Tennessee Business Litigation Lawyers Blog

Articles Posted in Real Estate Litigation

State Court in Tennessee vs. Federal Court in Tennessee: Advantages and Disadvantages

Published on: March 19, 2013 | by J. Ross Pepper

What are the differences between litigating a breach of contract case, personal injury case, or any other type of case in a Tennessee federal district court as opposed to a Tennessee state trial court? Which court is better for your case? When can your case be filed in federal court as opposed to state court?

The first thing to consider is whether or not your case can be filed in federal court. The federal trial courts in Tennessee, which are referred to as federal district courts, are courts of “limited jurisdiction,” as we lawyers say. By “limited jurisdiction” what we mean, in a very general sense, is that, of all of the cases that can be filed in a Tennessee state court, only a limited number of those could also be filed in a Tennessee federal district court.

A federal district court has jurisdiction over two broad categories of cases: (1) Diversity jurisdiction cases; and (2) federal subject matter jurisdiction cases. A federal court in Tennessee can hear a case (because it has jurisdiction to do so) where the case involves citizens of different states and where the amount in controversy exceeds $75,000.00. A Tennessee federal court also has jurisdiction over cases brought under federal laws and statutes which specifically provide for federal court jurisdiction like overtime pay cases under the FLSA, or age discrimination cases under the ADEA.

Tennessee Case Proves that Real Estate Commission Can be Recovered Even Without a Contract

Published on: December 7, 2012 | by J. Ross Pepper

The Court of Appeals of Tennessee, in the case of Rocky Top Realty, Inc. v. Young, issued an opinion that is a good reminder that, under Tennessee law, you don’t necessarily have to prove a breach of a contract to recover money you are owed for services (or goods). The case was a real estate commission case. Here are the facts of the case:

• The plaintiff (“Plaintiff”) acted as a “facilitator” in a real estate transaction

• It was undisputed that the Plaintiff introduced to the sellers (“Sellers”) the buyer (“Buyer”) who purchased Sellers’ property for 2.7 million dollars

“Time Is Of The Essence” Clauses And Their Effect On Real Estate Contracts In Tennessee

Published on: September 11, 2012 | by J. Ross Pepper

Many real estate contracts, and other contracts, which are entered into in Tennessee and governed by Tennessee law, contain “time is of the essence” clauses. What difference do such clauses make in Tennessee contracts? A recent decision of the Tennessee Court of Appeals demonstrates how such a clause can make a practical and critical difference in a breach of contract case in Tennessee.

In the case of Seaton v. Wise Properties-TN, LLC, the Tennessee Court of Appeals was confronted with the following facts relating to a breach of contract case:

• Buyer and Seller entered into a real estate contract for the purchase and sale of real estate in Athens, Tennessee

Using Appraisers As Expert Witnesses In Eminent Domain Cases In Tennessee

Published on: August 20, 2012 | by J. Ross Pepper

Landowners in Tennessee sometimes become defendants in eminent domain cases (also called condemnation actions) filed by the state, or a city or county government. These cases often become “battles of appraisers.”

When the government files a condemnation case, it must pay just compensation to the landowner. Tennessee courts have defined “just compensation” to mean “market value” which they have further defined to mean the price which a willing buyer would pay to a willing seller assuming that the seller was not required to sell the land and the purchaser was not required to purchase it. The date that market value is to be determined, in an eminent domain case, is the date of appropriation. (Not some future date or past date).

In determining market value in condemnation cases, all the factors that enhance or detract from the value of the land should be considered. For example, it is proper to consider the other reasonable available uses of the property, and comparable sales. It is not proper for a jury to consider any increase or decrease in the value of the land because of the announcement or construction of a new improvement on the property.

Home Construction Contract Case: Tennessee Court Of Appeals Upholds Nashville Chancery Court

Published on: July 24, 2012 | by J. Ross Pepper

A recent opinion of the Tennessee Court of Appeals in a construction defect case between a homeowner and a contractor is worth the read for any lawyer or homeowner contemplating a breach of contract case against a contractor. The opinion touches on two areas of the law that might be implicated in any construction defect case where breach of contract and/or negligence are alleged: (1) the amount of damages a homeowner might be able to recover for a contractor’s defective work; and (2) a homeowner’s right to the remedy of rescission of the contract in a breach of construction contract case.

The opinion gives a plenary explanation and description of the contractor’s work which was alleged to have been incomplete, defective, and below standard (which is too detailed and lengthy to be repeated in this blog). In a nutshell, the facts of the defective construction case were as follows:

• Homeowner retained Contractor to remodel her residence

Enforcing Mechanics and Materialmen’s Liens In Tennessee

Published on: July 2, 2012 | by J. Ross Pepper

To say that Tennessee law which governs the rights of contractors and subcontractors to place liens on property is complex and full of potential pitfalls is an understatement. If you are owed money for work or materials, you should consult with a qualified, experienced construction lien attorney as soon as you suspect you may not be paid and may need to use your lien rights. We had one case a few years back where our subcontractor client could have recovered substantially more money if it had only acted a couple of weeks sooner.

In Tennessee, both general contractors (also referred to as “prime contractors”) and subcontractors (also referred to as “remote contractors”) have lien rights in certain situations. To be enforceable and effective, these lien rights must be properly asserted and perfected under the statutes which govern mechanics and materialmen’s liens (“construction liens”) in Tennessee. The rationale behind giving lien rights to contractors and subcontractors is that they should have greater rights and a better chance of collecting their debt than a party to a typical contract because their work or materials increased the value of the owner’s real property.

Keep in mind that, if you are a contractor or subcontractor, even if you never file a lien, you may be able to collect your debt from the party with whom you contracted. Where mechanics and materialmen’s lien make a critical difference for contractors and subcontractors are in those situations in which they have provided work or materials and the party who agreed to pay them cannot or will not pay them. In many of those situations, provided that the contractor or subcontractor has jumped through all of the construction lien law “hoops,” it can recover from the owner of the property with respect to which it provided work or supplied materials.

Tennessee Supreme Court Holds Statute Of Frauds Applies To Settlement Agreement

Published on: June 20, 2012 | by J. Ross Pepper

In a recent opinion in a real estate litigation case which originated in Murfreesboro, the Supreme Court of Tennessee examined the Tennessee statute of frauds and made two significant rulings about its application. The case involved a settlement agreement which was made after a breach of contract suit had been filed to settle that suit.

The plaintiff (“Buyer”) and the defendant (“Seller”) entered into a real estate contract. The Buyer paid the Seller $10,000.00 in earnest money. After the real estate contract was entered into and the earnest money paid, the Buyer discovered that the Seller had conveyed one-half of her interest in the property at issue to her niece (“Niece”).

The Buyer sued the Seller and her Niece for breach of contract, fraud, and negligent and intentional misrepresentation. Seller filed a cross claim against Niece alleging that the Seller’s transfer of her one-half interest in the property to Niece was the result of undue influence and requesting that the transfer be set aside.

Re-Entry and Re-Possession By Landlords Under Commercial Leases: Have Court Approval

Published on: April 6, 2012 | by J. Ross Pepper

In situations in which a tenant under a commercial lease is in default, landlords tempted to lock the tenant out or to repossess the property should proceed with due respect for a Tennessee statute that has been around since 1821. That statute is known as the “forcible entry and detainer” statute.

The forcible entry and detainer statute creates a right on the part of the landlord to bring a court action to obtain a writ of possession for real property (held under either a commercial lease or residential lease) where the tenant continues to occupy the property after the lease has been terminated. The statute is a two-edged sword, so to speak, because its existence also makes it unlawful for a landlord to repossess or to lock out a tenant unless the landlord first obtains a writ of possession via a forcible entry and detainer action.

A Tennessee commercial lease case involving a commercial space at the Memphis, Tennessee Airport, discusses the rationale behind the Tennessee forcible entry and detainer statute, and how the landlord in that case ran afoul of the statute. In that case, the landlord had a lease which provided: “In the event of the cancellation or termination of this Lease by the Lessor, the Lessor may immediately or any time thereafter re-enter the demised premises… and repossess and have the same….” The lease in that case did not require the landlord to obtain court approval of any type before re-taking possession of the property.

Legal Issues Regarding Lease Renewal Provisions In Tennessee

Published on: March 28, 2012 | by J. Ross Pepper

Commercial lease cases sometimes involve disputes about lease renewal provisions and/or the lessee’s (tenant’s) right to renew the lease for an additional period of time. There are some general rules which Tennessee courts follow in resolving lease cases where there are disputes about renewal.

First, if someone leases property and obtains, in the lease agreement, the right to renew the lease for an additional term after the original lease term expires, that right cannot be taken away by the lessor of the property (the landlord) unless there is also a contract provision allowing the lessor to do just that (which, typically, there would not be). Second, if the lessor (landlord) assigns a lease to another party or sells the property which is leased, the successor to the lessor will be subject to the obligation to honor the lessee’s (tenant’s) right to renew. (If the lease agreement states that, if the property is assigned or sold, the lessee (tenant) loses its right to renew, then, in that event, the general rule will not apply, and the lessee (tenant) will not have the right to renew).

Where a lease contains specific terms about the manner and time period by which the lessee (tenant) must give notice of its intent to renew the lease, then, absent a waiver of those provisions by the lessor (landlord), the lessee must give the renewal notice in the manner and within the time period set forth in the lease. There have been cases in Tennessee where tenants (lessees) have not complied with terms related to renewal, yet have been successful in having a court decide that the renewal was effective.

Breach Of Real Estate Contract Case Sheds Light On “As Is” Clause And More

Published on: January 20, 2012 | by J. Ross Pepper

A recent Tennessee case involving the breach of a real estate contract provides some straightforward and pragmatic analysis and discussion of two issues that arose from that contract. Those issues might easily arise in other real estate cases, construction cases, or breach of contract cases. Those two issues were: (1) Whether an “as is” clause in the real estate contract was effective; and (2) what damages the homebuyers (“Buyers”) could recover from the Sellers who had represented that the home in question was connected to the sewer when it was not.

Here are the facts that were before the trial court in the case:

• The Sellers provided the Buyers with a purchase and sale agreement which contained the statement: “The plumbing system is connected to the city sewer.”

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