KARESA RIVERA ET AL.
WESTGATE RESORTS, LTD., L.P. ET AL.
Session Date: January 18, 2018
from the Chancery Court for Sevier County No. 15-1-002
Telford E. Forgety, Jr., Chancellor
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.
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.
O. Belcher, Nashville, Tennessee, and Richard T. Wallace,
Sevierville, Tennessee, for the appellees, Karesa Rivera and
R. Frierson, II, J., delivered the opinion of the court, in
which Charles D. Susano, Jr., and John W. McClarty, JJ.,
R. FRIERSON, II, JUDGE
Factual and Procedural Background
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.
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.
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
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
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.
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
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.
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 ...