November 2011 Archives

Claims Against Estates: Deadlines For Filing In Tennessee

November 23, 2011,

If a living person owes you money, under Tennessee law, generally, you have six years to file a breach of contract lawsuit against that person to collect your money. Once that person passes away, however, certain Tennessee laws set time deadlines for filing claims against estates. These laws may drastically shorten the time within which you must take action on your claim or lose it.

It is not necessary that you have a court judgment against the deceased person for the debt you are owed in order to make a claim against the estate of the deceased person. The personal representative of the deceased person's estate might challenge your claim by filing an "exception" to it, but cannot prevent you from filing your claim and bringing it before the probate court.

In Tennessee, the longest period that a creditor ever has to file a claim against an estate is twelve months from the date of the death of the deceased. That time period may be shorter (as discussed below). The reasoning behind requiring creditors to file their claims with a probate court within no later than one year of the death of the deceased is to allow heirs and beneficiaries of the estate of the deceased to receive their distributions without having to contend with the claims of creditors made years after the distributions.

In Tennessee, claims against the estate of a deceased person must be filed with the probate court within four months from the date the probate court clerk first publishes what is referred to as a "Notice to Creditors." Such notices to creditors are required to be published for two consecutive weeks in a newspaper in the county where the probate court in which the probate action has been filed is located. The probate court clerk is required to publish a notice to creditors within thirty days after the probate court issues letters testamentary or letters of administration. In Nashville, such notices are typically published in The Tennessean, City Paper, Nashville Scene, or Nashville Ledger.

There are two exceptions to the four month period for filing claims against an estate. The first exception applies where a creditor receives "actual notice" of the published notice. Creditors receive "actual notice" with frequency as, under Tennessee law, a personal representative is required to mail a copy of the published notice to "all creditors of the decedent of whom the personal representative has actual knowledge or who are reasonably ascertainable by the personal representative...."

If a creditor receives actual notice from the personal representative within the timeframe set forth in the statute (T.C.A. section 30-2-307, which is too complex to cover in this blog), the creditor's claim must be filed with the probate court within 60 days of the creditor's receipt of the notice sent by the personal representative.

The second exception to the four month deadline occurs where a creditor receives "actual notice" less than 60 days before the date that is twelve months from the decedent's date of death or receives no notice. In the event of either of those occurrences, the creditor has twelve months from the decedent's date of death to file its claim with the probate court.

If there is a dispute between the personal representative and the creditor as to either (1) whether the personal representative was required to send notice to the creditor; or, (2) whether the personal representative properly sent the notice, the burden of proof is on the creditor to prove its position. Keep in mind that, under long standing Tennessee law, the fact that a creditor did not know about the death of the person who owed the creditor money is immaterial. Standing alone, that fact does not, in any way, relieve the creditor from the deadlines set forth under Tennessee law.

Contractor Still Liable For Work Delegated To Subcontractor Says Supreme Court Of Tennessee

November 17, 2011,

In a recent breach of contract case involving a construction contract for the replacement of a roof, the Supreme Court of Tennessee made two holdings that are crucial to understand for those lawyers, builders, and other parties involved in construction contracts, particularly, those carried out, in whole or in part, by subcontractors. First, even if a contractor does not make an express representation that it will perform its work in a workmanlike manner, that condition will be implied, by operation of law, into its contract (unless, of course, such a warranty is expressly disclaimed). Second, the contractor cannot avoid financial responsibility when work is not performed in a workmanlike manner because the contractor hired a subcontractor to perform the work (unless there is some sort of disclaimer by the contractor).

Here are the basic facts of the case:

• The Defendant was a roofing contractor who contracted to replace the Homeowners' roof
• The contract between the Defendant and the Homeowners was oral
• The Defendant never made any warranties about the quality of his work, nor did he make any disclaimers about the quality of his work
• After the new roof was installed, it leaked
• The Defendant Contractor hired a subcontractor to repair the roof
• The Defendant Contractor and the subcontractor entered into an agreement whereby the subcontractor agreed that any damages caused by his repairs would be his, the subcontractor's, responsibility
• The subcontractor used a propane torch, caused a fire and over $800,000 in repair damages
• The subcontractor had no insurance coverage or ability to pay for the damages

The Homeowners' insurance company (the "Plaintiff") filed a lawsuit against the Defendant Contractor. The Plaintiff alleged that the Defendant was liable for (1) breach of contract; and, for (2) negligence.

The Contractor filed a motion for summary judgment on both Plaintiff's causes of action (negligence and breach of contract). The trial court granted the summary judgment on the Plaintiff's negligence claim on the grounds that the Contractor could not be liable for the negligent acts of the subcontractor. With respect to the Plaintiff's breach of contract claim, the trial court held that the Contractor was not liable because the damages were not foreseeable.

The Tennessee Court of Appeals reversed the decision of the trial court, and held the Contractor liable for breach of contract for the damages caused by the subcontractor. (The trial court's ruling on the negligence claim was not appealed). The case was then appealed to the Supreme Court of Tennessee. It affirmed the decision of the Court of Appeals.

The Supreme Court held that construction contracts impose an implied duty on a builder to perform its work in a workmanlike manner. What does "workmanlike manner" mean? The language used by the Supreme Court fairly establishes that whether a contractor's work is "workmanlike" will hinge upon whether or not the contractor "used the degree of skill and knowledge normally possessed by those members of the trade."

After determining that the Contractor had a contractual duty to perform the roofing contract in a workmanlike manner, the Supreme Court moved to the question of whether or not the Contractor was "let off the hook" because he had subcontracted the work which resulted in the fire damage. The Supreme Court made a distinction, which is very important to understand, between a contractor's liability in tort (for negligence) versus a contractor's liability for breach of contract.

Generally, a person who employs a subcontractor is not liable where the subcontractor's negligence injures another's person or property. The Supreme Court held, however, that, if a contractor delegates work to a subcontractor, the contractor is still liable for breach of contract for a breach of the implied duty to perform work in a workmanlike manner.

To further illustrate the difference between tort liability for the negligence of subcontractors and contractual liability for the work of subcontractors, consider this scenario: If, instead of nearly burning down the Plaintiffs' house and causing so much damage, the subcontractor had dropped a pallet of roofing materials on a passerby's car, the Contractor would not have been liable for the medical bills or car repair expenses of the passerby who had no contract with the Contractor (unlike the Homeowners in this case).