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Tennessee Supreme Court Clears Way for Appeals Despite Trial Courts Reserving Ruling on Attorney’s Fees

In unanimously holding that a bank was not shielded from liability after removing a joint tenant with right of survivorship from accounts without his consent, the Tennessee Supreme Court dropped a lengthy footnote resolving years of confusion as to whether an order was final for the purposes of appeal under Tenn. R. Civ. P. 54.02 when the trial court reserves ruling on attorney’s fees after granting a motion to dismiss.

Estate of Ella Mae Haire v. Webster focused primarily on two questions: (1) whether the appellant complied with Tenn. R. Civ. P. 10.03 by attaching disputed bank signature cards to his complaint and (2) whether the appellant, who was listed as a joint tenant with right of survivorship on bank accounts, sufficiently alleged claims against the bank by asserting that it removed his name from the accounts without his consent and breached its duty to him as a co-owner of the account by accepting forged signature cards. No. E2017-00066-SC-R11-CV, 2019 WL 1273780 (Tenn. Mar. 20, 2019). Reversing the Court of Appeals’s holding in favor of the bank, the Tennessee Supreme Court found that the complaint survived the bank’s motion to dismiss because the creation of the joint tenancy with right of survivorship created a contract between the depositors and bank that could only be modified with the consent of all parties. Id. at 7.

However, in discussing the case’s procedural history, the Tennessee Supreme Court cleared up a point of ongoing confusion about an order’s “finality” for purposes of appeal when the trial court reserves ruling on attorney’s fees.  Id. at *4 n.10. There, in accordance with Tenn. Code Ann. § 20-12-119(c)(3), “the trial court granted the bank’s request for attorney’s fees” but reserved ruling on their reasonableness and necessity until the conclusion of the appeal. Id. Section 20-12-119(c)(3) provides that awarding attorney’s fees after granting a motion to dismiss for failure to state a claim “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.” Id.

Contrary to the clear language of the statute, the Tennessee Court of Appeals had previously held “that a case may not be certified as final for purposes of appeal under Rule 54.02 if a trial court reserves a ruling on a request for attorney’s fees.” Id. (citing E Sols. for Bldgs., LLC v. Knestrick Contractor, Inc., No. M2017-00732-COA-R3-CV, 2018 WL 1831116, at *3-4 (Tenn. Ct. App. Apr. 17, 2018), perm. app. denied (Tenn. Aug. 9, 2018)).

The Tennessee Supreme Court recognized that the court has struggled to interpret the “interplay between [its] prior decisions . . . and section 20-12-119(c)(3)” when analyzing whether to certify a trial court order as final under Rule 54.02. Id. (citing Snyder v. First Tenn. Bank, N.A., No. E2013-01524-COA-R3-CV (Tenn. Ct. App. Oct. 28, 2013) (“order requiring a plaintiff to explain why a trial court’s reservation of the assessment of attorney’s fees pursuant to Tennessee Code Annotated section 20-12-119(c) qualified as a final judgment pursuant to Tennessee Rule of Civil Procedure 54.02”)). Ultimately, the Tennessee Supreme Court sided with the statute over precedent barring an appeal when the trial court reserves ruling on attorney’s fees.

The takeaway here allows parties to only have to argue attorney’s fees once their case has reached a final resolution. Practically speaking, in light of this opinion, litigants should strategize their approach to attorney’s fees holistically throughout all stages of a case and appeals, rather than at each dispositive stage.

Authored by: Hannah Kay Hunt Freeman