Articles Posted in Civil Procedure

 The Judges in the Chancery and Circuit Courts for Williamson, Hickman, Perry and Lewis Counties have announced substantial changes to the local rules of court.  The changes were effective December 1, 2014.

Among other significant changes, the local rules  now require that one who objects to a motion filed by an opponent file written opposition to the motion. Rule 5.03(c).  Regular motions must be filed at least fourteen days before a hearing, and opposition to the motion filed and served at least 4 days before the hearing. 

           The Court of Appeals recently addressed the requirements of personal jurisdiction within the context of a misrepresentation case. In Wall Transportation, LLC v. Damiron Corp., No. M2014-00487-COA-R3-CV (Tenn. Ct. App. Dec. 19, 2014), plaintiff was a Tennessee limited liability company and defendant was an Indiana corporation. Defendant had a website where it listed heavy-duty trucks for sale, and plaintiff located a truck on said website that it was interested in purchasing. Plaintiff called defendant’s Indiana location from Tennessee to inquire about the truck and was allegedly told certain things about its condition and mileage. Thereafter, plaintiff traveled to Indiana where he inspected the truck, negotiated a price, entered into a contract for sale, and took delivery of the truck.

            Several months later plaintiff filed suit in Robertson County, Tennessee alleging that defendant had made “false and fraudulent representations about the truck concerning its mileage, gear ratio, and the condition of the truck’s body[.]” Defendant made a special appearance for the sole purpose of filing a motion to dismiss for lack of personal jurisdiction under Tennessee Rule of Civil Procedure 12.02(2). The trial court granted this motion, finding specifically that defendant was an Indiana corporation, did not routinely do business in Tennessee, did not own property or have employees in Tennessee, did not direct advertising to Tennessee, did not purchase substantial amounts of materials from Tennessee, and did not routinely sell products to Tennessee customers. Further, the trial court found that all of the events related to the sale of the truck occurred in Indiana except for the initial phone call, which was initiated in Tennessee by plaintiff. Accordingly, the trial court held that defendant did not have the minimum contacts sufficient to establish personal jurisdiction.

            Based on the same facts cited by the trial court, the Court of Appeals affirmed the lack of personal jurisdiction finding. The Court explained that personal jurisdiction is based on the existence of minimum contacts, and that it can be established through either specific or general jurisdiction. Specific personal jurisdiction exists where a plaintiff can “show that the nonresident defendant has purposely established significant contact with the forum state and that the plaintiff’s cause of action arises out of or is related to those activities or contacts.” General personal jurisdiction requires a showing that the defendant had “continuous and systematic” contacts in the state. Here, neither requirements were met. The Court called defendant’s contacts with Tennessee “tenuous at best,” noting that it was not registered to do business in Tennessee and had no office, employees, vehicles, contact information, or bank accounts in Tennessee. Although defendant’s website could clearly be accessed from Tennessee, the Court specifically stated that “[t]he mere existence of a website is not a sufficient basis to support a finding that [defendant] could reasonably anticipate being haled into court [here].” (internal quotations omitted).

The Tennessee Court of Appeals recently took up a civil procedure issue of first impression in the state. In McGinnis v. Cox, No. M2014-00102-COA-R3-CV (Tenn. Ct. App. Oct. 31, 2014), the issue presented was“[w]hether a Rule 68 offer of judgment may be revoked by the offeror within the ten-day time period for acceptance on the basis that the offeror ‘changed his mind.’” Following the weight of authority from federal and other state courts, the Court held that offers of judgment under Rule 68 are generally not revocable prior to the ten-day window expiring.

The McGinnis case arose from a car accident, and though no answer was ever filed, plaintiffs presented defendants with an offer of judgment for a specified amount or the policy limits of the applicable insurance policy. It was undisputed that the offer of judgment was made pursuant to Rule 68. There was some discrepancy between the date on the certificate of service and the date the offer was actually mailed, but defendants’ counsel received it on March 13, 2013. Counsel for both parties spoke two days later and agreed to forgo the deadline due to the postposed mailing. On that same day, however, plaintiff’s counsel faxed defendants’ counsel stating that the offer of judgment was revoked. The basis of this purported revocation was that the plaintiff had changed his mind. Subsequently, but on the same day and well within the ten-day time frame, defendants responded by fax that they accepted the offer of judgment in the amount of the policy limit. As there were no allegations of fraud or other good cause, the trial court found that the offer of judgment could not be revoked and thus granted a motion to enforce the judgment. The Court of Appeals affirmed.

In analyzing the issue, the Court determined that “the failure to include a provision allowing revocation [in Rule 68] is indicative of an intent not to allow revocation within the ten-day time period for acceptance.” The Court stated that adding a revocation provision would “deprive the offeree of the ten  days to consider the offer of judgment  the offeree was clearly intended to possess pursuant to Rule 68’s plain language.” The Court emphasized that the 10-day window was needed to give the offeree an appropriate amount of time to consider the offer, as rejecting such an offer subjects the offeree to certain risks. Allowing revocation would give the offeror the ability to force the offeree into a hasty decision.

             In Potter’s Shopping Center, Inc. v. Szekely, No. M2014-00588-COA-R3-CV (Tenn. Ct. App. Oct. 8, 2014), the Court of Appeals relied on the recent Tennessee Supreme Court decision of Smith v. UHS of Lakeside, Inc., 2014 WL 3429204 (Tenn. 2014) to hold the trial court to a higher standard when entering an order granting partial summary judgment.

            The Potter’s Shopping case involved the building of a house and a claim for unjust enrichment by the supplier of materials against the owners of the home. The trial court granted partial summary judgment to plaintiff as to liability, but in its order, the court failed to state any legal grounds for its decision. Citing the Supreme Court’s Smith opinion, the Court of Appeals found that the trial court had failed to comply with Tenn. R. Civ. P. 56.04 when it failed to cite any evidence or argument it had considered in granting summary judgment. The Court noted that appellate courts were sometimes more lenient on this issue when the reasoning for the summary judgment could be gleaned from the record. In the present case, however, the record contained no transcript of the hearing and no other indication of the legal basis for the summary judgment decision.

            Finding that the summary judgment issue “involve[d] questions of law that require analysis and explanation,” the Court vacated the order granting partial summary judgment and remanded the case.

            This summer the Tennessee Supreme Court offered guidance on what a trial court must do when granting or denying a motion for summary judgment under Tenn. R. Civ. P. 56.04. Despite the longstanding practice of many courts to have a prevailing party draft and submit a proposed order, the Court emphatically expressed that the record must show that an order granting or denying summary judgment was the product of the trial court’s “independent judgment.”

               In Smith v. UHS of Lakeside, Inc., No. W2011-02405-SC-R11-CV (Tenn. July 15, 2014), plaintiff’s complaint listed multiple causes of action related to the alleged improper assessment and resulting delayed treatment of decedent. During lengthy pre-trial litigation, defendant moved for summary judgment as to all of plaintiff’s claims. After a hearing, the trial court ruled in favor of plaintiff on some claims and defendant on two claims. After orally announcing the direction of the ruling, the trial court stated: “As far as a basis for the ruling, I’m going to let [defendant’s counsel] make those…the motions in which you were successful, you’ll prepare the order and the rationale for the Court’s ruling.”

               Plaintiff later filed an amended complaint, and defendant again filed a motion for summary judgment as to all claims. This time the trial court granted defendant’s motion in total and stated, “I’m directing the defendant to prepare the order and to establish the rationale for the court’s ruling in quite specific detail[.]” Both orders submitted by defendant and signed and entered by the trial court were highly detailed, essentially adopting all of defendant’s arguments from its brief. After the entry of each order, plaintiff objected to the orders arguing that the orders contained rulings and findings that the trial court did not actually make.

The Tennessee Court of Appeals recently issued an opinion dealing with a circumstance when service of process was designed “unclaimed” by the U.S. Postal Service. In Goodman v. Ocunmola, No. E2014-00045-COA-R3-CV (Tenn. Ct. App. Sept. 4, 2014), wife sued husband for divorce and served husband with a summons and complaint through the Tennessee Secretary of State because husband lived in Kentucky. The Postal Service attempted to deliver the summons and complaint, sent via certified mail, on three separate occasions before returning the certified mail as “unclaimed.” Wife moved for and was granted a default judgment when husband failed to appear and respond to the complaint.

About a month later, husband moved to set aside the default judgment entered against him, arguing that wife intentionally failed to include husband’s apartment number on the address label for the process server (i.e., the Postal Service), with the goal of obtaining a default judgment due to husband’s failure to respond to the complaint. Husband claimed he found out about the default judgment when he discovered a letter from wife’s attorney in the trash bin by his mailbox, which he assumed was thrown away because its address label also did not include husband’s apartment number. The trial court denied husband’s request to set aside the default judgment, and husband appealed.

The appellate record didn’t include a transcript or statement of the evidence, which the court initially noted had “frustrated” its review of husband’s appeal. As for the merits of the appeal, the court observed that Tenn. R. Civ. P. 4.05 states “the United States Postal Service notation that a properly addressed registered or certified letter is “unclaimed,” or other similar notation, is sufficient evidence of the defendant’s refusal to accept delivery.” Unfortunately for husband’s appeal, the limited record was basically reduced to the fact that after making three attempts to serve the summons and complaint, the Postal Service declared the certified mail as “unclaimed.” Contrary to husband’s suggestion that the lack of an apartment number inhibited service of process, the certified mail containing the summons and complaint was not found in a trash can near the mailbox (like the letter from wife’s attorney) or returned as undeliverable because the address was insufficient. Instead the notice contained the husband’s correct name and correct apartment complex address, and the “unclaimed” designation by the Postal Service was sufficient to effectuate proper service. Accordingly, the court of appeals held that the trial court did not abuse its discretion in denying husband’s motion to set aside the default judgment.

When a party pleads a prima facie cause of action and obtains a default judgment on liability, a damages inquiry should necessarily follow, and during the damages determination the trial court should not reconsider liability issues.

In Tennison Brothers, Inc. v. Thomas, No. W2013-01835-COA-R3-CV (Tenn. Ct. App. Aug. 6, 2014), the Tennessee Court of Appeals held that a trial court erred when it refused to award damages to two parties who had already been granted default judgments on liability against a third party.   The case involved a decade-old business dispute over rights to a state permit to construct a billboard on two adjacent properties fronting Interstates 40 and 240 in Shelby County, Tennessee.

In July 2008, Tennison Brothers, Inc. sued Clear Channel Outdoor (CCO) and William Thomas for breach of contract, intentional interference with business relationships, and inducement to breach a contract and intentional interference with a contract. In September 2008, CCO asserted a cross-complaint against Thomas alleging similar causes of action as Tennison. Highlights from the ensuing four years of litigation according to the appellate opinion include:

Rule 60.02(1) of the Tennessee Rules of Civil Procedure allows the court to relieve a party from a final judgment or order on grounds of “mistake, inadvertence, surprise or excusable neglect.”  This is the rule that the plaintiffs attempted to rely on to set aside an order dismissing their case in Brown v. Juarez, No. E2013-00979-COA-R3-CV (Tenn. Ct. App. Apr. 10, 2014).

In Brown, after about three years of inactivity in the case, the defendants filed a motion to dismiss the case for failure to prosecute.  The motion included a notice of hearing and a statement that the motion would be granted if there was no response.  Plaintiffs’ counsel received the motion but failed to file a response and did not appear at the hearing.  Plaintiffs’ counsel argued that the notice was crafted to conceal the hearing date.  The court was not persuaded by that argument.  Nor was the court persuaded by the argument that the plaintiffs’ failure to appear and to respond was due to “mistake, inadvertence, surprise or excusable neglect.” 

The court noted that an absence of willfulness does not equate to neglect that is excusable.  So, while the court found that plaintiffs’ counsel did not willfully fail to appear or respond to the motion, the court found that the neglect was not excusable because had plaintiffs’ counsel read the entire motion, he would have noticed the hearing date.  Thus, the court concluded that the plaintiffs failed to prove entitlement to relief under Rule 60.02 and upheld the dismissal.  

 In Wright v. Dunlap, No. M2014-00238-COA-R3-CV (Tenn. Ct. App. April 30, 2014), a jury rendered a defense verdict in plaintiff’s car crash case. The trial court entered a judgment dismissing the case, and then Plaintiff’s case was dismissed on appeal because of her failure to take appropriate action within 30 days following entry of the trial court’s judgment.

After the entry of an adverse final judgment, Tennessee law requires that a notice of appeal be filed within 30 days from the entry of the judgment. However, there are various motions a party can file with the trial court that will extend the deadline to file the notice of appeal as long as the motions are filed within 30 days of the judgment. These motions are listed in Tenn. R. App. P. 4(b) and Tenn. R. Civ. P. 59.01. Once the trial court rules on the motion, the party then has 30 days from the entry of the order on the motion to file the notice of appeal.

The trial court’s judgment was entered on October 11, 2013. Plaintiff’s Rule 59 motion to alter or amend was filed more than thirty days later on November 15, 2013. Plaintiff argued on appeal that the Rule 59 motion was timely because a duplicate judgment virtually identical to the October 11, 2013 judgment was entered on October 22, 2013. However, the appellate court disagreed. Tennessee case law holds that where two substantially identical judgments are entered, the time for filing a notice of appeal or Rule 59 motion begins to run upon entry of the first judgment. Ball v. McDowell, 288 S.W.3d 833, 838 (Tenn. 2009). The later entry of a virtually identical judgment that doesn’t affect the parties’ substantive rights or obligations resolved by the first judgment does not extend the time for filing a Rule 59 motion or notice of appeal.