BEWARE OF GARNISHMENTS

A garnishment is a method of collecting a judgment. Typically, when we think of garnishments, we think of “wage” garnishments. But, garnishments can also be used by a judgment creditor to seize any funds owed by a party (the garnishee) to the judgment debtor. To encourage prompt and accurate response, the law allowing garnishments includes a penalty. If the person receiving the garnishment fails to respond, the person is liable for the full amount of the judgment.

Because of the unfairness to the garnishee, the law includes many provisions intended to protect the garnishee. In Little v. American National Property & Casualty Company, w2009-01798-COA-R3-CV (Sept. 22, 2010), the Tennessee Court of Appeals discussed those procedures. Ultimately, the Court held that the garnishee was not liable for the debt because it had not been properly served.

The facts showed that the garnishment was served on the garnishee – a Missouri insurance corporation – at the office in Tennessee of an independent agent. It was accepted by a “front-desk” person.

THE MORAL OF THIS STORY: Make sure that the “front-desk” people know that they are not authorized to accept any legal document.

FINALLY, A CASE THAT HOLDS THAT ARBITRATION IS NOT ALLOWED

Arbitration has its advocates, but I am not one of them. The judicial system in Tennessee provides most litigants with a fair and speedy disposition. Moreover, the judicial system provides a system for appeal and reconsideration. Arbitration does not. Often, even the best judges make mistakes of law or even in findings of fact. The arbitration process does not allow for that “further review.”

In Tennessee, the courts almost uniformly compel arbitration any time that the agreement provides for arbitration. In Tuetken v. Tuetken, W2008-00274-SC-R11-CV (Sept. 22, 2010), the Tennessee Supreme Court issued an opinion that gives a small victory to non-arbitration enthusiasts. In Tuetken, the court held that the parties could not agree, and the courts could not enforce, an agreement in a divorce proceeding to submit parenting issues to binding arbitration.

But the Court went further. The Court held that the parties in an arbitration proceeding cannot agree to change or modify the review procedures of the Tennessee Uniform Arbitration Act. So, even if the parties want the court to have the ability to provide “further review,” the court cannot exercise that authority. But, that is not all. The Court said that because the agreement to arbitrate was based upon the parties’ intent to give the court this expanded review authority, the agreement to arbitrate was invalid.

THE MORAL OF THIS STORY: If the other side insists on arbitration, insist that the agreement be tied to modifying the scope of appeal to the court to include a “do over.” Either the arbitration provision will be invalid or you may actually obtain a fair review.

YOU MUST ARBITRATE – EVEN IF THE ISSUE IS PURELY LEGAL

Tennessee courts mandate arbitration if the contract between the parties requires arbitration. In some cases, this mandate seems absurd. For instance, in Thomas v. Pediatrix Medical Group of Tennessee, P.C. E-2009-01836-COA-R3-CV (Tenn. Ct. App. Sept. 14, 2010), the issue was the validity of a non-competition provision in an employment agreement between a physician and his employer. After execution of the employment agreement, the Tennessee Supreme Court issued its decision in Murfreesboro Medical Clinic, P.A. v. Udom, 166 S.W.3d 674 (Tenn. 2005) holding that except as authorized by statute, physician non-competition agreements are void.

Physicians sue in court. The practice says the contract requires arbitration, so the practice demands arbitration. The physicians say arbitration is unnecessary because the issue is purely a legal issue. The court of appeals says, even if the case involves solely “legal” questions, because the contract requires arbitration, the dispute will be settled by arbitration. In fact, the court added “a panel of experienced, certified arbitrators will be able to rely on the well established laws of statutory construction” and properly decide the case.

The problem – what if the “panel of experienced, certified arbitrators” are wrong on the legal issues. Unfortunately, the Tennessee Uniform Arbitration Act and the Federal Arbitration Act allow only limited appeal of an arbitration decision. Judges often err on legal issues – and the court of appeals or supreme court exists to correct those errors.

THE MORAL OF THIS STORY – Do not sign an agreement that contains an arbitration provision unless you agree that legal issues may be decided by a court.

MOM SAID DO NOT RESUSCITATE – BUT I HAVE HER HEALTHCARE POWER OF ATTORNEY

Patient instructs doctor to “Do Not Resuscitate.” Patient crashes in front of the family members. A nurse’s assistant begins CPR. Another nurse comes into the room to help and notices the DNR notation in the chart. CPR stops. The son says “Save Mom.” I have a healthcare power of attorney, as Mom’s attorney in fact I am directing you to continue CPR. The nurses stop CPR -- Mom dies. Son sues.

Common sense says that the nurses should have continued performing CPR if they possessed actual knowledge that son in fact held a durable healthcare power of attorney for Mom. A wrongful life case is always easier to defend than a wrongful death case. But they did not, and Mom died.

In Tennessee, the Court of Appeals says that this is really a “medical malpractice” lawsuit. So, the family possesses the same obligations of expert proof and other hurdles that apply to every other medical malpractice lawsuit. Because the family failed to present expert proof on the issue of causation – would Mom have lived if CPR had been performed -- the court dismissed the case.

The unanswered question -- can the holder of a healthcare power of attorney overrule the patient’s own wishes. Although the court of appeals did not address that issue, it appears that the answer is No.

THE MORAL OF THIS STORY: If you give someone a healthcare power of attorney, make sure that the person understands what you want. It will save a lot of trauma for everyone.

Wheelock v. Doers, E2009-01968-COA-R3-CV (Tenn. Ct. App. Sept. 14, 2010)

NOT TAUGHT IN LAW SCHOOL

Foreign Judgments must be domesticated in Chancery Court or Circuit Court -- not General Sessions Court.

See Studsvik Logistics, LLC v. Royal Furniture Company.

CONTRACTUAL WAIVER OF RIGHT TO JURY

A big issue, and to my knowledge, the only case to address this one.

See Gregory Poole v. Union Planters Bank, N.A.

CORPORATE NAMES

On April 9, 2010, the Governor signed a bill that allows corporations and limited liability companies to use names that are indistinguishable from the name used by another entity. To do so, all entities using the same name must consent and must agree to use the same registered agent.

See House Bill No. 3815.