August 20, 2019
from the Chancery Court for Hamilton County No. 08-0976
Jeffrey M. Atherton, Chancellor
appeals the trial court's denial of her Tennessee Rule of
Civil Procedure 60.02(3) motion for relief from a default
judgment. Appellant argues that she was not properly served,
thus rendering the default judgment void ab initio.
Appellant also appeals the trial court's order allowing
Appellee to execute its judgment on Appellant's right of
survivorship interest in real property held as a tenancy by
the entirety. Discerning no error, we affirm and remand.
R. App. 3 Appeal as of Right; Judgment of the Chancery Court
Affirmed and Remanded
U. Holland, Chattanooga, Tennessee, for the appellant, Sandra
P. Mickles and S. Chase Smith, Chattanooga, Tennessee, for
the appellee, Smartbank.
Armstrong, J., delivered the opinion of the court, in which
Charles D. Susano, Jr. and Thomas R. Frierson, II, JJ.,
January 25, 2008, Appellant Sandra Stephens executed a
promissory note in favor of Cornerstone Community Bank
("Cornerstone"), the predecessor in interest to
Appellee SmartBank. The note was in the principal amount of
$50, 000 and was secured by a deed of trust on Ms.
Stephens' property located at 116 Hendricks Boulevard in
Chattanooga. Ms. Stephens defaulted on the note, and
Cornerstone initiated foreclosure proceedings on the
Hendricks property. The property was sold at foreclosure on
or about October 24, 2008, but the sale price did not cover
the full amount of the debt owed by Ms. Stephens.
about December 5, 2008, Cornerstone filed a complaint to
recover the deficiency on the note (approximately $32, 000).
The summons issued on January 20, 2009. According to the
summons return, process server William Vance Rose
"[d]ropped service [at] 6211 Pine Marr after identifying
[Ms. Stephens] from attached photo." In his affidavit,
Mr. Rose states that he served the summons on Saturday,
February 7, 2009. Ms. Stephens did not file an answer to the
complaint; on March 12, 2009, Cornerstone moved for a default
judgment. On March 23, 2009, the trial court entered an order
granting the default and entered a judgment against Ms.
Stephens for $32, 532 plus interest and attorney fees. The
judgment was recorded in Hamilton County. Ms. Stephens did
not pay on the judgment.
April 15, 2016, Kathryn Faulkner conveyed to Ms. Stephens and
her then-husband, Richard, as tenants by the entirety, real
property located at 1315 Duncan Avenue in
Chattanooga. On January 30, 2018, SmartBank, as
Cornerstone's successor in interest, filed a "Motion
for Order of Sale of Interest in Real Property," seeking
to foreclose on Ms. Stephens' survivorship interest in
the Duncan Avenue property to satisfy the default judgment,
March 21, 2018, Ms. Stephens filed a response in opposition
to SmartBank's motion for order of sale. In her response,
Ms. Stephens made two substantive arguments. First, she
argued that she was not properly served in the default
judgment action, supra. Second, Ms. Stephens argued
that SmartBank could not execute its lien on her survivorship
interest in the Duncan Avenue property. On March 22, 2018,
Ms. Stephens filed a Tennessee Rule of Civil Procedure
60.02(3) motion to set aside the March 23, 2009 default
judgment based on the alleged failure of service. On March
23, 2018, SmartBank filed a response in opposition to Ms.
March 26, 2018, the trial court heard arguments on
SmartBank's motion for order of sale on Ms. Stephens'
survivorship interest in the Duncan Avenue property. The
court reserved ruling pending the hearing on Ms.
Stephens' Rule 60.02(3) motion to set aside the default
judgment. The court heard the Rule 60.02 motion on August 13,
2018. By order of September 19, 2018, the trial court denied
Ms. Stephens' motion. By separate order of September 19,
2018, the trial court granted SmartBank's motion. Ms.
Ms. Stephens raises three issues as stated in her brief:
1. Does the evidence preponderate against the trial
court's finding that substitute service of process was
effective pursuant to Tenn. R. Civ. P. 4 et seq.
2. Did the trial court abuse its discretion when it denied
Appellant's motion to set aside the default judgment
pursuant to Tenn. R. Civ. P. 60.02 where service of process
was ineffective, and the underlying judgment obtained by
default was void ab initio.
3. If service was effective, may a creditor levy against a
debtor's right of survivorship in a tenancy by the
entirety that was created after the judgment lien against one
spouse was recorded.