IN THE COURT OF APPEALS OF TENNESSEE

AT NASHVILLE

Assigned on Briefs July 1, 2022

TENNESSEE HOMES v. DALTON L. WELCH, ET AL.

Appeal from the Circuit Court for Coffee County

No. 2020-CV-47049 William A. Lockhart, Judge

___________________________________

No. M2021-01383-COA-R3-CV

___________________________________

This appeal is a landlord-tenant dispute involving issues of liquidated damages and 

material breach of contract. The landlord filed a civil warrant in general sessions court to 

recover an early termination fee and other related fees pursuant to the parties’ lease 

agreement. The general sessions court entered a judgment in favor of the landlord finding 

that the early termination fee was reasonable and was not a penalty. The tenants appealed

the judgment to the circuit court. The circuit court also entered a judgment in favor of the 

landlord finding that the early termination fee was reasonable and was not a penalty and 

that the landlord did not breach the lease agreement. The tenants appeal. We affirm as 

modified and remand to the circuit court for calculation of damages.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Affirmed and 

Remanded

CARMA DENNIS MCGEE, J., delivered the opinion of the court, in which W. NEAL 

MCBRAYER and KRISTI M. DAVIS, JJ., joined.

Drew Justice, Murfreesboro, Tennessee, for the appellants, Dalton L. Welch and Alexis S. 

Clark.

James D. Lane, II, Tullahoma, Tennessee, for the appellee, Tennessee Homes.

OPINION

I. FACTS & PROCEDURAL HISTORY

In March 2020, Dalton L. Welch and Alexis S. Clark (collectively, “Tenants”)

entered into a “Tennessee Residential Lease Agreement” with Tennessee Homes

08/12/2022
- 2 -

(“Landlord”).

1

 The lease agreement consisted of 33 paragraphs and included six addenda

regarding the following: insurance; pest control; wi-fi end user acceptance agreement; zero 

tolerance for criminal activity; pets; and a statement of facts. The lease agreement was for 

a 12-month term and required monthly rent in the amount of $865.00. Additionally, the 

lease agreement contained the following relevant provisions:

3. DAMAGE DEPOSIT: Upon the due execution of this Agreement, 

Tenant shall deposit with Landlord the sum of [$500.00] receipt of which is 

hereby acknowledged by Landlord, as security for any damage caused to the 

Premises during the term hereof. Such deposit shall be returned to Tenant, 

without interest, and less any set off for damages to the Premises upon the 

termination of this Agreement. . . . .

. . . 

5. CONDITION OF PREMISES: Tenant stipulates, represents and 

warrants that Tenant has examined the Premises, and that they are at the time 

of this Lease in good order, repair, and in safe, clean and tenantable 

condition. Any damaged or non-working items on the Premises will be noted 

on the attached and signed ‘Check-in Sheet’.

. . . 

7. ALTERATIONS AND IMPROVEMENT: Tenant shall make no 

alterations to the buildings or improvements on the Premises or construct any 

building or make any other improvements on the Premises without the prior 

written consent of Landlord. Any and all alterations, changes, and/or 

improvements built, constructed or placed on the Premises by Tenant shall, 

unless otherwise provided by written agreement between Landlord and 

Tenant, be and become the property of Landlord and remain on the Premises 

at the expiration or earlier termination of this Agreement.

. . .

13. INSPECTION OF PREMISES: Landlord and Landlord’s agents shall 

have the right at all reasonable times during the term of this Agreement and 

any renewal thereof to enter the Premises for the purpose of inspecting the 

Premises and all buildings and improvements thereon. And for the purposes 

of making any repairs, additions, or alterations as may be deemed appropriate 

by Landlord for the preservation of the Premises of the building. . . . .

 

1 Ernest G. Hobbs, Jr. was the owner and property manager for Tennessee Homes, and we also refer

to him as “Landlord” in this opinion. 
- 3 -

. . . 

21. EARLY TERMINATION FEES: If this agreement terminates for 

nonpayment or other listed defaults, other than a Landlord approved written 

termination from Tenant, Tenant agrees to pay [$1,000.00], in addition to all 

other fees, charges, and damages allowed, as an Early Termination Fee 

(hereinafter referred to as ‘Early Termination Fee’). The Early Termination 

Fee is not a penalty, but rather a charge to compensate Landlord for Tenant’s 

failure to satisfy the terms of the agreement.

. . . 

24. FEES: Should it become necessary for Landlord to employ an attorney 

to enforce any of the conditions or covenants hereof, including the collection 

of rent or gaining possession of the Premises, Tenant agrees to pay all 

expenses incurred, including a reasonable attorney’s fee. . . . .

. . . 

27. SEVERABILITY: If any provision of this Agreement or the application 

thereof shall, for any reason and to any extent, be invalid or unenforceable, 

neither the remainder of this Agreement nor the application of the provision 

to other persons, entitles, or circumstances shall be affected thereby, but 

instead shall be enforced to the maximum extent permitted by Law.

After entering into the lease agreement, Tenants moved in to the apartment. Pursuant to 

paragraph 5 of the lease agreement, Tenants completed a check-in sheet and determined 

that, non-figuratively, everything but the kitchen sink was in acceptable condition at the 

time. They submitted a work order requesting that maintenance inspect the leaky sink. 

Both the check-in form and the work order contained notations that the sink was checked 

and/or repaired. However, according to Mr. Welch, he eventually had to fix the sink 

himself after waiting for help to no avail. Shortly after they moved in, Tenants also 

discovered that the refrigerator was not working properly, but this issue was not noted on 

the check-in form.

In June 2020, Mr. Welch drafted a letter expressing his and Ms. Clark’s

dissatisfaction with the apartment and their desire to terminate the lease. He described 

other issues such as the defective wi-fi and having to replace the refrigerator, and 

complained about the lack of response they received in regard to these issues. He also 

suggested that they should not have to pay anything further due to their trouble and that 

they would be out of the apartment by the end of June. In response to this letter, Landlord

agreed to let them out of their lease, but he informed them that, per paragraph 21 of the 
- 4 -

lease agreement, they would have to pay the early termination fee of $1,000. In a text 

message, Mr. Welch acknowledged that he would pay the early termination fee but 

disagreed to pay any other fees beyond that. At the end of June, Tenants moved out of the 

apartment as agreed but did not pay the early termination fee. Landlord was able to relet 

the apartment to another individual on July 9, 2020.

As a result of Tenants’ failure to pay the early termination fee, Landlord filed a civil 

warrant in general sessions court pursuant to paragraph 24 of the lease agreement. 

Landlord sought to recover the “early termination fee of $1,000.00,” as well as the

“remaining monthly rent until property is relet at $865.00 (8 months) per month; damages

of $250.00; courts costs of $145.50;service fees of $75.00; [and] attorney’s fees of $600.00 

for a total of $8,490.50.”

2

 Tenants disputed whether they caused any physical damage to 

the apartment, but an affidavit was filed by Landlord claiming otherwise. They also argued 

that the early termination fee was unenforceable because it was a penalty, which was 

against public policy. The general sessions court held a trial on the matter in September 

2020. The court entered judgment in favor of Landlord finding that the early termination 

fee was reasonable and was not a penalty. The court held that Landlord was entitled to a 

total of $1,870.50, less the $500.00 security deposit. The judgment for $1,870.50 included 

the following fees: $1,000.00 for the early termination fee; $600.00 for attorney’s fees; 

$145.50 for court costs; $75.00 for service fees; and $50.00 for damages. Thereafter, 

Tenants timely appealed the judgment to the circuit court.

The circuit court ultimately held a de novo trial on the matter in October 2021. 

Tenants raised an allegation not previously tried regarding a material breach by Landlord. 

After closing arguments, the court made an oral ruling in favor of Landlord and stated that

Landlord could submit an affidavit for attorney’s fees. Counsel for Landlord subsequently 

submitted an affidavit. On October 22, 2021, the circuit court then entered a judgment

detailing its findings. Like the general sessions court, the court found that the early 

termination fee was reasonable and was not a penalty. Furthermore, the court found that 

Landlord did not breach the lease agreement. Therefore, the court held that Landlord was 

entitled to judgment and calculated the judgment amount as follows:

Rent: $252.00

Damages: $50.00

Early Termination Fee: $1,000.00

Subtotal: $1,302.00

 

2 Tenants signed the twelve-month lease in March 2020 and vacated the premises at the end of 

June, so they remained on the property for approximately four months. Landlord filed a civil warrant 

requesting rent in the amount of $865/month for the remaining eight months of the lease. The civil warrant 

was filed on same day that the property was relet.
- 5 -

Security Deposit: -$500.00

Subtotal: $802.00

Refrigerator: -$300.00

Subtotal: $502.00

Attorney’s Fees (General Sessions Court): $145.50

Service Fee (General Sessions Court): $75.00

Subtotal: $1,322.50

Attorney’s Fees for [Circuit Court] Appeal: $1,650.00

Total Judgment in the Amount of $3,695.003

Afterward, Tenants timely filed an appeal with this Court.

Tenants filed a statement of the proceedings, to which Landlord filed an objection. 

After a hearing on the matter, the circuit court entered an order finding that all aspects of 

the statement of proceedings were consistent with what had transpired, with the exception 

of two clarifications concerning the lease agreement and the text messages between the 

parties. The court explained that the lease agreement was properly submitted into evidence 

without objection, the lease agreement was a binding contract entered into between the 

parties, Tenants only argued that the early termination fee was unenforceable, and the 

remainder of the lease agreement was enforceable. Additionally, the court explained that 

the text messages between the parties were admitted into evidence over the objection of 

Tenants, the objection was toward the relevance of the text messages and was overruled, 

and the text messages did not form a contract or amend the lease agreement.

Upon review of the record, this Court found that it did not have subject matter 

jurisdiction because the circuit court’s order from October 22, 2021, was not a final 

judgment pursuant to Tennessee Rule of Civil Procedure 58. Therefore, we ordered

Tenants to obtain entry of a final judgment in the circuit court. A supplemental record was 

subsequently filed with this Court which contained a final order that complied with 

Tennessee Rule of Civil Procedure 58.

II. ISSUES PRESENTED

 

3

In its calculation of the judgment amount, the circuit court’s math fails to add up, which Tenants 

point out in their appellate brief. Landlord attempts to clarify this discrepancy in its appellate brief, 

explaining that the court inadvertently left out the actual attorney’s fees of $600 from general sessions court 

and that the $145.50 represents the court costs, i.e., the filing fees for the civil warrant. Even assuming 

arguendo that this Court accepts Landlord’s explanation, the math still falls short of the total judgment 

amount of $3,695.00.
- 6 -

Tenants present the following issues for review on appeal, which we have reordered 

and slightly restated:

1. Whether Landlord materially breached the contract first, thereby justifying Tenants 

moving out early;

2. Whether the early termination fee was a valid and enforceable liquidated damages 

clause; and

3. Whether the final judgment improperly totaled the amount of damages from the 

circuit court’s oral ruling and/or improperly awarded attorney’s fee without 

evidence.

In addition to these issues, Landlord presents an issue of whether he is entitled to recover 

attorney’s fees incurred as a result of this appeal. For the following reasons, we affirm and 

remand to the circuit court for further proceedings consistent with this opinion.

III. STANDARD OF REVIEW

This is an appeal of a trial court’s decision made from a bench trial. “In an appeal 

from a bench trial, we review the trial court’s findings of fact de novo with a presumption 

of correctness, unless the evidence preponderates otherwise.” Smith v. Hi-Speed, Inc., 536 

S.W.3d 458, 467 (Tenn. Ct. App. 2016) (quoting Foster-Henderson v. Memphis Health 

Ctr., Inc., 479 S.W.3d 214, 223 (Tenn. Ct. App. 2015)). Furthermore, “great weight is 

given to the trial court’s determinations of credibility.” Pless v. Pless, 603 S.W.3d 753, 

770 (Tenn. Ct. App. 2019) (citing Walton v. Young, 950 S.W.2d 956, 959 (Tenn. 1997)). 

Therefore, we give “great weight to a trial court’s factual findings that rest on 

determinations of credibility.” Id. (quoting Nashville Ford Tractor, Inc. v. Great Am. Ins. 

Co., 194 S.W.3d 415, 424 (Tenn. Ct. App. 2005) (citations omitted)). “Although we also 

review the trial court’s resolution on a question of law de novo, no presumption of 

correctness attaches to the trial court’s legal conclusions.” Hi-Speed, Inc., 536 S.W.3d at 

467 (citing Bowden v. Ward, 27 S.W.3d 913, 916 (Tenn. 2000)). 

IV. DISCUSSION

A. Material Breach

We begin our discussion by first addressing the issue concerning material breach. 

Tenants contend that Landlord was the first party to materially breach the contract, i.e., the 

lease agreement. The circuit court found that Landlord did not breach the lease agreement. 

The court concluded that there were minor issues that Tenants experienced, but those issues 

did not constitute a breach of the lease agreement. We agree.

It is well established that a party must establish three elements in order to succeed 
- 7 -

on a breach of contract claim: “‘(1) the existence of an enforceable contract, (2) 

nonperformance amounting to a breach of contract, and (3) damages caused by the breach 

of the contract.’” Fitness & Ready Meals LLC v. Eat Well Nashville LLC, No. M2021-

00105-COA-R3-CV, 2022 WL 601073, at *3 (Tenn. Ct. App. Mar. 1, 2022) (quoting 

Bynum v. Sampson, 605 S.W.3d 173, 180 (Tenn. Ct. App. 2020) (citation omitted)). The 

parties’ dispute as to this particular issue pertains to the second element—a 

nonperformance that amounts to breach of the lease agreement. This Court has held that 

“in order for a contractual breach to be sufficient to relieve the non-breaching party of its 

contractual obligations, the initial breach must be ‘material.’” M & M Elec. Contractor, 

Inc. v. Cumberland Elec. Membership Corp., 529 S.W.3d 413, 423 (Tenn. Ct. App. 2016) 

(quoting DePasquale v. Chamberlain, 282 S.W.3d 47, 53 (Tenn. Ct. App. 2008) (citation 

omitted)). If the breach “‘was slight or minor, as opposed to material or substantial, the 

nonbreaching party is not relieved of his or her duty of performance, although he or she 

may recover damages for the breach.’” Id. (quoting Anil Constr. Inc. v. McCollum, No. 

W2014-01979-COA-R3-CV, 2015 WL 4274109, at *12 (Tenn. Ct. App. July 15, 2015) 

(no perm. app. filed) (citation omitted)). When determining the materiality of a party’s 

breach, it is the “clear trend” of Tennessee courts “to apply the test found in section 241 of 

the Restatement (Second) of Contracts.” Madden Phillips Constr., Inc. v. GGAT Dev. 

Corp., 315 S.W.3d 800, 822-23 (Tenn. Ct. App. 2009); see, e.g., State v. Howington, 907 

S.W.2d 403, 410-411 (Tenn. 1995); DePasquale, 282 S.W.3d at 53-54; Adams TV of 

Memphis, Inc. v. ComCorp of Tenn., Inc., 969 S.W.2d 917, 921 (Tenn. Ct. App. 1997). 

That test includes the following factors:

(a) the extent to which the injured party will be deprived of the benefit which 

he reasonably expected;

(b) the extent to which the injured party can be adequately compensated for 

the part of that benefit of which he will be deprived;

(c) the extent to which the party failing to perform or to offer to perform will 

suffer forfeiture;

(d) the likelihood that the party failing to perform or to offer to perform will 

cure his failure, taking account of all the circumstances including any 

reasonable assurances;

(e) the extent to which the behavior of the party failing to perform or to offer 

to perform comports with standards of good faith and fair dealing.

Restatement (Second) of Contracts § 241 (1981). However, when analyzing the materiality 

of a breach, we have held that sometimes “these factors are only marginally helpful in 

analyzing the materiality.” M & M Elec. Contractor, Inc., 529 S.W.3d at 423.
- 8 -

In order to resolve this issue of first material breach, we examine the issues that 

Tenants experienced during their time at the apartment. There were three specific issues 

that Tenants experienced regarding the sink, the refrigerator, and the wi-fi. Landlord 

testified that he observed a problem with the sink when the lease was first entered into in 

March 2020, but the records he provided demonstrated that he sent someone to fix it just a 

few days later. He explained that he did not receive any further complaints from Tenants 

about the sink until June 2020. Mr. Welch testified that he informed someone about the 

sink, but after about two weeks, he was unaware if anyone had come to fix it and decided 

to fix it himself. He agreed that it was conceivable that someone might have come to fix 

it while he was away, but he did not believe that someone should have entered his 

apartment without his permission.

As for the refrigerator, Landlord testified that he was contacted and told that the 

refrigerator was not working properly shortly after Tenants had moved in. He told Tenants 

to load up the refrigerator with ice in order to keep the food cool temporarily because he 

did not have anyone to fix it at the time. He learned a few days later, however, that Tenants 

bought their own refrigerator from a relative. He admitted that the refrigerator was not 

working and that he contracted to provide working appliances, but he maintained that he 

was unaware of the defective refrigerator when he entered into the contract. Mr. Welch 

testified that no one offered to replace the refrigerator at the time he communicated it was 

not working, so after about three days he bought a new one from his mother. He stated that 

Landlord never gave him any credit toward his rent for the expense and that he left this 

refrigerator when they moved out of the apartment. At the time of his testimony, he was 

unable to remember whether he paid $300 or $400 for the refrigerator. His letter from June 

2020 reflected that he paid $500 for it.

With respect to the wi-fi, Landlord testified that he was never informed of any 

problems with the wi-fi until June 2020. Tenants complained that it did not work or that it 

worked only intermittently. As a result, Landlord asked maintenance to look into the 

matter and checked with other tenants to see whether they were having any problems, but 

he received no other complaints. Mr. Welch testified that the wi-fi “never really worked,” 

but he admitted that he did not complain about it until later because of his prior complaints 

regarding the sink and the refrigerator. Contrary to Landlord’s testimony, Mr. Welch stated 

that other tenants expressed to him that their wi-fi did not work either. Ms. Clark testified 

that there was never an offer to improve the wi-fi or reduce their rent due to its 

defectiveness.

For a breach of contract claim, we have held that “[w]hether a party has fulfilled its 

obligations under a contract or is in breach of the contract is a question of fact.” A & P 

Excavating and Materials, LLC v. Geiger, 622 S.W.3d 237, 248 (Tenn. Ct. App. 2020) 

(quoting Forrest Constr. Co., LLC v. Laughlin, 337 S.W.3d 211, 225 (Tenn. Ct. App. 

2009)). Even assuming that these issues amounted to a breach, we find that the evidence 

does not preponderate against the circuit court’s conclusion that the issues were minor, and 
- 9 -

therefore not material. Landlord was initially aware of the issue with the sink and 

attempted to resolve it expeditiously by sending someone to fix it. After doing so, he was 

unaware that any problem with the sink remained until he was informed by Tenants in June 

2020. Mr. Welch admitted that someone might have come to fix the sink while he was 

away, and the documents in the record demonstrate that someone did on March 17, 2020. 

He did not believe that someone should have entered the apartment without his permission, 

but paragraph 13 of the parties’ lease agreement clearly gave Landlord, and his agents, the 

right to enter the apartment for the purposes of inspection and repair. Landlord was 

unaware of the defective refrigerator at the time the parties entered into the lease 

agreement. After he was informed of the issue, he offered a temporary solution to Tenants 

until he could find someone to fix the refrigerator. After only a few days, however, Tenants 

decided to replace the refrigerator themselves. They replaced the refrigerator without any 

prior written consent of Landlord, which was in contravention of paragraph 7 of the parties’ 

lease agreement. Finally, both Landlord and Mr. Welch testified that the issue with the wifi was not brought up until June 2020, which was shortly before Tenants decided to move 

out of the apartment. Landlord then had someone look into the issue and checked with 

other tenants to determine whether they were having issues with the wi-fi, but he received 

no other complaints. In the addendum regarding the wi-fi, Tenants acknowledged that the 

wi-fi “may not be uninterrupted or error-free.”

While we agree that the situation for Tenants was not ideal, the extent to which they 

had been deprived of the benefit they reasonably expected did not rise to the level of 

material. See Restatement (Second) of Contracts § 241(a) (1981). In regard to all three 

issues mentioned above, Landlord attempted, or offered to attempt, to resolve them. From 

our review of the record, Landlord acted reasonably and in good faith when these issues 

were brought to his attention. See Restatement (Second) of Contracts § 241(e) (1981). 

Additionally, it was likely that he would have cured these issues if Tenants had 

communicated further about the sink, had waited more than a few days to allow him to 

resolve the issue with the refrigerator, and had brought the issue with the wi-fi to his 

attention sooner. See Restatement (Second) of Contracts § 241(d) (1981). We sympathize 

with Tenants—no one wants to move into an apartment and encounter problems, 

irrespective of the materiality. Nevertheless, we find that these issues were “slight or 

minor, as opposed to material or substantial,” and therefore Tenants were not relieved of 

their duty of performance. M & M Elec. Contractor, Inc., 529 S.W.3d at 423 (quoting Anil 

Constr. Inc., 2015 WL 4274109, at *12 (no perm. app. filed) (citation omitted)). As such, 

we conclude Landlord did not materially breach the lease agreement first.

B. Liquidated Damages

While the parties differ on whether the lease agreement’s provision regarding an 

early termination fee is enforceable, both of them appear to agree that the lease on its face 

provides for the potential collection of an early termination fee in addition to “other fees, 

charges, and damages.” Tenants contend that the provision in the lease agreement 
- 10 -

providing for an early termination fee was unenforceable. To support this contention, they 

argue that the early termination fee was unenforceable because, when viewed 

prospectively, damages were not difficult to ascertain and the early termination fee was not 

a reasonable estimate of damages. They also argue that the early termination fee was a 

penalty because it was cumulative to damages rather than a substitute for damages. 

Additionally, they claim that the lease agreement’s language stating the early termination 

fee was “not a penalty” is irrelevant and that Landlord had “less-than-zero damages” 

without the early termination fee. In response to these arguments, Landlord contends that 

the early termination fee was reasonable, bore a direct relationship with the monthly rental 

amount, and was not a penalty. At trial, Landlord testified that the early termination fee 

applied in addition to all other damages because he had other business expenses, besides 

lost rent and physical damage, which the fee helped subsidize. In order to address this 

issue, we review the Tennessee case law on liquidated damages.

i. Generally

Initially, although not technically raised as a separate issue, we determine the 

finding that the “early termination fee” is, on its face, a purported liquidated damages 

clause to be integral to our review. See Keck v. Meek, No. E2017-01465-COA-R3-CV, 

2018 WL 3199220, at *7 (Tenn. Ct. App. June 28, 2018) (determining that whether the 

trial court properly found that the buyers exercised their option to purchase the subject 

property was integral to its review, although it was not raised as a separate issue by the 

sellers). The lease agreement did not refer to the early termination fee as “liquidated 

damages.” The provision reads as follows:

21. EARLY TERMINATION FEES: If this agreement terminates for 

nonpayment or other listed defaults, other than a Landlord approved written 

termination from Tenant, Tenant agrees to pay [$1,000.00], in addition to all 

other fees, charges, and damages allowed, as an Early Termination Fee 

(hereinafter referred to as ‘Early Termination Fee’). The Early Termination 

Fee is not a penalty, but rather a charge to compensate Landlord for Tenant’s 

failure to satisfy the terms of the agreement.

However, we note that “the parties’ choice of language does not determine the nature of 

the provision.” Anesthesia Med. Grp., P.C. v. Buras, No. M2004-01599-COA-R3-CV, 

2006 WL 2737829, at *2 (Tenn. Ct. App. Sept. 25, 2006) (citing Guiliano v. Cleo, Inc., 

995 S.W.2d 88, 97 (Tenn. 1999)). Our Supreme Court has explained that “[a] contractual 

provision need not explicitly include the term ‘liquidated damages’ to constitute a 

liquidated damages provision.” Guiliano, 995 S.W.2d at 97. Rather, “it is the task of the 

Court and not of the parties to decide the true nature of the sum payable.” P.S. Atiyah, An 

Introduction to the Law of Contract 316-17 (3d ed. 1981). “If the contract is for a matter 

of uncertain value, and a reasonable sum is fixed by the parties as the amount to be paid on 

breach, that sum, though actually called a ‘penalty’ in the instrument, is recoverable as 
- 11 -

liquidated damages if the obligation be not in fact performed.” Ill. Cent. R. Co. v. So. 

Seating & Cabinet Co., 58 S.W. 303, 305 (Tenn. 1900) (citations omitted) (emphasis 

added). Concomitantly, if the sum is “unreasonable . . . , the stipulation, however named, 

is a penalty, and only actual damages, to be ascertained in the ordinary way, can be 

recovered.” Id. at 306 (emphasis added).

Although it is not explicitly stated in the lease agreement, the provision was clearly

intended to be a stipulation for liquidated damages. See Buras, 2006 WL 2737829, at *2 

(“The term ‘liquidated damages’ means a sum agreed upon by contracting parties at the 

time they enter into their contract, to be paid as compensation for damages suffered by one 

party in the event that the other breaches the contract.”) (citing V.L. Nicholson v. Transcon 

Inv., 595 S.W.2d 474, 484 (Tenn. 1980)). We can conclude so because the clear language 

of the provision made the fee due or conditioned upon termination “for nonpayment or 

other listed defaults” and referred to the fee as a “charge to compensate Landlord for 

Tenant’s failure to satisfy the terms of the agreement.” See id. (concluding that the 

provision was clearly one for liquidated damages because the clear language of the 

contract’s provision made the payment due or conditioned upon a breach, or, specifically, 

an “event of default.”) (citing Guiliano, 995 S.W.2d at 97).

Therefore, as a preliminary matter, we find that the circuit court properly analyzed 

the “early termination fee” as a provision for liquidated damages. The decisive question is 

whether the liquidated damages provision at issue is enforceable. 

ii. Enforceability4

We have found that “[t]he beginning point for any current day discussion of 

liquidated damages is the Tennessee Supreme Court’s holding in Guiliano . . . .” Id. at *6. 

Our Supreme Court discussed the issue of liquidated damages at length in Guiliano and 

determined that the “prospective approach” best addresses the recovery of liquidated 

damages. Guiliano, 995 S.W.2d at 100; see Allmand v. Pavletic, 292 S.W.3d 618, 630-31 

(Tenn. 2009) (reaffirming and applying the principles of liquidated damages from 

Guiliano); Hensley v. Cocke Farmer’s Coop., No. E2014-01775-COA-R3-CV, 2015 WL 

 

4

If we find that the liquidated damages provision is unenforceable, the lease agreement contains a 

severability provision in paragraph 27, which would allow the remainder of the lease agreement to still be 

enforced. We note that:

Even if the [liquidated damages] provision is an unenforceable penalty, or where the clause 

is invalid for other reasons, the injured party will not forfeit all rights to contract 

enforcement, but may still seek its actual demonstrated damages. Where the liquidated 

damages clause is unenforceable, and no bar exists to a damages remedy, this situation 

might actually benefit the plaintiff where it can prove a loss, because the actual damages 

could exceed liquidated damages.

22 Tenn. Prac. Contract Law & Prac. § 12:37 (footnote omitted).
- 12 -

5121142, at *5-6 (Tenn. Ct. App. Aug. 31, 2015), perm. app. denied (Tenn. Ct. App. Jan. 

21, 2016) (applying the principles of liquidated damages from Guiliano in a case involving 

a contractual provision for severance pay). The Court explained that “there are two 

important interests at issue: the freedom of parties to bargain for and to agree upon terms,” 

such as a term providing for liquidated damages, “and the limitations set by public policy.” 

Id. “Generally, the parties to a contract are free to agree upon liquidated damages and upon 

other terms that may not seem desirable or pleasant to outside observers.” Id.; see Chapman 

Drug Co. v. Chapman, 341 S.W.2d 392, 398 (Tenn. 1960); 22 Am. Jur. 2d Damages § 686 

(1988). In that respect, we “should not interfere in the contract, but should carry out the 

intentions of the parties and the terms bargained for in the contract, unless those terms 

violate public policy.” Id.; see McKay v. Louisville & N.R. Co., 182 S.W. 874, 875 (Tenn. 

1916) (citing Baltimore & Ohio S.W. Ry. Co. v. Voight, 176 U.S. 498, 505, 20 S.Ct. 385, 

387, 44 L.Ed. 560 (1900)). 

In the context of parties agreeing to a liquidated damages provision, the Court 

further explained that:

[I]t is generally presumed that [the parties] considered the certainty of 

liquidated damages to be preferable to the risk of proving actual damages in 

the event of a breach. 22 Am. Jur. 2d Damages § 726.

Liquidated damages permit the parties to allocate business and litigation risks 

and often serve as part of the contractual bargain. In addition, they lend 

certainty to the contractual agreement and allow the parties to resolve 

defaults and other related disputes efficiently, when actual damages are 

impossible or difficult to measure. C.T. McCormick, Handbook on the Law 

of Damages § 157 (1935).

Id. Thus, under the prospective approach, we “focus on the intentions of the parties based 

upon the language in the contract and the circumstances that existed at the time of contract 

formation.” Id. (footnote omitted). The Court explained that those circumstances include:

[W]hether the liquidated sum was a reasonable estimate of potential damages 

and whether actual damages were indeterminable or difficult to measure at 

the time the parties entered into the contract. If the provision satisfies those 

factors and reflects the parties’ intentions to compensate in the event of a 

breach, then the provision will be upheld as a reasonable agreement for 

liquidated damages. However, if the provision and circumstances indicate 

that the parties intended merely to penalize for a breach of contract, then the 

provision is unenforceable as against public policy.

Id. at 100-01 (internal citation omitted). Following this approach, the circuit court properly 

determined that the provision regarding the early termination fee must be viewed 
- 13 -

prospectively, rather than retrospectively, at the time the parties entered into the lease 

agreement.

A liquidated damages provision is “subject to close scrutiny because of the public 

policy against forfeitures.” Bachour v. Mason, No. M2012-00092-COA-R3-CV, 2013 WL 

2395027, at *4 (Tenn. Ct. App. May 30, 2013) (citations omitted); Anesthesia Med. Grp., 

P.C. v. Chandler, No. M2005-00034-COA-R3-CV, 2007 WL 412323, at *9 n.7 (Tenn. Ct. 

App. Feb. 6, 2007) (citations omitted); Buras, 2006 WL 2737829, at *7 n. 10 (citations 

omitted). The viewpoint from which we are to analyze a liquidated damages provision is 

described in both Chandler and Buras as follows:

The law continues to be that a liquidated damages provision will be upheld 

if the amount of such damages bears a reasonable relationship to the amount 

of actual damages that would likely be sustained in the event of a breach and 

if the actual amount of damages would be difficult to determine or prove. 

Conversely, liquidated damages will not be upheld if they are deemed to 

constitute a penalty against the breaching party rather than a reasonable way 

to guarantee compensation for damages to the non-breaching party. 

Guiliano, 995 S.W.2d at 98.

Chandler, 2007 WL 412323, at *9; Buras, 2006 WL 2737829, at *7 (footnote omitted). 

The circuit court found that the early termination fee was reasonable and not a penalty. 

Yet, the court did not elaborate on why the early termination fee was reasonable and did 

not make a finding that the actual amount of damages would have been difficult to 

determine or prove.

When viewing the provision prospectively, it was a “reasonable prediction” that 

Landlord could sustain damages if Tenants did not complete their 12-month term. 

Guiliano, 995 S.W.2d at 99; see Buras, 2006 WL 2737829, at *7 (explaining that “at the 

time the contract was signed it was clearly foreseeable, and in fact likely, that [the plaintiff] 

would suffer damages if [the defendant] did not complete his three-year employment 

commitment”). Tenants point out in their reply brief that the apartment could have been 

filled in one day hypothetically, and the lost rent would have only been approximately 

$29.00 ($865.00 monthly rent ÷ 30 days). Likewise, we point out that the apartment could 

have not been filled during the remainder of the 12-month term, and the lost rent would 

have been approximately $6,920.00 ($865.00 monthly rent × 8 months). Moreover, if 

Tenants had moved out earlier than June 2020, the lost rent would have been even greater

if the apartment could not have been filled. The $1,000.00 early termination fee was not 

disproportionate in Landlord’s favor; in fact, it was favorable to Tenants. See Buras, 2006 

WL 2737829, at *7 (explaining that the liquidated damages were not disproportionate in 

plaintiff’s favor, but were favorable to the defendant). When Tenants did move out, 

Landlord was able to relet the apartment to another individual on July 9, 2020 and only 

sustained approximately $252.00 in lost rent. Nevertheless, “the amount of actual damages
- 14 -

at the time of breach is of little or no significance to the recovery of liquidated damages” 

under the prospective approach. Guiliano, 995 S.W.2d at 99. The early termination fee in 

the amount of $1,000.00 was a reasonable estimate of the damages Landlord could sustain

at time the parties entered into the lease agreement. 

Still, “the actual amount of damages” must have been “difficult to determine or 

prove” in order for a liquidated damages provision to be enforceable. Chandler, 2007 WL 

412323, at *9; Buras, 2006 WL 2737829, at *7. In Buras, we found that the actual damages 

could not be accurately predicted at the time of the contract formation because, among 

other things, it could not be ascertained how long it would take to find a replacement for 

the defendant who did not complete his three-year employment commitment. Buras, 2006 

WL 2737829, at *7. Similarly, at the time the parties entered into the lease agreement in 

this case, it would have been difficult to determine the following: (1) if and when Tenants 

would breach by moving out and (2) if and when Landlord would be able to find a new 

tenant to replace them. We are unable to find any Tennessee case law specifically 

addressing the characterization of such fees in residential lease agreements.5 However, the 

Missouri Court of Appeals has interpreted a similar lease provision to be a valid liquidated 

damages clause. In Paragon Grp. Inc. v. Ampleman, 878 S.W.2d 878, 881 (Mo. Ct. App. 

1994), the Court examined a provision from a lease agreement, which provided a $920.00 

termination fee equal to the amount of two month’s rent. Nine months remained on the 

lease when the tenant breached the lease, and the Court determined that that $920.00 was 

not an unreasonable estimate of the damages the landlord would incur upon breach of a 

$5,520.00 lease when nine months remained in the lease term. Id. (citations omitted). 

Additionally, the Court disagreed with the tenant’s contention that the amount of damages 

would not be difficult to ascertain, explaining that “Missouri courts have consistently held 

actual damages for breach of real estate sales contracts are uncertain and difficult to prove.” 

Id. (citations omitted). The Court further explained as follows:

Like real estate contracts, it is difficult to measure damages upon breach of 

a lease by the tenant. While the amount of rent due under the lease is easily 

measurable, it is hard to say how long the apartment will be vacant or how 

much time, expense and energy will be expended to re-let the premises. It is 

also difficult to estimate whether or how many prospective long-term tenants 

were turned away while the leasing tenant occupied the premises or how this 

damaged the landlord. Contrary to Tenant’s assertions, it is even harder to 

measure the damages of a large apartment complex where marketing and 

leasing activities are occurring daily. In that situation, putting a price on 

 

5 We do note that the Keck case involved a dispute concerning a “Tennessee Residential Lease 

Agreement,” in which this Court addressed an issue regarding liquidated damages, but it pertained to the 

transfer of real property. Keck, 2018 WL 3199220, at *1, 15. The sellers in that case relied in part on a 

provision for “liquidated damages” of the parties’ real estate contract, which provided that if the buyers 

failed “to perform the covenants herein contained within the time specified,” the sellers would be able to 

retain “as liquidated damages all sums which have theretofore been paid.” Id. at *15.
- 15 -

Landlord’s damages is difficult at best. Where the difficulty of loss is great, 

significant latitude is allowed in setting the amount of anticipated damages.

Id. (internal citations omitted). Accordingly, the Court in Ampleman found that the trial 

court did not err in finding the clause in question was a valid liquidated damages clause. 

Like the Missouri Court of Appeals, we emphasize that “it is difficult to measure damages 

upon breach of a lease by the tenant.” Id. Furthermore, “[w]hile the amount of rent due 

under the lease is easily measurable,” it is difficult to ascertain, among other things, “how 

long the apartment will be vacant or how much time, expense and energy will be expended 

to re-let the premises.” Id. The damages Landlord would potentially suffer, if Tenants did 

not complete the 12-month term, were “indeterminable or difficult to ascertain at the time 

of contract formation.” Chandler, 2007 WL 412323, at *10 (quoting Guiliano, 995 

S.W.2d at 99) (emphasis added). 

As such, we find that at the time the parties entered into the lease agreement, the 

early termination fee of $1,000.00 was a reasonable estimate of potential damages and such 

damages were difficult to ascertain at the time the parties entered into the lease agreement.

iii. Scope of Liquidated Damages

Though we have analyzed the liquidated damages provision from the viewpoint 

described in Chandler and Buras, our discussion does not end here. “If [a] contract 

contains no criteria for determining the stipulated liquidated damages, these exactions will 

be unenforceable.” 22 Tenn. Prac. Contract Law & Prac. § 12:36; see Cummins v. Vaughn, 

911 S.W.2d 739, 742 (Tenn. Ct. App. 1995) (explaining that the parties eliminated the basis 

for recovery of liquidated damages when they obliterated the criteria for the amount of 

liquidated damages). The provision in the lease agreement contained such criteria, stating

that it was “a charge to compensate Landlord for Tenant[s’] failure to satisfy the terms of 

the agreement.” Thus, the $1,000.00 early termination fee was an estimation of the 

anticipated actual damages Landlord would suffer for Tenants’ failure to satisfy the lease 

agreement. The following discussion on this issue, which has been called a “Have Cake 

and Eat It” clause,6is instructive:

Questions sometimes arise on whether a party in the same action for breach 

may obtain both liquidated and conventional damages. Along with obtaining 

liquidated damages, a party can exercise its conventional right to recover 

other damages proximately related to a breach of the contract, but only where 

they are outside the scope of the liquidated damages clause. On the other 

hand, a party may not elect between its right to recover liquidated damages 

versus actual damages for losses covered by a liquidated damages clause, 

except as permitted by the contract.

 

6

J. Calamari & J. Perillo, The Law of Contracts, § 14.32 (4th ed. 1998).
- 16 -

22 Tenn. Prac. Contract Law & Prac. § 12:36 (footnotes omitted). The liquidated damages 

provision stated that Tenants agreed to pay the early termination fee “in addition to all other 

fees, charges, and damages allowed . . . .” Therefore, Landlord could recover “other fees, 

charges, and damages” that were not contemplated by the liquidated damages provision. 

As we have explained, “[t]he liquidated damage clauses of contracts do not cover damages 

flowing from ‘events’ not contemplated by the parties at the time they are signed ‘unless 

the contract expressly provides that damages other than those enumerated . . . shall not be 

recovered.’” Loveday v. Barnes, No. 03A01-9201CV0030, 1992 WL 136176, at *4 (Tenn. 

Ct. App. June 19, 1992) (citing 22 Am. Jur. 2d Damages § 728).

By that same token, Landlord cannot have his cake and eat it too. “If a party elects 

the remedy of liquidated damages, he or she cannot generally seek additional damages for 

the same breach.”

7

 Wayne Boykin & Assocs. v. Tinsely, No. M2006-02465-COA-R3-CV, 

2008 WL 820512, at *7 (Tenn. Ct. App. Mar. 26, 2008); see G.H. Swope Bldg. Corp v. 

Horton, 338 S.W.2d 556, 568-69 (Tenn. 1960) (“Having retained the $250, the owner has 

received all the damages he is entitled to receive under the accepted offer to buy. As the 

Court views it, to hold otherwise would be to ignore the accepted meaning of the expression 

‘liquidated damages.’”). The very nature of a liquidated damages provision is to settle in 

advance the “anticipated actual damages” that might arise “from a future breach.” 22 Am. 

Jur. 2d Damages § 506 (footnote omitted). “The effect of a clause for stipulated damages 

in a contract is to substitute the agreed amount for the actual damages resulting from a 

breach of the contract . . . . A valid liquidated damages clause precludes recovery for actual 

damages; both actual damages and liquidated damages cannot be awarded.” 22 Am. Jur.

2d Damages § 535 (footnotes omitted).

Here, it is evident that the parties contemplated the $1,000.00 early termination fee 

to be a reasonable estimate of the lost rent and related damages that Landlord would

potentially suffer in light of a breach by Tenants. Consequently, we determine that the 

early termination fee was meant to compensate Landlord for the lost rent, and the lost rent 

is not recoverable by Landlord.8 Therefore, to the extent that the circuit court awarded the

 

7 This Court has also briefly discussed this issue of “double recovery” in a case involving a breach 

of a construction contract, though we did not reach the substance of the issue. Airline Const. Inc. v. Barr, 

807 S.W.2d 247, 259-60 (Tenn. Ct. App. 1990). In Barr, the plaintiff alleged that the award of liquidated 

damages was a penalty because the defendant was also awarded lost profits under an oral agreement 

between the parties. Id. at 260. However, we ultimately concluded that the issue was moot because we 

determined that that the admission of evidence surrounding the oral agreement violated the parol evidence 

rule. Id.

8 We have noted that a breach of contract claim for unpaid rent may be “antithetical” to a claim that 

liquidated damages are proper under the same contract. Keck, 2018 WL 3199220, at *15 n.5. In the Keck

case, which involved the transfer of real property, we found that the liquidated damages provision was 

unenforceable under the circumstances. Id. at *15. In this case, we conclude that Landlord may not recover 

both liquidated damages and actual damages in the form of lost rent, but, unlike the Keck case, we have 

found that the liquidated damages provision is enforceable under these circumstances.
- 17 -

$252.00 in lost rent, the total judgment amount should be reduced by that amount.9

iv. Intent

Lastly, we note that Tenants initialed the liquidated damages provision in the lease 

agreement demonstrating that they agreed to it and were aware of it. They signed the 

addendum regarding the statement of facts and initialed the statement: “I/We understand 

and agree there is an early termination fee as stated in the lease agreement[.]” 

Furthermore, just before moving out, Mr. Welch acknowledged through a text message in 

June 2020 that he would pay the early termination fee “like it says in the lease.” At the 

time the parties entered into the lease agreement, and even at the time the parties were 

anticipating a breach through their correspondence in June 2020, they intended for the early 

termination fee to resolve Tenants’ default efficiently, when actual damages were 

impossible or difficult to measure. Guiliano, 995 S.W.2d at 100 (citing C.T. McCormick, 

Handbook on the Law of Damages § 157 (1935).

Accordingly, we conclude that the early termination fee, as a liquidated damages 

provision, was valid and enforceable. Enforcing this provision “gives effect to the original 

intentions of the parties and furthers the goals and purposes of stipulating in advance to 

potential damages.” Buras, 2006 WL 2737829, at *8. However, as previously discussed, 

Landlord may not recover the actual damages of $252.00 in the form of lost rent. As such, 

the total judgment amount should be reduced by $252.00.

C. Final Judgment Amount

i. Calculation

Tenants’ final issue concerns the calculation of the final judgment amount and the 

award of attorney’s fees. They state in their appellate brief, “the math on the final judgment 

simply does not add up.” After struggling with the math provided in the circuit court’s 

judgment, we agree. Moreover, Landlord admits in his appellate brief that the math was 

“incorrect” and a certain fee was “omitted by mistake.” Landlord attempts to clarify the 

discrepancies in his appellate brief, explaining that the court inadvertently left out the 

 

9 We note here that the lease agreement contained a separate provision concerning the security 

deposit, and, incidentally, any damages to the apartment. The deposit was intended to be “security for any 

damage caused to the Premises during the term hereof.” Additionally, the provision stated that “such 

deposit shall be returned to Tenant, without interest, and less any set off for damages to the Premises upon 

the termination of this Agreement.” In light of this separate provision, we determine that the damages to 

the apartment were not contemplated by the liquidated damages provision. Furthermore, the early 

termination fee was recoverable “in addition to all other fees, charges, and damages allowed,” and recovery 

of damages to the apartment were permitted because they were provided for elsewhere in the lease 

agreement. As such, pursuant to the security deposit provision, the circuit court properly found that the 

$500.00 deposit should be returned to Tenants less the $50.00 for damages to the apartment.
- 18 -

actual attorney’s fees of $600.00 from general sessions court and that the $145.50 

represents the court costs, i.e., the filing fees for the civil warrant. It is evident that this 

explanation solves the discrepancy of how the court reached the subtotal of $1,322.50:

Rent: $252.00

Damages: $50.00

Early Termination Fee: $1,000.00

Subtotal: $1,302.00

Security Deposit: -$500.00

Subtotal: $802.00

Refrigerator: -$300.00

Subtotal: $502.00

[Court Cost’s] [$145.50]

Attorney’s Fees (General Sessions Court): [$600.00]

Service Fee (General Sessions Court): $75.00

Subtotal: $1,322.50

Regardless of this explanation, the math still falls $722.50 short of the total judgment 

amount of $3,695.00:

Subtotal: $1,322.50

Attorney’s Fees for [Circuit Court] Appeal: $1,650.00

Total Judgment in the Amount of $3,695.00

In light of these mathematical discrepancies, we remand this issue to the circuit court to 

determine the correct amount for the total judgment to be awarded to Landlord. See St. 

John-Parker v. Parker, 638 S.W.3d 624, 649 (Tenn. Ct. App. 2020) (remanding to the trial 

court for an inadvertent omission of discretionary cost from its final judgment). We also 

reiterate that Landlord may not recover the actual damages of $252.00 in the form of lost 

rent because that amount was contemplated by the liquidated damages provision. On 

remand, the correct amount for the total judgment to be awarded to Landlord should be 

reduced by $252.00. However, Landlord may recover “all other fees, charges, and 

damages” that were not contemplated by the liquidated damages provision.

ii. Reasonable Attorney’s Fees
- 19 -

Tenants also argue that attorney’s fees should not be awarded at all without 

sufficient evidence to assess the reasonableness of the fees. The lease agreement contained 

language providing for attorney’s fees as follows: “Should it become necessary for 

Landlord to employ an attorney to enforce any of the conditions or covenants hereof,

including the collection of rents or gaining possession of the Premises, Tenant agrees to 

pay all expenses incurred, including a reasonable attorney’s fee.” After trial, counsel for 

Landlord submitted an affidavit, stating in pertinent part, “My current hourly rate for 

creditor clients is $250.00/hour. However, I currently represent the Plaintiff in this matter 

and charge an hourly rate of $150.00/hour.” Counsel for Landlord did not include the 

number of hours or an estimated amount of attorney’s fees incurred. In its judgment, the 

circuit court found that Landlord was entitled to a judgment of attorney’s fees pursuant to 

paragraph 24 of the lease agreement. The court found that Landlord was entitled to 

$1,650.00 in attorney’s fees for the proceedings in circuit court, but, as discussed above, 

the court’s calculation of the total judgment inadvertently omitted the $600.00 attorney’s 

fees for the proceedings in general sessions court.

Tenants concede in their appellate brief that the record suggests the attorney’s fees 

from general sessions court were $600.00.10 Similar to the previous issue on the calculation 

of the total judgment, Landlord explains how the court reached the amount of attorney’s 

fees incurred. He explains that the amount of attorney’s fees contained in the court’s 

judgment reflected that attorney’s fees from the circuit court were a total of $1,650.00. 

Therefore, he states that this amount, when divided by the hourly rate of $150.00, disclosed 

that the amount of time expended was 11 hours. In regard to this issue, we have explained 

that:

Where an attorney’s fee is based upon a contractual agreement expressly 

providing for a reasonable fee, the award must be based upon the guidelines 

by which a reasonable fee is determined. Wilson Mgmt. Co. v. Star Distrib. 

Co., 745 S.W.2d 870, 873 (Tenn. 1988). Obviously, the burden of proof on 

the question of what is a reasonable fee in any case is upon the plaintiff, and 

plaintiff should be in a position to tender such proof. Id. However, a trial 

judge may fix the fees of lawyers in causes pending or which have been 

determined by the court, with or without expert testimony of lawyers and 

with or without a prima facie showing by plaintiffs of what a reasonable fee 

would be. Id. The trial judge may feel that the proceedings which he or she 

has heard have sufficiently acquainted him or her with the appropriate factors 

to make a proper award of an attorney’s fee without proof or opinions of 

 

10 The circuit court’s judgment notes that the attorney’s fees from general sessions court were 

$600.00 when recounting the general sessions court’s judgment. The general sessions court’s judgment 

found that Landlord was entitled to attorney’s fees in the amount of $600.00. Landlord also references the 

$600.00 fee in its trial brief.
- 20 -

other lawyers. Kahn v. Kahn, 756 S.W.2d 685, 696-97 (Tenn. 1988). 

Therefore, reversal of a fee award is not required merely because the record 

does not contain proof establishing the reasonableness of the fee. Kline v. 

Eyrich, 69 S.W.3d 197, 210 (Tenn. 2002). Should a dispute arise as to the 

reasonableness of the fee awarded, then in the absence of any proof on the 

issue of reasonableness, it is incumbent upon the party challenging the fee to 

pursue the correction of that error in the trial court by insisting upon a hearing 

on that issue, or to convince the appellate courts that he was denied the 

opportunity to do so through no fault of his own. Id. (citing Wilson Mgmt. 

Co., 745 S.W.2d at 873); Kahn, 756 S.W.2d at 697. Absent a request for a 

hearing by the party dissatisfied by the award, a trial court is not required to 

entertain proof as to the reasonableness of the amount of attorney’s fees 

awarded. Richards v. Richards, No. M2003-02449-COA-R3-CV, 2005 WL 

396373, at *15 (Tenn. Ct. App. W.S. Feb. 17, 2005).

Malibu Equestrian Est., Inc. v. Sequatchie Concrete Serv., Inc., No. M2005-02954-COAR3-CV, 2007 WL 2200171, at *7 (Tenn. Ct. App. July 30, 2007).

Tenants did not request a hearing with the circuit court expressing their 

dissatisfaction with the award of attorney’s fees. Therefore, the circuit court was not 

“required to entertain proof as to the reasonableness of the amount of the attorney’s fees 

awarded.” Id. (citing Richards, 2005 WL 396373, at *15). Given that Tenants failed to 

pursue any correction of the award of attorney’s fees in circuit court, they must convince 

this Court that they were denied the opportunity to do so through no fault of their own. Id. 

(citing Kline, 69 S.W.3d at 210). In their appellate brief, they argue that neither the final 

judgment nor the attorney’s fees affidavit were served upon them prior to entry of 

judgment. Counsel for Tenants argues that he did not even see the attorney’s fees affidavit 

at all until he acquired the appellate record from this Court. Additionally, both the final 

judgment and the attorney’s fees affidavit were missing a proper certificate of service. 

Counsel admits that, conceivably, he had some obligation to object to these errors, but 

argues that there was no opportunity to do so.

Tenants contend that they were denied the opportunity to challenge the award of 

attorney’s fees, but after the circuit court’s oral ruling, they were on notice that Landlord 

would be filing an affidavit for attorney’s fees. Therefore, we find that Tenants were not 

denied the opportunity to challenge the attorney’s fees. Despite Tenants’ arguments, we 

find that the circuit court was capable of adjudging the value of the attorney’s services. See 

id. at *8 (“Having overseen the proceedings below, the trial court was capable of adjudging 

the value of the attorney’s services.”). Furthermore, we have reviewed the record and 

conclude that the $1,650.00 award of attorney’s fees was reasonable. The attorney’s fees 

affidavit demonstrated that counsel for Landlord charged $150.00/hour, and the $1,650.00 

award of attorney’s fees shows that he was compensated for 11 hours of services. We find 

no error in the circuit court’s handling of this issue.
- 21 -

D. Appellate Attorney’s Fees

Landlord presents an additional issue requesting attorney’s fees for this appeal. The 

parties’ lease agreement contained language providing for reasonable attorney’s fees: 

“Should it become necessary for Landlord to employ an attorney to enforce any of the 

conditions or covenants hereof, including the collection of rent or gaining possession of 

the Premises, Tenant agrees to pay all expenses incurred, including a reasonable attorney’s 

fee.”

In Tennessee, we have “long followed the ‘American Rule’ with regard to attorney’s 

fees.” Eberbach v. Eberbach, 535 S.W.3d 467, 474 (Tenn. 2017) (citing State v. Brown & 

Williamson Tobacco Corp., 18 S.W.3d 186, 194 (Tenn. 2000)). Under the American Rule, 

“a party in a civil action may recover attorney’s fees only if: (1) a contractual or statutory 

provision creates a right to recover attorney’s fees; or (2) some other recognized exception 

to the American Rule applies, allowing for recovery of such fees in a particular case.” Id.

(quoting Cracker Barrel Old Country Store, Inc. v. Epperson, 284 S.W.3d 303, 308 (Tenn. 

2009) (citing Taylor v. Fezell, 158 S.W.3d 352, 359 (Tenn. 2005); John Khol & Co. P.C.

v. Dearborn & Ewing, 977 S.W.2d 528, 534 (Tenn. 1998))). When an agreement exists 

between parties that entitles the prevailing party to recover attorney’s fees, “[o]ur courts 

long have observed at the trial court level that parties are contractually entitled to recover 

their reasonable attorney’s fees . . . .” Id. at 478; see, e.g, Seals v. Life Invs. Ins. Co. of 

Am., No. M2002-01753-COA-R3-CV, 2003 WL 23093844, at *4 (Tenn. Ct. App. Dec. 30, 

2003); Hosier v. Crye-Leike Com., Inc., No. M2000-01182-COA-R3-CV, 2001 WL 

799740, at *6 (Tenn. Ct. App. July 17, 2001). Our Supreme Court has stated that this 

observation is also true at the appellate court level and explained its reasoning as follows:

Absent fraud, mistake, or some other defect, our courts are required to 

interpret contracts as written, giving the language used a natural meaning.

U.S. Bank, N.A. v. Tennessee Farmers Mut. Ins. Co., 277 S.W.3d 381, 386-

87 (Tenn. 2009). This axiomatic rule does not change or lose its force 

because the parties to an agreement are before an appellate court. Indeed, 

one of the bedrocks of Tennessee law is that our courts are without power to 

make another and different contract from the one executed by the parties 

themselves. Dubois v. Gentry, 182 Tenn. 103, 184 S.W.2d 369, 371 (1945); 

see also Bob Pearsall Motors, Inc. v. Regal Chrysler-Plymouth, Inc., 521 

S.W.2d 578, 580 (Tenn. 1975) (“The courts, of course, are precluded from 

creating a new contract for the parties.”).

Id. Following this reasoning, the Court concluded that our appellate courts “do not have 

discretion to deny an award of fees mandated by a valid and enforceable agreement 

between the parties . . . .” Id. at 479. Therefore, if the parties’ lease agreement provided 

for attorney’s fees under certain circumstances, that provision must be enforced.
- 22 -

As mentioned before, the parties’ lease agreement contained language providing for 

“a reasonable attorney’s fee” if it became “necessary for Landlord to employ an attorney 

to enforce any of the conditions or covenants” of the agreement.11 There is a valid and 

enforceable lease agreement which contains language providing for “a reasonable 

attorney’s fee.” Landlord initiated this lawsuit in general sessions court when it became 

“necessary for [him] to employ an attorney to enforce” the liquidated damages clause of 

the lease agreement. Tenants appealed the general sessions court’s decision and the circuit 

court’s decision, both of which awarded judgment in favor of Landlord, and Landlord was 

forced to defend his award. The defense of those judgments qualifies as “enforc[ing] any 

of the conditions or covenants” of the lease agreement. Therefore, we conclude that the 

parties’ lease agreement entitles Landlord to an award of reasonable attorney’s fees for this 

appeal.

As such, we conclude that Landlord is entitled to an award of reasonable attorney’s 

fees incurred before this Court. We grant Landlord’s request for an award of reasonable 

attorney’s fees on appeal and remand the case to the circuit court for a determination of the 

appropriate amount of those fees.

V. CONCLUSION

For the aforementioned reasons, we affirm the decision of the circuit court in regard 

to the issues of material breach of contract and the enforceability of the early termination 

fee. We affirm the award of damages to Landlord. However, we remand for the circuit 

court to determine the correct amount for the total judgment to be awarded to Landlord and 

to reduce the total judgment amount by $252.00 to exclude the lost rent awarded. We also

remand the case to the circuit court for a determination of the appropriate amount of 

attorney’s fees to be awarded to Landlord for this appeal. Costs of this appeal are taxed to 

the appellants, Dalton L. Welch and Alexis S. Clark, for which execution may issue if 

necessary.

_________________________________

CARMA DENNIS MCGEE, JUDGE

 

11 There were two Tennessee cases involving a lease agreement that employed similar language, 

which we found instructive in our analysis of this issue. See Country Mile, LLC v. Cameron Props., No. 

M2017-01771-COA-R3-CV, at *28 (Tenn. Ct. App. Mar. 13, 2019); Keck, 2018 WL 3199220, at *2.