Mark T. Harthun v. Joan M. Edens

IN THE COURT OF APPEALS OF TENNESSEE
AT JACKSON
January 19, 2016 Session

MARK T. HARTHUN v. JOAN M. EDENS

Appeal from the Chancery Court for Shelby County
No. CH1414411 Walter L. Evans, Chancellor

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No. W2015-00647-COA-R3-CV – Filed March 17, 2016
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This appeal arises from a contract to purchase real estate. Appellee contracted to sell
Appellant the property at issue, subject to the property appraising at a certain value and the
Appellant obtaining financing. Upon discovering that the property was subject to an
easement held by the Tennessee Valley Authority, Appellant refused to purchase the
property, contending that Appellee could not convey good and marketable title. Appellee
filed suit for specific performance and also sought injunctive relief to prevent Appellant from
purchasing other real property. In response, Appellant first filed a motion for summary
judgment. Later, Appellant filed an answer and countercomplaint, seeking damages for
breach of contract. Appellant then filed a motion for voluntary nonsuit of her
countercomplaint and, on the same day, filed an amended motion for summary judgment.
Appellee then filed a motion for leave to take a voluntary nonsuit. After Appellee filed his
motion for nonsuit, Appellant filed a motion for attorney‟s fees, costs, and the return of
earnest money. The trial court granted Appellee‟s motion for nonsuit, notwithstanding the
Appellant‟s pending motion for summary judgment. The trial court denied Appellant‟s
motion for attorney‟s fees and costs, but granted the motion for return of earnest money.
Appellant appeals.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court is Affirmed
in Part, Vacated in Part, and Remanded

KENNY ARMSTRONG, J., delivered the opinion of the Court, in which ARNOLD B. GOLDIN,
and BRANDON O. GIBSON, JJ., joined.

David L. Pool and Kevin D. Hudson, Memphis, Tennessee, for the appellant, Joan M. Edens.
Robin H. Rasmussen and Megan L. Black, Memphis, Tennessee, for the appellee, Mark T.
Harthun.

OPINION

I. Background

On August 19, 2014, Mark Harthun (“Appellee”) and Joan Edens (“Appellant”)
executed a “Purchase and Sale Agreement” (“the Agreement”) by which Mr. Harthun
contracted to sell property located at 6493 Keswick Cove, Memphis, Tennessee, 38119 (“the
Property”) to Ms. Edens for $158,000.00. As part of the Agreement, Ms. Edens posted
$500.00 as earnest money. The Agreement contained the following provision:

Seller warrants at the time of Closing, Seller will convey or cause to be
conveyed to Buyer or Buyer‟s assign(s) good and marketable title to said
Property by general warranty deed, subject only to:
(1) zoning;
(2) setback requirements and general utility, sewer, and drainage
easements of record on the Binding Agreement Date upon which
the improvements do not encroach;
(3) subdivision and/or condominium declarations, covenants,
restrictions, and easements of record on the Binding Agreement
Date; and
(4) leases and other encumbrances specified in this agreement.

If [a] title examination, closing or loan survey pursuant to Tenn. Code Ann. §
62-18-126, boundary line survey, or other information discloses material
defects, Buyer may, at Buyer‟s discretion:

(1) accept the Property with the defects OR
(2) require Seller to remedy such defects prior to the Closing Date.
Buyer shall provide Seller with written notice of such defects
via the Notification form or equivalent written notice. If defects
are not remedied prior to Closing Date, Buyer and Seller may
elect to extend the Closing Date by mutual written agreement
evidenced by the Closing Date/Possession Amendment form or
other written equivalent. If defects are not remedied by the
Closing Date or any mutually agreed upon extension thereof,
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 this Agreement shall terminate, and Buyer shall be entitled to
refund of Earnest Money.

The Agreement also contained a provision for attorney‟s fees: “In the event that any party
hereto shall file suit for breach or enforcement of this Agreement…the prevailing party shall
be entitled to recover all costs of such enforcement, including reasonable attorney‟s fees.”

Also on August 19, 2014, Ms. Edens signed a “Property Condition Disclosure” form
acknowledging the condition of the property. Included on this form was a box, which was
checked, indicating that the property was subject to a “utility easement.” The closing date of
the transaction was originally set for September 19, 2014. On September 12, 2014, the
parties amended the Agreement moving the closing date to October 15, 2014. Upon learning
that one of the easements on the property was held by the Tennessee Valley Authority
(“TVA”) and encompassed a substantial portion of the property, Ms. Edens sent a
“Notification” dated September 23, 2014 to Mr. Harthun requiring that Mr. Harthun
“remedy” the defect of TVA‟s easement on the property. Ms. Edens later notified Mr.
Harthun that she would not be purchasing the property because she considered the TVA
easement an impairment on the property‟s title.

On September 26, 2014, Appellee filed a complaint in the Chancery Court of Shelby
County, seeking to enjoin Appellant from entering into any other contracts to buy real
property and to require specific performance by Appellant. On October 2, 2014, Appellant
filed a motion for summary judgment. On the same day, Appellant filed a “Response to
Plaintiff‟s Petition for Injunctive Relief.” On October 20, 2014, Appellant filed an answer
and countercomplaint, asserting various defenses to the contract and claiming damages for
breach of contract and violations of Tennessee Code Annotated Sections 66-5-201, et seq.
On November 17, 2014, Appellant filed a “Notice of Entry Upon Land for Inspection
and Other Purposes.” On November 18, 2014, the trial court entered an order denying
Appellee‟s petition for a temporary injunction. On December 29, 2014, Appellant filed a
motion to compel Appellee to comply with her notice of entry. On January 22, 2015,
Appellant filed an amended motion for summary judgment. That same day, Appellant filed a
notice of voluntary nonsuit dismissing her counterclaims against Appellee. On January 23,
2015, the trial court entered an order granting Appellant‟s nonsuit. On February 04, 2015,
Appellee filed a motion for leave to take a voluntary nonsuit and a request to strike
Appellant‟s appraisal of the property.

On March 10, 2015, Appellant filed a motion for attorney‟s fees as the prevailing
party and for the return of her earnest money. On March 13, 2015, the trial court entered an
order granting Appellee‟s motion for nonsuit notwithstanding Appellant‟s pending motion
for summary judgment. On March 27, 2015, the trial court entered an amended order to
correct a mistake in its March 13, 2015 order. Also on March 27, 2015, the trial court
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entered an order granting Appellant‟s motion for the return of earnest money, but denied her
motion for attorney‟s fees and costs. Appellant filed her notice of appeal on April 6, 2015.

II. Issues

Appellant presents two issues on appeal:

1. Whether the trial court erred in granting Appellee‟s motion for a voluntary nonsuit.
2. Whether the trial court erred in not awarding Appellant attorney‟s fees as the
prevailing party.

III. Analysis

A. Trial Court’s Grant of Voluntary Nonsuit

“Our review of a trial court‟s decision to permit or to disallow a voluntary
dismissal…is governed by an abuse of discretion standard.” Gordon v. Wilson, No. 02A01-
9611-CV-00282, 1998 WL 315940 (Tenn. Ct. App. June 17, 1998) (citing Stewart v.
University of Tennessee, 519 S.W.2d 591, 592 (Tenn. 1974)). A trial court abuses its
discretion when it “applies an incorrect legal standard, or reaches a decision which is against
logic or reasoning that causes an injustice to the party complaining.” Eldridge v. Eldridge,
42 S.W.3d 82, 85 (Tenn. 2001). When reviewing for an abuse of discretion, “an appellate
court cannot substitute its judgment for that of the trial court.” Pratcher v. Methodist
Healthcare Memphis Hosps., 407 S.W.3d 727, 741 (Tenn. 2013).

Appellant contends that the trial court erred when it granted Appellee‟s motion for
voluntary nonsuit. Specifically, Appellant argues that the trial court abused its discretion
because it violated Tennessee Rule of Civil Procedure 41.01. Appellee argues that the trial
court acted within its discretion.

Tennessee Rule of Civil Procedure 41.01 provides, in pertinent part, that “except when
a motion for summary judgment is pending, the plaintiff shall have the right to take a
voluntary nonsuit to dismiss an action without prejudice by filing a written notice of
dismissal at any time before the trial….” (emphasis added). “Rule 41…provides that a party
has a right to take a voluntary nonsuit to dismiss an action without prejudice except when a
motion for summary judgment is pending.” Oliver v. Hydro-Vac Services Inc., 873 S.W.2d
694, 695 (Tenn. Ct. App. 1993). “Thus, „in most situations, a voluntary non-suit may be
taken as a matter of right. However, such is not the case when a motion for summary
judgment is pending.‟” Ewan v. Hardison Law Firm, 465 S.W.3d 124, 130 (Tenn. Ct. App.
2014) (quoting Clevenger v. Baptist Health Systems, 974 S.W.2d 699, 700 (Tenn. Ct. App.
1997)) (emphasis omitted). Despite Rule 41.01‟s prohibition, “under a proper set of
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circumstances, the Court has the authority to permit a voluntary dismissal, notwithstanding
the pendency of a motion for summary judgment.” Stewart, 519 S.W.2d at 593. “[T]he trial
judge, in the exercise of his sound judicial discretion, [has] the authority to grant [a plaintiff‟s
motion for voluntary nonsuit], upon a proper showing.” Id.

It is undisputed that Appellee filed his motion for voluntary nonsuit after Appellant
filed her motion for summary judgment. Under Rule 41.01, Appellee could no longer take a
nonsuit as of right after Appellant‟s motion for summary judgment was filed. Rather, the
decision to grant the nonsuit rested within the trial court‟s discretion. As discussed above, a
trial court has the discretion to grant a nonsuit despite a pending motion for summary
judgment. Therefore, we cannot conclude that the trial court abused its discretion in this case
merely because it granted Appellee‟s motion for nonsuit. However, this does not end our
review.

The trial court generally has discretion to grant a nonsuit notwithstanding a pending
motion for summary judgment, however, it is not entitled to do so in all cases. “„The general
rule is that where the right to take a voluntary dismissal is in the discretion of the trial court,
it should be granted absent some showing of plain legal prejudice to the defendant.‟” Oliver,
873 S.W.2d at 696 (quoting Price v. Boyle Inv. Co., 1990 WL 60659, at *3 (Tenn. Ct. App.
May 11, 1990), perm. app. denied (Tenn. June 11, 1990)). “„The possibility of one being
subjected to a second lawsuit is insufficient legal prejudice.‟” Id. (quoting Price, 1990 WL
60659, at *3.) Appellant presents several arguments as to why she was prejudiced by the
trial court‟s grant of the nonsuit. First, Appellant argues that she was prejudiced by the grant
of Appellee‟s motion for nonsuit because she demonstrated valid defenses to Appellee‟s
claims. Second, Appellant argues that the Appellee‟s motion for voluntary nonsuit was
designed to avoid an adverse ruling in the case. Finally, Appellant argues that she was
prejudiced because she was barred from seeking attorney‟s fees.

Sufficient prejudice to block the grant of a voluntary dismissal may include when the
non-movant presents “a valid defense, such as the statute of limitations, to the plaintiff‟s
claims.” Hamilton v. Cook, No. 02A01-9712-CV00324, 1998 WL 704528, at *5 (Tenn. Ct.
App. Oct. 12, 1998) (citing Metropolitan Fed. Bank v. W.R. Grave & Co., 999 F.2d 1257,
1262-63 (8th Cir. 1993)). Sufficient prejudice may also “exist where the plaintiff moves for a
voluntary dismissal after participating in a hearing where the trial judge expresses an adverse
opinion on the merits of the plaintiff‟s claim. Id. (citing Piedmont Interstate Fair Ass’n v.
Bean, 209 F.2d 942, 947-48 (4th Cir. 1954)). “A plaintiff‟s right to voluntary dismissal
without prejudice is subject to…an implied exception which prohibits nonsuit when it would
deprive the defendant of some vested right.” Ewan v. Hardison Law Firm, 465 S.W.3d 124,
130 (Tenn. Ct. App. 2014) (quoting Lacy v. Cox, 152 S.W.3d 480, 484 (Tenn. 2004)).

The record does not reveal that Appellant has been prejudiced by the trial court‟s grant
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of Appellee‟s motion for a nonsuit. While Appellant did present defenses to Appellee‟s
claims, none are statutory in nature. We also reject Appellant‟s claim that the trial judge
expressed an adverse opinion on the merits of Appellee‟s case. There is nothing in the
record, either in the trial court‟s orders or in the transcript, to indicate that the trial court
expressed an adverse opinion on the merits of Appellee‟s case. Finally, we reject Appellant‟s
argument that she was deprived of a vested right. Appellant claims that she was deprived of
a vested right to seek attorney‟s fees and costs. Appellant moved for an award of her
attorney‟s fees and costs, which the trial court considered and denied. While Appellant was
not successful in seeking fees and costs, she was not prevented from pursuing them. Because
Appellant was not prejudiced, we conclude that the trial court did not abuse its discretion by
granting Appellee‟s motion for a voluntary nonsuit.

B. Prevailing Party

In its order on Appellant‟s Motion Requesting Costs and Attorney Fees as the
Prevailing Party and Return of Earnest Money, the trial court denied Appellant‟s request for
attorney‟s fees. Appellant argues that the trial court erred in its ruling because she was the
prevailing party in this litigation and, under the terms of the Agreement, was entitled to
attorney‟s fees. Appellee argues that Appellant is not the prevailing party in this lawsuit and,
therefore, she is not entitled to attorney‟s fees.

Unfortunately, we do not reach the merits of this issue because the trial court did not
make sufficient and relevant findings of fact and conclusions of law in compliance with
Tennessee Rule of Civil Procedure 52.01. Tennessee Rule of Civil Procedure 52.01 states
that “[i]n all actions tried upon the facts without a jury, the court shall find the facts specially
and shall state separately its conclusions of law and direct the entry of the appropriate
judgment.” (emphasis added). Prior to July 1, 2009, trial courts were not required to make
findings of fact and conclusions of law unless requested by the parties. See Poole v. Union
Planters Bank N.A., 337 S.W.3d 771, 791 (Tenn. Ct. App. 2010). Rule 52.01 now mandates
that trial courts make findings of fact and conclusions of law regardless of the parties‟
request. This requirement is not a “mere technicality.” See Hardin v. Hardin, No. W2012-
00273-COA-R3-CV, 2012 WL 6727533, at *3 (Tenn. Ct. App. Dec. 27, 2012) (quoting In re
K.H., No. W2008-01144-COA-R3-PT, 2009 WL 1362314, at *8 (Tenn. Ct. App. 2009)).
“[F]indings and conclusions facilitate appellate review by affording a reviewing court a clear
understanding of the basis of the trial court‟s decision.” Lovlace v. Copley, 418 S.W.3d 1, 34
(Tenn. 2013). “There is no bright-line test by which to assess the sufficiency of factual
findings, but „the findings of fact must include as much of the subsidiary facts as is necessary
to disclose to the reviewing court the steps by which the trial court reached its ultimate
conclusion on each factual issue.‟” Id. at 35 (citing 9C CHARLES WRIGHT ET AL., FEDERAL
PRACTICE AND PROCEDURES § 2571 at 219-233 (3d ed. 2005)).

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 The March 27, 2015 order denying Appellant‟s motion for attorney fees and costs
merely concludes that Appellant is not entitled to costs and fees. Specifically, the order
states:

This matter came before the Court on March 20, 2015, upon
[Appellant‟s] Motion Requesting Costs and Attorney Fees as the Prevailing
Party and Return of Earnest Money (“Motion”). Upon consideration of
[Appellant‟s] Motion and supporting Memorandum, [Appellee‟s] Response in
Opposition and supporting Memorandum, and argument of counsel, the Court
finds that Defendant‟s Motion, limited to the demand for the return of $500 in
earnest money is well taken, and should be granted. The Court denies the
request for costs under Rule 54.04 of the Tennessee Rules of Civil Procedure,
and denies the request for costs and attorney‟s fees under the Purchase and
Sale Agreement entered into by the Parties on August 19, 2014.

In this case, the Agreement between the parties contains a provision providing that
“[i]n the event that any party hereto shall file suit for breach or enforcement of this
Agreement…the prevailing party shall be entitled to recover all costs of such enforcement,
including reasonable attorney‟s fees.” The trial court‟s order does not contain any findings of
fact whatsoever. If this Court were to review the trial court‟s determination not to award fees
and to apportion costs, we would have to speculate as to what facts form the basis of the trial
court‟s determination. It is this Court‟s purview to review, not assume or speculate. Without
any facts in the trial court‟s order, we are forced to guess at the rational the trial court used in
arriving at its decision. This we cannot do. Accordingly, we conclude that the trial court did
not comply with Tennessee Rule of Civil Procedure 52.01.

When a trial court‟s order fails to meet the requirements of Rule 52.01, “the
appropriate remedy is to „vacate the trial court‟s judgment and remand the cause to the trial
court for written findings of fact and conclusions of law.‟” Hardin, 2012 WL 6727533 at *5
(quoting Lake v. Haynes, No. W2010-00294-COA-R3-CV, 2011 WL 2361563, at *1 (Tenn.
Ct. App. June 9, 2011)). Because the trial court‟s order on Appellee‟s motion for attorney‟s
fees and costs and the return of earnest money does not comply with Rule 52.01, we vacate
the portion of the order denying attorney‟s fees and apportioning costs and remand the cause
with instructions to issue an order in compliance with Tennessee Rule of Civil Procedure
52.01.

IV. Conclusion

For the foregoing reasons, the judgment of the trial court is affirmed in part, vacated
in part, and remanded for such further proceedings as may be necessary and are consistent
with this opinion. Costs of the appeal are taxed to the Appellant, Joan M. Edens, and her
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surety, for all of which execution may issue if necessary.

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KENNY ARMSTRONG, JUDGE

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