Court Opinion

ID: 4270938
Source: CourtListenerOpinion
Date Created: 2018-04-27 20:45:45.832365+00
Date Added: 2024-06-11T14:33:28.175296
License: Public Domain

04/27/2018
               IN THE COURT OF APPEALS OF TENNESSEE
                          AT KNOXVILLE
                              January 18, 2018 Session

   KARESA RIVERA ET AL. v. WESTGATE RESORTS, LTD., L.P. ET AL.

                 Appeal from the Chancery Court for Sevier County
                 No. 15-1-002   Telford E. Forgety, Jr., Chancellor

                            No. E2017-01113-COA-R3-CV

The plaintiffs accepted an offer of judgment from the defendant company, which
included payment of the plaintiffs’ reasonable attorney’s fees and expenses in an amount
to be determined by the trial court. The trial court awarded attorney’s fees and expenses
to the plaintiffs in the amount of $56,423.24, expressly determining such amount to be
reasonable. The defendant company has appealed. Inasmuch as the trial court failed to
consider the factors listed in Tennessee Supreme Court Rule 8, Rule of Professional
Conduct 1.5 (“RPC 1.5”) when making its determination regarding a reasonable award of
attorney’s fees, we vacate the trial court’s fee award and remand this matter for further
proceedings concerning this issue. We accordingly decline to award fees to the plaintiffs
on appeal.

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

THOMAS R. FRIERSON, II, J., delivered the opinion of the court, in which CHARLES D.
SUSANO, JR., and JOHN W. MCCLARTY, JJ., joined.

Gregory C. Logue and Robert L. Vance, Knoxville, Tennessee, for the appellant,
Westgate Resorts, Ltd., L.P.

John O. Belcher, Nashville, Tennessee, and Richard T. Wallace, Sevierville, Tennessee,
for the appellees, Karesa Rivera and Gabriel Rivera.

                                       OPINION

                         I. Factual and Procedural Background

      On January 5, 2015, the plaintiffs, Karesa and Gabriel Rivera, filed a complaint in
the Sevier County Chancery Court against Westgate Resorts, Ltd., L.P., a/k/a Westgate
Resorts, Ltd. (“Westgate”); Stephen A. Wilson; James Z. Brown; and Michael W. Lewis
(collectively, “Defendants”). In this complaint, the Riveras stated that in May 2014, they
traveled to Pigeon Forge, Tennessee, for a family vacation, where they were approached
by an employee of Westgate. According to the Riveras, this employee asked the Riveras
to attend a time-share sales presentation in exchange for receiving free breakfast and
show tickets. The Riveras attended the time-share sales presentation on May 29, 2014,
and were solicited to purchase a time-share interest at the Westgate Resort in Gatlinburg.

       The Riveras claimed that Mr. Wilson, Mr. Brown, and Mr. Lewis talked with the
Riveras during the time-share sales presentation and made various representations and
promises regarding the purchase of a time-share interest, including that Westgate would
“buy [the time-share interest] back” if the Riveras were not satisfied with their purchase.
Although the Riveras did eventually agree to purchase a time-share interest, they later
asserted that they were pressured to sign documents that they were not given sufficient
opportunity to review and did not understand. According to the Riveras, within two to
three weeks following their execution of the purchase agreement for a time-share interest,
they began to contact Westgate to ascertain whether Westgate would “buy it back.” The
Riveras stated that following repeated refusals by Westgate to relieve the Riveras of their
obligations, the Riveras consulted with counsel and filed the instant action.

       The Riveras averred that Defendants violated the Tennessee Time-Share Act,
violated the Tennessee Consumer Protection Act, and made negligent and fraudulent
misrepresentations. The Riveras sought to rescind the contract and have their purchase
money refunded. The Riveras also sought damages, including treble and punitive
damages, as well as attorney’s fees.

        The record reflects that on October 12, 2016, the Riveras filed a notice of
acceptance of Westgate’s offer of judgment, dated October 11, 2016. The parties agreed
that the Riveras would be allowed to rescind the contract and that all obligations between
the parties would be cancelled. The parties further agreed that all claims would be
released and that Westgate would pay to the Riveras (1) their purchase funds of
$3,587.20; (2) additional damages of $8,000.00; and (3) an award of “reasonable
attorneys’ fees and expenses in an amount to be set by the Court.” In addition, the
Riveras’ claims against the other defendants would be dismissed with prejudice.
Westgate’s offer of judgment was attached as an exhibit. The Riveras affirmed that they
had accepted the offer of judgment. They asked the trial court to determine the amount
of attorney’s fees and expenses and enter judgment accordingly.

      The Riveras subsequently submitted a motion requesting that the trial court set the
amount of attorney’s fees, with an attached affidavit from their counsel. The Riveras
sought attorney’s fees and expenses in the amount of $56,423.24. Westgate filed a
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response in opposition to the Riveras’ motion regarding attorney’s fees, asserting that the
amount sought was unreasonable. Westgate argued that the court should consider the
factors listed in Tennessee Supreme Court Rule 8, RPC 1.5 when making its
determination regarding a reasonable award of attorney’s fees.

        Westgate further claimed that an offer to rescind the purchase agreement and
refund the monies paid by the Riveras had been extended to the Riveras by Westgate on
January 21, 2015, approximately two weeks following the filing of the Riveras’
complaint. According to Westgate, it made another written offer of settlement on April
15, 2016, which included rescission, a full refund, and compensation for “reasonable”
damages and attorney’s fees. The Riveras failed to accept either of these previous offers,
and litigation continued. Westgate contended that the vast majority of fees and expenses
were incurred after these offers were made. Westgate attached an affidavit executed by
defense counsel, detailing the terms of the prior offers of settlement.

       The Riveras filed a reply to Westgate’s opposing response, stating that the prior
offers made by Westgate contained no offer of damages beyond refund of the purchase
monies and reasonable attorney’s fees, despite the Riveras’ claim for punitive and treble
damages. The Riveras reiterated that the fee award they were seeking was reasonable.

       The trial court entered a final order on May 10, 2017, stating in pertinent part:

              On March 3, 2017, this Court held a hearing on Plaintiffs’ Motion to
       Set Amount of Attorney’s Fees and Expenses (the “Motion”) to determine a
       reasonable amount of attorneys’ fees and expenses to be awarded to
       Plaintiffs.

              Having considered the Offer of Judgment and the Notice of
       Acceptance thereof; the Motion; Defendants’ Response thereto; the
       Plaintiffs’ Reply; all materials filed in support of and in response to the
       Motion; the oral argument of counsel on the issue of the award of
       attorneys’ fees and expenses; and the record as a whole, the Court finds that
       the Motion should be granted, that the Plaintiffs should receive an award of
       reasonable attorneys’ fees in the amount of $51,866.75 and expenses in the
       amount of $4,556.49, for a total award of fees and expenses in the amount
       of $56,423.24, and that judgment should be entered pursuant to Tenn. R.
       Civ. P. 68.

Pursuant to the terms of the offer of judgment, the trial court also dismissed the Riveras’
claims against Mr. Wilson, Mr. Brown, and Mr. Lewis with prejudice. Westgate, as the
sole remaining defendant, timely appealed.
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                                   II. Issues Presented

      Westgate has presented three issues on appeal, which we have restated slightly:

      1.     Whether the trial court erred by failing to apply the factors set forth
             in Tennessee Supreme Court Rule 8, RPC 1.5 when setting the
             reasonable amount of attorney’s fees to be awarded to the Riveras.

      2.     Whether the trial court erred by setting an award of attorney’s fees
             and expenses that is unreasonable pursuant to the factors listed in
             RPC 1.5.

      3.     Whether the trial court erred by declining to limit the amount of
             recovery to the terms of Westgate’s reasonable offer of settlement
             pursuant to Tennessee Code Annotated § 47-18-109(c)(4).

The Riveras present the following additional issue, which we have also restated slightly:

      4.     Whether the Riveras are entitled to an award of reasonable attorney’s fees
             and expenses incurred on appeal.

                                 III. Standard of Review

       As our Supreme Court has previously explained with regard to an award of
attorney’s fees by the trial court:

              The trial court’s determination of a reasonable attorney’s fee is “a
      subjective judgment based on evidence and the experience of the trier of
      facts,” United Med. Corp. of Tenn., Inc. v. Hohenwald Bank & Trust Co.,
      703 S.W.2d 133, 137 (Tenn. 1986), and Tennessee has “no fixed
      mathematical rule” for determining what a reasonable fee is. Killingsworth
      v. Ted Russell Ford, Inc., 104 S.W.3d 530, 534 (Tenn. Ct. App. 2002).
      Accordingly, a determination of attorney’s fees is within the discretion of
      the trial court and will be upheld unless the trial court abuses its discretion.
      Kline v. Eyrich, 69 S.W.3d 197, 203 (Tenn. 2002); Shamblin v. Sylvester,
      304 S.W.3d 320, 331 (Tenn. Ct. App. 2009). We presume that the trial
      court’s discretionary decision is correct, and we consider the evidence in
      the light most favorable to the decision. Henderson v. SAIA, Inc., 318
S.W.3d 328, 335 (Tenn. 2010); Keisling v. Keisling, 196 S.W.3d 703, 726
      (Tenn. Ct. App. 2005). The abuse of discretion standard does not allow the
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       appellate court to substitute its judgment for that of the trial court, Williams
       v. Baptist Mem’l Hosp., 193 S.W.3d 545, 551 (Tenn. 2006); Myint v.
       Allstate Ins. Co., 970 S.W.2d 920, 927 (Tenn. 1998), and we will find an
       abuse of discretion only if the court “applied incorrect legal standards,
       reached an illogical conclusion, based its decision on a clearly erroneous
       assessment of the evidence, or employ[ed] reasoning that causes an
       injustice to the complaining party.” Konvalinka v. Chattanooga-Hamilton
       Cnty. Hosp. Auth., 249 S.W.3d 346, 358 (Tenn. 2008); see also Lee Med.,
       Inc. v. Beecher, 312 S.W.3d 515, 524 (Tenn. 2010).

Wright ex rel. Wright v. Wright, 337 S.W.3d 166, 176 (Tenn. 2011).

                       IV. Propriety of the Trial Court’s Fee Award

      Westgate asserts that the trial court erred by failing to apply the factors listed in
Tennessee Supreme Court Rule 8, RPC 1.5 when making its determination regarding the
amount of a reasonable attorney’s fee award. Westgate further asserts that if the factors
were properly considered, the amount awarded would be deemed unreasonable.

       The Riveras contend that the offer of judgment they accepted was conclusive,
pursuant to Tennessee Rule of Civil Procedure 68, and that no right of appeal lies
therefrom unless specifically preserved in the offer. Rule 68 provides:

               At any time more than 10 days before the trial begins, a party
       defending against a claim may serve upon the adverse party an offer to
       allow judgment to be taken against the defending party for the money or
       property, or to the effect specified in the offer, with costs then accrued.
       Likewise a party prosecuting a claim may serve upon the adverse party an
       offer to allow judgment to be taken against that adverse party for the money
       or property or to the effect specified in the offer with costs then accrued. If
       within 10 days after service of the offer the adverse party serves written
       notice that the offer is accepted, either party may file the offer and notice of
       acceptance, together with proof of service thereof, with the court and
       thereupon judgment shall be rendered accordingly. An offer not accepted
       shall be deemed withdrawn and evidence thereof is not admissible except in
       a proceeding to determine costs. If the judgment finally obtained by the
       offeree is not more favorable than the offer, the offeree shall pay all costs
       accruing after the making of the offer. The fact that an offer is made but
       not accepted does not preclude a subsequent offer.

       As this Court has previously elucidated regarding a Rule 68 offer of judgment:
                                              5
             Rule 68 judgments are akin to consent orders, which are “conclusive
      upon the consenting parties, and can neither be amended nor in any way
      varied without like consent; nor can it be reheard, appealed from or
      reviewed upon writ of error.” Nance v. Pankey, 880 S.W.2d 944, 946
      (Tenn. Ct. App. 1993). However, a party may appeal from a consent order
      upon a claim of lack of actual consent, fraud in its procurement, mistake, or
      lack of the court’s jurisdiction to enter the judgment. Swift & Co. v. United
      States, 276 U.S. 311, 323-24, 48 S. Ct. 311, 72 L. Ed. 587 (1928). “A
      judgment by consent is in substance a contract of record made by the
      parties and approved by the court.” 49 C.J.S Judgments § 227. The
      cardinal rule of contract interpretation is that the court “must attempt to
      ascertain and give effect to the intent of the parties.” Christenberry v.
      Tipton, 160 S.W.3d 487, 494 (Tenn. 2005). In attempting to ascertain the
      intent of the parties, the court must examine the language of the contract,
      giving each word its usual, natural, and ordinary meaning. See Wilson v.
      Moore, 929 S.W.2d 367, 373 (Tenn. Ct. App. 1996). The “court’s initial
      task in construing a contract is to determine whether the language of the
      contract is ambiguous.” Planters Gin Co. v. Fed. Compress & Warehouse
      Co., 78 S.W.3d 885, 889-90 (Tenn. 2002). Where the language of a
      contract is clear and unambiguous, its literal meaning controls the outcome
      of the dispute. Id. at 890.

Jackson v. Purdy Bros. Trucking Co., Inc., No. E2011-00119-COA-R3-CV, 2011 WL
4824198, at *3 (Tenn. Ct. App. Oct. 12, 2011).

       In the case at bar, the offer of judgment accepted by the Riveras provided that they
would receive an award of “reasonable attorneys’ fees and expenses in an amount to be
set by the Court.” This language expressly requires the trial court to determine a
“reasonable” amount of attorney’s fees and expenses to be awarded. Such determination
regarding the reasonableness of the amount awarded would inherently require the court to
consider the factors listed in Tennessee Supreme Court Rule 8, RPC 1.5. See First
Peoples Bank of Tenn. v. Hill, 340 S.W.3d 398, 410 (Tenn. Ct. App. 2010) (determining
that a fee award made pursuant to a contractual provision must be reasonable and must
take into consideration the appropriate factors). Therefore, if the trial court failed to
properly consider those factors, thereby potentially setting an unreasonable fee, Westgate
should clearly have the ability to appeal that decision because an unreasonable award
would be in violation of the parties’ contractual agreement.

      Concerning the reasonableness of a fee award, Tennessee Supreme Court Rule 8,
RPC 1.5 states in pertinent part:
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       (a)    A lawyer shall not make an agreement for, charge, or collect an
              unreasonable fee or an unreasonable amount for expenses. The
              factors to be considered in determining the reasonableness of a fee
              include the following:

              (1)    the time and labor required, the novelty and difficulty
                     of the questions involved, and the skill requisite to
                     perform the legal service properly;

              (2)    the likelihood, if apparent to the client, that the
                     acceptance of the particular employment will preclude
                     other employment by the lawyer;

              (3)    the fee customarily charged in the locality for similar
                     legal services;

              (4)    the amount involved and the results obtained;

              (5)    the time limitations imposed by the client or by the
                     circumstances;

              (6)    the nature and length of the professional relationship
                     with the client;

              (7)    the experience, reputation, and ability of the lawyer or
                     lawyers performing the services;

              (8)    whether the fee is fixed or contingent;

              (9)    prior advertisements or statements by the lawyer with
                     respect to the fees the lawyer charges; and

              (10)   whether the fee agreement is in writing.

       The trial court’s final judgment does not expressly discuss or analyze the above-
listed factors. Moreover, in the trial court’s memorandum opinion attached to and
incorporated into the final judgment, the court also failed to analyze or discuss the above
factors.

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      Westgate maintains that this Court has previously vacated an award of attorney’s
fees when the trial court failed to consider the RPC 1.5 factors. For example, in
Southwind Prop. Assoc., Inc. v. Ford, No. W2016-01169-COA-R3-CV, 2017 WL
991108, at *13 (Tenn. Ct. App. Mar. 14, 2017), this Court recently stated:

              From our review, the trial court’s ruling makes no mention of many
      of the factors outlined under Rule 1.5. While the trial court’s order states
      that the trial court “is aware” of the “amount involved” in this case, the trial
      court provides no specific explanation for the large attorney’s fee award
      relative to the small recovery by the Association in this case. Tenn. Sup.
      Ct. R. 8, RPC 1.5(4). Additionally, although the invoices contained in the
      record on appeal reflect charges up to $300.00 per hour, the trial court made
      no finding as to “the fee customarily charged in the locality for similar legal
      services[.]” Tenn. Sup. Ct. R. 8, RPC 1.5(3). Most importantly, neither the
      trial court’s oral ruling, nor its written order, contains any finding that the
      award is reasonable under the circumstances. As we have explained:

             When the trial court has exercised its discretion in light of the
             appropriate factors and found the fee to be reasonable, we
             simply review for abuse of discretion. . . . Where, however,
             there is no finding that the fee is reasonable, and no way to
             ascertain whether the court made the award in light of the
             appropriate factors, there is no way for us to accord the
             normal deference to the trial court.

      First Peoples Bank [v. Hill], 340 S.W.3d [398,] 410 [(Tenn. Ct. App.
      2010)]. Where this Court is unable to discern whether the trial court
      actually evaluated the amount of the fee to see if it is reasonable in light of
      the appropriate factors, the correct approach is to vacate the award and
      “remand [the] case to the trial court for a new determination of an
      attorney’s fee award under [Supreme Court Rule 8, RPC 1.8] and the
      applicable case law.” Ferguson Harbour Inc. v. Flash Market, Inc., 124
S.W.3d 541, 553 (Tenn. Ct. App. 2003). Because the trial court’s oral and
      written rulings provide this Court with no illumination as to whether it
      considered the reasonableness of the requested fee in light of the factors
      outlined in Rule 1.5, we must likewise vacate and remand this case with
      instructions to consider the reasonableness of the fee awarded under the
      circumstances of this case and the applicable factors.

                                             8
See also First Peoples Bank of Tenn., 340 S.W.3d at 410 (“[W]e will vacate the award of
attorney’s fees and, rather than try to make a determination in the first instance, remand
to the trial court for determination of a reasonable fee.”).

       Similarly, in the case at bar, the trial court failed to properly consider the RPC 1.5
factors when making its determination regarding a “reasonable” award of attorney’s fees.
As such, the issue of a reasonable award of attorney’s fees and expenses must be
remanded to the trial court for determination pursuant to the applicable factors. See
Southwind, 2017 WL 991108, at *13 (holding that where this Court is “unable to discern
whether the trial court actually evaluated the amount of the fee to see if it is reasonable in
light of the appropriate factors, the correct approach is to vacate the award” and remand
the issue to the trial court for determination).

                       V. Consideration of Prior Settlement Offers

       Westgate posits that because it communicated prior settlement offers to the
Riveras that were not accepted and because one of those prior offers included attorney’s
fees and other damages aimed at “making the Riveras whole,” any attorney’s fees
incurred by the Riveras following that offer should not be awarded. Westgate bases this
argument on the language of Tennessee Code Annotated § 47-18-109(c)(4), a provision
contained within the Tennessee Consumer Protection Act, which states:

       In any private action commenced under this section, the court may, upon
       the introduction of proof that the person against whom the action is filed
       has made a written, reasonable offer of settlement which has been
       communicated to the affected party, limit the amount of recovery to the
       terms of the offer of settlement.

We recognize that this statutory subsection has been utilized in other cases to limit the
amount of fees awarded following transmittal of a reasonable, written settlement offer
that was not accepted. See Scott v. Noland Co., No. 03A01-9502-CV-00072, 1995 WL
440375, at *6 (Tenn. Ct. App. July 26, 1995).

        In the case at bar, however, the trial court addressed Westgate’s argument
regarding the prior settlement offers at great length in its memorandum opinion, wherein
the court ultimately determined that the prior settlement offer that included attorney’s
fees was not for a discrete amount and did not specifically address the Riveras’ claims for
treble or punitive damage claims. The settlement offer communicated in April 2016
stated in pertinent part:

                                              9
              With depositions on the horizon, I wanted to recommunicate
       Westgate’s offer to rescind the contract between Plaintiffs and Westgate, as
       well as Westgate’s willingness to make Plaintiffs whole for their alleged
       losses resulting from the transaction, including reasonable attorneys’ fees. I
       would like to point out that Westgate’s initial offer to rescind the contract
       was communicated to Plaintiffs on June 21, 2015, just 16 days after
       Plaintiffs filed their Complaint, which was Westgate’s first notice that
       Plaintiffs even wanted to rescind. In response to Westgate’s offer to
       rescind, on February 16, 2015, Plaintiffs demanded a payment of $90,000
       from Westgate. This demand did not include even an allegation that
       Plaintiffs had actually sustained $90,000 in damages, much less support for
       such a claim.

              Since Plaintiffs’ demand of $90,000, Plaintiffs have confirmed in
       written discovery that their total alleged compensatory damages are
       $3,974.80. Westgate is willing to reimburse Plaintiffs this amount. If
       Plaintiffs claim they have suffered additional compensatory damages,
       please let me know those amounts, and to the extent they are reasonable,
       Westgate will also agree to pay those amounts. In addition, Plaintiffs
       objected to Westgate’s request that they disclose the amount of attorneys’
       fees they have paid. Please provide those, and to the extent they are
       reasonable, Westgate will also agree to reimburse Plaintiffs for those fees.

       As the trial court explained in its memorandum opinion:

       I don’t think what we had at that time constituted a concrete offer of
       settlement. It wasn’t a concrete—it wasn’t an offer of settlement that could
       have been accepted. Let’s say as to the ultimate offer of judgment . . . it
       was concrete in terms of dollar amounts. It was concrete, and it was
       accepted when it became concrete in terms of dollar amount. It didn’t get
       that way until October 11, 2016.

       Moreover, the Riveras contend that the offer they accepted was the only offer that
contained any specific amount of additional damages over and above a simple refund of
their purchase monies. Upon our review of the prior settlement offers, we agree. To the
extent that the Riveras sought payment of more than compensatory damages, the October
11, 2016 offer of judgment was the first offer to pay such damages. We further agree
with the trial court that the prior offer made in April 2016 was not sufficiently definite to
be accepted without further negotiation. In addition, the Riveras’ claims also implicated
the Tennessee Time-Share Act and alleged negligent and fraudulent misrepresentations
by Westgate, and thus the claims were not solely based in the Consumer Protection Act.
                                             10
We therefore affirm the trial court’s determination that attorney’s fees should not be
limited to the amount incurred prior to the previous settlement offer pursuant to
Tennessee Code Annotated § 47-18-109(c)(4).

                             VI. Attorney’s Fees on Appeal

       The Riveras seek an award of attorney’s fees on appeal pursuant to the Tennessee
Consumer Protection Act and the Tennessee Time-Share Act. Inasmuch as Westgate has
prevailed with regard to an issue on appeal, however, we determine that an award of
attorney’s fees on appeal to the Riveras is not warranted.

                                    VII. Conclusion

       For the foregoing reasons, we vacate the trial court’s award of attorney’s fees and
expenses and remand this issue to the trial court for further proceedings consistent with
this opinion. We decline to award the Riveras additional attorney’s fees incurred on
appeal. Costs on appeal are assessed one-half to the Riveras and one-half to Westgate.

                                                 _________________________________
                                                 THOMAS R. FRIERSON, II, JUDGE

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