F & M Bank v. Fleming, M2020-01086-COA-R3-CV

CourtCourt of Appeals of Tennessee
Writing for the CourtJ. STEVEN STAFFORD, JUDGE
Decision Date28 September 2021
Docket NumberM2020-01086-COA-R3-CV



No. M2020-01086-COA-R3-CV

Court of Appeals of Tennessee, Nashville

September 28, 2021

Session August 17, 2021

Appeal from the Circuit Court for Montgomery County No. 2017-CV-1980 Ross H. Hicks, Judge

Appellant debtor appeals the trial court's decision to find certain affirmative defenses waived, to deny his motion to continue the summary judgment hearing in order to conduct discovery, and to grant summary judgment to the defendant bank. Discerning no reversible error, we affirm.

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

Thomas F. Bloom, Nashville, Tennessee, for the appellant, George Raymond Fleming, Jr.

John R. Cheadle, Jr. and Mary Barnard Cheadle, Nashville, Tennessee, for the appellee, F&M Bank.

J. Steven Stafford, P.J., W.S., delivered the opinion of the court, in which Kenny Armstrong and Carma Dennis McGee, JJ., joined.



I. Factual and Procedural History

On September 18, 2017, Plaintiff/Appellee F&M Bank ("the Bank") filed a complaint in the Montgomery County Circuit Court against Defendant/Appellant George Raymond Fleming, Jr. ("Appellant"), relating to an indebtedness secured by a Multipurpose Note and Security Agreement ("the Note"). According to the complaint, Appellant's indebtedness under the Note was $212, 857.61, including principal and interest. The Bank further alleged that the loan was past due and payable, that demands for payments had been made and refused, and that there were not "set-offs or counter-claims." The Bank therefore sought a judgment of $212, 857.61, plus ongoing interest and attorney's fees. A copy of the Note attached to the complaint reflected that the loan occurred on December 30, 2011, with an original loan amount of $1, 587, 936.34 and a maturity date of March 29, 2012. The Note further provided that Appellant agreed to grant the Bank a security interest in a number of parcels of real property described in an exhibit to the Note.

On November 22, 2017, counsel for Appellant filed a notice of appearance; therein, he noted that he reserved the right to file a responsive pleading raising affirmative defenses. On November 30, 2017, the Bank filed a motion for default judgment, seeking entry of judgment in the amount set forth in the complaint and attorney's fees. On December 12, 2017, Appellant filed a motion for additional time to file a responsive pleading. The Bank thereafter gave notice that its motion for default judgment would be heard on January 11, 2018.The notice of hearing also stated that the parties had agreed that Appellant had until January 10, 2018 "to file an answer."

Appellant did not file an answer as expected. Instead, on January 9, 2018, Appellant filed a motion for a more definite statement, seeking additional information about what properties were sold to satisfy a portion of the $1, 587, 936.34 debt, how the properties were sold, and how the proceeds were applied. Appellant also sought information about the demands for payment that were made by the Bank. This information was necessary, Appellant claimed, in order "to determine what affirmative defenses may be available to [Appellant]."

The motion for default judgment was heard on January 11, 2018. During the hearing, counsel for Appellant stated that he would strike his motion for a more definite statement. As a result, the trial court orally ruled that the motion for default judgment would be denied, Appellant's motion for a more definite statement would be stricken, and Appellant would file an answer within ten days of the date of the hearing. The trial court also provided some direction as to Appellant's affirmative defenses:

You take whatever position is [Appellant's] position with regard to that but then include, subject to raising affirmative defenses, that may become a --and you can mention the ones that you - you've -- all those you think might have any applicability . . . should those become applicable as discovery proceeds, something to that nature. And then that -- that gets us past the pleading stage and into the discovery stage where this information can be explored

No written order was entered as to the motion for default judgment or the motion for a more definite statement until years later, when the omission became apparent. As a result, on July 10, 2020, Appellant filed a motion for the trial court to enter an order on those motions nunc pro tunc. The parties thereafter disagreed as to the trial court's ruling with regard to Appellant's affirmative defenses. The Bank asserted that Appellant was ordered to promptly file an answer raising all possible affirmative defenses that may become applicable as discovery proceeds; Appellant asserted that he was permitted to file available affirmative defenses following a period of discovery. Eventually, the trial court entered an order nunc pro tunc to January 11, 2018, denying the motion for default judgment, striking Appellant's motion for a more definite statement, and ordering Appellant to file an answer. The order entered by the trial court did not specifically mention affirmative defenses.

Eleven days following the hearing, on January 22, 2018, Appellant filed an answer in which he admitted the existence of the Note, denied the other allegations, and reserved all affirmative defenses that might become available based upon discovery or other investigation. The case then became dormant, with no further filings and no discovery occurring.

On January 24, 2020, the trial court issued an order to show cause why the case should not be dismissed for lack of prosecution. In response, on February 12, 2020, Appellee filed a motion for summary judgment. In its attached statement of undisputed material facts, the Bank asserted that Appellant entered into a loan with the Bank, that he failed to pay as promised, that the Note matured on March 29, 2012, and that the amount still due on Appellant's loan was $87, 857.61 as of December 27, 2016. The Bank further asserted that the loan documents provide for the continuing accrual of interest and attorney's fees. The statement of undisputed material facts cited the Note, an affidavit of the Bank's attorney as to fees, and an affidavit of the Bank's Vice President Collections Manager.

On April 30, 2020, Appellant filed a motion requesting a postponement of the hearing on the motion for summary judgment so that discovery could proceed under Rule 56.07 of the Tennessee Rules of Civil Procedure, discussed in detail, infra. Therein, Appellant asserted that neither party had "begun any discovery" and indicated that such discovery was necessary to determine, inter alia, how the Bank had come to the $87, 857.61 figure, when the complaint originally sought $212, 857.61. Appellant accompanied his motion with affidavit from himself detailing his own investigation into a foreclosure sale of fourteen separate parcels of Appellant's property on October 21, 2016; documents relating to the foreclosure sale were attached to Appellant's affidavit. Appellant's attorney also filed an affidavit detailing what discovery was necessary to respond to the motion for summary judgment; the information Appellant's counsel claimed was necessary also concerned the foreclosure sale.

On May 1, 2020, Appellant also filed a response in opposition to Appellant's motion for summary judgment, raising procedural arguments against the Bank's motion and again asserting that a continuance should be granted under Rule 56.07. In his response, Appellant set forth his own statement of facts, asserting that this was not a straightforward collection case, but a case to collect a deficiency judgment following a foreclosure, which Appellant argued implicated Tennessee Code Annotated section 35-5-118.[1] Appellant's statement of facts concerns the procedural history of the case, including the lack of discovery that had occurred, and the foreclosure of certain property under the security agreement. Specifically, Appellant asserted that thirteen of Appellant's properties had been sold at a foreclosure sale, with ten properties being purchased by the Bank and three other properties purchased by another individual. Appellant further asserted that the total consideration paid for the properties sold was $1, 273, 480.00, while the 2016 fair market value for ad volorem taxes as established by the assessor of Property for Montgomery County for these properties totaled $1, 699, 600.00. Appellant did not, however, file any response to the Bank's statement of undisputed material facts. The Bank filed a response to Appellant's facts, generally admitting for purposes of summary judgment that Appellant's facts concerning the foreclosures of the properties were correct.

On June 8, 2020, the trial court entered a memorandum opinion denying Appellant's motion to continue and granting the Bank's motion for summary judgment. First, the trial court ruled that Appellant's procedural arguments concerning the Bank's motion for summary judgment were without merit. Second, the trial court found that the motion to continue would be denied because Appellant engaged in no discovery in the two years following the filing of the complaint and waived the affirmative defense of inadequacy of the foreclosure sales price by not raising it in his answer or any subsequent pleadings before the Bank filed its motion for summary judgment. Thus, the trial court ruled that "[a]t this late stage of the proceedings, seeking discovery to explore the possibility that such a defense might exist is simply inadequate to overcome [Appellant's] waiver of this defense and/or the merits of [the Bank's] Motion for Summary Judgment." The trial court further ruled that Appellant's effort to reference the Tax Assessor's valuations of the property was not sufficient to overcome the presumption that the sales price was fair...

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