person’s notice of lien or pleading filed, in the discretion of the court, no recovery may be allowed thereon, and the lienor may be liable for any actual expenses incurred by the injured party, including attorneys’ fees, as a result of the lienor’s exaggeration.

Some courts will remove all lien rights–even the portions that are valid–where a contractor overstates its lien rights.  Although Tennessee Courts haven’t yet considered it, other jurisdictions with similar statutes have allowed recovery of fees where the lienor knowingly asserts lien claims on property that is not lienable. The statute certainly appears to provide recovery where a lien claimant asserts a lien that is invalid, such as an untimely claim.

Tennessee Courts follow the “American Rule,” meaning that a party can’t recover attorney fees unless they are provided for in a contract between the parties. If you are fighting with a lien claimant over an exaggerated or defective lien in Tennessee, consider turning the tables on them–ask for an award of attorneys fees.

Resources to Learn More About For Profit Student Loan Forgiveness

Student loans are a big problem for folks in the Middle Tennessee area. After I gave an interview on the “for profit” student loan forgiveness story last week, my phone started ringing off the hook.

One of the statements I made (which didn’t make the interview) was that a borrower who wants to make a forgiveness request may not need to hire a lawyer to help them with this process.

I mean, I love taking client money as much as the next lawyer, but there are resources online that you should review before talking to a lawyer.

I think the official Federal Student Aid website was a great resource. The site is written in good, clear text and contains a a link at the bottom, under the “How to Repay Your Loans” tab. The specific link is “Forgiveness, Cancellation, and Discharge.” This section contains a comprehensive “Frequently Asked Questions” section, as well links to the application to utilize the forgiveness process.

Lawyers are great and can be a benefit in any process like this. But, before you hire one, I’d suggest that you read the website and get an understanding of the issues first. Then, you know, bring in the big guns.

Loophole Under Federal Laws May Allow Some “For Profit” College Student Loans to be Forgiven

 

Last week, I talked to NewsChannel5 about a loophole under federal law that may allow borrowers to have their student loans forgiven, where they attended a “for profit” college that has either closed or made clearly false claims to attract students.

NewsChannel5

The law doesn’t apply to traditional colleges or universities, but, instead, to “for profit” colleges, a list of which can be found here.

These colleges generally target non-traditional students (i.e. older students with full time jobs), generally offer only night or online courses, and are known for advertising aggressively.

A great background “primer” on these issues can be found in “The Rise and Fall of For Profit Schools,” which suggests that the “advertising aggressively” part is the root of the trouble. Saying that “these schools made promises they couldn’t keep,” the article says that the industry may misrepresentations to get the attention of prospective students. This generally involves advertising inflated post-graduation job placement rates, misleading claims about potential future earnings, and lies about their faculty and facility quality.

With the economic downturn, as unemployed workers were looking for work and new job skills, those prospective students were the perfect marks for such alleged claims. Because many were unemployed or low income, the student body relied on federal student financial aid to pay the tuition.

The NewsChannel5 report drew from this Wall Street Journal article, which presented the shocking numbers of students availing themselves of the loan forgiveness process. Five years ago, the government had received only a handful of such requests; in the past 6 months, the story says, “more than 7,500 borrowers owing over $164 million have made applications.

Yikes.

Insufficient Service of Process Arguments May be Recognized Under Tennessee Law

Note: This post contains updated information after its original posting date.

When it comes to creditor rights deficiency lawsuits, it’s rare that I see something new.

Most defendants’ Answers to my lawsuits to collect unpaid debts follow the same pattern: They admit the jurisdictional/party paragraphs, claim they lack sufficient information on the amount of the debt, and then deny all paragraphs alleging default and asking for a judgment.

Recently, however, I saw a creative argument that, honestly, freaked me out.

It was an Answer that contained the following “Affirmative Defense:”

Plaintiff’s claim should be dismissed due to insufficient service of process for failure to include required information on the Return of Service. The Return on Service of Summons for both Defendants fails to include the process server’s name and/or address as required by Tennessee Rule of Civil Procedure 4.01(2). See Lasher v. Robertson, No. 03A01-9402-CV-00075, 1994 WL 579972, *2-3 (Tenn. Ct. App. Oct. 24, 1994).

In that Lasher opinion, the Court of Appeals was faced with a return on a Summons that “contained only the date and the unreadable signature of the process server.” 

Two years later, the defendant filed a motion to dismiss, alleging insufficient service of process of the lawsuit. That motion was granted.

Citing Tenn. R. Civ. P. 4.01, the Court of Appeals agreed.

For starters, “The process server must be identified by name and address on the return.” See Tenn. R. Civ. P. 4.01(2).   Further, “The person serving the summons shall promptly make proof of service to the court and shall identify the person served and shall describe the manner of service.” See Tenn. R. Civ. P. 4.03(1).

Applying those rules, the Court of Appeals wrote:

The Plaintiff’s process server met none of the requirements contained in Rule 4.01(2) of the Tennessee Rules of Civil Procedure. The process server was not identified by name and address on either the return of service or on the affidavit; he did not promptly and within the time during which the person served must respond, make proof of service to the Court; he did not identify the person served nor describe the manner of service. Even considering the very untimely filed affidavit of Daniel C. Derrick, the requirements of Rule 4.03(1) of the Tennessee Rules of Civil Procedure still were not met. Indeed, the record is totally void of the location of Defendant Robertson’s residence. Neither Defendant filed an answer and there is no indication in the record before us of any documents being served upon either Defendant during the pendency of the proceedings in the lower Court.

Id. at *3.

Given the custom and practice regarding service of process Tennessee handling consumer and commercial collection lawsuits, this case and analysis can have broad reaching impact.

In the end, there’s a lesson here: (1) Include the process server’s name and address on the Summons; and (2) When in doubt, include the method, manner, and details of the service on your Summonses.

Domestication of Federal Court Judgments: Really Easy

Four years ago, I talked about the process of domesticating a foreign judgment, which is the process by which a party makes a judgment of one state enforceable in a different state. Under each state’s version of the Uniform Enforcement of Foreign Judgments Act, I said, it’s a pretty easy process.

What I didn’t mention, however, is how much easier it is to enforce a judgment granted in Federal District Court in another District Court.

In the federal system, pursuant to 28 U.S.C. § 1963, all a plaintiff must do is record a certified copy of the final judgment in the other district. “A judgment so registered shall have the same effect as a judgment of the district court of the district where registered and may be enforced in like manner.”

To cut through the legalese, once you record your out-of-district, final judgment, it becomes enforceable immediately in the new district. There’s no need to serve a copy on the judgment debtor; there’s no 30 day response or objection period.

The reasoning behind this is simple. When you cross state lines, you take your judgment into a new jurisdiction, with a different state constitution and different laws. Under the federal court system, you’re not truly crossing any boundaries. And that’s a pretty powerful tool to keep in mind when deciding where to file an action against an out of state defendant.