Burr & Forman

02.20.2013   |   Blog Articles, Consumer Finance Litigation, Tennessee

Burr Commentary: Tennessee Appellate Court Clarifies Requirements for Filing Appeal from General Sessions Court

We have many clients doing business in Tennessee who are regularly forced to navigate the somewhat confusing rules regarding filing appeals from General Sessions Court to Circuit Court. Appeals are often required in smaller collections cases, in which collectors may receive unfavorable verdicts in General Sessions Court. Oftentimes this may be due to the misapplication of a procedural or evidentiary rule that can be resolved in the Circuit Court. In other situations, debtors may appeal General Sessions judgments and may pair their appeal with a case in federal court alleging a violation of the Fair Debt Collection Practices Act. In both of these situations, an appeal may be dismissed based upon the failure to comply with Tennessee’s rules regarding appeal bonds. However, Tennessee rules on appeals are been somewhat confusing, with courts disagreeing on the amount and type of bond required for an appeal. Last week, the Court of Appeals of Tennessee issued an opinion in Bernatsky v. Designer Baths & Kitchens, LLC, No. W2012-00803-COA-R3-CV, 2013 WL 593911 (Tenn. Ct. App. Feb. 15, 2013), in which it clarified the rules for filing an appeal to Circuit Court. The Bernatsky decision involved an interpretation of Tennessee Code Annotated § 27-5-103 (200), which states:

(a) Before the appeal is granted, the person appealing shall give bond with good security, as hereinafter provided, for the costs of the appeal, or take the oath for poor persons.

(b) An appeal bond filed by a plaintiff or defendant pursuant to this chapter shall be considered sufficient if it secures the cost of the cause on appeal.

The Bernatsky court was faced with interpreting what it means to “give bond with good security . . . for the costs of the appeal.” The lower court in the Bernatsky case had dismissed the petitioner’s appeal, finding that because section 103 did not specify a dollar amount required for an appeal, that the statute clearly required a bond with no monetary limit. The Court of Appeals, however, found that section 103 was ambiguous, and did not “clearly require” anything. Looking at legislative history and public policy, the Court determined that requiring an appeal bond in an unlimited amount would not make “practical sense” and could create issues under the Tennessee Constitution. Thus, the Court found that the appeal bond is an “amount certain,” and is $150 in costs as set by Tennessee Code Annotated § 8-21-401(b)(1)(C)(i) and that the appeal bond can be either a cash bond or surety bond. The Bernatsky decision eases the burden of filing appeals from the General Sessions Court to Circuit Court. In so doing, the Court has reduced the cost to collectors filing appeals from unfavorable General Sessions’ verdicts, but also restricts the ability for successful General Sessions’ litigants to argue that an appeal did not satisfy all of Tennessee’s procedural requirements. Thus, when obtaining verdicts in General Sessions Court, be prepared to see appeals filed on a more regular basis after the Bernatsky decision. For more information on consumer finance litigation topics, please contact one of the Burr & Forman team members for assistance. We are happy to answer any questions or concerns you may have.

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