Janet Wynn Snyder v. First Tennessee Bank, N.A.

IN THE COURT OF APPEALS OF TENNESSEE
AT KNOXVILLE
October 26, 2015 Session
JANET WYNN SNYDER v. FIRST TENNESSEE BANK, N.A.
Appeal from the Chancery Court for Knox County
No. 183863-1 John F. Weaver, Chancellor
No. E2015-00530-COA-R3-CV-FILED-FEBRUARY 3, 2016
This case involves the trial court‟s award of litigation costs, inclusive of attorney‟s fees,
pursuant to Tennessee Code Annotated § 20-12-119(c) (Supp. 2015), upon granting the
defendant‟s Tennessee Rule of Civil Procedure 12.02(6) motion to dismiss the plaintiff‟s
action. The trial court entered a judgment in favor of the defendant in the amount of
$10,000, the statutory maximum, against the plaintiff and her surety. The plaintiff
appeals the portion of the ruling holding the surety liable for the $10,000 judgment of
litigation costs in the event the principal fails to satisfy the judgment. Having determined
that the surety‟s cost bond explicitly referred to “costs” as defined in Tennessee Code
Annotated § 20-12-120 (2009), rather than as defined in subsection -119(c), we reverse
the trial court‟s judgment as to the surety. We affirm the trial court‟s judgment against
the principal and remand for enforcement of that judgment.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court
Affirmed in Part, Reversed in Part; Case Remanded
THOMAS R. FRIERSON, II, J., delivered the opinion of the court, in which D. MICHAEL
SWINEY, C.J., and JOHN W. MCCLARTY, J., joined.
Mark E. Brown, Knoxville, Tennessee, for the appellant, Janet Wynn Snyder.
J. Michael Winchester, Knoxville, Tennessee, for the appellee, First Tennessee Bank,
N.A.
OPINION
I. Factual and Procedural Background
This is the second time the instant action has come before this Court on appeal.
The plaintiff, Janet Wynn Snyder, originally commenced the action on October 1, 2012,
by filing a complaint alleging breach of contract against the defendant, First Tennessee
Bank, N.A. (“the Bank”). Upon a motion to dismiss filed by the Bank pursuant to
Tennessee Rule of Civil Procedure 12.02(6), the trial court conducted a hearing and
subsequently granted the motion in an order entered May 31, 2013. Upon Ms. Snyder‟s
appeal, this Court affirmed the dismissal of her complaint. See Snyder v. First Tenn.
Bank, N.A., 450 S.W.3d 515 (Tenn. Ct. App. 2014), perm. app. denied (Tenn. Oct. 15,
2014) (“Snyder I”). Determining that Ms. Snyder‟s breach of contract claim alleged
wrongful acceleration of a note in default, this Court held that “wrongful acceleration is
not an existing cause of action in this state, and we decline the invitation to create such a
cause of action.” Id. at 516. This Court therefore affirmed the trial court‟s dismissal of
the complaint for failure to state a claim upon which relief could be granted. Id.
In Snyder I, this Court described the factual and procedural background underlying
the original action as follows:
Snyder‟s complaint alleges the key background facts of this case. In
1988, Snyder‟s father executed a last will and testament which created a
trust (“the Trust”) out of the remainder of his estate. Some years after
executing this will, Snyder‟s father died. Snyder and certain members of
her family were beneficiaries of the Trust. Under the terms of the Trust,
Snyder received 30% of the income from the Trust annually. The Bank
eventually was appointed trustee. The value of the Trust on the date of
appointment was $1,464,315.57 with a market value of $1,506,841.21.
Snyder and her husband signed a note and deed of trust for their
home as well as a note and deed of trust on a home equity line of credit.
These loans were from the Bank. In 2005, Snyder, in the midst of financial
difficulties, asked for help from the Trust in making her monthly mortgage
payments. Snyder‟s requests were denied. In the fall of 2005, Snyder
asked that the Trust be terminated and that the proceeds be paid to the
beneficiaries. The Bank announced that it would resign as trustee. The
Bank, however, refused to join the beneficiaries in dissolving the Trust.
In December 2005, Snyder asked the Bank for a “hardship advance”
pending the Trust‟s dissolution so that Snyder could make mortgage
2
payments due the Bank. The Bank did not grant Snyder‟s request. Snyder
alleged that she then had no choice but to hire an attorney to seek
dissolution of the Trust. Snyder entered into a contingent fee arrangement
with an attorney to seek court approval of the dissolution of the Trust. In
March 2006, the Bank filed a petition in the Trial Court seeking the
appointment of a successor trustee. Snyder filed a counter-claim.
The Bank threatened foreclosure and served notice on Snyder that it
was accelerating its loans on Snyder‟s home. At this point, Snyder‟s share
of the Trust would have been sufficient to cover the loan shortfall. Snyder
obtained several delays of the foreclosure. In November 2006, the Trust
was dissolved by agreed order. The Bank wrote itself a check from the
corpus of the Trust to cover . . . Snyder‟s loan deficiency. The Bank failed
to make distributions to the beneficiaries. Snyder filed a motion to compel
the Bank to make the distributions, which the Bank subsequently did.
In October 2012, Snyder sued the Bank seeking compensatory and
punitive damages. Snyder alleged breach of contract in that the Bank acted
in bad faith and forced Snyder to incur needless attorney‟s fees in
dissolving the Trust. The Bank filed a motion to dismiss for failure to state
a claim upon which relief can be granted and failure to join a party. Snyder
filed a response to the motion, clarifying that her complaint alleged “breach
of the Deed of Trust contract on the real property.”
In March 2013, the Trial Court heard arguments on the Bank‟s
motion to dismiss. In May 2013, the Trial Court granted the Bank‟s motion
to dismiss for failure to state a claim upon which relief can be granted. In
its memorandum opinion incorporated into the final judgment of dismissal,
the Trial Court held, inter alia: any breach of fiduciary duty claim was
time-barred; no foreclosure occurred and any wrongful foreclosure claim
failed; and, there was no breach of contract claim as any such claim was
time-barred, and, in any event, the Bank did not breach its contracts. The
Trial Court stayed the issue of costs and attorney‟s fees sought by the Bank
under Tenn. Code Ann. § 20-12-119(c) pending resolution of any appeal.
Thereafter, Snyder timely appealed to this Court.
Id. at 516-17 (footnotes omitted). This Court remanded the case to the trial court “for
collection of the costs below and further proceedings pursuant to Tenn. Code Ann. § 20-
12-119(c).” Id. at 519.
3
Upon remand, the Bank filed a motion to award costs and attorney‟s fees, pursuant
to Tennessee Code Annotated §§ 20-12-119(c) and 20-12-135, on October 29, 2014. The
Bank attached to its motion a memorandum and affidavit setting forth attorney‟s fees in
the amount of $57,238.75 and a court reporter‟s fee in the amount of $403.25, for a total
amount of $57,642.00. The Bank requested that, pursuant to subsection -119(c), the trial
court impose a judgment for the maximum statutory amount of $10,000 in litigation
costs, inclusive of attorney‟s fees, against Ms. Snyder. The Bank also specifically
requested that the court find Ms. Snyder‟s surety liable for the statutory maximum of
$10,000 in the event that Ms. Snyder failed to satisfy the judgment as principal.
Concomitant with Ms. Snyder‟s original complaint, her counsel, Menefee &
Brown, Inc. (hereinafter, “the Surety”), had filed a cost bond pursuant to Tennessee Code
Annotated § 20-12-120, recognizing itself “as surety for all costs and taxes in this cause.”
Ms. Snyder filed a response to the Bank‟s motion, arguing, as pertinent to this appeal,
that the plain language of the statute does not implicate liability of the Surety for
litigation costs beyond court costs.1
The trial court conducted a hearing on January 21, 2015, during which the Bank‟s
counsel presented an affidavit supporting the reasonableness of the costs and attorney‟s
fees presented. On February 27, 2015, the court issued a Memorandum Opinion, finding,
inter alia, that the court reporter‟s fee and attorney‟s fees presented were reasonable. The
court awarded the Bank a judgment for litigation costs, inclusive of attorney‟s fees, in the
maximum statutory amount of $10,000. See Tenn. Code Ann. § 20-12-119(c).
Regarding the Bank‟s argument that this award should be taxed against the Surety as well
as against Ms. Snyder, the court requested that the parties submit post-trial briefs, which
each did respectively. Upon consideration, the court entered a judgment on March 27,
2015, taxing the $10,000 award of litigation costs against both Ms. Snyder and the
Surety. Ms. Snyder timely appealed.2
1
Ms. Snyder also argued in her response that as Tennessee Code Annotated § 20-12-119(c) is written, it
violates the equal protection and separation of powers clauses of the United States and Tennessee
Constitutions. Her counsel announced during the final hearing on this matter, however, that Ms. Snyder
had elected to waive any constitutional argument.
2
We address the issue of whether the Surety is a party to this appeal in a subsequent section of this
opinion.
4
Issues Presented
Ms. Snyder presents one issue on appeal, which we have restated as follows:
1. Whether the trial court erred by ruling that Tennessee Code
Annotated § 20-12-119(c) applies to a party‟s surety, as well as to
the party, when the party‟s case is dismissed upon a Tennessee Rule
of Civil Procedure 12.02(6) motion to dismiss for failure to state a
claim upon which relief can be granted.
The Bank presents two additional issues, which we have similarly restated as follows:
2. Whether either Ms. Snyder or her surety has standing to pursue a
claim or remedy in this appeal.
3. Whether this appeal is frivolous pursuant to Tennessee Code
Annotated § 27-1-122.
III. Standard of Review
The issues raised are primarily questions of law, specifically involving
interpretation of Tennessee Code Annotated § 20-12-119(c). We review questions of
law, including those of statutory construction, de novo with no presumption of
correctness. See Cunningham v. Williamson Cnty. Hosp. Dist., 405 S.W.3d 41, 43 (Tenn.
2013) (citing Mills v. Fulmarque, Inc., 360 S.W.3d 362, 366 (Tenn. 2012)). Our
Supreme Court has summarized the principles involved in statutory construction as
follows:
When dealing with statutory interpretation, well-defined precepts apply.
Our primary objective is to carry out legislative intent without broadening
or restricting the statute beyond its intended scope. Houghton v. Aramark
Educ. Res., Inc., 90 S.W.3d 676, 678 (Tenn. 2002). In construing
legislative enactments, we presume that every word in a statute has
meaning and purpose and should be given full effect if the obvious
intention of the General Assembly is not violated by so doing. In re
C.K.G., 173 S.W.3d 714, 722 (Tenn. 2005). When a statute is clear, we
apply the plain meaning without complicating the task. Eastman Chem.
Co. v. Johnson, 151 S.W.3d 503, 507 (Tenn. 2004). Our obligation is
simply to enforce the written language. Abels ex rel. Hunt v. Genie Indus.,
Inc., 202 S.W.3d 99, 102 (Tenn. 2006). It is only when a statute is
ambiguous that we may reference the broader statutory scheme, the history
5
of the legislation, or other sources. Parks v. Tenn. Mun. League Risk
Mgmt. Pool, 974 S.W.2d 677, 679 (Tenn. 1998). Further, the language of a
statute cannot be considered in a vacuum, but “should be construed, if
practicable, so that its component parts are consistent and reasonable.”
Marsh v. Henderson, 221 Tenn. 42, 424 S.W.2d 193, 196 (1968). Any
interpretation of the statute that “would render one section of the act
repugnant to another” should be avoided. Tenn. Elec. Power Co. v. City of
Chattanooga, 172 Tenn. 505, 114 S.W.2d 441, 444 (1937). We also must
presume that the General Assembly was aware of any prior enactments at
the time the legislation passed. Owens v. State, 908 S.W.2d 923, 926
(Tenn. 1995).
In re Estate of Tanner, 295 S.W.3d 610, 613-14 (Tenn. 2009).
To the extent that we need also review the factual findings of the trial court, we
presume those findings to be correct and will not overturn them unless the evidence
preponderates against them. See Tenn. R. App. P. 13(d); Morrison v. Allen, 338 S.W.3d
417, 425-26 (Tenn. 2011). “In order for the evidence to preponderate against the trial
court‟s findings of fact, the evidence must support another finding of fact with greater
convincing effect.” Wood v. Starko, 197 S.W.3d 255, 257 (Tenn. Ct. App. 2006).
IV. Standing
We first address the threshold issue of standing to raise the issue of the Surety‟s
liability on appeal. The Bank contends that because the Surety was not named as a party
before the trial court or on the notice of appeal, it cannot raise an issue on its own behalf.
The Bank further contends that Ms. Snyder cannot raise the issue of a judgment not
entered against her. Ms. Snyder asserts that the trial court joined the Surety to the action
by including the Surety in the judgment. Upon careful consideration, we conclude that
the Surety has standing to appeal the judgment entered against it.
This Court has explained the elements constituting standing as follows:
In order to establish standing, a party must demonstrate three essential
elements. First, the party must demonstrate that it has suffered an injury
which is “distinct and palpable,” Metropolitan Air Research Testing Auth.,
Inc., 842 S.W.2d [611,] 615 [(Tenn. Ct. App. 1992)], and not conjectural or
hypothetical. Second, the party must establish a causal connection between
that injury and the conduct of which he complains. Third, it must be likely
that a favorable decision will redress that injury.
6
Petty v. Daimler/Chrysler Corp., 91 S.W.3d 765, 767 (Tenn. Ct. App. 2002) (additional
internal citations omitted).
The Bank, in its motion for costs and attorney‟s fees, expressly requested that the
trial court hold the Surety liable for the maximum statutory amount in addition to holding
Ms. Snyder liable. Upon the trial court‟s request at the close of the hearing on the
motion, the Bank and Ms. Snyder each respectively submitted a post-trial brief on the
issue, which the trial court carefully considered. As Ms. Snyder notes, the record reveals
that the Bank at no time introduced a standing argument to the trial court regarding the
Surety. We therefore determine that the Bank has not properly raised the issue on appeal
of standing before the trial court. See Dorrier v. Dark, 537 S.W.2d 888, 890 (Tenn.
1976) (“This is a court of appeals and errors, and we are limited in authority to the
adjudication of issues that are presented and decided in the trial courts . . . .”).
Moreover, we determine that the requirements for standing as to the Surety on
appeal are met. In having a $10,000 judgment rendered against it as well as the principal,
the Surety arguably suffered a distinct and palpable injury as a result of the trial court‟s
application of the statute, an injury that would be redressed if this Court found in the
Surety‟s favor. See Petty, 91 S.W.3d at 767. To rule that the Surety has no standing in
this action would deprive the Surety of due process to seek relief from the judgment.3
This Court has the discretion to add a party pursuant to Tennessee Rule of Appellate
Procedure 19(e), which provides that “[p]arties may be added or dropped by order of the
appellate court on its own motion or on motion of a party and on such terms as are just.”
We therefore, on our own motion and in the interest of justice, join the Surety as a party
to this appeal.
V. Applicability of Tennessee Code Annotated § 20-12-119(c) to Surety
The Surety contends that the trial court erred by applying Tennessee Code
Annotated § 20-12-119(c) to assess attorney‟s fees against the Surety as well as against
Ms. Snyder as the principal plaintiff. Subsection 119(c) provides for a defendant to
recover up to $10,000 in “reasonable and necessary litigation costs,” including court
reporter‟s and attorney‟s fees, from a plaintiff when the plaintiff‟s action is dismissed for
failure to state a claim upon which relief can be granted. The Bank contends that the trial
court properly interpreted the statute to find the Surety liable for $10,000 in litigation
costs, inclusive of the court reporter‟s fee and attorney‟s fees, in the event that Ms.
Snyder failed to pay the judgment. Upon our careful review, we conclude that under the
terms of the cost bond filed in the instant action, the Surety limited its liability to “costs”
as defined in Tennessee Code Annotated § 20-12-120 and is therefore not liable for the
3
We are not persuaded by the Bank‟s argument that the Surety‟s only avenue of redress from the
judgment should be to sue its own client if she should fail to pay the judgment.
7
$10,000 in fees awarded to the Bank for litigation costs if Ms. Snyder fails to satisfy the
judgment.
The General Assembly amended Tennessee Code Annotated § 20-12-119 to add
subsection (c) effective July 1, 2012. See 2012 Pub. Acts, Ch. 1046 § 1 (H.B. 3124).
Section -119 provides in full:
(a) In all civil cases, whether tried by a jury or before the court without
a jury, the presiding judge shall have a right to adjudge the cost.
(b) In doing so, the presiding judge shall be authorized, in the presiding
judge‟s discretion, to apportion the cost between the litigants, as in
the presiding judge‟s opinion the equities of the case demand.
(c)(1) Notwithstanding subsection (a) or (b), in a civil proceeding, where a
trial court grants a motion to dismiss pursuant to Rule 12 of the
Tennessee Rules of Civil Procedure for failure to state a claim upon
which relief may be granted, the court shall award the party or
parties against whom the dismissed claims were pending at the time
the successful motion to dismiss was granted the costs and
reasonable and necessary attorney‟s fees incurred in the proceedings
as a consequence of the dismissed claims by that party or parties.
The awarded costs and fees shall be paid by the party or parties
whose claim or claims were dismissed as a result of the granted
motion to dismiss.
(2) Costs shall include all reasonable and necessary litigation costs
actually incurred due to the proceedings that resulted from the filing
of the dismissed claims, including, but not limited to:
(A) Court costs;
(B) Attorneys‟ fees;
(C) Court reporter fees;
(D) Interpreter fees; and
(E) Guardian ad litem fees.
(3) An award of costs pursuant to this subsection (c) shall be made only
after all appeals of the issue of the granting of the motion to dismiss
have been exhausted and if the final outcome is the granting of the
motion to dismiss. The award of costs and attorneys‟ fees pursuant
to this section shall be stayed until a final decision which is not
subject to appeal is rendered.
8
(4) Notwithstanding any other provision of this section, the court shall
not require a party to pay costs under this section in excess of a
combined total of ten thousand dollars ($10,000) in any single
lawsuit. Where multiple parties are entitled to recover their costs
from a single party under this section and those parties‟ combined
actual costs under this section exceed ten thousand dollars ($10,000),
then the court shall apportion the awarded costs to the moving
parties in proportion to the amount of each moving party‟s incurred
costs unless agreed otherwise by the moving parties. Nothing in this
section shall be construed to limit the award of costs as provided for
in other sections of the code or at common law.
(5) This subsection (c) shall not apply to:
(A) Actions by or against the state, other governmental entities, or
public officials acting in their official capacity or under color
of law;
(B) Any claim that is dismissed by the granting of a motion to
dismiss that was filed more than sixty (60) days after the
moving party received service of the latest complaint,
counter-complaint or cross-complaint in which that dismissed
claim was made;
(C) Any claim that the party against whom the motion to dismiss
was filed withdrew, or in good faith amended to state a claim
upon which relief may be granted; however, this subdivision
(c)(5)(C) shall not apply unless a pleading providing notice of
the withdrawal or amendment was filed with the court and
delivered to the opposing party or parties at least three (3)
days before the date set for the hearing of the motion to
dismiss or by the deadline for the filing of a response to the
motion to dismiss, whichever is earlier. Nothing in this
section shall be construed to prevent a party from striking its
own motion to dismiss.
(D) Actions by pro se litigants, except where the court also finds
that the pro se party acted unreasonably in bringing, or
refusing to voluntarily withdraw, the dismissed claim;
9
(E) Any claim which is a good faith, non-frivolous claim filed for
the express purpose of extending, modifying, or reversing
existing precedent, law or regulation, or for the express
purpose of establishing the meaning, lawfulness or
constitutionality of a law, regulation or United States or
Tennessee constitutional right where the meaning, lawfulness
or constitutionality is a matter of first impression that has not
been established by precedent in a published opinion by the
Tennessee supreme court, court of appeals, court of criminal
appeals, a United States district court in Tennessee, or by the
United States supreme court. This subdivision (c)(5)(E) shall
not apply unless at the time the successful motion to dismiss
was filed the party that made the dismissed claim had
specially pleaded in its latest complaint, counter-complaint or
cross-complaint that the dismissed claim was made for one
(1) of the express purposes listed above and cited the contrary
precedent or interpretation the party seeks to distinguish or
overcome, or whether the issue to be decided is a matter of
first impression as described in this subdivision (c)(5)(E); or
(F) Any claim for which relief could be granted under a law, a
court precedent published by a court described in subdivision
(c)(5)(E), or a regulation, that was in effect and applicable to
the claim at the time the motion to dismiss was filed; where
that law, precedent or regulation was cited in the pleading in
which the dismissed claim was made or in the response to the
motion to dismiss; and where the motion to dismiss the claim
was granted due to the subsequent repeal, amendment,
overruling or distinguishing of that law, regulation or
published court precedent.
(6) This section shall not be construed to limit the ability of any court to
dismiss a claim or assess costs against a party whose claim has been
dismissed, where permitted or required by other law, court rule or at
common law.
Upon affirming the trial court‟s grant of the Bank‟s motion to dismiss Ms.
Snyder‟s action for failure to state a claim upon which relief could be granted, this Court
remanded the case to the trial court “for collection of the costs below and further
proceedings pursuant to Tenn. Code Ann. § 20-12-119(c).” Snyder I, 450 S.W.3d at 519.
On remand, the Bank filed a motion for costs and attorney‟s fees, arguing that, pursuant
10
to subsection -119(c), the maximum amount allowed should be taxed to the Surety as
well as to Ms. Snyder. During the hearing on the motion, the Bank presented
documentation of a $403.25 court reporter‟s fee and $57,238.75 in attorney‟s fees
expended to defend against Ms. Snyder‟s complaint. The Bank conceded that pursuant to
Tennessee Code Annotated § 20-12-119(c)(4), $10,000 was the maximum amount the
court could award for costs and fees.
During the hearing, Ms. Snyder did not dispute the applicability of Tennessee
Code Annotated § 20-12-119(c) to this case or the reasonableness of the Bank‟s claimed
court reporter‟s fee and attorney‟s fees. It was also undisputed that none of the statutory
exceptions delineated in Tennessee Code Annotated § 20-12-119(c)(5) applied in this
case.4 At the close of the hearing, the trial court accordingly awarded the Bank $10,000
in litigation costs. The court initially took under advisement the Bank‟s argument that
this award should be taxed against the Surety as well as against Ms. Snyder. Upon
consideration of supplemental briefs filed by the parties, the court entered a judgment
taxing the statutory maximum of $10,000 in litigation costs to both Ms. Snyder and the
Surety. In its argument on appeal, the Surety concentrates on the applicability of the
award for attorney‟s fees without directly addressing the court reporter‟s fee.
Whether an award of attorney‟s fees pursuant to Tennessee Code Annotated § 20-
12-119(c) properly may be entered against a principal‟s surety as well as the principal is a
matter of first impression.5 Prior to the filing of this opinion, Tennessee appellate courts
have been called upon to review the recently enacted subsection -119(c) in only a handful
of decisions, none of which has addressed the statute‟s applicability to a party‟s surety.
See, e.g., Baxter Bailey Invs. LLC v. APL Ltd., Inc., No. W2015-00067-COA-R3-CV,
2015 WL 5560563 at *9 (Tenn. Ct. App. Sept. 21, 2015) (noting subsection 119(c) as an
exception to the American Rule generally followed in Tennessee); Davidson v. Baydoun,
No. M2014-01486-COA-R3-CV, 2015 WL 3455426 at *4 (Tenn. Ct. App. May 29,
2015) (concluding that the plaintiff erroneously invoked subsection 119(c) when
appealing a grant of summary judgment on behalf of the defendant and when the original
4
We note that in her January 2013 response to the motion to dismiss, Ms. Snyder stated: “While there
are no reported cases in Tennessee, the Plaintiff has found authority from other jurisdictions which clearly
shows that creditors must exercise a degree of caution when enforcing acceleration clauses in their
mortgage [documents].” Ms. Snyder did not, however, plead that her claim was filed for “the express
purpose of extending, modifying, or reversing existing precedent, law or regulation . . . .” See Tenn. Code
Ann. § 20-12-119(c)(5)(E). Ms. Snyder did not argue the applicability of the exception contained in
Tennessee Code Annotated § 20-12-119(c)(5)(E) during the hearing on the Bank‟s motion to award costs
and attorney‟s fees, nor does she argue on appeal that this exception applies. Moreover, we determine
that, under the specific facts of this case, Tennessee Code Annotated § 20-12-119(c)(5)(E) does not apply.
5
Recognizing this issue of first impression as embracing an important question of law, we further note
that the question may be appropriate for review by the Tennessee Supreme Court.
11
complaint had been filed prior to the subsection‟s enactment); Arledge v. Arledge, No.
M2014-01344-COA-R3-CV, 2015 WL 3429918 at *1 (Tenn. Ct. App. May 28, 2015)
(concluding that a trial court‟s grant of a motion to dismiss must specify the ground of
failure to state a claim upon which relief can be granted in order to trigger application of
subsection -119(c)).
The trial court in its Memorandum Opinion, incorporated into the final judgment,
properly began statutory interpretation of Tennessee Code Annotated § 20-12-119(c) by
interpreting the plain meaning of the statute. See In re Estate of Tanner, 295 S.W.3d at
613 (“When a statute is clear, we apply the plain meaning without complicating the
task.”). The trial court stated in pertinent part:
Looking to the language of Tenn. Code Ann. § 20-12-119 itself, it is clear
the General Assembly does not use the term “surety,” but only refers to the
“party or parties.” The statute uses the phrase “party or parties” numerous
times, but never refers to a “surety.” Thus, the literal wording of the statute
does not address the situation in which a surety would be responsible for
the costs under these circumstances.
We agree with the trial court that the plain language of Tennessee Code Annotated § 20-
19-119(c) makes no mention of taxing a surety with litigation costs as defined in
subsection -119.
The trial court also analyzed the plain language of Tennessee Code Annotated §
20-12-119(c) in terms of whether the directives therein are mandatory or discretionary,
finding that they are mandatory. We agree with this determination also. As the trial
court noted, the General Assembly used the auxiliary verb, “shall,” throughout the
subsection rather than the auxiliary verb, “may.” See Bellamy v. Cracker Barrel Old
Country Store, Inc., 302 S.W.3d 278, 281 (Tenn. 2009) (“„When „shall‟ is used . . . it is
ordinarily construed as being mandatory and not discretionary.‟”) (quoting Stubbs v.
State, 393 S.W.2d 150, 154 (Tenn. 1965)). Our Supreme Court has explained further that
“[t]o determine whether the use of the word „shall‟ in a statute is mandatory or merely
directory, we look to see „whether the prescribed mode of action is of the essence of the
thing to be accomplished.‟” Myers v. AMISUB (SFH), Inc., 382 S.W.3d 300, 309 (Tenn.
2012) (quoting 3 Norman J. Singer & J.D. Singer, Statutes and Statutory Construction §
57:2 (7th ed. 2008)). We determine that the award to the party or parties against whom
the dismissed claims were pending, the items to be included in that award, and the
manner in which the award is to be granted are fundamental to the award of litigation
costs set forth in the statute. The implementation of “shall” in the statute therefore
dictates that we construe such requirements as mandatory. See, e.g., Myers, 382 S.W.3d
at 309.
12
We generally review an award of discretionary costs according to an abuse of
discretion standard. See Tenn. Code Ann. § 20-12-119(a)-(b); Placencia v. Placencia, 3
S.W.3d 497, 503 (Tenn. Ct. App. 1999) (“Absent a clear abuse of discretion, appellate
courts generally will not alter a trial court‟s ruling with respect to costs.”). Under
Tennessee Code Annotated § 20-12-119(c), this Court continues to review the trial
court‟s factual determination of whether litigation costs, including attorney‟s fees, are
reasonable under an abuse of discretion standard. See Wright ex rel. Wright v. Wright,
337 S.W.3d 166, 176 (Tenn. 2011). In addition, in applicable cases, a trial court‟s
determination of whether a pro se litigant has “acted unreasonably in bringing, or
refusing to voluntarily withdraw, the dismissed claim” would be reviewed under an abuse
of discretion standard. See Tenn. Code Ann. § 12-20-119(c)(5)(D) (excepting a pro se
litigant from application of -119(c) in certain circumstances). However, apart from these
specific factual determinations, the standard of review for the award of litigation costs
pursuant to Tennessee Code Annotated § 20-12-119(c) is a matter of law due to the
mandatory language of the statute. As noted previously, we review matters of law de
novo with no presumption of correctness. See Cunningham, 405 S.W.3d at 43.
The trial court in its Memorandum Opinion proceeded to analyze Tennessee Code
Annotated § 20-12-119(c) within the statutory scheme of Title 20 (“Civil Procedure”) and
Chapter 12 (“Costs”) as a whole, concluding that “the mere absence of „surety‟ from this
specific provision is not conclusive as to the intent of the General Assembly.” Rather
than moving immediately to such global analysis, however, we determine it necessary to
further analyze the plain language of subsection -119(c) itself.
Subsection -119(c) specifically defines “costs” for the purposes of this subsection
as including:
all reasonable and necessary litigation costs actually incurred due to the
proceedings that resulted from the filing of the dismissed claims, including,
but not limited to:
(A) Court costs;
(B) Attorney‟s fees;
(C) Court reporter fees;
(D) Interpreter fees; and
(E) Guardian ad litem fees.
Tenn. Code Ann. § 20-12-119(c)(2) (emphasis added). We stress that when a term is
expressly defined in a statute, we must look to the statutory definition rather than other
sources unless the statutory definition proves insufficient or ambiguous. See, e.g.,
13
Shockley v. Mental Health Coop., Inc., 429 S.W.3d 582, 591 (Tenn. 2013) (defining a
term according to its “plain and ordinary” meaning, “including dictionary definitions,”
only after determining that the statute at issue did not define the term); see also Najo
Equip. Leasing, LLC v. Comm’r of Revenue, ___ S.W.3d ___, ___, No. W2014-01096-
COA-R3-CV, 2015 WL 1873215 at *8 (Tenn. Ct. App. Apr. 23, 2015) (“„If the statute
does not sufficiently define a word used therein, the court may consider all known
definitions of the word, including dictionary definitions, in order to determine the plain
and ordinary meaning of the word.‟”) (quoting 82 C.J.S. Statutes § 415) (emphasis
added).
In contrast to the inclusion of attorney‟s fees in this statutory definition, Tennessee
generally adheres to the “American Rule,” under which “„attorneys‟ fees are not
recoverable in the absence of a statute or contract specifically providing for such recovery
. . . .‟” Cracker Barrel Old Country Store, Inc. v. Epperson, 284 S.W.3d 303, 309 (Tenn.
2009) (quoting Pullman Standard, Inc. v. Abex Corp., 693 S.W.2d 336, 338 (Tenn. 1985)
(emphasis in Cracker Barrel). It is undisputed, however, that in enacting Tennessee
Code Annotated § 20-12-119(c), the General Assembly has specifically provided for the
recovery of attorney‟s fees within the maximum amount of litigation costs to be awarded.
Furthermore, the General Assembly has specifically defined litigation “costs” for the
purposes of this statute as including attorney‟s fees. See Tenn. Code Ann. § 20-12-
119(c)(2).
The Surety does not dispute that the definition of litigation “costs” provided in
Tennessee Code Annotated § 20-12-119(c)(2) includes attorney‟s fees insofar as which
costs the trial court shall tax to the party whose complaint is dismissed pursuant to Rule
12.02(6). The Surety focuses its argument on the absence of the word “surety” in the
statute, contending that taxing costs to a “party” does not include taxing those costs to the
party‟s surety. In the instant action, the Surety drafted the following cost bond, which
was attached to the complaint:
COST BOND
We recognize ourselves as surety for all costs and taxes in this cause
in accordance with Tenn. Code Ann. §20-12-120.
(Underlined emphasis added.) The cost bond was signed by Mark E. Brown, as counsel
for Ms. Snyder and President of the Surety. The Surety indicated in its cost bond that it
was complying with Tennessee Code Annotated § 20-12-120, which provides:
Security given by plaintiff. – No leading process shall issue from any
court without security being given by the party at whose instance the action
14
is brought for the successful prosecution of the party‟s action, and, in case
of failure, for the payment of court costs and taxes that may be awarded
against the party, unless in cases and instances specifically excepted.
(Emphasis added.)
The Surety asserts that the trial court‟s interpretation of Tennessee Code
Annotated § 20-12-119(c) as applicable to the Surety is in conflict with the requirement
of security for “court costs and taxes” set forth in Tennessee Code Annotated § 20-12-
120. The Surety argues that “[t]he statute [subsection 119(c)] itself creates a distinction
between costs and attorney fees.” We disagree with the Surety‟s interpretation in this
regard. The plain language of subsection -119(c) creates a distinction between “court
costs” and “attorney‟s fees,” both of which are specifically included within the statutory
definition of litigation “costs” for purposes of defining “all reasonable and necessary
litigation costs actually incurred due to the proceedings that resulted from the filing of the
dismissed claims . . . .” See Tenn. Code Ann. § 20-12-119(c)(2). The statute thus also
creates a distinction, for purposes of applying subsection -119(c), between litigation
“costs” in the broader sense and specific “court costs.”
We do find, however, that in the case at bar, the Surety limited its liability through
the language of its cost bond. The trial court stated in its Memorandum Opinion that the
Surety had “used no words of limitation in this self-authored cost bond.” To the contrary,
we determine that in explicitly drafting its cost bond “in accordance with” Tennessee
Code Annotated § 20-12-120, the Surety limited its liability to “court costs and taxes” as
defined in section -120, rather than the broader umbrella of litigation “costs” as defined
in subsection -119(c). We therefore conclude that pursuant to the plain language of
Tennessee Code Annotated §§ 20-12-119(c) and 20-12-120, the cost bond, as drafted and
filed in this case, did not commit the Surety to liability for the court reporter‟s fee and
attorney‟s fees.6 Inasmuch as we determine the plain language of Tennessee Code
Annotated § 20-12-119(c) to be clear and unambiguous as pertinent to this issue, we
further determine the trial court‟s detailed analysis of the surrounding statutory scheme 7
6
Confining our analysis to the facts of this case, we do not address whether a surety who had not limited
its liability for “costs” in any way would be liable for the full $10,000 judgment of litigation costs
pursuant to Tennessee Code Annotated 20-12-119(c). As a point of practice, we suggest that attorneys
acting as sureties draft cost bonds with the distinction between “court costs” and broader litigation
“costs,” as defined in Tennessee Code Annotated § 20-12-119(c), clearly in mind.
7
In particular, upon the Bank‟s argument that the General Assembly previously had specifically excluded
an attorney standing as a surety from liability for certain types of costs whenever such exclusion was
intended, the trial court reviewed Tennessee Code Annotated § 20-12-135, -136 (2009) (excluding the
surety from liability for “discretionary costs”). The trial court determined that pursuant to the mandatory
language of Tennessee Code Annotated § 20-12-119(c), the costs adjudged were not discretionary.
15
and the applicable legislative history8 to be unnecessary. See In re Estate of Tanner, 295
S.W.3d at 614 (“It is only when a statute is ambiguous that we may reference the broader
statutory scheme, the history of the legislation, or other sources.”).
VI. Costs and Attorney‟s Fees on Appeal
The Bank asserts that this appeal is frivolous. The Bank thereby requests an
award of costs and attorney‟s fees on appeal pursuant to Tennessee Code Annotated § 27-
1-122 (2000), which provides:
When it appears to any reviewing court that the appeal from any court of
record was frivolous or taken solely for delay, the court may, either upon
motion of a party or of its own motion, award just damages against the
appellant, which may include, but need not be limited to, costs, interest on
the judgment, and expenses incurred by the appellee as a result of the
appeal.
We determine that this appeal was not frivolous or taken solely for delay.
Moreover, as this Court has stated:
[I]t is in the sole discretion of this court whether to award attorney‟s fees on
appeal. As such, when this Court considers whether to award attorney‟s
fees on appeal, we must be mindful of “the ability of the requesting party to
pay the accrued fees, the requesting party‟s success in the appeal, whether
the requesting party sought the appeal in good faith, and any other equitable
factor that need be considered.”
Parris v. Parris, No. M2006-02068-COA-R3-CV, 2007 WL 2713723 at *13 (Tenn. Ct.
App. Sept. 18, 2007) (quoting Dulin v. Dulin, No. W2001-02969-COA-R3-CV, 2003 WL
22071454 at *10 (Tenn. Ct. App. Sept. 3, 2003)) (other internal citations omitted). Upon
careful consideration of all the factors listed above, particularly the Surety‟s success on
appeal, the Bank‟s request for costs and attorney‟s fees on appeal is denied.
8
Upon Ms. Snyder‟s motion, this Court entered an order on July 31, 2015, taking “judicial notice of the
legislative history of the statute submitted as an addendum to the appellant‟s brief.” Ms. Snyder
subsequently resubmitted to this Court audio recordings of the legislative discussion surrounding the
enactment of Tennessee Code Annotated § 20-12-119(c) with no objection from the Bank. These audio
recordings had also been submitted to and reviewed by the trial court. See Debate on H.B. 3124 Before
the House, 107th Gen. Assemb. (Apr. 24, 2012).
16
VII. Conclusion
For the reasons stated above, we reverse the trial court‟s judgment against the
Surety for $10,000 in litigation costs. We affirm the trial court‟s judgment against the
principal. The Bank‟s request for an award of costs and attorney‟s fees on appeal is
denied. This case is remanded to the trial court for enforcement of the judgment against
the principal and collection of costs below. Costs on appeal are taxed to the appellee,
First Tennessee Bank, N.A.
_________________________________
THOMAS R. FRIERSON, II, JUDGE
17