Court Opinion

ID: 1067232
Source: CourtListenerOpinion
Date Created: 2013-10-09 19:25:43.178051+00
Date Added: 2024-06-11T15:47:22.244395
License: Public Domain

IN THE COURT OF APPEALS OF TENNESSEE
                             AT NASHVILLE
                                    March 17, 2003 Session

   FERGUSON HARBOUR INCORPORATED v. FLASH MARKET, INC.

                 A Direct Appeal from the Circuit Court for Sumner County
                    No. 21941-C     The Honorable C. L. Rogers, Judge

                     No. M2002-00750-COA-R3-CV - Filed April 14, 2003

         This case involves a dispute over the validity of a contract. Appellant claims that its
signature on the contract was obtained through economic duress and that the contract is, therefore,
void. The trial court found for Appellee, awarding compensatory damages and attorney’s fees.
Appellee contends that the award of attorney’s fees was unreasonably low. We affirm the trial
court’s award of compensatory damages. On the issue of attorney’s fees, we reverse the order of the
trial court and remand this case for a determination of reasonable attorney’s fees consistent with this
opinion.

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

W. FRANK CRAWFORD , P.J., W.S., delivered the opinion of the court, in which DAVID R. FARMER ,
J. and HOLLY KIRBY LILLARD, J., joined.

Allan B. Thorp; Nanette L. Wesley, Memphis, For Appellant, Flash Market, Inc.

Stephen C. Knight, Nashville, For Appellee, Ferguson Harbour, Incorporated

                                             OPINION

        On or about July 31, 1994, a truck owned by non-party Bob Taylor Trucking purchased diesel
fuel from Flash Market, Inc.’s (“Flash,” “Defendant,” or “Appellant”) convenience store located at
409 E. Service Road in West Memphis, Arkansas. Due to no fault of Flash, the truck leaked diesel
fuel onto Flash’s property.
        There is dispute in the record as to whether Flash called Ferguson Harbour, Inc.’s1 (“FHI,”
“Plaintiff,” or “Appellee”) emergency line or whether FHI was dispatched to Flash’s location by the
EPA, or by Bob Taylor Trucking. This dispute of fact will be discussed in more detail below. What
is not in dispute is the fact that FHI’s crew cleaned up the diesel fuel spill at Flash. It is also
undisputed that FHI obtained Flash’s on-site manager, Douglas McMahan’s, signature on an
emergency field agreement (the “Agreement”). The circumstances surrounding the reason why Mr.
McMahan signed the Agreement are, however, in dispute and will be discussed in more detail infra.
The Agreement reads as follows:

                   EMERGENCY FIELD AGREEMENT TO PERFORM WORK

                    This Agreement, effective this 31 day of July, 1994, by and
                 between Ferguson Harbour Incorporated (“FHI”) and Flash Market
                 (“CLIENT”).
                         The parties to this Agreement, in consideration of the
                 mutual covenants and stipulations set out, agree as follows:
                         CLIENT contracts with FHI to perform the following
                 described services (“WORK”) at FHI’s rate of compensation set
                 forth in the rate schedule attached hereto as Exhibit A:
                         Respond to diesel spill at 409 E. Service Rd., W. Memphis,
                 AR.
                 CLIENT assigns Purchase Order Number _ to the WORK.
                 CLIENT shall be responsible for securing all necessary approvals,
                 permits, and easements required for the WORK to be performed.
                 CLIENT warrants that it holds clear title to all waste to be treated,
                 stored and/or disposed and is under no legal restraint which would
                 prohibit the treatment, storage and/or disposal of such waste. At
                 no time shall FHI assume any ownership interest whatsoever in
                 such waste.
                 CLIENT shall assume full responsibility for compliance with the
                 provisions of all applicable federal, state, and local laws. FHI shall
                 not be held responsible for any loss or damage to CLIENT’S
                 property. CLIENT agrees to pay FHI for a minimum of 4 hours.
                 Client also agrees to pay FHI for all reporting, work plans, health
                 and safety plans, final reports, etc. as required by federal, state or
                 local regulations, or to finalize the project.
                         FHI agrees to perform in accordance with its rate schedule
                 until such WORK is completed, or, in the alternative, it is ordered
                 in writing by CLIENT to stop WORK. FHI may at any time

        1
          Ferguson Harbour, Inc. specializes in decontamination, and removal of hazardo us waste. They advertise in
the Yellow Pages and list a 24-hour emergency number.

                                                       -2-
                   delegate the performance of the WORK, but such delegation shall
                   not relieve FHI of its responsibilities hereunder.
                           CLIENT authorizes the WORK to be done and agrees that
                   payment is due upon receipt of invoice. If payment is not made
                   within ten (10) days of the invoice date, then a service charge of 1
                   ½% a month is due on any unpaid balance. In the event payment is
                   not made and this Agreement is placed in the hands of an attorney
                   for collection, CLIENT agrees to pay all collection costs, including
                   reasonable attorney fees.
                           This Agreement may be terminated by either party upon 48-
                   hours written notice. In the event of termination, CLIENT shall
                   compensate FHI for all work performed prior to termination.
                           In witness whereof, the parties have executed this
                   Agreement by the signature of their duly authorized employees or
                   representatives on the day and year written above.

                   CLIENT                                          FERGUSON HARBOUR
                                                                   INCORPORATED

                   By: /s/ Douglas McMahan                         By: /s/ Dale Ozien
                   Title: Mgr.                                     Title: Division Manager

         The Agreement obligates Flash to pay FHI for the clean-up. Disputing the legality of the

Agreement, Flash refused to pay for FHI’s services.2 On August 25, 2000, FHI filed a General

Sessions Civil Summons against Flash for $2,514.15. After denying a Motion to Dismiss for

improper venue, the General Sessions Court entered judgment in favor of FHI for $10,000 on

July 16, 2001.

        Flash appealed to the Circuit Court of Sumner County. On September 12, 2001, Flash
filed a Motion to Dismiss for Improper Venue, along with supporting documentation. On
October 17, 2001, FHI filed a response to Flash’s Motion to Dismiss. Flash’s Motion to Dismiss
was heard on October 19, 2001 and an Order denying the Motion was entered on November 13,
2001.

         2
            An invoice d ated A ugust 16, 19 94 w as sent to Flash’s W est M emp his location. T he invo ice reflec ts a total
charge of $2,514.15 due within 10 days of the date of the invoice and subject to a 1.5% monthly finance charge
thereafter.

                                                             -3-
       The matter proceeded to trial on February 27, 2002. By Order dated March 8, 2002,
judgment was entered for FHI for $7,908, including attorney’s fees in the amount of $2,000. On
April 10, 2002, FHI filed a Motion to Alter or Amend Judgment or for Relief from Judgment,
requesting additional attorney’s fees. Flash filed a response to FHI’s Motion on May 1, 2002.
The Motion to Alter or Amend was heard on May 3, 2002 and was subsequently denied by Order
dated May 9, 2002.

        Flash appeals from the trial court’s Order and raises four issues for our review as stated in
the brief:

               I. The trial court erred when it ruled there was an enforceable
               contract.

               II. The trial court erred by ruling the statute of limitations had not
               run.

               III. The trial court erred by allowing inadmissible hearsay evidence
               to toll the running of the statute of limitations.

               IV. The trial court erred by not holding the lawsuit barred by laches.

        FHI raises one additional issue for our review: Whether the trial court abused its
discretion by failing to apply the applicable legal standard for determining reasonable attorneys’
fees.

                               The trial court erred when it ruled
                               there was an enforceable contract

       Since this case was tried by the court sitting without a jury, we review the case de novo
upon the record with a presumption of correctness of the findings of fact by the trial court.
Unless the evidence preponderates against the findings, we must affirm, absent error of law. See
Tenn. R. App. P. 13.

       Flash contends that the Agreement is unenforceable due to the fact that it was signed
under economic duress. Specifically, Flash asserts that FHI’s crew blocked Flash’s fuel islands
until McMahan signed the Agreement. At the trial, McMahan testified, in relevant part, as
follows:

               Q. Did you [Mr. McMahan] have any other conversations with the
               man in charge for Ferguson Harbour?

               A. Yes, sir.

                                                 -4-
Q. Tell me about those conversations.

A. Well, they [FHI] were close to getting through with cleaning up
the spill by the time I got there. They had it swept up in little tracks.
I told the gentleman–he told me that I had to sign a piece of paper or
they [FHI] couldn’t leave the parking lot. I told him I wasn’t signing
anything because it’s not our [Flash’s] spill and we’re [Flash] not
responsible for it. We had several discussions along those lines.

Q. When you say you had several discussions, can you go into more
detail.

A. Well, he couldn’t move his equipment until I signed the paper,
and I wasn’t signing the paper because, at that particular time, I was
under the impression that, my signing the paper, I was saying I was
responsible for the diesel spill, which I was not.

Q. Where was his truck and his equipment, what he had out there?
Was it interfering with your being able to do business?

A. The truck, the equipment, and plus the fact they [FHI] had the
diesel island taped off, we [Flash] were actually shut down at the
time.

Q. Would you say that you and the man with Ferguson Harbour were
shouting at each other about it?

A. Yes, sir, I would. We were kind of like two people bumping
heads, I guess. He couldn’t move his equipment. I couldn’t sell
anything and I wasn’t signing anything.

Q. Did you tell him anything about whether you would pay for it [the
clean-up]?

A. Yes, sir, I told him that I wasn’t paying the bill. If I signed it, I
felt like I was responsible for getting it, it was our bill.

*                                 *                                  *

Q. When you had this heated discussion where you said you weren’t
going to pay and he wasn’t going to move, what did you do?

A. I went inside and called Mr. Patterson.

                                  -5-
       Q. Is Mr. Patterson the president of the company [Flash]?

       A. Yes, sir.

On cross-examination, Mr. McMahan testified, in pertinent part, as follows:

       Q. When you [Mr. McMahan] arrived, you saw them [FHI’s crew]
       working there?

       A. Yes, sir.

       Q. They were working on your property, Flash Market’s property?

       A. Yes, sir.

       Q. They were cleaning an oil spill that was on that property?

       A. Yes, sir.

       Q. You watched them work. When did he [FHI’s employee] come
       in and ask you to sign the document?

       A. When did he come in and ask me to sign the document? After he
       was finished.

       Q. After he was finished? So you let them finish?

       A. I went and talked to the gentleman as soon as I got there and
       asked him who sent them out, and all that kind of stuff, and told him
       I wasn’t paying any bills for picking up the diesel fuel.

       Q. You told him that later, didn’t you?

       A. I told him that at the time I arrived there.

       Q. So your testimony is you arrived on the scene. You saw these
       fellows working on your property and you walked up to them and
       said, “I’m not paying for any of this”? Is that what you’re saying?

       A. No, sir. What I said was, “Who sent you out here,” and he said
       the EPA, and I said, “I’m not paying for any spills that’s [sic] not
       mine.”

                                         -6-
                  *                                     *                                       *

                  Q. ...Are you alleging to this Court that you were forced to sign that
                  document, Mr. McMahan?

                  A. I was told to sign that document by the president of the company. 3

                  Q. By which president?

                  A. Mr. Patterson

                  *                                         *                                     *

                  Q. Was it your understanding that Mr. Patterson knew that it [the
                  document] was a contract to obligate Flash Market for the cleanup
                  when he told you to sign it?

                  A. I have no idea what Mr. Patterson knew.

                  Q. He pretty much knew what was going on when he told you to sign
                  it, didn’t he?

                  A. All I know is Mr. Patterson told me to sign the paper to get the
                  people off the lot so we could continue doing business.

                  *                                         *                                       *

                  Q. Now, was this person from Ferguson Harbour holding a gun to
                  you or anything like that?

                  A. No, sir.

                  *                                         *                                       *

                  Q. ...Couldn’t you [Mr. McMahan] have called the police?

                  A. Why would I want to call the police?

         3
           We note that, in his Affidavit that was introduced at trial as Exhibit 7, Mr. M cMa han claims he signed the
Agreement “only in order to cause [FHI] to unblock the fuel islands....” Mr. McM ahan’s Affidavit makes no mention
of his being instructed to sign the Agreement by Mr. Patterson.

                                                         -7-
               Q. Well, if a man is on your property and you don’t want him there
               and he’s refusing to move and he’s keeping you from doing business,
               wouldn’t it be logical to call the police?

               A. The EPA officer that was there is a Sheriff’s Department member.

               Q. Why didn’t you complain to him?

               A. What would I complain of, the guy refused to move his
               equipment?

               Q. Whatever you’re complaining about now that you’re saying forced
               you to sign this contract against your will.

               A. Did I say I was forced to sign the contract against my will?

               Q. That’s what you’re–

               A. Or that Patterson told me to sign the contract so we could
               continue doing business?

       Harold Patterson, president of Flash, also testified at the trial. The relevant portion of his
testimony reads as follows:

               Q. Did he [FHI’s employee] tell you [Mr. Patterson] that he wouldn’t
               remove his equipment–

               A. Yes, sir, he had–he had our diesel lanes blocked. We had trucks
               lined up trying to get fuel there and he had them blocked off with his
               truck and the yellow-looking tape around them and would not remove
               it unless we signed this form. It’s a big confusion at the truck stop
               and you have the truckers trying to fuel and can’t get fuel.

               Q. Did you have truckers there trying to get fuel?

               A. Yes, sitting in line trying to get to the fuel lines.

               Q. Did you tell Mr. McMahan to sign the document?

               A. Yes, sir, sure did.

       On cross-examination, Mr. Patterson testified, in pertinent part, as follows:

                                                 -8-
                  Q. ...You [Mr. Patterson] had every opportunity to read that contract
                  if you wanted to, didn’t you?

                  A. I agree.

                  Q. All you had to do was ask for it. You chose not to and you
                  instructed Mr. McMahan to go ahead and sign it?

               A. Yes, sir, sure did.
       FHI’s only witness at trial was Keith F. Bailey, the president and CEO of FHI. Mr.
Bailey was not present at Flash the night of the spill and offered no rebuttal to the testimony
proffered by Messrs. McMahan and Patterson. However, the trial court, in its ruling from the
bench, notes some problems with the credibility of Flash’s witnesses:

                  The reason I’m [the court] concerned about that credibility is, in
                  Exhibit 8,4 at that time, the defendant was claiming that Ferguson
                  Harbour was contacted by Taylor Trucking Company to come clean
                  up the diesel fuel. Today, the testimony from the defendant is that
                  Ferguson Harbour was contacted by the EPA.

                  Again, Exhibit 8,5 demonstrates that the defendant, back in April of
                  2001, in that letter, disclaimed any knowledge that the person signing
                  the contract for Flash Market was an employee, didn’t know who it
                  was, didn’t know anything about him. Today, that’s the manager who
                  testified here today and that signed it at the direction of the president.

      At the close of the trial, the trial court issued its ruling from the bench. On the issue of
whether there was an enforceable contract, the court ruled as follows:

                  Based on the evidence, the Court finds certain facts to be that there,
                  in fact, was a contract signed between the parties dated July 31, 1994,
                  providing for certain work to be performed and that the total cost
                  under that contract is $2,514.15.

         4
            Exhibit 8 is a letter sent from Flash’s attorney to FH I’s attorne y. The relevant portion of the letter is as
follows: “Subsequent to the spill, parties from Taylor T rucking contacted Ferguson Harbour asking them to respo nd to
the location to clean up the d iesel fuel.”

         5
           The pertinent section of Exhibit 8 reads as follows: “The signature contained on the Emergency Field
Agreement to Pe rform W ork is unknown to Flash Market and is not a Flash Market employee regardless of what it states
on the document itself.”

                                                           -9-
               The contract further provides for one-and-a-half percent interest if not
               paid within 10 days of the invoice and also provides for reasonable
               attorney’s fees.

         From our review of the entire record in this case, we, too, find that there was a valid and
enforceable contract between FHI and Flash. The preponderance of the evidence simply does not
support Flash’s contention that Mr. McMahan’s signature was obtained under economic duress.
Rather, the weight of the evidence indicates that Mr. Patterson, the president of Flash, was on-
site at the time the Agreement was signed and, despite the opportunity to review the document,
did not do so. In terms of economic duress, there is no proof in evidence to show that Flash was
in danger of losing any business from FHI’s alleged blocking of the gas pumps. In fact, Mr.
Patterson’s testimony indicates that the trucks “lined up” and waited for the pumps to reopen.
Furthermore, Mr. McMahan’s testimony indicates that there was an EPA officer on-site the night
of the spill. Rather than sign the Agreement, Flash could have asked for the EPA officer’s aid in
removing FHI’s equipment. In fact, at the close of proof, the trial court points this option out to
Flash:

               I’m [the court] not buying into an argument that you [Flash] did it
               [signed the Agreement] just to clear your gas pumps. I think I’d be
               telling the EPA man to have them removed or calling the police, one
               or the other, if I truly did not want to sign the contract.

         We concur with the trial court’s analysis. For that, and the foregoing reasons, we affirm
the trial court’s finding that there was a valid and enforceable contract between FHI and Flash.

                               The trial court erred by ruling that
                              the statute of limitations had not run

         As noted above, this suit was initially filed on August 25, 2000. The applicable statute of
limitations for FHI’s claim is six (6) years. See T.C.A. § 28-3-109(a)(3). It is well settled that
the cause of action accrues when a party repudiates a contract or clearly indicates that it refuses
to perform. Flash asserts that the statute of limitations began to run on the night the Agreement
was signed, July 31, 1994. Specifically, Flash asserts that it repudiated the Agreement
immediately after signing and, therefore, more than six years had elapsed when FHI filed suit on
August 25, 2000. Both Messrs. McMahan and Patterson testified that they made it clear to FHI’s
on-site employee that Flash would not be responsible for the clean-up bill. Mr. Patterson
testified as follows:

               Q. Did you [Mr. Patterson] tell him [FHI’s employee] whether or not
               you would pay for the services?

               A. I told him we would not pay for it.

                                                -10-
       In the alternative, Flash argues that, regardless of any repudiation on the night of July 31,
1994, they clearly repudiated on or about August 16, 1994, when they received the invoice from
FHI. On this theory, Mr. Patterson testified as follows:

               Q. When you [Mr. Patterson] got the invoice, what did you do?

               A. Well, I–I called Ferguson Harbour and explained to them the
               situation, you know, this is not our invoice...

       On cross-examination, Mr. Patterson continued as follows:

               Q. Did you make any effort? Did you ever write to Ferguson
               Harbour and tell them in a letter, “Look, this is not our obligation.
               This is somebody else’s obligation. You’ve billed the wrong
               person?” You never did that, did you?

               A. I talked with them one time on the phone and that’s the only time
               I ever talked with them about this.

               Q. The only time you ever talked to them?

               A. Or anybody in our office about it, that I know of.

       On the question of when, exactly, Flash clearly refused to pay for FHI’s services, Mr.
Keith Bailey, president of FHI, testified as follows:

               Q. After you sent the invoice, did you receive anything at all by way
               of any communication, whether verbal or written or any form of
               communication, from the defendant objecting to it, telling you that
               they didn’t owe it?

               A. No, sir.

               Q. In fact, after you sent the invoice and didn’t get it for awhile, did
               somebody on behalf of FHI contact them and ask them to pay it?

               A. Yes, sir.

               Q. Did they pay it?

               A. No, sir.

               Q. Did they promise to pay it?

                                                -11-
               A. Yes, sir.

               *                                       *                             *

               Q. What is your policy with respect to filing lawsuits?

               A. We work with our clients. They say they’re going to pay, we
               work with them.... Finally, you know, when it gets to the point where
               we can’t believe what our clients are saying anymore, then we have
               to pursue legal action, and that’s what we did in this case.

               *                                       *                                 *

               Q. ...When you first learned that this defendant was refusing to pay
               your invoice, would it have been within the first year of the date that
               the project was completed or sometime after that?

               A. No, it was way after that.

               *                                       *                         *

               Q. ...to your knowledge, did anyone on behalf of Flash Market
               ever–up until we got into the courtroom last time, did anyone on
               behalf of Flash Market ever tell you that they were repudiating the
               contract, that they were challenging the contract, or anything like
               that?

               A. No, sir. If we had a written document or something that came
               back, whatever, I would have sat down with them and said, “Hey,
               let’s work through this.”

               Q. Did that happen?

               A. No, sir.

       Obviously there is dispute in the record as to whether Flash repudiated the Agreement
immediately upon signing and/or immediately upon receipt of the invoice, or whether
negotiations continued for some time until it became clear that Flash was not willing to pay FHI.

         When the resolution of the issues in a case depends upon the truthfulness of witnesses,
the trial judge who has the opportunity to observe the witnesses in their manner and demeanor,
while testifying is in a far better position than this Court to decide those issues. See McCaleb v.
Saturn Corp., 910 S.W.2d 412, 415 (Tenn. 1995); Whitaker v. Whitaker, 957 S.W.2d 834, 837

                                                -12-
(Tenn. Ct. App. 1997). The weight, faith, and credit to be given to any witness’s testimony lies
in the first instance with the trier of fact, and the credibility accorded will be given great weight
by the appellate court. See id.; In re Estate of Walton v. Young, 950 S.W.2d 956, 959 (Tenn.
1997).

       From the record before us, it is clear that the trial court accepted the testimony of Keith
Bailey but had doubt as to the credibility of Messrs. Patterson and McMahan:

                  The Court further finds that, after the work was performed, an invoice
                  was sent on August 16, 1994. The Court finds from the proof, and
                  has to infer from the proof, that subsequent to 1994, there were
                  discussions regarding payment of this invoice and/or nonpayment, but
                  more importantly, the Court accepts the testimony of the plaintiff that
                  there were promises to pay.

                  I make that decision based on three factors. One, the lawsuit against
                  the defendant was not filed until August of 2000, which the Court
                  infers from that that the plaintiff did make some efforts to work with
                  the defendant about getting paid.

                   Two, I’m disturbed about the defendant, when I received Exhibit 8,
                   the defendant’s credibility on his claim that there never were any
                   discussions much after the August 16, ‘94 invoice.6

                   *                                        *                                     *

                   ...I believe the lawsuit was filed within the applicable statute of
                   limitations, which I find to be six years. According to the plaintiff,
                   it was, approximately, almost three years worth of promises to pay
                   before they realized the defendant was not going to pay and they
                   instituted a lawsuit in 2000. So I’ll find that the statute of limitations
                   does not bar the action.

        From our reading of the entire record in this case, we find that the question of when FHI
had notice of Flash’s intention not to pay is a matter of Plaintiff’s story versus Defendant’s story.
The issue, therefore, comes down to credibility of the witnesses. Because the trier of fact is in a
better position than this Court to determine the candor of these witnesses, we must defer to the
trial court’s finding absent abuse of discretion. Because we find no abuse of discretion in the
trial court’s favoring Plaintiff’s evidence, we affirm the finding of the trial court that this suit was
timely filed.

         6
           As noted supra, Exhibit 8 is a letter from Flash’s attorney to FHI’s attorney. The purp ose o f the letter is to
dispute Flash’s liability under the A greem ent.

                                                          -13-
                         The trial court erred in allowing inadmissible
                          hearsay evidence to toll the running of the
                                      statute of limitations

       Flash asserts that the trial court erred in allowing Mr. Bailey to testify about Flash’s
alleged agreement to pay FHI’s invoice, despite the fact that Mr. Bailey allegedly had no personal
knowledge of any such promise. The specific testimony in question is as follows:

               Q. In fact, after you [FHI] sent the invoice and didn’t get it for
               awhile, did somebody on behalf of FHI contact them and ask them to
               pay it?

               A. Yes, sir.

               Q. Did they pay it?

               A. No, sir.

               Q. Did they promise to pay it?

               A. Yes, sir.

               Q. Eventually–

               MR. THORP [attorney for Flash]: I’ll object unless he can testify to
               who wit [sic]. Did he hear a conversation? Otherwise, it’s hearsay.

               MR. BAYDOUN [attorney for FHI]:He’s welcome to cross-examine,
               your Honor.

               THE COURT: I’m going to overrule the objection at this point. Go
               ahead.

       We note that the trial court is afforded wide discretion in the admission or rejection of
evidence, and the trial court’s action will be reversed on appeal only when there is a showing of
an abuse of discretion. See Otis v. Cambridge Mut. Fire Ins. Co., 850 S.W.2d 439 (Tenn.
1992); Davis v. Hall, 920 S.W.2d 213, 217 (Tenn. Ct. App. 1995).

       Flash asserts that the trial court’s decision concerning the statute of limitations “could
only have been based upon the hearsay testimony cited above.” We disagree. Even if we
concede that the trial court erred in allowing Mr. Bailey to testify about something outside his

                                                -14-
personal knowledge, we note that Mr. Bailey’s testimony was not dispositive on the issue of the
running of the statute of limitations.

         The trial court clearly found that there was a valid contract and that Flash did not repudiate
that contract immediately upon signing it. We agree with those findings (see discussion supra under
Issue 1). The Agreement, as printed in its entirety above, clearly obligates Flash to pay FHI for the
clean-up. Furthermore, the Agreement contemplates a ten day grace period from the date of the
invoice in which no penalty will be charged for non-payment. There is no indication in the
Agreement that failure to pay immediately upon receipt of the invoice, or for at least ten days
thereafter, is evidence of a repudiation, absent written or verbal communication from Flash to FHI
that they did not intend to pay. Although Flash’s witness, Mr. Patterson, testified that he contacted
FHI upon receipt of the invoice to say that Flash would not pay, it is clear from the record that the
trial court disputed the credibility of this witness. Since we find nothing in the record to indicate that
the trial court’s finding on credibility constituted an abuse of discretion, we cannot take Mr.
Patterson’s testimony as fact on this appeal.
         What we are left with is the Agreement itself. As stated above, we find nothing in this
Agreement to indicate that FHI knew or should have known that Flash would not pay the invoice
upon receipt. And based upon the fact that the Agreement contemplates a grace period of ten days,
we cannot say that FHI should have been charged with notice of repudiation until such time as that
ten days had lapsed. Therefore, the earliest that the statute of limitations could have begun to run
would have been ten days from the date of the invoice, which would have been August 26, 1994.
The six-year statute of limitations would, therefore, have expired on August 26, 2000. This suit was
filed on August 25, 2000, which was within the applicable statute.

                               The trial court erred by not holding
                                  the lawsuit barred by laches.

        Laches is an equitable doctrine that can be invoked when a party exercises unreasonable
delay in pursuing ones rights. Nunley v. Nunley, 925 S.W.2d 538, 542 (Tenn. Ct. App.1996)
(citing Hannewald v. Fairfield Communities, Inc., 651 S.W.2d 222, 228 (Tenn. Ct. App.1983);
Parker v. Bethel Hotel Co., 34 S.W. 209, 217 ( Tenn. 1896)). Delay by itself is not sufficient to
invoke the doctrine of laches. Id. “[T]he determinative test as to laches, which may be available
as a successful defense, is not the length of time that has elapsed, but whether, because of such
lapse of time, the party relying on laches as a defense has been prejudiced by the delay.” Id.
(quoting Brister v. Estate of Brubaker, 336 S.W.2d 326, 332 (Tenn. 1960)). In cases where
delay in filing suit can be explained or justified, the defense of laches will not be applied. Shell v.
Law, 935 S.W.2d 402 (Tenn. Ct. App.1996). Application of the doctrine of laches lies within the
discretion of the trial court. John P. Saad & Sons, Inc. v. Nashville Thermal Transfer Corp.,
715 S.W.2d 41 (Tenn.1986); Hardeman County Bank v. Stallings, 917 S.W.2d 695 (Tenn. Ct.
App.1995).

        In the instant case, Flash claims that FHI’s suit should have been dismissed on the basis
of laches due to the fact that FHI delayed filing suit for more than six years after the Agreement

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was signed by McMahan. Flash asserts that they were prejudiced by FHI’s delay in that Flash
would have sued Bob Taylor Trucking for negligently causing the spill had Flash been found
liable to FHI for the clean up; however, because of FHI’s delay, Flash is now barred by the
statute of limitations from filing suit against Bob Taylor Trucking. After careful review of the
record, we cannot agree with Flash’s position. Any claims Flash had against Bob Taylor
Trucking were independent of FHI’s suit for breach of contract. At any time within the
applicable statute of limitations, Flash could have sued Bob Taylor Trucking for negligence,
regardless of any liability Flash might have had to FHI. Therefore, the trial court did not abuse its
discretion in disallowing the defense of laches under the facts of this case.

                        Whether the trial court abused its discretion by
                         failing to apply the applicable legal standard
                          for determining reasonable attorneys’ fees.

       By Order dated March 8, 2002, the trial court awarded FHI $5,908, plus $2,000 in
attorney’s fees. On April 10, 2002, FHI filed a Motion to Alter or Amend, requesting additional
attorney’s fees. FHI’s Motion was denied by Order entered May 9, 2002.

         The Agreement between FHI and Flash provides that, “[i]n the event payment is not made
and this Agreement is placed in the hands of an attorney for collection, Client agrees to pay all
collection costs, including reasonable attorney fees.” In support of FHI’s claim for attorney’s
fees under the Agreement, Nader Baydoun, attorney for FHI, filed two Affidavits, along with the
time sheets kept in connection with this case. Mr. Baydoun’s Affidavit indicates that his hourly
rate was $205. The time sheets show that FHI incurred $7,656.50 in attorney’s fees and $334.99
in expenses for prosecuting this action for a total charge of $7,991.49. As noted above, the trial
court awarded only $2,000 in attorney’s fees. FHI now contests the reasonableness of the trial
court’s decision and claims, specifically, that the trial court lowered the amount of attorney’s fees
because the compensatory damage award was only $5,908. From our review of the record, and
in particular the Orders dated March 8, 2002 and May 9, 2002, there is no indication that the trial
court’s award of $2,000 in attorney’s fees was in any way based on the amount of compensatory
damages. In fact, the trial makes no specific findings as to the factors which justify this amount
in fees.

       The following are the factors listed in D.R.2-106 S.Ct. Rule 8 concerning the
determination of whether a fee is reasonable:

               (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.

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               (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.

        From the record before us, we conclude that the trial court did not use the proper standard
in determining the award of attorney’s fees and expenses in this case. In determining the amount
of fees and expenses to award, the issue is not how the fees requested compare to the amounts
eventually awarded to the plaintiffs; rather, the issue is how the requested fees and expense
measure up under D.R. 2-106. Where the attorney’s fee is based upon a contractual obligation
expressly providing for reasonable attorney’s fees, the award must be based upon the guidelines
by which a reasonable fee is determined. See Wilson Management Co. V. Star Distrib. Co., 745
S.W.2d 870, 873 (Tenn. 1988); see also United Med. Corp. Of Tennessee v. Hohenwald Bank
& Trust Co., 703 S.W.2d 133, 136 (Tenn. 1986). We, therefore, remand this case to the trial
court for a new determination of an attorney’s fee award under D.R. 2-106 and the applicable
case law.

        For the foregoing reasons, we affirm the Order of the trial court to the extent that it
awards FHI $5,908 in compensatory damages, exclusive of attorney’s fees. We reverse the Order
of the trial court on the issue of attorney’s fees and remand the matter for a determination of
reasonable attorney’s fees consistent with this opinion. Costs of this appeal are assessed to
Appellant, Flash Market, Inc., and its surety.

                                      __________________________________________
                                      W. FRANK CRAWFORD, PRESIDING JUDGE, W.S.

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