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Thursday, May 11, 2017

How a Defendant's Bankruptcy Affects the Timeliness of a Tort Action Filed Against That Defendant

The Tennessee Court of Appeals recently issued an excellent opinion that sets out how a defendant's bankruptcy affect the timeliness of a tort action filed against the defendant in McCollough v. Vaughn
No. M2016-01458-COA-R3-CV (Tenn. Ct. App. Apr. 27, 2017).  Here is the syllabus from the slip opinion:
This action arises out of a two-car accident. Prior to the commencement of this action, the driver of the vehicle who is the defendant in this action filed a petition in bankruptcy court. Shortly thereafter, and being unaware of the bankruptcy proceeding, Plaintiffs commenced this action naming the driver of the other vehicle as the only named defendant. Summons was issued for the defendant driver as well as Plaintiffs’ uninsured motorist insurance carrier. Summons was served on the carrier; however, summons for Defendant was returned unserved, and more than a year passed before Plaintiffs requested issuance of an alias summons. Upon motions of the defendant and the uninsured motorist carrier, the trial court dismissed all claims as time barred upon the finding that Plaintiffs failed to comply with Tenn. R. Civ. P. 3 by obtaining the issuance of a new summons for service of process on the defendant within one year of the issuance of the previous summons that was not served. Plaintiffs appeal contending their claims are not time barred because the defendant filed her bankruptcy petition prior to the commencement of this action and Tenn. Code Ann. § 28-1-109 expressly states, “When the commencement of an action is stayed by injunction, the time of the continuance of the injunction is not to be counted.” We agree. The bankruptcy court’s automatic stay not only enjoined the commencement of this action but the issuance of process, and Tenn. Code Ann. § 28-1-109 expressly states that the time of the continuance of an injunction is not to be counted in calculating the statute of limitations. The bankruptcy injunction remained in effect for 202 days; therefore, that period is not to be counted. With the addition of 202 days to the period within which Plaintiffs could obtain the issuance of an alias summons under Tenn. R. Civ. P. 3, the issuance of the alias summons was timely. As a consequence, the trial court’s order dismissing this case is vacated, and this matter is remanded with instructions to reinstate the complaint as to the defendant driver and the uninsured motorist carrier for further proceedings consistent with this opinion. 
Here is a link to the slip opinion:

NOTE: This is a must-read opinion for any Tennessee practitioner who handles tort cases.

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