In Donovan v. Hastings, the
Supreme Court of Tennessee analyzed whether the trial and appellate courts
properly limited an award of attorney fees and costs under Tennessee Code
§ 20-12-119(c) to a plaintiff homeowner to those incurred after the date an amended
countercomplaint was filed by the defendant contractor. 2022 WL 12301177, at *1
(Tenn. June 27, 2022).
Plaintiff homeowner entered into
a contract with the defendant contractor to construct an addition to and
renovate part of her Nashville home. The homeowner paid the contractor $130,000.00,
but was unhappy with the quality of the work. After several attempts to cure, the
homeowner remained dissatisfied. In May 2018, she filed a complaint against the
contractor alleging breach of contract, among other things. The contractor counterclaimed,
and subsequently filed an amended counterclaim alleging breach of contract.
The trial court granted Plaintiff
homeowner’s motion to dismiss the amended counterclaim for failure to state a
claim. The homeowner then sought attorney fees and costs pursuant to Tennessee
Code § 20-12-119(c). That statute provides:
"[W]here 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 were dismissed as a result of the granted motion to dismiss."
Tenn. Code § 20-12-119(c)(1).
The trial court excluded fees and
costs incurred prior to the date the amended counterclaim was filed. After the
homeowner appealed, a split panel of the Court of Appeals affirmed.
The Supreme Court of Tennessee,
however, reversed the appellate court, vacated the trial court’s award, and
remanded for further consideration. The Supreme Court held the trial and appellate courts erred in holding that the homeowner’s
award of attorney fees and costs under Tennessee Code § 20-12-119(c) was
limited to those incurred after the date the amended counterclaim was filed.
The Supreme Court found the
language in both subsections (c)(1) and (2) relates to the claim that
was dismissed. Since the claim at issue was filed as part of the contractor’s
original countercomplaint and repeated without change in the amended
countercomplaint, the Court found the same breach of contract claim remained
pending in the proceedings from the time the original countercomplaint was
filed until the trial court granted the homeowner’s motion to dismiss the
amended countercomplaint. The Supreme Court held the fees and costs recoverable
by the homeowner in connection with the dismissal of the contractor’s breach of
contract claim were not limited to those incurred after the amended
countercomplaint was actually filed.
This case serves as a reminder
for Tennessee contractors who find themselves defending against frivolous
complaints to utilize Tennessee Code § 20-12-119 to recover attorneys
fees and costs in the event the claim is successfully dismissed on a Rule 12(b)(6)
motion. It also serves as a warning to you of the potential for an award of
attorney’s fees and costs against you if your claim is successfully dismissed.
