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Rivera v. Westgate Resorts, Ltd., L.P.

Court of Appeals of Tennessee, Knoxville

April 27, 2018

KARESA RIVERA ET AL.
v.
WESTGATE RESORTS, LTD., L.P. ET AL.

          Session Date: January 18, 2018

          Appeal from the Chancery Court for Sevier County No. 15-1-002 Telford E. Forgety, Jr., Chancellor

          The plaintiffs accepted an offer of judgment from the defendant company, which included payment of the plaintiffs' reasonable attorney's fees and expenses in an amount to be determined by the trial court. The trial court awarded attorney's fees and expenses to the plaintiffs in the amount of $56, 423.24, expressly determining such amount to be reasonable. The defendant company has appealed. Inasmuch as the trial court failed to consider the factors listed in Tennessee Supreme Court Rule 8, Rule of Professional Conduct 1.5 ("RPC 1.5") when making its determination regarding a reasonable award of attorney's fees, we vacate the trial court's fee award and remand this matter for further proceedings concerning this issue. We accordingly decline to award fees to the plaintiffs on appeal.

         Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Vacated; Case Remanded

          Gregory C. Logue and Robert L. Vance, Knoxville, Tennessee, for the appellant, Westgate Resorts, Ltd., L.P.

          John O. Belcher, Nashville, Tennessee, and Richard T. Wallace, Sevierville, Tennessee, for the appellees, Karesa Rivera and Gabriel Rivera.

          Thomas R. Frierson, II, J., delivered the opinion of the court, in which Charles D. Susano, Jr., and John W. McClarty, JJ., joined.

          OPINION

          THOMAS R. FRIERSON, II, JUDGE

         I. Factual and Procedural Background

         On January 5, 2015, the plaintiffs, Karesa and Gabriel Rivera, filed a complaint in the Sevier County Chancery Court against Westgate Resorts, Ltd., L.P., a/k/a Westgate Resorts, Ltd. ("Westgate"); Stephen A. Wilson; James Z. Brown; and Michael W. Lewis (collectively, "Defendants"). In this complaint, the Riveras stated that in May 2014, they traveled to Pigeon Forge, Tennessee, for a family vacation, where they were approached by an employee of Westgate. According to the Riveras, this employee asked the Riveras to attend a time-share sales presentation in exchange for receiving free breakfast and show tickets. The Riveras attended the time-share sales presentation on May 29, 2014, and were solicited to purchase a time-share interest at the Westgate Resort in Gatlinburg.

         The Riveras claimed that Mr. Wilson, Mr. Brown, and Mr. Lewis talked with the Riveras during the time-share sales presentation and made various representations and promises regarding the purchase of a time-share interest, including that Westgate would "buy [the time-share interest] back" if the Riveras were not satisfied with their purchase. Although the Riveras did eventually agree to purchase a time-share interest, they later asserted that they were pressured to sign documents that they were not given sufficient opportunity to review and did not understand. According to the Riveras, within two to three weeks following their execution of the purchase agreement for a time-share interest, they began to contact Westgate to ascertain whether Westgate would "buy it back." The Riveras stated that following repeated refusals by Westgate to relieve the Riveras of their obligations, the Riveras consulted with counsel and filed the instant action.

         The Riveras averred that Defendants violated the Tennessee Time-Share Act, violated the Tennessee Consumer Protection Act, and made negligent and fraudulent misrepresentations. The Riveras sought to rescind the contract and have their purchase money refunded. The Riveras also sought damages, including treble and punitive damages, as well as attorney's fees.

         The record reflects that on October 12, 2016, the Riveras filed a notice of acceptance of Westgate's offer of judgment, dated October 11, 2016. The parties agreed that the Riveras would be allowed to rescind the contract and that all obligations between the parties would be cancelled. The parties further agreed that all claims would be released and that Westgate would pay to the Riveras (1) their purchase funds of $3, 587.20; (2) additional damages of $8, 000.00; and (3) an award of "reasonable attorneys' fees and expenses in an amount to be set by the Court." In addition, the Riveras' claims against the other defendants would be dismissed with prejudice. Westgate's offer of judgment was attached as an exhibit. The Riveras affirmed that they had accepted the offer of judgment. They asked the trial court to determine the amount of attorney's fees and expenses and enter judgment accordingly.

         The Riveras subsequently submitted a motion requesting that the trial court set the amount of attorney's fees, with an attached affidavit from their counsel. The Riveras sought attorney's fees and expenses in the amount of $56, 423.24. Westgate filed a response in opposition to the Riveras' motion regarding attorney's fees, asserting that the amount sought was unreasonable. Westgate argued that the court should consider the factors listed in Tennessee Supreme Court Rule 8, RPC 1.5 when making its determination regarding a reasonable award of attorney's fees.

         Westgate further claimed that an offer to rescind the purchase agreement and refund the monies paid by the Riveras had been extended to the Riveras by Westgate on January 21, 2015, approximately two weeks following the filing of the Riveras' complaint. According to Westgate, it made another written offer of settlement on April 15, 2016, which included rescission, a full refund, and compensation for "reasonable" damages and attorney's fees. The Riveras failed to accept either of these previous offers, and litigation continued. Westgate contended that the vast majority of fees and expenses were incurred after these offers were made. Westgate attached an affidavit executed by defense counsel, detailing the terms of the prior offers of settlement.

         The Riveras filed a reply to Westgate's opposing response, stating that the prior offers made by Westgate contained no offer of damages beyond refund of the purchase monies and reasonable attorney's fees, despite the Riveras' claim for punitive and treble damages. The Riveras reiterated that the fee award they were seeking was reasonable.

On March 3, 2017, this Court held a hearing on Plaintiffs' Motion to Set Amount of Attorney's Fees and Expenses (the "Motion") to determine a reasonable amount of attorneys' fees and expenses to be awarded to Plaintiffs.
Having considered the Offer of Judgment and the Notice of Acceptance thereof; the Motion; Defendants' Response thereto; the Plaintiffs' Reply; all materials filed in support of and in response to the Motion; the oral argument of counsel on the issue of the award of attorneys' fees and expenses; and the record as a whole, the Court finds that the Motion should be granted, that the Plaintiffs should receive an award of reasonable attorneys' fees in the amount of $51, 866.75 and expenses in the amount of $4, 556.49, for a total award of fees and expenses in the amount of $56, 423.24, and that judgment should be entered pursuant to Tenn. R. Civ. P. 68.

Pursuant to the terms of the offer of judgment, the trial court also dismissed the Riveras' claims against Mr. Wilson, Mr. Brown, and Mr. Lewis with prejudice. Westgate, as the sole remaining defendant, timely appealed.

          II. Issues Presented Westgate has presented three issues on appeal, which we have restated slightly:

1. Whether the trial court erred by failing to apply the factors set forth in Tennessee Supreme Court Rule 8, RPC 1.5 when setting the reasonable amount of ...

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