Lesa C. Williams v. Renard A. Hirsch, Sr. ( 2018 )

05/25/2018
IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
May 23, 2017 Session
LESA C. WILLIAMS ET AL. v. RENARD A. HIRSCH, SR.
Appeal from the Chancery Court for Davidson County
No. 09-425-III Don R. Ash, Senior Judge
___________________________________
No. M2016-00503-COA-R3-CV
___________________________________
This is the third appeal in this declaratory judgment action. The action seeks a
determination of whether a discharged attorney is entitled to compensation for his
services in connection with a tort action that settled after his discharge. After a bench
trial, the trial court determined that the discharged attorney’s right to compensation was
governed by a retainer agreement with the client, as modified by a subsequent letter
agreement. The retainer agreement entitled the attorney, upon discharge, to
compensation calculated at a reasonable hourly rate or one third of any offer made to
settle the case, whichever was greater, plus expenses. Because no bona fide settlement
offer was made before the attorney was discharged and the attorney provided insufficient
evidence of the time he spent on the case, the trial court declared that the discharged
attorney was not entitled to compensation. The trial court also awarded sanctions against
the attorney for discovery abuse. Upon review, we discern no reversible error. So we
affirm.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed
W. NEAL MCBRAYER, J., delivered the opinion of the court, in which FRANK G.
CLEMENT, JR., P.J., M.S. and ANDY J. BENNETT, J., joined.
Gary M. Kellar and Robert L. Smith, Sr., Nashville, Tennessee, for the appellant, Renard
A. Hirsch, Sr.
Winston S. Evans, Nashville, Tennessee, for the appellees, Lesa C. Williams, Lesly J.
Williams, Alana Williams, and the Estate of Lesly Williams, Sr.
James W. Price, Jr., Nashville, Tennessee, for the appellee, Aundreas Smith.
Jon D. Ross and Elizabeth S. Tipping, Nashville, Tennessee, for the appellee, Neal &
Harwell, PLC.
OPINION
I.
A.
In the first appeal in this case, we described the background facts as follows:
On October 1, 2005, Lesa C. Williams and her family were involved
in a tragic motor vehicle accident. Following the accident, Ms. Williams,
through her conservators, contacted attorney Aundreas Smith, a family
friend with whom Ms. Williams shares a common sister-in-law, concerning
the possibility of filing a personal injury lawsuit. Ms. Smith was employed
at the time by Smith, Hirsch, Blackshear and Harris, PLC, and
Ms. Williams eventually retained both Ms. Smith and Renard Hirsch, a
partner at Smith, Hirsch, Blackshear and Harris, to represent her. The
retainer agreement entered into by the parties provided that Ms. Williams
would pay Ms. Smith and Mr. Hirsch a one-third contingency fee. Ms.
Smith and Mr. Hirsch filed suit on behalf of Ms. Williams and her family
on December 30, 2005.
Ms. Smith left Smith, Hirsch, Blackshear and Harris, PLC in April
of 2006. In October of 2006, the parties decided to associate Phil Elbert of
Neal and Harwell, PLC to serve as lead counsel in the case. The
agreement, signed by all three counsel and Ms. Williams, states that Neal
and Harwell would receive 50% of the one third contingency fee.
During the course of the litigation, Ms. Williams grew closer with
Ms. Smith. At the same time, however, Ms. Williams became dissatisfied
with Mr. Hirsch’s representation. On January 3, 2008, Ms. Williams
requested that Mr. Hirsch withdraw as counsel of record. Mr. Hirsch
complied and, in March of 2008, filed a Notice of Attorney’s Lien claiming
“an undivided fifty percent of one-third of the total recovery.” On May 22,
2009, the trial court approved a settlement awarding Ms. Williams a
substantial recovery.
Williams v. Hirsch (Williams I), No. M2010-02407-COA-R9-CV, 2011 WL 303257, at
*1 (Tenn. Ct. App. Jan. 25, 2011).
2
On March 5, 2009, Ms. Williams, relying on the original retainer agreement, filed
this action in the Chancery Court for Davidson County, Tennessee, asking for a
declaration either that Mr. Hirsch was not entitled to any compensation or that his
compensation was limited to a reasonable hourly rate. In his answer, Mr. Hirsch denied
that he was a party to the retainer agreement and asserted that the 2006 letter agreement
with Neal & Harwell replaced the original agreement. He also moved for summary
judgment claiming that Ms. Williams lacked standing. Id.
On January 27, 2010, the trial court granted Ms. Smith permission to intervene.
The court also granted Mr. Hirsch’s motion for summary judgment and dismissed
Ms. Williams’s complaint, but allowed Ms. Williams to file an interlocutory appeal. Id.
Upon review, we held that Ms. Williams had standing, reversed the trial court’s decision,
and remanded for further proceedings. Id. at *2.
After remand, discovery ensued, and the court granted Neal & Harwell permission
to intervene. Williams v. Hirsch (Williams II), No. M2012-01996-COA-R3-CV, 2013
WL 5230745, at *2 (Tenn. Ct. App. Sept. 13, 2013). Ms. Smith, Ms. Williams, and
Mr. Hirsch also renewed their previously filed motions for summary judgment. Id. at *3.
The trial court awarded summary judgment to “both sides” and divided the fee award
among the three attorneys. Id. at *4. In the second appeal, we determined that the trial
court’s award of partial summary judgment was inappropriate in light of disputed
material facts. So we reversed the court’s judgment and again remanded for further
proceedings. Id. at *8-9.
B.
Following the second remand and the assignment of a new judge, the trial court
conducted a six-day bench trial. After hearing all the evidence, the trial court found that
Ms. Williams, Ms. Smith, and Mr. Elbert were credible witnesses, but Mr. Hirsch was
not.
Ms. Smith is related to the Williams family by marriage. In late October 2005,
along with other family members, she rushed to the hospital after learning about the
motor vehicle accident. Lesa Williams was in a coma. Her husband and daughter had
died, and her minor son was in critical condition. Ms. Smith drafted a petition to appoint
two family members, Mary Rougier and Vernae Coffee, as conservators for
Ms. Williams.
The conservators asked Ms. Smith to represent the family in a personal injury and
wrongful death action. Ms. Smith drafted a written agreement reflecting that she was
being retained to provide all services related to the tort claim in exchange for a 33 1/3%
contingency fee. Among other provisions, the retainer agreement included a discharge or
withdrawal clause:
3
Client may, if unsatisfied with the services for any reason, discharge the
attorney at any time; however, it is understood that client will pay attorney
at time of discharge all fees and expenses then due, calculated at hourly rate
set forth; or if contingent fee, a reasonable hourly rate or one third of any
offer made to settle the case whichever is greater, plus expenses for the
time expended. Attorney may withdraw at any time if attorney believes
claim/cause of action lacks merit or is not fiscally practical to pursue.
Discharge or withdrawal requires written notice mailed to last known
address of attorney/client using Certified Mail with Return Receipt
Requested.
When Ms. Smith and the conservators signed the agreement, the only attorney named in
the agreement was Aundreas Smith.
At that time, Ms. Smith was associated with the law firm of Smith, Hirsch,
Blackshear and Harris, PLC, and her practice focused on workers’ compensation cases.
Renard Hirsch, a member of the firm, practiced mostly in the commercial litigation and
bankruptcy fields, but he had experience with personal injury actions. Ms. Smith and
Mr. Hirsch orally agreed to work the Williams case together and to divide the
contingency fee evenly.
Ms. Smith told the conservators that she wanted to add Mr. Hirsch as co-counsel
on the tort litigation. They agreed, and Ms. Smith wrote Mr. Hirsch’s name beside hers
in the retainer agreement. But Mr. Hirsch never signed the agreement. Ms. Smith
claimed that she gave Mr. Hirsch a copy of the agreement immediately after she added
his name. But according to Mr. Hirsch, although he knew that Ms. Smith had a retainer
agreement, he did not see the agreement or become aware that his name had been added
until April 2006.
In any event, Mr. Hirsch and Ms. Smith immediately began working together on
the tort case. They both did research on the potential defendants and the applicable law.
On December 30, 2005, they filed the initial complaint, which they each signed as co-
counsel. And afterward, they both drafted and signed additional pleadings and appeared
in court when necessary.
When Lesa Williams emerged from her coma, she was told about the pending
litigation and the decision to retain Ms. Smith and Mr. Hirsch. In January 2006, the
conservatorship was removed, and Ms. Williams began handling her own affairs. After
Ms. Smith reviewed the retainer agreement with her, Ms. Williams ratified it. When
Ms. Williams reviewed the retainer agreement, Mr. Hirsch’s name was listed as one of
the attorneys. During this time, Ms. Smith also brought Mr. Hirsch to meet
4
Ms. Williams. According to Ms. Williams, Mr. Hirsch introduced himself as co-counsel,
confirming her belief that he had been retained as co-counsel in the 2005 agreement.
After Ms. Smith left Mr. Hirsch’s firm and opened her own office in April 2006,
Mr. Hirsch and Ms. Smith continued their joint representation. They signed pleadings as
co-counsel and appeared in court. And, notably, Mr. Hirsch accepted Ms. Williams’s
check for anticipated expenses in the tort case, deposited the client funds in his firm trust
account, and paid the expenses as they became due.
But both attorneys realized that, due to the complexity of the litigation, they
needed to retain more experienced counsel. After interviewing several different
attorneys, they eventually chose Phil Elbert of Neal & Harwell based on his favorable
track record in similar litigation. Ms. Williams agreed that Ms. Smith and Mr. Hirsch
could retain Neal & Harwell as co-counsel if the attorneys were willing to divide the
contingency fee.
Mr. Elbert drafted a letter reflecting the terms of the division. In the 2006 letter
agreement, Neal & Harwell agreed to associate as co-counsel in the tort case in exchange
for “one-half of one-third of the gross amount of any recovery” plus expenses unless the
total gross recovery was $1 million or less. All three attorneys and Ms. Williams signed
the 2006 letter agreement, indicating their approval. According to Ms. Smith, Mr. Elbert,
and Ms. Williams, the 2006 letter agreement was intended to modify, not replace, the
2005 retainer agreement. But Mr. Hirsch maintained that the letter was a new retainer
agreement.
As the case progressed, Ms. Williams became increasingly dissatisfied with
Mr. Hirsch. And in December 2007, she decided to discharge him. She explained that,
during a critical period in the case, she never saw his contribution and he never
communicated with her. She asked Ms. Smith whether the discharge provision allowed
her to fire any of her attorneys. After Ms. Smith said that it did, Ms. Williams drafted a
discharge letter.
In January 2008, Ms. Williams notified Mr. Hirsch that he was discharged and
asked him to provide an accounting of the time he spent on the tort case. But Mr. Hirsch
never provided an accounting. Eventually he conceded that he did not maintain any time
records during the tort case and could only guess at his time.
As requested, Mr. Hirsch moved to withdraw as co-counsel, and on February 13,
2008, the trial court granted his motion. On March 26, 2008, Mr. Hirsch filed a notice of
attorney’s lien for “an undivided fifty percent of one third of the total recovery, whether
by settlement or at trial.”
5
In December 2008, the remaining attorneys and Ms. Williams agreed to modify
the division of the contingency fee. While the percentage of the contingency fee
remained the same (33 1/3%), the parties agreed that Neal & Harwell would receive 60%
of the fee, plus expenses, and Ms. Smith would receive 40%, plus expenses. But because
Mr. Hirsch claimed entitlement to a share of the fee, as evidenced by his notice of an
attorney’s lien, the 2008 agreement included a provision allowing Mr. Hirsch to receive
the full amount of any court-ordered compensation:
Any portion of the Fee awarded Mr. Hirsch will be paid first from
Ms. Smith’s 40% share Fee, except that if Ms. Smith’s portion of the Fee or
payment for time actually spent by him working on the case is reduced
down to as low as 25% by payments against Mr. Hirsch’s claim, the next
payments against Mr. Hirsch’s claim shall come from Neal & Harwell’s
share of the Fee. However, regardless of the portion of the Fee or monies
claimed or awarded to Mr. Hirsch, in no event shall Neal & Harwell receive
less than 50% of the Fee in this case. Therefore, [f]or example, if
Mr. Hirsch were to be awarded a sum equal to 15% of the Fee in this case,
Ms. Smith’s portion of the Fee would be reduced to 25%. If Mr. Hirsch
were to prevail in his claim to a 25% portion of the Fee, the first 15% of the
portion awarded to him would come from Ms. Smith’s share of the Fee and
the next 10% would come from Neal & Harwell’s share, reducing Neal &
Harwell’s share to 50%.
C.
The trial court found that the 2005 retainer agreement, as modified by the 2006
letter agreement, governed Mr. Hirsch’s right to compensation. Although Mr. Hirsch did
not sign the 2005 agreement,
Ms. Smith possessed apparent authority to add Mr. Hirsch’s name to the
2005 Agreement, and in any event, Mr. Hirsch’s conduct is consistent alone
with the theory Ms. Smith acted for him in executing the 2005 Agreement.
Accordingly, ratification has occurred as a matter of law and Mr. Hirsch is
estopped from denying liability under the 2005 Agreement made by his
agent, Ms. Smith.
The court further found that Mr. Hirsch “failed to prove the parties intended the
2006 Agreement to operate as a novation of the 2005 Agreement.” Based on the
language of the 2006 Agreement and the parties’ subsequent conduct, the court
determined that the 2006 letter agreement only modified the contingency fee provision of
the 2005 agreement. So the discharge provision remained effective.
6
Upon discharge, Mr. Hirsch was entitled to be paid “a reasonable hourly rate or
one third of any offer made to settle the case whichever is greater, plus expenses for the
time expended.” Because the only settlement offer made before Mr. Hirsch was
discharged was not a bona fide offer, the court declined to award Mr. Hirsch a fee on that
basis. And in the absence of any proof regarding the reasonable value of his services, the
court declared that Mr. Hirsch was not entitled to any compensation.
II.
Of Mr. Hirsch’s sixteen issues on appeal, many appear to be variations on the
same theme. As we see it, Mr. Hirsch has raised three main issues1:
(1) Did the trial court err in finding that Mr. Hirsch’s compensation was
governed by the 2005 retainer agreement as modified by the 2006 letter
agreement?
(2) Did the trial court abuse its discretion in granting Plaintiffs’ motion in
limine to preclude argument that the 2008 agreement evidenced unclean
hands?
(3) Did the trial court abuse its discretion in awarding monetary sanctions
against Mr. Hirsch for discovery abuse?
In a non-jury case, our review of the trial court’s factual findings is de novo upon
the record, accompanied by a presumption of the correctness of the findings, unless the
preponderance of the evidence is otherwise. Tenn. R. App. P. 13(d). Evidence
preponderates against a finding of fact if the evidence “support[s] another finding of fact
with greater convincing effect.” Rawlings v. John Hancock Mut. Life Ins. Co., 78 S.W.3d
291, 296 (Tenn. Ct. App. 2001). But in weighing the preponderance of the evidence, the
trial court’s findings of fact that are based on witness credibility are given great weight,
and they will not be overturned absent clear and convincing evidence to the contrary. In
re Adoption of A.M.H., 215 S.W.3d 793, 809 (Tenn. 2007). We review a trial court’s
1
Mr. Hirsch also raises two subsidiary issues. First, he asks this Court to reconsider our previous
ruling that Ms. Williams has standing to bring this declaratory judgment action. See Williams I, 2011 WL
303257, at *2. The law of the case doctrine “generally prohibits reconsideration of issues that have
already been decided in a prior appeal of the same case.” Memphis Pub. Co. v. Tenn. Petroleum
Underground Storage Tank Bd., 975 S.W.2d 303, 306 (Tenn. 1998). Although in limited circumstances
an appellate court may choose to reconsider a previously decided issue, we decline to do so here. See id.
(describing circumstances which may justify reconsideration of an issue decided in prior appeal).
Second, he contends that Ms. Williams lacked the authority to file this declaratory judgment
action on behalf of the other Williams plaintiffs. Because Mr. Hirsch failed to raise this issue in the trial
court, he cannot raise it now on appeal. See Emory v. Memphis City Sch. Bd. of Educ., 514 S.W.3d 129,
146 (Tenn. 2017) (“[L]itigants must raise their objections in the trial court or forego the opportunity to
argue them on appeal.”).
7
conclusions of law de novo, with no presumption of correctness. Kaplan v. Bugalla, 188
S.W.3d 632, 635 (Tenn. 2006).
A.
After the accident, the conservators retained Ms. Smith to represent the Williams
family in connection with their personal injury and wrongful death claims. When the
2005 agreement was executed, all parties to the agreement understood that Ms. Smith
was the sole attorney subject to the terms of the agreement.
At issue here is whether the 2005 agreement was effectively modified to add
Mr. Hirsch as a party. A contract “may be modified by the express words of the parties
in writing or by parol, where both parties consent to such modifications.” Lancaster v.
Ferrell Paving, Inc., 397 S.W.3d 606, 611 (Tenn. Ct. App. 2011). Both Ms. Smith and
the conservators agreed to the modification, and Ms. Williams subsequently ratified the
2005 agreement as modified. But Mr. Hirsch maintains that he never authorized
Ms. Smith to add his name or consented to be bound by the modified agreement.
In our view, the question turns on whether Mr. Hirsch ratified the modified 2005
retainer agreement. Ratification “occurs when one approves, adopts or confirms a
contract previously executed ‘by another[,] in his stead and for his benefit, but without
his authority.’” Webber v. State Farm Mut. Auto. Ins. Co., 49 S.W.3d 265, 270 (Tenn.
2001) (quoting James v. Klar & Winterman, 118 S.W.2d 625, 627 (Tex. Ct. App. 1938)).
By ratifying an unauthorized contract, the principal becomes bound by the contract terms
just as if he had executed it originally. Harber v. Leader Fed. Bank for Sav., 159 S.W.3d
545, 552 (Tenn. Ct. App. 2004). The principal’s intent may be shown through “conduct
of the purported principal manifesting that he consents to be a party to the transaction or
from conduct justifiable only if there is a ratification.” Webber, 49 S.W.3d at 270
(quoting Osborne Co. v. Baker, 245 S.W.2d 419, 421 (Tenn. Ct. App. 1951)).
Ratification is a question of fact. Id. at 270.
The trial court found that Mr. Hirsch ratified the addition of his name to the 2005
agreement. The evidence does not preponderate against that finding. Mr. Hirsch first
verified that the conservators had executed a retainer agreement and then proceeded to
act as co-counsel. When the conservatorship ended, he informed Ms. Williams that he
was co-counsel, appeared in court on her behalf, and later accepted her funds into his
firm’s trust account. He never told Ms. Williams he needed his own retainer agreement.
And whether he knew his name had been added to the retainer agreement from the
beginning or in April 2006,2 he never voiced any objection. See Harber, 159 S.W.3d at
552 (noting that ratification may be “implied from silence”).
2
Although Mr. Hirsch claimed he was merely assisting another lawyer in his firm and was
unaware his name had been added to the 2005 agreement, the trial court did not find his testimony
8
But the determination that Mr. Hirsch was bound by the 2005 retainer agreement
does not end our inquiry. Mr. Hirsch contends that the 2006 letter agreement with Neal
& Harwell operated as a novation that replaced and extinguished the previous agreement.
“A novation is a contract substituting a new obligation for an old one . . . .” Blaylock v.
Stephens, 258 S.W.2d 779, 781 (Tenn. Ct. App. 1953). Novation requires proof of four
elements: “(1) a previous valid obligation, (2) an agreement supported by evidence of
intention, (3) extinguishment of the old contract, and (4) a valid new one.” Crabb v.
Cole, 84 S.W.2d 597, 600 (Tenn. Ct. App. 1935) (quoting Peoples Bank of Clifton v.
Russ, Wayne County Equity Opinion, (Tenn. June 6, 1932)). The party asserting
novation has the burden of proving that all parties had a clear and definite intent to
replace the old contract with the new one. Jetton v. Nichols, 8 Tenn. App. 567, 574-75
(1928).
Whether the parties intended a novation is also a question of fact. Lowe v. Smith,
No. M2015-02472-COA-R3-CV, 2016 WL 5210874, at *7 (Tenn. Ct. App. Sept. 19,
2016). Evidence of the parties’ intent may be shown through an express agreement or by
subsequent conduct. Bank of Crockett v. Cullipher, 752 S.W.2d 84, 89 (Tenn. Ct. App.
1988). Although Ms. Williams, Ms. Smith, and Mr. Elbert denied that the 2006
agreement was intended as a novation, intent for a novation “may be implied from the
facts and circumstances attending the transaction and the parties’ subsequent conduct.”
Cumberland Cty. Bank v. Eastman, No. E2005-00220-COA-R3-CV, 2005 WL 2043518,
at *4 (Tenn. Ct. App. Aug. 25, 2005); see 58 AM. JUR. 2D Novation § 26, Westlaw
(database updated May 2018) (“A novation may be established either by direct evidence
or circumstantially by proof of facts from which the intention to effect such an agreement
may be reasonably implied.”).
The language used in the 2006 letter agreement did not express a clear intent to
replace the 2005 agreement. Rather, the letter agreement, by its plain terms, merely
confirmed the division of the contingency fee with Neal & Harwell and left the rights and
responsibilities of the client and other co-counsel unaddressed. Contrary to Mr. Hirsch’s
contention, the fact that the letter was addressed to Mr. Hirsch and Ms. Smith and
referred to the ongoing litigation did not transform the letter into a new retainer
agreement.
The parties’ subsequent conduct also failed to support the claimed novation.
Ms. Williams certainly acted as if the 2005 agreement remained effective. After she
became dissatisfied with Mr. Hirsch’s representation, she asked Ms. Smith what rights
she had under the 2005 agreement. The language in her discharge letter was also
consistent with the terms of the 2005 agreement. In 2008, Mr. Hirsch based his claim to
credible, and this record lacks sufficient evidence to overturn the court’s credibility finding. See Wells v.
Tenn. Bd. of Regents, 9 S.W.3d 779, 783 (Tenn. 1999).
9
a share of the contingency fee on the 2005 agreement.3 And he admitted at trial that,
after the 2006 letter agreement was signed, the 2005 agreement remained in effect for
Ms. Smith.4
We conclude that the evidence does not preponderate against the court’s finding
that Mr. Hirsch failed to establish the requisite intent for a novation. The 2006 letter
agreement only modified the contingency fee provision of the 2005 agreement, leaving
the remaining terms of the 2005 agreement in effect. See 58 AM. JUR. 2D Novation § 2,
Westlaw (database updated May 2018) (“[A] novation differs from a modification of a
contract since a modification alters only certain portions of the contract, and leaves the
original contract in place, while a novation substitutes a new contract and wholly
extinguishes the earlier contract.”) (footnotes omitted). So Mr. Hirsch’s right to
compensation was governed by the discharge provision of the 2005 agreement.5
B.
Based on the deposition of Mr. Hirsch’s ethics expert, the trial court excluded any
argument at trial that the 2008 agreement was unethical, evidenced unclean hands, or
impacted Mr. Hirsch’s rights. Mr. Hirsch contends that the trial court’s ruling improperly
granted Plaintiffs summary judgment on his unclean hands defense.
3
Mr. Hirsch told Ms. Williams’s attorney that he was entitled to a share of the contingency fee
“based on the retainer agreement which was executed by Ms. Williams’[s] conservators and subsequently
acknowledged by her.” Mr. Hirsch contends that his statement was inadmissible because it was made
during settlement negotiations. See Tenn. R. Evid. 408. Surprisingly, although the trial court initially
sustained Mr. Hirsch’s objection, Mr. Hirsch’s counsel ultimately moved the letter containing the
statement into evidence. “[A] party to a lawsuit cannot complain of an error if he created the situation.”
Waters v. Coker, 229 S.W.3d 682, 690 (Tenn. 2007); see Tenn. R. App. P. 36(a) (“Nothing in this Rule
shall be construed as requiring relief be granted to a party responsible for an error or who failed to take
whatever action was reasonably available to prevent or nullify the harmful effect of an error.”). Under
these circumstances, we conclude that Mr. Hirsch waived his objection. See King v. Sevier Cty. Election
Comm’n, 282 S.W.3d 37, 41 (Tenn. Ct. App. 2008) (noting that appellant could not object to the
admissibility of a document that he offered into evidence himself).
4
When asked whether “the 2005 retainer agreement [was] replaced by the 2006 Neal & Harwell
letter as to all the terms,” Mr. Hirsch replied:
A. Well, Ms. Smith, when she left, took the 2005 retainer agreement with her. So I guess
she might be still under that. But as far as me, my firm, once Ms. Smith left, this is the
only agreement that we had, the 2006.
5
Because we have concluded that Mr. Hirsch was bound by the terms of the 2005 agreement, as
modified by the 2006 letter agreement, we need not address Mr. Hirsch’s challenge to the trial court’s
alternative finding that he was discharged for cause.
10
We review the trial court’s decision on a motion in limine for an abuse of
discretion. Singh v. Larry Fowler Trucking, Inc., 390 S.W.3d 280, 284 (Tenn. Ct. App.
2012). “A trial court abuses its discretion when it ‘causes an injustice by applying an
incorrect legal standard, reaches an illogical result, resolves the case on a clearly
erroneous assessment of the evidence, or relies on reasoning that causes an injustice.’”
Id. (quoting Gonsewski v. Gonsewski, 350 S.W.3d 99, 105 (Tenn. 2011)).
A motion in limine allows a party to seek a pre-trial ruling on the admissibility of
evidence expected to be offered at trial. Duran v. Hyundai Motor Am., Inc., 271 S.W.3d
178, 192 (Tenn. Ct. App. 2008). It serves as “a substitute for an evidentiary objection at
trial” and should not be used to obtain a dispositive ruling on substantive legal issues.
Id.; see also Harris v. White, No. M2011-00992-COA-R3-CV, 2012 WL 1795086, at *8
(Tenn. Ct. App. May 16, 2012).
According to Mr. Hirsch, Ms. Smith and Mr. Elbert, with the consent of
Ms. Williams, agreed to divide his share of the contingency fee among themselves and
then tried to conceal their alleged misconduct in an effort to ensure they received a larger
fee. To the extent that the trial court precluded this argument based on the absence of
proof that the 2008 agreement was unethical, we agree that a motion in limine was not
the proper vehicle for that determination. See Duran, 271 S.W.3d at 192; Tenn. R. Civ.
P. 56.04. But we conclude that the error was harmless because the doctrine of unclean
hands does not apply here. See Tenn. R. App. P. 36(b) (“A final judgment from which
relief is available and otherwise appropriate shall not be set aside unless, considering the
whole record, error involving a substantial right more probably than not affected the
judgment or would result in prejudice to the judicial process.”).
The doctrine of unclean hands is a maxim of equity that allows a court “to decline
to grant relief to parties who have willfully engaged in unconscionable, inequitable,
immoral, or illegal acts with regard to the subject matter of their claims.” In re Estate of
Boote, 265 S.W.3d 402, 417 (Tenn. Ct. App. 2007) (footnote omitted). A court of equity
cannot be used to aid a party in “profiting from [his or] her own misconduct.” Emmit v.
Emmit, 174 S.W.3d 248, 253 (Tenn. Ct. App. 2005). But this defense has limitations: “it
must be confined to the particular matter in litigation and the conduct complained of must
have injured the party making the complaint.” Edmisten v. Edmisten, No. M2001-00081-
COA-R3-CV, 2003 WL 21077990, at *7 (Tenn. Ct. App. May 13, 2003); see Nolen v.
Witherspoon, 187 S.W.2d 14, 16 (Tenn. 1945); Coleman Mgmt., Inc. v. Meyer, 304
S.W.3d 340, 352-53 (Tenn. Ct. App. 2009).
When a plaintiff “is not asking the chancellor to enforce any right growing out of
any transaction nor is he seeking injunctive relief or, in fact, any ‘in personam’ relief,”
and “asks only that the chancellor render a declaratory decree so . . . as to settle the
controversy which exists,” the doctrine of unclean hands does not apply. Hogue v.
11
Kroger Co., 373 S.W.2d 714, 716 (Tenn. 1963).6 Here, Plaintiffs asked the court to
declare that Mr. Hirsch was not entitled to recover a fee or, alternatively, that he was only
entitled to compensation for his services at a reasonable hourly rate. Plaintiffs are not
asking the court to enforce their rights.
And, as explained above, Mr. Hirsch’s right to compensation flows from the 2005
retainer agreement, as modified by the 2006 letter agreement. The remaining attorneys’
subsequent agreement to alter the division of their portion of the contingency fee had no
detrimental impact on Mr. Hirsch’s fee. See Nolen, 187 S.W.2d at 16 (explaining that the
conduct complained of must have “injured, damaged, or prejudiced the defendant”).
At best, the alleged concealment efforts raised potential credibility issues. And the
court allowed Mr. Hirsch to use the 2008 agreement for impeachment. His attorney
elicited extensive testimony about the circumstances surrounding the discovery and
eventual disclosure of the agreement and the impact of those circumstances on Plaintiffs’
credibility. But after hearing all the evidence, the trial court found Ms. Smith,
Ms. Williams, and Mr. Elbert credible, and this record does not contain sufficient
evidence to overturn the court’s finding. See Wells v. Tenn. Bd. of Regents, 9 S.W.3d
779, 783 (Tenn. 1999).
C.
Finally, we turn to Mr. Hirsch’s appeal of the trial court’s award of monetary
sanctions for discovery abuse. We review the trial court’s decision under the abuse of
discretion standard. Laseter v. Regan, 481 S.W.3d 613, 639 (Tenn. Ct. App. 2014). We
will not overturn the court’s decision unless the trial court misconstrued or misapplied the
controlling law or the decision is against the substantial weight of the evidence. Mercer
v. Vanderbilt Univ., Inc., 134 S.W.3d 121, 133 (Tenn. 2004).
During discovery, Plaintiffs subpoenaed Mr. Hirsch’s designated ethics expert,
William Hunt, to appear for a deposition and bring certain documents. After Mr. Hunt
failed to produce the requested documents or to answer a series of questions about
communications with Mr. Hirsch, claiming attorney-client privilege, Plaintiffs filed a
motion to exclude his testimony at trial as a sanction for discovery abuse. Although the
trial court refused to exclude the expert’s testimony, on November 6, 2015, the court
ordered Mr. Hirsch to produce “all documents exchanged between Mr. Hunt and
Defendant or his counsel” and to make Mr. Hunt available for another deposition.
6
Plaintiffs argue that the unclean hands doctrine never applies in a declaratory judgment action.
But the doctrine can be applied in a declaratory judgment action when the court has been asked to enforce
rights arising from alleged misconduct. See, e.g., In re Estate of Boote, 265 S.W.3d at 418 (vacating trial
court decision finding unclean hands doctrine inapplicable because the trial court used the wrong
evidentiary standard); Gossum v. Moore, No. 2, 1991 WL 159893, at *5 (Tenn. Ct. App. Aug. 22, 1991)
(affirming use of unclean hands doctrine in declaratory judgment action).
12
In response, Mr. Hirsch produced a few emails, none of which were dated before
July 2015. During Mr. Hunt’s second deposition, he disclosed that he had emails with
Mr. Hirsch going back to 2012, and none of the older emails had been produced. This
revelation stopped the second deposition. After Mr. Hirsch’s attorney produced a
computer disc containing hundreds of additional documents, including emails found on
the computers of Mr. Hirsch and his attorneys, Plaintiffs’ counsel pointed out that the
court’s order included emails on Mr. Hunt’s computer. Mr. Hirsch’s attorney then
produced another disc containing more previously unseen documents. After all the
requested documents were finally produced, Mr. Hunt’s deposition resumed for the third
time.
Plaintiffs moved for sanctions for discovery abuse. Because Mr. Hirsch failed to
provide substantial justification for his noncompliance with the court’s order, the court
granted the motion and ordered Mr. Hirsch to pay the attorney’s fees and expenses
associated with Plaintiffs’ original motion and with the two additional depositions of Mr.
Hunt.
Tennessee Rule of Civil Procedure 37.02 authorizes the trial court to award a
variety of sanctions for failure to comply with a discovery order, “including being found
in contempt, having designated facts be taken as established, striking pleadings, [or]
dismissing an action or claim or granting a judgment by default.” Mansfield v.
Mansfield, No. 01A019412CH0058, 1995 WL 643329, at *5 (Tenn. Ct. App. Nov. 3,
1995) (footnotes omitted); Tenn. R. Civ. P. 37.02. Whether or not the court chooses to
award one of these sanctions, Rule 37.02 directs the court to “require the party failing to
obey the order or the attorney advising the party or both to pay the reasonable expenses,
including attorney’s fees, caused by the failure, unless the court finds that the failure was
substantially justified or that other circumstances make an award of expenses unjust.”
Tenn. R. Civ. P. 37.02. Monetary awards under Rule 37.02 should not be excessive and
must be directly related to the abuse. Burnette v. Sundeen, 152 S.W.3d 1, 4 (Tenn. Ct.
App. 2004).7
We cannot say the trial court abused its discretion in ordering Mr. Hirsch to pay
the attorney’s fees and expenses caused by his failure to fully comply with the court’s
order.8 The monetary sanctions awarded were directly related to the discovery abuse and
7
We are unpersuaded by Mr. Hirsch’s argument that trial courts are only authorized to award
monetary sanctions in extreme cases. Although we have cautioned trial courts to use restraint when
considering whether a harsh sanction such as dismissal or entry of default judgment is appropriate, the
award of monetary sanctions does not raise the same concerns. See Amanns v. Grissom, 333 S.W.3d 90,
99 (Tenn. Ct. App. 2010); Pegues v. Ill. Cent. R.R. Co., 288 S.W.3d 350, 354 (Tenn. Ct. App. 2008).
8
Rule 37.02 is limited to sanctions for non-compliance with a court discovery order. Alexander
v. Jackson Radiology Assocs., P.A., 156 S.W.3d 11, 15 (Tenn. Ct. App. 2004). Thus, the attorney’s fees
13
were not excessive under the circumstances. See id. Mr. Hirsch’s repeated failure to
comply with the court’s order necessitated two additional depositions. And his
explanation that he simply overlooked a few documents is insufficient. Mr. Hirsch
produced hundreds of additional documents after Mr. Hunt’s second deposition.
Mr. Hirsch now contends that the requested documents were not important to the
case. Still, he did not fully comply with the court’s order and provided no substantial
justification for his failure to do so. Once the trial court ordered the documents produced,
Mr. Hirsch’s duty was to fully comply. See Cofer v. Harris, No. E2011-00242-COA-R3-
CV, 2012 WL 112581, at *6 (Tenn. Ct. App. Jan. 12, 2012) (concluding that failure to
fully comply with a court order to produce documents without substantial justification
was sufficient basis for award of monetary sanctions regardless of whether the documents
at issue affected the court’s ultimate decision in the case).
III.
We conclude that the evidence does not preponderate against the trial court’s
findings on ratification and novation. And although the court’s partial grant of Plaintiffs’
motion in limine may have been in error, any error was harmless. We also conclude that
the trial court did not abuse its discretion in awarding sanctions against Mr. Hirsch for
discovery abuse. So we affirm.
_________________________________
W. NEAL MCBRAYER, JUDGE
associated with the motion to exclude Mr. Hunt’s testimony at trial should not have been included in the
award. But these fees could have been awarded under Rule 37.01 or under the trial court’s inherent
authority to order sanctions as necessary to prevent abuse of the discovery process. See Tenn. R. Civ. P.
37.01(4); Laseter, 481 S.W.3d at 639.
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