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.