Cracker Barrel Old Country Store, Inc. v. Richard Epperson

IN THE COURT OF APPEALS OF TENNESSEE

AT NASHVILLE

August 8, 2007 Session

CRACKER BARREL OLD COUNTRY STORE, INC., ET AL. v.

RICHARD EPPERSON, ET AL.

Appeal from the Chancery Court for Davidson County

No. 05-2220-II Carol McCoy, Chancellor

No. M2006-02424-COA-R3-CV - Filed March 4, 2007

In denying a request for attorneys’ fees in an action involving the enforcement of a declaration of

easements and restrictions, the trial court found the phrase “costs and expenses” in that declaration

does not include recovery of attorneys’ fees. The trial court is affirmed.

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

Affirmed

PATRICIA J. COTTRELL, J., delivered the opinion of the court, in which E. RILEY ANDERSON , SP. J.,

joined. FRANK G. CLEMENT, JR., J. filed a dissenting opinion.

C. Dewees Berry, Nancy S. Jones, Nashville, Tennessee, for the appellants, Cracker Barrel Old

Country Store, Inc. and Cracker Barrel Associates LLC.

William T. Ramsey, Jonathan H. Wardle, Nashville, Tennessee, for the appellees Richard

Epperson and Timothy Causey.

OPINION

The sole issue on appeal is whether the parties intended to include attorneys’ fees in an

agreement that allowed recovery of litigation cost and expenses.

Cracker Barrel Old Country Store, Inc., and Cracker Barrel Associates LLC (collectively

“Cracker Barrel”) filed suit against Mr. Richard Epperson and Timothy Causey (collectively

“defendants”) alleging that defendants’ plan to expand their building violated the Declaration of

Reciprocal Rights and Easement and Restrictive Covenants (“Declaration”) which governed the use

of both the properties of Cracker Barrel and defendants. As part of that action, Cracker Barrel

requested that it be awarded attorneys’ fees. The defendants likewise sought to recover attorneys’

fees in their counterclaim.

According to Cracker Barrel, paragraph 9 of the Declaration authorizes award of attorneys’

fees as follows:

The easements, restrictions, benefits, and obligations herein set forth shall create

mutual benefits and servitude on the Property running with the land and shall inure

to the benefit of and be binding upon the respective Lot Owners, their successors and

assigns. In the event of any violation or threatened violation of any of the provisions

of this Declaration, any person having an interest of record in any part of the Property

shall be entitled forthwith to full and adequate relief by injunction and/or all such

other available legal and equitable remedies from the consequences of any such

violation. All costs and expenses of any suit or proceeding shall be assessed against

the defaulting party.

It is not disputed that Cracker Barrel ultimately prevailed when an Agreed Judgment and

Permanent Injunction was entered in January of 2006. With regard to attorneys’ fees, the Agreed

Judgment provided as follows:

IT IS FURTHER ORDERED that should the Parties be unable to resolve

through informal, non-binding mediation that portion of the dispute dealing with the

interpretation of Paragraph Nine (9) of the Declaration, as it relates to the payment

of Plaintiffs’ attorneys’ fees, costs and expenses incurred in connection with

obtaining this Permanent Injunction, Plaintiffs may renew their motion for an award

of such fees, costs and expenses.

After a hearing, the trial court awarded Cracker Barrel its costs but found that the language

in the Declaration authorizing “costs and expenses” did not include attorneys’ fees. Cracker Barrel

appeals the trial court’s denial of its request for attorneys’ fees.

It is well settled that Tennessee follows the American Rule which provides that litigants must

pay their own attorneys’ fees unless there is a statute or contract providing otherwise. Taylor v.

Fezell, 158 S.W.3d 352, 359 (Tenn. 2005); State v. Brown & Williamson Tobacco Corp., 18 S.W.3d

186, 194 (Tenn. 2000); State ex rel. Orr v. Thomas, 585 S.W.2d 606, 607 (Tenn. 1979). In the

absence of such a fee-shifting statute, contract provision, or other recognized equitable ground,

courts may not compel a losing party to pay the winning party’s attorneys’ fees. Brown &

Williamson Tobacco Corp., 18 S.W.3d at 194; Kultura, Inc. v. Southern Leasing Corp., 923 S.W.2d

536, 540 (Tenn. 1996).

Without a statutory or contractual basis, or certain equitable bases, allowance of attorneys’

fees is contrary to the public policy of Tennessee. John Kohl & Co. v. Dearborn and Ewing, 977

S.W.2d 528, 534 (Tenn. 1998); Pullman Standard v. Abex Corp., 693 S.W.2d 336, 338 (Tenn.

1985); Thayer v. Wright Company, 362 S.W.2d 805, 812 (Tenn. 1961); Fossett v. Gray, 173 S.W.3d

742, 752 (Tenn. Ct. App. 2004); Morrow v. Bobbitt, 943 S.W.2d 384, 392 (Tenn. Ct. App. 1996);

John J. Heirigs Constr. Co. v. Exide, 709 S.W.2d 604, 609 (Tenn. Ct. App. 1986); ABC Painting Co.

v. White Oaks Apartments of Hermitage, 2006-00280-COA-R3-CV, 2007 WL 14250, at *4 (Tenn.

Ct. App. Jan. 2, 2007) (no Tenn. R. App. P. 11 application filed).

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For purposes of determining whether an exception to the American Rule exists, the

Declaration is considered a contract. Thus, the question here is whether the Declaration in paragraph

9 authorizes recovery of attorneys’ fees. Our courts have provided a standard to assist in deciding

whether the parties to a contract intended the prevailing party to recover attorneys’ fees in actions

to enforce the contract.1 In Pullman Standard, the Tennessee Supreme Court stated the requirement

thusly:

We continue to adhere to the rule in Tennessee that attorneys’ fees are not

recoverable in the absence of a statute or contract specifically providing for such

recovery . . .

693 S.W.2d at 338 (emphasis added).

This requirement that a contract “specifically” provide for recovery of attorneys’ fees has

been a consistently applied by Tennessee courts. Kultura, 923 S.W.2d at 540 (holding UCC’s

allowance for recovery of “any loss” does not include attorneys’ fees); Chambers v. City of

Chattanooga, 71 S.W.3d 281, 284 (Tenn. Ct. App. 2001); Pinney v. Tarpley, 686 S.W.2d 574, 581

(Tenn. Ct. App. 1984); Hosier v. Crye-Leike Commercial, Inc., M2000-01182-COA-R3-CV, 2001

WL 799740, at *3 (Tenn. Ct. App. July 17, 2001) (no Tenn. R. App. P. 11 applications filed) (“[o]ne

of the most common exceptions to the American Rule involves contracts containing provisions

expressly allowing the prevailing party to recover its reasonable attorneys’ fees . . . ”); Hewgley v.

Vivo, No. 01-A-01-9506-CH-00266, 1997 WL 92077, at *4 (Tenn. Ct. App. March 5, 1997) (no

Tenn. R. App. P. 11 application filed) (“[A] contract must contain an express provision for the

payment of attorneys’ fees in order to enable a prevailing party to recover the legal expenses it

incurred to enforce the contract.”)

We have found no Tennessee decision addressing whether “costs and expenses” in a contract

include attorneys’ fees, and the parties have likewise provided no such authority. Given our long

recognized adherence to the American Rule, the attendant public policy considerations, and the

decisions requiring authorization of attorneys’ fees to be “specific” or “express,” we conclude that

“costs and expenses,” as used in the Declaration, do not include attorneys’ fees.

The Declaration simply does not include any express intention that a losing party in an

enforcement action regarding the Declaration would be required to pay the prevailing party’s

attorneys’ fees. The Declaration is a sophisticated document governing development of property that

is intended to run with the land, presumably drafted by an attorney. If the drafter of the Declaration

had intended to abrogate the American Rule, the document could have “specifically” or “expressly”

1

The question, however, is whether the owner of the property who created the obligations in the Declaration

intended “costs and expenses” to include attorneys’ fees. This issue is presented in a slightly unique contractual setting

since Cracker Barrel and the defendants did not form the contract at issue, but their properties are subject to it.

Consequently, when we speak of the intent of the contracting parties, it is not Cracker Barrel and the defendants but

rather the original owner of the properties who created the Declaration.

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done so. Absent an expression of a clear and unambiguous intent, we decline to interpret the phrase

“costs and expenses” to include attorneys’ fees. Therefore, we affirm the trial court.

Cracker Barrel makes several arguments that, while well argued, we do not find persuasive.

In its primary argument, Cracker Barrel relies on decisions interpreting statutory authorization for

fees and expenses. However, we believe it is appropriate to rely primarily upon Tennessee decisions

examining whether contractual provisions include attorneys’ fees rather than statutory enactments.

The inquiry regarding interpretation of contracts involves the parties’ intent, while interpreting

statutes involves determining legislative intent. While there may be some analogy to be drawn, one

must tread carefully since indicia of the intent of private parties in a commercial context is far

different from indicia of what the legislature intended when it enacted a particular piece of

legislation.

Cracker Barrel also argues that by requesting attorneys’ fees in their counter-complaint

defendants are estopped from arguing that paragraph 9 of the Declaration does not authorize

attorneys’ fees. We do not agree. First, while the defendants’ counterclaim requests recovery of

fees, it does not cite a basis for the request. Therefore, the request was not necessarily a

manifestation of defendants’ interpretation of the Declaration. They simply asked to recover

attorneys’ fees. Second, while in the normal context when the parties to a contract are arguing over

its meaning, one party’s pleading on the issue may be an admission about that party’s intent, such

is not the case here. Since defendants were not parties to the Declaration at its formation, any

pleading by defendants on the matter is not indicative of what the drafters intended paragraph 9 to

mean.

The trial court is affirmed. Costs of this appeal are taxed to Cracker Barrel Old Country

Store, Inc. and Cracker Barrel Associate LLC for which execution may issue if necessary.

____________________________________

PATRICIA J. COTTRELL, JUDGE

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