John O. Threadgill v. Wells Fargo Bank, N.A., E2016-02339-COA-R3-CV

In 2011 Threadgill (as trustee for ELM Children’s Educational Trust) sued Wells Fargo contesting an impending foreclosure and alleging contract, misrepresentation, and consumer-protection claims; the trial court granted Wells Fargo summary judgment and dismissed with prejudice.
On appeal this court determined the trustee (a non-attorney) could not represent the trust pro se, so the appeal was ineffective; the Tennessee Supreme Court denied review.
Two weeks after the Supreme Court denial, Threadgill filed a new, pro se suit in his individual capacity asserting essentially the same claims against Wells Fargo.
Threadgill conceded this second suit was barred by res judicata but sought declaratory relief that Wells Fargo is estopped from enforcing the note and deed of trust because it failed to assert those rights as a compulsory counterclaim in the first suit.
The trial court granted Wells Fargo summary judgment on res judicata and denied Threadgill’s requested declaration, ruling nonjudicial foreclosure need not be pleaded as a compulsory counterclaim.
Threadgill appealed; the Court of Appeals reviewed whether enforcement of a note/deed of trust is a compulsory counterclaim under Tenn. R. Civ. P. 13.01 and affirmed the trial court.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether a lender’s claim to enforce a promissory note/deed of trust is a compulsory counterclaim under Tenn. R. Civ. P. 13.01	Threadgill: the note/deed is a claim that had to be asserted as a mandatory counterclaim in the first suit, so failure to do so renders the note unenforceable	Wells Fargo: enforcement via non-judicial (power-of-sale) foreclosure is not a judicial claim and thus need not be pleaded as a counterclaim	Held: A non-judicial foreclosure right is not a compulsory counterclaim under Tenn. R. Civ. P. 13.01; declaration denied

ELM Children’s Educ. Trust v. Wells Fargo Bank, N.A., 468 S.W.3d 529 (Tenn. Ct. App. 2014) (prior appeal in this matter; non-attorney trustee could not prosecute appeal for trust)
Crain v. CRST Van Expedited, Inc., 360 S.W.3d 374 (Tenn. Ct. App. 2011) (explaining failure to plead compulsory counterclaim can preclude later suit on that claim)
Napier v. Stone, 114 S.W.2d 57 (Tenn. Ct. App. 1937) (recognizing non-judicial foreclosure is permissible if statutory and deed terms are followed)
Robertson v. U.S. Bank, N.A., 831 F.3d 757 (6th Cir. 2016) (stating lender did not forfeit non-judicial foreclosure rights by failing to assert a counterclaim in court)
Maddox v. Ky. Fin. Co., 736 F.2d 380 (6th Cir. 1984) (holding compulsory-counterclaim rules do not bar subsequent nonjudicial foreclosure)
In re Draffen, 731 S.E.2d 435 (N.C. Ct. App. 2012) (same conclusion by another appellate court)