In The News

When Your Out of State Debtor Banks at a National Bank, You May Not Need to Domesticate Your Judgment

On my Creditor Rights 101 blog, I talked about the process of domestication of judgments, which is basically the process by which you make a judgment from one state enforceable in another state. You see, a judgment awarded in Tennessee can only reach a debtor's assets located inside the State of Tennessee. So, if you have a judgment against somebody who lives in Texas, you may have to file a second lawsuit in Texas to attach his assets.

But don't go buy a pair of cowboy boots just yet.

I mean, sure, if he owns land in Texas,  owns a car that's registered in Texas, or has a million dollars in cash under his Texas bed, then your Tennessee judgment is not going to be effective to execute on those assets. To get those, you need to go through the domestication process, which results in your out of state judgment being recognized by that foreign state as a valid judgment for enforcement in that state.

But, here's a trick: What if the debtor has all his assets in that foreign state, but he banks at a national bank with offices all over the country? And what if that bank has a branch in Tennessee? The answer is that you can levy on that bank account.

So, debtors with accounts at Wells Fargo Bank, National Association and Bank of America, watch out.

A Reminder About Collection on Unpaid Legal Invoices: Wait a Year

This is an issue I've written about before over at Creditor Rights 101, in Collection on Unpaid Invoices: One Really Good Reason to Wait a Year.

But, I mention it again because the Tennessee Court of Appeals revisited the issue recently, in Scott Ostendorf, et. al. v. R. Stephen Fox, et. al. (Tenn. Ct. Apps.,  No. E2013-01978-COA-R3-CV, July 16, 2014).

In that case, the law firm committed possible malpractice regarding the perfection of a client's lien security interest rights. The issue came to light in November 2008, and the client sued for malpractice in March 2012. Clearly, the lawsuit was filed more than one year after the facts alleged to be malpractice.

This was a pretty easy one for the Court, which cited the Tennessee Supreme Court's opinion at Kohl & Co., P.C. v. Dearborn & Ewing, 977 S.W.2d 528, 532 (Tenn. 1998):

"The statute of limitations for legal malpractice is one year from the time the cause of action accrues. Tenn. Code Ann. § 28-3-104(a)(2). When the cause of action accrues is determined by applying the discovery rule. Under this rule, a cause of action accrues when the plaintiff knows or in the exercise of reasonable care and diligence should know that an injury has been sustained as a result of wrongful or tortious conduct by the defendant. Shadrick v. Coker, 963 S.W.2d 726, 733 (Tenn. 1998)."

As I said in my prior post, I'm not condoning legal malpractice, nor suggesting that you should play hard-ball in collection of unpaid invoices for services that involved malpractice. But, as I said in my last post, if you sue a client for unpaid bills, it's more than likely going to result in that client claiming malpractice, whether it's merited or not.

If you think that such a claim will be raised from vindictiveness or tactic planning, then any lawyer should sit on the unpaid bills for services for at least a year. It's an easy "summary judgment" / "failure to state a claim upon which relief can be granted" issue.

Tennessee Courts will give Pro Se Litigants "Some Leeway," But Not Much

Some of the hardest trials to handle aren't when there's a good attorney on the other side. Instead, the toughest cases can be when there's a non-attorney on the other side, meaning the other party is representing himself.  In the legal world, this is called "pro se" representation.

With a lawyer on the other side, there's an expectation that they know the rules of civil procedure, the local rules, and the relevant law. As a result, you can expect that you will be able to cut to the chase and narrow the issues.

With a pro se litigant, everything could be at issue and, worse, a pro se party probably doesn't know the rules of the court, meaning objection deadlines will be missed and all other types of procedural missteps can occur. This places the lawyer and the Judge in a strange situation--do you hold the pro se litigant to same standards as a party who goes to the trouble of hiring a lawyer? Shouldn't they  be held to that standard?

A recent Tennessee Court of Appeals case (click here to review) considered that issue in a dispute where a property owner was fighting a foreclosing creditor. The Court noted that "there are a multitude of problems with Defendant’s brief," including a complete failure to comply with the Tennessee Rules of Appellate Procedure.  The Court called the pro se filing "a rambling and, at times, incoherent brief."

The Court went on to say it “must not excuse pro se litigants from complying with the same substantive and procedural rules that represented parties are expected to observe.” Young v. Barrow, 130 S.W.3d 59, 63 (Tenn. Ct. App. 2003). "It is well-settled that, '[w]hile a party who chooses to represent himself or herself is entitled to the fair and equal treatment of the courts, [p]ro se litigants are not . . . entitled to shift the burden of litigating their case[s] to the courts.'” Chiozza v. Chiozza, 315 S.W.3d 482, 487 (Tenn. Ct. App. 2009). However, “[t]he courts give pro se litigants who are untrained in the law a certain amount of leeway in drafting their pleadings and briefs.” Young, 130 S.W.3d at 63.

This is good text to remember the next time a person appears on their own behalf in a matter. This frequently happens in debt collection cases for the obvious reason: if a person can't pay their bills, then how can they afford to hire a lawyer.

 

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

A few months 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.