The MDA awarded a piece of real property to Husband but required him to satisfy the mortgage debt within 90 days such that Wife would no longer be liable on the mortgage. The MDA also contained an enforcement provision entitling the “prevailing party” in any action to enforce the MDA to his or her attorney’s fees.
Husband failed to remove Wife from the mortgage debt as directed in the MDA. Wife filed a motion to enforce the MDA and a motion for civil contempt. Wife also sought to recover her attorney’s fees.
One week prior to the hearing on Wife’s motion to hold Husband in contempt, Husband paid off the mortgage indebtedness in full, thereby removing Wife from that debt and finally complying with the MDA.
The trial court found the issue of civil contempt was rendered moot by Husband’s belated compliance. Under the enforcement provision of the MDA, the trial court determined Wife was the prevailing party and ordered Husband to pay $4000 of Wife’s legal fees. The trial court further found that but for Wife’s petition for civil contempt, Husband would not have adhered to the terms of the MDA.
On Appeal: In a 2-1 decision, the Court of Appeals affirmed the trial court.
Husband argued Wife was not the “prevailing party” because there was no evidentiary hearing on the merits or any finding by the trial court that he was in contempt.
Tennessee adheres to the “American Rule,” which provides that, absent a statute of agreement to the contrary, litigants are responsible for their own attorney’s fees. Tennessee courts have consistently held that marital dissolution agreements are a contract between parties contemplating divorce. After a divorce decree becomes final, a marital dissolution agreement becomes merged into the decree; however, the agreement, as a property settlement agreement, does not lose its contractual nature by merger into the decree of divorce and is not subject to later modification by the trial court.
An act of contempt is an intentional act that hinders, delays, or obstructs the court’s administration of justice. An action for civil contempt is designed to coerce compliance with a court’s order. Persons who have failed to make payments required by a court order may be held to be in civil contempt if the court concludes, by a preponderance of the evidence, that they have not made the payments even though they have the present ability to do so.
There are no bright-line rules in determining who is the “prevailing party.” Thus, these determinations are necessarily fact-intensive and fact-specific. The Tennessee Supreme Court has ruled that a party need not attain complete success on the merits of the lawsuit in order to prevail. Rather, a prevailing party is one who has succeeded on any significant issue in litigation which achieves some of the benefit the parties sought in bringing suit. Status as a prevailing party arises when the outcome of litigation materially alters the legal relationship between the parties by modifying the defendant’s behavior in a way that directly benefits the plaintiff.
After examining the relevant case law, the Court concluded:
[A] party may be recognized as the prevailing party if that party achieves the primary benefit sought in instituting the legal proceedings and/or if the action modifies the opposing party’s behavior in a way that provides a direct benefit, regardless of the fact there was no hearing or judgment on the merits.
The majority further explained:
Wife’s primary purpose in filing the petition for contempt was to compel Husband to comply with  the MDA by removing her from all liability on the mortgage. The record clearly establishes that, by filing and pursuing this action, Wife altered Husband’s behavior by forcing him to comply with  the MDA by paying off the mortgage, and by altering Husband’s behavior, Wife achieved the benefit she sought. Moreover, as the trial court correctly concluded, but for Wife instituting legal proceedings to procure the enforcement of the provision requiring Husband to satisfy the debt on the mortgage, Husband would not have complied with the MDA.
For the foregoing reasons, we have concluded that Wife was the prevailing party even though the trial court did not address the merits of the case.
Thus, the majority of the Court of Appeals affirmed the trial court.
Dissent: Judge McBrayer dissented, arguing controlling precedent says to be a prevailing party, one must receive at least some judicially-sanctioned relief on the merits of his or her claim.
[R]ead in context, the material alteration [of the legal relationship of the parties] requirement is not an alternative to a judgment on the merits, but rather, an additional requirement to become a “prevailing party.” In other words, a party only “prevails” when “actual relief on the merits of his claim materially alters the legal relationship between the parties by modifying the defendant’s behavior in a way that directly benefits the plaintiff.”
K.O.’s Comment: The case law cited in both the majority and dissenting opinions appears confusing and subject to varying interpretations. This case present a pure question of law that appears well-suited for clarification by the Tennessee Supreme Court.
Information provided by K.O. Herston: Knoxville, Tennessee Divorce, Matrimonial and Family Law Attorney.