08/10/2022
IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
January 20, 2022 Session
MICHAEL THOMSON v. GENESIS DIAMONDS, LLC
Appeal from the Circuit Court for Wilson County
No. 2019-CV-598 Michael Wayne Collins, Judge
___________________________________
No. M2021-00634-COA-R3-CV
___________________________________
This appeal involves an award of attorney’s fees pursuant to Tenn. Code Ann. § 20-12-
119(c). The trial court dismissed two of the plaintiff’s three claims for relief pled in his
amended complaint pursuant to Tenn. R. Civ. P. 12.02(6), upon its finding that the plaintiff
had failed to state a claim for which relief could be granted on the two claims. The third
claim also was included in the defendant’s motion to dismiss, as well as arguments for
improper venue and lack of subject matter jurisdiction, all of which were denied by the
trial court. More than thirty days after a final judgment was entered, the defendant
requested an award of attorney’s fees and discretionary costs. In his supporting affidavit,
the defendant’s counsel included attorney’s fees as relevant to the entire motion to dismiss
instead of distinguishing the time spent regarding the claims that were dismissed pursuant
to Rule 12.02(6). The trial court awarded the defendant attorney’s fees in the amount of
$10,000, which is the maximum amount of attorney’s fees a trial court can award under
Tenn. Code Ann. § 20-12-119(c). The trial court denied the defendant’s request for
discretionary costs as untimely. We affirm the trial court’s denial of discretionary costs,
vacate the award of attorney’s fees, and remand for the Trial Court to reconsider the
attorney’s fees award as consistent with this opinion and the Tennessee Supreme Court’s
opinion in Donovan v. Hastings, No. M2019-01396-SC-R11-CV, -- S.W.3d -- , 2022 WL
2301177 (Tenn. June 27, 2022).
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court
Affirmed in Part, Vacated in Part; Case Remanded
D. MICHAEL SWINEY, C.J., delivered the opinion of the court, in which JOHN W.
MCCLARTY and THOMAS R. FRIERSON, II, JJ., joined.
Edmund J. Schmidt, III, Nashville, Tennessee, for the appellant, Michael Thomson.
Daniel A. Horowitz and Lindsay B. Smith, Nashville, Tennessee, for the appellee, Genesis
Diamonds, LLC.
OPINION
Background
This appeal arises from a dispute regarding jewelry that Michael Thomson
(“Plaintiff”) was purchasing from Genesis Diamonds, LLC (“Defendant”). In May 2019,
Plaintiff filed a civil warrant in the Wilson County General Sessions Court against
Defendant, alleging “[b]reach of contract and fraud in the amount of $14,860.58, plus court
costs and attorney fees.” Upon agreement of the parties, the matter was transferred to the
Wilson County Circuit Court (“Trial Court”) in September 2019. Following this transfer,
the matter from general sessions court was assigned a new docket number with the Trial
Court of 2019-CV-512. In October 2019, Plaintiff filed a separate complaint with the Trial
Court, alleging breach of contract, that was assigned the docket number, 2019-CV-598.
In July 2020, Defendant filed a motion to dismiss Plaintiff’s complaint. At the
hearing concerning the motion to dismiss, a discussion occurred as to the two separate
complaints pending in the Trial Court, as well as their respective court files and assigned
docket numbers. During that hearing, Plaintiff’s counsel explained as follows:
The General Sessions complaint was transferred here. . . . [W]hat I did was I
went ahead and filed a complaint here. I’ve always been fuzzy on the rule if
it’s transferred up and we go off the civil warrant or if I file a new complaint.
I, out of an abundance of caution, went ahead and filed another complaint
just to make sure that we have something to go off of.
After determining documents to be missing, the Trial Court discovered that two files
existed relevant to this matter. The court clerk informed the Trial Court that “[w]hen a
new complaint came in, they filed a whole new case.” The Trial Court explained that “the
problem is an administrative problem. Somehow in between the courts, things got
confused.” The Trial Court then instructed the parties as follows:
[F]irst of all, let me tell you what we’ve got to do to clean this mess up: One,
I need an order combining these two files. It’s all about the same case. I’ve
got 2019-CV-512 and 2019-CV-598. I need those combined. . . .
Because what happened, the General Sessions Court transferred it, and at the
same time, [Plaintiff’s counsel] filed a complaint so we’ve technically got
two complaints. We’ve got a General Sessions complaint that alleges breach
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of contract and fraud and then we’ve got a Circuit case that just alleges an
agreement; doesn’t really allege fraud.
So, [Plaintiff’s counsel], I’m gonna need you to amend your complaint and
decide which ways you’re going. [I]f you’re going breach of contract, then
you’re gonna have to attach . . . a written contract. If you’re alleging . . .
breach of oral agreement, that’s different but you’ve got to clean your
pleadings up. And it’s really not your fault. Like I said, it’s administrative
because we’ve got two different files, two different complaints and we need
a new amended one.
The Trial Court subsequently entered an order denying Defendant’s motion to
dismiss and ordering Plaintiff to file an amended complaint within fifteen days with the
contract at issue included as an exhibit. Additionally, the Trial Court entered a separate
order, stating that it had “determined sua sponte that there were two different docket
numbers for this matter” and ordering that the two cases with docket numbers 2019-CV-
512 and 2019-CV-598 be consolidated. Shortly thereafter, Plaintiff filed an amended
complaint, which identified both docket numbers. The amended complaint included three
causes of action: (1) breach of contract, (2) facilitation of fraud, and (3) breach of oral
agreement. Defendant later filed an answer to Plaintiff’s amended complaint, which also
identified both docket numbers.
Defendant also filed a motion to dismiss the amended complaint, alleging that
Wilson County was not the proper venue, that Plaintiff had failed to state a claim for which
relief could be granted on each of his three claims, and that the Trial Court lacked subject
matter jurisdiction over the entire action or, at a minimum, the breach of oral agreement
claim. Plaintiff filed a response to the motion requesting that the motion to dismiss be
denied, to which Defendant replied.
In January 2021, the Trial Court granted in part and denied in part Defendant’s
motion to dismiss. As part of its order, it granted dismissal of Plaintiff’s claims for
facilitation of fraud and breach of oral agreement upon its determination that Plaintiff had
failed to state a claim for which relief could be granted. The Trial Court denied the motion
as to Defendant’s arguments regarding improper venue, subject matter jurisdiction, and the
Rule 12.02(6) motion concerning the remaining breach of contract claim. Following entry
of this order, Plaintiff’s only remaining claim was breach of contract.
Approximately a week prior to entry of the Trial Court’s order granting partial
dismissal, Defendant filed a motion for summary judgment regarding the remaining claim.
While the summary judgment motion was pending, Plaintiff filed a notice of voluntary
nonsuit with the Trial Court in February 2021, stating that he was dismissing his complaint
against Defendant with prejudice. The Trial Court subsequently entered an order on
February 25, 2021, dismissing Plaintiff’s action against Defendant with prejudice. In its
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order, the Trial Court also stated that “[a]ll costs shall be taxed to the Plaintiff, Michael
Thomson.”
On April 5, 2021, Defendant filed a motion for attorney’s fees and costs.
Defendant’s motion included both docket numbers in the following format: “2019-CV-598
(2019-CV-512).” According to the motion, Defendant had prevailed on a “now-final Rule
12.02(6) motion” and was entitled to a “mandatory attorney’s fee award,” pursuant to
Tenn.Code Ann. § 20-12-119(c). Defendant requested an award of attorney’s fees totaling
$10,000. In its motion, Defendant includes an analysis of each factor included in Tenn.
Sup. Ct. R. 8, Rule of Professional Conduct 1.5(a), concerning whether the award of
attorney’s fees is reasonable. Defendant further states in its motion that pursuant to the
Trial Court’s February 2021 order assessing costs, it was including an affidavit, itemizing
its “costs and discretionary costs incurred in this action, which total $3,409.57.” Defendant
further states that it is entitled to an award of discretionary costs, pursuant to Rule 54.04(2),
and that “discretionary costs were so taxed” in the order of voluntary dismissal.
Plaintiff filed a memorandum in opposition to Defendant’s request for attorney’s
fees, asking that the Trial Court deny the motion. According to Plaintiff, counsel for
Defendant failed to delineate the time he spent on the two causes of action that were
dismissed in the complaint and had, therefore failed to meet his burden of proof.
Alternatively, Plaintiff argued that if attorney’s fees are awarded, any award should be
minimal due to the lack of complexity and that any attorney’s fees incurred before the
amended complaint should be excluded. In his response, Plaintiff relied heavily on
Donovan v. Hastings, No. M2019-01396-COA-R3-CV, 2020 WL 6390134 (Tenn. Ct.
App. Oct. 30, 2020), appeal granted (Tenn. Apr. 7, 2021), rev’d, No. M2019-01396-SC-
R11-CV, -- S.W.3d -- , 2022 WL 2301177 (Tenn. June 27, 2022). Plaintiff further argued
that the Trial Court should deny Defendant’s request for discretionary costs.
Defendant filed a reply to Plaintiff’s memorandum, pointing out that, unlike counsel
in Donovan, defense counsel in this case was hired pursuant to a “fixed-fee representation”
and, based on that reason, arguing that Donovan had “no plausible relevance” to the present
case. Defendant further argued that even if the present case had been billed hourly, the
amount of attorney’s fees would have “eclipsed” the $10,000 fee requested under the
statute.
Following a hearing in May 2021, the Trial Court granted the Defendant’s motion
and awarded a $10,000 award for attorney’s fees to Defendant but denied an award of
discretionary costs. The Trial Court entered an order to that effect on May 10, 2021,
including both docket numbers listed as follows: “2019-CV-598 (2019-CV-512).” In its
order, the Trial Court stated as follows:
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Upon consideration of the Defendant’s Motion, the Plaintiff’s Opposition,
the Defendant’s Reply, the arguments of the Parties’ counsel, and the entire
record, the Court FINDS and ORDERS as follows:
1. The Defendant’s motion for an award of attorney’s fees pursuant to
Tenn. Code Ann. § 20-12-119(c)(1) shall be GRANTED. The Court finds
that the Defendant is entitled to an award of attorney’s fees under Tenn. Code
Ann. § 20-12-119(c)(1) because it prevailed on a motion to dismiss two of
the Plaintiff’s claims for failure to state a claim upon which relief could be
granted. The Court further finds that even after applying the Plaintiff’s
requested reductions and reducing the Defendant’s time spent on pre-
Amended Complaint litigation pursuant to Donovan v. Hastings, No.
M2019-01396-COA-R3-CV, 2020 WL 6390134 (Tenn. Ct. App. Oct. 30,
2020), appeal granted (Apr. 7, 2021), the Defendant’s reasonable and
necessary attorney’s fees exceed the maximum $10,000.00 recoverable
under Tenn. Code Ann. § 20-12-119(c)(4). It is therefore ORDERED,
ADJUDGED, AND DECREED that pursuant to Tenn. Code Ann. § 20-12-
119(c)(1)-(4), JUDGMENT SHALL ISSUE in favor of the Defendant
against the Plaintiff, and the Plaintiff, Michael Thomson, is ORDERED to
pay the Defendant, Genesis Diamonds, reasonable and necessary attorney’s
fees in the amount of TEN THOUSAND DOLLARS ($10,000.00), for
which execution may issue against the Plaintiff if necessary.
2. The Court finds that its February 25, 2021 Order taxing “all costs”
against the Plaintiff, Michael Thomson, does not include discretionary costs.
Accordingly, the Defendant’s motion for discretionary costs having been
filed on April 5, 2021, the Defendant’s motion for an award of discretionary
costs shall be DENIED.
Plaintiff timely filed a notice of appeal to this Court. In the notice of appeal, Plaintiff
states that he is appealing the final judgment of the Trial Court filed on May 10, 2021. The
docket number listed on the notice of appeal is 2019-CV-598. On appeal, Defendant filed
a motion to dismiss the appeal, arguing res judicata because Plaintiff had only appealed
from one docket number. However, this Court denied that motion without prejudice,
determining that the issue would be “more appropriately addressed in the parties’ briefs.”
Discussion
Although not stated exactly as such, Plaintiff identifies the following issues for our
review on appeal: (1) whether this appeal is precluded by res judicata because Plaintiff
included only the docket number, 2019-CV-598, in his notice of appeal; (2) whether the
Trial Court erred in awarding $10,000 in attorney’s fees to Defendant, pursuant to Tenn.
Code Ann. § 20-12-119(c)(1), when counsel for Defendant failed to specify the time he
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spent on only the claims that were dismissed pursuant to Tenn. R. Civ. P. 12.02(6); and (3)
whether the Trial Court erred by failing to consider the factors in Tenn. Sup. Ct. R. 8, Rule
of Professional Conduct 1.5(a) in making its award of attorney’s fees. In response to
Plaintiff’s issues on appeal, Defendant raises the following issues, which we have restated:
(1) whether Plaintiff’s failure to file a transcript of the proceedings or statement of evidence
concerning the attorney’s fees hearing must result in “a conclusive presumption” that the
award of attorney’s fees was reasonable; (2) whether Plaintiff’s issue regarding the Trial
Court’s alleged error in failing to consider the Rule 1.5(a) factors is waived due to his
failure to identify it as an issue for appeal in his Rule 24 statement; (3) whether Plaintiff
has waived an issue concerning whether the time spent litigating the attorney’s fees award
is compensable; and (4) whether any error by the Trial Court is harmless because
Defendant has been forced to litigate its attorney’s fee award and such time is compensable.
Defendant raises an additional issue for our review on appeal as follows: whether the Trial
Court erred by denying Defendant’s motion for discretionary costs.
We first address the issue of res judicata. Defendant first raised this issue regarding
res judicata in his motion to dismiss filed with this Court prior to briefing. After this Court
determined that issue would be better addressed in the parties’ appellate briefs, Plaintiff
included in his brief an issue concerning whether res judicata applies in this case. This
matter originated in general sessions court where Plaintiff filed a civil warrant against
Defendant. After the parties’ agreement to transfer the matter to the Trial Court, a new
docket number was assigned, 2019-CV-512. Subsequently, Plaintiff filed a separate
complaint arising from the same incident that was issued a different docket number, 2019-
CV-598, by the Trial Court.
After discovering the two separate cases and docket numbers, the Trial Court
characterized it as an “administrative problem” that arose between the general sessions and
circuit courts. The Trial Court remedied this issue by consolidating the two cases and
allowing Plaintiff to file a single amended complaint that included all of Plaintiff’s claims,
instructing Plaintiff “to clean [the] pleadings up.” Plaintiff subsequently filed his amended
complaint and included both docket numbers on the amended complaint. From that point,
the Trial Court proceeded on the amended complaint. At this point, although two dockets
numbers existed, only one complaint existed with all of Plaintiff’s causes of action.
The order of voluntary dismissal and the subsequent order regarding attorney’s fees
each included both docket numbers. Because Plaintiff filed a notice of appeal with only
one of the docket numbers included, Defendant argues that the order related to the case not
appealed has become final and is now res judicata to the case that has been properly
appealed to this Court. We disagree that res judicata applies to this appeal.
Defendant argues on appeal the circumstances in this appeal are similar to those of
this Court’s opinion in Rainbow Ridge Resort, LLC v. Branch Banking & Tr. Co., 525
S.W.3d 252 (Tenn. Ct. App. 2016), where this Court found that res judicata applied
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because only one of two consolidated cases had been appealed.1 However, we find this
case distinguishable from Rainbow Ridge Resort, LLC, which involved two separate cases
that had been consolidated and separate judgments that had been entered for each case. To
the contrary, the present case involved an administrative error within the lower courts that
resulted in two case files being made and two docket numbers being assigned. In this case,
after the amended complaint was filed, the Trial Court proceeded only with the single
amended complaint, which replaced the two previous pleadings by Plaintiff. The Trial
Court entered only one court order awarding attorney’s fees; there were not two awards of
attorney’s fees to Defendant. We hold that res judicata does not preclude Plaintiff from
proceeding with this appeal. Therefore, we find Defendant’s argument that this Court does
not have jurisdiction to consider this appeal to be without merit.
We next address Plaintiff’s argument that the Trial Court erred by awarding to
Defendant $10,000 in attorney’s fees. In response to this argument, Defendant raises an
issue concerning whether Plaintiff’s failure to file a statement of the evidence or a transcript
of the hearing regarding attorney’s fees results in a “conclusive presumption” that the
award of attorney’s fees was reasonable. However, Plaintiff stated during oral argument
that neither party presented evidence at that hearing and that the only evidence regarding
attorney’s fees was the affidavit filed by Defendant’s counsel. Defendant stated during
oral argument that he was “not saying there was witness testimony” at the hearing
regarding attorney’s fees but stated that “the way attorney’s fees proceedings work”
allowed the attorney requesting fees to speak during the hearing regarding the fees incurred
and the basis for the fees. Based on the statements of counsel, it does not appear that actual
evidence under oath was presented during the hearing regarding the award of attorney’s
fees. Although a transcript would have been beneficial in this case, it is not essential for
appellate review where no evidentiary hearing occurred. Therefore, we hold that
Defendant’s argument urging this Court to apply a “conclusive presumption” of
reasonableness to the attorney’s fees award to be unavailing.
We further disagree with Defendant’s argument that Plaintiff waived his argument
on appeal that the Trial Court erred by failing to consider the Tenn. Sup. Ct. R. 8, Rule of
Professional Conduct 1.5(a) factors when determining whether the attorney’s fees were
reasonable. According to Defendant, Plaintiff waived this argument because he did not
include the issue in his Tenn. R. App. P. 24 statement of issues at the initial stage of this
appeal. In its brief, Defendant seems to confuse Rules 24 and 27 of the Tennessee Rules
of Appellate Procedure. Rule 27(a)(4) requires an appellant to include in his or her brief a
“statement of the issues presented for review,” while Rule 24 involves the content and
1
We note that Defendant also cites to this Court’s memorandum opinion in an unrelated case, Northgate
Ltd. Liab. Co. v. Amacher, No. M2018-01407-COA-R3-CV, 2019 WL 3027906 (Tenn. Ct. App. July 11,
2019). Pursuant to Tenn. Ct. App. R. 10, memorandum opinions “shall not be cited or relied on for any
reason in any unrelated case.”
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preparation of the record from the trial court proceedings for purposes of appellate review.
Regarding the content of the record, Tenn. R. App. P. 24(a) states that
[i]f less than the full record on appeal as defined in this subdivision is deemed
sufficient to convey a fair, accurate and complete account of what transpired
with respect to those issues that are the bases of appeal or if a party wishes
to include any papers specifically excluded in this subdivision, the party
shall, within 15 days after filing the notice of appeal, file with the clerk of
the trial court and serve on the appellee a description of the parts of the record
the appellant intends to include on appeal, accompanied by a short and plain
declaration of the issues the appellant intends to present on appeal.
(Emphasis added.) Additionally, Rule 24(h) requires a party preparing a transcript or
statement of evidence to file notice to the other party, “accompanied by a short and plain
declaration of the issues the party may present on appeal.”
The authority provided by Defendant in support of this waiver argument is caselaw
concerning either a party’s noncompliance with Rule 27 for failing to designate an issue in
the statement of the issues section of an appellate brief or an appellant’s failure to develop
a proper record sufficient to allow this Court to review the issues on appeal as required by
Rule 24. It is well settled that an appellant’s failure to designate an issue in its appellant
brief as required by Tenn. R. App. P. 27 may result in waiver of that issue. See In re
Tamera W., 515 S.W.3d 860, 873 (Tenn. Ct. App. 2016) (“This Court has repeatedly held
that the failure to designate an argument as an issue in the party’s appellate brief results in
a waiver of the argument on appeal.”). However, the statement of the issues presented for
review on appeal required by Rule 27 is separate and distinct from the declaration of the
issues to be filed with the trial court in preparation of the record for purposes of appeal.
Furthermore, as Plaintiff pointed out in the docketing statement form he filed with this
Court, the form instructs the appellant to include a “[c]oncise statement of the issues
proposed to be raised” but provides that the appellant is “not bound by this statement [of
issues].” We find Defendant’s argument that Plaintiff waived this issue to be without merit.
Finding no waiver exists, we will address Plaintiff’s issue regarding the award of
attorney’s fees to Defendant. Attorney’s fees were awarded in this case pursuant to Tenn.
Code Ann. § 20-12-119(c), which states as follows in pertinent part:
(c)(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
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that party or parties. The awarded costs and fees shall be paid by the party or
parties whose claim or claims were dismissed as a result of the granted
motion to dismiss.
(2) Costs shall include all reasonable and necessary litigation costs actually
incurred due to the proceedings that resulted from the filing of the
dismissed claims, including, but not limited to: . . . (B) Attorneys’ fees . . . .
(Emphasis added.)
An award of attorney’s fees under Tenn. Code Ann. § 20-12-119(c) is mandatory
upon a trial court’s granting of a motion to dismiss pursuant to Tenn. R. Civ. P. 12.02(6)
for failure to state a claim upon which relief can be granted. Irvin v. Green Wise Homes,
LLC, No. M2019-02232-COA-R3-CV, 2021 WL 709782, at *5 (Tenn. Ct. App. Feb. 24,
2021), perm. app. denied (Tenn. June 9, 2021). In such a case, the trial court does not have
the discretion to deny an award of attorney’s fees if a Rule 12.02(6) motion is granted,
except in specific situations enumerated in section 20-12-119(c)(5).2 Id. However, that
award of attorney’s fees to the prevailing party must be “reasonable and necessary” fees
that were “incurred in the proceedings as a consequence of the dismissed claims.” See
Tenn. Code Ann. § 20-12-119(c) (2021).
Our Supreme Court has stated as follows regarding the amount of an award of
attorney’s fees:
The trial court’s determination of a reasonable attorney’s fee is “a subjective
judgment based on evidence and the experience of the trier of facts,” United
Med. Corp. of Tenn., Inc. v. Hohenwald Bank & Trust Co., 703 S.W.2d 133,
137 (Tenn. 1986), and Tennessee has “no fixed mathematical rule” for
determining what a reasonable fee is. Killingsworth v. Ted Russell Ford,
Inc., 104 S.W.3d 530, 534 (Tenn. Ct. App. 2002). Accordingly, a
determination of attorney’s fees is within the discretion of the trial court and
will be upheld unless the trial court abuses its discretion. Kline v. Eyrich, 69
S.W.3d 197, 203 (Tenn. 2002); Shamblin v. Sylvester, 304 S.W.3d 320, 331
(Tenn. Ct. App. 2009). We presume that the trial court’s discretionary
decision is correct, and we consider the evidence in the light most favorable
to the decision. Henderson v. SAIA, Inc., 318 S.W.3d 328, 335 (Tenn.
2010); Keisling v. Keisling, 196 S.W.3d 703, 726 (Tenn. Ct. App. 2005).
The abuse of discretion standard does not allow the appellate court to
substitute its judgment for that of the trial court, Williams v. Baptist Mem’l
Hosp., 193 S.W.3d 545, 551 (Tenn. 2006); Myint v. Allstate Ins. Co., 970
2
We note that Tenn. Code Ann. § 20-12-119(c)(5) limits an award of attorney’s fees under this section in
certain circumstances, none of which have been argued in the current action.
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S.W.2d 920, 927 (Tenn. 1998), and we will find an abuse of discretion only
if the court “applied incorrect legal standards, reached an illogical
conclusion, based its decision on a clearly erroneous assessment of the
evidence, or employ[ed] reasoning that causes an injustice to the complaining
party.” Konvalinka v. Chattanooga–Hamilton Cnty. Hosp. Auth., 249
S.W.3d 346, 358 (Tenn. 2008); see also Lee Med., Inc. v. Beecher, 312
S.W.3d 515, 524 (Tenn. 2010).
Wright ex rel. Wright v. Wright, 337 S.W.3d 166, 176 (Tenn. 2011).
On appeal, Plaintiff argues that the Trial Court’s award of attorney’s fees is
reversible error because the Trial Court had not applied the factors in Tenn. Sup. Ct. R. 8,
Rule of Professional Conduct 1.5(a) in making its decision. Plaintiff further takes issue
with the amount of attorney’s fees awarded to Defendant and argues that counsel for
Defendant had not distinguished the time he spent on the individual claims that were
dismissed pursuant to Tenn. R. Civ. P. 12.02(6), as opposed to the time spent on the other
issues.
Following the amended complaint, three claims were pled by Plaintiff, including (1)
breach of contract, (2) facilitation of fraud, and (3) breach of oral agreement. The Trial
Court granted the dismissal of two claims for facilitation of fraud and breach of an oral
agreement, pursuant to Tenn. R. Civ. P. 12.02(6), for failure to state a claim upon which
relief can be granted. However, Defendant’s motion seeking to dismiss the claim for
breach of contract pursuant to Tenn. R. Civ. P. 12.02(6) was denied, as well as the motions
to dismiss for improper venue and lack of subject matter jurisdiction.
The Trial Court found that Defendant was entitled to an award of attorney’s fees
because it had succeeded in its motion to dismiss two of the three claims for failure to state
a claim, pursuant to Tenn. R. Civ. P. 12.02(6). In support of the motion for attorney’s fees,
Defendant’s attorney filed an affidavit with an attachment reflecting time entries and task
descriptions regarding the requested attorney’s fees. In defense counsel’s affidavit, he
states that the entries in the attachment are “accurate approximations and descriptions of
the time and tasks” regarding his representation of Defendant and that he charged $300 per
hour in 2020. The time entries in the attachment to the affidavit refer often to the motion
to dismiss as a whole but do not mention the specific claims that were dismissed by the
Trial Court pursuant to Rule 12.02(6).
Our Supreme Court recently considered an appeal regarding an award of attorney’s
fees pursuant to Tenn. Code Ann. § 20-12-119(c). See Donovan v. Hastings, No. M2019-
01396-SC-R11-CV, -- S.W.3d -- , 2022 WL 2301177 (Tenn. June 27, 2022). The Supreme
Court in Donovan held that attorney’s fees pursuant to Tenn. Code Ann. § 20-12-119 are
not limited to only those incurred after the filing of an amended complaint when the
dismissed claim was pled in the original complaint. Id. at *5. In making its decision in
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Donovan, the Supreme Court emphasized that the statutory language in Tenn. Code Ann.
§ 20-12-119(c)(1) and (c)(2) “relates causally to the claim that was dismissed” (emphasis
in original). The Court in Donovan cited to this Court’s opinion in First Cmty. Mortgage,
Inc. v. Appraisal Servs. Grp., Inc., 644 S.W.3d 354 (Tenn. Ct. App. 2021), perm. app.
denied (Tenn. Mar. 24, 2022), and stated that Tenn. Code Ann. § 20-12-119(c), is “limited
in scope” as a fee shifting mechanism. Donovan, 2022 WL 2301177, at *5. The Court
recognized that the sponsor of the bill had indicated that the statute at issue was intended
only to involve the costs that were associated with a defendant’s obligation to answer the
complaint and file the motion to dismiss pursuant to Rule 12.02(6). Id. (quoting First
Cmty. Mortgage, Inc., 644 S.W.3d at 367). In Donovan, the Court identified the purpose
of Tenn. Code Ann. § 20-12-119(c) as “shifting attorney fees and costs incurred as a
consequence of a meritless claim to the party who filed it.” Donovan, 2022 WL 2301177,
at *5. Throughout its opinion, the Supreme Court clearly emphasized the intended
objective of awarding attorney’s fees stemming from the meritless claim or claims that
were dismissed pursuant to Rule 12.02(6).
Upon review of defense counsel’s affidavit concerning attorney’s fees, there is no
statement specifically identifying whether the actions performed by counsel involved only
the dismissed claims or all three claims; the tasks in the attachment refer only to the motion
to dismiss as a whole. Only two of the five requests for dismissal in Defendant’s motion
were granted by the Trial Court for failure to state a claim for which relief can be granted
and would qualify for an award of attorney’s fees under Tenn. Code Ann. § 20-12-119(c)
as attorney’s fees “actually incurred due to the proceedings that resulted from the filing of
the dismissed claims.” As our Supreme Court pointed out, an award of attorney’s fees
pursuant to Tenn. Code Ann. § 20-12-119(c) relates to the actual claim that was dismissed
for failure to state a claim upon which relief could be granted.
On appeal, Defendant argues that defense counsel had charged Defendant over
$33,000 to represent it in this matter, which included a fixed fee and any costs and expenses
incurred. Defendant also argues that the time counsel has since spent litigating the
attorney’s fee award, including this appeal, are compensable.3 According to Defendant,
any error regarding the award of attorney’s fees is harmless.4 We disagree that we can
3
Although Defendant argues that Plaintiff has waived any argument concerning whether defense counsel’s
time spent litigating the attorney’s fee award is compensable, Plaintiff has maintained in his brief that only
the attorney’s fees relevant to the dismissed claims are compensable under Tenn. Code Ann. § 20-12-
119(c).
4
As part of his argument that the attorney’s fee award was harmless error, Defendant argues on appeal that
the attorney’s fees incurred regarding Plaintiff’s claims prior to the amended complaint would be
compensable. Defendant argued that the dismissed breach of oral agreement claim was included in the
October 2019 complaint filed with the Trial Court, prior to the filing of the amended complaint. However,
we note that Defendant argued exactly the opposite before the Trial Court in his motion to dismiss the
amended complaint, stating that the third claim in the amended complaint for breach of an oral agreement
had “been raised for the first and only time in the Plaintiff’s Amended Complaint.”
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assume that such error is harmless. While it may well be so, we cannot assume that the
attorney’s fees related to the two dismissed claims would be more than the $10,000
statutory limit without evidence to support such an award. As a general rule, courts do not
deal in “assumptions.” We further note that this Court has held that due to the limited
scope of Tenn. Code Ann. § 20-12-119(c), attorney’s fees incurred on appeal are not
compensable under that statute. See First Cmty. Mortgage, Inc., 644 S.W.3d at 367.
We hold that the limited scope of Tenn. Code Ann. § 20-12-119(c) allows an award
of attorney’s fees only for the tasks performed regarding the claims that were actually
dismissed by the Trial Court for failure to state a claim upon which relief can be granted.
Therefore, we vacate the Trial Court’s award of attorney’s fees and remand to the Trial
Court for recalculation of the attorney’s fee award in this case in compliance with our
Supreme Court’s opinion in Donovan and this opinion. During remand, the Trial Court
should consider the factors in Tenn. Sup. Ct. R. 8, Rule of Professional Conduct 1.5(a)
when determining whether the award of attorney’s fees is reasonable and necessary. See
Donovan, 2022 WL 2301177, at *6 n.13 (“Rule of Professional Conduct 1.5 sets forth the
‘correct legal standard’ when assessing the reasonableness of a cost and fee request.”).
Further, in compliance with Donovan, the Trial Court on remand should consider
Defendant’s request for attorney’s fees incurred prior to the amended complaint only to the
extent that the claim or claims were pled by Plaintiff prior to the amended complaint and
defense counsel’s fees prior to the amended complaint involved those specific claims that
were dismissed pursuant to Tenn. R. Civ. P. 12.02(6).
We next address Defendant’s issue concerning discretionary costs. In its February
25, 2021 order on the voluntary dismissal of the remaining claims, the Trial Court ordered
that all costs would be taxed to Plaintiff. Defendant argues that this award of “all costs”
included discretionary costs, in addition to court costs. Tenn. R. Civ. P. 54.04(2) provides
that discretionary costs are allowed only in the trial court’s discretion. Although Rule
54.04(2) allows a court to tax discretionary costs at the time of a voluntary dismissal, the
court order did not specify that discretionary costs were being awarded and no motion
requesting discretionary costs was pending before the Trial Court when the voluntary
dismissal order was entered. Additionally, despite Defendant’s argument to the contrary,
the Trial Court found that “all costs” in its February 2021 order did not include
discretionary costs.
A request for discretionary costs must be filed and served within thirty days from
entry of the judgment. See Tenn. R. Civ. P. 54.04(2). Defendant’s first request for
discretionary costs was in its motion requesting an award of attorney’s fees and costs, filed
on April 5, 2021, more than thirty days after entry of the dismissal order. Therefore,
Defendant’s motion for discretionary costs was untimely. We affirm the Trial Court’s
denial of Defendant’s motion for discretionary costs.
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Conclusion
The judgment of the Trial Court is affirmed in part and vacated in part. This cause
is remanded to the Trial Court for further proceedings consistent with this opinion. The
costs on appeal are assessed against the appellee, Genesis Diamonds, LLC.
_________________________________
D. MICHAEL SWINEY, CHIEF JUDGE
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