United States District Court, W.D. Tennessee, Western Division
H. MAYS, JR., UNITED STATES DISTRICT JUDGE.
the Court is Defendants' Motion for Clarification
Regarding Remaining Issues for Trial, filed on July 6, 2017.
(ECF No. 226 (“Clarification Mot.”).) On July 27,
2017, Plaintiff Church Joint Venture, a Limited Partnership
(“Church JV”) filed a response to the Motion for
Clarification. (Pl.'s Resp. to Defs.' Mot. for
Clarification Regarding Remaining Issues for Trial, ECF No.
227 (“Clarification Resp.”).)
following reasons, the Clarification Motion is GRANTED in
part and DENIED in part. To the extent Church JV asks this
Court to reconsider its Order dated March 9, 2017, that
request is DENIED.
history of this matter is recounted in Section I of the
Court's Order dated November 17, 2016, and Section I of
the Court's Order dated March 9, 2017. See Church
Joint Venture, a Ltd. P'Ship v. Blasingame, No.
2:12-CV-02999, 2016 WL 6810873, at *2-5 (W.D. Tenn. Nov. 17,
2016); Church Joint Venture, a Ltd. P'Ship v.
Blasingame, No. 2:12-CV-02999, 2017 WL 943961, at *1-3
(W.D. Tenn. Mar. 9, 2017) (“March 2017 Order”).
This section addresses only the March 2017 Order and
March 2017 Order limited the trial to two issues. See,
e.g., March 2017 Order, 2017 WL 943961, at *1. The first
is whether and to what extent deposits of annuity and
paycheck payments by Margaret Gooch Blasingame
(“MGB”) between January 1, 2007, and July 31,
2008, into a bank account in the name of the Blasingame
Family Residence Generation Skipping Trust
(“BFRGST”) are fraudulent transfers. Id.
at *1, *8. The second is whether and to what extent the
transfer by MGB and Earl Benard Blasingame
(“EBB”) of certain real property (specifically,
property listed in a quitclaim deed dated January 14, 2005)
to the Blasingame Family Business Investment Trust
(“BFBIT”) is a fraudulent transfer. Id.
at *1, *9. After entry of the March 2017 Order, trial in this
matter was scheduled for March 20, 2017. (See, e.g.,
Minutes, ECF No. 216.)
March 15, 2017, Church JV filed an Agreed Emergency Motion
for Continuance of Trial Setting. (ECF No. 219.) The Court
granted the motion and scheduled a telephone conference on
April 4, 2017. (Order Granting Emergency Mot. for Continuance
of Trial Setting, ECF No. 220; Notice of Setting, ECF No.
222.) After the telephone conference, the Court scheduled the
trial for June 19, 2017, with a pretrial conference on June
7, 2017. (Notice of Re-Setting, ECF No. 224.)
parties submitted a proposed Joint Pretrial Order on June 2,
2017. The Joint Pretrial Order suggested that,
notwithstanding the Court's prior orders, the parties
disagreed about the scope of the issues remaining for trial.
At the pretrial conference, Defendants addressed certain
legal issues that, they contended, needed to be resolved
before trial. The Court ordered Defendants to file a motion
addressing any outstanding legal issues, and ordered Church
JV to file a response. Defendants filed the Clarification
Motion on July 7, 2017, and Church JV filed the Clarification
Response on July 27, 2017.
Argument Based on Section 26-2-106(a)
Clarification Motion asks the Court to “clarify and/or
modify [the March 2017 Order] regarding the scope of issues
remaining for trial” in two ways. The first
clarification sought is how section 26-2-106(a) of the
Tennessee Code affects the claim that MGB's transfers of
annuity and paycheck payments into a BFRGST account were
section 66-3-302(12) of the Tennessee Code,
“transfer” means “every mode . . . of
disposing of or parting with an asset or an interest
in an asset . . . .” (Emphasis added.)
“Asset” means “property of the debtor,
” but does not include “[p]roperty to the extent
it is generally exempt under nonbank-ruptcy law.” Tenn.
Code Ann. § 66-3-302(2). Defendants argue that, under
section 26-2-106(a) of the Tennessee Code, “the maximum
amount of disposable earnings which a creditor of MGB could
have garnished from her paycheck is 25% of her disposable
earnings.” (Clarification Mot. 2.) As a result,
Defendants argue that only 25 percent of MGB's paycheck
transfers are “assets” that can be fraudulently
Clarification Response argues that section 26-2-106(a)
“deals with exemption as to earnings but only in the
context of garnishment, ” and that it
“specifically does not address or apply to the question
of whether the transfer of earnings to a third-party
[sic], in an attempt to hinder, delay or defraud a
creditor of the wage earner, can be defeated or not.”
(Clarification Resp. 2-3.) Church JV cites Lawrence v.
Jahn (In re Lawrence), 219 B.R. 786, 793 (E.D.
Tenn. 1998), for the proposition that, notwithstanding
section 26-2-106(a), “[o]nce earnings come into the
debtor's possession, creditors have the right under
Tennessee law to attach and execute on the earnings to
collect debts . . . .” (Clarification Resp. 3.)
addressed a solo-practitioner podiatrist undergoing a Chapter
7 bankruptcy. 219 B.R. at 789. He had $140, 000 in
uncollected bills to patients, and he claimed that, because
of section 26-2-106(a), 75 percent of that sum was exempt
from bankruptcy. Id. The bankruptcy trustee
responded, inter alia, that section 26-2-106(a)
“merely limits the amount of earnings which may be
garnished outside of bankruptcy and does not purport to
create an exemption of earnings from bankruptcy . . ...