Write the Wrong Defendant’s Name on Your Judgment? General Sessions Litigants Can Correct Clerical Errors in Judgments in Tennessee

Davidson County General Sessions Court (also known as “small claims” court) is the wild, wild west of our local courts. Things move fast, many parties are not represented by lawyers, and there are dozens of cases on each docket.  Because the jurisdiction of General Sessions goes up to $25,000 (sometimes more) and a creditor can get a judgment in as little as a month, I file a number of my Nashville creditor lawsuits there.

The prevailing party usually writes up his own judgment, and, in the rush of cases, the judgment may sometimes include a clerical error, either in the name of the parties, the computation of the amount of the judgment, or other terms.  When there’s an error, the party has the right to appeal the whole thing under Tenn. Code Ann. § 27-5-108, but the best practice is to move to correct the “clerical error” in the judgment under Tenn. Code Ann. § 16-15-727.

The application of that statute was discussed  in a Tennessee Attorney General Opinion (No. 04-090, May 10, 2044), applying Rule 60.01 of the Tennessee Rules of Civil Procedure applies in Sessions Courts.

Interestingly, the Opinion says that a litigant can only “correct” a “clerical error” in a judgment, and expressly stops short of any relief that a litigant might have under Rule 59 to “alter or amend” a judgment.  This means that alleged errors on a point of law are not in the same category as clerical errors and cannot be changed.

So, if you get back to your office and realize you’ve written the wrong amount on the Judgment–or the wrong responsible party–you’ve got relief. Rule 60.01 does not contain a time limitation, and corrections may be made at any time upon the court’s initiative or upon motion of either party. Parties whose rights may be modified by the correction must be given notice of the Motion. Decisions to correct are within the discretion of the Judge. Obvious errors are usually corrected.

Enforcement and Domestication of Foreign Judgments in Tennessee: Simple Under The Uniform Enforcement of Foreign Judgments Act

To creditors’ chagrin, judgments aren’t enforceable across state lines. Before a Tennessee judgment can be enforced against the debtor’s assets in Florida, the creditor has to “domesticate” that judgment, which requires that a second action be filed in the new state to recognize the out-of-state judgment.

Fortunately, this process is governed by a commonly adopted act, the Uniform Enforcement of Foreign Judgments Act (Tenn. Code Ann. § 26-6-101, et. seq.), which creates a stream-lined process for creditors to follow.

It’s generally just a two step process. The creditor must (1) file an authenticated copy of the judgment and (2) file a supporting Affidavit. In most cases, the judgment of the sister state will be entitled to “full faith and credit” by the new court.

There are limited grounds for attack on domestication. The defendant doesn’t get to re-litigate the case; instead, he or she can only contest procedural defects, like no service of process or fraud. These issues must be raised in the 30 days after service of the domestication action.

On June 30, 2011, the Tennessee Court of Appeals issued a new opinion, at Cadlerock, LLC v. Sheila R. Weber, which provides a good summary of the issues and law presented on foreign judgment enforcement actions. This Act isn’t often litigated, but this is a good case to have handy, just in case.

When Enforcing Judgments, Look Back Four Years for Potential Fraudulent Transfers in Tennessee

From time to time, the judgment enforcement process hits a brick wall because your debtor is “judgment proof,” which means that they don’t own anything: no car, no property, and no cash.

This can be a disconnect from reality, especially where the debtor lives in a big house with a fancy car parked in the driveway. How can this guy be broke?

That’s when I investigate fraudulent transfers, which are transfers out of the debtor’s name to a third party—a wife, parent, or child—to keep the assets out of the creditor’s reach.  This is more common than you’d think.

Tennessee has adopted the Uniform Fraudulent Transfer Act, at Tenn. Code Ann. § 66-3-301 et seq. That Act provides for a number of “badges of fraud,” such as transfers to an “insider”, transfers that render the person insolvent, transfers where equal value is not given for an asset, or transfers with “actual intent” to hinder or defraud creditors.

“Actual intent” means what someone is “thinking,” which, you can guess, is hard to prove.  As a result, the Act provides some common ways to prove intent, at Tenn. Code Ann. § 66-3-305(b). These include:

  • The debtor retained possession of the asset;
  • The transfer was kept a secret;
  • Prior to the transfer, the debtor had been sued or threatened with suit;
  • The transfer was to an insider;
  • No equivalent value was provided; and
  • The transfer was made prior to a substantial debt was incurred.

Under Tennessee law, a creditor can attack fraudulent transfers from up to four (4) years preceding your lawsuit.

Long story short, when enforcing a judgment in Tennessee, don’t just examine what your debtor owns, but look also to what he used to own.  Then, look back at least 4 years, because, in Tennessee, fraudulent transfers can be attacked for a long time.

Transfers of the big assets (like real property) are all of public record, so your cause of action can easily be discovered, if you know to look for it.

Unpaid Invoices: To Collect or Not?

In this economy, everyone is looking to find new revenue, and this invariably leads them to that stack of old invoices and accounts receivable they never touched when they were so busy dealing with good, paying customers.

Collections attorneys are seeing more “first time” collections clients and, with those clients, are seeing the same two issues.

First, a creditor who has never sued over unpaid invoices has also probably never had its invoices scrutinized in Court. There, every aspect of the unpaid bill, down to the date, the address, and the amount owed, is nit-picked and magnified. Are your invoices and credit applications “collections ready”?

Second, customers don’t like being collected against, and successful collections can be as much “public relations” as it is legal strategy. Is the collections approach you take appropriate and representative of the way you treat customers, good or non-paying?

These are simply issues to consider and, with the right planning, you may be able to avoid expense and hassle in the process. Plus, maybe, you can turn that stack of invoices into money.