Posted by: koherston | June 5, 2017

TN Supreme Court Says Marital Dissolution Agreement Requires Attorney’s Fee Award: Eberbach v. Eberbach

Facts: Father and Mother divorced in 2011. The trial court approved their marital dissolution agreement (MDA) that included the following fee provision:

In the event it becomes reasonably necessary for either party to institute legal proceedings to procure the enforcement of any provision of this Agreement, the prevailing party shall also be entitled to a judgment for reasonable expenses, including attorney’s fees, incurred in prosecuting the action.

The MDA also incorporated the terms of the parties’ agreed parenting plan, which includes provisions related to child support and assigning responsibility for the children’s uncovered medical expenses.

Postdivorce litigation ensued on several issues, including Mother’s request for reimbursement of Father’s portion of the uncovered medical expenses for their three children.

The trial court awarded a judgment against Father for reimbursement of the children’s uncovered medical expenses in the amount of $26,096.50. Under the MDA, Mother was also awarded a judgment for her attorney’s fees in the amount of $19,870.

Father appealed to the Court of Appeals, which affirmed the trial court’s judgments but declined to award Mother her attorney’s fees on appeal.

Mother appealed.

On Appeal: The Tennessee Supreme Court reversed the denial of an award of attorney’s fees to Mother.

Mother argued the Court of Appeals lacks the discretion to deny attorney’s fees to prevailing parties when there is a contract between the parties entitling the prevailing party to such fees.

Tennessee has long followed the “American Rule” with regard to attorney’s fees. This rule provides that a party in a civil action may recover attorney’s fees only if a contractual or statutory provision creates a right to recover attorney’s fees or some other exception applies. Otherwise, litigants are responsible for their own attorney’s fees.

tennessee attorney's feesOne of the most common exceptions to the American Rule involves contracts that contain provisions expressly permitting or requiring the prevailing party to recover its reasonable attorney’s fees incurred to enforce the contract.

A marital dissolution agreement is a contract entered into by spouses in contemplation of divorce. As a contract, a MDA generally is subject to the rules governing construction of contracts. A MDA may include enforceable contractual provisions regarding an award of attorney’s fees in postdivorce legal proceedings.

Parties to postdivorce proceedings may also request an award of attorney’s fees on statutory grounds. Three commonly used statutes are Tennessee Code Annotated § 27-1-122 (frivolous appeals), Tennessee Code Annotated § 36-5-103(c) (enforcing orders for alimony or child support, or cases about child custody or visitation), and Tennessee Code Annotated § 36-6-108(i) (parental relocation), all of which give courts the discretion to award attorney’s fees.

The same is not true when the parties to postdivorce litigation have a MDA that contains a mandatory fee-award provision. It is well-settled that parties are contractually entitled to recover their reasonable attorney’s fees when they have an agreement that says the prevailing party in litigation is entitled to recover fees. In such cases, the trial court does not have the discretion to set aside the parties’ agreement and supplant it with its own judgment. The sole discretionary judgment the trial court may make is to determine the amount of attorney’s fees that is reasonable under the circumstances.

The Supreme Court held the same analysis applies to appellate courts:

A marital dissolution agreement is a contract and as such is subject to the rules governing construction of contracts. Absent fraud, mistake, or some other defect, our courts are required to interpret contracts as written, giving the language used a natural meaning. This axiomatic rule does not change or lose its force because the parties to an agreement are before an appellate court. . . .

It necessarily follows that if an agreement is valid and enforceable, it must be enforced as written regardless of whether the parties are before a trial court or an appellate court. Accordingly, we hold that the Court of Appeals has no discretion whether to award attorney’s fees when the parties have a valid and enforceable marital dissolution agreement which requires an award of reasonable attorney’s fees to a prevailing or successful party.

Applying this holding, the Court ruled that Mother was entitled to recover attorney’s fees on appeal:

[B]ecause [Mother] was the prevailing party at both the trial and appellate levels, the parties’ MDA entitles her “to a judgment for reasonable expenses, including attorney’s fees, incurred in prosecuting the action” in each of the proceedings.

Thus, the case was remanded to the trial court to enter an award for the reasonable attorney’s fees Mother incurred both before the Court of Appeals and the Supreme Court.

Eberbach v. Eberbach (Tennessee Supreme Court, May 23, 2017).

Information provided by K.O. Herston: Knoxville, Tennessee Divorce and Family-Law Attorney.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Categories

%d bloggers like this: