Moore & Brooks - Attorneys At Law - Knoxville, Tennessee

Tennessee Bankruptcy Blog
Items and Issues of Interest

Making Bank's pay for Identity Theft! - Jim Moore - 7/29/10
Perry A. Craft [http://craftsheppardlaw.com/attorneys/perry-craft/] did an excellent job in pursuing an identity theft case for the son of a friend of mine against MBNA America Bank. A copy of Western District of Tennessee District Judge Bernice Bouie Donald's 26 page Order dealing many of the issues involved can be downloaded by clicking here.

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Dr. Nicholas and Mr. Hyde - Jim Moore - 10/6/08
White collar crime and human excess are seem to go hand in hand. It's just on such a grander scale when someone has HUGE amounts of cash available.

From the November 2008 issue of Vanity Fair:
Dr. Nicholas and Mr. Hyde

Henry Nicholas isn’t just another tech-boom billionaire charged with backdating stock options. All the drive, arrogance, and aggression he poured into building microchip-maker Broadcom—one of the major success stories of the Internet Age—morphed into an increasing obsession with sex and drugs, according to federal prosecutors. The author investigates the allegations about Nicholas’s out-of-control world: the parade of prostitutes, the spiking of clients’ drinks with Ecstasy, and the secret lair he built underneath the Orange County mansion he shared with his wife and kids.

You can find the entire article by Bethany Mclean on line at VanityFair.com. You can also download a copy of the drug indictment and the Securities Fraud indictment.

Please use the comments to add any interesting items with regard to Dr. Nicholas or Broadcom.

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Tough being an honest Contractor! - Jim Moore - 6/5/08
A couple of weeks ago I tried a lawsuit in Knox County Chancery Court for 3 days in front of our newest Chancellor, Michael W. Moyers. Although the Chancellor did not decide every issue in my client's favor he spent the time to write an detailed and scholarly opinion entered in Mullins, et ux v. Hurley, et al, Knox County Chancery, 164725-3, May 28, 2008. I'll write more when I have the time.

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Possession is a Rebuttable Presumption! - Jim Moore - 5/1/08
The Induction Tech v. Justus, TCA, E.S., Mar 18, 2008 opinion is of interest because it deals with an issue that arises with almost all debtors. Individuals almost always have items in their home that belong to other family members. Most business have property on the premises that belongs to the owners individually, employees or other businesses. If the items have significant value there can be problems with creditors and bankruptcy trustees.

As summarized by Judge Sharon G. Lee, (a former bankruptcy lawyer, who was once verbally ruled in Contempt of Court by Judge Bare, who was VERY angry with her co-counsel):

The judgment creditor obtained an order of execution on certain items of personal property in the possession of the judgment debtor. After the sheriff’s department seized the property, several parties filed a motion to intervene, alleging that some of the assets seized were owned by them and not the judgment debtor. Following a trial, the trial court ruled in the intervenors’ favor, finding that they had demonstrated ownership of the property at issue. We affirm the judgment of the trial court.

The question becomes one of fact. Specifically, just who does the property belong to? As reviewed by Judge Lee there is a "rebuttable presumption of ownership" but this presumption is almost always meaningless.

Induction argues on appeal that the trial court was presented with insufficient evidence of ownership of the intervenors, that the trial court “improperly applied the burden of proof relative to the issue of ownership of property in possession and control of the judgment debtor,” and that the trial court “failed to consider the totality of the circumstances” in rendering its decision. Generally speaking, “a rebuttable presumption of ownership arises from possession of property.” 73 C.J.S. Property § 70 (updated 2008); see also Park v. Harrison, 27 Tenn. (8 Hum.) 412, 1847 WL 1670, at *1 (Tenn. 1847); Arnold v. May, 10 Tenn. App. 315, 1929 WL 1648, at *4 (Tenn. Ct. App. 1929).

All it takes is for the true owner of the property to swear "That's mine!" and the presumption is gone. The creditor then has the problem of proving the witness has committed perjury. Something difficult to do without spending time and money on investigations and/or discovery. And this is exactly where Induction ended up. As the opinion points out:

Courtney Hizer, principal owner of Induction, testified that he had “some questions” about the claimed ownership of the intervenors, but no documentation that the items claimed by the intervenors did not belong to them. Regarding the testimony of the intervenors as outlined above, Mr. Hizer testified that “I don’t feel like any of these people are lying or anything like that . . . .” Induction did not provide any other evidence tending to show that the intervenors did not own the seized property they claimed to own.

Induction does attempt another approach after the trial is over by pointing out T.C.A. § 66-3-103. This statute provides that "[p]ossession of goods and chattels continued for five (5) years, without demand made and pursued by due process of law, shall, as to the creditors of the possessor or purchasers from the possessor, be deemed conclusive evidence that the absolute property is in such possessor, unless the contrary appear by bill of sale, deed, will, or other instrument in writing, proved or acknowledged and registered.” The court refuses to consider the new issue but I doubt it would have mattered. Note that the statute requires possession continue for 5 years. A one day break is enough. And proving continuous "possession" for five years is not going to be easy. Plus most debtors are going to realize a judgment creditor is after them and will just return property to its true owners.

A more interesting question is raised when the property in question is money in a bank account that has the debtor's name on it. This is particularly true when the money is not Tenants by the Entirety property. Someday I'll write on this aspect of the issue.

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