Court Opinion

ID: 4308198
Source: CourtListenerOpinion
Date Created: 2018-08-29 14:18:44.358595+00
Date Added: 2024-06-11T14:42:44.291857
License: Public Domain

08/29/2018
                IN THE COURT OF APPEALS OF TENNESSEE
                           AT KNOXVILLE
                                  July 19, 2018 Session

           APRIL DORIS SCHMIDT v. AARON ERROL ANKROM

                  Appeal from the Circuit Court for Bradley County
                     No. V-14-312 Lawrence H. Puckett, Judge
                      ___________________________________

                            No. E2017-01909-COA-R3-CV
                        ___________________________________

In this appeal, the marital dissolution agreement at issue stated the parties’ intent to enter
into a separate farm lease agreement for up to 7 years, upon completion of which the ex-
wife could sell the property subject to the ex-husband’s right of first refusal. However,
the parties never entered into the contemplated farm lease. The ex-wife, desiring to sell
the property prior to the passing of 7 years, brought a declaratory judgment action
seeking a declaration of the rights of the parties under the marital dissolution agreement.
The trial court held that the ex-wife would be in breach of the agreement if she sold the
property prior to 7 years and awarded attorney’s fees to the ex-husband. The ex-wife
appeals. We reverse.

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

JOHN W. MCCLARTY, J., delivered the opinion of the court, in which D. MICHAEL
SWINEY, C.J., and THOMAS R. FRIERSON, II, J., joined.

Adam U. Holland, Chattanooga, Tennessee, for the appellant, April Doris Schmidt.

Andrew J. Brown, Cleveland, Tennessee, for the appellee, Aaron Errol Ankrom.

                                         OPINION

                                    I.     BACKGROUND

       The parties were divorced by a Final Decree on July 15, 2014. The decree
referenced and incorporated an agreed upon Marital Dissolution Agreement (“MDA”).
This MDA awarded certain real property to April Doris Schmidt (“Schmidt” or “Wife”),
situated in Cleveland, Tennessee, provided that the parties entered into a separate rental
agreement allowing Aaron Errol Ankrom (“Ankrom” or “Husband”) to “farm, raise
crops, and livestock for up to (7) seven years.” Upon completion of such farm lease,
Schmidt might sell the property, subject to Ankrom’s right of first refusal.

      The contractual language in the MDA at the center of this dispute reads as follows:

             The parties agree the real property situated [in Cleveland]
             shall be awarded to Wife free and clear of claims by
             Husband. Husband and Wife will enter into a separate rental
             agreement allowing the Husband to farm, raise crops and
             livestock for up to (7) seven years. Wife shall be allowed to
             claim the mortgage interest and taxes on the property for the
             tax years 2014 and thereafter. Upon entry of the Final
             Decree, Husband shall execute a Quitclaim Deed to be
             prepared by Husband which transfers his interest in this
             property to Wife. Wife shall be responsible for payment of
             all costs associated with preparing and recording the
             Quitclaim Deed. Wife shall be responsible for the mortgage,
             taxes and insurance on the property, holding the other
             harmless for the same. Husband during the term of the rental
             agreement shall have use of the property and agrees to
             maintain the property.

             After seven (7) years, Should (sic) Wife elect to sell the
             property, Husband shall have the option of the first refusal
             regarding the purchase. If the parties cannot agree on a sales
             price, the property shall be appraised by a professional
             property appraiser and the appraisal shall set the sales price.
             Husband is not obligated to purchase the property. Wife
             agrees to pay the upcoming taxes and insurance on this
             property that will be due later in 2014 and thereafter.

      The MDA also provided the following Enforcement provision:

             In the event it becomes reasonably necessary for either party
             to institute or defend legal proceedings relating to the
             enforcement of any provision of this Agreement, the
             successful party shall also be entitled to a judgment for
             reasonable expenses, including attorney’s fees, incurred in
             connection with such proceedings.

       Upon the conclusion of the parties’ divorce, Ankrom quitclaimed his interest in
the property to Schmidt via a quitclaim deed. However, the parties did not subsequently
enter into a farm lease as contemplated. The record reveals that Husband demonstrated

                                           2
no intention to farm the property. Schmidt, desiring to sell the property prior to 7 years
elapsing, brought an action for declaratory judgment to declare the farm lease provision
and attendant 7-year purchase option unenforceable as a matter of law.

       At a hearing on Schmidt’s motion for partial summary judgment and Ankrom’s
motion for summary judgment, the trial court found in favor of Ankrom, holding that he
had a right of first refusal to purchase the property for 7 years from the date the parties’
executed the MDA and that selling the property prior to that time would result in a breach
of the agreement. Schmidt timely filed this appeal.

                                       II.       ISSUES

       We consolidate and restate the issues raised on appeal by Schmidt as follows:

       A.    Whether the contractual language awarding Ankrom a 7-year
       purchase option was valid and enforceable when the parties did not
       subsequently enter into the contemplated farm lease.

       B.      Whether Ankrom was entitled to recover reasonable attorney’s fees
       and costs as the prevailing party in a declaratory judgment action pursuant
       to the enforcement provision of the MDA.

                             III.   STANDARD OF REVIEW

       Summary judgment is appropriate “when the undisputed facts, as well as the
inferences reasonably drawn from the undisputed facts, support only one conclusion-that
the moving party is entitled to a judgment as a matter of law.” Green v. Green, 293
S.W.3d 493, 513 (Tenn. 2009) (citing Griffis v. Davidson Cnty. Metro. Gov’t, 164
S.W.3d 267, 283-84 (Tenn. 2005)); Pero’s Steak & Spaghetti House v. Lee, 90 S.W.3d
614, 620 (Tenn. 2002); see Tenn. R. Civ. P. 56.04. “Questions of contract interpretation
are generally considered to be questions of law, and thus are especially well-suited for
resolution by summary judgment.” Ross Products Div. Abbott Labs. v. State, No.
M2006-01113-COA-R3-CV, 2007 WL 4322016, at *2 (Tenn. Ct. App. Dec. 5, 2007)
perm. app. denied (Tenn. Apr. 28, 2008) (citing Doe v. HCA Health Servs. of Tenn., 46
S.W.3d 191, 196 (Tenn. 2001)); Campora v. Ford, 124 S.W.3d 624, 628 (Tenn. Ct. App.
2003); Guiliano v. Cleo, Inc., 995 S.W.2d 88, 95 (Tenn. 1999); Hamblen Cnty. v. City of
Morristown, 656 S.W.2d 331, 335-36 (Tenn. 1983). The resolution of a motion for
summary judgment is a matter of law, which we review de novo with no presumption of
correctness. Bourland, Heflin, Alvarez, Minor & Matthews, PLC v. Heaton, 393 S.W.3d
671, 674 (Tenn. Ct. App. 2012) (citing Martin v. Norfolk S. Ry. Co., 271 S.W.3d 76, 84
(Tenn. 2008)). “We are required to review the evidence in the light most favorable to the

                                             3
nonmoving party and to draw all reasonable inferences favoring the nonmoving party.”
Martin, 271 S.W.3d at 84 (citing Staples v. CBL & Assocs., Inc., 15 S.W.3d 83, 89 (Tenn.
2000)).

                                   IV.      DISCUSSION

                                                 A.

             i.     Intent of the Parties

       A marital dissolution agreement “is a contract and as such generally is subject to
the rules governing construction of contracts.” Johnson v. Johnson, 37 S.W.3d 892, 896
(Tenn. 2001). As such, MDAs have been found to be valid and enforceable contracts
between the parties. Barnes v. Barnes, 193 S.W.3d 495, 498 (Tenn. 2006). Interpretation
of an MDA is subject to the rules of construction governing contracts:

             The resolution of this issue involves the interpretation of the
             parties’ MDA. An MDA is contractual in nature and is
             binding between the parties; therefore, the interpretation of
             the MDA is “subject to the rules governing construction of
             contracts.”

Minor v. Nichols, No. W2012-01720-COA-R3-CV, 2014 WL 356508, *5 (Tenn. Ct.
App. 2012) (citing Barnes, 193 S.W.3d at 498). “Each provision of an MDA should be
construed in light of the entire MDA, and the language in these provisions should be
given its natural and ordinary meaning.” Minor, 2014 WL 356508 at *5 (citing Elliott v.
Elliott, 149 S.W.3d 77, 84 (Tenn. Ct. App. 2004)).

        The parties stipulated and the trial judge held that the terms of the disputed
provisions are not ambiguous. An unambiguous contract must be interpreted as written
“and not in accordance with a party’s unexpressed intent.” Pitt v. Tyree Org., Ltd., 90
S.W.3d 244, 252 (Tenn. Ct. App. 2002). “Where the contract’s language is clear and
unambiguous, the agreement is to be given effect according to its terms, and ‘the court
will interpret the contract’s terms by assigning language its ordinary meaning and without
resort to extrinsic evidence.’” Bourland, Heflin, Alvarez, Minor & Matthews, PLC, 393
S.W.3d at 676 (citations omitted). “When the language of the MDA is plain and
unambiguous, courts determine the intent of the parties from the four corners of the
contract and enforce its plain terms as written.” Minor, 2014 WL 356508 at *6; see Int’l
Flight Ctr. v. City of Murfreesboro, 45 S.W.3d 565, 570 (Tenn. Ct. App. 2000).

       The court does not attempt to ascertain the parties’ state of mind at the time the
contract was executed but rather the parties’ intentions as “actually embodied and

                                             4
expressed in the contract as written.” Rainey v. Stansell, 836 S.W.2d 117, 118 (Tenn. Ct.
App. 1992). For this reason, we do not look to the testimony of the parties as to the
reason for inserting the 7-year purchase option into the MDA but instead look no further
than the four corners of the MDA.

        “All provisions in the contract should be construed in harmony with each other, if
possible, to promote consistency and to avoid repugnancy between the various provisions
of a single contract.” Guiliano, 995 S.W.2d at 95. Construing the contract as a whole, as
we are required to do, we find that the 7-year purchase option was tied to the farm lease
contemplated by both parties. Obviously, the parties intended entering a farm lease prior
to the Wife selling the property. Here, the provision states: “Husband and Wife will enter
into a separate rental agreement allowing the Husband to farm, raise crops and livestock
for up to (7) seven years.” There is no serious debate as to the meaning of this provision.
It is clear, unambiguous, and susceptible to only one interpretation. The provision
continues that “after seven (7) years, Should (sic) Wife elect to sell the property, Husband
shall have the option of the first refusal regarding the purchase.” This second provision
gives the Husband a purchase option at the conclusion of the farm lease. The parties not
having subsequently entered into the contemplated farm lease, the 7-year restriction is
left orphaned. Separating these provisions therefore creates an ambiguity as to the
running of the option. Such interpretation ignores that the parties intended to first enter
into a farm lease.

       Significantly, the MDA makes no provision for the parties not entering into a farm
lease. There is no provision stating that Schmidt cannot sell the property prior to 7 years,
only that “[a]fter seven years, Should (sic) Wife elect to sell the property, Husband shall
have the option of the first refusal regarding the purchase.” Giving the language of the
provision its usual and ordinary meaning, it is obvious that the parties intended for
Schmidt to be free to sell it, subject to Ankrom’s right of first refusal. Construing the
contract as a whole, it appears to this court that the parties intended that Ankrom have the
right of first refusal once a farm lease was no longer in the picture. It is uncontroverted
that the parties did not subsequently enter into the contemplated farm lease, so Schmidt
will not be in breach of contract for selling the property, as long as she gives Ankrom the
right of first refusal.

        The intent of the parties within the four corners of the document reveals that the
parties intended Ankrom to have a right of first refusal once Schmidt was free to sell the
property. Considering how the law abhors restrictions on alienation, we reverse the trial
court’s holding restricting Schmidt from selling the property prior to June 26, 2021.
Schmidt may sell the property at any time, but Ankrom’s right of first refusal stands
intact.

                                             5
              ii.    Agreement to Agree Provision

       The contract provision that the parties would enter into a separate farm lease
agreement stipulates an agreement to agree, a provision unenforceable as a matter of law.
It is well settled in contract law that mere agreements to agree are not enforceable. Four
Eights, LLC v. Salem, 194 S.W.3d 484, 485-87 (Tenn. Ct. App. 2005); see Engenius
Entm’t, Inc. v. Herenton, 971 S.W.2d 12, 17-18 (Tenn. Ct. App. 1997).

       The trial court correctly held that the farm lease provision is unenforceable as a
matter of law, as the courts cannot enforce an agreement to agree, but the court erred in
finding that the 7-year purchase option is valid and enforceable apart from the parties
entering into the contemplated farm lease. Ankrom contends that the provision allows
him to enter into a farm lease for any duration, from one day up to 7 years. There is
nothing in the MDA specifying from what date the 7 years begins to run. A contract for
future action must specify all material and essential terms. Four Eights, 194 S.W.3d at
487. The MDA at issue sets out no definite terms, dates, prices, or duration, other than
the requirement that the lease extends up to 7 years, with an option for Husband to
purchase after 7 years. We find that the provision is unenforceable because of its
uncertainty, vagueness, and its reference to future action without sufficiently definite
terms.

                                            B.

       The American Rule is well-established for the award of attorney’s fees, and parties
are generally responsible for their own attorney’s fees. State v. Brown & Williamson
Tobacco Corp., 18 S.W.3d 186, 194 (Tenn. 2000). One exception to the rule, however, is
that a party may recover attorney’s fees when a contractual provision creates a right to
recover such fees. Cracker Barrel Old Country Store, Inc. v. Epperson, 284 S.W.3d 303,
308 (Tenn. 2009). Accordingly, prevailing parties are entitled to recover their reasonable
attorney’s fees to enforce their contractual rights. Cracker Barrel Old Country Store,
Inc., 284 S.W.3d at 309.

       The parties’ MDA Enforcement provision provides:

              In the event it becomes reasonably necessary for either party
              to institute or defend legal proceedings relating to the
              enforcement of any provision of this Agreement, the
              successful party shall also be entitled to a judgment for
              reasonable expenses, including attorney’s fees, incurred in
              connection with such proceedings.

We have previously held that when an MDA provision mandates an award of attorney’s
fees to the prevailing party, the courts do not have discretion to deny such an award. See,

                                            6
e.g., Eberbach v. Eberbach, 535 S.W.3d 467, 476 (Tenn. 2017); Beem v. Beem, No.
W2009-00800-COA-R3-CV, 2010 WL 1687782, at *9-10 (Tenn. Ct. App. 2010).

        Schmidt contends that an award of attorney’s fees to Ankrom in this action is
inappropriate because her action was not to enforce the MDA, but rather sought a
declaratory judgment on the rights of the parties under the MDA. The parties’ MDA
states that the successful party is entitled to a judgment for reasonable attorney’s fees and
costs in any action brought “relating” to enforcement of any MDA provision. Schmidt’s
counsel points to New Covenant Baptist Church v. Sark, No. E2002-02693-COA-R3-CV,
2003 WL 21544248, *1 (Tenn. Ct. App. 2003), where we reversed an award of attorney’s
fees, finding that a close reading of the language in the underlying contract awarded
attorney’s fees solely in actions to “enforce” the agreement.

        The MDA at issue provides an award of attorney’s fees and costs to the prevailing
party in any action “relating” to the enforcement of any provision of the MDA; as such,
the parties’ enforcement provision is broader than the contractual language in New
Covenant. While an action for declaratory judgment is not an action to enforce the
MDA, such action does “relate” to the enforcement of the MDA. The contractual
language in the parties’ MDA is different from the narrow language in the underlying
contract in New Covenant and is therefore distinguishable. In this case, however, because
we reverse the trial court below and allow Schmidt to sell the property, costs and
attorney’s fees are awarded to Schmidt as the prevailing party. We remand the case to
the trial court to establish the amount of reasonable attorney’s fees.

                                   V.      CONCLUSION

       We reverse the decision of the trial court and remand this cause for all further
proceedings as may be necessary and consistent with this opinion. The costs of this
appeal are assessed to the appellee, Aaron Errol Ankrom.

                                                  _________________________________
                                                  JOHN W. MCCLARTY, JUDGE

                                             7