Now that the school children have had their field trip, the General Assembly has completed its business and adjourned. One of its parting shots was the law mislabeled ad the Tennessee Civil Justice Act of 2011. This bill received more attention than Taylor Swift in a shopping mall. It was poked and prodded by all sides. Even that esteemed New York City District Attorney Fred Thompson applied some of his smooth talking to this one. At the end of the day, you would assume that there would be no surprises. Certainly, everyone should know by now what is or is not in this bill. Here are some that I found:
Biggest surprise. Tennessee now allows a successful plaintiff to recover attorney's fees in tort lawsuits. If you are a plaintiff in a lawsuit and you win, you can now recover your attorney's fees. The new law specifically allows the plaintiff in a "tort action" to recover his or her "economic damages." The new law defines "economic damages" to include "other objectively verifiable monetary losses." Attorney's fees are objectively verifiable and they sure are monetary. This surprise is not limited to "personal injury" lawsuits. This provision applies to business tort cases. So, be sure to allege a tort. Tenn. Code Ann. section 29-39-103.
Second surprise. You cannot sue Federal Express in Memphis. Federal Express is a Delaware corporation. Its registered agent in the State of Tennessee is in Knox County. Under the new law, a corporation, partnership or limited liability company that is formed in another state can only be sued in the county where its registered agent for service of process is located. So, you cannot sue Federal Express in Shelby County. Instead, you must sue Federal Express in Knox County -- a difference of 380 miles. Tenn. Code Ann. section 20-4-104. There is an exception to this rule. You can sue Federal Express in Memphis if "all or a substantial part of the events or omissions giving rise to the cause of action accrued in Shelby County. So, if the Fed Ex van hits you in Shelby County, you can sue in Memphis. I predict a lot of litigation over this one.
Third surprise. No Appeal Bonds. You win your lawsuit and the court enters a judgment. In the old days -- that would be yesterday -- you could begin collecting on the judgment immediately. If the losing party wanted to avoid collection, it could post an appeal bond. Typically, the appeal bond is a letter of credit, a certificate of deposit or a surety bond issued by an insurance company. If during the three (3) years or so that the appeal is pending, you win, you do not need to worry about collection. You merely call the bank or the insurance company and say pay me my money.
Now, the loser does not need to post a bond to avoid collection. All the loser needs to do is show that if he loses the appeal, and the bank or insurance company comes after the loser, then loser will be insolvent. In Tennessee, a person is insolvent if (a) the value of your assets does not exceed your liabilities or (b) you are unable to pay your debts when they are due. For most people, paying a judgment for even $10,000 makes them insolvent.
The statute directs the trial court to set a "bond in an amount that would allow the appeal of the judgment to proceed." Tenn. Code Ann. section 27-1-124(e). Presumably, this is the amount that will permit the loser to remain "solvent." So, you don't need to worry about the loser filing bankruptcy until after the appeal is over.
Fourth surprise. The law does not take effect until October 1, 2011. What is that about? The law specifically states that it applies to "liability actions for injuries, deaths and losses covered by this act which accrue on or after that date." So, you may want to accrue before October 1 or you may want to accrue after October 1. The issue will be those cases in which the cause of action accrues before October 1, but the lawsuit is not filed until January 1.
My Prediction. This one will be amended.
See Amendment No. 1 to HB2008.
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