Town & Country Jewelers, Inc. v. Andrew Timothy Sheriff

06/13/2018

IN THE COURT OF APPEALS OF TENNESSEE

AT JACKSON

April 17, 2018 Session

TOWN & COUNTRY JEWELERS INC. ET AL. v. ANDREW TIMOTHY

SHERIFF ET AL.

Appeal from the Chancery Court for Shelby County

No. CH-03-0204-02 Jim Kyle, Chancellor

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No. W2017-01375-COA-R3-CV

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Over ten years after entry of a judgment, the judgment creditors filed a motion for scire

facias to revive the judgment. The trial court denied the motion based on a determination

that expiration of the statute of limitations deprived the court of subject matter

jurisdiction. On appeal, the judgment creditors argue that their motion was timely

because the debtor revived the debt by agreeing that the debt was nondischargeable in

bankruptcy. We conclude that the trial court possessed subject matter jurisdiction but

that revival does not apply. So we affirm as modified.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed

as Modified

W. NEAL MCBRAYER, J., delivered the opinion of the court, in which J. STEVEN

STAFFORD, P.J., W.S., and BRANDON O. GIBSON, J., joined.

Geoffrey G. Gaia and R.H. Chockley, Memphis, Tennessee, for the appellants, Town &

Country Jewelers, Inc., Linda Rozen, and Doron Rozen.

G. Chadwick Reeves, Memphis, Tennessee, for the appellee, Andrew Sheriff.

OPINION

I.

On January 31, 2003, Town & Country Jewelers, Inc., Linda Rozen, and Doron

Rozen (collectively, “Plaintiffs”) filed suit against Andrew Sheriff and Jessica Trotter1

for conversion and fraud in the Chancery Court of Shelby County, Tennessee. On

August 11, 2003, the court entered a default judgment against Mr. Sheriff for

$519,357.47. Mr. Sheriff made no payments on the judgment.

Three years later, Mr. Sheriff filed a petition for relief under Chapter 7 of Title 11

of the United States Code in the United States Bankruptcy Court for the Western District

of Tennessee. Mr. Sheriff included the 2003 state court judgment as a debt on his

bankruptcy schedules.

After receiving notice of the bankruptcy filing, Plaintiffs filed an adversary

proceeding seeking a determination that the 2003 judgment was a nondischargeable debt.

See 11 U.S.C. § 523(a)(2), (a)(4), (c)(1) (Supp. 2016). On May 8, 2008, the bankruptcy

court entered a consent order providing that the 2003 state court judgment was

nondischargeable and that Mr. Sheriff remained obligated to pay the judgment. Shortly

thereafter, the bankruptcy court granted Mr. Sheriff a discharge. See 11 U.S.C. § 727

(Supp. 2016).

On June 20, 2016, approximately twelve years and ten months after entry of the

default judgment, Plaintiffs filed a motion for scire facias to revive the judgment. The

chancery court denied Plaintiffs’ motion after concluding that expiration of the statute of

limitations deprived the court of subject matter jurisdiction. See Tenn. Code Ann. § 28-

3-110(a)(2) (2017). This appeal followed.

II.

A.

Subject matter jurisdiction refers to a court’s “lawful authority to adjudicate a

controversy brought before it.” Northland Ins. Co. v. State, 33 S.W.3d 727, 729 (Tenn.

2000). A court’s subject matter jurisdiction is derived—“either explicitly or by necessary

implication”—from the state constitution or statute. Benson v. Herbst, 240 S.W.3d 235,

239 (Tenn. Ct. App. 2007). If subject matter jurisdiction is lacking, the court must

dismiss the case. Dishmon v. Shelby State Cmty. Coll., 15 S.W.3d 477, 480 (Tenn. Ct.

App. 1999). Whether a court lacks subject matter jurisdiction presents a question of law,

which we review de novo. Chapman v. DaVita, Inc., 380 S.W.3d 710, 712-13 (Tenn.

2012).

The existence of subject matter jurisdiction depends on “the nature of the cause of

action and the relief sought.” Landers v. Jones, 872 S.W.2d 674, 675 (Tenn. 1994).

1

The judgment obtained against co-defendant Jessica Trotter was the subject of a separate appeal.

See Town & Country Jewelers, Inc. v. Trotter, 538 S.W.3d 508 (Tenn. Ct. App. 2017).

2

There is no question that the chancery court, by statute, had subject matter jurisdiction

over Plaintiffs’ original action for money damages and injunctive relief based on claims

of fraud and conversion. See Tenn. Code Ann. § 16-11-102(a) (2009). Plaintiffs’ motion

to revive the judgment was an attempt to continue or extend the original action, not a new

cause of action. See Town & Country Jewelers, Inc. v. Trotter, 538 S.W.3d 508, 513

(Tenn. Ct. App.), perm. app. denied, (Tenn. Nov. 21, 2017); Cook v. Alley, 419 S.W.3d

256, 260 (Tenn. Ct. App. 2013). Thus, the court retained subject matter jurisdiction to

consider the motion.

And expiration of the statute of limitations for actions on judgments did not

deprive the court of subject matter jurisdiction. See Town & Country Jewelers, Inc., 538

S.W.3d at 512-13. “[S]tatutes of limitations do not constitute grants of subject matter

jurisdiction but rather restrict the powers of a court to act on a claim over which it has

subject matter jurisdiction.” Estate of Brown, 402 S.W.3d 193, 198-99 (Tenn. 2013).

B.

The trial court found that Plaintiffs “failed to take action on their judgment within

the statutory time period set forth in Tennessee Code Annotated § 28-3-110(a)(2).”

Whether the statute of limitations applies is a question of law that we review de novo

with no presumption of correctness. Owens v. Truckstops of Am., 915 S.W.2d 420, 424

(Tenn. 1996). Actions on judgments “shall be commenced within ten (10) years after the

cause of action accrued.” Tenn. Code Ann. § 28-3-110(a)(2). And the cause of action

accrues upon entry of the judgment in the trial court. Marcum-Bush v. Quinn, No.

M2017-01732-COA-R3-CV, 2018 WL 1559972, at *3 (Tenn. Ct. App. Mar. 29, 2018);

see also Shepard v. Lanier, 241 S.W.2d 587, 590-91 (Tenn. 1951) (reaching same

conclusion under predecessor statute).

But a judgment creditor may seek to extend the time for execution on an

unsatisfied judgment by following the procedure set forth in Tennessee Rule of Civil

Procedure 69.04. At the time Plaintiffs requested extension of the judgment, the rule

provided as follows:

Within ten years from entry of a judgment, the judgment creditor whose

judgment remains unsatisfied may move the court for an order requiring the

judgment debtor to show cause why the judgment should not be extended

for an additional ten years. A copy of the order shall be mailed by the

judgment creditor to the last known address of the judgment debtor. If

sufficient cause is not shown within thirty days of mailing, another order

shall be entered extending the judgment for an additional ten years. The

same procedure can be repeated with any additional ten-year period . . . .

Tenn. R. Civ. P. 69.04.

3

We conclude that denial of the motion for scire facias to revive the judgment was

appropriate based on Plaintiffs’ failure to comply with Rule 69.04. Our procedural rules

have “the force and effect of law.” Frye v. Blue Ridge Neurosci. Ctr., P.C., 70 S.W.3d

710, 713 (Tenn. 2002). And the plain language of Rule 69.04 required Plaintiffs to file

their motion within ten years from entry of the judgment. Tenn. R. Civ. P. 69.04.

Plaintiffs filed their motion more than two years too late.2

On appeal, Plaintiffs contend that the revival exception to the statute of limitations

excused their tardiness. Revival is an appropriate response to a statute of limitations

defense when a debtor has “revive[d] a plaintiff’s remedy that had been barred by the

running of a statute of limitations either by expressly promising to pay the debt or by

acknowledging the debt and expressing a willingness to pay it.” Ingram v. Earthman,

993 S.W.2d 611, 633-34 (Tenn. Ct. App. 1998) (footnote omitted). Once revival has

been established, the statute of limitations period is measured “from when the conduct

constituting the revival occurred.” Id. at 634.

We find no case in which revival has been used to excuse failure to comply with

Rule 69.04, and Plaintiffs have cited to none. But even assuming that revival is

applicable, the proof here was insufficient. Revival requires either an “express,

unconditional promise to pay” or “an acknowledgement of an existing debt” under

circumstances that imply a willingness to pay. Broddie v. Johnson, 33 Tenn. (1 Sneed)

463, 467 (1853). In the absence of an express promise to pay, the proof must establish an

“unqualified and direct” acknowledgment of the debt made “in such terms and under

such circumstances as to authorize an inference that [the debtor] is willing to pay it.” Id.

at 468, 469-70 (quoting Belote’s Ex’rs v. Wynne, 15 Tenn. (7 Yer.) 534, 542 (1835)).

Plaintiffs argue that, by agreeing to the entry of the consent order on May 8, 2008,

Mr. Sheriff acknowledged his debt in such a manner that the law should imply a

willingness to pay. We disagree. The language used in the consent order does not imply

a willingness to pay the 2003 judgment. The consent order provided as follows:

1. [The 2003 judgment] arising from [Mr. Sheriff’s] theft of

property from Rozen shall be a nondischargeable debt for the purposes of

this pending bankruptcy.

2. Andrew Timothy Sheriff shall remain obligated to pay the

Judgment in accord with the orders of that Court.

2

We find Plaintiffs’ argument that their motion was timely because it was an action to extend the

consent decree, not the 2003 judgment, unavailing. Their motion did not seek to enforce or extend the

decree of the bankruptcy court. Rather, they specifically requested the trial court to issue a writ of scire

facias to Mr. Sheriff “to appear and show cause, why the judgment rendered on August 11, 2003, should

not be revived and extended.”

4

We interpret court orders like any other written instrument using the familiar rules of

contract construction. State v. Phillips, 138 S.W.3d 224, 229 (Tenn. Ct. App. 2003). The

language here is unambiguous. Mr. Sheriff merely agreed that the 2003 judgment

represented a debt that was nondischargeable in bankruptcy. See Dick Broad. Co. v. Oak

Ridge FM, Inc., 395 S.W.3d 653, 659 (Tenn. 2013) (“The literal meaning of the contract

language controls if the language is clear and unambiguous.”).

C.

Finally, Mr. Sheriff seeks an award of attorney’s fees as damages for a frivolous

appeal. See Tenn. Code Ann. § 27-1-122 (2017). The statute authorizing an award of

damages for a frivolous appeal “must be interpreted and applied strictly so as not to

discourage legitimate appeals.” See Davis v. Gulf Ins. Grp., 546 S.W.2d 583, 586 (Tenn.

1977) (citing the predecessor to Tennessee Code Annotated § 27-1-122). A frivolous

appeal is one “utterly devoid of merit.” Combustion Eng’g, Inc. v. Kennedy, 562 S.W.2d

202, 205 (Tenn. 1978). We do not find this appeal devoid of merit or perceive that it was

taken solely for delay. Thus, we decline to award Mr. Sheriff his attorney’s fees on this

basis.

III.

Expiration of the statute of limitations did not deprive the trial court of subject

matter jurisdiction over Plaintiffs’ motion for scire facias to revive the 2003 judgment.

But because Plaintiffs did not file their motion within ten years from entry of the

judgment, the motion was untimely under Tennessee Rule of Civil Procedure 69.04. The

consent order entered in the bankruptcy court declaring the 2003 judgment

nondischargeable did not serve to extend the time for compliance. So we affirm the

denial of Plaintiffs’ motion on the ground of untimeliness. See Shutt v. Blount, 249

S.W.2d 904, 907 (Tenn. 1952) (“[I]f the Trial Judge reached the right result for the wrong

reason, there is no reversible error.”).

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W. NEAL MCBRAYER, JUDGE

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