Cumberland Properties, LLC v. Ravenwood Club, Inc.

IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
February 16, 2011 Session
CUMBERLAND PROPERTIES, LLC v. RAVENWOOD CLUB, INC., ET AL.
Direct Appeal from the Chancery Court for Davidson County
No. 09-18-I Claudia Bonnyman, Chancellor
No. M2010-01814-COA-R3-CV - Filed April 5, 2011
This is a contract case. Appellant, a Nashville Country Club, hired Appellee, a real estate
development and consulting firm, to help the Club procure the best price available for the
sale of its real property. Appellee claimed that it was due fees under the parties’ written
agreement. Following a hearing, the trial court entered judgment in favor of Appellee.
Appellant appeals, arguing that: (1) the parties’ contract was not supported by adequate
consideration; (2) the parties’ contract was void as against public policy based upon
Appellants’ allegation that Appellee was acting as a broker; (3) the trial court erred in
allowing parol evidence and in its interpretation of the terms of the parties’ agreement; and
(4) the trial court erred in calculating Appellee’s damages. Discerning no error, we affirm
and remand for determination of Appellee’s reasonable attorney’s fees and costs in defending
this appeal. Affirmed and remanded.
Tenn. R. App. P. 3. Appeal as of Right; Judgment of the Chancery Court Affirmed
J. S TEVEN S TAFFORD, J., delivered the opinion of the Court, in which A LAN E. H IGHERS, P.J.,
W.S., and D AVID R. F ARMER, J., joined.
Samuel T. Bowman and William A. Lewis, Nashville, Tennessee, for the appellants,
Ravenwood Club, Inc. and Ravenwood Country Club, LLC.
Kemper Harlan Dodson, III, Donald N. Capparella, Kristen B. Amonette, and Candi Renee
Henry, Nashville, Tennessee, for the appellee, Cumberland Properties, LLC.
OPINION
Ravenwood Country Club (the “Club”) is located in the Hermitage area of Nashville.
The Club is run by a volunteer board of directors that is comprised of members of the Club
who are elected by the membership of the Club. The Club has operated, under one owner
or another, for approximately fifty years. In recent years, it has operated under the ownership
of Ravenwood Club, Inc., a non-profit corporation. Ravenwood Country Club, L.L.C., is a
member-managed L.L.C. that owns all of the assets and liabilities of Ravenwood Club, Inc.
(together with Ravenwood Country Club, L.L.C., “Ravenwood,” or “Appellants”).
Cumberland Properties, L.L.C. (“Cumberland,” or “Appellee”) is a real estate
development, consulting, and brokerage firm. Glenn Dukes is acquisition manager for
Cumberland, and he holds a Tennessee real estate broker license. Mr. Dukes has been in the
real estate business for approximately thirty years. At all times relevant to this litigation, Mr.
Dukes acted on behalf of Cumberland in negotiations with Ravenwood.
In 2002 and 2003, prior to the time that Ravenwood and Cumberland entered into the
business agreement(s) that are the subject of the instant appeal, Ravenwood fell into a
difficult financial condition. Ravenwood began to sell its property, including timber, in
order to meet its financial obligations. One of Ravenwood’s assets was a tract of real
property that was comprised of approximately 91.62 acres of unzoned, undeveloped land to
the north and northeast of the country club property.1 Ravenwood’s then-president, Lee
Jennings, entered into negotiations with Freeman Webb Investments (“Freeman”) to sell this
undeveloped land. At that time, Ravenwood’s property was essentially landlocked. There
was no access for commercial developments, and it would not have been approved for
residential access and development. Consequently, the development of the land would
require access and re-zoning. Freeman owned property adjacent to the Club, which property
could serve as access to Ravenwood’s property with approval of the city. In addition,
Freeman was attempting to secure another parcel of property–not owned by Ravenwood–by
which it hoped to secure access to the Ravenwood property.
On July 15, 2003, Ravenwood and Freeman reached a tentative agreement, which was
memorialized in a “Letter of Intent for the Purchase of [91.62] acres” sent from Freeman to
Ravenwood’s board of directors. Under the terms of this letter, Freeman proposed to pay
$1,000,000 to Ravenwood for the 85 acres (which was later discovered to be 91.62 acres),
and two hundred sixty-five memberships to the Club. The payment of the $1,000,000 was
to be made according to the terms of the “payment of consideration” section of the letter,
which required $470,000 of the total amount to be paid at the closing, with one-half of the
membership dues ($265,000) also due at closing. As an incentive for retaining members,
the letter further contemplated that, if the full membership dues were paid within four years
of the closing, then the purchase price of $1,000,000 would be discounted to $10,000 per
1
The parties initially referenced the 91.62 acre tract as an 85 acre tract. Following a survey of the
property, the actual acreage was found to be 91.62 and the initial error was corrected going forward in the
record.
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acre. Thus, the deal between Ravenwood and Freeman was essentially $850,000 for 85 acres
of property and two hundred sixty-five Club memberships.
In an effort to better its position under the letter of intent with Freeman, Ravenwood
hired Cumberland to consult. Ravenwood and Cumberland began a business relationship on
October 21, 2003, when they entered into a letter agreement. The October 21, 2003 letter
was superseded by a second letter dated November 18, 2003. The November 18, 2003 letter
(the “Letter”) sets out the scope of Cumberland’s services as follows:
The scope of services would include but not be limited to the
following:
1. To represent Ravenwood Club’s interest in the design and
planning of any proposed development.
2. To inform the Board of Directors of the status of the project
on an as needed basis.
3. To use its best efforts to negotiate more favorable terms for
Ravenwood Club in the Definitive Agreement.
4. To use its best efforts to increase the amount of revenue to be
received by Ravenwood Club from the sale of Property and
Membership Interest (“Proceeds”).
In consideration for these services, the Letter states that Cumberland’s fee would be based
on the following schedule:
1. Ten (10) percent of the amount of increase of Proceeds from
One Million Dollars ($1,000,000) to One Million Two Hundred
Thousand Dollars ($1,200,000).
2. Fifteen (15) percent of the amount of increase of Proceeds
from One Million Two Hundred Thousand Dollars ($1,200,000)
to One Million Four Hundred Thousand Dollars ($1,400,000).
3. Twenty (20) percent of any amount of increase of Proceeds
in excess of One Million Four Hundred Thousand Dollars
($1,400,000).
In addition to the foregoing, the Letter further states that:
[S]hould Cumberland Properties be successful in negotiating the
deletion of Section 1(f) from the Letter of Intent between
Ravenwood Club and Freeman...dated July 15, 2003 and the
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purchase price for both the real property and the membership
interest are paid in full at closing, Cumberland Properties shall
receive three (3) percent of the Proceeds received by
Ravenwood Club from the initial closing, said fee to be paid at
closing.2
There shall be Twelve Thousand Five Hundred Dollars
and No Cents ($12,500.00) of Earnest Money released from the
Escrow Account to Ravenwood Club when the Purchase
Contract is approved by the Board of Directors of [the Club].
The amount of such earnest money shall be divided equally
between Ravenwood...and Cumberland....
This Letter is signed by Glenn Dukes on behalf of Cumberland, and by Richard Daugherty,
as President of the Club.
Pursuant to the terms of the Letter, Cumberland, acting on behalf of Ravenwood,
helped to negotiate the final terms of the sale of a portion of the 91.62 acres to Freeman. On
December 10, 2003, Ravenwood and Freeman executed a Real Estate Purchase Contract (the
“Freeman-Ravenwood Agreement”). Under the Freeman-Ravenwood Agreement, Freeman
purchased approximately 61.12 acres of the total 91.62 acres and one-hundred ninety family
memberships. The purchase price was set at $867,957.53. Under Paragraph 6.4 of the
Freeman-Ravenwood Agreement, both Ravenwood and Freeman warranted “to the other [,]
that no broker or agent has been engaged by it in connection with the negotiation and/or
consummation of this Agreement.”
On December 11, 2003 (the day after the Freeman-Ravenwood Agreement was
executed), Ravenwood and Cumberland entered into a “Real Property Services Agreement”
(the “Ravenwood-Cumberland Agreement”). The Ravenwood-Cumberland Agreement is
signed by Mr. Dukes, on behalf of Cumberland, and by Mr. Daugherty, on behalf of
Ravenwood. The Ravenwood-Cumberland Agreement, which was prepared by
Cumberland’s attorney, provides, in relevant part, as follows:
1. Recital. This Agreement supplements the letter agreement
dated November 18, 2003 between Ravenwood Club and
Cumberland Properties, L.L.C. regarding certain Property and
Membership Interests (the “Letter Agreement”).... The Letter
2
Section 1(f) of the July 15, 2003 letter of intent provides for the decrease in purchase price to
$10,000 per acre, as discussed above.
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Agreement remains in full force and effect, as supplemented by
this Agreement. This Agreement is not necessary in order to
form the agreement between the parties, but does provide
additional details for their convenience.
The Ravenwood-Cumberland Agreement states that “[t]he parties agree that
Cumberland has already performed valuable services and will continue to perform such
services in relation to” the sale between Ravenwood and Freeman. To that end, the services
expected from Cumberland, under the Ravenwood-Cumberland Agreement, were
substantially the same as those outlined in the Letter, supra. While the amount of fees due
Cumberland for its services remained the same in the Ravenwood-Cumberland Agreement
as it was in the Letter, supra, the parties added a clause in the Ravenwood-Cumberland
Agreement that was not set out in the Letter, namely Paragraph 6(d), which provides:
The parties contemplate that Ravenwood Club will sell
the Property, and Membership Interests, expeditiously, and, in
any event, on or before March 1, 2005, so that the Fee...would
be paid within that period. However, should Ravenwood Club
for any reason not sell all of the Property or Membership
Interests on or before March 1, 2005 for any reason, including
but not limited to the fact that Freeman Webb ([or] its successor)
does not purchase all of the Property or Membership Interests,
then, to the extent any such Property or Membership Interests
are not then sold, Cumberland shall be paid the remaining
portions of the Fee at such time or times as the remaining
Property and Membership Interests are sold.
In addition to the foregoing provision, the Ravenwood-Cumberland Agreement also
includes a “Buyout Provision,” i.e., Paragraph 7(a), which provides:
Should Ravenwood Club for any reason not sell all of the
Property or Membership Interests on or before March 1, 2005
for any reason, including, but not limited to, the fact that
Freeman Webb (or its successor) does not purchase all of the
Property or Membership Interests, then Ravenwood Club shall
have the right upon written notice to Cumberland, and
Ravenwood Club shall have the obligation upon written request
from Cumberland, to buyout the remaining Fee by paying to
Cumberland the remaining Fee under the [fee] schedule [set out
in the Ravenwood-Cumberland Agreement], based upon the fair
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market value of the remaining Property and Membership
Interests, as of the date of the giving of written notice.3
The Ravenwood-Cumberland Agreement also contains a merger/integration/no oral
modification clause, i.e., Paragraph 10, which provides:
This Agreement constitutes the entire agreement of the
parties and any prior discussions, warranties, representations,
understandings or agreements are merged herein and barred
hereby. Each party warrants and represents that it is not relying
on any information, projection, prediction or representation,
written or verbal, from any source, except as expressly set forth
in this Agreement. This Agreement may not be amended except
by writing, signed by each of the parties, which writing sets
forth as its express purpose the amendment of this Agreement.
This Agreement may not be amended orally, by implication,
waiver, course of dealing or industry custom.
On January 7, 2005, and as contemplated under the Freeman-Ravenwood Agreement
(supra),4 the sale of the 61.12 acres of the total 91.62 acres and one-hundred ninety family
memberships closed. On the same day, Ravenwood and Cumberland executed an “Amended
and Restated Real Property Services Agreement” (the “Amended Ravenwood-Cumberland
Agreement”). Mr. Dukes testified that the purpose of the Amended Ravenwood-Cumberland
Agreement was to add additional property to the service agreement; however, the record does
not indicate any other property at issue other than the original 91.62 acres. Nonetheless,
under the Amended Ravenwood-Cumberland Agreement, the services expected of
Cumberland were expanded to include, in addition to the services outlined in the original
Ravenwood-Cumberland Agreement, the following:
(e) To obtain information as to potential users and uses of the
Additional Property.
(f) To communicate and meet with potential users or others
3
Paragraph 7(b) of the Ravenwood-Cumberland Agreement states that, should the parties be unable
to agree upon the fair market value of the Property and Membership Interests within thirty days after written
notice, then the matter shall be submitted to binding arbitration.
4
We note that Ravenwood and Freeman executed two addenda to the original Freeman-Ravenwood
Agreement. These addenda, dated December 11, 2003 and January 4, 2005 respectively, do not bear on the
instant appeal.
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having information.
(g) To inform the Board of Directors as to the status of such
matters as requested.
(h) To use its best efforts to advise as to terms and conditions
for Ravenwood Club to consider.
In addition to the additional services, the Amended Ravenwood-Cumberland
Agreement modifies the buyout provision (i.e., Paragraph 7) as follows:
(a) Should Ravenwood Club for any reason not sell all of the
Property or Membership Interests on or before March 1, 2005
for any reason, including, but not limited to, the fact that
Freeman Webb (or its successor) does not purchase all of the
Property or Membership Interests, then Ravenwood Club shall
have the obligation upon written request from Cumberland, to
buyout the remaining Fee by paying to Cumberland the
remaining Fee under the schedule in Paragraph 6 above, based
upon the fair market value of the remaining Property and
Membership Interests, as of the date of the giving of the written
notice.5
The modification to the buyout provision will be discussed in more detail below. It
is, however, important to note that the fee schedule remains the same in the Amended
Ravenwood-Cumberland Agreement as it was in the original Ravenwood-Cumberland
Agreement.
In August 2005, Cumberland negotiated, on behalf of Ravenwood, an option contract,
whereby E. Phillips Development acquired an option to purchase the remaining 30.5 acres
of Ravenwood property. The negotiated price was $2,000,000, and the sale was to close on
or before July 15, 2009. The record indicates that, although E. Phillips Development
exercised its option to purchase the 30.5 acres, for reasons unrelated to the instant lawsuit,
the sale did not close.
5
Although the Amended Ravenwood-Cumberland Agreement was attached to the original complaint,
see infra, Mr. Dukes testified at trial that this was not, in fact, the agreement upon which Cumberland sought
payment. Rather, because the Freeman sale closed before the Amended Ravenwood-Cumberland Agreement
was executed, Cumberland sought payment related to that sale under the original Ravenwood-Cumberland
Agreement, supra.
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On May 2, 2008, Cumberland sent a written demand to be bought out under the terms
of Paragraph 7(a) of the Ravenwood-Cumberland Agreement. In a follow-up letter, dated
May 29, 2008, Cumberland suggested that the parties agree on a fair market value of
$2,000,000 for the remaining property and membership interests. In the letter, Cumberland
calculated the total due under the buyout provision, Paragraph 7(a), of the Ravenwood-
Cumberland Agreement to be $343,591. On October 30, 2008, Cumberland filed a demand
for arbitration, allegedly pursuant to the terms of the Ravenwood-Cumberland Agreement.
However, Ravenwood took the position that it was not obligated to submit to arbitration.
Ultimately, the parties could not agree on the fee amount due to Cumberland and,
consequently, the present litigation ensued.
On January 7, 2009, Cumberland filed a petition for declaratory judgment against
Ravenwood in the Chancery Court for Davidson County. By its petition, Cumberland asked
the trial court to declare the amounts due to it under the Ravenwood-Cumberland Agreement.
On February 12, 2009, Ravenwood filed its answer, wherein it avers that there is a genuine
controversy as to the interpretation of the Ravenwood-Cumberland Agreement, and that same
is “so vague, contradictory, and confusing as to be void and unenforceable.” Ravenwood
further states, in relevant part, that:
4. Cumberland apparently includes in its demand for payment
the value of the 61.12 acres sold to Freeman Webb Investments,
Inc. on January 7, 2005. At that time, Cumberland submitted a
bill for consulting services in the sum of $26,038.73 which was
paid in full at closing. Cumberland has waived the right to make
any further claim for fees in connection with the sale to Freeman
Webb....
In addition to denying the material allegations contained in Cumberland’s petition for
declaratory judgment, Ravenwood also claimed that Cumberland had breached the contract
in relation to its dealings with E. Phillips Development, to wit:
7. Cumberland negotiated an agreement with E. Phillips
Development, LLC, under which Ravenwood will receive a
water line, sewer line and two fire hydrants at the value of
$100,000.00 of which Ravenwood will pay one-half the cost, or
$50,000. In exchange for this Ravenwood gave four sewer
easements across the golf course.... These four sewer easements
cover 4,000 feet crossing over the cart paths and irrigation
system many times leaving the course scarred with manhole
covers throughout the easement. The value of this easement is
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$300,000, which gives Ravenwood a net loss of $250,000.00
8. Cumberland negotiated an agreement for 190 prepaid
memberships as part of the purchase price of the Freeman Webb
property that closed on January 7, 2009. There was no
activation or expiration date on these memberships. There was
no contractual method to receive revenue from these inactive
members in the form of dues, increase of dues or assessment.
There was an assessment from 1-1-07 thru 3-1-08 for a total of
15 months at $60.00 per month for all Ravenwood members.
This resulted in a net loss of $171,000.00 to Ravenwood.
9. Cumberland negotiated an agreement with E. Phillips
Development, LLC, under which Ravenwood may be required
to exchange the scenic entrance it presently has for a new
entrance so steep it borders on hazardous and will be
treacherous in inclement weather. The old entrance gave
Ravenwood a direct access to Stones River Road across land it
owned in fee simple; the new road is only an easement across
property that Ravenwood previously owned, which will inhibit
further development of Ravenwood’s remaining land. The net
loss to Ravenwood in entrance value is $500,000.00.
10. Cumberland negotiated a Homeowner association fee for
the new housing development of $30.00 per month for the use
of the pool, tennis [courts] and grounds for a total of $360.00
per year. As of this date Ravenwood has received no revenue
from this transaction. Ravenwood sells this membership for
$450.00 for use from Memorial Day thru Labor Day. This
results [in] a net loss of $90.00 x 190 homes = $17,100.00 per
year x 10 years = $171,000.00 net loss to Ravenwood.
11. As a direct and proximate result of Cumberland’s breach of
the contract[] between the parties, Ravenwood has suffered
damages and losses in the total sum of $1,092,000.00.
Cumberland answered the counterclaim on March 6, 2009, wherein it denied any breach of
contract on its part.
On March 23, 2010, Ravenwood filed a motion for summary judgment on grounds
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that: (1) Cumberland was not entitled to a commission for the sale of a 61.12 acre parcel of
property because that property sold for less than the $1,000,000 threshold set by the
Ravenwood-Cumberland Agreement; (2) the Ravenwood-Cumberland Agreement was
unenforceable as a matter of law and policy because Cumberland is a licensed real estate
broker and, therefore, is not entitled to collect a commission on the unsold parcel; (3) if,
however, Cumberland was entitled to collect a commission on the unsold parcel, such
commission was no more than $120,000. Although we do not find an order denying the
motion for summary judgment in the appellate record, it is obvious that the court did deny
the motion as the matter proceeded to full hearing on May 25, 2010. At the close of
Cumberland’s case-in-chief, Ravenwood moved for involuntary dismissal under Tennessee
Rule of Civil Procedure 41.02. This motion was denied. Following the hearing, on July 30,
2010, the trial court entered a final order.6 Therein, the court specifically found that
Ravenwood had failed to meet its burden regarding its counterclaim and, consequently,
denied recovery thereon. The court also made specific findings concerning the arbitration
and consideration provisions of the Ravenwood-Cumberland Agreement, namely:
12. The Court finds that the arbitration provisions are not
relevant in this case for a number of reasons [which are not
elaborated in the order] and by agreement of the parties.
13. The Court also finds the preamble contained in the
agreement that is the subject of this case relevant which states
“[f]or and in consideration of the mutual agreements and
understandings as herein contained, receipt and sufficiency of
which consideration is hereby acknowledged, the parties agree
to be bound as follows....”
The court awarded Cumberland judgment against Ravenwood in the amount of
$343,591, plus attorney’s fees, expenses, and pre-judgment interest at a rate of six percent
per annum. In reaching these amounts, the court specifically found:
18. The Court is aided by the testimony of Glenn Dukes about
his math calculations, which also appear in Trial Exhibit 17, the
language in the December 11, 2003 contract, Trial Exhibit 6,
which refers to agreeing upon the fair market value of the
property and membership interests upon which [Cumberland’s]
fee will be based, the definition of proceeds, and the definition
of property.
6
An amended order was filed on July 30, 2010.
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19. In applying paragraph six (6), sections a, b, and c of the
agreement in this case, the Court finds that the fair market value
of the thirty (30) acres of property, is two million dollars
($2,000,000) as agreed by the parties, and the fair market value
of the rest of the property was its purchase price of eight
hundred sixty-seven thousand nine hundred fifty-eight dollars
($867,958). Therefore, the total proceeds are two million eight
hundred sixty-seven thousand nine hundred fifty-eight dollars
($2,867,958).
20. Based upon the fee structure set forth in the agreement and
applying paragraph 7 and sections a, b, and c of paragraph 6, the
Court finds that the amount of the proceeds totaling between one
million dollars ($1,000,000) and one million two hundred
thousand dollars ($1,200,000) is two hundred thousand dollars
($200,000). Ten percent (10%) of two hundred thousand dollars
($200,000) is twenty thousand dollars ($20,000).
21. The amount of proceeds totaling between one million two
hundred thousand dollars ($1,200,000) and one million four
hundred thousand dollars ($1,400,000) is two hundred thousand
dollars ($200,000). Fifteen percent (15%) of two hundred
thousand dollars ($200,000) is thirty thousand dollars ($30,000).
22. The Plaintiff’s fee shall also be based upon twenty percent
(20%) of the proceeds exceeding one million four hundred
thousand dollars ($1,400,000). The court finds that the total
proceeds in the amount of two million eight hundred sixty-seven
thousand nine hundred fifty-eight dollars ($2,867,958) less one
million four hundred thousand dollars ($1,400,000) is one
million four hundred sixty-seven thousand nine hundred fifty-
eight dollars ($1,467,958). Twenty percent (20%) of one
million four hundred sixty-seven thousand nine hundred fifty-
eight dollars ($1,465,958) is two hundred ninety-three thousand
five hundred ninety one dollars ($293,591).
23. Thus, the total of twenty thousand dollars ($20,000), thirty
thousand dollars ($30,000) and two hundred ninety-three
thousand five hundred ninety-one dollars ($293,591) is three
hundred forty-three thousand five hundred ninety-one dollars
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($343,591), and the Court awards the Plaintiff a judgment
against the Defendant in this amount.
In addition to the foregoing, the trial court also specifically found that the contract was
neither unconscionable, nor without consideration:
The Court further finds the contract is not unconscionable.
There was no proof that the defendants lacked opportunity of
choice. The parties noted there was mutual consideration to
contract. The defendants did not show why the contract was
unconscionable.
An order setting fees and expenses was entered on July 29, 2010. By this order, the
trial court awarded Cumberland a judgment against Ravenwood in the amount of
$140,470.55 for fees and expenses as the prevailing party.
Ravenwood appeals, and raises four issues for review as stated in its brief:
1. Whether the Chancery Court erred in finding the existence
of sufficient and adequate consideration to support the Real
Property Services Agreement when the evidence at trial
demonstrated the lack of a new promise or forbearance on the
party of Cumberland Properties in exchange for the benefit of
the buyout provision in Paragraph 7(a) of the Real Property
Services Agreement.
2. Whether the Chancery Court erred in concluding that
Cumberland Properties was allowed to collect its commission
under the terms of the Real Property Services Agreement when
the 30.5-acre parcel of property never sold, and when
Cumberland Properties did no more than procure an option to
purchase the 30.5 acres.
3. Whether the Chancery Court erred in allowing Cumberland
Properties to offer parol evidence that altered the plain meaning
of the Real Property Services Agreement when the contract was
unambiguous and contained an integration clause.
4. Alternatively, if this Court concludes that (a) a licensed real
estate broker can collect a commission for property that has
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never sold, and (b) the Real Property Services Agreement is
supported by consideration, whether the Chancery Court erred
in determining the amount of damages.
We first note that, because this case was tried by the court sitting without a jury, we
review the case de novo upon the record with a presumption of correctness of the findings
of fact by the trial court. Unless the evidence preponderates against the findings, we must
affirm, absent error of law. See Tenn. R. App. P. 13(d).
It is well settled in Tennessee that the interpretation of a written contract is a matter
of law, and thus, no presumption of correctness in its interpretation exists. NSA DBA Benefit
Plan, v. Connecticut Gen. Life Ins. Co., 968 S.W.2d 791 (Tenn. Ct. App. 1997). The
cardinal rule in the construction of contracts is to ascertain the intent of the parties. West v.
Laminite Plastics Mfg. Co., 674 S.W.2d 310 (Tenn. Ct. App. 1984). If the contract is plain
and unambiguous, the meaning thereof is a question of law, and it is the Court's function to
interpret the contract as written according to its plain terms. Petty v. Sloan, 277 S.W.2d 355(Tenn. 1955). The language used in a contract must be taken and understood in its plain,
ordinary, and popular sense. Bob Pearsall Motors, Inc. v. Regal-Chrysler Plymouth, Inc.,
521 S.W.2d 578 (Tenn. 1975). In construing contracts, the words expressing the parties'
intentions should be given the usual, natural, and ordinary meaning. Ballard v. N. Am. Life
& Cas. Co., 667 S.W.2d 79 (Tenn. Ct. App. 1983). If the language of a written instrument
is unambiguous, the Court must interpret it as written rather than according to the
unexpressed intention of one of the parties. Sutton v. First Nat. Bank of Crossville, 620
S.W.2d 526 (Tenn. Ct. App. 1981). In determining whether an ambiguity exists in a contract,
we are guided by the following principles:
Contractual language is ambiguous when it is susceptible
to more than one interpretation and reasonably intelligent
persons could come to different conclusions as to the meaning
of the contract. However, an ambiguity arises in a contract only
when contractual terms are susceptible to fair and honest
differences, and when both of the interpretations advanced are
reasonable.
A word or expression in the contract may, standing alone,
be capable of two meanings and yet the contract may be
unambiguous. Thus, in determining whether or not there is such
an ambiguity as calls for interpretation, 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
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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.
77 C.J.S. Contracts § 304 (citations omitted). However, a contract is not ambiguous merely
because the parties have different interpretations of the contract's various provisions,
Cookeville Gynecology & Obstetrics, P.C. v. Southeastern Data Sys., Inc., 884 S.W.2d 458,
462 (citing Oman Constr. Co. v. Tennessee Valley Authority, 486 F. Supp. 375, 382 (M.D.
Tenn. 1979)), nor can this Court create an ambiguity where none exists in the contract.
Cookeville P.C., 884 S.W.2d at 462 (citing Edwards v. Travelers Indem. Co., 201 Tenn.
435, 300 S.W.2d 615, 617-18 (1957)).
Consideration
“A party attempting to prove the existence of a contract ‘is required to show that the
agreement on which he [or she] relies was supported by adequate consideration [.]’” Calabro
v. Calabro, 15 S.W.3d 873, 876 (Tenn. Ct. App. 1999) (quoting Price v. Mercury Supply
Company, Inc., 682 S.W.2d 924, 933 (Tenn. Ct. App. 1984)). The absence of consideration
“renders the contract, undertaking, or promise void and unenforceable as between the
parties.” 21 Steven W. Feldman, Tennessee Practice: Contract Law and Practice § 5:1 (2007).
Generally, it is not required that consideration be adequate in the sense that it represents
actual value, Lloyd v. Turner, 602 S.W.2d 503, 509 (Tenn. Ct. App. 1980), and a contract
will not be set aside for mere inadequacy. Farrell v. Third Nat'l Bank, 101 S.W.2d 158, 163
(Tenn. Ct. App. 1936). However, where the inadequacy of consideration is not the sole issue
and the case involves other inequitable incidents, relief is more readily granted. Woodard v.
Bruce, 339 S.W.2d 143, 148 (Tenn. Ct. App. 1960). Whether there is adequate consideration
is a matter of law and may be reviewed by this court de novo. Applewhite v. Allen, 27 Tenn.
697 (1848).
Consideration may take a number of different forms, including a return promise. See,
e.g., Estate of Hordeski v. First Federal Savings and Loan Ass'n of Russell County, Ala.,
827 S.W.2d 302, 304 (Tenn. Ct. App. 1991) (“It may be a promise for a promise.”).
However, “[w]ords of promise which by their terms make performance entirely optional with
the ‘promisor’ do not constitute a promise.” Restatement (Second) of Contracts § 77, cmt.
a. This is referred to as an “illusory promise.” A promise may be illusory because it
“essentially promis[es] nothing at all, or allow[s] the promisor to decide whether or not to
perform the promised act.” Walker v. Ryan's Family Steak Houses, Inc., 289 F. Supp. 2d
916, 929 (M.D. Tenn. 2003) (citations omitted), aff'd, 400 F.3d 370 (6th Cir. 2005), cert.
denied, 546 U.S. 1030, 126 S. Ct. 730 (2005). Similarly, a “promise may also be illusory if
it is too indefinite to be enforceable.” Id. Courts do, however, generally endeavor to avoid
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finding that a promise was illusory and that there was thereby a failure of consideration. See,
e.g., 1 E. Allan Farnsworth, Farnsworth on Contracts § 2.13, at 136 (3d ed. 2004). However,
“[e]very contract imposes upon the parties a duty of good faith and fair dealing in the
performance and interpretation of the contract.” Elliot v. Elliot, 149 S.W.3d 77, 84-85 (Tenn.
Ct. App. 2004) (citations omitted). Although this implied covenant cannot be used to create
new contractual obligations or to alter the specific terms of a contract, see, e.g., Goot v.
Metro. Gov't of Nashville & Davidson County, No. M2003-02013-COA-R3-CV, 2005 WL
3031638, at *7 (Tenn. Ct. App. Nov. 9, 2005) (citations omitted), courts often imply this
covenant in order to prevent a promise from being deemed illusory. See, e.g., Storek &
Storek, Inc. v. Citicorp Real Estate, Inc., 100 Cal. App. 4th 44, 61 (Cal. Ct. App. 2002).7
Tennessee Code Annotated Section 47-50-103 creates a rebuttable presumption that
“[a]ll contracts in writing signed by the party to be bound, or the party's authorized agent and
attorney, are prima facie evidence of a consideration.” In the instant case, all of the
documents at issue (and particularly the Letter and the Ravenwood-Cumberland Agreement)
were signed. The question, then, is whether Ravenwood put forth any evidence to rebut the
7
Perhaps the most famous instance of this is to be found in Justice Cardozo's opinion for the New
York Court of Appeals in Wood v. Lucy, Lady Duff-Gordon, 118 N.E. 214 (N.Y. 1917). In Wood the
plaintiff and defendant had entered into a contract whereby the plaintiff “was to have the exclusive right ...
to place [the defendant's] indorsements on the designs of others ... [and] ... also to have the exclusive right
to place [the defendant's] designs on sale, or to license others to market them.” Id. at 214 The defendant
breached this agreement and was sued. For her defense, the defendant contended that no contract existed
because the plaintiff never made a return promise binding him to act. Id. The court rejected this argument
and concluded that a “promise to pay the defendant one-half of the profits and revenues resulting from the
exclusive agency and to render accounts monthly was a promise to use reasonable efforts to bring profits and
revenues into existence.” Id. at 215. “In the same vein, covenants to use ‘good faith’ or ‘best efforts' to
generate profits for the licensor are routinely implied where the licensor grants exclusive promotional or
licensing rights in exchange for a percentage of profits or royalties, but the licensee does not expressly
promise to do anything.” Third Story Music, Inc. v. Waits, 41 Cal. App. 4th 798, 805 (Cal. Ct. App.1995).
Similarly, because of this implied covenant of good faith, courts often uphold contracts that are made
contingent upon the securing of financing on acceptable terms. See, e.g., Mezzanotte v. Freeland, 200 S.E.2d
410, 414-16 (N.C. Ct. App. 1973).
Another case is particularly instructive. In Magruder Quarry & Co., L.L.C. v. Briscoe, 83 S.W.3d
647 (Mo. Ct. App. 2002), the defendants were granted a lease to property “for the purpose of mining,
quarrying, removing, and marketing limestone rock.” Id. at 648. The lease provided that the rental rate would
be “eighteen cents ($0.18) per ton of any and all rock product sold during the preceding month[.]” Id. In a
suit against the lessees, the trial court held that the contract was null and void because this was no promise
at all. Id. at 650. Reading into the parties' contract an implied covenant of good faith and reasonable efforts,
the appellate court reversed and concluded that the contract was supported by adequate consideration. Id.
at 652; see Cordry v. Vanderbilt Mortg. & Fin., Inc., 445 F.3d 1106, 1110-11 (8th Cir. 2006).
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presumption of proper consideration. Before addressing this question, we first review the
grounds for Ravenwood’s argument.
Ravenwood’s argument rests upon the addition of both the Recital paragraph and
Paragraph 7(a) (the buyout provision) to the Ravenwood-Cumberland Agreement (both of
which are set out in full above). Ravenwood cites Mr. Dukes’ testimony that, from the onset
of his engagement with Ravenwood, Cumberland was always engaged to perform the same
services (i.e., the services under both the Letter and the Ravenwood-Cumberland Agreement
were identical–that is to sell the 91.62 acres at the best price). However, Ravenwood
contends that, because the buyout provision contained in the Ravenwood-Cumberland
Agreement (supra) was not contained in the Letter, there was no consideration for the buyout
clause. Ravenwood contends that the language contained in the Recital paragraph, indicating
that the clause “is not necessary in order to form the agreement between the parties,” is not
necessarily true given the additional language that the Recital paragraph “provide[s]
additional details for [the parties’] convenience.” Ravenwood contends that these “additional
details” were not, in fact, provided because the agreement (in terms of both services to be
performed by Cumberland, and fees to be paid by Ravenwood) remained unchanged from
the Letter to the Ravenwood-Cumberland Agreement. Consequently, Ravenwood contends
that “[t]he only ‘additional detail’ seems to be the imposition of the substantial burden of the
buyout provision,” which provision “gave Cumberland...the right to be paid not based on the
increase in the amount of Proceeds, but instead, based on the hypothetical increase in the fair
market value of the property at the time the demand was made.” Without proper
consideration, Ravenwood contends that the buyout provision is unenforceable.
To support its contention that Cumberland provided no addition consideration for the
buyout provision, Ravenwood relies upon the testimony of Mr. Dukes, which was adduced
during his cross-examination. Mr. Dukes admitted that Cumberland had performed
substantially the same services under both the Letter and Ravenwood-Cumberland
Agreement. Ravenwood argues that Mr. Dukes’ testimony “is clear that Cumberland...never
did anything, nor promised to do or forebear from doing, anything different from the first day
of its engagement until the last day of the engagement.” While we concede that the
obligations and fee structure agreed upon by Ravenwood and Cumberland remained
substantially unchanged during the course of their dealings, this fact, standing alone, does
not negate the trial court’s finding that consideration was given.
The parties entered into the Letter on November 18, 2003. Cumberland’s efforts,
pursuant to the Letter, resulted in the December 10, 2003 Freeman-Ravenwood Agreement.
Following the execution of the Freeman-Ravenwood Agreement, Ravenwood and
Cumberland discussed the fact that Ravenwood might not need to sell all of its land because
of the funds it had received under the Freeman-Ravenwood Agreement. Because of
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Ravenwood’s financial condition at the outset of its dealings with Cumberland, it did not
seem likely that Ravenwood would be able to sell less than the full 91.62 acres at that time.
Following the Freeman-Ravenwood Agreement, Ravenwood and Cumberland decided to
continue their business relationship and executed the Ravenwood-Cumberland Agreement,
dated December 11, 2003. The Ravenwood-Cumberland Agreement indicates that
Cumberland had already provided valuable services and would “continue to perform such
services.”
The sale to Freeman closed on January 7, 2005, at which time Ravenwood received
an infusion of cash. Because of its better financial condition, Ravenwood was able to
contemplate the possibility of working with other developers, a prospect that was not
available before the Freeman transaction closed. At this point, Ravenwood and Cumberland
again met to discuss their business arrangement and, at that time, executed the Amended
Ravenwood-Cumberland Agreement, which also indicates that Cumberland has, and will
continue, to provide valuable services to Ravenwood.
From our review of the record, and the documents executed by Ravenwood and
Cumberland, it is clear that each of these documents represents the desire for a continued
relationship. The trial court acknowledged this fact when it stated that “lots of work was left
to be done...when [the Ravenwood-Cumberland Agreement] was entered into, and there were
continuing services that both parties expected the plaintiffs would provide.” The execution
of the Ravenwood-Cumberland Agreement, and the amendment thereto, was precipitated by
a change in Ravenwood’s financial standing and each document contemplated ongoing
services from Cumberland in pursuit of other business opportunities for Ravenwood.
More importantly, the plain language of the buyout provision supports the trial court’s
finding that consideration existed. It is important to note that the buyout provision contained
in the first Ravenwood-Cumberland Agreement was mutual:
Should Ravenwood Club for any reason not sell all of the
Property ... on or before March 1, 2005 ...then Ravenwood Club
shall have the right upon written notice to Cumberland, and
Ravenwood Club shall have the obligation upon written request
from Cumberland, to buyout the remaining Fee.
This language clearly indicates that both Cumberland and Ravenwood made the same
promise, and took the same risk–that, at any time after March 1, 2005, either party could
“call,” and the other risked not making as much money as it might have. It is also important
to note that, when the Ravenwood-Cumberland Agreement was made, the subject property
had not been rezoned; consequently, Cumberland risked being paid nothing because the value
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of the land would not have increased absent a rezoning.8 Subsequently, the mutuality
language contained in the buyout clause was omitted in the Amended Ravenwood-
Cumberland Agreement. The Amended Ravenwood-Cumberland Agreement provides:
Should Ravenwood...not sell all of the Property...on or before
March 1, 2005...then Ravenwood...shall have the obligation
upon written request from Cumberland, to buyout the remaining
Fee by paying Cumberland the remaining Fee under the
schedule in Paragraph 6...based upon the fair market value of
the remaining Property....
Because the reason for the omission of the mutuality language in the Amended
Ravenwood-Cumberland Agreement is not contained in the appellate record, whether the
omission was intentional or a typographical error is not dispositive. Even if we assume that
the mutuality language was intentionally omitted, Cumberland clearly gave additional
consideration for the Amended Ravenwood-Cumberland Agreement by assuming four new
enumerated services in the Amended Ravenwood-Cumberland Agreement, as set out above.
From the totality of the circumstances, we conclude that sufficient consideration
existed for the Letter, the Ravenwood-Cumberland Agreement, and the Amended
Ravenwood-Cumberland Agreement.
Illegality / Public Policy
Ravenwood next asserts that Paragraph 7(a) of the Ravenwood-Cumberland
Agreement is unenforceable because it allegedly violates the public policy of the State of
Tennessee and the laws regulating licensed real estate brokers. The question of whether a
contract, or a provision thereof, is against public policy is a question of law. See Vintage
Health Resources v. Guiangan, 308 S.W.3d 448 (Tenn. Ct. App. 2009), perm. app denied
(Tenn. Feb. 22, 2010).
At trial, the parties stipulated that Cumberland and Mr. Dukes were licensed real
8
Paragraph 7:1(c) of the Freeman-Ravenwood Agreement provides, in relevant part, as follows:
Purchaser agrees that it shall exercise its best efforts to rezone the [subject
property, i.e., approximately 30 acres of retained pasture land] for single-
family residential use....
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estate brokers. However, it is important to note that, in Paragraph 6.4 of the Freeman-
Ravenwood Agreement, Ravenwood specifically warrants that “no broker or agent has been
engaged by it in connection with the negotiation and/or consummation of this Agreement.”
Nevertheless, Ravenwood now takes the position that Cumberland was acting as a broker in
this case. Specifically, Ravenwood contends that, under Tennessee law, a real estate broker
can never receive payment from any transaction unless a purchase of land has been
completed and the broker is paid a commission. Cumberland argued, and the trial court
agreed, that, in the context of this business arrangement, Cumberland was not engaged as a
real estate broker.
In support of its argument, Ravenwood relies upon the case of Burton v. Rose, 194
S.W. 575 (Tenn. 1917) for the proposition that an agent or broker who does nothing more
than produce a party who enters into an option contract is not entitled to his or her
commission. As is relevant to this appeal, the Burton Court concluded that an agent does
not “show a performance entitling him to recover the contract percentage by merely
producing a person who enters into a contract with the owner by the terms of which it is
optional....” Burton, 194 S.W. at 575. Specifically, the Burton Court reasoned that “[n]o
absolute purchaser, ready, able, and willing to take the property, is procured in such case.”
Id. Instead, the agent “must rely upon the option ripening into a sale absolute for his
commission.” Id. We have reviewed the Burton case and conclude that its holding is limited
to this: when a contract establishes a broker’s payment based solely upon a commissioned
percentage of the sale price, the broker does not get paid until the land actually sells. Id.
Consequently, Burton is not controlling in the instant case.
This Court finds more guidance from The Tennessee Real Estate Broker License Act,
and specifically Tennessee Code Annotated Section 62-13-102(4)(A), which defines a
“broker” as:
[A]ny person who, for a fee, commission, finders fee or any
other valuable consideration or with the intent or expectation of
receiving a fee, commission, finders fee or any other valuable
consideration from another, solicits, negotiates or attempts to
solicit or negotiate the listing, sale, purchase, exchange, lease or
option to buy, sell, rent or exchange for any real estate or of the
improvements on the real estate or any time-share interval as
defined in the Tennessee Time-Share Act, compiled in title 66,
chapter 32, part 1, collects rents or attempts to collect rents,
auctions or offers to auction or who advertises or holds out as
engaged in any of the foregoing...
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By its plain language, the statute specifically contemplates that a broker may be paid
by a “fee, commission, finder’s fee, or any other valuable consideration.” Tenn. Code Ann.
§ 62-13-102(4)(A); see also Pacesetter Props. Inc. v. Hardaway, 635 S.W.2d 382, 391
(Tenn. Ct. App. 1981) (finding that real estate finder’s fees are created by contract and are
enforceable upon terms of same). While Ravenwood argues that its fee arrangement with
Cumberland was strictly a sale-based commission, the plain language of the parties’
agreement establishes a method for payment in case the property does not sell (i.e., the
buyout provision, supra). Ravenwood cites Mr. Dukes’ testimony that his payment was
“contingent” in order to negate the plain terms of the agreement establishing a mechanism
for payment in the absence of a sale. In relevant part, Mr. Dukes testified:
Q. So your payment under this contract was entirely contingent;
is that correct?
A. Yes, sir.
Q. The three percent was contingent upon negotiating a
payment in case?
A. Yes, sir.
Q. And the other percentages were contingent upon either a sale
or upon a value upon giving the notice; is that correct.
A. Yes, sir.
A close reading of this section of Mr. Dukes’ testimony, however, does not support
Ravenwood’s argument. Mr. Dukes does not testify that Cumberland’s payment is
completely contingent upon a sale; rather, he states that some of Cumberland’s payment is
contingent upon sale and some is contingent upon Cumberland finding a buyer, whether or
not the sale is completed. From Mr. Dukes’ testimony, and in light of the plain language of
the contractual provision, we conclude that neither Cumberland, nor Mr. Dukes, violated The
Tennessee Real Estate Broker License Act in the contract made with Ravenwood. The
parties’ fee agreement is contractual in nature. Although the contract provides for payment
to Cumberland, even in the absence of a completed sale, this arrangement does not violate
the plain language of the Tennessee Real Estate Broker License Act, which specifically
allows a broker to accept “a finders fee, or any other valuable consideration” for its services.
Parole Evidence
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Ravenwood asserts that the trial court erred in admitting parol evidence, which it
contends altered the terms of the written agreement with Cumberland. Although, as set out
above, the court stated that it was aided by the testimony of Mr. Dukes, it is important to note
that it was Ravenwood, not Cumberland, that elicited the parol evidence in question during
its cross-examination of Mr. Dukes. From the transcript, Ravenwood vigorously cross-
examined Mr. Dukes concerning the written agreement. In fact, Ravenwood was so thorough
in its cross-examination that Mr. Dukes was questioned about punctuation marks contained
in the agreement. To the extent that Ravenwood elicited the testimony to which it now
objects, the objection is waived. Palanki ex rel. Palanki v. Vanderbilt Univ., 215 S.W.3d
380. (Tenn. Ct. App. 2006). In Palanki, this Court specifically stated:
[A] party cannot generally be heard to complain about testimony
elicited by his own cross-examination of an opposing party or a
witness. Bakery Servs., Inc. v. Thornton Chevrolet, Inc., 224
Ga.App. 31, 479 S.E.2d 363, 365 (1996), Doucette v. Doucette,
168 Vt. 626, 725 A.2d 901, 904 (1998), Dorfman v. Schwabl,
777 So. 2d 427, 429-30 (Fla.Dist.Ct.App.2000). The Supreme
Court has held:
It was assigned as error that the Court, over
the objection of defendant's counsel, permitted the
plaintiff to testify in regard to a rent contract
which was a wholly independent matter, and said
contract, if admissible, being in writing, it should
have been produced.
In answer to this assignment of error it may
be stated that this evidence was brought out by
defendant's counsel in his cross-examination of
plaintiff. Not one word was said about it in the
original examination.
Cartwright v. Smith, 104 Tenn. 688, 58 S.W. 331, 332
(Tenn. 1900).
The rule is based upon the general principle that a party
cannot take advantage of errors which that party has induced or
invited. Gentry v. Betty Lou Bakeries, 171 Tenn. 20, 100
S.W.2d 230, 231 (1937).
Palanki, 215 S.W.3d at 392.
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It appears, moreover, that the trial court did not base its judgment on Mr. Dukes’
testimony; rather, the court stated that it was aided by this testimony, but then stated that it
was relying upon the language of the agreement between the parties, and specifically the
language “which refers to agreeing upon the fair market value of the property and
membership interest upon which the Plaintiff’s fee will be based, the definition of proceeds,
and the definition of property.” On appeal, Ravenwood contends that Mr. Dukes’ testimony
lacked credibility. Although the trial court did not make a specific finding that Mr. Dukes
was a credible witness, we concede that, to the extent that the trial court was aided by Mr.
Dukes’ testimony, we can conclude that the trial court did find Mr. Dukes at least somewhat
credible. It is well settled that, when the resolution of the issues in a case depends upon the
truthfulness of witnesses, the trial judge who has the opportunity to observe the witnesses and
their manner and demeanor while testifying is in a far better position than this Court to
decide those issues. See McCaleb v. Saturn Corp., 910 S.W.2d 412, 415 (Tenn. 1995);
Whitaker v. Whitaker, 957 S.W.2d 834, 837 (Tenn. Ct. App. 1997). The weight, faith, and
credit to be given to any witness' testimony lies in the first instance with the trier of fact, and
the credibility accorded will be given great weight by the appellate court. Whitaker, 957
S.W.2d at 837; see also Walton v. Young, 950 S.W.2d 956, 959 (Tenn. 1997).
Damages
From our review of the record, it is apparent that Ravenwood’s theory of damages has
been somewhat inconsistent. In its motion for summary judgment, Ravenwood claimed that
Cumberland was entitled to no more than $120,000. However, in closing arguments at trial,
counsel for Ravenwood claimed that Cumberland was entitled to “an amount no greater than
$93,591.60.” And, on appeal, Ravenwood asserts that the proper amount of damages owed
to Cumberland is “at most...$143,591.60.” In contrast, from the record, it appears that
Cumberland has always relied upon the written agreement for its damages calculation.
Again, the fee schedule, as set out in the Ravenwood-Cumberland Agreement is as follows:
1. Ten (10) percent of the amount of increase of Proceeds from
One Million Dollars ($1,000,000) to One Million Two Hundred
Thousand Dollars ($1,200,000).
2. Fifteen (15) percent of the amount of increase of Proceeds
from One Million Two Hundred Thousand Dollars ($1,200,000)
to One Million Four Hundred Thousand Dollars ($1,400,000).
3. Twenty (20) percent of any amount of increase of Proceeds
in excess of One Million Four Hundred Thousand Dollars
($1,400,000).
It is clear from the record, and from the plain language of the contract, that
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Cumberland’s fee is based upon a tiered system. This interpretation is in keeping with the
parties’ stated goal that Ravenwood wished to provide Cumberland with an incentive to
increase the purchase amounts for the ninety-one acres of property with potential buyers.
From the entire agreement, we agree with the trial court’s determination that “proceeds,” as
used by the parties includes not only revenue from the sale of the ninety one acre parcel of
land, but also (and alternatively) revenue from any sales plus the market value of unsold land
at the time Cumberland requested payment under the buyout provision.
It is undisputed that sixty acres of land sold for $867,958. The parties further agreed
that the remaining thirty-one acres were worth $2,000,000 when Cumberland exercised its
option to be paid. Thus, the total Proceeds are $2,867,958. Pursuant to the tiered fee
structure, Cumberland’s fee is calculated as follows:
Contractual Term Calculation Fee
10% of the amount between $1,000,000 and $1,200,000 .1(200,000) $20,000
15% of the amount between $1,200,000 and $1,400,000 .15(200,000) $30,000
20% of the amount exceeding $1,400,000 .2(1,467,958) $293,591.60
Total Fee $343,591.60
As set out in its order, supra, this is the exact formula used by the trial court. Based
upon the language of the contract, we conclude that the trial court properly interpreted the
contract and properly calculated Cumberland’s fee. Moreover, based upon the provisions of
the Ravenwood-Cumberland Agreement, which provides for pre-judgment interest,
attorney’s fees, and expenses, we conclude that the trial court was correct in awarding these
amounts as well. Concerning interest, although the agreement provides for its payment, it
does not specify a rate for either pre, or post-judgment interest. Because the contract is
specifically governed by Tennessee law,9 Tennessee Code Annotated Section 47-14-123
9
Paragraph 13 of the Ravenwood-Cumberland Agreement provides:
This Agreement shall be a Tennessee contract. This Agreement shall be
performed in, and construed under, the laws of the State of Tennessee. Any
litigation in relation to this Agreement shall be conducted only in the
Courts located within Davidson County, Tennessee. In any litigation in
relation to this Agreement, the prevailing party shall be entitled to recover
attorney’s fees and all costs of litigation, including, but not limited to,
discovery, depositions, travel, court costs, experts and the like.
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supports the interest rate applied by the trial court.10
For the foregoing reasons, we affirm the order of the trial court. Costs of this appeal
are assessed against the Appellants, Ravenwood Club, Inc. and Ravenwood Country Club,
L.L.C., and their surety. Pursuant to the terms of the Ravenwood-Cumberland Agreement,
see fn. 9, Cumberland requests that this Court award it attorney’s fees and costs in defending
this appeal. As specifically set out in Paragraph 13 of the parties’ agreement, we conclude
that Cumberland, as the prevailing party, is entitled to collect its reasonable attorney’s fees
and costs incurred in defending this appeal. Therefore, we remand to the trial court for a
determination of the appropriate fee amount and for entry of judgment in favor of
Cumberland for the attorney fees and expenses.
_________________________________
J. STEVEN STAFFORD, JUDGE
10
Tennessee Code Annotated Section 47-14-123 provides, in relevant part, as follows:
Prejudgment interest, i.e., interest as an element of, or in the nature of,
damages, as permitted by the statutory and common laws of the state as of
April 1, 1979, may be awarded by courts or juries in accordance with the
principles of equity at any rate not in excess of a maximum effective rate
of ten percent (10%) per annum...
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