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Menche v. White Eagle Property Group, LLC

Court of Appeals of Tennessee, Jackson

August 26, 2019


          Session June 18, 2019

          Appeal from the Chancery Court for Shelby County No. CH-16-1060 Joe Dae L. Jenkins, Chancellor

         Plaintiff/Appellant brought suit against Defendants/Appellees over various business disputes. During the course of the discovery process, the trial court granted three motions to compel against Plaintiff, twice reserving Defendants' request for attorney's fees. Eventually, Defendants moved for discovery sanctions against Plaintiff, asking the trial court to award Defendants the attorney's fees and expenses related to prosecuting the three motions to compel as well as the motion for sanctions. Shortly after the third motion to compel was granted, however, Plaintiff requested a voluntary nonsuit pursuant to Rule 41.01. Because Defendants' motion for partial summary judgment was pending, the Defendants were required to agree to the nonsuit. The trial court granted the nonsuit based on Defendants' consent, but later held a hearing on the Defendants' motion for sanctions and awarded the Defendants their attorney's fees and expenses. Plaintiff appealed to this Court. Discerning no reversible error, we affirm.

         Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed

          Henry C. Shelton, III, and J. Bennett Fox, Jr., Memphis, Tennessee, for the appellant, Solomon Menche.

          J. Joshua Kahane, and Aubrey B. Greer, Memphis, Tennessee, for the appellees, White Eagle Property Group, LLC, Jeff Weiskopf, and Israel Orzel.

          J. Steven Stafford, P.J., W.S., delivered the opinion of the court, in which Carma Dennis McGee, J., joined.



         I. Background

         This case arose out of a business dispute between Solomon Menche ("Appellant") and White Eagle Property Group, LLC and other various defendants (collectively, "Appellees").[1] Several years ago Appellant invested money with Appellees for a real estate venture that was ultimately unsuccessful; consequently, the relationship of the parties deteriorated. Appellant brought suit against Appellees on June 23, 2016, in the Shelby County Chancery Court ("trial court") alleging, inter alia, that Appellees were liable to Appellant for breach of contract, conversion, breach of fiduciary duty, and fraud. After some discovery, Appellees filed a motion for partial summary judgment on February 14, 2017.

         Along with their motion for partial summary judgment, Appellees also filed a motion to stay as to the written discovery that Appellant had propounded upon Appellees.[2] A lengthy and bitter discovery dispute between the parties ensued, leading Appellees to file, on October 20, 2017, their first motion to compel discovery, alleging that Appellant was refusing to respond to various discovery requests. The trial court held a hearing on this motion on November 8, 2017, and thereafter entered an order granting Appellees' motion to compel; therein, the trial court ordered Appellant to respond to Appellees' first set of interrogatories and request for documents "on or before December 11, 2017." This order contained no mention of attorney's fees or expenses. The trial court delayed hearing Appellees' motion for partial summary judgment.

         The relationship between the parties did not improve; on December 29, 2017, Appellees filed a second motion to compel, asserting that Appellant had not timely produced the discovery previously ordered by the trial court, and that Appellant had refused to appear at a deposition despite being noticed by Appellees. In this second motion to compel, Appellees requested that they be awarded their reasonable attorney's fees and expenses incurred in the filing of both the first and second motion to compel, pursuant to Tennessee Rule of Civil Procedure 37.01.[3] Appellant filed a response to the second motion to compel asserting that Appellant had been out of the country in December of 2017, and that Appellant had produced some discovery on December 29, 2017, but that Appellees responded by simply filing the second motion to compel.

         The trial court heard the second motion to compel on January 19, 2018, and thereafter entered an order granting Appellees' motion. The trial court found that Appellant had failed to comply with the trial court's previous order and that the discovery responses that had been provided by Appellant were insufficient in that they were not timely submitted and "were not submitted with a verification page." As such, the trial court ordered Appellant to "file and serve a duly executed and notarized verification of his December 29, 2017 [r]esponses no later than February 2, 2018." Further, the trial court stated that Appellant should make himself available for deposition "no later than March 5, 2018." In addition, the trial court ordered the parties to participate in mediation. Finally, the trial court reserved ruling on Appellees' request for an award of expenses and attorney's fees incurred in bringing both motions to compel.

         Finally, on February 27, 2018, Appellees filed a third motion to compel, averring that Appellant would not agree to dates for deposition or mediation, and, further, that Appellant had not fully complied with the trial court's orders as to Appellees' interrogatories or requests for documents.[4] Again, Appellees asserted that they were entitled to recover their attorney's fees and expenses in connection with all three motions to compel. The trial court entered an order granting the third motion to compel on March 29, 2018, again noting that it would reserve ruling on "the fees and expenses to be paid by [Appellant] to [Appellee] associated with the first, second, and third motions to compel[.]"

         Then, on April 16, 2018, Appellees filed a motion entitled "Motion for Civil Sanctions" wherein Appellees asserted that Appellant had grossly and willfully abused the discovery process and that in addition to sanctions in the form of attorney's fees and expenses, Appellant's case should be dismissed. However, before this motion could be heard, Appellant sought a voluntary dismissal pursuant to Tennessee Rule of Civil Procedure 41.01. Because Appellees' motion for partial summary judgment remained pending, however, Appellees were required to consent to Appellant's request for the nonsuit. See Tenn. R. Civ. P. 41.01(1) ("[E]xcept when a motion for summary judgment made by an adverse party is pending, the plaintiff shall have the right to take a voluntary nonsuit to dismiss an action without prejudice by filing a written notice of dismissal[.]"). Appellees agreed to the proposed nonsuit and the trial court approved this agreement via order entered April 20, 2018. The agreed order granting dismissal reads as follows:

Before the Court, pursuant to Tenn. R. Civ. Pro. 41.01(3), is the [Appellant's] request to take a voluntary nonsuit to dismiss this action in its entirety without prejudice, to which [Appellees] consent. Based upon [Appellant's] request, [Appellees'] consent, and the entire record in this matter, the request is well taken and should be granted.
IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that [Appellant's] lawsuit is DISMISSED without prejudice pursuant to Tenn. R. Civ. Pro. 41.01, with court costs to be assessed to [Appellant].

         Despite the filing of the agreed order, on May 4, 2018, Appellees filed a notice to set their motion for sanctions for hearing. Appellees asserted that their motion for civil sanctions was unaffected by the voluntary dismissal, urging that the trial court retained jurisdiction to adjudicate the motion. Appellant filed a response asserting that the trial court lacked jurisdiction to hear the motion because the voluntary dismissal had already been granted by agreement, and that the entry of the order of dismissal effectively ended the case. Nonetheless, the trial court held a hearing on Appellees' motion for sanctions on June 8, 2018, and on July 12, 2018, entered an order granting the motion for sanctions, noting that the motion had been filed, docketed, and served prior to the entry of the agreed order of voluntary dismissal. To that point, the trial court noted that it retained subject matter jurisdiction over the motion for sanctions and found that Appellant owed Appellees "any and all reasonable expenses and attorney fees associated with the actions culminating in [Appellees'] [m]otions to [c]ompel and prosecuting the [m]otion on civil sanctions." Accordingly, the trial court ordered Appellant to pay $51, 000.00 in attorney's fees and expenses to Appellees. Appellant thereafter filed a timely notice of appeal to this Court.

         II. Issues Presented

         Appellant raises two issues in this appeal:

1.Whether the trial court erred in exercising jurisdiction over Appellees' motion for discovery sanctions after the consent order of dismissal was entered.
2. Whether the trial court abused its discretion in ordering discovery sanctions against [Appellant].

         III. Standard of Review

         Here, the parties' primary dispute on appeal is whether the trial court retained jurisdiction to grant Appellees' motion for sanctions after the agreed order of voluntary dismissal was entered. In addressing subject matter jurisdiction, our supreme court has previously explained:

The concept of subject matter jurisdiction involves a court's lawful authority to adjudicate a controversy brought before it. See Meighan v. U.S. Sprint Communications Co., 924 S.W.2d 632, 639 (Tenn. 1996); Standard Sur. & Casualty Co. v. Sloan, 180 Tenn. 220, 230, 173 S.W.2d 436, 440 (1943). Subject matter jurisdiction involves the nature of the cause of action and the relief sought, see Landers v. Jones, 872 S.W.2d 674, 675 (Tenn. 1994), and can only be conferred on a court by constitutional or legislative act. See Kane v. Kane, 547 S.W.2d 559, 560 (Tenn. 1977); Computer Shoppe, Inc. v. State, 780 S.W.2d 729, 734 (Tenn. Ct. App. 1989). Since a determination of whether subject matter jurisdiction exists is a question of law, our standard of review is de novo, without a presumption of correctness. See Nelson v. Wal-Mart Stores, Inc., 8 S.W.3d 625, 628 (Tenn. 1999).

Northland Ins. Co. v. State, 33 S.W.3d 727, 729 (Tenn. 2000).

         Moreover, Appellant asserts that the trial court abused its discretion in awarding Appellees discovery sanctions. "Appellate courts review a trial court's decision to impose sanctions and its determination of the appropriate sanction under an abuse of discretion standard." Alexander v. Jackson Radiology Assoc's, P.A., 156 S.W.3d 11, 14 (Tenn. Ct. App. 2004) (citing Lyle v. Exxon Corp., 746 S.W.2d 694, 699 (Tenn. 1988)). "An abuse of discretion occurs where the trial court has applied an incorrect legal standard or where its decision is illogical or unreasoned and causes an injustice to the complaining party." Id. (citing Mercer v. Vanderbilt Univ., Inc., 134 S.W.3d 121, 131 (Tenn. 2004)).

         IV. Discussion


         The primary dispute in the present appeal is whether it was appropriate for the trial court to grant Appellees' motion for sanctions after the parties agreed to enter an order nonsuiting Appellant's case. According to Appellant, there is no applicable rule in Tennessee that extended the trial court's jurisdiction once the case was dismissed; further, Appellant argues that because Appellees agreed to the voluntary dismissal, they "held all the cards" and could have "insisted to the [trial] court that ruling on pending motions be reserved." Ultimately, Appellant urges that the trial court lacked authority to award Appellees sanctions under these circumstances.

         In contrast, Appellees assert that the motion for sanctions was "collateral or ancillary" to Appellant's original lawsuit, and that the trial court retained jurisdiction to rule on the motion even after the agreed order of voluntary dismissal was entered. In support, Appellees urge that the "ability of [the] trial court to enforce its orders, and to punish or deter express violations of orders, is vital to the administration of justice and the power of the trial court." Appellees further point out that other states have determined that motions for sanctions are collateral to an underlying claim; Appellees also argue that, by analogy, in Tennessee there are circumstances under which a trial court may take action even after a case has been dismissed. See, e.g., Tenn. R. Civ. P. 54.04 (involving discretionary costs). To summarize, Appellees aver that a trial court retains jurisdiction "to entertain and impose sanctions for pre-voluntary dismissal bad conduct by a plaintiff after the entry of a voluntary dismissal." Alternatively, Appellees assert that the order of dismissal was simply not a final order because the issue of sanctions was not adjudicated by the order, and that the trial court acted within its discretion in later entering the order granting Appellees' motion for sanctions.

         The parties assert that the case-at-bar turns on the question of subject matter jurisdiction post-final judgment. Having reviewed the record and the arguments of the parties, however, we perceive the dispositive issue here to be whether the agreed order allowing a nonsuit was in fact a final order in light of Appellees' unadjudicated motion for sanctions.[5] To the extent that the agreed order of dismissal was not a final order, the case was not fully adjudicated and the trial court was well within its discretion in ruling on the motion for sanctions. Consequently, the first question we must address is whether the agreed order granting a voluntary nonsuit was final despite the fact that the motion for discovery sanctions was unaddressed.

         Tennessee Rule of Appellate Procedure 3(a) provides that

Except as otherwise permitted in rule 9 and in Rule 54.02 Tennessee Rules of Civil Procedure, if multiple parties or multiple claims for relief are involved in an action, any order that adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties is not enforceable or appealable and is subject to revision at any time before entry of a final judgment adjudicating all the claims, rights, and liabilities of all parties.

         As such, a final judgment is "one which determines a particular cause and terminates all litigation on the same right." Aetna Cas. & Sur. Co. v. Miller,491 S.W.2d 85, 86 (Tenn. 1973); see also Gaskill v. Gaskill,936 S.W.2d 626, 634 n.4 (Tenn. Ct. App. 1996) ("A final judgment is one that resolves all the claims between all the parties."); Shofner v. Shofner,181 S.W.3d 703, 712-13 (Tenn. Ct. App. 2004) ("A final judgment is primarily one that fully adjudicates all the claims between all the parties"). Simply put, a final order "leav[es] nothing else for the trial court to do." In re Estate of Henderson,121 S.W.3d 643, 645 (Tenn. 2003). An order that is not final is "subject to revision at any time before entry of a final judgment adjudicating all the ...

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