Session June 4, 2019
from the Circuit Court for Davidson County No. 17-C-162
Kelvin D. Jones, Judge
appeal arises from an action for default on a promissory
note. Approximately eight and a half years after the debtors
stopped making monthly payments under an installment note,
the creditor filed suit for missed monthly payments going
back six years from the date of the filing of the complaint,
as well as for future installments and the final payment that
were to become due under the terms of the note. The debtors
asserted that the debt, or some portion thereof, was
time-barred. As a result, the debtors raised the statute of
limitations as a defense and filed a counterclaim, alleging
that the creditor violated the Fair Debt Collection Practices
Act and the Tennessee Consumer Protection Act by seeking a
judgment on a time-barred debt. The creditor moved for
summary judgment on all issues. The trial court granted the
motion, concluding that the amounts that the creditor sought
are not barred by the statute of limitations and that the
undisputed material facts established the creditor's
claim against the debtor as a matter of law. This appeal
followed. We affirm.
R. App. P. 3 Appeal as of Right; Judgment of the Circuit
S. Mangrum, Brentwood, Tennessee, for the appellants, Stacy
Lee and Janice Lee.
Thomas Lieber, Jr., Brentwood, Tennessee, for the appellees,
Deutsche Bank National Trust Company, Franklin Credit
Management Corporation, and Mackie Wolf Zientz & Mann,
G. Clement Jr., P.J., M.S., delivered the opinion of the
Court, in which D. Michael Swiney, C.J., and Richard H.
Dinkins, J., joined.
G. CLEMENT, JR., P.J., M.S.
January 20, 2006, Stacy and Janice Lee (the "Lees")
executed a promissory note (the "Note") in exchange
for a loan. Deutsche Bank National Trust Company, as
certificate trustee on behalf of Bosco Credit II Trust Series
2010-1 ("Deutsche Bank"), assumed ownership of the
underlying debt and became payee under the Note via an
Note, which has a date of maturity of February 1, 2021,
requires the Lees to make monthly payments until that date,
as well as a final "balloon payment" on that date,
to pay off the full amount of the Note's principal and
interest. However, the Lees have not made a payment since
2008. The Note sets forth that failure to make a
monthly payment constitutes default, and, in the event of
default, the holder of the Note may accelerate payment of the
Note by demanding that the full amount of the unpaid
principal and interest be paid immediately. The Note permits
acceleration of payment thirty days after giving notice of
Credit Management Corporation ("Franklin Credit"),
servicer for Deutsche Bank, sent a notice of default letter
to the Lees on August 15, 2016. The letter stated that the
unpaid principal balance on the Note was $59, 010.66 and that
the accrued interest to date was $33, 188.11. The letter also
requested that the Lees immediately contact Franklin Credit
to make payment on the total outstanding amount of $92,
198.77. The letter expressly indicated that time-barred
amounts were not being sought.
three months later, Mackie Wolf Zientz & Mann, P.C.
("Mackie Wolf"), attorneys for Franklin Credit,
sent separate letters to the Lees, again giving notice of
default, as well as accelerating the balance due under the
Note and demanding payment of $92, 198.77. The letters
indicated that the total balance owed may increase due to
accrued interest and other charges. Although Deutsche Bank
would have been entitled to late fees pursuant to the terms
of the Note, no demand was made for any late fees.
not received payment from the Lees upon demand, Deutsche Bank
initiated this lawsuit on January 20, 2017, asserting claims
of breach of contract and unjust enrichment against the Lees.
The Lees filed an answer, disputing the amount owed and
asserting the six-year statute of limitations as a defense.
The Lees also filed a counterclaim against Deutsche Bank,
arguing that Deutsche Bank violated the Fair Debt Collection
Practices Act ("FDCPA"), 15 U.S.C. §§
1692-1692p, and the Tennessee Consumer Protection Act
("TCPA"), Tenn. Code Ann. §§ 47-18-101 to
-131, by attempting to collect time-barred debts.
Bank moved for summary judgment on June 12, 2017, arguing
that the monthly-installment nature of the Note makes it such
that a new cause of action for default on a payment accrues
each month that a payment is missed. Accordingly, Deutsche
Bank argued that it was entitled to missed monthly payments
going back six years from the date Deutsche Bank filed its
complaint. Additionally, Deutsche Bank argued that it was
entitled to the future monthly payments through the date of
maturity and the final balloon payment as permitted by the
acceleration clause. Further, Deutsche Bank argued that it did
not violate the FDCPA or TCPA by attempting to collect on
time-barred debts by seeking a judgment for installments that
became due more than six years earlier. Along with its
motion, Deutsche Bank filed a statement of undisputed
material facts as required by Tenn. R. Civ. P. 56.03.
However, Deutsche Bank did not support each fact in its
statement by citation to the record, which Tenn. R. Civ. P.
Lees filed a response to the motion on September 1, 2017;
however, the Lees' statement of disputed facts, like that
of Deutsche Bank, failed to sufficiently cite to the record.
In their response to the motion, the Lees argued that the
trial court should deny the motion for failure to comply with
Tenn. R. Civ. P. 56.03. The Lees also made alternative
arguments as to why Deutsche Bank sought to collect on
time-barred debts, which the Lees argued would deny relief to
Deutsche Bank based on the statute of limitations and
constitute violations of the FDCPA and TCPA. First, the Lees
disagreed with Deutsche Bank's theory regarding accrual
of causes of action, instead arguing that, because the
Lees' last payment was in 2008, the entire debt is
time-barred. Second, the Lees argued that, even under
Deutsche Bank's theory, Deutsche Bank was seeking at
least some amount that is time-barred because Deutsche Bank
sought the ...