Smartbank v. Stephens, E2018-01900-COA-R3-CV
| Decision Date | 21 October 2019 |
| Docket Number | No. E2018-01900-COA-R3-CV,E2018-01900-COA-R3-CV |
| Parties | SMARTBANK v. SANDRA STEPHENS |
| Court | Tennessee Court of Appeals |
Appeal from the Chancery Court for Hamilton County
Jeffrey M. Atherton, Chancellor
Appellant appeals the trial court's denial of her Tennessee Rule of Civil Procedure 60.02(3) motion for relief from a default judgment. Appellant argues that she was not properly served, thus rendering the default judgment void ab initio. Appellant also appeals the trial court's order allowing Appellee to execute its judgment on Appellant's right of survivorship interest in real property held as a tenancy by the entirety. Discerning no error, we affirm and remand.
Tenn. R. App. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed and Remanded
KENNY ARMSTRONG, J., delivered the opinion of the court, in which CHARTES D. SUSANO, JR. and THOMAS R. FRIERSON, II, JJ., joined.
Adam U. Holland, Chattanooga, Tennessee, for the appellant, Sandra Stephens.
Brian P. Mickles and S. Chase Smith, Chattanooga, Tennessee, for the appellee, Smartbank.
OPINIONOn January 25, 2008, Appellant Sandra Stephens executed a promissory note in favor of Cornerstone Community Bank ("Cornerstone"), the predecessor in interest to Appellee SmartBank. The note was in the principal amount of $50,000 and was secured by a deed of trust on Ms. Stephens' property located at 116 Hendricks Boulevard in Chattanooga. Ms. Stephens defaulted on the note, and Cornerstone initiated foreclosure proceedings on the Hendricks property. The property was sold at foreclosure on or about October 24, 2008, but the sale price did not cover the full amount of the debt owed by Ms. Stephens.
On or about December 5, 2008, Cornerstone filed a complaint to recover the deficiency on the note (approximately $32,000). The summons issued on January 20, 2009. According to the summons return, process server William Vance Rose "[d]ropped service [at] 6211 Pine Marr after identifying [Ms. Stephens] from attached photo." In his affidavit, Mr. Rose states that he served the summons on Saturday, February 7, 2009. Ms. Stephens did not file an answer to the complaint; on March 12, 2009, Cornerstone moved for a default judgment. On March 23, 2009, the trial court entered an order granting the default and entered a judgment against Ms. Stephens for $32,532 plus interest and attorney fees. The judgment was recorded in Hamilton County. Ms. Stephens did not pay on the judgment.
On April 15, 2016, Kathryn Faulkner conveyed to Ms. Stephens and her then-husband, Richard, as tenants by the entirety, real property located at 1315 Duncan Avenue in Chattanooga.1 On January 30, 2018, SmartBank, as Cornerstone's successor in interest, filed a "Motion for Order of Sale of Interest in Real Property," seeking to foreclose on Ms. Stephens' survivorship interest in the Duncan Avenue property to satisfy the default judgment, supra.
On March 21, 2018, Ms. Stephens filed a response in opposition to SmartBank's motion for order of sale. In her response, Ms. Stephens made two substantive arguments. First, she argued that she was not properly served in the default judgment action, supra. Second, Ms. Stephens argued that SmartBank could not execute its lien on her survivorship interest in the Duncan Avenue property. On March 22, 2018, Ms. Stephens filed a Tennessee Rule of Civil Procedure 60.02(3) motion to set aside the March 23, 2009 default judgment based on the alleged failure of service. On March 23, 2018, SmartBank filed a response in opposition to Ms. Stephens' motion.
On March 26, 2018, the trial court heard arguments on SmartBank's motion for order of sale on Ms. Stephens' survivorship interest in the Duncan Avenue property. The court reserved ruling pending the hearing on Ms. Stephens' Rule 60.02(3) motion to set aside the default judgment. The court heard the Rule 60.02 motion on August 13, 2018. By order of September 19, 2018, the trial court denied Ms. Stephens' motion. By separate order of September 19, 2018, the trial court granted SmartBank's motion. Ms. Stephens appeals.
Ms. Stephens raises three issues as stated in her brief:
We review the trial court's decision to grant or deny a Rule 60.02 motion under the abuse of discretion standard. Federated Ins. Co. v. Lethcoe, 18 S.W.3d 621, 624 (Tenn. 2000); Underwood v. Zurich Ins. Co., 854 S.W.2d 94, 97 (Tenn. 1993). In Eldridge v. Eldridge, 42 S.W.3d 82 (Tenn. 2001), the Tennessee Supreme Court discussed the abuse of discretion standard, stating:
Under the abuse of discretion standard, a trial court's ruling "will be upheld so long as reasonable minds can disagree as to propriety of the decision made." State v. Scott, 33 S.W.3d 746, 752 (Tenn. 2000); State v. Gilliland, 22 S.W.3d 266, 273 (Tenn. 2000). A trial court abuses its discretion only when it "applie[s] an incorrect legal standard, or reache[s] a decision which is against logic or reasoning that cause[s] an injustice to the party complaining." State v. Shirley, 6 S.W.3d 243, 247 (Tenn. 1999). The abuse of discretion standard does not permit the appellate court to substitute its judgment for that of the trial court. Myint v. Allstate Ins. Co., 970 S.W.2d 920, 927 (Tenn. 1998).
Eldridge, 42 S.W.3d at 85. Appellate courts ordinarily permit discretionary decisions to stand even though reasonable judicial minds can differ concerning their soundness. Overstreet v. Shoney's, Inc., 4 S.W.3d 694, 709 (Tenn. Ct. App. 1999). When reviewing a discretionary decision by the trial court, the "appellate courts should begin with the presumption that the decision is correct and should review the evidence in the light most favorable to the decision." Silliman v. City of Memphis, 449 S.W.3d 440, 447-48 (Tenn. Ct. App. 2014) (citations omitted).
The question of whether SmartBank was entitled to levy against Ms. Stephen'sright of survivorship in a tenancy by the entirety was tried by the court sitting without a jury. As such, we review the trial court's findings of fact de novo on the record with the presumption that those findings are correct, "unless the preponderance of the evidence is otherwise." Tenn. R. App. P. 13(d). We review the trial court's conclusions of law de novo with no presumption of correctness. Gonsewski v. Gonsewski, 350 S.W.3d 99, 105-106 (Tenn. 2011); Hyneman v. Hyneman, 152 S.W.3d 549, 553 (Tenn. Ct. App. 2003).
Furthermore, in this case, the trial court made findings that Ms. Stephens' testimony was not credible and that Mr. Rose's testimony was credible. Specifically, in its statements from the bench, the trial court noted that Ms. Stephens' testimony that she did not reside at the Pine Marr Drive property (where Mr. Rose served the summons) proved to be false based on SmartBank's entry of exhibits showing that, at all relevant times, Ms. Stephens' vehicle was registered to the Pine Marr address, and this address was listed, with the Secretary of State, as the mailing address for Ms. Stephens' business. In its order denying Ms. Stephens' Rule 60.02(3) motion, the trial court notes the discrepancies in her testimony and states that Based on the foregoing inconsistencies in Ms. Stephens' testimony, the trial court specifically held that, "This Court believes the testimony of Vance Rose . . . over the testimony of [Ms. Stephens] . . . ."
With regard to credibility determinations, this Court has stated:
When a trial court has seen and heard witnesses, especially where issues of credibility and weight of oral testimony are involved, considerable deference must be accorded to the trial court's factual findings. Further, "[o]n an issue which hinges on the credibility of witnesses, the trial court will not be reversed unless there is found in the record clear, concrete, and convincing evidence other than the oral testimony of witnesses which contradict the trial court's findings."
In re M.L.P., 228 S.W.3d 139, 143 (Tenn. Ct. App. 2007) (citing Seals v. England/Corsair Upholstery Mfg. Co., Inc., 984 S.W.2d 912, 915 (Tenn. 1999)); In re Estate of Leath, 294 S.W.3d 571, 574-75 (Tenn. Ct. App. 2008). Accordingly, where issues of credibility and weight of testimony are involved, this Court will accord considerable deference to the trial court's factual findings. Id.
In issues one and two, Ms. Stephens argues that the March 23, 2009 default judgment was void ab initio for lack of personal jurisdiction because she was never served by Cornerstone. Thus, she contends that the trial court erred in denying her relief under Tennessee Rule of Civil Procedure 60.02, which provides, in relevant part:
On motion and upon such terms as are just, the court may relieve a party or the party's legal representative from a final judgment, order or proceeding for the following reasons: . . . (3) the judgment is void . . . The motion shall be made within a reasonable time . . . .
In Turner v. Turner, 473 S.W.3d. 257 (Tenn. 2015), the Tennessee Supreme Court explained that a judgment may be void ab initio based on ineffective service of process, to-wit:
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