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Church Joint Venture v. Blasingame

United States District Court, W.D. Tennessee, Western Division

August 8, 2017

CHURCH JOINT VENTURE, A LIMITED PARTNERSHIP, Plaintiff,
v.
EARL BENARD BLASINGAME; MARGARET GOOCH BLASINGAME; BLASINGAME FAMILY BUSINESS INVESTMENT TRUST; and BLASINGAME FAMILY RESIDENCE GENERATION SKIPPING TRUST; Defendants.

          ORDER

          SAMUEL H. MAYS, JR., UNITED STATES DISTRICT JUDGE.

         Before 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.”).)

         For the 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.

         I. BACKGROUND

         The 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 subsequent proceedings.

         The 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.)

         On 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.)

         The 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.

         II. ANALYSIS

         A. Argument Based on Section 26-2-106(a)

         The 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 fraudulent transfers.

         Under 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 transferred. (Id.)

         The 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.)

         Lawrence 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 . . ...


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