It’s Not Me, It’s You: My Thoughts on Dealing with “The Clients From Hell”

I can remember the email like it was yesterday, even though it’s been a few years now.

I’m sitting on my couch, at 7pm on the Friday night before New Years Eve. I check my work e-mail to find this long, mean request (demand) from a client. The client wanted updates on about a dozen matters, and they wanted them right then. The e-mail had the red exclamation point and a condescending tone that was unmistakable.

This client had long before decided that I was over-paid, too slow to respond, and, despite the great success I’d had for them, not very good at my job.

In the spirit of New Years Eve Resolutions, I decided right then that the next year would bring one specific change: I was going to fire my largest paying client.

The next week, I did just that. There was no conciliatory or touchy-feely “let’s work this out” effort. Instead, I thanked them for the work and gave them a list of 3 lawyers who I sincerely thought would do a fine job for them.

You can imagine my interest, then, in the recent articles about “How to Handle the Client from Hell.” Here’s the original article, “How to Deal with a Toxic Client.”

I’m fortunate to be a very busy lawyer, and the risk I took by firing a big client was tempered by my ability to focus my efforts on my other clients (who actually appreciated my work and results).

Not every lawyer has that luxury, but I question the advice in the articles, like asking the ranting client “What was that all about?” Open hostility rarely makes for a good working relationship, especially one that involves hourly billings that the client is complaining about.

My ultimate take-away on my decision was this: I screen new clients thoroughly, to make sure that their expectations fit in with my abilities (including costs, results, and time). If they want constant updates on minor developments, they might not be for me (unless, of course, they are willing to pay me for those constant updates).

Angry, ungrateful, and cheap? No, thank you.

You’ve Got the Escalade, Now What? A Reminder of What Slow Pay Motions Can’t Do

With the economy in shambles, I’ve come to learn that, sometimes, people are broke.

When I ask that they pay me $250 a month on a judgment, they turn around and file a “slow pay” motion asking to pay me $20 a month.  I talked about Slow Pay Motions (a.k.a. Motion to Pay Judgment by Installments) a few years ago.

Let me revisit one aspect I left out in that earlier post:  What exactly does a Slow Pay Motion stop you from doing?

Tenn. Code Ann. § 26-2-216 does not stay garnishments against real or personal property; it only stays garnishments against wages or salaries due to the debtors:

The filing of such motion by the debtor shall stay the issuance, execution or return of any writ of garnishment against wages or salary due the judgment debtor or any other funds belonging to the judgment debtor …

Tennessee cases support this conclusion: “No such installment payments are to be ordered unless the debtor has filed an affidavit stating that no other assets are available for payment of the judgment except the wages or salary of the debtor and that any other funds receivable by the debtor are so limited that installment payments are appropriate.” Harrington v. Harrington, 759 S.W.2d 664, 668 (Tenn. 1988).

So, let’s say you execute against a Cadillac Escalade (congratulations), and the borrower files a Slow Pay. In that case, the Court may enter a Slow Pay Order and set payments. But, that Order will prevent Wage Garnishments;  it will not stop collections on real or personal property.

Useful CLE Alert: 2013 Tennessee Real Estate Law Conference in Nashville

It’s getting close to the end of the year, so now is the time to be looking to satisfy the year end CLE requirements.

Tennessee Attorney’s Memo is presenting the 2013 Tennessee Real Estate Law Conference on October 4, 2013.  This all day seminar will cover a number of topics related to real estate, mortgages, and case law updates.

Most important, Sean Kirk of Bonelaw will speak about our practice group’s big victory in the Sterling Ventures case, which was the first opinion to construe  Tenn. Code Ann.  § 35-5-118–the new Tennessee post-foreclosure deficiency statute.

Other topics will include:

  • Commercial development and financing
  • Work-out for troubled real estate loans
  • Post-foreclosure deficiency suits
  • Curing title defects
  • New mortgage rules
  • Environmental concerns
  • Ethical considerations in real estate law
  • Real estate case law/legislative update

Computation of Time: How Do You Count “10 Days” for a General Sessions Court Appeal in Tennessee?

Everybody knows that, in Tennessee General Sessions Courts, you have a right to file a de novo appeal in ten days. But, lawyers sometimes scratch their heads on how to count ten days. Is it business days? Is it calendar days?
Tenn. Code Ann. § 27-5-101 may provide the Answer:

Any person dissatisfied with the judgment of a recorder or other officer of a municipality charged with the conduct of trials, in a civil action, may, within ten (10) entire days thereafter, Sundays exclusive, appeal to the next term of circuit court.

So, under the statute, you use calendar days but you exclude any intervening Sundays.
Also, see Tenn. Code Ann. § 1-3-102:

The time within which any act provided by law is to be done shall be computed by excluding the first day and including the last, unless the last day is a Saturday, a Sunday, or a legal holiday, and then it shall also be excluded.

So, if the tenth day falls on a Saturday, Sunday, or a legal holiday, the deadline rolls forward.

Ok, last question, what’s a “legal holiday” in Tennessee? See Tenn. Code Ann. § 15-1-101:

January 1; the third Monday in January, “Martin Luther King, Jr. Day”; the third Monday in February, known as “Washington Day”; the last Monday in May, known as “Memorial” or “Decoration Day”; July 4; the first Monday in September, known as “Labor Day”; the second Monday in October, known as “Columbus Day”; November 11, known as “Veterans’ Day”; the fourth Thursday in November, known as “Thanksgiving Day”; December 25; and Good Friday; and when any one (1) of these days falls on Sunday, then the following Monday shall be substituted; and when any of these days falls on Saturday, then the preceding Friday shall be substituted; also, all days appointed by the governor or by the president of the United States as days of fasting or thanksgiving, and all days set apart by law for holding county, state, or national elections, throughout this state, are made legal holidays, and the period from twelve o’clock (12:00) noon to twelve o’clock (12:00) midnight of each Saturday which is not a holiday is made a half-holiday, on which holidays and half-holidays all public offices of this state may be closed and business of every character, at the option of the parties in interest of the same, may be suspended.

Tour of Tennessee Courts: Tips for Rutherford County General Sessions

I enjoy hitting the road and going to courts all over middle Tennessee. But, at the same time, it can be disconcerting to go to court in a new county, which generally has its own Local Rules and customs of practice. No matter how long you’ve been practicing, you never want to embarrass yourself in front of a foreign court.

So, I’m starting a “Tour of Tennessee” blog series, which discusses the different Courts that I go to, along with some tips and tricks for appearances.

First stop, Rutherford County General Sessions Court. Here is a link to the General Sessions Court’s website, which has updated, good information about the Court, including phone number, address, and Clerk information.

Note that the Rutherford County Courts, including General Sessions, post a variety of their  dockets online.  Be sure to print out a copy of the docket before you go to court.

Their Local Rules are also posted online, and read those before you go.

Here are some helpful tips to know from the Local Rules:

  • The Court presumes cases will be tried on the the date they are set, but, on the first setting in civil actions, the  “court may liberally grant a continuance on the first setting of a case.”
  • The Court does not allow “indefinite” continuances. Under Local Rule 5.01, the Court only allows continuances of less than 60 days.
  • The Court will only allow 3 continuances, absent good cause.
  • The Court caps attorney fees at 25%, unless good cause is shown.

Here are a few other things to know:

  • The Judge, Larry Brandon, is sharp, both in his legal acumen, as well as his wit and the way he runs the Courtroom. Stay on his good side by being early, paying attention, and reading the Local Rules before you go.
  • Seriously, that’s important: stay on his good side across the board.
  • Many Clerks are liberal and let you use any old Civil Warrant  forms, but, if you’re in doubt about your form, be sure to use the official Civil Warrant forms from the Rutherford County General Sessions Clerk.  Using the standard form is an important part of staying on the Judge’s and the Clerk’s good side.
  • On street parking is plentiful all around the Courthouse, and there are a number free lots available.
  • General Sessions Court takes place on the third floor of the Courthouse. The General Sessions Clerk is on the first floor.
  • The security line can get long, particularly if you’re running late. Be prepared to remove watches, belts, and other metal items. Attorneys can purchase “pre-screened” pass cards for $5, which allow you to by-pass security. If you go there a lot, keep that in mind.
  • The elevator  gets backed up, and, if you’re running late, head to the stairs in the back of the building.
  • Judge Brandon starts promptly, at 9AM.
  • It’s about a 45 minute drive from downtown Nashville, so give yourself an hour.
  • Cases are generally called in batches, organized by the Plaintiff’s attorney’s name, meaning all of an attorney’s cases are generally bundled together and called at the same time (and then that attorney is allowed time to go to the hall and review the matters or write them up).

Rutherford County General Sessions Court is an active court, often with a large number of cases (40-50) set on one docket. Be early, be prepared, and read the Local Rules, and your court appearance will go fine.

Confessions of Judgment aren’t Valid in Tennessee: Here’s Why

All kinds of search terms lead visitors to this site. I routinely look at them, because it’s a great insight into what creditor rights issues people want to learn about. (And, sometimes, it’s pretty funny.)

A common query is whether confessions of judgments are valid in Tennessee. Frankly, after nearly 15 years of practice in Tennessee, I’ve never dealt with a confession of judgment, so, as a practical matter, I don’t think they are valid in Tennessee. But, recently, I actually came across the answer.

As background, a confession of judgment is a contract provision (or a stand-alone contract) in which one party agrees on the front-end of a transaction to let the other party enter a judgment against him if the deal goes bad.  You agree, in advance and before any default or dispute arises, that the other party can get a judgment, even without a lawsuit pending and despite any legitimate defenses that may ultimately exist.

You can imagine why a creditor would include such a provision in their contracts.

Tennessee doesn’t allow such provisions. Tenn. Code Ann. § 25-2-101(a) says:

Any power of attorney or authority to confess judgment which is given before an action is instituted and before the service of process in such action, is declared void; and any judgment based on such power of attorney or authority is likewise declared void.

But, an agreement to allow a judgment may be allowed after a lawsuit is filed and after the party is served (when, it would be assumed, the party has received due process of the law and the issues are defined).  § 25-2-101(b) says:

This section shall not affect any power of attorney or authority given after an action is instituted and after the service of process in such action.

So, even though Confessions of Judgment are not valid in Tennessee at the time of the contract, such provisions will be enforceable after the filing of the lawsuit, such as in a forbearance or settlement agreement.

New Opinion Analyzes Common Defenses to Domestication of Foreign Judgments in Tennessee

A good rule of thumb in Tennessee is that a valid foreign judgment will be enforceable here, provided the plaintiffs comply with the procedural requirements of Tennessee Code Annotated § 26-6-101, et seq.

A new Tennessee Court of Appeals opinion, in Bancorpsouth Bank v. David J. Johnson, et. al. (July 16, 2013), examined both the general law, as well as the potential defenses to domestication. This is a good case to know, since it reviews all aspects of the foreign judgment enrollment process.

First, it presents the three “standard” defenses to domestication:

a forum state may decline to accord full faith and credit to the judgment or public act of another state if it is (1) void due to a lack of personal or subject matter jurisdiction, (2) based upon fraud, or (3) “where enforcement of the judgment would violate the public policy of the forum state.” …  Tennessee courts have recognized and adopted all three of these exceptions. … (citations omitted)

These defenses aren’t easy to establish, and the Court notes  “a party who seeks to show that a foreign judgment should not be enforced in Tennessee must meet a ‘stern and heavy‘ burden.”

Most attacks on a foreign judgment are under Defense No. 1 (that the judgment is void); this new case is interesting in that is that the Court provides a good analysis of Defense Nos. 2 and 3 (which no other case that I’ve seen has done).

Defense No. 2, Fraud:  “[T]o deny full faith and credit on the basis of fraud, there must be allegations of extrinsic fraud, that is, fraud that is collateral to questions which were either determined or which could have been determined in the underlying action. Extrinsic fraud is contrasted with intrinsic fraud, which pertains to an issue involved in the underlying action or where the acts allegedly constituting fraud were or could have been litigated…”

“‘[E]xtrinsic fraud ‘consists of conduct that is extrinsic or collateral to the issues examined and determined in the action,’. . . while intrinsic fraud is fraud within the subject matter of the litigation, such as forged  documents produced at trial or perjury by a witness.”

An example of extrinsic fraud is a party lying to the other party about the court date or committing some fraud regarding the litigation (something beyond the allegations of the lawsuit). Intrinsic fraud would be some fraud related to or contained in the allegations of the lawsuit, such as a fraudulent signature on the note at issue.

Defense No. 3, Public Policy:  “Under the public-policy exception to full faith and credit, “Tennessee courts are not obligated to give full faith and credit to any judgment of a state which we hold to be violative of Tennessee’s public policy or the Federal Constitution.”

This is rare, however: “The principle of giving full faith and credit to the judgments of sister states will “almost invariably” outweigh the interest of an individual state; the public-policy exception to full faith and credit is applied only on ‘extremely rare occasions.'”

While the Court doesn’t provide examples, the Defendants’ argument is illustrative. Here, they argued that the foreclosure that resulted in the deficiency balance at issue in the lawsuit was improper, and it was an issue that Tennessee has a defense for, under Tenn. Code Ann. § 35-5-118.

The Court saw this as an improper attempt to re-litigate potential defenses under the underlying judgment, not some public policy that rendered the out-of-state judgment unenforceable.

Most cases cite the three major defenses, and this new opinion is significant because it provides helpful analysis of what constitutes those defenses.

Tennessee Secretary of State to launch new online UCC filing system on July 1, 2013

The ability to file documents online is one of the many ways technology has made the practice of law easier. Faced with a looming deadline, attorneys no longer need to rush to the Courthouse before closing time. Nowadays, they pdf their pleading and can upload it at 11:59 from home.

Starting on July 1, 2013, the Tennessee Secretary of State will allow parties to make Tennessee Uniform Commercial Code (UCC) filings online. Information about this program can be found in this release.

To prepare Tennessee UCC filers for this process, the Secretary of State has posted a number of links to a number of training videos, which cover topics such as:

  • Filing a Tennessee UCC1 Financing Statement
  • Filing a Tennessee UCC3 Amendment – Termination
  • Filing a Tennessee UCC3 Amendment – Continuation
  • Filing a Tennessee UCC3 Amendment – Party Update
  • Filing a Tennessee UCC3 Amendment – Assignment
  • Filing a Tennessee UCC3 Amendment – Collateral and Max Indebtedness Change
  • Filing a Tennessee UCC5 Information Statement
  • Filing a Tennessee UCC11 Information Request
  • Searching the Tennessee UCC Database

The electronic filing system also coincides with the implementation of the 2010 Amendments to UCC Article 9, which also become effective on July 1, 2013. I’ll discuss those in a later post.

For now, I’ll say that I’m really excited about the prospect of filing and searching UCC records online. This is a great development for Tennessee lawyers.

Post-It Note: Creditor’s Rights During Bankruptcy

As many of you know, I’ll occasionally use this blog as a place to post reminders or cites to cases for my own benefit. As you’ve seen in the past, I call those entries “Post-It Notes.”

I saw this CLE seminar and thought the content would be helpful (plus, it’s a good outline for any future Creditor’s Rights CLEs I might teach). It’s presented by NBI Seminars and is called “Creditor’s Rights in Bankruptcy.” It’s set for July 31, 2013.

Here’s the Agenda:

 

  • Case Evaluation
    • 10 Questions to Ask Before Getting Started
    • Important Timeline Considerations
    • Determining the Priority of Claims
  • Miscellaneous Creditors’ Rights
    • The Involuntary Bankruptcy as a Collection Remedy
    • Examination of Debtor’s Affairs
    • Rule 2004 Exams
    • Creditors’ Committees in Chapter 11 Cases
    • Dismissal or Conversion of a Bankruptcy Case
    • Appointment of and Communication With a Trustee or Examiner
    • Recovery of Property for the Benefit of Creditors
    • Municipal Collection Issues
  • Ethical Representation During Bankruptcy

    • Collection Letters and Communication With the Debtor
    • Misrepresentation
    • Intermingling Activities of Collection Agency and Attorney
    • Harassment
    • Attorneys’ Fees
    • Avoiding Violations of the Injunction
  • Overview of Creditors’ Rights Under Each Chapter
    • Chapter 7
    • Chapter 13
    • Chapter 12
    • Chapter 11
    • When the Debtor Converts From a Chapter 13 to a Chapter 7 Case
    • Significance of Valuation of Collateral
  • Claims and Distributions
    • Filing and Allowance of Claims
    • Objections to Discharge
    • Objections to Confirmation
    • Dealing With Objections to Claim
    • Distribution to Creditors
    • UCC Filing
    • What to do When the Debtor Defaults on the Repayment Plan
    • Recovery of Fraudulent Transfers
    • Reaffirmation Agreements
  • Automatic Stay
    • Broad Scope of the Automatic Stay
    • Obtaining Relief From the Automatic Stay
    • Motion for Lift of Stay: How, Why You Can Request It
    • Changes in the Automatic Stay in Consumer Cases Involving Repeat Filers
    • Changes in the Automatic Stay in Certain Other Limited Situations Involving Liens on Real Estate
    • Changes in the Automatic Stay Involving Consumer Landlord/Tenant Law
    • Exceptions to the Automatic Stay and Related Changes
    • Monetary Sanctions for Automatic Stay Violation Where Notice is Lacking
  • Representing Creditors in Adversary Proceedings
     
  • Special Rights in Particular Property
    • Reclamation Rights
    • Setoffs
    • Landlords and Equipment Lessors