Under the Tennessee Governmental Tort Liability Act, Tennessee counties and cities are liable for the negligent actions of their employees. In Giggers v. Memphis Housing Authority, No. W2010-00806-SC-R11-CV, the Tennessee Supreme Court held that immunity under the GTLA is always removed whenever an employee violates a governmental entity’s established policy.
In Giggers, a resident of a housing project operated by the Memphis Housing Authority had a bad day. He elected to remove some of his hostility by firing a gun at the housing project’s security office. Unfortunately, the plaintiff’s father was in the path of the gunfire. He died as a result of the gunshot wounds.
The plaintiff sued MHA alleging that MHA knew that the shooter was dangerous yet failed to evict him. Apparently, the angry shooter previously committed an aggravated assault upon another resident. In response to this incident, MHA placed the shooter “on probation.”
The initial reaction of most people is that the government is not liable for the actions of a criminal. In their first appeal, the Tennessee Supreme Court held that MHA, as a landlord, owed a duty to the residents to protect them. So, the question on this appeal is whether MHA acted negligently.
The answer to this question depends upon a subtlety of the GTLA. If the injury resulted from a
“discretionary” act, the entity retains its immunity. If the injury results from an “operational”
act, immunity is removed and the government is liable.
MHA argued, predictably, that its decision of whether to evict a tenant is a “discretionary” decision because it involves the exercise of decision-making. True, the Court noted, the employee makes a decision – to evict or to not evict. That decision does not constitute “planning
or policy making” – two essential elements of a discretionary act under the GTLA. Without those elements, the decision is an “operational” act.
Hidden in this decision is an important message. The plaintiff argued that MHA violated its
“one-strike” policy when it failed to evict the shooter after the first incident. The Court did not rule on this specific issue because MHA disputed the existence of this “one-strike” policy. Instead, the Court remanded the case to the trial court with the instruction that any act that violates an established policy is always an operational act.
THE MORAL OF THIS STORY – REVIEW YOUR POLICIES IMMEDIATELY.
At least for governmental immunity purposes, any violation of a policy is always Bad News.
See Giggers v. Memphis Housing Authority, No. W2010-00806-SC-R11-CV (Tenn. April 2, 2012)
Thursday, April 5, 2012
Wednesday, March 21, 2012
ALWAYS ATTACH YOUR ADDENDA TO YOUR AGREEMENTS - OR THERE MAY BE NO CONTRACT
This case involves what should have been a "normal" residential real estate deal. The buyer offered to purchase the seller's house at $147,300.00. The parties exchanged counter-offers and ultimately, the buyer accepted the seller's counter-offer to sell the house for a price of $151,000.00. If that was the rest of the story, I would not be writing this account.
It appears that the seller soon realized that the purchase price was not enough to pay all of her costs, including the real estate commissions. So, she refused to close and sold the house to another buyer (presumably at a higher price).
The buyer sued the seller for breach of contract. As this case shows, a written document signed by both parties with an agreed upon price is not always a "contract."
In this case, the parties used a form residential real estate agreement published by the Tennessee Association of Realtors to document the transaction. Like many residential real estate contracts, the form referenced several addenda, including a "Short Sale Addendum." The Short Sale Addendum was not, however, attached to the agreement signed by both parties. We don't know why, but apparently this fact was undisputed. A short sale addendum typically states that the deal is contingent upon the agreement of the mortgage holders to accept less than what they were entitled to receive. But, I digress.
As every law student learns, the elements of a contract are: an offer, an acceptance and consideration. In this case, all three are present. But, there is one element that all contracts must have -- a meeting of the minds.
The court of appeals held that because of the omission of the addendum from the actual contract, "there was no meeting of the minds." The buyer argued that the parties intended to use the TAR form short sale addendum. The court of appeals, however, rejected this argument noting that the "form" agreement does not reference the specific TAR form.
THE MORAL OF THIS STORY:
Always attach your Addenda, or you may lose more than just your mind.
See Casey E. Bevans v. Rhonda Burgess, et al.
It appears that the seller soon realized that the purchase price was not enough to pay all of her costs, including the real estate commissions. So, she refused to close and sold the house to another buyer (presumably at a higher price).
The buyer sued the seller for breach of contract. As this case shows, a written document signed by both parties with an agreed upon price is not always a "contract."
In this case, the parties used a form residential real estate agreement published by the Tennessee Association of Realtors to document the transaction. Like many residential real estate contracts, the form referenced several addenda, including a "Short Sale Addendum." The Short Sale Addendum was not, however, attached to the agreement signed by both parties. We don't know why, but apparently this fact was undisputed. A short sale addendum typically states that the deal is contingent upon the agreement of the mortgage holders to accept less than what they were entitled to receive. But, I digress.
As every law student learns, the elements of a contract are: an offer, an acceptance and consideration. In this case, all three are present. But, there is one element that all contracts must have -- a meeting of the minds.
The court of appeals held that because of the omission of the addendum from the actual contract, "there was no meeting of the minds." The buyer argued that the parties intended to use the TAR form short sale addendum. The court of appeals, however, rejected this argument noting that the "form" agreement does not reference the specific TAR form.
THE MORAL OF THIS STORY:
Always attach your Addenda, or you may lose more than just your mind.
See Casey E. Bevans v. Rhonda Burgess, et al.
Tuesday, March 20, 2012
MORTGAGE ON A LIFE ESTATE - NO PROBLEM UNLESS THE LIFE TENANT DIES
Bankers are people, and people make mistakes. In this case, the Banker made a very costly mistake. Husband and wife wanted to borrow some money. They apparently did not have any collateral, so they offered to pledge Mom's house to secure the loan.
Mistake # 1 -- To make things easier, Banker agreed to make the loan to Mom instead of to Husband and Wife. He could have made the loan to all three without any problem, but I digress.
Mistake #2 -- Banker received an "attorney's title letter" but apparently fails to review it. I say apparently, because if the Banker had reviewed the letter he would have realized that Mom only had a life estate in her house. He needed to obtain the signature of husband and wife to the deed of trust to make sure that the lien survived Mom's death.
Mistake #3 -- Banker made the loan to Mom secured by a deed of trust on her house. This was a mistake because Mom then died leaving the Bank without any collateral.
The Bank sues Husband and Wife. Predictably, Husband and Wife said it is not our problem. The Chancellor agreed. Clearly, the Bank intended to make a loan to Mom secured by her interest in the property, and the Bank received the benefit of its bargain. The court of appeals remanded the case because the Chancellor failed to rule on the Bank's claim of "promissory estoppel." It is hard to imagine how the Bank will be able to assert that it "justifiably relied" upon any misstatements of fact when the Bank just failed to read the title report it ordered.
The Moral of this Story:
Don't bother getting a title opinion if you are not going to read it. Or, if you make a loan to one person secured by someone else's property, make sure that the real borrower signs the note or even better a personal guaranty.
See The Farmers Bank v. Clint B. Holland, et al.
Mistake # 1 -- To make things easier, Banker agreed to make the loan to Mom instead of to Husband and Wife. He could have made the loan to all three without any problem, but I digress.
Mistake #2 -- Banker received an "attorney's title letter" but apparently fails to review it. I say apparently, because if the Banker had reviewed the letter he would have realized that Mom only had a life estate in her house. He needed to obtain the signature of husband and wife to the deed of trust to make sure that the lien survived Mom's death.
Mistake #3 -- Banker made the loan to Mom secured by a deed of trust on her house. This was a mistake because Mom then died leaving the Bank without any collateral.
The Bank sues Husband and Wife. Predictably, Husband and Wife said it is not our problem. The Chancellor agreed. Clearly, the Bank intended to make a loan to Mom secured by her interest in the property, and the Bank received the benefit of its bargain. The court of appeals remanded the case because the Chancellor failed to rule on the Bank's claim of "promissory estoppel." It is hard to imagine how the Bank will be able to assert that it "justifiably relied" upon any misstatements of fact when the Bank just failed to read the title report it ordered.
The Moral of this Story:
Don't bother getting a title opinion if you are not going to read it. Or, if you make a loan to one person secured by someone else's property, make sure that the real borrower signs the note or even better a personal guaranty.
See The Farmers Bank v. Clint B. Holland, et al.
BASEBALL AND PRENUPS
Baseball is in the air -- Opening Day is almost here -- and the Cardinals will win the Series without Pujols. Okay, I was daydreaming.
In baseball, everyone knows that three strikes and you are out. This case emphasizes that Life often works the same way.
Strike 1 -- You file a joint tax return with your husband.
Strike 2 -- Husband Dies.
Strike 3 -- You signed a prenuptial agreement and Husband left all of his property to someone else.
In baseball, if the catcher drops the ball on the third strike, you can run to first base and avoid the out if you arrive before the ball. That almost never happens. In this case, the widow was trying to outrun the catcher's throw. She lost.
Because the couple filed a joint tax return, the IRS made the refund check payable to both Husband and Wife. When the executor asked the widow to endorse the check so it could be deposited into the Estate account. She said no, "the funds are all mine."
The court of appeals, acting as umpire, called the widow "Out." Specially, the Court held that the proper way to determine ownership of the refund was to look at who earned the income. The wife did not earn any income reflected on the return. As all of the income was attributable to husband, the Court held that 100% of the refund belonged to the Estate.
Arguably, the wife should be entitled to the amount by which the deductions or credits attributable to wife reduced the amount of income payable by the husband. But, it does not appear that the wife made that argument.
THE MORAL OF THE STORY:
Don't argue balls and strikes with the Umpire
Never sign a prenuptial agreement unless you really really intend to give up all of your claims to all of your spouse's assets.
See The Estate of Noel C. Hunt, III, H. Wayne Grant, Executor v. Trisha L. Jolley Hunt
In baseball, everyone knows that three strikes and you are out. This case emphasizes that Life often works the same way.
Strike 1 -- You file a joint tax return with your husband.
Strike 2 -- Husband Dies.
Strike 3 -- You signed a prenuptial agreement and Husband left all of his property to someone else.
In baseball, if the catcher drops the ball on the third strike, you can run to first base and avoid the out if you arrive before the ball. That almost never happens. In this case, the widow was trying to outrun the catcher's throw. She lost.
Because the couple filed a joint tax return, the IRS made the refund check payable to both Husband and Wife. When the executor asked the widow to endorse the check so it could be deposited into the Estate account. She said no, "the funds are all mine."
The court of appeals, acting as umpire, called the widow "Out." Specially, the Court held that the proper way to determine ownership of the refund was to look at who earned the income. The wife did not earn any income reflected on the return. As all of the income was attributable to husband, the Court held that 100% of the refund belonged to the Estate.
Arguably, the wife should be entitled to the amount by which the deductions or credits attributable to wife reduced the amount of income payable by the husband. But, it does not appear that the wife made that argument.
THE MORAL OF THE STORY:
Don't argue balls and strikes with the Umpire
Never sign a prenuptial agreement unless you really really intend to give up all of your claims to all of your spouse's assets.
See The Estate of Noel C. Hunt, III, H. Wayne Grant, Executor v. Trisha L. Jolley Hunt
Tuesday, January 10, 2012
DECEDENT'S ESTATES AND PROBATE 50 YEARS AFTER DEATH
Who files a probate proceeding 50 years after the decedent's death and why?
What happens when someone dies without a will? Lawyers make lots of money.
Urban Legend #1. If I die without a will, my estate will not have to pay the “death” tax. The Tennessee Inheritance Tax is based upon the value of the property owned at the time of death. The tax applies even if the decedent does not have a will.
Urban Legend #2. If I have a will, but I do not go through probate, my estate will not have to pay the “death” tax. Some states calculate a tax based upon the value of assets in the probate estate. The Tennessee Inheritance Tax is calculated on the value of the assets owned at the time of death.
Urban Legend #3. If I do not have a will, it will all work out. It will work out – it just may take 50 years.
In Tennessee, if a person dies without a will, the Government decides who inherits a person’s property. Sometimes it all works out; at other times the family feuds.
Ben and Pearl Bates had nine children. They owned a house in McMinnville, Tennessee where they lived until their deaths. Ben died in 1959, and Pearl died in 1962. Both died without a will. As they had nine (9) children, under Tennessee law each child owned a 1/9th interest in the house.
Fifty (50) years later, one son filed petitions to probate his parents’ estates. He did not, however, file these petitions because he wanted to pay some overdue death taxes. He had an ulterior motive – he wanted to be reimbursed for “expenses, renovations, upkeep, liability insurance and property taxes” he had allegedly spent on the property – over $200,000.
Our hero forgot a basic principle of Tennessee law when he filed the probate petitions. At the time of death, any interest in real estate immediately vested in the heirs. The estate can claim the real estate, but only if there is not enough personal property to pay the claims of creditors. In this case, because over 50 years had passed, the statute of limitations barred any claims by any creditors to the assets of the estates. The real estate never became a part of the “probate” estate. Therefore, the probate court lacked jurisdiction to consider son’s claims.
THE MORAL OF THIS STORY:
THEY CALL IT “FAMILY FEUD” FOR A REASON. When money is involved, the feuding begins.
In re Estate of Bates, M2011-0164-COA-R3-CV (Tenn. Ct. App. Jan. 5, 2012)
What happens when someone dies without a will? Lawyers make lots of money.
Urban Legend #1. If I die without a will, my estate will not have to pay the “death” tax. The Tennessee Inheritance Tax is based upon the value of the property owned at the time of death. The tax applies even if the decedent does not have a will.
Urban Legend #2. If I have a will, but I do not go through probate, my estate will not have to pay the “death” tax. Some states calculate a tax based upon the value of assets in the probate estate. The Tennessee Inheritance Tax is calculated on the value of the assets owned at the time of death.
Urban Legend #3. If I do not have a will, it will all work out. It will work out – it just may take 50 years.
In Tennessee, if a person dies without a will, the Government decides who inherits a person’s property. Sometimes it all works out; at other times the family feuds.
Ben and Pearl Bates had nine children. They owned a house in McMinnville, Tennessee where they lived until their deaths. Ben died in 1959, and Pearl died in 1962. Both died without a will. As they had nine (9) children, under Tennessee law each child owned a 1/9th interest in the house.
Fifty (50) years later, one son filed petitions to probate his parents’ estates. He did not, however, file these petitions because he wanted to pay some overdue death taxes. He had an ulterior motive – he wanted to be reimbursed for “expenses, renovations, upkeep, liability insurance and property taxes” he had allegedly spent on the property – over $200,000.
Our hero forgot a basic principle of Tennessee law when he filed the probate petitions. At the time of death, any interest in real estate immediately vested in the heirs. The estate can claim the real estate, but only if there is not enough personal property to pay the claims of creditors. In this case, because over 50 years had passed, the statute of limitations barred any claims by any creditors to the assets of the estates. The real estate never became a part of the “probate” estate. Therefore, the probate court lacked jurisdiction to consider son’s claims.
THE MORAL OF THIS STORY:
THEY CALL IT “FAMILY FEUD” FOR A REASON. When money is involved, the feuding begins.
In re Estate of Bates, M2011-0164-COA-R3-CV (Tenn. Ct. App. Jan. 5, 2012)
Thursday, December 15, 2011
JUDGMENT AND COMPOUND INTEREST
Until this case, I always thought that post-judgment interest was "simple" interest and not compound interest. Apparently, I was wrong. The court of appeals notes in passing "the trial court determined that the effective post-judgment interest rate is 10%, compounded annually. It is from this order that the current appeal arises." But, the court does not even address the propriety of the use of compound interest as opposed to simple interest.
The case itself emphasizes an important point -- the statute of limitations on the judgment does not commence until the judgment is final. If the court of appeals remands the case for further proceedings, then the judgment is not final.
See Orlando Residence LLC v. Nashville Lodging Company, et al.
The case itself emphasizes an important point -- the statute of limitations on the judgment does not commence until the judgment is final. If the court of appeals remands the case for further proceedings, then the judgment is not final.
See Orlando Residence LLC v. Nashville Lodging Company, et al.
Thursday, December 8, 2011
A CHRISTMAS PRESENT FOR BORROWERS - NON-JUDICIAL FORECLOSURE AND AN ACCURATE PAYOFF
In this case, a homeowner's association exercised its right under its Master Deed and conducted a non-judicial foreclosure sale to collect amounts owed by the homeowner to the association. Although the property was worth in excess of $300,000, the association purchased the property for the amount owed -- $12,000. The owner sued and asked the court to set aside the foreclosure.
In Tennessee, however, as long as the foreclosure sale is properly noticed, then "shocking inadequacy of the foreclosure sale price" is not grounds to set aside the sale. But, if sloppy bookkeeping makes it impossible to determine the correct amount owed on the date of the foreclosure sale, then the court of appeals says it is property to set aside the sale.
This case is scary for lenders as it states that the amount must be accurate. Generally, it is difficult to enjoin a foreclosure sale. But, it the lender cannot on the day of the foreclosure sale, provide an accurate accounting of the amount owed, then this case says the foreclosure sale should be set aside. Look for more lawsuits over foreclosure sales.
See Brooks v. Rivertown on the Island HOA
In Tennessee, however, as long as the foreclosure sale is properly noticed, then "shocking inadequacy of the foreclosure sale price" is not grounds to set aside the sale. But, if sloppy bookkeeping makes it impossible to determine the correct amount owed on the date of the foreclosure sale, then the court of appeals says it is property to set aside the sale.
This case is scary for lenders as it states that the amount must be accurate. Generally, it is difficult to enjoin a foreclosure sale. But, it the lender cannot on the day of the foreclosure sale, provide an accurate accounting of the amount owed, then this case says the foreclosure sale should be set aside. Look for more lawsuits over foreclosure sales.
See Brooks v. Rivertown on the Island HOA
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