Steven H. Parker v. Brunswick Forest Homeowners Association, Inc.

06/13/2019

IN THE COURT OF APPEALS OF TENNESSEE

AT JACKSON

April 10, 2019 Session

STEVEN H. PARKER v. BRUNSWICK FOREST HOMEOWNERS

ASSOCIATION, INC.

Appeal from the Chancery Court for Shelby County

No. CH-16-1541 JoeDae L. Jenkins, Chancellor

___________________________________

No. W2018-01760-COA-R3-CV

___________________________________

Following a bench trial, the trial court awarded the Defendant/Appellee $28,372.06 in

attorney’s fees based upon an attorney’s fees provision in the parties’ written agreement.

Plaintiff/Appellant appeals the award of attorney’s fees on the basis that the relevant

provision is inapplicable under the circumstances. Because we conclude that the trial

court did not err in awarding the Appellee its attorney’s fees, we affirm.

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

J. STEVEN STAFFORD, P. J., W.S., delivered the opinion of the court, in which ARNOLD B.

GOLDIN and KENNY ARMSTRONG, JJ., joined.

John R. Candy, Collierville, Tennessee, for the appellant, Steven H. Parker.

Brandon F. McNary and Peter D. Baskind, Memphis, Tennessee, for the appellee,

Brunswick Forest Homeowners Association, Inc.

OPINION

BACKGROUND

This case is about fees assessed by the Brunswick Forest Homeowners

Association (“the Association”) against Steven H. Parker (“Homeowner”) related to

Homeowner’s residence in Shelby County, Tennessee. Homeowner purchased his home

in 2014 subject to various provisions enshrined in the Declaration of Covenants,

Conditions and Restrictions for Brunswick Forest (“CCRs” or “the Declaration”). One

such provision states that the homeowners in Brunswick Forest “shall be deemed to

covenant and agree to pay to [the Association] . . . annual assessments or charges.” As

such, the Association assessed charges against Homeowner for the years 2015 and 2016.

Homeowner, however, did not tender payment, and the Association mailed a letter to the

Homeowner indicating that Homeowner was delinquent. The Association requested that

Homeowner tender $280.00 to cover the late assessments, as well as $100.00 in related

attorney’s fees.

Homeowner again refused to pay the assessments. On July 18, 2016, the

Association sent a second letter to Homeowner, advising him that due to the delinquency

of the assessments, a lien on Homeowner’s property was to be recorded in the Shelby

County Register’s Office. In response, Homeowner, acting pro se, filed a complaint

against the Association on September 29, 2016, in the Chancery Court for Shelby County

(“the trial court”). Appellant also named two directors of the Association, Paul T. Ryan

and Garrett Temple, individually, in the complaint, however, both Mr. Ryan and Mr.

Temple were dismissed from the case early in the litigation and are not parties to this

appeal. In his complaint, Homeowner alleged that the Association did not follow the

relevant bylaws of the CCRs in calculating the assessments and because of that, the

assessments and the lien placed on Homeowner’s home were invalid. According to

Homeowner, the Association was liable for breach of fiduciary duty, a conflict of interest,

and for intentional harm inflicted upon the Homeowner. Homeowner sought the removal

of the lien from his property, and a declaration that “the amount of the assessment for

which the lien was filed was not set in accordance with the [CCRs] and the Tennessee

Code Annotated regarding Non-profit corporations.”

On November 7, 2016, the Association filed an answer denying the material

allegations contained in Homeowner’s complaint. The Association also filed a

counterclaim against Homeowner, asserting a cause of action for breach of contract on

the basis that Homeowner failed to fulfill his obligations under the CCRs, namely,

payment of the annual assessments for 2015 and 2016. The Association further asserted

that it was entitled to costs and attorney’s fees pursuant to the CCRs.

Contentious litigation ensued. The first trial judge assigned to the case recused

himself due to a conflict of interest; the case was thereafter transferred to a different

division of the Shelby County Chancery Court. In the meantime, Homeowner sought to

amend his complaint, and eventually filed an amended complaint wherein he also alleged

a breach of contract action; specifically, Homeowner averred that he was unlawfully

denied access to the “books and records” of the Association, in violation of the CCRs.

Eventually, on August 24, 2017, the Association filed a motion for partial summary

judgment asking the trial court to find Homeowner liable for breach of contract “for his

failure to pay assessments.” The motion was heard September 27, 2017, and on

September 29, 2017, the trial court entered an order granting the Association summary

judgment on its breach of contract claim.1

1

The trial judge relied on the following provision from the CCRs in rendering his decision:

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Also on September 29, 2017, conflict with the second trial judge came to a head

after allegations from the Homeowner that the judge had been harassing Homeowner and

attempting to force him to retain counsel. While the trial judge denied these allegations,

he ultimately decided to recuse himself from the case. Accordingly, a second order of

recusal was entered September 29, 2017, and the case was again transferred to a different

division of the chancery court.

Homeowner eventually retained counsel, and this matter proceeded to trial on

August 23, 2018. At the hearing, the court first heard testimony from the Homeowner,

who conceded that he purchased his home in 2014 and that he signed the CCRs at issue at

that time. Homeowner testified in support of his affirmative claims, generally testifying

that the Association did not provide access to information needed to support the

assessments, such as how the assessments were calculated, and that the assessments,

along with the lien to secure them, were invalid as a result.

The trial court also heard testimony from Mr. Ryan and Mr. Temple. Mr. Ryan

testified that he was one of the partners in the Brunswick Forest development and that he

was serving as a director of the Brunswick Homeowner’s Association when the dispute

with the Homeowner began.2 With regard to the assessments, Mr. Ryan testified that the

assessment amount had been the same for many years because the Association “had a

history with the expenses and knew what the expenses were.” He also testified that the

Association followed all provisions in the CCRs when assessing the various fees for each

lot, including estimating the annual amounts thirty days before each assessment period

and sending a notice of assessment to each homeowner. Mr. Ryan also confirmed that the

Homeowner refused to pay his assessments for 2015 and 2016.

Article VI, Section I of Declaration provides that:

[e]ach Owner of any Lot, by acceptance of a deed therefor, whether or not it shall be so

expressed in any such deed or other conveyance, shall be deemed to covenant and agree

to pay to the Association: (1) annual assessments or charges; (2) special assessments for

capital improvements; and (3) emergency assessments, such assessments to be fixed,

established and collected from time to time as hereinafter provided. The annual special

and emergency assessments, together with such interest thereon and costs of collection

thereof as are hereinafter provided, shall be a charge on the land and shall be a continuing

lien upon the Lot against which each such assessment is made. Each such assessment,

together with such interest thereon and cost of collection thereof as are hereinafter

provided, shall also be the personal obligation of the Person who was the Owner of such

Lot at the time when the assessment fell due.

Accordingly, the trial court found that “[Homeowner] failed to pay the assessments for 2015 and 2016.”

2

Mr. Ryan no longer serves as a director of the Association.

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Mr. Temple’s3 testimony regarding how the assessments were calculated largely

reiterated that of Mr. Ryan. Mr. Temple also recalled a meeting with the Homeowner

during December of 2016, at which time the Homeowner’s delinquent assessments

totaled $280.00. Mr. Temple testified that in the meeting, Homeowner agreed to pay

assessments going forward if the Association would waive the outstanding $280.00 and

remove the lien from Homeowner’s property. Mr. Temple testified that when the

Association would not agree to those terms, Homeowner abruptly left the meeting.

Finally, Mr. Temple stated that because of the protracted litigation caused by this case,

the Association had been forced to raise the yearly assessment amount to $650.00.

The trial court issued an oral ruling in which it concluded that the Homeowner

failed to carry his burden of proof in showing that the Association breached its contract

with the Homeowner, or that Homeowner had suffered any damage as a result of the

Association’s actions. The trial court determined that Homeowner’s complaint should be

dismissed in its entirety; the issue of attorney’s fees, however, was reserved for a later

date.

The trial court held a final hearing on September 5, 2018 in order to determine the

issue of attorney’s fees, which both parties had requested they be awarded. At the

hearing, counsel for the Association testified about the fees incurred throughout the case,

stating that much of the Association’s work was done in response to the multitude of

motions and pleadings that were filed by the Homeowner while he was proceeding pro

se. Counsel’s overall testimony was that the fees incurred were reasonable under the

circumstances, and that the total amount including costs came to $32,371.06.

The dispute at this hearing, however, largely centered on the language of the

CCRs and whether, pursuant to that language, the Association could collect attorney’s

fees related to its defense of Homeowner’s claims. One provision of the CCRs, found in

Article VI, section five, provides that “[t]he Association may bring an action at law

against” a homeowner in the event that the assessments are unpaid, and that “the

Association may collect from the said [m]ember interest, costs and reasonable attorneys’

fees.” Further, Article XII, section 3 expressly discusses enforcement of the CCRs and

states that “[t]he expense of enforcement by the Association shall be chargeable to the

Owner of the Lot violating these covenants and restrictions and shall constitute a lien on

of the Lot, collectible in the same manner as assessments hereunder.”

Based upon the language in the CCRs, particularly the Article VI provision, the

Homeowner argued that most of the fees incurred by the Association arose in defense of

Homeowner’s actions, rather than from prosecuting its own breach of contract claim. As

such, the Homeowner argued that the Association’s attorney’s fees did not accrue as a

result of the Association “bring[ing] an action at law[.]” In support, the Homeowner

3

Mr. Temple was still serving as the president of the Association at the time of trial.

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alleged that he had examined the bills submitted by the Association, and that the fees

accrued in prosecuting the Association’s counterclaim only amounted to approximately

$1,500.00. Based upon the language of the contract, Homeowner asserted that the

Association was not entitled to any award of attorney’s fees over and above what was

accrued in bringing the counterclaim. Essentially, Homeowner argued that the

Association should only be awarded, if anything, $1,500.00 in attorney’s fees.

At the conclusion of the hearing, the trial court ruled that it would award

attorney’s fees to the Association. In addressing the Homeowner’s argument that the

Association was entitled only to fees accrued in furtherance of its counterclaim, the trial

court noted the following:

It appears that this litigation rolls out of the Association’s right to

collect Association dues through annual assessments. [Homeowner]

disputed the Association’s right to collect the annual assessments and

refused to pay them, which gave rise to his lawsuit, which initiated this

litigation.

The gravamen of his lawsuit was to avoid the payment of annual

assessments, two years’ worth, plus an [sic] attorney fees of $100.00. The

litigation was protracted; although not overly complicated, it was protracted

based upon the numerous pleadings filed by [Homeowner] who did a pretty

decent job being a non-lawyer requiring the Association’s counsel to

respond to the various motions and pleadings that he filed.

Accordingly, the trial court found that the Association was entitled to attorney’s

fees in the amount of $28,372.06.

On September 10, 2018, the trial court entered two written orders finalizing its

rulings. The first order, titled Order Dismissing Plaintiff’s Complaint, provided that

although Homeowner was contractually required to pay assessments to the Association,

Homeowner failed to pay in 2015, 2016, and 2018.4 As such, the Association’s “lien on

the property was valid[,]” and, further, Homeowner failed to show how he was damaged

by the lien. Accordingly, it was the trial court’s conclusion that Homeowner did not carry

his burden of proof as to any of his claims. A separate order was entered addressing the

attorney’s fees, wherein the trial court found that “this matter arose solely out of the

[Association’s right to collect assessments[,]” and that Homeowner’s “lawsuit against

[the Association] was for the sole purpose of avoiding the payment of assessments.” The

trial court further noted that the Association was required to respond to Homeowner’s

4

It is undisputed that Homeowner did pay the assessments for 2017. It is also undisputed that

after trial, on August 28, 2018, the Homeowner remitted $980 to the Association in order to have the lien

on Homeowner’s property removed.

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pleadings in order to fully prosecute its counterclaim, and that as such, the Association

was entitled to an award of attorney fees pursuant to the language in the CCRs. Finally,

the trial court determined that the requested attorney’s fees were reasonable in light of all

the circumstances.

Homeowner filed a timely notice of appeal to this Court on September 26, 2018.

ISSUE PRESENTED

The Homeowner raises a single issue for review: Whether the trial court erred in

awarding attorney’s fees to the Association.

STANDARD OF REVIEW

This case was resolved following a bench trial. Under rule 13 of the Tennessee

Rules of Appellate Procedure, the trial court’s findings of fact from a bench trial are

reviewed “de novo upon the record of the trial court, accompanied by a presumption of

the correctness of the finding, unless the preponderance of the evidence is otherwise.”

Tenn. R. App. P. 13(d). A trial court’s conclusions of law, however, are not entitled to a

presumption of correctness. Johnson v. Johnson, 37 S.W.3d 892, 894 (Tenn. 2001).

We also bear in mind that the single issue for review in this case centers on the

trial court’s interpretation and application of an attorney’s fees provision within a written

contract. “The interpretation of a written agreement is a question of law and not of fact.”

Cracker Barrel Old Country Store, Inc. v. Epperson, 284 S.W.3d 303, 308 (Tenn.

2009). Moreover, “[t]hough normally review of an award of attorney’s fees is subject to

an abuse of discretion standard,” where the parties dispute the trial court’s “interpretation

and application of a contractual provision allowing for attorney’s fees[,]” our review is de

novo. Southwind Residential Prop. Ass’n, Inc. v. Ford, No. W2016-01169-COA-R3-CV

2017 WL 991108, at *10 (Tenn. Ct. App. Mar. 14, 2017) (citing Clark v. Rhea, No.

M2002-02717-COA-R3-CV, 2004 WL 63476, at *2 (Tenn. Ct. App. Jan. 13, 2004)).

DISCUSSION

The dispute in the present case turns on the trial court’s application of a provision

within the CCRs providing for attorney’s fees incurred in a collection action. We have

previously held that CCRs “arise from a series of overlapping contractual transactions”

and as such, “should be viewed as contracts.” General Bancshares, Inc. v. Volunteer

Bank & Trust, 44 S.W.3d 536, 540 (Tenn. Ct. App. 2000) (citing Maples Homeowners

Ass’n v. T &R Nashville Ltd. P’ship, 993 S.W.2d 36, 39 (Tenn. Ct. App. 1998)).

Accordingly, CCRs “should be construed using the rules of construction generally

applicable to the construction of other contracts.” Id.; see also Southwind, 2017 WL

991108, at *6 (“Because the instant case involves the interpretation of restrictive

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covenants, we apply well-established rules of construction and law in order to construe

the terms of the covenants.”). Thus, because the CCRs at issue here are subject to the

rules of construction applicable to contracts, we turn first to an overview of those rules.

As we have previously noted,

“[t]he cardinal rule for interpretation of contracts is to ascertain the

intention of the parties and to give effect to that intention consistent with

legal principles.” Rainey v. Stansell, 836 S.W.2d 117, 118–19 (Tenn. Ct.

App. 1992) (quoting Bob Pearsall Motors, Inc. v. Regal Chrysler–

Plymouth, Inc., 521 S.W.2d 578 (Tenn. 1975)). “A primary objective in the

construction of a contract is to discover the intention of the parties from a

consideration of the whole contract.” Id. at 119 (citing McKay v. Louisville

& N.R. Co., 133 Tenn. 590, 182 S.W. 874, 875 (1916)). When resolving

disputes concerning contract interpretation, we are to ascertain the intention

of the parties based upon the “usual, natural, and ordinary meaning” of the

contractual language. Id. “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 v. Cleo, Inc., 995 S.W.2d 88, 95 (Tenn.

1999) (citing Rainey, 836 S.W.2d at 118–19).

If the contract language is unambiguous, the written terms control, not the

“unexpressed intention of one of the parties.” Sutton v. First Nat’l Bank of

Crossville, 620 S.W.2d 526, 530 (Tenn. Ct. App. 1981). “The language of a

contract is ambiguous when its meaning is uncertain and when it can be

fairly construed in more than one way.” Gredig v. Tenn. Farmers Mut.

Ins. Co., 891 S.W.2d 909, 912 (Tenn. Ct. App. 1994) (citing Farmers-

Peoples Bank v. Clemmer, 519 S.W.2d 801, 805 (Tenn. 1975)). “A

strained construction may not be placed on the language used to find

ambiguity where none exists.” Id. (quoting Farmers-Peoples Bank, 519

S.W.2d at 805). “An ambiguous provision in a contract generally will be

construed against the party drafting it.” Allstate Ins. Co. v. Watson, 195

S.W.3d 609, 612 (Tenn. 2006).

Commerce Union Bank, Brentwood, Tennessee v. Bush, 512 S.W.3d 217, 22728

(Tenn. Ct. App. 2016).

Moreover, the present case centers on the trial court’s decision to award the

Association its attorney’s fees based upon the parties’ written agreement. “Tennessee,

like most jurisdictions, adheres to the ‘American rule’ for the award of attorney fees.”

Cracker Barrel, 284 S.W.3d at 309 (citing John Kohl & Co. v. Dearborn & Ewing, 977

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

338 (Tenn. 1985)). “As a general principle, the American rule reflects the idea that public

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policy is best served by litigants bearing their own legal fees regardless of the outcome of

the case.” Id. (citing House v. Estate of Edmondson, 245 S.W.3d 372, 377 (Tenn.

2008)). There are, however, recognized exceptions to the American rule; indeed, “a party

in a civil action may recover attorney fees only if: (1) a contractual or statutory provision

creates a right to recover attorney fees; or (2) some other recognized exception to the

American rule applies, allowing for recovery of such fees in a particular case.” Id. (citing

John Kohl, 977 S.W.2d at 534; Taylor v. Fezell, 158 S.W.3d 352, 357 (Tenn.

2005)).Thus, “[i]n the context of contract interpretation, Tennessee allows an exception

to the American rule only when a contract specifically or expressly provides for the

recovery of attorney fees.” Id. (citing House, 245 S.W.3d at 377) (emphasis in original);

see also Pinney v. Tarpley, 686 S.W.2d 574, 581 (Tenn. Ct. App. 1984) (“In the absence

of an express agreement to pay attorney’s fees for enforcement of a contract, such fees

are not recoverable in Tennessee.”); Eberbach v. Eberbach, 535 S.W.3d 467, 474 (Tenn.

2017) (noting that in the absence of a contractual provision providing for attorney’s fees,

“litigants are responsible for their own attorney’s fees.”). “Accordingly, parties who

have prevailed in litigation to enforce their contractual rights are entitled to recover their

reasonable attorney’s fees once they demonstrate that the contract upon which their

claims are based contains a provision entitling the prevailing party to its attorney’s fees.”

Eberbach, 535 S.W.3d at 474.

It has also been held, however, that a contractual provision allowing for attorney’s

fees must explicitly convey the right to recover those fees. For instance, on its own the

phrase “all costs and expenses” is not specific enough to include an award of attorney’s

fees. Cracker Barrel, 284 S.W.3d at 31011; compare Kultura, Inc. v. S. Leasing Corp.,

923 S.W.2d 536, 540 (Tenn. 1996) (determining that alone, the phrase “any loss” does

not include attorney’s fees), with Harris v. 4215 Harding Road Homeowners Ass’n, 74

S.W.3d 359, 361 (Tenn. Ct. App. 2001) (holding that an award of attorney’s fees was

appropriate where the master deed at issue provided that “all costs and expenses,

including a reasonable attorney’s fee,” was recoverable in an action to enforce the deed),

and Urbanavage v. Capital Bank, No. M2016-01363-COA-R3-CV, 2018 WL 3203100,

at *10 (Tenn. Ct. App. June 29, 2018) (recognizing that the language “late fee and

interest . . . and cost of collection when delinquent, including reasonable attorney’s

fees[,]” was a proper legal basis upon which to award attorney’s fees). Consequently, a

departure from the American rule is inappropriate in the absence of a provision expressly

providing for an award of attorney’s fees.

Turning to the instant case, the pertinent clause of the CCRs is found in Article VI,

section five of the Declaration:

Any assessment levied pursuant to this Declaration or any

installment thereof, which is not paid within ten (10) days after it is due,

may, upon resolution of the Board of Directors, bear interest at a rate not to

exceed the highest rate allowed under the laws of the State of Tennessee,

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and may, by resolution of the Board of Directors, subject the Member

obligated to pay the same to the payment of such penalty or “late charge” as

the said Board may fix. The Association may bring an action at law

against the Member personally obligated to pay the same, or foreclose

the lien against the Lot or Lots subject to prior mortgages or Deeds of

Trust upon the Lot or Lots, then belonging to said Member; in either

of which events, the Association may collect from the said Member

interest, costs and reasonable attorneys’ fees. No Owner may waive or

otherwise escape liability for the assessments provided for herein by

abandonment of his Lot.

(emphasis added). Clearly, the CCRs at issue provide for an award of attorney’s fees

when the Association “bring[s] an action at law” to recover an unpaid assessment. Thus,

there can be no dispute that the Association was, in fact, at least entitled to its attorney’s

fees incurred solely in prosecuting its counterclaim for the unpaid assessments. Unlike

other contracts we have previously considered, however, the CCRs do not specifically

state whether the attorney’s fees also extend to defense of an action. The dispute, then,

involves whether the above language also authorizes the Association to recover the fees

incurred in ostensibly defending against Homeowner’s claims.

In the absence of specific language authorizing attorney’s fees for defending

actions, this Court has often rejected claims for attorney’s fees by defendants, albeit

based on different contractual language and factual situations not present in this case. For

instance, in Smith v. Crossman, No. M2003-01108-COA-R3-CV, 2004 WL 1732319

(Tenn. Ct. App. Aug. 2, 2004), we addressed the issue of an attorney’s fees provision

within a commercial lease. In Smith, the tenants of small grocery store sued their

landlord after a Dollar General store in the same complex began selling food items,

which the tenants alleged was in violation of a protective covenant within their lease.

2004 WL 1732319, at *1. In response, the landlord argued that it had no authority to

constrain the Dollar General from selling food, and also added a counterclaim for

attorney’s fees only. Id. Eventually, the tenants dismissed their lawsuit, but the landlord’s

counterclaim for attorney’s fees remained. Id. The trial court held that the landlord was

entitled to attorney’s fees in the amount of $14,320, based on the following provision in

the lease:

Tenant shall pay reasonable attorneys fees incurred by Landlord in the

enforcement of any terms, covenants, or provisions of this lease, and the

Landlord also agrees to reimburse tenant for reasonable attorney fees in the

enforcement of any terms, covenants, or provisions of this lease.

The tenants appealed, making a similar argument to that of the Homeowner in the

case-at-bar; specifically, the tenants asserted that the landlord’s attorney’s fees were only

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incurred in defense of their claim, rather than through the landlord’s enforcement of his

rights under the lease. Id. at *2. We agreed:

In its counterclaim, [l]andlord merely invoked the attorney’s fees provision

and alleged that it was ‘incurring attorneys fees in the defense of this

action. . . .’ At no time did [l]andlord counter that [t]enants were in breach

of the lease or seek to enforce any term of the agreement.

Id. In the Smith lease, attorney’s fees were only recoverable where terms of the lease

were being enforced. Id. In that particular case, the landlord was not attempting “to

enforce any term, covenant or provision of the lease[,]” but rather only sought to defend

against the tenants’ claim. Id. As such, the award of attorney’s fees was inappropriate

under the circumstances, and we reversed the trial court’s decision. Id. at *3.

Similarly, in White v. Empire Exp. Inc., 395 S.W.3d 696 (Tenn. Ct. App. 2012),

we again considered the propriety of a trial court’s award of attorney’s fees. In that case,

the plaintiff truck driver brought suit against his employer and an affiliated company for

breach of contract and conversion over a rent-to-own lease of the plaintiff’s truck. 395

S.W.3d at 705. The defendants filed an answer, arguing that plaintiff had defaulted on the

contract by failing to make various payments, and sought a declaration “saying that

[plaintiff] failed to satisfy his obligations.” Id. Defendants also counterclaimed for money

damages, “including attorney fees incurred in defending the suit.” Id.

Eventually, the defendants sought summary judgment on the plaintiff’s breach of

contract claim, and also “claimed they were entitled to summary judgment on their

counterclaim for attorney’s fees and other damages pursuant to the [l]ease.” Id. Likewise,

the plaintiff filed a cross-motion for summary judgment asking the trial court to

determine that the defendants had breached the lease agreement. Id. at 706.The trial court

granted in part the plaintiff’s motion for summary judgment, finding that the plaintiff was

not in breach of contract; on the other hand, the defendants’ motion for summary

judgment was denied completely, and their counterclaim for attorney’s fees under the

terms of the lease was dismissed. Id. The case proceeded to trial, and the plaintiff

prevailed on all of the remaining claims. Id. at 71011. The defendants thereafter

appealed to this Court. Id.

One of the many issues raised on appeal was whether the trial court erred in

denying the defendants’ motion for summary judgment for attorney’s fees under the

terms of the parties’ agreement. Id. at 71112. In that lease, the attorney’s fees clause

provided that “[plaintiff] agrees to pay all expenses incurred by [the defendant] in

enforcing its rights after the occurrence of any event of default hereunder, including the

reasonable fees of any attorneys retained by [the defendant] . . . .” Id. at 718. On appeal,

we concluded that pursuant to the particular language of the lease at issue, the trial court

was correct in determining that the defendants were not entitled to attorney’s fees. Id. In

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so holding, we pointed out that the defendants were “being required to defend their own

actions rather than seeking to enforce their rights as provided in [the lease].” Id. Because

the lease indicated that attorney’s fees were only available through action by the

defendant “enforcing its rights” after a default, this Court determined that the

counterclaim for attorney’s fees, on its own, was insufficient to bring the counterclaim

within the purview of the attorney’s fees clause at issue. Id. Consequently, the trial

court’s decision to deny the defendants their attorney’s fees was upheld on appeal in

White.

Finally, in Southwind Residential Prop. Ass’n, Inc. v. Ford, No. W2016-01169-

COA-R3-CV, 2017 WL 991108, at *10 (Tenn. Ct. App. Mar. 14, 2017), we yet again

addressed a situation in which the parties disputed the applicability of an attorney’s fees

provision, as it relates to fees incurred defending and pursuing a claim. In that case, the

plaintiff homeowner’s association filed suit against two homeowners after a dispute arose

over the homeowners’ refusal to pay the full amount of the annual assessments on their

property. Id. at *2. In addition to the assessments, the association’s petition asked for

costs and attorney’s fees. Id. The homeowners responded by answering the petition but

also by filing a counterclaim for other various actions such as negligent

misrepresentation, intentional misrepresentation, and breach of contract. Id. The parties

litigated for several years before the matter proceeded to trial, and the association was

eventually awarded a judgment for the assessments at issue, as well as an award of nearly

$67,000 in attorney’s fees. Id. at *6. The homeowners appealed, raising, inter alia, the

trial court’s decision to grant the association its attorney’s fees. Id.

In addressing the attorney’s fees issue on appeal, we looked to the language of the

relevant CCRs, which provided that “[e]ach such assessment, together with interest and

costs of collection, including reasonable attorney’s fees, shall be a personal obligation of

the person who was the owner of such Member’s Property at the time when the

assessment fell due.” Id. at *10. Based upon the foregoing language, the homeowners

argued that

the attorney’s fees incurred in this case are not properly categorized as

‘costs of collection,’ because the fees awarded by the trial court include

fees incurred in the defense of two separate lawsuits, [n]either [of which]

involves the collections of assessments, nor [are] reasonably related to the

collection of assessments in the present action.

Id.

Essentially, the homeowners asserted that to the extent the attorney’s fees at issue

were incurred in defense of the homeowners’ claims unrelated to the assessments, those

could not be construed as “costs of collection.” Id. at *11. However, because we

concluded that the homeowners failed to preserve a specific objection to the attorney’s

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fees award at trial, this argument was waived on appeal. Id. Notably, however, we stated

in dicta that “typically, we would agree with [the homeowners] that costs incurred in

separate litigation not related to this collection action cannot be categorized as costs

of collection for purposes of the CCRs.” Id. (emphasis added). Accordingly, although

the homeowners in Southwind failed to properly raise the argument that the association

could not recover certain fees accrued in defense of a separate, unrelated claim, we

acknowledged that under different circumstances, such an argument could have merit.

Distilled to their essence, the above cases stand for the proposition that, in the

absence of an express provision authorizing attorney’s fees for the defense of an action,

the defendant cannot recover attorney’s fees where the defendant: (1) did not assert a

claim for affirmative relief, such as a breach of contract action, against the plaintiff, see

Smith, 2004 WL 1732319 at *2–*3; (2) did not prevail in showing that the plaintiff

breached some duty to the defendant, see White, 395 S.W.3d at 718; and (3) sought

attorney’s fees related to a wholly separate action unrelated to the present enforcement

proceeding. See Southwind, 2017 WL 991108, at *10 (involving fees related to an action

involving landscaping rather than assessments). In this case, however, the Association

promptly filed a counterclaim for breach of contract against Homeowner, prevailed on all

claims, both in prosecution of the counterclaim and defense of Homeowner’s claims, and

the claims were clearly interrelated as they both concerned the validity of the assessments

and the lien. Consequently, none of the above cases prohibit the award of fees in this

case.

Of course, determining that our caselaw does not prohibit the award in this

situation does not settle the matter of whether the fees were authorized by the language in

the CCRs. As such, we turn to caselaw from our sister jurisdictions to inform our

analysis. For example, several states have held that where attorney’s fees were authorized

for bringing certain claims under a statute, fees incurred in defending such a claim could

be authorized where “the claim and counterclaim are so interrelated that segregation of

fees incurred in prosecution of the claim and defense of the counterclaim is not

necessary.” G.R.A.V.I.T.Y. Enterprises, Inc. v. Reece Supply Co., 177 S.W.3d 537, 551

(Tex. App. 2005); see also Regency Homes of Dade, Inc. v. McMillen, 689 So.2d 1204

(Fla. Ct. App. 1997) (noting that where the issues involved both defense of a lien and a

counter-petition for breach of contract, the issues were so intertwined that the attorney’s

time could not reasonably be apportioned); Jerels v. Begue, No. 24700, 2010 WL

1780140, at *3 (Ohio Ct. App. May 5, 2010) (finding under an Ohio landlord/tenant

statute that when a trial court concludes that work completed in support of a claim and

the work completed in defending the related counterclaim are indivisible, “it is within the

trial court’s discretion to award the prevailing [party] the attorney fees he or she

reasonably incurred in both pursuing the claim and defending against the counterclaim.

To hold otherwise would be illogical.”). The attorney’s fee award in this case, however,

is not based upon statute, but based upon a contract; accordingly, the trial court had

considerably less discretion in the award of fees in this case. See Eberbach, 535 S.W.3d

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at 47879 (“[T]he trial court does not have the discretion to set aside the parties’

agreement and supplant it with its own judgment.”).

Other courts, however, have come to similar conclusions after considering

attorney’s fees based solely on a contract. First, in Heyde v. State Sec., Inc., 1958-

NMSC-009, 63 N.M. 395, 400, 320 P.2d 747, the New Mexico Supreme Court held that

where attorney’s fees were authorized “to enforce covenants” in a lease, attorney’s fees

were authorized not only for the fees associated with their complaint, but also with

defending against the tenants’ counterclaim. Id. at 11. The Wyoming Supreme Court

soon adopted an arguably more expansive rule on this issue. See Barker v. Johnson, 591

P.2d 886 (Wyo. 1979). In Barker, the parties entered into a sales contract that provided

that if the seller “must bring an action to foreclose . . . or to collect any damages,” the

buyers would be responsible for “all costs” of the action including attorney’s fees. Id. at

890. The buyers eventually sued the seller for specific performance; the seller answered

and filed a counterclaim for possession and quiet title. Although the buyers prevailed in

their claim for specific performance in the trial court, the trial court awarded the seller

attorney’s fees. Id. at 888. The Wyoming Supreme Court reversed the trial court, ruling

in favor of the seller on the substantive merits of the claim. The court, however, affirmed

the award of attorney’s fees to the seller, despite the fact that the lawsuit was “instituted

by the [buyers]” because the buyers’ action “added to the necessity for [the seller] to

obtain a decree quieting its title.” Id.

Federal courts have adopted a similar rule. First, in Exchange Nat. Bank of

Chicago v. Daniels, 763 F.2d 286 (7th Cir.), on reh’g in part, 768 F.2d 140 (7th Cir.

1985), the United States Court of Appeals for the Seventh Circuit held that attorney’s

fees associated with defending against counterclaims were authorized by the contract as

costs to enforce the debt, as “the Borrowers’ counterclaims . . . were integral to the

‘enforcement’ of the note, and that the other litigation commenced by the Borrowers was

designed to frustrate the enforcement of the note.” Id. at 294.

Again, the situation was reversed and the rule somewhat expanded in Duryea v.

Third Nw. Nat. Bank of Minneapolis, 606 F.2d 823 (8th Cir. 1979). In Duryea, the

United States Court of Appeals for the Eigth Circuit agreed with the district court that

attorney’s fees were authorized to the defendant creditor where attorney’s fees were

authorized by the contract as “costs of collection.” Id. at 826. As the Court explained:

If the Bank had instituted suit to collect the note and plaintiff had, by

way of counterclaim, served the complaint that is the basis of this action, all

costs of both bringing suit and defending against the counterclaim would be

“costs of collection” of the note. See Taylor v. Continental Supply Co., 16

F.2d 578 (8th Cir. 1926). This court sees little difference where plaintiff

brings suit to prevent collection of the note. Because it is necessary for the

Bank to defend against such an action in order to collect on the note,

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attorney’s fees incurred in defending against plaintiff’s suit are a “cost of

collection” as that term is used in the note. A contrary result would permit

the maker of a note by winning the “race to the courthouse” to coerce

settlement. This would render the “cost of collection” provision of little

value, apparently contrary to what the parties to the note intended.

Id. (quoting the district court with approval). District courts considering the above

opinions describe them as creating as a rule allowing the recovery of attorney’s fees

where the debtor’s action has “been brought as a roadblock to collection” on the debt.

Kennington Ltd., Inc. v. Wolgin, No. CIV. A. 89-0080, 1989 WL 83556, at *3 (E.D. Pa.

July 28, 1989). As the district court explained, without such a rule, “costs of defense

would be made to depend on which party files first (‘the race to the courthouse’), an

arbitrary and undesirable result.” Id.

State courts have relied on the federal precedent to reach similar conclusions. See

State Bank of Cokato v. Ziehwein, 510 N.W.2d 268, 270 (Minn. Ct. App. 1994) (“For

example, where a debtor sued a creditor to prevent collection and the creditor

successfully counterclaimed for the amount due, the creditor was entitled to recover

attorney fees incurred in both defending the debtor’s claim and prosecuting the

counterclaim as ‘costs of collection.’ Similarly, where a debtor brought a counterclaim

which, if successful, would have reduced the amount due under the note, the creditor was

entitled to fees related to its action on the note as well as fees for the counterclaim.”)

(citations omitted) (citing Duryea, 606 F.2d at 826). But see Carefree Foliage, Inc. v.

Am. Tours, Inc., 153 Ill. App. 3d 190, 196, 505 N.E.2d 1039, 1043 (1987) (holding that

the Daniels rule only applies when the contract provides for attorney’s fees related to

both “collection” and “enforcement” of the debt); see also Kaiser v. Olson, 105 Ill. App.

3d 1008, 1017, 435 N.E.2d 113, 120 (1981) (holding that “some language more express

than ‘costs of collection’ should have been employed to have placed the party charged on

notice that he was undertaking to protect the obligee from costs incurred in defending

against a separate claim and not just the ordinary collection expenses in recovering upon

a defaulted promissory note”).

Keeping the above authority in mind, we again turn to the language of the CCRs at

issue here. See Sutton v. First Nat’l Bank of Crossville, 620 S.W.2d 526, 530 (Tenn. Ct.

App. 1981) (holding that, in general, the written terms control interpretation of a

contract). As previously stated, the CCRs expressly provide that the Association may

recover its attorney’s fees when the Association “bring[s] an action at law” related to

unpaid assessments. This language is both broad and vague. Black’s Law Dictionary

defines “bring an action” as “[t]o sue; institute legal proceedings.” Black’s Law

Dictionary 219 (9th ed. 2009). The contract therefore simply states that where such an

action is brought against a homeowner obligated to pay assessments, the Association may

recover its attorney’s fees; neither the terms “collection” nor “enforcement” are included

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in this provision. Clearly, here the Association did institute legal proceedings against

Homeowner, albeit in the posture of counter-plaintiff.

The language of this provision, however, should not be read in isolation but must

be construed in light of the contract as a whole. Fisher v. Revell, 343 S.W.3d 776 (Tenn.

Ct. App. 2009) (quoting 77 C.J.S. Contracts § 304) (“[In interpreting a contract,] the

whole instrument must be considered, and not an isolated part, such as a single sentence

or paragraph. The language in a contract must be construed in the context of that

instrument as a whole, and in the circumstances of that case, and cannot be found to be

ambiguous in the abstract.”). Elsewhere in the contract the Association’s right to enforce

the terms of the CCRs is discussed. Article XII General Provision Section 3 expressly

discusses enforcement of the CCRs and states that “[t]he expense of enforcement by the

Association shall be chargeable to the Owner of the Lot violating these covenants and

restrictions and shall constitute a lien on of the Lot, collectible in the same manner as

assessments hereunder.”

We agree with Homeowner that a contract providing only that a party is entitled to

recover “costs” and “expenses” does not authorize the award of attorney’s fees. See

Cracker Barrel, 284 S.W.3d at 310 (“The term ‘costs’ has not generally been construed

to encompass attorney fees.”); Nyrstar Tennessee Mines-Strawberry Plains, LLC v.

Claiborne Hauling, LLC, No. E2017-00155-COA-R3-CV, 2017 WL 5901017, at *2

(Tenn. Ct. App. Nov. 29, 2017) (holding that a provision allowing for “expenses” or even

“legal expenses” did not authorize an award of attorney’s fees). Such is not the case here.

In this case, while the “expense of enforcement” provision of the CCRs does not

expressly contain an attorney’s fees provision, this provision explicitly references the

manner in which assessments are collected. The provision regarding collection of

assessments expressly provides that the Association may recover its attorney’s fees when

its provisions are met, i.e., when an action is brought. Reading the contract as a whole, as

we must, we conclude that the contract provides for collection of attorney’s fees and

costs where the Association “bring[s]” an action for collection of assessments and

enforcement of the terms of the CCRs.

Further, we conclude that all actions taken in this particular case, including the

action of defending against Homeowner’s complaint, fall within the ambit of the CCRs’

attorney’s fee provision. The constellation of facts shown at trial demonstrate that this

collection action was initiated by the mailing of a letter pursuant to the Fair Debt

Collection Practices Act, 15 U.S.C. 1692(g). Thereafter, Homeowner filed the instant

action whose primary goal was to rescind the lien placed on his property for the unpaid

assessments and be awarded damages that allegedly resulted from the lien. In support of

that relief, Homeowner testified at trial that the assessments were invalid because he was

not provided sufficient information to determine the proper calculation of the

assessments. Homeowner’s claim that the lien should be rescinded therefore rested on his

claim that assessments upon which the lien was based were invalid. Moreover, the trial

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court made an express finding, based upon Homeowner’s own testimony, that the

gravamen of Homeowner’s lawsuit has always been to avoid payment of the

assessments.5 This finding, coupled with Homeowner’s decision to file this lawsuit

shortly after receiving the debt collection letter, supports our conclusion that

Homeowner’s lawsuit was an effort “to frustrate the enforcement of the [CCRs].”

Daniels, 763 F.2d at 294.

Here, it was necessary for the Association to respond to Homeowner’s claim in

order to obtain relief on its counterclaim to collect on the assessments; stated differently,

had Homeowner succeeded in showing that the assessments were in some way invalid,

the Association would likely not have prevailed on its claim to collect the unpaid

assessments. The same is true regardless of which party actually filed suit first. To hold

otherwise would be to exalt form over function and reward parties for winning the race to

the courthouse in violation of Tennessee’s long-settled public policy. See Word v. Metro

Air Serv’s, Inc., 377 S.W.3d 671, 675 (Tenn. 2012) (citing West v. Vought Aircraft

Indus., Inc., 256 S.W.3d 618, 622 (Tenn. 2008)) (noting that a race to the courthouse

protocol “engages attorneys in the undignified spectacle of literally racing to secure

perceived procedural advantages.”); Watson v. Watson, 658 S.W.2d 132, 134 (Tenn. Ct.

App. 1983) (rejecting the argument that plaintiff had priority in boundary dispute “simply

because [plaintiff] ‘won the race to the courthouse’ irrespective of the actual intent of

any of the parties to either conveyance.”).

Based on the foregoing, we conclude that the trial court did not err in holding that

the CCRs provided for an award of attorney’s fees that arose not only out of prosecution

of the Association’s counterclaim, but also with regard to defending against the claims

contained in Homeowner’s complaint. Nothing in Homeowner’s brief on appeal can be

construed as arguing that the fees awarded by the trial court were unreasonable under the

circumstances. As such, the decision of the trial court to award the Association

$28,372.06 in attorney’s fees is affirmed.

CONCLUSION

The order of the Shelby County Chancery Court awarding Brunswick Forest

Homeowners Association its attorney’s fees and costs is affirmed. Costs of this appeal are

taxed against the Appellant, Steven H. Parker, for which execution may issue if

necessary.

5

Arguably, such a finding, rendered by the trial court following a trial on the merits, is entitled to

a presumption of correctness and will not be overturned unless the evidence preponderates otherwise.

Turner v. Turner, 473 S.W.3d 257, 269 (Tenn. 2015) (citing Tenn. R. App. P. 13(d). The evidence does

not preponderate against the trial court’s characterization of Homeowner’s claims.

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_________________________________

J. STEVEN STAFFORD, JUDGE

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