Court Opinion

ID: 9909618
Source: CourtListenerOpinion
Date Created: 2023-12-13 19:09:41.19547+00
Date Added: 2024-06-11T12:48:02.768477
License: Public Domain

12/13/2023
                IN THE COURT OF APPEALS OF TENNESSEE
                             AT JACKSON
                               November 28, 2023 Session

      CAROLYN M. STARK ET AL. v. WILLIAM S. MCLEAN ET AL.

                   Appeal from the Chancery Court for Dyer County
                    No. 14-CV-73      Tony Childress, Chancellor
                      ___________________________________

                            No. W2023-00145-COA-R3-CV
                        ___________________________________

In a prior appeal, we addressed multiple issues connected to a judgment that was entered
following a bench trial. Among other things, we affirmed the trial court’s determination
that one of the Defendants in this litigation should be held liable for breach of fiduciary
duty, but we also rejected multiple issues raised by the Plaintiffs in pursuit of additional
relief. As part of our disposition, we remanded the case for further proceedings with
respect to matters of costs and expenses under Tennessee Code Annotated section 35-15-
1004, as well as prejudgment interest. After the trial court entered orders on remand
addressing these issues, the Plaintiffs filed the present appeal, chiefly arguing (a) that they
are entitled to 100% of their costs and expenses and (b) that the trial court erred in the
amount of prejudgment interest it awarded them. Having reviewed the record transmitted
to us on appeal, we affirm the judgment of the trial court.

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

ARNOLD B. GOLDIN, J., delivered the opinion of the Court, in which KENNY ARMSTRONG
and CARMA DENNIS MCGEE, JJ., joined.

James S. Wilder, III, Christine A. Coronado, and Becky Dykes Bartell, Dyersburg,
Tennessee, for the appellants, Susan Lazenby and Carolyn M. Stark.

Marianna Williams, Dyersburg, Tennessee, for the appellee, William S. McLean.

                                         OPINION

                  BACKGROUND AND PROCEDURAL HISTORY

       This is the second appeal of this matter. Because the general background of the case
is adequately set out in our prior opinion, Stark v. McLean, No. W2020-00086-COA-R3-
CV, 2022 WL 1751747 (Tenn. Ct. App. June 1, 2022) (“Stark I”),1 we only reference it
here briefly.

        The underlying case primarily revolves around several issues among family
members, including those pertaining to fiduciary duties owed by a son who served as a
trustee of several trusts created by his parents. Id. at *1. The trial court granted significant
relief to the son’s sisters following a bench trial, including for breach of fiduciary duty, id.
at *1-2, and in the first appeal, the son raised an issue of whether he should have been held
responsible for violating his fiduciary duty as trustee. Id. at *3. This son, Steve McLean
(“Steve”), had conducted his own farming operations at farms that had been transferred
into the subject trusts, id. at *1, and his “enrichment from the farmland occurred
notwithstanding the fact that the farms had been subject to trust administration.” Id. at *3.
We ultimately held in Stark I that “the trial court did not err in its decision to hold [Steve]
accountable for failing to fulfill his fiduciary duties with respect to income derived from
the subject farmland,” and although his sisters—Plaintiffs Carolyn Stark and Susan
Lazenby (“the Plaintiffs”)—were unsuccessful in the pursuit of several appellate issues of
their own, we did agree with them that the trial court erred in failing to hold Steve
additionally liable with respect to a specific converted CD. Id. at *4, 8. In addition to
remanding for the entry of a modified judgment on that issue, we remanded for the entry
of a modified award of prejudgment interest, citing the following considerations:

        First, there is the issue of our decision herein to remand for the entry of a
        modified judgment on the Plaintiffs’ CD conversion claim, which creates an
        additional source of recovery to which prejudgment interest can attach.

        ....

               Second, there is the fact that the trial court’s award of prejudgment
        interest was not calculated to run through the date of entry of judgment.

        ....

               Third, there is the issue of the trial court’s specific decision, which is
        challenged by the Plaintiffs on appeal, to not award prejudgment interest on
        [certain specified] farm crop rent . . . .

Id. at *8-9. As to the second consideration above, we noted that “the trial court’s decision
to cut off the awarded interest was completely arbitrary.” Id. at *9. Further, as to the third
        1
          Although Stark I was designated as a memorandum opinion, we cite to it in the present appeal for
context given that it is a related case. See, e.g., Khan v. Regions Bank, 572 S.W.3d 189, 192 n.3 (Tenn. Ct.
App. 2018) (noting that the Court could cite to a previous memorandum opinion for procedural context
because the case was related).

                                                   -2-
consideration above, i.e., the court’s decision to not award prejudgment interest on certain
specified crop rent, we opined from our review of the judgment that, “[i]n a sense, it
appears that the trial court ‘split the baby’ on this issue, correctly discrediting Steve’s
defense to the substantive claims against him pertaining to the farms in trust but embracing
his arguments nonetheless for purposes of denying prejudgment interest for these claims.”
Id.

       In addition to the issue of the CD and the matter of prejudgment interest, we
remanded the case for the trial court to address the issue of costs and expenses under
Tennessee Code Annotated section 35-15-1004. Pursuant to that statute, “[i]n a judicial
proceeding involving the administration of a trust, the court, as justice and equity may
require, may award costs and expenses, including reasonable attorney’s fees, to any party,
to be paid by another party or from the trust that is the subject of the controversy.” Tenn.
Code Ann. § 35-15-1004. In remanding for further findings on this issue, we noted that
both sides had commented on the lack of clarity that then surrounded the trial court’s award
under the statute. Stark I, 2022 WL 1751747, at *10. Of further note, in connection with
our discussion, we broached an argument from the Plaintiffs that they would, supposedly,
be entitled to 100% of their costs and expenses:

               One of the Plaintiffs’ appellate arguments would, if accepted, appear
       to obviate the need for a remand for further findings and would instead
       prompt a remand for the entry of a modified award for the full amount of
       relief the Plaintiffs have sought under the statute. Indeed, the Plaintiffs
       contend that they “are entitled to 100% of all the expenses incurred in the
       prosecution of this lawsuit, in addition to the attorneys’ fees, as a matter of
       law” pursuant to the statute. Concerning this asserted grievance, we note that
       the operative language of the statutory provision provides that relief may be
       given “as justice and equity may require.” Tenn. Code Ann. § 35-15-1004(a).
       Not all of the claims asserted in this case related to Steve’s administration of
       the trusts, and the trial court’s actions here, despite the lack of clarity
       otherwise appearing as to what the total award was composed of, reveal that
       it was attempting to measure the Plaintiffs’ recovery in light of this fact.
       Although the Plaintiffs criticize the trial court’s approach, we note that the
       trial court’s approach, i.e., attempting to tailor recovery in a larger lawsuit to
       the portion of the litigation dealing with trust issues, does not appear to be an
       entirely novel one. Indeed, as one commentator has observed of the Uniform
       Trust Code provision on which Tennessee Code Annotated section 35-15-
       1004 is patterned, some courts applying statutes based on the provision have
       required fee claimants to apportion fees and costs to allow for their
       subtraction “when claims covered by the fee statute are joined with claims
       that were not covered by the statute.”

Id. at *10 n.15. In remanding the case, we also held that the trial court should award the
                                          -3-
Plaintiffs reasonable attorney’s fees incurred in the appeal in defense of Steve’s issue
pertaining to his fiduciary responsibilities. Id. at *11.

        Following our remand of the case, the trial court entered a series of orders to address
the above-mentioned issues. Of particular note as it pertains to the issues in this appeal,
the trial court awarded nearly $280,000.00 to the Plaintiffs for costs and expenses under
Tennessee Code Annotated section 35-15-1004, specifically signaling that the amount
awarded was primarily based on the testimony of Steve’s expert witness, attorney Bruce
Smith, and also included certain specific expenses that the trial court determined were
“directly traceable to the trust portion of this case and . . . not included in the opinion of
Mr. Smith.” As is of much dispute herein, this award did not constitute 100% of the
Plaintiffs’ requested costs and expenses. In the trial court’s assessment, “justice and
equity” required that Steve pay for costs and expenses associated with the portion of the
judicial proceeding that “involved the administration of the trust over which he was a
trustee,” and in connection with this conclusion, the court noted that the larger litigation
had also involved non-trust issues and several Defendants other than Steve. Further, as for
the matter of prejudgment interest concerning certain farm crop rent, the trial court noted
in its “Modified Judgment and Order on Remand” that it had applied a two percent interest
rate. This appeal later followed.

                                             DISCUSSION

       The Plaintiffs’ brief2 raises two primary issues for our consideration on appeal. In
addition to arguing that the trial court erred “in not awarding [them] 100% of the fees and
expenses incurred,” the Plaintiffs raise the question of whether the trial court “abused its
discretion in awarding . . . pre-judgment interest on the farm income from 2000 to 2007 at
a rate of 2 percent.” As an additional issue, the Plaintiffs raise the question of whether they
are entitled to attorney’s fees and costs incurred in this appeal.

      We turn first to the trial court’s award under Tennessee Code Annotated section 35-
15-1004. As noted earlier, that statute provides that, “[i]n a judicial proceeding involving
the administration of a trust, the court, as justice and equity may require, may award costs
and expenses, including reasonable attorney’s fees, to any party, to be paid by another party
or from the trust that is the subject of the controversy.” Tenn. Code Ann. § 35-15-1004.
Here, the trial court’s award of approximately $280,000.00 under the statute was, as already
mentioned, based primarily on the testimony of attorney Bruce Smith (“Mr. Smith”). Mr.
Smith, who testified that the Plaintiffs were entitled up to $275,000.00 in fees and

        2
          The Plaintiffs did not list their presented issues until page twenty-four of their appellate brief,
with their “Statement of Issues” appearing after their denominated “Statement of the Case and Procedural
History” and “Statement of Facts” sections. As a point of instruction, we note that a “statement of the
issues presented for review” is supposed to be presented before a “statement of the case” and a “statement
of facts” per the briefing requirements of Rule 27 of the Tennessee Rules of Appellate Procedure. See
Tenn. R. App. P. 27.
                                                   -4-
expenses, noted that he had reviewed the billing records from the Plaintiffs’ counsel, made
notes about what he had observed, and had looked at the factors in Rule 1.5 of the Rules
of Professional Conduct.3 Mr. Smith’s testimony pointed to the fact that the larger
litigation in the case had also involved several Defendants other than Steve, that not all
claims were related to trust administration, and that the Plaintiffs had not succeeded on
several claims. By way of general illustration, Mr. Smith testified as follows on this
subject:

               In my opinion, plaintiffs could not recover for attorney’s fees related
        to Donna McLean. The Court also ruled that Lyn McLean didn’t do anything
        wrong and that he had no liability. Looking at the core of this case . . . the
        Donna McLean allegations were not only not related to trust administration,
        but they were not related to the core components . . . of this lawsuit. Clearly
        the Court can award attorney’s fees for Steve McLean’s breach of fiduciary
        duty, but I approached this on the basis that Lyn McLean was dismissed,
        Donna McLean was dismissed. Mr. Hopkins took Chapter 7 bankruptcy, and
        he was also a trustee of a different trust. Steve McLean was not a trustee of
        the McLean Investment Trust, and then there were certain aspects of claims
        for which Your Honor . . . did award a judgment. . . . [A]gain, there are some
        claims where it is possible in looking at the [Plaintiffs’ counsel’s] invoices .
        . . where you could tell where the plaintiffs did -- how they spent their time
        preparing the case for trial and . . . prosecuting the matters in court. And you
        can also see where they expended expense on, say, the . . . USDA, FSA, other
        components of their proof.

               So I began looking at what can you tell from these bills how time was
        spent on various claims, and the answer is . . . you can tell a lot from the bills.
        It’s possible . . . to break out how . . . plaintiff’s time was expended.

Mr. Smith further testified that “there are many times where lawyers spend time doing
things, and they can’t bill the client properly for all the work that is expended on a particular
matter.” Regarding this case, he explained, “there were many instances . . . where more
people worked on something than were needed to accomplish what was before the
particular task.” Mr. Smith’s testimony reflected that he had also scrutinized how much
time was spent on particular tasks by individual attorneys, stating, among other things, that
“there was a minimum of 44.75 hours billed to the clients for a total of $8,950 for
summarizing a deposition at which [that counsel] was present.”4 His testimony also noted,
for instance, that over $4,000.00 had been billed for the preparation of a single letter

        3
          Rule 1.5 outlines the factors that are “to be considered in determining the reasonableness of a
fee.” Tenn. Sup. Ct. R. 8, RPC 1.5.
        4
          In terms of the length of the deposition summarized, Mr. Smith commented that the summarizing
attorney had charged 6.75 hours for attending the deposition.
                                                  -5-
concerning a discovery issue.

       In addition to relying on Mr. Smith’s testimony for the amount of its award, the trial
court added in certain expert expenses “directly traceable to the trust portion of this case
and . . . not included in the opinion of Mr. Smith.” We note that the trial court is given
wide discretion under Tennessee Code Annotated section 35-15-1004 in awarding costs
and expenses, see id. (providing that “the court, as justice and equity may require, may
award costs and expenses”), and here, we cannot conclude that the ultimate approach
manifested in connection with the court’s award constitutes an abuse of discretion. To this
end, we respectfully reject the merits of the Plaintiffs’ raised issue that the trial court erred
in not awarding them 100% of their fees and expenses. As to that premise of the Plaintiffs’,
which is the specific issue before us, we are of the opinion that it was entirely within the
trial court’s discretion to take into account, as Mr. Smith did in his testimony, that this case
involved more than just trust issues involving Steve. In our view, and in the same vein, it
was also within the trial court’s discretion to take into account the fact that the litigation
involved several unsuccessful claims, including against Defendants other than Steve. As
noted earlier in this Opinion, we previously broached in Stark I the issue that the Plaintiffs
are presently raising. Indeed, to quote again from Stark I:

       [A]s one commentator has observed of the Uniform Trust Code provision on
       which Tennessee Code Annotated section 35-15-1004 is patterned, some
       courts applying statutes based on the provision have required fee claimants
       to apportion fees and costs to allow for their subtraction “when claims
       covered by the fee statute are joined with claims that were not covered by the
       statute.”

Stark I, 2022 WL 1751747, at *10 n.15. That same commentator also has observed that
some courts have required fee claimants to apportion fees and costs “to reflect effort spent
on unsuccessful claims unrelated to successful ones.” Daniel F. Blanchard III, Attorney’s
Fees in Judicial Proceedings Involving Trusts, Estates, & Protected Persons: When Is an
Award Just & Equitable?, 72 S.C. L. Rev. 145, 169 (2020). We are of the opinion that
such considerations are not beyond the authority of a court to consider when exercising its
discretion under section 35-15-1004, and of course, just because a fee is billed to a client
in relation to a matter involving the administration of a trust, that does not make the entire
fee a reasonable one. As to this latter concern, although Mr. Smith’s testimony—which
was relied upon by the trial court—did ultimately reflect his view that up to $275,000.00
in fees and expenses would be an appropriate recovery in this case, we note again that he
scrutinized a number of expenses to illustrate his opinion here that many of the billings in
this case were not reasonable. The Plaintiffs acknowledge in their briefing that the
statutory language “as justice and equity may require” should trigger “great deference” in
relation to an award of costs and expenses under the statute, and it is through our
recognition of the trial court’s discretion regarding such awards that we respectfully reject
the Plaintiffs’ insistence that they should recover 100% of their litigation costs and
                                              -6-
expenses and thereby affirm the award that was entered.

       We next turn our attention to the Plaintiffs’ raised issue concerning awarded
prejudgment interest on farm income from 2000 to 2007.5 This issue, like the issue of
costs and expenses under section 35-15-1004, also involves discretion on the part of the
trial court. See, e.g., Spencer v. A-1 Crane Serv., Inc., 880 S.W.2d 938, 944 (Tenn. 1994)
(noting that the “award of pre-judgment interest is within the sound discretion of the trial
court and the decision will not be disturbed by an appellate court unless the record reveals
a manifest and palpable abuse of discretion”). “[D]iscretion extends not only to awarding
of prejudgment interest but also to the amount of interest allowed and the time over which
it shall be calculated.” AHCI, Inc. v. Lamar Advert. of Tenn., Inc., No. 03A01-9301-CH-
00010, 1994 WL 25848, at *4 (Tenn. Ct. App. Jan. 26, 1994), aff'd, 898 S.W.2d 191 (Tenn.
1995). “If a discretionary decision is within a range of acceptable alternatives, we will not
substitute our judgment for that of the trial court simply because we may have chosen a
different alternative.” Teague v. Kidd, No. E2011-02363-COA-R3-CV, 2012 WL
5869637, at *6 (Tenn. Ct. App. Nov. 21, 2012).

       By statute, prejudgment interest may be awarded, as a general matter, “at any rate
not in excess of a maximum effective rate of ten percent (10%) per annum.” Tenn. Code
Ann. § 47-14-123. Although the Plaintiffs argue on appeal that we should direct the trial
court to award them ten percent prejudgment interest regarding the farm income at issue,
we fail to discern a manifest and palpable abuse of discretion on the part of the trial court
in awarding them two percent prejudgment interest. This was permissibly within the trial
court’s discretion,6 and it is not the province of this Court to substitute our judgment even
if we, arguendo, might have independently chosen a different alternative. In light of our
disposition on this issue, as well as the raised issue concerning costs and expenses, we
further respectfully reject the Plaintiffs’ request for attorney’s fees and costs in connection
with this appeal.

        5
            Other awards of prejudgment interest were not appealed by either side in this appeal, and because
they are not at issue, we do not inquire into their propriety.
          6
            Of course, that the statute generally allows for prejudgment interest up to ten percent in no way
requires the application of such a percentage. Again, the choice of a particular rate is discretionary. See
Boesch v. Holeman, No. E2021-01242-COA-R3-CV, 2022 WL 3695977, at *5 (Tenn. Ct. App. Aug. 26,
2022) (holding that “the 2.5% simple interest rate is a reasonable award within the statutory bounds of
prejudgment interest calculation”); Cook’s Roofing, Inc. v. Hartford Underwriters Ins. Co., No. W2019-
00271-COA-R3-CV, 2020 WL 4151216, at *17-18 (Tenn. Ct. App. July 20, 2020) (rejecting argument that
the trial court should have awarded interest at the “market rate” of six percent and affirming application of
a rate of one percent); MSK Constr., Inc. v. Mayse Constr. Co., No. E2014-00139-COA-R3-CV, 2014 WL
4826655, at *7 (Tenn. Ct. App. Sept. 30, 2014) (holding that the decision to award prejudgment interest at
a rate of one percent “was wholly within the court’s discretion”).
                                                   -7-
                                    CONCLUSION

      In light of the foregoing discussion, we affirm the judgment of the trial court and
remand the case for such further proceedings that are necessary and consistent with this
Opinion.

                                                     s/ Arnold B. Goldin
                                                 ARNOLD B. GOLDIN, JUDGE

                                          -8-