Donovan v. Hastings, M2019-01396-SC-R11-CV

CourtSupreme Court of Tennessee
Writing for the CourtHOLLY KIRBY, JUSTICE.
PartiesMINDY DONOVAN v. JOSHUA R. HASTINGS
Docket NumberM2019-01396-SC-R11-CV
Decision Date27 June 2022

MINDY DONOVAN
v.

JOSHUA R. HASTINGS

No. M2019-01396-SC-R11-CV

Supreme Court of Tennessee, Nashville

June 27, 2022


Session Heard at Columbia December 1, 2021.[1]

Appeal by Permission from the Court of Appeals Chancery Court for Davidson County No. 18-0568-I Patricia Head Moskal, Chancellor.

We granted permission to appeal in this case to consider awards of attorney fees and costs after dismissal of a claim pursuant to Tennessee Code Annotated § 20-12-119(c). The plaintiff homeowner entered into a contract with the defendant contractor. The homeowner sued the contractor, and the contractor filed a countercomplaint alleging breach of contract. After his motion to amend was granted, the contractor filed an amended countercomplaint asserting the same breach of contract claim with revised damages. The trial court later granted the homeowner's motion to dismiss the countercomplaint for failure to state a claim. The homeowner then sought attorney fees and costs pursuant to Tennessee Code Annotated § 20-12-119(c). The trial court granted the motion but excluded fees and costs incurred prior to the date the amended countercomplaint was filed. After the homeowner appealed the amount of attorney fees awarded, a split panel of the Court of Appeals affirmed. On appeal, we hold that the trial court and the Court of Appeals erred in holding that the homeowner's award of attorney fees and costs under Tennessee Code Annotated § 20-12-119(c) was limited to those incurred after the date the amended countercomplaint was filed. We reverse the Court of Appeals, vacate the trial court's award, and remand to the trial court for reconsideration of the award of reasonable attorney fees and costs.

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Ben M. Rose, Brentwood, Tennessee, for the appellant, Mindy Donovan.

Jeffrey Spark, Nashville, Tennessee, for the appellee, Joshua R. Hastings.

HOLLY KIRBY, J., DELIVERED THE OPINION OF THE COURT, IN WHICH ROGER A. PAGE, C.J., AND SHARON G. LEE and JEFFREY S. BIVINS, JJ., joined.

OPINION

HOLLY KIRBY, JUSTICE.

FACTUAL AND PROCEDURAL HISTORY

In 2017, Plaintiff/Appellant homeowner Mindy Donovan hired Defendant/Appellee contractor Joshua Hastings to construct an addition to and renovate parts of her Nashville home.[2] The parties entered into a residential construction contract in which Ms. Donovan agreed to pay Mr. Hastings approximately $176,300 to complete the project.

Ms. Donovan paid Mr. Hastings $130,000 toward the total due but was unhappy with the quality of the work. After several attempts to correct the problems, Ms. Donovan remained dissatisfied. In May 2018, she filed a complaint against Mr. Hastings in the Davidson County Chancery Court. The complaint alleged breach of contract, unjust enrichment, fraud, conversion, negligence, and violation of the Tennessee Consumer Protection Act.

On July 18, 2018, Mr. Hastings filed his answer. He also filed a countercomplaint asserting his own breach of contract claim and seeking anticipated profits of approximately $40,000.

On February 1, 2019, Mr. Hastings filed a motion to amend his countercomplaint. The trial court granted the motion, and on March 29, 2019, Mr. Hastings filed his amended countercomplaint. The amended countercomplaint asserted the same breach of contract claim but revised the amount of damages sought.

In May 2019, Ms. Donovan filed a motion to dismiss Mr. Hastings's amended countercomplaint, containing his claim for breach of contract, for failure to state a claim

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pursuant to Tennessee Rule of Civil Procedure 12.02(6).[3] The motion maintained that Ms. Donovan could not be held liable for breach of the contract because it lacked mutuality of consideration and thus was unenforceable.[4]

After a hearing, the trial court agreed with Ms. Donovan and dismissed Mr. Hastings's countercomplaint. By then all of Ms. Donovan's claims against Mr. Hastings had been dismissed, so the trial court made its order a final, appealable judgment. The order did not address Ms. Donovan's request for attorney fees and costs in connection with the dismissal of the countercomplaint.

Once the order dismissing Mr. Hastings's countercomplaint was certified as final and the time for Mr. Hastings to appeal had elapsed,[5] Ms. Donovan filed a motion for costs and attorney fees incurred in connection with her motion to dismiss pursuant to Tennessee Code Annotated § 20-12-119(c).[6] In her motion, she requested the statutory maximum of $10,000.[7] In support, Ms. Donovan submitted an itemized list of legal services with relevant time entries dating back to February 1, 2019, the date Mr. Hastings filed his motion to amend the countercomplaint.[8] In opposition, Mr. Hastings argued that many of the expenses Ms. Donovan claimed were neither reasonable nor necessary.

On July 29, 2019, the trial court filed an order granting Ms. Donovan's motion. The trial court excluded or reduced some of the attorney time entries and costs based on the

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factors articulated in Tennessee Rule of Professional Conduct 1.5,[9] finding that some of the time entries were duplicates for two attorneys to perform the same work or were otherwise unreasonable "in light of the single, narrow legal issue presented and the relative dollar amount at issue." It excluded some costs and time entries it deemed "not related to the motion to dismiss, as they were incurred prior to the date on which the Amended Countercomplaint was filed (March 29, 2019)." In light of all of these considerations, the order granting Ms. Donovan's motion awarded attorney fees in the reduced amount of $3,600.[10]

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Ms. Donovan appealed to the Court of Appeals.[11] Donovan v. Hastings, No. M2019-01396-COA-R3-CV, 2020 WL 6390134 (Tenn. Ct. App. Oct. 30, 2020), perm. app. granted, (Tenn. Apr. 7, 2021). She argued that the trial court erred in reducing the fees and costs from the amount she requested. In particular, Ms. Donovan contended that the trial court erroneously excluded all requested fees and costs incurred prior to March 29, 2019 because several of the time entries before that date involved research and analysis of the breach of contract claim, were incorporated into her motion to dismiss, and thus were recoverable because they were incurred as a consequence of the dismissed breach of contract claim. Id. at *4. For that reason, she contended that the trial court erred in limiting her recovery to only $3,600.

A split panel of the Court of Appeals affirmed the trial court's assessment of attorney fees and costs. All members of the panel found that the trial court did not abuse its discretion in excluding some costs and attorney time entries because they were duplicates or otherwise unreasonable. The panel split, however, on the trial court's interpretation of Tennessee Code Annotated § 20-12-119(c).

The majority held that, because the breach of contract claim actually dismissed by the trial court was contained in the amended countercomplaint, the trial court was correct to exclude all fees and costs incurred prior to the filing of the amended countercomplaint. Id. at *5. Judge Neal McBrayer dissented in part; he would have held that since the original complaint included the same breach of contract claim that was ultimately dismissed, fees and costs incurred prior to the filing of the amended countercomplaint were also recoverable. Id. at *7 (McBrayer, J., concurring in part and dissenting in part).

We granted Ms. Donovan's request for permission to appeal to this Court.

ANALYSIS

Tennessee common law as to attorney fees aligns with the "American rule," under which "a party in a civil action may recover attorney fees only if: (1) a contractual or statutory provision creates a right to recover attorney fees; or (2) some other recognized exception to the American rule applies, allowing for recovery of such fees in a particular case." Cracker Barrel Old Country Store, Inc. v. Epperson, 284 S.W.3d 303, 308 (Tenn. 2009) (citing Taylor v. Fezell, 158 S.W.3d 352, 359 (Tenn. 2005); John Kohl &Co. P.C. v. Dearborn &Ewing, 977 S.W.2d 528, 534 (Tenn. 1998)).

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This appeal requires us to interpret one such exception. The relevant facts are undisputed, and the issues involve only statutory interpretation.[12] This Court has explained:

The cardinal rule of statutory construction is to effectuate legislative intent, with all rules of construction being aid[s] to that end. We examine the language of the statute, its subject matter, the object and reach of the statute, the wrong or evil which it seeks to remedy or prevent, and the purpose sought to be accomplished in its enactment. We must seek a reasonable construction in light of the purposes, objectives, and spirit of the statute based on good sound reasoning.

Spires v. Simpson, 539 S.W.3d 134, 143 (Tenn. 2017) (citations and quotation marks omitted). "The text of the statute is of primary importance, and the words must be given their natural and ordinary meaning in the context in which they appear and in light of the statute's general purpose." Coffee Cnty. Bd. of Educ. v. City of Tullahoma, 574 S.W.3d 832, 839 (Tenn. 2019) (quoting Mills v. Fulmarque, Inc., 360 S.W.3d 362, 368 (Tenn. 2012)).

The statute at issue in this appeal provides:

(1) Notwithstanding subsection (a) or (b), in a civil proceeding, where a trial court grants a motion to dismiss pursuant to Rule 12 of the Tennessee Rules of Civil Procedure for failure to state a claim upon which relief may be granted, the court shall award the party or parties against whom the dismissed claims were pending at the time the successful motion to dismiss was granted the costs and reasonable and necessary attorney's fees incurred in the proceedings as a consequence of the dismissed claims by that party or parties. The awarded costs and fees shall be paid by the party or parties whose claim or claims
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