Timothy W. Hudson v. Delilah M. Grunloh

IN THE COURT OF APPEALS OF TENNESSEE
AT KNOXVILLE
Assigned on Briefs January 8, 2014
TIMOTHY W. HUDSON v. DELILAH M. GRUNLOH
Direct Appeal from the Chancery Court for Sullivan County
No. B0021690C E. G. Moody, Chancellor
No. E2013-01434-COA-R3-CV-FILED-MARCH 11, 2014
This case involves a claim for contractual attorney fees and a counterclaim for legal
malpractice. The trial court dismissed the legal malpractice claim at the summary judgment
stage, it granted summary judgment on certain aspects of the attorney’s fee claim, and,
following a trial, it awarded a judgment in favor of the attorney. We affirm.
Tenn. R. App. P. 3; Appeal as of Right; Judgment of the Chancery Court Affirmed
A LAN E. H IGHERS, P.J., W.S., delivered the opinion of the Court, in which D AVID R. F ARMER,
J., and J. S TEVEN S TAFFORD, J., joined.
Delilah M. Grunloh, Johnson City, Tennessee, pro se
Timothy W. Hudson, Bristol, Tennessee, pro se
OPINION
I. F ACTS & P ROCEDURAL H ISTORY
In June 2011, Max Wilson filed a Complaint seeking a divorce from his wife of
approximately fourteen years, appellant Delilah Grunloh. Attorney Timothy Hudson agreed
to represent Ms. Grunloh in her divorce, and on July 7, 2008, a fee agreement was executed.
Attorney Hudson represented Ms. Grunloh from July 7, 2008 to September 8, 2009, when
he was discharged by her.
No children were born of the marriage between Mr. Wilson and Ms. Grunloh, and the
divorce proceedings focused upon the ownership of assets accumulated during the marriage.
Ms. Grunloh had substantial mortgages on three residences, she and her husband were
heavily in debt, and she was having difficulty paying the overhead in her liquor store
business. During the divorce, Ms. Grunloh took the position that she was entitled to all
property acquired during the marriage with the exception of a vacant lot. Mr. Wilson,
however, claimed that he was an unnamed partner in the liquor store business, that he worked
steadily in the liquor store business, and, therefore, that he was entitled to half of the equity
in the liquor store business and real estate. Thus, the divorce case required appraisals on
three residences and the liquor store and an analysis of the history of the liquor store
business.
By agreed order, the case was set for trial on April 8, 2009. Trial was held over two
days in April and May 2009 without decision. At the conclusion of trial, the trial court
advised the attorneys to file briefs and to return to court at a later time. The case was
continued, however, pending sales of the residences and the liquor store and due to a possible
agreement between the parties as to the division of assets.
Ms. Grunloh hired a realtor to sell the properties and she hired an auctioneer to sell
the contents of the main residence. An auction of the main residence’s contents occurred on
August 20, 2009; neither Ms. Grunloh nor Attorney Hudson attended the sale. Shortly
thereafter, on September 8, 2009, Ms. Grunloh sent Attorney Hudson a letter terminating his
representation based upon her dissatisfaction with the proceeds earned at the sale and his
failure to attend such. Upon motion by Attorney Hudson, he was allowed to withdraw on
October 21, 2009. On July 7, 2010, an order was entered dismissing the divorce case due to
reconciliation.
On September 25, 2009, Attorney Hudson filed an Intervening Complaint in the
chancery court alleging that Ms. Grunloh had failed to pay him as provided for in the fee
agreement and claiming that she owed a balance of $17,063.75 for attorney fees and
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litigation expenses. On November 17, 2009, Ms. Grunloh, acting pro se, filed her Answer
to Intervening Complaint generally arguing that Attorney Hudson had not earned the fee
claimed. Then, on December 28, 2009, Ms. Grunloh filed an Amended Answer and Counter
Claim asserting a claim of legal malpractice against Attorney Hudson. Ms. Grunloh claimed
that Attorney Hudson’s “failure to rep[re]sent her at the [furnishings] sale[] . . . resulted in
the [perpetration of] a fr[a]ud by selling her valuable household furnishings at a price
substant[i]ally below true value.” As damages, she sought “the difference in the value of the
furnishings and the amount they were sold for at auction” as well as “pun[i]tive damages in
the amount not to exceed $25,000.00.” In her Amended Answer and Counter Claim, Ms.
Grunloh demanded, for the first time, a jury trial on the issues of damages and attorney fees.
On April 9, 2010, Attorney Hudson filed a Motion for Summary Judgment along with
a Statement of Material Facts in support thereof.1 He requested that he be awarded a
monetary judgment of $17,063.75, plus interest, on his claim for attorney fees and that Ms.
Grunloh’s claim for legal malpractice be dismissed. Also on April 9, Attorney Hudson filed
his Affidavit with an attached itemization of time.2 Attorney Hudson filed his Supplemental
Affidavit noting an erroneous prior omission of 4.5 attorney hours, thus, leaving an unpaid
principal balance of $17,963.75. He also filed a Supplemental Statement of Material Facts.
In June 2010, Ms. Grunloh filed a “Motion to Strike or Disregard Attorney Statement
of Time” arguing, essentially, that the entire itemization should be struck because, among
other things, she should not have been charged $200.00 per hour for travel or for telephone
calls by Attorney Hudson, the 117 phone calls listed were unsupported by a “memo, phone
log or billing statement[,]” because 55 phone calls were listed with other charges incurred
on the days of the phone calls, she did not receive periodic billing statements, and because
certain work was unnecessary. Ms. Grunloh also filed a Statement of Facts in Opposition
to Motion for Summary Judgment.
Following a hearing on April 4, 2011,3 the trial court entered an Order, on April 7,
granting in part and denying in part, Attorney Hudson’s motion for summary judgment. The
trial court dismissed Ms. Grunloh’s claim for legal malpractice stating:
1
It appears that Attorney Hudson filed no memorandum in support of his motion for summary
judgment.
2
The itemization set out in detail the following charges: 122.35 attorney hours x $200.00 per hour
= $24,470.00; 5 legal assistant hours x $75.00 per hour = $375.00; court reporter fee $75.00. The itemization
listed the total fees and costs as $24,920.00 less $7,856.25 paid by Ms. Grunloh, for a balance due of
$17,063.75.
3
The record contains no transcript of this hearing.
-3-
The court finds that Mr. Hudson has filed a statement of material facts with his
supporting affidavit establishing the standard for local practicing divorce
attorneys, and that he complied with that standard, thereby negating an
essential element of Ms. Grunloh’s counterclaim for legal malpractice. Ms.
Grunloh has filed no expert affidavit.
It then found no genuine issues of material fact as to the following issues:
a. The parties entered into a valid written contract for Mr. Hudson to represent
Ms. Grunloh in this divorce;
b. The rate of $200 per hour recited in the contract was appropriate;
c. The $200 per hour rate includes travel and telephone time, and the contract
provides for reimbursement of litigation expenses;
d. Mr. Hudson concedes that the blank of the contract for the hourly charge for
legal assistant time was not completed and that the 5.0 hours of legal assistant
time of $75 per hour for a total of $375.00 will not be sought[.]
However, it denied summary judgment on Attorney Hudson’s fee claim finding “there is a
genuine issue of disputed fact as to the accuracy of the itemization of time.”
On December 21, 2012, the trial court entered an Order denying Ms. Grunloh’s jury
demand for two stated reasons:4
First, [Ms. Grunloh] did not demand a jury trial in her original answer to the
intervening complaint, or 15 days thereafter as required by Rule 38.02,
Tennessee Rules of Civil Procedure. Secondly, Ms. Grunloh in her amended
answer and counterclaim asked for a jury trial only on the issue of damages
sought in her counterclaim.5 When there is a demand for a jury trial only on
a specific issue, then the demand is limited to those issues. Rule 38.04,
Tennessee Rules of Civil Procedure. Ms. Grunloh’s counterclaim was
dismissed by summary judgment. Therefore, even if Ms. Grunloh’s demand
for a jury trial for damages sought in the counterclaim could be considered
timely, the jury trial demand did not survive dismissal of the counterclaim.
4
The December 21, 2012 order set aside an October 11, 2012 order which had granted Ms. Grunloh’s
demand for a jury.
5
We find this statement curious as Ms. Grunloh’s Amended Answer and Counter Claim demanded
a jury trial “on the issue of damages” as well as an advisory jury on “[t]he issue of attorney fee[s.]” The jury
trial issue will be addressed below.
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A hearing was held on the remaining issues on January 9, 2013.6 On February 20,
2013, the trial court entered its lengthy Findings of Fact and Conclusions of Law, in part, as
follows:
1. The court previously found upon summary judgment that Ms. Grunloh’s
amended counterclaim for malpractice should be dismissed. The court also
found and ruled that Mr. Hudson’s motion for summary judgment should be
granted in part. The court incorporates the findings and conclusions in that
order. The court reaffirms the prior ruling that Ms. Grunloh entered into a
valid contract for legal representation by Mr. Hudson in her divorce, that the
hourly rate of $200 per hour in the contract was appropriate, the contract
hourly rate did include travel, telephone calls, and reimbursement for litigation
expenses, did not include legal assistant time, that the malpractice amended
counterclaim should be dismissed as a matter of law, and the only remaining
issue for trial was the accuracy of the time recorded on the billing statement
and the reasonableness of the fee.
2. Mr. Hudson introduced itemization of his time through the testimony of his
legal assistant, Ms. Isley, who has 20 years’ experience. Ms. Isley testified
that billing was prepared by the use of daily time logs which were transferred
onto an Excel spreadsheet, from which the itemization of the statement was
prepared. Ms. Isley also testified that in preparation for her testimony, she
went back to the time log sheets to check her accuracy and found that the
itemized statement was accurate except that she had actually under-billed Ms.
Grunloh 2.5 hours which were not transferred to the Excel spreadsheet to the
itemization of the bill. Mr. Hudson does not ask that the 2.55 hours be
included. Furthermore, in the course of this litigation, Ms. Grunloh pointed
out two additional court appearances that were not included in the itemization,
and they have been now included and highlighted in bold for the dates of May
6, 2009, and May 20, 2009 in the itemization of time exhibit. Ms. Grunloh’s
objection and motion that the itemization is inadmissible hearsay is overruled.
The itemization is clearly an admissible business record.
3. A total of 125.85 [hours] are recorded for attorney time, with a contract rate
of $200 per hour, for a total amended bill of $25,170. The legal assistant time
of $375 is not allowed as conceded by Mr. Hudson. There is an expense for
a court reporter in the amount of $75. Ms. Grunloh has paid $7,856.25,
leaving a balance of $17,588.75. Mr. Hudson seeks a judgment for that sum,
6
A Statement of the Evidence from this hearing is included in the appellate record.
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plus interest at the contract rate of 12%, per year, not compounded.
4. In the court’s prior order, Ms. Grunloh was directed to itemize her
objections to Mr. Hudson’s statement so the court may go through them at
trial. Her objections are contained in her motion. Her objection that the
statement was hearsay is overruled for the reasons stated above. Her second
claim is that the attorney’s fees are unreasonable and excessive. This claim
will be discussed below. She further says that Mr. Hudson is not entitled to
recover on a quantum meruit theory. This is overruled. Mr. Hudson does not
seek recovery on a quantum meruit theory, but on his contract. She says Mr.
Hudson failed to show proof that he put in his trust account her deposit of
$5,000, that he should produce evidence that it went into his trust account, and
that she never received any accounting. Ms. Isley testified the $5,000 went
into the trust account. Ms. Isley testified that when she billed Ms. Grunloh
twice during the course of representation, the itemization of Mr. Hudson’s
time was provided and all of Ms. Grunloh’s payments were credited in the bill.
Ms. Grunloh’s deposit of $5,000 and an additional $2,856.25 she paid were
credited. The court accepts Ms. Isley’s testimony. Ms. Grunloh does not
claim she paid more than credited.
5. Ms. Grunloh does not largely deny the accuracy of Mr. Hudson’s reported
time. Her criticisms are directed more to the manner in which the attorney’s
time was kept, and the overall reasonableness of the fee. For example, as to
the 117 telephone calls shown on the statement, Mr. Grunloh did not deny the
calls, but says they should have been listed separately and not included with
other activity recorded on the same day. There is no requirement that the
telephone calls and other legal work done on the same day has to be listed
separately. The court finds Mr. Hudson’s method of stating time was neither
deceptive nor unreasonable. Ms. Grunloh objects to the time spent on a post-
trial brief that was never filed as unreasonable. The court finds that the 8 ½
hours for preparing a brief that never was filed was reasonable, in that, the
brief was ordered by the court and prepared, but not filed because the parties
attempted to work out a disposition of their property before scheduling further
court hearings. No further proceedings were scheduled because the parties
reconciled, discharged their attorney, and dismissed their divorce claims.
6. Ms. Grunloh claims that the meeting Mr. Hudson had with attorney Tom
Jessee was unnecessary. Mr. Jessee had referred Ms. Grunloh to Mr. Hudson
to handle the divorce, and had been hired by Ms. Grunloh as to a potential
fraud claim against Wells Fargo regarding the financing on Ms. Grunloh’s
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three houses. These houses were valuable marital property with significant
debt and subject of the divorce proceedings. The charges for the meeting
included automobile travel time roundtrip between Bristol and Johnson City,
TN and a phone conference with Ms. Grunloh. The meeting was necessary
and reasonable.
7. The court finds that Mr. Hudson’s meetings and calls with the realtor of
Ms. Grunloh, and with the attorney representing a prospective buyer of the
liquor store were reasonable and necessary in that the disposition of the liquor
store and Ms. Grunloh’s houses were significant assets of the marital property
in the divorce case. The court does not agree with Ms. Grunloh’s objections
to these charges.
8. Ms. Grunloh admits that she had no criticism of Mr. Hudson until just
before she discharged him, that she told him and his assistant that he was doing
a good job for her on multiple occasions, and that this was her opinion up until
the agreed ordered auction of household furnishings and the failed closing of
one of her homes. It was after these events in late August, 2009, several weeks
after the divorce trial, that she changed her opinion. She stated that Mr.
Hudson should have attended the auction, [and] stopped the auction when the
furnishings did not bring an appropriate price. Ms. Grunloh, however, admits
that she chose the auctioneer, that he had a good reputation, that she knew him,
and that she did not attend the auction herself. Furthermore, she did not ask
Mr. Hudson to attend the auction. The court does not find that Mr. Hudson
was obligated to attend without being requested or [that he]could have done
anything to stop a court-ordered auction because of low bidding. Ms. Grunloh
does not blame Mr. Hudson for the failed closing of the attempted sale of a
house. It was right after these events, however, that the parties discharged
their attorneys, reconciled, and dismissed their divorce claims.
After setting out its findings of fact and conclusions of law, and considering the requisite
factors, the trial court found “that both Mr. Hudson’s contract for services and his charged
fees, as amended, are reasonable.” Based upon Mr. Hudson’s failure to attend the auction,
however, the trial court reduced Attorney Hudson’s fee by $1,600. Thus, the trial court
awarded Attorney Hudson $15,988.75, plus 12% prejudgment interest from October 1, 2009
to February 20, 2013, for a total of $22,495.46. A Final Judgment on Intervening Complaint
was entered on February 20, 2013. Ms. Grunloh timely appealed.7 She then filed a
7
A July 8, 2013 Order indicates that Ms. Grunloh was not served with the February 20, 2013
(continued...)
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“Statement of Evidence and Proceedings” to which Attorney Hudson filed an objection and
his own Statement of the Evidence. The trial court adopted Mr. Hudson’s Statement of the
Evidence as a “fair, accurate, and complete account of the evidence presented at the final
hearing of January 9, 2013[.]”
II. I SSUES P RESENTED
Ms. Grunloh presents the following issues for review, as we perceive them:
1. Whether the trial court erred in granting in part, Attorney Hudson’s Motion for
Summary Judgment related to the issues of legal malpractice and attorney fees;
2. Whether the trial court erred in denying Ms. Grunloh’s demand for a jury trial
regarding the accuracy of the time itemization;
3. Whether the trial court erred in accepting Attorney Hudson’s Statement of the
Evidence;
4. Whether the trial court erred in making certain factual findings related to billing
statements, the deposit of the retainer fee in the trust account, and notice to Ms.
Grunloh of the withdrawal of funds; and
5. Whether the trial court erred in finding Attorney Hudson’s fee was reasonable.
For the following reasons, we affirm the decision of the chancery court.
III. D ISCUSSION
A. Summary Judgment
1. Ms. Grunloh’s Claim of Legal Malpractice
We first address Ms. Grunloh’s apparent argument that the trial court erred in
summarily dismissing her legal malpractice claim against Attorney Hudson. A grant or
denial of summary judgment presents a question of law which we review de novo without
7
(...continued)
Findings of Fact and Conclusions of Law and Final Judgment on Intervening Complaint until May 20, 2013.
Thus, Ms. Grunloh’s June 13, 2013 Notice of Appeal was timely.
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a presumption of correctness. Kinsler v. Berkline, LLC, 320 S.W.3d 796, 799 (Tenn. 2010)
(citing Blair v. W. Town Mall, 130 S.W.3d 761, 763 (Tenn. 2004)).
A motion for summary judgment should be granted only “if the pleadings, depositions,
answers to interrogatories, and admissions on file, together with the affidavits, if any, show
that there is no genuine issue as to any material fact and that the moving party is entitled to
a judgment as a matter of law.” Tenn R. Civ. P. 56.04. “The party seeking the summary
judgment has the burden of demonstrating that no genuine disputes of material fact exist and
that it is entitled to a judgment as a matter of law.” Green v. Green, 293 S.W.3d 493, 513
(Tenn. 2009) (citing Martin v. Norfolk S. Ry., 271 S.W.3d 76, 83 (Tenn. 2008); Amos v.
Metro. Gov’t of Nashville & Davidson County, 259 S.W.3d 705, 710 (Tenn. 2008)).
“A moving party who seeks to shift the burden of production to the nonmoving party
who bears the burden of proof at trial must either: (1) affirmatively negate an essential
element of the nonmoving party’s claim; or (2) show that the nonmoving party cannot prove
an essential element of the claim at trial.” Hannan v Alltel Publ’g Co., 270 S.W.3d 1, 9,
(Tenn. 2008) (footnote omitted). In order to negate an essential element of the claim, “the
moving party must point to evidence that tends to disprove an essential factual claim made
by the nonmoving party.” Martin, 271 S.W.3d at 84 (citing Blair, 130 S.W.3d at 768). “It
is not enough for the moving party to challenge the nonmoving party to ‘put up or shut up’
or even to cast doubt on a party’s ability to prove an element at trial.” Hannan, 270 S.W.3d
at 8.8 “If the moving party is unable to make the required showing, then its motion for
summary judgment will fail.” Martin, 271 S.W.3d at 83 (citing Byrd v. Hall, 847 S.W.2d
208, 215 (Tenn. 1993)).
If the moving party does make a properly supported motion, “[t]he non-moving party
must then establish the existence of the essential elements of the claim.” McCarley v. West
Quality Food Serv., 960 S.W.2d 585, 588 (Tenn. 1998). The nonmoving party is required
to produce evidence of specific facts establishing that genuine issues of material fact exist.
Martin, 271 S.W.3d at 84 (citing McCarley, 960 S.W.2d at 588; Byrd, 847 S.W.2d at 215).
“The nonmoving party may satisfy its burden of production by: (1) pointing to evidence
establishing material factual disputes that were over-looked or ignored by the moving party;
(2) rehabilitating the evidence attacked by the moving party; (3) producing additional
evidence establishing the existence of a genuine issue for trial; or (4) submitting an affidavit
explaining the necessity for further discovery pursuant to Tenn. R. Civ. P. 56.06.” Id. (citing
McCarley, 960 S.W.2d at 588; Byrd, 847 S.W.2d at 215 n.6). “The nonmoving party’s
8
The Tennessee General Assembly has enacted a law that legislatively reverses the holding in
Hannan. See Tenn. Code Ann. § 20-16-101. However, the statute applies only to cases filed on or after July
1, 2011. Thus, in this appeal, we apply the summary judgment standard set forth in Hannan.
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evidence must be accepted as true, and any doubts concerning the existence of a genuine
issue of material fact shall be resolved in favor of the nonmoving party.” Id. (citing
McCarley, 960 S.W.2d at 588).
A claimant alleging legal malpractice bears the burden of proving all of the essential
elements of such claim. Horton v. Hughes, 971 S.W.2d 957, 959 (Tenn. Ct. App. 1998).
“In order to make out a prima facie legal malpractice claim, [the claimant] must present
competent evidence showing (1) that the accused attorney owed a duty to the plaintiff, (2)
that the attorney breached that duty, (3) that the plaintiff suffered damage, and (4) that the
breach proximately caused the plaintiff’s damage.” Id. (citing Lazy Seven Coal Sales, Inc.
v. Stone & Hinds, P.C., 813 S.W.2d 400, 403 (Tenn. 1991); Blocker v. Dearborn & Ewing,
851 S.W.2d 825, 827 (Tenn. Ct. App. 1992)). “When determining whether a lawyer
breached a duty, the question becomes whether the lawyer failed to exercise the degree of
care, skill, and diligence commonly possessed and exercised by other attorneys practicing in
the same jurisdiction.” Id. (citing Cleckner v. Dale, 719 S.W.2d 535, 540 (Tenn. Ct. App.
1986)). “Except for obvious, common sense mistakes, establishing the applicable standard
of care and determining whether a lawyer breached that standard require expert evidence.”
Id. (citing Blocker, 851 S.W.2d at 827; Cleckner, 719 S.W.2d at 540).
As stated above, the trial court found that Attorney Hudson’s “statement of material
facts with his supporting affidavit establish[ed] the standard for local practicing divorce
attorneys, and that he complied with that standard, thereby negating an essential element of
Ms. Grunloh’s counterclaim for legal malpractice.” It then found that Ms. Grunloh had
failed to satisfy her burden of production because she did not file an expert affidavit
indicating that Attorney Hudson had breached the standard of care.
On appeal, Ms. Grunloh seems to imply that the trial court erred in dismissing her
legal malpractice claim because it wrongfully relied upon a memorandum opinion for its
position that Ms. Grunloh was required to present an expert affidavit.
“It is well-settled law that, ‘[i]n a legal malpractice action, expert testimony is
required to establish negligence and proximate cause unless the alleged malpractice is within
the common knowledge of laymen.’” Strong v. Baker, No. M2007-00339-COA-R3-CV,
2008 WL 859086, at *7 (Tenn. Ct. App. Mar. 31, 2008) perm. app. denied (Tenn. Oct. 27,
2008) (quoting Rose v. Welch, 115 S.W.3d 478, 484 (Tenn. Ct. App. 2003)). “Only in cases
involving, ‘‘clear and palpable negligence’’ can legal malpractice be determined without
expert testimony.” Id. (citing Rose, 115 S.W.3d at 484; Cleckner, 719 S.W.2d at 540).
“Thus, except in extreme cases, if a defendant-attorney presents expert proof that he or she
did not breach the duty of care, the plaintiff-client must present rebuttal expert proof that a
breach of care did occur in order to create a genuine issue of material fact.” Id. (citing
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Bursack v. Wilson, 982 S.W.2d 341, 343-45 (Tenn. Ct. App. 1998)). “[A]bsent allegations
of obvious negligence, expert evidence is required.” Id.
In this case, Ms. Grunloh’s allegation of legal malpractice is based upon Attorney
Hudson’s failure to attend the furnishings auction although Ms. Grunloh, herself, hired the
auctioneer, she, along with the auctioneer, arranged for the auction, and she never asked
Attorney Hudson to attend the auction. The allegation related to the scope of Attorney
Hudson’s representation does not constitute “clear and palpable negligence” within the
common knowledge of a layperson . Thus, when Attorney Hudson presented his affidavit
stating that his conduct complied with the applicable standard of care, he affirmatively
negated an essential element of Ms. Grunloh’s claim, and she was required to present expert
testimony to meet her burden of production. See id. (citing Bursack, 982 S.W.2d at 343-44).
Because she failed to do so, the trial court properly granted Attorney Hudson’s motion for
summary judgment dismissing Ms. Grunloh’s claim for legal malpractice. See id. (affirming
summary dismissal of a legal malpractice claim where the defendant presented an expert
affidavit indicating compliance with the standard of care and the plaintiff failed to present
expert testimony in response).
2. Attorney Hudson’s Claim for Contractual Attorney Fees
Next, we address Ms. Grunloh’s argument that the trial court erred in granting partial
summary judgment on Attorney Hudson’s claim for contractual attorney fees. As stated
above, the trial court found no genuine issues of material fact as to the following issues:
a. The parties entered into a valid written contract for Mr. Hudson to represent
Ms. Grunloh in this divorce;
b. The rate of $200 per hour recited in the contract was appropriate;
c. The $200 per hour rate includes travel and telephone time, and the contract
provides for reimbursement of litigation expenses;
d. Mr. Hudson concedes that the blank of the contract for the hourly charge for
legal assistant time was not completed and that the 5.0 hours of legal assistant
time of $75 per hour for a total of $375.00 will not be sought;
Ms. Grunloh’s appellate brief is not a model of clarity, but it appears that she
challenges only the trial court’s interpretation of the fee agreement to apply the $200 per hour
fee to Attorney Hudson’s telephone calls and to his travel time.9 “Questions of contract
9
Ms. Grunloh also argues that the fee agreement “was silent as to any amount for the legal assistant.”
(continued...)
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interpretation are generally considered to be questions of law, and thus are especially well-
suited for resolution by summary judgment.” RCR Bldg. Corp. v. Pinnacle Hospitality
Partners, No. M2012-00286-COA-R3-CV, 2012 WL 5380587, at *7 (Tenn. Ct. App. Nov.
15, 2012) perm. app. denied (Tenn. Apr. 9, 2013) (quoting Ross Prods. Div. Abbott Labs. v.
State, No. M2006-01113-COA-R3-CV, 2007 WL 4322016, at *2-3 (Tenn. Ct. App. Dec. 5,
2007)).
“‘The cardinal rule for interpretation of contracts is to ascertain the intention of the
parties and to give effect to that intention, consistent with legal principles.’” Maggart v.
Almany Realtors, Inc., 259 S.W.3d 700, 703-04 (Tenn. 2008) (quoting Bob Pearsall Motors,
Inc. v. Regal Chrysler-Plymouth, Inc., 521 S.W.2d 578, 580 (Tenn. 1975)). “[O]ur task is
to ascertain the intention of the parties based upon the usual, natural, and ordinary meaning
of the contractual language.” Guiliano v. Cleo, 995 S.W.2d 88, 95 (Tenn. 1999) (citing
Hamblen County v. City of Morristown, 656 S.W.2d 331, 333-34; Bob Pearsall Motors, Inc.,
521 S.W.2d at 580)). “The interpretation should be one that gives reasonable meaning to all
of the provisions of the agreement, without rendering portions of it neutralized or without
effect.” Id. (citing Davidson v. Davidson, 916 S.W.2d 918, 922-23 (Tenn. Ct. App. 1995)).
“All of the contract provisions should be construed in harmony with each other, if possible,
to promote consistency and avoid repugnancy between the various provisions in a single
contract.” Id. (citing Guiliano, 995 S.W.2d at 95).
The one-page fee agreement executed by the parties in this case provides in relevant
part:
I agree to the following fee terms:
Hourly (See attached policy) $200.00 per/hr. Partner
$ per/hr. Legal Assistant
Deposit: $5,000 to be paid Wednesday 7/9 at 11:30
Flat: $ to be paid _______________________
Contingent: $ to be paid _______________________
9
(...continued)
However, we find this issue moot as Attorney Hudson agreed to deduct the $375.00 legal assistant fee from
his claim. With the exceptions of time spent on the telephone and traveling, Ms. Grunloh apparently does
not challenge the $200.00 per hour rate, in and of itself. She challenges the reasonableness of the total fee
based upon the allegedly unsatisfactory results and the allegedly unnecessary time spent, but summary
judgment was not granted as to these issues and they were considered at trial. For example, the trial court
stated in its Findings of Fact and Conclusions of Law that after summary judgment was granted, “the only
remaining issue for trial was the accuracy of the time recorded on the bill statement and the reasonableness
of the fee.”
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The attached one-page policy, also signed by Ms. Grunloh, further provided, in pertinent
part:
[The law firm] calculates time to the nearest quarter hour. For example, if we
discuss your case by telephone, you may be charged 1/4 hour whether we talk
eight (8) minutes or twenty (20) minutes. We generally charge no time for
very brief communications, and they may appear on your bill as “N/C” for no
charge.
You will be charged for all time spent on your case including, but not limited
to, travel time, court waiting time, review of documents, research,
correspondence, communications with adverse counsel, interviewing
witnesses, client conferences, hearings and trials.
On appeal, Ms. Grunloh argues that the $200.00 per hour fee should not be applied
to Attorney Hudson’s time spent traveling and on the telephone because, although the
attached policy indicated that she would be charged for such time spent, “[t]here was no
amount stated for either telephone or travel expenses.” We reject this argument. The first
page of the fee agreement states that Ms. Grunloh will be charged $200.00 per attorney hour
as further explained in the attached policy. Such policy clearly explains that Ms. Grunloh
will be charged for Mr. Hudson’s time spent on the telephone and for “travel time.”
Noticeably absent from the policy is any deviance from the $200.00 per hour rate stated on
page one. Construing both pages together, it is clear, as a matter of law, that the parties
intended Attorney Hudson to charge telephone and travel time at the $200.00 per hour rate.
The trial court’s grant of summary judgment on this issue is affirmed.
B. Demand for Jury Trial
As stated above, the trial court found that a genuine issue of disputed fact existed as
to the accuracy of Attorney Hudson’s itemization of time. However, it denied Ms. Grunloh’s
demand for a jury trial on this issue based, in part, upon her failure to demand a jury trial in
her original answer to the Intervening Complaint, or 15 days thereafter as required by Rule
38.02, Tennessee Rules of Civil Procedure.
On appeal, Ms. Grunloh argues that she should have been afforded a jury trial
“regarding the accuracy of the itemization of time.” She asserts that she could not have
demanded a jury within 15 days of Attorney Hudson’s September 24, 2009 Intervening
Complaint because his itemization of time was not filed until April 12, 2010.
“The right to trial by jury is constitutional and jealously guarded.” Realty Ass’n v.
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Richter/Dial Builders, Inc., No. M1997-00168-COA-R3-CV, 2000 WL 146381, at *6 (Tenn.
Ct. App. Feb. 11, 2000) (citing Caudill v. Mrs. Grissoms Salads, Inc., 541 S.W.2d 101 (Tenn.
1976)). However, a party must demand a jury trial in accordance with the provisions of
Tennessee Rule of Civil Procedure 38.02 which provides: “Any party may demand a trial by
jury of any issue triable of right by jury by demanding the same in any pleading specified in
Rule 7.0110 or by endorsing the demand upon such pleading when it is filed, or by written
demand filed with the clerk, with notice to all parties, within fifteen (15) days after the
service of the last pleading raising an issue of fact.” Tenn. R. Civ. P. 38.02.
In this case, Attorney Hudson filed his Intervening Complaint on or about October 6,
2009, alleging that Ms. Grunloh had “breached her obligation under the [fee agreement]” and
that she owed him “$17,063.75 for attorney’s fee and litigation expenses.” Ms. Grunloh filed
her Answer on November 17, 2009 alleging that Attorney Hudson had protracted the
litigation in order to inflate his fee and generally denying that Attorney Hudson had earned
the fee sought in his Intervening Complaint. On December 28, 2009, Ms. Grunloh filed an
Amended Answer and Counterclaim asserting a claim of legal malpractice and, for the first
time, demanding a jury trial on the issue of attorney fees. Attorney Hudson filed his
itemization of time on April 9, 2010.
We find untenable Ms. Grunloh’s argument regarding the timeliness of her jury
demand. She argues that she could not demand a jury trial as to the issue of attorney fees
until she saw a break-down of his charges via the April 9, 2010 itemization of time.
However, the issue of attorney fees was raised in Attorney Hudson’s October 2009
Intervening Complaint, and she demanded a jury trial on the issue of attorney fees in
December 2009, four months before the itemization of time was filed. Because Ms. Grunloh
failed to comply with Rule 38.02, we affirm the trial court’s denial of a jury trial on the issue
of attorney fees.11
C. Statement of the Evidence
10
Rule 7.01 pleadings include complaint, answer, reply to a counterclaim, answer to a cross-claim,
third-party complaint when proper under Rule 14, and third-party answer when a third-party complaint is
served.
11
We note that Tennessee Rule of Civil Procedure 39.02 gives the trial court discretion to grant a jury
trial “‘even though the moving party had not made a timely demand for a jury as required by Rule 38.’”
Marion v. Bowling, 1999 WL 1059670, at * (Tenn. Ct. App. Nov. 22, 1999) (quoting Smith v. Williams, 575
S.W.2d 503, 505 (Tenn. Ct. App. 1978)). This decision is, of course, discretionary, and in any event, Ms.
Grunloh does not raise Rule 39.02 as a vehicle for relief on appeal.
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Next, Ms. Grunloh asserts an argument related to the statements of evidence filed in
this case. As explained above, Ms. Grunloh filed a Statement of the Evidence to which
Attorney Hudson timely filed an objection and his own Statement of the Evidence. The trial
court, in a September 24, 2013 Order, adopted Mr. Hudson’s statement as a “fair, accurate,
and complete account of the evidence presented at the final hearing of January 9, 2013[.]”
Ms. Grunloh raises as an issue on appeal, whether the trial court “erred in granting
[Attorney Hudson’s] motion allowing him to file two (2) statements in the record by order
entered September 24, 2013.” In her brief, she argues:
[Attorney Hudson] filed a response (objection) to [Ms. Grunloh’s]
Statement of Evidence [] alleging that its contents were unfair, inaccurate and
not a complete account of the evidence at the final hearing. [Attorney Hudson]
also attached two (2) statements attributed to Grunloh and Ms. Isley.
[Attorney Hudson] did not state a single ground in support of his
contention that [Ms. Grunloh]’s statement was unfair, inaccurate and not a
complete account of the evidence from the final hearing seven months earlier.
What Ms. Grunloh’s characterizes as two attached statements appears to be the summary of
testimony included within Attorney Hudson’s Statement of the Evidence.
Rule 24 of the Tennessee Rules of Appellate Procedure provides in relevant part:
(c) Statement of the Evidence When No Report, Recital, or Transcript Is
Available. If no stenographic report, substantially verbatim recital or
transcript of the evidence or proceedings is available, the appellant shall
prepare a statement of the evidence or proceedings from the best available
means, including the appellant’s recollection. The statement should convey
a fair, accurate and complete account of what transpired with respect to those
issues that are the bases of appeal. The statement, certified by the appellant or
the appellant’s counsel as an accurate account of the proceedings, shall be filed
with the clerk of the trial court within 60 days after filing the notice of appeal.
Upon filing the statement, the appellant shall simultaneously serve notice of
the filing on the appellee, accompanied by a short and plain declaration of the
issues the appellant intends to present on appeal. Proof of service shall be
filed with the clerk of the trial court with the filing of the statement. If the
appellee has objections to the statement as filed, the appellee shall file
objections thereto with the trial court within fifteen days after service of the
declaration and notice of the filing of the statement. Any differences regarding
the statement shall be settled as set forth in subdivision (e) of this rule.
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....
(e) Correction or Modification of the Record. If any matter properly
includable is omitted from the record, is improperly included, or is misstated
therein, the record may be corrected or modified to conform to the truth. Any
differences regarding whether the record accurately discloses what occurred
in the trial court shall be submitted to and settled by the trial court regardless
of whether the record has been transmitted to the appellate court. Absent
extraordinary circumstances, the determination of the trial court is conclusive.
If necessary, the appellate or trial court may direct that a supplemental record
be certified and transmitted.
Tenn. R. App. P. 24 (emphasis added).
In this case, Attorney Hudson followed the procedure set forth in Rule 24; he timely
objected to Ms. Grunloh’s Statement of the Evidence and he filed his own Statement of the
Evidence. The trial court reconciled the two statements by adopting Attorney Hudson’s
version of the proceedings. Ms. Grunloh has alleged no “extraordinary circumstances”
which would warrant overruling this otherwise conclusive determination. The trial court’s
approval of Attorney Hudson’s Statement of the Evidence is affirmed.
E. Factual Findings
In her appellate brief, Ms. Grunloh challenges factual findings made by the trial court
related to billing statements, the deposit of the retainer fee into a trust account, and notice to
her of the retainer fee’s withdrawal. Specifically, with regard to these issues, the trial court
found:
[Ms. Grunloh] says Mr. Hudson failed to show proof that he put in his trust
account her deposit of $5,000, that he should produce evidence that it went
into his trust account, and that she never received any accounting. Ms. Isley
testified the $5,000 went into the trust account. Ms. Isley testified that when
she billed Ms. Grunloh twice during the course of representation, the
itemization of Mr. Hudson’s time was provided and all of Ms. Grunloh’s
payments were credited in the bill. Ms. Grunloh’s deposit of $5,000 and an
additional $2,856.25 she paid were credited. The court accepts Ms. Isley’s
testimony. Ms. Grunloh does not claim she paid more than credited.
We review a trial court’s findings of fact de novo on the record and presume them to
be correct unless the evidence preponderates otherwise. Tenn. R. App. P. 13(d); Armbrister
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v. Armbrister, 414 S.W.3d 685, 692 (Tenn. 2013) (citations omitted). When the trial court’s
determinations are based on its assessment of witness credibility, we will not reevaluate those
determinations absent clear and convincing evidence to the contrary. Jones v. Garrett, 92
S.W.3d 835, 838 (Tenn. 2002).
On appeal, Ms. Grunloh challenges the finding regarding billing statements being sent
to Ms. Grunloh because, she claims, the itemization of time did not “state[] that any item was
prepared, delivered, mailed or otherwise sent to Grunloh.”12 According to the Statement of
the Evidence approved by the trial court, “[Ms. Isley] . . . testified that not only did she mail
Ms. Grunloh[] the itemized statements, but when Ms. Grunloh came to the office to make a
payment that she gave her a copy of the most current itemized statement. She believes that
happened on at least two occasions.” In its Findings of Fact and Conclusions of Law, the
trial court specifically credited Ms. Isley’s testimony.
In her brief, Ms. Grunloh challenges the findings regarding the deposit of the retainer
fee and the notice of withdrawal13 by pointing out that she testified that she received no proof
from Attorney Hudson that the money was deposited, by noting that the itemization of time
contained no entry concerning a deposit or notice, and by arguing, without further
explanation, that “Ms. Isley’s testimony is not trustworthy and should not have been
considered by the court.” The Statement of the Evidence adopted by the trial court does not
mention deposit of the retainer fee, but it implies that Ms. Isley testified that Ms. Grunloh
was notified when withdrawals were made from such fee.
Assuming, arguendo, that these challenged factual findings are even pertinent to the
issues on appeal,14 we find Ms. Grunloh’s challenges are without merit. After reviewing the
record before us, particularly the trial court’s accreditation of Ms. Isley’s testimony, we have
determined that the evidence does not preponderate against the trial court’s findings related
to billing statements, the deposit of the retainer fee into trust, or notice to Ms. Grunloh of the
12
Ms. Grunloh argues that Ms. Isley’s testimony was hearsay. However, this argument is raised
regarding Ms. Isley’s ability to testify as to the accuracy of the itemization of time, and not with regard to
the challenged factual findings.
13
The Rules of Professional Conduct require a lawyer to “deposit into a client trust account legal fees
and expenses that have been paid in advance, to be withdrawn by the lawyer only as fees are earned or
expenses incurred.” Tenn. Sup. Ct. R. 8, RPC 1.15(c). A comment further provides that “[w]hen the
lawyer earns the fee, the funds shall be promptly withdrawn from the client trust account, and timely notice
of the withdrawal of funds should be provided to the client. Tenn. Sup. Ct. R. 8, RPC 1.15 Cmt. 10.
14
It is unclear whether Ms. Grunloh made these allegations in support of her claim of legal
malpractice or in defense of Attorney Hudson’s fee claim.
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retainer fee’s withdrawal.
F. Reasonableness of Attorney Hudson’s Fee
Finally, we address Ms. Grunloh’s apparent claim that the trial court erred in finding
Attorney Hudson’s fee was reasonable.15 We review a trial court’s determination regarding
the reasonableness of an attorney fee under the abuse of discretion standard. Coleman v.
Coleman, No. W2012-02183-COA-R3-CV, 2013 WL 5308013, at *11 (Tenn. Ct. App. Sept.
19, 2013). “A trial court’s determination on the reasonableness of fees is ‘a subjective
judgment based on evidence and the experience of the trier of fact’; there is ‘no fixed
mathematical rule’ for determining what a reasonable fee is.” Id. (quoting United Med.
Corp. of Tenn., Inc. v. Hohenwald Bank & Trust Co., 703 S.W.2d 133, 137 (Tenn. 1986);
Killingsworth v. Ted Russell Ford, Inc., 104 S.W.3d 530, 534 (Tenn. Ct. App. 2002)). “On
appeal, ‘[w]e presume that the trial court’s discretionary decision is correct, and we consider
the evidence in a light most favorable to the decision.’” Id. (quoting Wright ex rel. Wright
v. Wright, 337 S.W.3d 166, 176 (Tenn. 2011)). “‘[W]e will find an abuse of discretion only
if the court ‘applied incorrect legal standards, reached an illogical conclusion, based its
decision on a clearly erroneous assessment of the evidence, or employ[ed] reasoning that
causes an injustice to the complaining party.’’” Id. (quoting Konvalinka v. Chattanooga-
Hamilton County Hosp. Auth., 249 S.W.3d 346, 358 (Tenn. 2008)).
Again, the record contains no transcript from the proceedings below. Relevant to
attorney fees, the Statement of the Evidence provides:
Ms. Isley testified that a total of 125.85 [hours] are recorded for attorney time,
with a contract rate of $200 per hour, for a total of $25,370 for attorney time.
. . . Ms. Isley further testified that Ms. Grunloh required frequent attention,
calling nearly every day for months, showing up without appointments to drop
off documents and/or requesting to speak with Mr. Hudson[.]
Additionally, Attorney Hudson’s affidavit indicates that he has been licensed as an attorney
since 1981 and that, since 1985, when he began practicing in the area of domestic relations,
he has “been lead counsel in hundreds of divorce cases[.]” His affidavit states that he
represented Ms. Grunloh for fifteen months and it characterizes Ms. Grunloh’s divorce case
as “complex[,]” noting that “[s]he had substantial mortgages on three residences, she and her
15
Ms. Grunloh frames the issue as whether “[t]he Court erred in awarding plaintiff a judgment and
prejudgment interest for the work plaintiff claimed he did.” However, her argument in regard to this issue
relates to reasonableness. She makes no argument that, if the principal award is upheld, the award of
prejudgment interest should be reversed.
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husband were heavily in debt, and she was having trouble paying the overhead in her liquor
store business.” The affidavit notes that “[t]he case required appraisals on three residences
and the liquor store, real estate, and an analysis of the history of the liquor store business.”
It explains the divorcing parties’ conflicting positions which led to a “hotly contested trial”;
Ms. Grunloh claimed that “all marital property was hers except for a vacant lot” while Mr.
Wilson’s position was that he was a partner in the liquor store business and, thus, that he was
entitled a portion of the business. Further, it states that, upon Ms. Grunloh’s request,
Attorney Hudson “expedite[d]” a draft order allowing the furnishings auction to take place.
On appeal, Ms. Grunloh challenges Attorney Hudson’s fee by arguing that the fee is
excessive when compared to the results obtained. She states that “[t]here were no results of
any kind other than a tremendous loss at the sale of Grunloh’s antiques.”16 She also
challenges the fee’s reasonableness based upon the purported simplicity of the case. She
points out that “aside from the issue of divorce the single issue concerned the interest of the
parties in the real estate and package store business. There were no issues of child custody
and support or alimony of any kind.” Finally, she makes specific challenges to the charge
of $200 per hour for Attorney Hudson’s telephone conversations and his travel time, and to
his recovery of $1,700 for the preparation of a brief which, she claims, was not filed until
after Attorney Hudson’s discharge.
When determining the reasonableness of an attorney’s fee, the trial court must look
to the non-exclusive factors set out in Rule 1.5(a) of the Tennessee Rules of Professional
Conduct:
(1) the time and labor required, the novelty and difficulty of the questions
involved, and the skill requisite to perform the legal service properly;
(2) the likelihood, if apparent to the client, that the acceptance of the particular
employment will preclude other employment by the lawyer;
(3) the fee customarily charged in the locality for similar legal services;
(4) the amount involved and the results obtained;
(5) the time limitations imposed by the client or by the circumstances;
(6) the nature and length of the professional relationship with the client;
16
Ms. Grunloh also seems to challenge the $375 legal assistant fee, but, as stated above, this fee was
deducted from Attorney Hudson’s award.
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(7) the experience, reputation, and ability of the lawyer or lawyers performing
the services;
(8) whether the fee is fixed or contingent;
(9) prior advertisements or statements by the lawyer with respect to the fees the
lawyer charges; and
(10) whether the fee agreement is in writing.
Tenn. Sup. Ct. R. 8, RPC 1.5(a).
In determining that Attorney Hudson’s fee was reasonable, the trial court considered,
and made express findings, as to each of the above-listed factors:
(1.) The court finds that this was a complex case, involving multiple
residences with significant debt and a liquor store business. After two days of
contentious trial, the court requested the parties to file briefs due to the
difficulty of the questions involved. The contentiousness was, in part, over
whether the liquor store business was a partnership of the parties or solely
owned by Ms. Grunloh, and Ms. Grunloh’s claims that her husband was an
alcoholic who did not positively contribute to the marital estate and deserved
nothing. . . . Experience and skill were necessary to perform legal services for
Ms. Grunloh in her divorce case.
(2.) The acceptance of Ms. Grunloh’s case would not preclude Mr. Hudson
from accepting other employment.
(3.) Mr. Hudson’s fee of $200 per hour is within the customary range in this
locality for legal services similar to that needed in this case, and for an attorney
of Mr. Hudson’s skill and experience.
(4.) The court finds that the total attorney’s fees of $25,370.75 were not
unreasonable given the complexity and contentiousness of the case, extensive
preparation, discovery, trial, and post-trial proceedings.
(5.) Ms. Grunloh testified that she wanted her divorce litigation to proceed as
quickly as possible, and Mr. Hudson did not proceed quickly enough. The
court does not find the process was delayed by Mr. Hudson, and, in fact, the
parties reconciled after discharging their attorneys.
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(6.) Ms. Grunloh hired Mr. Hudson on July 9, 2008, and she discharged him
on September 8, 2009. Ms. Isley testified that Ms. Grunloh required frequent
attention, calling nearly every day showing up without appointments to drop
off documents and/or to speak with Mr. Hudson, that Ms. Grunloh referred at
least one client to Mr. Hudson, that she was complimentary of Mr. Hudson,
that Ms. Grunloh had no complaint about his fee, that she never questioned the
billing statement, and Ms. Grunloh’s opinion of Mr. Hudson did not change
until after the auction, the failed closing and she reconciled with her husband.
The case involved extensive discovery, preparation, research, mediation, two
days of trial, and post-trial work.
(7.) Mr. Hudson is experienced, respected and an effective advocate well
known to the court. His affidavit of his experience is filed.
(8.) The fee is hourly.
(9.) There was no evidence of any prior advertisement or statements by Mr.
Hudson’s fees as [to] what he normally charges.
(10.) The fee agreement was in writing, including a billing policy addendum
that explained how he would keep his time, and the interest rate of 12% per
year which Ms. Grunlow signed.
After reviewing the record in this case, we cannot say that the trial court abused its
discretion in finding Attorney Hudson’s fee was reasonable. The evidence presented
indicates that Ms. Grunloh’s divorce involved a complicated implied partnership issue, that
Ms. Grunloh and Attorney Hudson agreed to a $200 per hour rate including telephone
communications and travel time and that this rate was customary within the locality, that the
time expended was necessary and reasonable, that the delay in filing the brief was due to a
continuation of the proceedings, and that the divorce case was concluded without decision
simply because the parties reconciled. The judgment against Ms. Grunloh for attorney fees
is affirmed.
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IV. C ONCLUSION
For the aforementioned reasons, we affirm the decision of the chancery court. Costs
of this appeal are taxed to Appellant, Delilah M. Grunloh, for which execution may issue if
necessary.
_________________________________
ALAN E. HIGHERS, P.J., W.S.
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