Court Opinion

ID: 9951750
Source: CourtListenerOpinion
Date Created: 2024-03-18 21:10:07.909556+00
Date Added: 2024-06-11T14:42:19.036768
License: Public Domain

03/18/2024
                IN THE COURT OF APPEALS OF TENNESSEE
                            AT NASHVILLE
                         Assigned on Briefs November 1, 2023

                 J.E.T., INC., d/b/a UPS STORE v. RON HASTY

                 Appeal from the Circuit Court for Davidson County
                       No. 21C642 Lynne T. Ingram, Judge
                     ___________________________________

                            No. M2023-00253-COA-R3-CV
                        ___________________________________

A tenant sued its landlord for allegedly breaching the parties’ lease agreement. The tenant,
however, failed to comply with the parties’ discovery schedule. After conferring, the
parties established a new discovery deadline, agreed that failure to meet the deadline would
result in dismissal with prejudice, and filed an agreed order to that effect, which was
approved by the trial court. The landlord asserted that the tenant failed to meet the new
deadline and sought dismissal with prejudice. A hearing was scheduled. Before the
hearing, the tenant filed a notice nonsuiting the case, and the trial court granted the tenant
a voluntary dismissal without prejudice. The landlord filed a motion to alter or amend,
arguing the dismissal should have been with prejudice. The trial court denied that motion.
The landlord appeals. We reverse and remand for further proceedings.

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

JEFFREY USMAN, J., delivered the opinion of the court, in which JOHN W. MCCLARTY and
CARMA DENNIS MCGEE, JJ., joined.

Seth McInteer and Howell O’Rear, Nashville, Tennessee, for the appellant, Ronald Hasty.

Randall N. Songstad and Ronald L. Harper, Memphis, Tennessee, for the appellee, J.E.T.,
Inc., d/b/a UPS Store.

                                         OPINION

                                              I.

      Appellant Ron Hasty owns real property at 707 Main Street in Nashville, Tennessee.
In April 2017, Mr. Hasty agreed to lease commercial space to the Appellee J.E.T.
Incorporated (J.E.T.), a Tennessee corporation. The parties’ lease included a ten-year term
and renewal options that could extend the term for an additional ten years.

       In March 2020, a series of tornadoes ravaged Middle Tennessee.1 Mr. Hasty’s
property sustained significant damage. The storm compromised the roof, leading to water
leakage and prolonged power outages. Following delays in repairs, Mr. Hasty asked J.E.T.
to temporarily vacate the property. Despite having repeatedly assured J.E.T. that this
would only be a temporary arrangement, Mr. Hasty provided notice that this action would
be permanent, citing a provision in the parties’ lease agreement that allowed Mr. Hasty to
terminate the lease if “the Premises are damaged but not wholly destroyed” by a storm.

       J.E.T. objected and filed a complaint in Davidson County Chancery Court in April
2021. The company alleged that Mr. Hasty breached the parties’ lease agreement and
sought compensatory damages “in an amount not to exceed $3,500,000.00” as well as
attorney’s fees. Mr. Hasty denied breaching the lease agreement, contending that his
conduct was sanctioned by the contract’s plain language.

        This appeal, however, does not relate to the merits of parties’ divergent
interpretations of the lease agreement, but instead their actions during discovery. On
August 8, 2022, Mr. Hasty served J.E.T. with written discovery requests, including
interrogatories and requests for production. J.E.T. does not dispute that the deadline to
respond to these written discovery requests was September 7, 2022, nor does it assert that
it complied with that deadline. J.E.T. also does not dispute that it failed to respond to a
September 23, 2022 email from Mr. Hasty’s counsel concerning J.E.T.’s noncompliance.
When Mr. Hasty contacted J.E.T.’s counsel on October 3, 2022, regarding the company’s
failure to respond to the September 23, 2022 email, J.E.T. asked Mr. Hasty if he would
allow the company to respond by October 11, 2022. Mr. Hasty agreed to this extension;
nevertheless, J.E.T. still did not submit the required documents by this new deadline.

        On October 12, 2022, Mr. Hasty’s counsel reached out to J.E.T. once again. The
parties disagree about the exact nature of this discussion. According to Mr. Hasty, “the
parties entered into a binding agreement regarding an additional extension of time . . . and
the consequence of [J.E.T.’s] failure to produce responses by the agreed date.” Mr. Hasty
states that the parties agreed to a twenty-day time horizon and that another failure to comply
by J.E.T. would result in a dismissal with prejudice. J.E.T. disagrees with the
characterization of this conversation as creating a “binding agreement.”

        J.E.T., however, concedes that “[i]t was understood by both parties that an Agreed
        1
          March 2-3, 2020 Tornadoes, National Weather Service (last updated Feb. 24, 2021),
https://www.weather.gov/ohx/20200303. According to the National Weather Service, the severe weather
event spawned ten tornadoes, which constituted the worst tornado outbreak in Tennessee in nearly a decade.
Id.

                                                  -2-
Order would be entered reflecting these terms.” The Agreed Order J.E.T. references, which
both parties signed and the trial court adopted, reads as follows:

       [J.E.T.’s] counsel called [Mr. Hasty’s] counsel on October 12, 2022. During
       that call, the parties agreed that [J.E.T.] would be given an additional 20 days
       from October 12, 2022, to produce the responses to the Interrogatories and
       Requests for Production and that, if [J.E.T.] did not produce responses within
       that 20-day period, [J.E.T.’s] Complaint in this matter would be dismissed
       with prejudice. The parties agreed to the entry of an order reflecting that
       agreement.

              It is therefore ORDERED that:

              ...

              (2) If [J.E.T.] has not served Defendant with responses and
              responsive documents by or before November 1, 2022, the Court will
              enter an order dismissing [J.E.T.’s] Complaint with prejudice.

       With J.E.T. allegedly failing to meet the agreed-upon deadline, Mr. Hasty filed a
“Motion for Order Dismissing Case with Prejudice” on December 2, 2022. In support
thereof, Mr. Hasty relied upon the parties’ agreement as reflected in the Agreed Order. Mr.
Hasty represented to the trial court that J.E.T. failed to honor the twenty-day production
deadline, though he did explain that his counsel “receive[d] a package . . . ostensibly mailed
on October 31, 2022 . . . containing several hard copies of documents and a flash drive
containing several digital copies.” This package, Mr. Hasty submitted, did not contain any
written responses to his interrogatories or an explanation of the package’s contents.
“[B]ecause the documents contain no other organization or notation identifying the specific
Requests to which the documents respond, it is virtually impossible for [Mr. Hasty] to
determine or articulate the deficiency of the documents actually produced,” he argued.
Consistent with the terms of the parties’ agreement as reflected in the Agreed Order, Mr.
Hasty asked the trial court to dismiss J.E.T.’s lawsuit with prejudice. A hearing was set
for December 16, 2022.

       On December 12, 2022—four days before the scheduled hearing on Mr. Hasty’s
motion—J.E.T. submitted a notice of voluntary dismissal pursuant to Tennessee Rule of
Civil Procedure 41.01. J.E.T. noted that Mr. Hasty had not filed a motion for summary
judgment and that the company had not previously given notice of a voluntary dismissal.
Accordingly, J.E.T. asserted that it was entitled to a dismissal without prejudice under Rule
41.01. The trial court granted J.E.T. a voluntary dismissal without prejudice the same day
Mr. Hasty’s motion to have J.E.T.’s case dismissed with prejudice was set to be heard.

       Mr. Hasty filed a motion to alter or amend under Tennessee Rule of Civil Procedure
                                             -3-
59.04. He argued that the parties agreed to a dismissal with prejudice, as evidenced by the
trial court’s Agreed Order, in the event that J.E.T. did not honor the twenty-day discovery
deadline extension established on October 12, 2022. Mr. Hasty asserted that “[t]he Parties’
agreement and the agreed order precluded Plaintiff J.E.T. from taking a voluntary nonsuit
without prejudice.” Asserting that J.E.T. failed to adequately produce discovery responses
by the deadline, Mr. Hasty argued that a contractual right to dismissal with prejudice
“vested” on November 1, 2022, and that the vested rights exception to Rule 41.01 barred
J.E.T. from a voluntary dismissal without prejudice. Mr. Hasty also argued that various
contract law principles such as the doctrine of volenti non fit injuria, meaning “he who
consents to what is done cannot complain of it,” also made granting a voluntary dismissal
without prejudice inappropriate.

       J.E.T. responded by invoking the plain text of Rule 41.01, which does not mention
a party’s vested rights. It also noted that Mr. Hasty had not filed a motion for summary
judgment before J.E.T. requested a voluntary dismissal without prejudice, which is an
express limitation under Rule 41.01 that is inapplicable to the present case. J.E.T. also
argued that Mr. Hasty “is attempting to turn a Consent Order into a binding contract and
apply contractual principles to a simple Order that was substantially complied with.”

       The trial court denied Mr. Hasty’s motion to alter or amend without addressing the
merits of his arguments. Mr. Hasty appeals, presenting three issues for review:

   1. Whether the trial court erred in allowing [J.E.T.] to voluntarily dismiss the
      Complaint without prejudice when doing so deprived [Mr. Hasty] of a right that
      vested during the pendency of the case.

   2. Whether the Parties’ agreement, memorialized in the Agreed Order, executed by
      both attorneys for the Parties and adopted and entered as an order of the trial court,
      precluded [J.E.T.] from voluntarily dismissing its Complaint without prejudice.

   3. Whether the trial court erred in failing to enforce the Parties’ agreement and the trial
      court’s November 14, 2022 Order, requiring the dismissal of [J.E.T.’s] Complaint
      with prejudice.

(Emphasis in original). In response, J.E.T. argues in support of the trial court’s decision to
permit it to voluntarily dismiss without prejudice.

                                              II.

       Pursuant to Tennessee Rule of Civil Procedure 41.01, “the general rule is that a
party has a free and unrestricted right to voluntarily dismiss an action until trial.” Britt v.
Usery, No. W2022-00256-COA-R3-CV, 2024 WL 195879, at *3 (Tenn. Ct. App. Jan. 18,
2024). Rule 41.01 states:
                                             -4-
        Subject to the provisions of Rule 23.05, Rule 23.06, or Rule 66 or of any
        statute, and except when a motion for summary judgment made by an adverse
        party is pending, the plaintiff shall have the right to take a voluntary nonsuit
        to dismiss an action without prejudice by filing a written notice of dismissal
        at any time before the trial of a cause and serving a copy of the notice upon
        all parties . . . .

Tenn. R. Civ. P. 41.01(1). Accordingly, the text of Rule 41.01 creates four exceptions to
the expansive right to nonsuit. Rule 23.05 places restrictions on voluntary nonsuits in class
action lawsuits, Rule 23.06 does the same for derivative actions by shareholders, and Rule
66 applies when a receiver has been appointed. Additionally, a party does not have a right
to take a voluntary nonsuit in cases where the opposing party’s motion for summary
judgment is pending.2

        The Tennessee Supreme Court in Lacy v. Cox noted three other limitations on the
right to nonsuit. 152 S.W.3d 480, 484 (Tenn. 2004). In addition to the express exceptions
in Rule 41.01(1), the Lacy Court indicated that there is

        an implied exception which prohibits nonsuit when it would deprive the
        plaintiff of some vested right. . . . [Additionally,] [a] plaintiff is further
        limited to taking no more than two nonsuits without prejudice, Tenn. R. Civ.
        P. 41.01(2), and nonsuit cannot be taken more than one year after an initial
        dismissal.

Id.

        Insofar as J.E.T. implies that deprivation of vested rights imposes no limitation upon
its right to nonsuit without prejudice, the Tennessee Supreme Court has plainly indicated
to the contrary. The Tennessee Supreme Court declared that “[t]hough not stated in the
rule, the right of plaintiff to a nonsuit is subject to the further restriction that the granting
of the nonsuit will not deprive the defendant of some right that became vested during the
pendency of the case.” Anderson v. Smith, 521 S.W.2d 787, 790 (Tenn. 1975). The
existence of this exception has been repeatedly recognized by the Tennessee Supreme
Court and this court. See, e.g., Lacy, 152 S.W.3d at 484; Weedman v. Searcy, 781 S.W.2d
855, 856 (Tenn. 1989); Autin v. Goetz, 524 S.W.3d 617, 631 (Tenn. Ct. App. 2017); Ewan
v. Hardison L. Firm, 465 S.W.3d 124, 130 (Tenn. Ct. App. 2014).

        2
          A pending motion for summary judgment removes the ability of a plaintiff to take a voluntary
dismissal as a matter of right, but the trial court may still permit in appropriate circumstances a voluntary
dismissal while a summary judgment motion is pending. See, e.g., Stewart v. Univ. of Tenn., 519 S.W.2d
591, 593 (Tenn. 1974); Autin v. Goetz, 524 S.W.3d 617, 631 (Tenn. Ct. App. 2017); Ewan v. Hardison L.
Firm, 465 S.W.3d 124, 136 (Tenn. Ct. App. 2014).
                                                   -5-
       Relying upon the vested rights exception, Mr. Hasty contends that dismissal with
prejudice is required. Mr. Hasty argues that his vested right arises from the Agreed Order
and the occurrence of the triggering/vesting condition provided for therein. According to
Mr. Hasty, J.E.T.’s failure to meet the extended discovery deadline triggered his right to a
dismissal with prejudice, which he sought via a motion filed with the trial court. His basis
for arguing that the Agreed Order creates a vested right that limits J.E.T.’s right to nonsuit
its case without prejudice is driven by his contention that the parties’ agreement, which
was approved of by the court, is contractual in nature. Mr. Hasty does not argue that any
other exceptions are applicable to deprive J.E.T. of its right to nonsuit. In response, J.E.T.
argues that the Agreed Order that was approved by the trial court is not contractual in nature
and does not create a vested right.

        J.E.T. contends, but does not offer support for its proposition, that agreed orders are
not contractual in nature.3 Tennessee courts have, in fact, viewed agreed orders that have
been approved by courts as being contractual in nature. For example, this court has stated
that “[a]n agreed order is a contract and its interpretation is governed by the laws of
contract.” In re Est. of Diviney, No. M-2017-00739-COA-R3-CV, 2017 WL 5712904, at
*5 (Tenn. Ct. App. Nov. 28, 2017). Similarly, we have observed that “[a]n agreed order is
a binding contract and represents the achievement of an amicable result to pending
litigation.” Demquarter Healthcare Invs., L.P. v. OP Chattanooga, LLC, No. E-2016-
00031-COA-R3-CV, 2016 WL 7479143, at *7 (Tenn. Ct. App. Dec. 29, 2016) (quotation
omitted). Additionally, we have described an agreed order as “a contract between parties
to litigation.” City of Gatlinburg v. Kaplow, No. E2013-01941-COA-R3CV, 2014 WL
2194517, at *5 (Tenn. Ct. App. May 27, 2014) (quoting Envtl. Abatement, Inc. v. Astrum
R.E. Corp., 27 S.W.3d 530, 539 (Tenn. Ct. App. 2000)). Understanding agreed orders
approved by a court as being essentially contractual in nature is a widely shared
conventional understanding. See, e.g., 56 Am. Jur. 2d Motions, Rules, and Orders § 44
(“An agreed order . . . is essentially a contract, although it is given the same force and effect
as judgments rendered after litigation”); 60 C.J.S. Motions and Orders § 4 (“A[n] . . . agreed
order . . . is not an adjudication of the parties’ rights but, rather, a record of their private,
contractual agreement that, once entered, is generally binding on the parties”). In other
words, J.E.T.’s contention that agreed orders entered by the court are not contractual in
nature is not well grounded.

        The parties’ duel over the question of whether Mr. Hasty has a vested right that
limits J.E.T.’s ability to voluntarily dismiss its case without prejudice is primarily fought
over the importance of this court’s opinion in Miller v. American Association,
Incorporated. 6 Tenn. App. 506, 513 (Tenn. Ct. App. 1927). Mr. Hasty notes that Miller
        3
          J.E.T. does not dispute that agreements between the parties related to the litigation that are
contractual in nature can form the basis for a finding the existence of vested rights that constrain the ability
to dismiss a case without prejudice. See, e.g., Shell v. Shell, No. E2007-01209-COA-R3-CV, 2008 WL
2687529, at *3 & n.3 (Tenn. Ct. App. July 9, 2008) (finding a loss of a right to dismiss without prejudice
in the wake of a mediated settlement agreement).
                                                     -6-
involved the imposition of a limitation upon voluntary dismissal without prejudice and
argues that the circumstances of the Miller case are closely analogous to the present case.
J.E.T. does not seek to distinguish Miller from the present case but instead contends that
Miller is “obsolete case law from ninety-six (96) years ago,” long before the adoption of
Rule 41.01, which J.E.T. argues superseded the Miller decision.

        In Miller, the complainant generally struggled with the discovery process as the case
proceeded and had failed to depose three apparently important witnesses in the case. See
id. at 507-12. In open court, the parties reached consensus for an agreed order that was
approved by the court, which provided as follows:

       In this cause, it is agreed by all parties concerned that complainant, W. D.
       Miller may have thirty days further time from this date in which to take the
       depositions of Ben Sowders, Ben Davis and Surveyor Jones, and defendant
       will have fifteen days in which to take rebuttal proof. It is also agreed that
       this cause may be heard by the Chancellor on a day fixed by him at any time
       within sixty days from this date after time for taking the proof has expired.

Id. at 510. The trial court set a trial date and when it arrived the complainant in Miller
sought to voluntarily dismiss his suit without prejudice. Id. at 510-11. The trial court
declined to allow the complainant to do so

       for the reason that it was agreed in open court on October 11, 1926, that this
       cause, in consideration of the complainant being granted additional time in
       which to take proof that the cause would be tried at a time fixed by this court
       and the time having been fixed in pursuance of said order and agreement, this
       court being now of the opinion that complainant cannot now take a voluntary
       nonsuit over the objection of the defendant.

Id. at 510.

        The complainant appealed, and this court affirmed the trial court. Id. at 513. We
concluded “under these facts” that “the complainant was not entitled to dismiss his suit
without prejudice.” Id. at 512. This court indicated that the trial court quite rightly
understood the complainant as having lost his right to voluntarily nonsuit without prejudice
via the agreement and entry of an agreed order to that effect. Id. at 513. In reaching this
conclusion, the Miller court drew upon Jones v. Kimbro, a mid-1840s decision of the
Tennessee Supreme Court. 25 Tenn. 319 (1845). In Jones v. Kimbro, the plaintiff was
unprepared for trial. Id. at 320. The parties reached an agreement that was entered upon
the trial docket that “[i]f the papers in this case are not found and the cause ready for trial
at the next term, it will then be dismissed.” Id. When the case next appeared on the trial
docket, the plaintiff remained unprepared and sought further delay. Id. The trial court
rejected the attempt and dismissed the case pursuant to the parties’ agreement; the plaintiff
                                               -7-
appealed. Id. The Tennessee Supreme Court affirmed the trial court, observing that

          [the agreement] was made, it is obvious, to avoid a non-suit, or obtain a
          continuance. The agreement was proved and admitted. Good faith required
          its enforcement; and the power as well as the duty of the court to enforce fair
          and reasonable agreements, relating to the conduct and despatch of business
          before it, is necessarily incident to the nature of its position, and required to
          ensure the orderly and faithful determination of causes.

Id. at 321.

        J.E.T. is right that this court’s decision in Miller is more than ninety years old and
that the Miller decision predates the adoption of Rule 41.01. With regard to the latter point,
though the origins of the right to nonsuit trace back to the common law, nonsuits had been
centrally provided for and framed by statute in Tennessee since the first decade of statehood
and remained so until these statutes were replaced by Rule 41.01 in the early 1970s. See
Britt, 2024 WL 195879, at *4 & n.3. The problem for J.E.T. is that Rule 41.01 does not
disturb the Miller decision. This conclusion is reflected in the Tennessee Supreme Court’s
embrace of the vested rights exception as an enduring implied exception to freely allowed
nonsuits and its express indication that this exception survives the adoption of Rule 41.01.
See Lacy, 152 S.W.3d at 484; Anderson, 521 S.W.2d at 790. In other words, it is not
apparent how Rule 41.01 would disturb the Miller decision.

       As for the age of the Miller decision itself, the passage of time alone does not drain
from a precedent either its authority or its reason. After all, “[t]he practice of following
precedent aims to prevent the passage of time from making a difference to the treatment of
two disputes that are relevantly similar.”4 J.E.T. does not fully develop its argument for
why this court should not adhere to prior precedent in this case, failing to indicate what
changes time has wrought or unveiled that unsettle this prior precedent. The core rationale
of Miller remains solid. A plaintiff struck a deal with the defendant buying an extension
of time for discovery at the cost of foregoing the ability to have the case dismissed without
prejudice, and that deal was approved by the trial court. Whether a plaintiff should have
struck such a deal is not the question. Having done so and having received the benefit of
the bargain, the plaintiff does not escape the terms of the agreement reached by the parties
and approved by the court with entry of the agreed order. That rationale remains as sensible
today as it was ninety-six years ago.5

          4
              Sebastian Lewis, Precedent and the Rule of Law, 41 Oxford Journal of Legal Studies 873, 886
(2021).
          5
          This is not a case that runs afoul of Justice Holmes’ admonition that “[i]t is revolting to have no
better reason for a rule of law than that so it was laid down in the time of Henry IV. It is still more revolting
if the grounds upon which it was laid down have vanished long since, and the rule simply persists from
blind imitation of the past.” Oliver Wendell Holmes, Jr., The Path of the Law, 10 HARV. L. REV. 457, 469
                                                     -8-
       Beyond dueling over Miller, J.E.T. also references this court’s decision in Oliver v.
Hydro-Vac, 873 S.W.2d 694 (Tenn. Ct. App. 1994), in support of its continuing ability to
nonsuit. This court noted in Oliver that the mere possibility of being subject to another suit
does not constitute sufficient prejudice to bar a party from being able to voluntarily dismiss
without prejudice. Id. at 696. This is necessarily so as a contrary understanding would
effectively defeat the ability to nonsuit in any case. Unlike the present case, the Oliver
case did not involve an agreement to dismiss with prejudice; to the contrary, no agreement
existed at all in Oliver. In other words, Oliver neither undermines the Miller decision nor
speaks to the circumstances of the present case.

        J.E.T. did not seek to voluntarily dismiss its case prior to the running of the extended
time period for discovery that the parties agreed to, which was approved by the trial court,
or prior to Mr. Hasty filing a motion seeking to have the case dismissed in accordance with
the parties’ agreement. Under these circumstances, if J.E.T. did not meet the terms of the
parties’ agreement, then Mr. Hasty has a vested right barring J.E.T. from obtaining a
voluntary dismissal without prejudice. We reach this conclusion given that the parties
agreed to a dismissal with prejudice should certain conditions be met, the agreement was
approved by the trial court, those conditions that would trigger a dismissal with prejudice
under the parties’ agreement allegedly transpired, and Mr. Hasty sought dismissal pursuant
to the terms of the agreement – all prior to J.E.T. seeking to voluntarily dismiss without
prejudice.

                                              IV.

        As noted above, Mr. Hasty’s right to a dismissal with prejudice is dependent upon
the triggering conditions having occurred. J.E.T., however, insists in its briefing before
this court, as it did before the trial court, that it complied with the parties’ November 1,
2022 discovery deadline. Specifically, J.E.T. states on appeal, “Simply put, [Mr. Hasty]
propounded discovery requests to [J.E.T.]. Despite [J.E.T.’s] best efforts, [Mr. Hasty] was
less than satisfied with [J.E.T.’s] responses. [J.E.T.] can demonstrate that it responded to
the discovery requests, just perhaps not to [Mr. Hasty’s full satisfaction].”

       The trial court did not make a finding as to whether J.E.T. complied with the terms
of the parties’ agreement as set forth in the Agreed Order. Given our conclusion that if the
triggering condition occurred then the parties’ agreement creates a vested right limiting
J.E.T.’s ability to obtain a dismissal without prejudice, the question of whether J.E.T.
complied with the terms of the Agreed Order becomes critical. The determination of
whether to grant Mr. Hasty’s motion for dismissal with prejudice rises and falls upon the
question of whether J.E.T. satisfied the terms of the Agreed Order. Accordingly, we
remand this case back to the trial court to determine whether J.E.T. complied with the terms

(1897).
                                             -9-
of the parties’ agreement as set forth in the Agreed Order.

                                             V.

       In considering the arguments advanced on appeal and for the reasons discussed
above, we reverse the judgment of the trial court and remand for further proceedings
consistent with this opinion. The costs of the appeal are taxed to the appellee, J.E.T., Inc.
d/b/a UPS Store, for which execution may issue if necessary.

                                                    _________________________________
                                                    JEFFREY USMAN, JUDGE

                                           - 10 -