Tennessee Supreme Court Reverses Trial Court’s Calculation of Attorney Fees and Costs

The Tennessee Supreme Court today reversed a Davidson County trial court’s calculation of attorney fees awarded after dismissal of a contractor’s claim against a Middle Tennessee homeowner.  The Court held that, under Tennessee law, the trial court’s limit on the attorney fee award was error.

In 2017, homeowner Mindy Donovan entered into a contract with Joshua Hastings to renovate parts of her Nashville home.  Ms. Donovan paid Mr. Hastings $130,000 toward the total amount due but was not happy with the quality of the work.  Ultimately, Ms. Donovan sued Mr. Hastings in the Davidson County Chancery Court.

Mr. Hastings filed an answer to Ms. Donovan’s complaint and also filed a countercomplaint alleging Ms. Donovan breached their contract.  He later amended the countercomplaint. The amended countercomplaint had the same breach of contract claim but changed the amount of damages sought.

The trial court granted Ms. Donovan’s motion to dismiss Mr. Hastings’ countercomplaint, and neither party appealed that order.  Later, Ms. Donovan filed a motion for attorney fees under a Tennessee statute, Tennessee Code Annotated § 20-12-119(c), that in certain circumstances allows for limited awards of attorney fees after a claim is dismissed.  Ms. Donovan requested $10,000 in fees and costs.

The trial court granted Ms. Donovan’s request but only awarded attorney fees totaling $3,600.  The trial court held Ms. Donovan could not recover attorney fees for legal work done before Mr. Hastings filed his amended countercomplaint.

Ms. Donovan appealed to the Court of Appeals, which affirmed in a split decision. The majority of the Court of Appeals reasoned that because the claim that was dismissed was contained in the amended countercomplaint, attorney fees could not be awarded for services performed before the amended countercomplaint was filed.  Judge Neal McBrayer dissented on the basis that the statute did not limit the attorney fee award in the way the trial court held.  Since the dismissed breach of contract claim was contained in both the original and amended countercomplaint, Judge McBrayer argued Ms. Donovan should be able to recover fees incurred prior to the date the amended countercomplaint was filed.  Ms. Donovan was then granted permission to appeal to the Tennessee Supreme Court.

The Supreme Court reversed.  The Court noted that the history of Tennessee Code Annotated 20-12-119(c) showed that the legislature provided for limited awards of attorney fees to discourage filing claims that have no merit.  The Supreme Court noted that the original countercomplaint had contained the same breach of contract claim; the amendment only changed the amount of damages sought.  The Court said: “The same breach of contract claim remained pending in the proceedings from the time the original countercomplaint was filed until the trial court granted Ms. Donovan’s motion to dismiss the amended countercomplaint.”  It held that it was more consistent with the purpose of the statute, discouraging baseless claims, to allow litigants to recover attorney fees dating back to when the dismissed claim was filed.

For this reason, the Court reversed the trial court and the Court of Appeals. It held Ms. Donovan could recover attorney fees for legal services done before Mr. Hastings filed the amended countercomplaint.

To read the unanimous opinion in Mindy Donovan v. Joshua R. Hastings, authored by Justice Holly Kirby, go to the opinions section of TNCourts.gov.