“the taxation of costs of a cause . . . is an incident to the merits of the case, and not such a controlling element of the cause as to determine the question of finality of the decree.”
How later courts described this case
- “the taxation of costs of a cause . . . is an incident to the merits of the case, and not such a controlling element of the cause as to determine the question of finality of the decree.”
Written by the judges who cited it.
The opinion
IN THE COURT OF APPEALS OF TENNESSEE
AT KNOXVILLE
May 25, 2016 Session
HITACHI CAPITAL AMERICA CORP v.
COMMUNITY TRUST & BANKING COMPANY,
ET AL.
Appeal from the Chancery Court for Hamilton County
No. 10-0230 W. Frank Brown, III, Chancellor
___________________________________
No. E2015-02121-COA-R3-CV
FILED-SEPTEMBER 20, 2016
___________________________________
This is a declaratory judgment action in which the intervening plaintiff sought to establish
priority lien status over the original plaintiff as well as a Rule 19 defendant. We affirm the
decision of the Chancery Court.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court
Affirmed; Case Remanded
JOHN W. MCCLARTY, J., delivered the opinion of the Court, in which CHARLES D. SUSANO,
JR., J., and D. MICHAEL SWINEY, C.J., joined.
Christopher D. Markel and Wilson C. von Kessler, II, Chattanooga, Tennessee, for the
appellant, Hitachi Capital America Corp.
Samantha A. Lunn and Caleb T. Holzaepfel, Chattanooga, Tennessee, for the appellee,
Cornerstone Community Bank.
OPINION
I. BACKGROUND
On September 27, 2010, the Hamilton County Chancery Court granted the Appellee,
Cornerstone Community Bank (“Cornerstone”), summary judgment in its suit against
Southern Group, LLC, Travis L. Shields, Thomas A. Dobson, and Joshua Dobson
(“Debtors”), jointly and severally. The order granting the motion for summary judgment (the
“Order”) awarded Cornerstone an unpaid principal loan balance, accrued and unpaid interest,
additional interest, attorney fees and expenses, and post-judgment interest. The Order did not
assess court costs. Cornerstone subsequently filed a judgment lien against certain real
property located in Marion County, Tennessee (the “Property”) with the Marion County
Register of Deeds on November 8, 2010. Approximately nine months later, on August 29,
2011, the court entered an amended order adjudging costs against the Debtors.
On October 26, 2010, in a separate Hamilton County Chancery Court proceeding (“the
Community case”), Community Trust and Banking Company (“Community Bank”) and
Debtors entered an agreed judgment awarding Community Bank an unpaid principal loan
balance and post-judgment interest. Community Bank subsequently filed a judgment lien
with the Register of Deeds in Marion County, Tennessee on November 1, 2010, also against
the Property in Marion County.
On March 23, 2011, in yet another separate proceeding, this time in the Circuit Court
for Marion County, Tennessee, Hitachi Capital America Corporation (“Hitachi”) was
awarded default judgment against Travis Shields, one of the Debtors in the Cornerstone and
Community cases. Hitachi subsequently filed a judgment lien with the Register of Deeds in
Marion County, Tennessee on April 28, 2011 – nearly six months after Cornerstone filed its
judgment lien, but four months before the Hamilton County trial court entered its amended
order adjudging costs – also against the Property in Marion County.
On November 5, 2014, Hitachi filed an intervening complaint in the Community case,
adding Appellee Cornerstone as a Rule 19 Defendant. In its intervening complaint, Hitachi
asserted that Cornerstone’s judgment lien against the Property had not been perfected
because the September 2010 Order upon which the lien was predicated was not a valid and
final judgment due to its failure to assess court costs.
Cornerstone appeared in the present case in December 2014 and subsequently filed a
motion to dismiss the intervening complaint. The trial court denied the motion and converted
it to a motion for summary judgment. On October 6, 2015, following a hearing, the court
granted summary judgment in favor of Cornerstone. The court ruled, inter alia, that the
September 2010 order was a valid and final judgment, and that Cornerstone was entitled to
lien priority status over Hitachi. In the order, the court found:
1. Pursuant to Tennessee Rule of Civil Procedure 54.04 (“Costs
included in the bill of costs prepared by the clerk shall be
awarded to the prevailing party unless the court otherwise
directs”), and Tenn. Code Ann. §20-22-1010 (“[t]he successful
party in all civil actions is entitled to full costs, unless otherwise
directed by law or by a court of record, for which judgment shall
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be rendered”), court costs are awarded to the prevailing party in
a civil action.
2. In State ex rel McAllister v. Goode, 968 S.W.2d 834, 840
(Tenn. Ct. App. 1997), the Tennessee Court of Appeals stated
that a “final judgment” is one that adjudicates all claims
between the parties, “leaving nothing else for the trial court to
do.” Further, according to dicta in Sullivan v. Parham, No. 86-
272-II, 1987 WL 18716, at * 2 (Tenn. Ct. App. Oct. 23, 1987), a
judgment may be final without the adjudication of court costs to
the parties.
3. Though there is no binding precedent directly on point, it
appears to this court that a final judgment is not compelled to
include court costs. Rather, court costs are included as a matter
of law. To find otherwise could call the finality of other prior
judgments into question.
Accordingly, the trial court held that Cornerstone was entitled to lien priority status over
Hitachi. This timely appeal followed:
II. ISSUE
We consolidate the issues raised by the parties into the following single and
dispositive issue: Whether the trial court erred in finding that the order granting summary
judgment in the Cornerstone case, entered September 27, 2010, constituted a valid and final
judgment, notwithstanding the Order’s failure to assess court costs.
III. STANDARD OF REVIEW
Summary judgment is appropriate where “the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if any, show that there is
no genuine issue as to any material fact and that the moving party is entitled to a judgment as
a matter of law.” Tenn. R. Civ. P. 56.04. To make this showing the moving party – where it
does not bear the burden of proof at trial – must either “(1) affirmatively negat[e] an essential
element of the nonmoving party’s claim or (2) [demonstrate] that the nonmoving party’s
evidence at the summary judgment stage is insufficient to establish the nonmoving party’s
claim or defense.” Rye v. Women’s Care Ctr of Memphis, MPLLC, 477 S.W.3d 235, 264
(Tenn. 2015).
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This court reviews a trial court’s grant of summary judgment de novo with no
presumption of correctness. See City of Tullahoma v. Bedford Cnty., 938 S.W.2d 408, 412
(Tenn. 1997). In reviewing the trial court’s decision, we must view all of the evidence in the
light most favorable to the non-movant and resolve all factual inferences in the non-movant’s
favor. Luther v. Compton, 5 S.W.3d 635, 639 (Tenn. 1999); Muhlheim v. Knox. Cnty. Bd. of
Educ., 2 S.W.3d 927, 929 (Tenn. 1999). If the undisputed facts support only one conclusion,
then the moving party is entitled to judgment as a matter of law and the trial court’s decision
will be upheld. See White v. Lawrence, 975 S.W.2d 525, 529 (Tenn. 1998); McCall v.
Wilder, 913 S.W.2d 150, 153 (Tenn. 1995).
IV. DISCUSSION
In appealing the trial court’s ruling, Hitachi challenges the finality of the September
2010 Order granting the motion for summary judgment in the Cornerstone case. Hitachi
contends that because the Order failed to assess costs, the case remained open until the
amended order adjudging costs was entered in August 2011. Hitachi recorded its lien four
months before the entry of the amended order and argues accordingly that Hitachi is entitled
to lien priority status above Cornerstone.
Cornerstone responds that the September 2010 Order constituted a valid and final
judgment, that its November 2010 lien was perfected as of the date of its filing, and that
Cornerstone is accordingly entitled to lien priority status above Hitachi.
We therefore must determine which filing – the September 2010 Order or the August
2011 amended order – constituted the final judgment in the Cornerstone case, allowing
Cornerstone to perfect its lien against the Property.
As recently stated in Utopia Place, LLC v. Eastern Properties, Inc. Bellevue, No.
M20140-02196-COA-R3-CV, 2016 WL 4005927 (Tenn. Ct. App. July 20, 2016):
A final judgment is not an “order that adjudicates fewer than all the claims or
the rights and liabilities of fewer than all the parties.” Tenn. R. App. P. 3(a).
Orders that resolve fewer than all claims or the rights and liabilities of fewer
than all the parties are “subject to revision at any time before entry of a final
judgment adjudicating all the claims, rights, and liabilities of all parties.” Id.
Our Supreme Court has described a final judgment as a judgment “that
resolves all of the parties’ claims and leaves the court with nothing to
adjudicate.” Bill v. McDowell, 288 S.W.3d 833, 836-37 (Tenn. 2009).
2016 WL 4005927 at * 3.
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A lien on real property is perfected when a final judgment is recorded in the register’s
office of the county where the subject property is located. Andrews v. Fifth Third Bank, 228
S.W.3d 102, 107-109 (Tenn. Ct. App. 2007) (internal citations omitted). A judgment in a
civil action “is final if: (1) the court expressly designated it as a final judgment pursuant to
Tennessee Rule of Civil Procedure 54.02; or (2) the order adjudicated all the claims in the
action.” Id. at 108. A final judgment, therefore, is one which “fully and completely defines
the parties’ rights with regard to the issue, leaving nothing else for the trial court to do.”
State ex rel. McAllister v. Goode, 968 S.W.2d 834, 840 (Tenn. Ct. App. 1997).
The Tennessee Supreme Court has held that “when consecutive ‘final’ judgments are
entered, a subsequent entry of judgment operates as the final judgment only if the subsequent
judgment affects the parties’ substantive rights or obligations settled by the first judgment.”
Ball v. McDowell, 288 S.W.3d 833, 838 (Tenn. 2009).
Here, we find nothing in the record to suggest that the September 2010 Order failed to
fully adjudicate all of the case’s claims or to define the parties’ rights with regard to the
issue. The Order plainly states that Cornerstone “established a prima facie case for breach of
contract” against each of the defendant Debtors and that the Debtors “failed to set forth any
evidence creating a genuine issue of material fact.” It goes on with specificity and
particularity to award Cornerstone a judgment against the Debtors, jointly and severally, for
the remaining loan principal amount, accrued and unpaid interest, additional interest which
had accrued during litigation, reasonable attorney fees and expenses accrued during
litigation, post-judgment interest, and additional attorney fees and expenses accruing after
August 27, 2010. In contrast, the amended order adjudging costs entered in August 2011 did
not alter or address any of the substantive claims or rights of the parties simply taxes costs
against the defendants. The amended order did not affect the parties’ substantive rights or
obligations set forth in the preceding Order. See Ball, 288 S.W.3d at 837.
As further importantly noted in Utopia Place, “[c]ourt costs do not factor into the
determination of whether an order or judgment is final.” 2016 WL 4005927 at * 5. “A
decree will be treated as final, and an appeal entertained only where there is nothing left for
future determination except the adjudication of the costs.” Mengle Box Co. v. Lauderdale
Cnty, 230 S.W. 963, 966 (Tenn. 1921). In Mengle, the Court stated,
In settling the question as to whether a given decree is final, the decision as to
costs does not enter as an element; it is the decision as to the merits that
determines. If the entire merits are disposed of, the decree is final; otherwise
not.
230 S.W. at 965 (internal quotation omitted). See also Sullivan v. Parham, No. 86-272-II,
1987 WL 18716, at *2 (Tenn. Ct. App. Oct. 23, 1987) (“A final judgment must leave nothing
for future adjudication except, perhaps, the taxation of court costs.”)(J. Koch); Cockrell v.
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Cockrell, 83 S.W.2d 281, 283 (Tenn. Ct. App. 1935) (“the taxation of costs of a cause . . . is
an incident to the merits of the case, and not such a controlling element of the cause as to
determine the question of finality of the decree.”).
V. CONCLUSION
The judgment of the trial court is affirmed, and the case is remanded for such further
proceedings as may be necessary. Costs of the appeal are taxed to the appellant, Hitachi
Capital America Corp.
_________________________________
JOHN W. McCLARTY, JUDGE
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