W. Douglas Harris v. Gary McMichael ( 2021 )

11/12/2021
IN THE COURT OF APPEALS OF TENNESSEE
AT KNOXVILLE
Assigned on Briefs July 1, 2021
W. DOUGLAS HARRIS v. GARY MCCMICHAEL ET AL.
Appeal from the Circuit Court for Knox County
No. 2-688-14 William T. Ailor, Judge
___________________________________
No. E2020-00817-COA-R3-CV
___________________________________
The trial court found that Appellant, a Florida attorney, breached his fiduciary duty to
Appellees, his clients, and disgorged Appellant of all fees paid by Appellees except for
$5,000. Appellant appeals. Discerning no error, we affirm.
Tenn. R. App. P. 3 Appeal as of Right;
Judgment of the Circuit Court Affirmed and Remanded
KENNY ARMSTRONG, J., delivered the opinion of the court, in which J. STEVEN STAFFORD,
P.J., W.S., joined. KRISTI M. DAVIS, J., not participating.
W. Douglas Harris, Panama City Beach, Florida, appellant, pro se.
James R. Moore, Knoxville, Tennessee, for the appellees, Gary McMichael and Lisa
McMichael.
OPINION
I. FACTUAL AND PROCEDURAL HISTORY
Appellees, Gary and Lisa McMichael, reside in Tennessee. The instant lawsuit
stems from representation provided to the McMichaels by Appellant W. Douglas Harris, a
Florida attorney. In connection with a commercial real estate development in Florida, the
McMichaels signed guarantees on certain loans for the Florida development, and then
allegedly defaulted on those loans. This precipitated a lawsuit against the McMichaels by
the bank and their former partners in the venture (“the Florida Litigation”). At the outset
of the Florida Litigation, the McMichaels were represented by attorney Gregory D. Smith.
Unfortunately, Mr. Smith fell ill prior to resolution of the Florida Litigation, and the
McMichaels engaged Mr. Harris as their attorney.
Giving rise to the instant appeal, on October 30, 2014, Mr. Harris filed a complaint
against the McMichaels in the Knox County Circuit Court (“trial court”), alleging a claim
for breach of contract, quantum meruit, and bad check. In the complaint, Mr. Harris
averred, inter alia, that: (1) he and Mr. McMichael entered into an attorney-client
agreement on June 2, 2014, which provided for a $30,000 retainer and hourly fees charged
at $350 per hour for attorney time and $100 per hour for legal assistant time; (2) the amount
owed on the June 2 agreement had been paid in full; (3) the parties entered into an amended
attorney-client representation agreement on August 25, 2015, which provided for the same
hourly fees as the prior agreement and for a $30,000 retainer which was “deemed earned
upon payment and non-refundable”; (4) Mr. Harris performed legal services pursuant to
the amended agreement and incurred hourly fees equal to or in excess of the $30,000
retainer; (5) on August 15, 2015, Mr. McMichael tendered a check to Mr. Harris for
$15,000 which was not honored when Mr. Harris presented it to the issuing bank; (6) the
amended agreement provided for a lien on Mr. McMichael’s real, personal, and intangible
property for any unpaid balance; and (7) Mr. McMichael failed to pay the $30,000 owed.
On December 8, 2014, the McMichaels filed an answer and counter-complaint, in
which they averred that: (1) they had paid Mr. Harris $41,775; (2) the fees Mr. Harris
sought were not justified; (3) they did not issue any bad checks; (4) Mr. Harris “failed to
properly document that he has earned the sums paid to him or that the amounts charged are
ethical or reasonable”; (5) Mr. Harris “used his position of trust, and advantage as an
attorney, to breach his original agreement with the [McMichaels] and improperly and
unethically demand two later fee agreements, which included additional ‘non-refundable’
fees, and an hourly rate increase of $100.00 and ‘liens’ on assets”; and (6) Mr. Harris
threatened to disclose the McMichaels’ confidential information if he was not paid. The
McMichaels requested that Mr. Harris be disgorged of the $41,775 they had paid.
The trial court heard the case on September 17, 2018. The evidence presented at
the hearing showed that the parties entered into an “Attorney-Client Representation
Agreement” (“the First Agreement”), with Mr. McMichael as the client. The First
Agreement states that Mr. Harris, will represent him “in regard to Charter Bank’s Motion
for Summary Judgment Case # 2010 CA 2267. . . .” It further states, “[T]his agreement
will allow Attorney to make a limited appearance just for the pending Motion for Summary
Judgment scheduled for March 6, 2014,” and “the Attorney may provide additional legal
services to the Client on which the Attorney and client may subsequently agree.” With
respect to fees, the First Agreement provided: “The current standard hourly rate for
attorneys is $250.00 and $100.00 for legal assistants. Time billed shall be in increments
of one quarter of an hour.” The First Agreement also required a $5,000 retainer, “deemed
earned upon payment and non-refundable.”
Pursuant to the First Agreement, on March 6, 2014, Mr. Harris appeared at the
summary judgment hearing in the Florida Litigation. At the hearing, the judge recused
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himself, and the hearing was continued. On March 12, 2014, Mr. Harris sent Mr.
McMichael an email that stated:
Please find attached my legal invoice. There is no money due. I did not
charge you for any of my expenses in traveling back to Okaloosa County or
for drafting the motion to disqualify Judge Brown. Thank you for the
opportunity to be of assistance to you in this matter. Good luck in the future.
The email included a block bill (which Mr. Harris calls a “skinny bill”), showing “20 hours
@$250.00 = $5000.00” for “reviewing the Motion for summary judgment filed by Charter
Bank, researching available defenses, writing a memorandum in opposition to MSJ[,]
[t]raveling from Palm Beach County to Okaloosa County and attending the SJ hearing and
preparing a motion for disqualification of Judge Brown.” It also stated, “Under the terms
of our agreement this will comp[l]ete our agreement.” The statement did not provide
quarter-hour itemization of Mr. Harris’ work as contemplated in the agreements, see
further discussion infra.
The hearing on the motion for summary judgment in the Florida Litigation was
rescheduled to May 1, 2014. Mr. Harris informed Mr. McMichael that he would not appear
at that hearing without further payment. So, Mr. McMichael paid Mr. Harris $1,500 on
April 30, 2014, and Mr. Harris represented the McMichaels at the May 1 hearing.
Concerning the April 30, 2014 payment, the Statement of Evidence in the instant case
provides:
During the trial of this matter, [Mr. Harris] called Defendant, Gary
McMichael, to the stand to testify. [Mr. McMichael] testified that on April
30, 2014, [Mr. Harris] demanded another payment of $1,500.00 or he would
not appear at a Motion for Summary Judgment hearing, and which amount
was paid by [Mr. McMichael]’s sister. [Mr. and Mrs. McMichael] never
signed any other fee agreement or received a detailed billing statement for
any of this money paid to [Mr. Harris] for work to be performed for this
amount. There was another hearing on the Foreclosure suit scheduled for
May 1, 2014, which [Mr. Harris] admits was scheduled without his
participation.
Additionally, [Mr. McMichael] testified that [Mr. Harris] demanded
an additional $5,000.00 payment, which was supported by emails dated May
14 and 15, wherein [Mr. Harris] asked [Mr. McMichael] if he had made
arrangements for the $5,000.00 payment and [Mr. McMichael] replied that
he (was) considering options such as using an “AMX (sic) card” or paying
by check as stated in emails dated May 15 and 16, 2014. [Mr. McMichael]
further states, “I am relying on you for the long haul here to help me and my
wife.” [Mr. McMichael] sent a payment of $5,000.00 via Pay Pal to [Mr.
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Harris] on May 16, 2014 at 22:27 (10:27 p.m.) which incurred a service
charge of $275.00 to [the McMichaels].
(Parentheticals in original.) On May 27, 2014, Mr. Harris sent a letter to Mr. McMichael.
In relevant part, the letter states:
When we met in late February, you were facing a hearing date of
March 6, 2014, and needed to make sure that no money judgment would be
entered that might affect your ability to obtain funding for your project in
downtown Ft. Walton Beach. You stated that you needed 60 days to
complete that closing. That date would have been May 1st, 2014.
With that in mind, I prepared for and attended the hearing on March
6, 2014, and instead of arguing against Charter Bank’s Motion for Summary
Judgment, an opportunity presented itself to seek to have Judge Brown
recuse himself and I drafted and filed a motion, . . . [which] was granted, and
I had achieved your desired result. [1]
***
Without my participation in the scheduling, another hearing was set
on May 1st to hear Charter Bank’s Motion for Summary Judgment. You
requested that I attend, and I prepared for that hearing and attended in front
of Judge Flowers in Crestview. After the hearing, Judge Flowers requested
proposed orders, and I have reviewed Charter Bank’s proposed order and
have drafted and delivered to the judge my proposed order. Both Charter
Bank’s and my proposed orders do not attach any money judgment to you or
Lisa, thereby your desire not to have a money judgment against you whereby
you can close on your new deal was accomplished.
As far as the mediation on the 19th of May, you requested that I attend
with you. . . . After discussing the case with [opposing counsel], he stated
that without your discovery, now due by the 31st of May, he would not be
able to negotiate with you to reach a settlement and he thought that your
attending would be a waste of time and money. . . .
***
I agreed to assist you in your effort to give you more time to close
your downtown deal, and I have accomplished that task and far more. I am
1
Mr. McMichael disputes that recusal of the judge in the Florida Litigation was his “desired result.”
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willing to discuss with you continued representation that would be based on
a value[-]based billing with lost opportunity factored in. . . .
Attached to the May 27 letter was a “Statement for Professional Fees” for the period of
March 7, 2014 through May 27, 2014. The statement showed 33.5 hours of work at $250
per hour for a total of $8,375. The statement concludes with “Thank you for the
opportunity to represent you in this matter. Under the terms of our agreement this will
conclude our agreement. Good Luck with the remaining issues in the case.” Mr.
McMichael responded by email, wherein he expressed his dissatisfaction with the level of
communication from Mr. Harris.
The parties subsequently discussed Mr. Harris’ further representation, and on June
4, 2014, Mr. Harris emailed Mr. McMichael, stating, “Attached please find fee agreement.
Once we have it executed and I have the retainer, we can talk and I will do a detailed
schedule and plan of attack.”2 Attached to the email was an “Amended Agreement” (“the
Second Agreement”). The Second Agreement bore Mr. Harris’ signature, was dated June
14, 2014, and provided for Mr. Harris “to represent [Mr. McMichael] in regard to Case #
2010 CA 2267, pending in Okaloosa County, Florida, and . . . the exclusive right to take
all legal steps to represent the client’s interests in those matters.” It set attorney fees at
$350 per hour, $100 more than charged under the First Agreement; provided for billing in
one-quarter-hour increments; and required a $30,000 retainer fee “deemed earned upon
payment and nonrefundable.” On receipt of the Second Agreement, Mr. McMichael stated
in email to Mr. Harris, “We need to talk today. Please call me.” Mr. Harris replied by
email, “Read my email. Once you have signed the agreement and sent the $30,000, we can
talk.” The parties executed the Second Agreement on June 10, and the McMichaels paid
Mr. Harris the $30,000 in three $10,000 installments on June 10, June 18, and June 24,
2014.
On August 25, 2014, a few days before a scheduled motion hearing in the Florida
Litigation, the parties executed yet another agreement, titled “Amendment to Attorney-
Client Representation Agreement Dated in June 2014,” (the “Third Agreement”). In
relevant part, the Third Agreement provided:
Client shall pay Attorney $30,000 for his services under this amended
agreement. Client shall deliver $15,000 of said fee to Attorney upon
execution of this contract or August 25th 2014, whichever is later, the
remaining $15,000 shall be due by September 15, 2014 and will be deemed
earned upon payment and nonrefundable. It is anticipated that said $30,000
will cover Fees and expenses up to and including the deficiency hearing on
October 7, 2014.
2
According to the Statement of Evidence, “[t]he uncontroverted testimony was that [Mr. Harris]
failed to follow through with his promise and no such schedule or plan of attack was ever provided.”
-5-
The Third Agreement provided for attorney fees of $350 per hour. On August 29, 2014,
Mr. Harris appeared as counsel for the McMichaels at a hearing on several motions in the
Florida Litigation. Mr. Harris requested a continuance, and stated to the court multiple
times that he was not prepared. Correspondence from Mr. Harris to Mr. McMichael
suggests that Mr. Harris continued representing the McMichaels through September 2014.
On September 30, 2014, Mr. McMichael emailed Mr. Harris to inform him that the
McMichaels were retaining other counsel, and stated, “I will get with you to resolve the
bill and payment.” On October 21, 2014, Mr. Harris withdrew as the McMichaels’ counsel
of record in the Florida Litigation.
It is undisputed that the McMichaels paid Mr. Harris a total of $41,500 and that Mr.
Harris demanded an additional $30,000 under the Third Agreement. Prior to the hearing
in the instant case, Mr. Harris tendered a statement alleging that the McMichaels owed a
balance of $40,027.50, comprised of 50.2 hours of work by Mr. Harris and 33.3 hours of
work by a paralegal from August 7, 2014, though October 24, 2014.
By order of June 21, 2019, the trial court held that Mr. Harris did not prove his bad-
check claim. The trial court further held that Mr. Harris “procured agreements subsequent
to the initial agreement through coercion,” which rendered the subsequent agreements void.
Finally, the trial court held that the doctrine of quantum meruit was inapplicable because
the parties had express contracts. The trial court disgorged Mr. Harris of all fees and
removed the liens on the McMichaels’ property. In a subsequent order of January 7, 2020,
the trial court granted the McMichaels discretionary costs of $1,537.60 for court reporter
fees and $3,720 for expert witness fees.
On July 19, 2019, Mr. Harris filed a Motion to Alter or Amend the Judgment,
wherein he asserted, inter alia, that the trial court “contradicted itself by finding that the
fee agreements were voidable, and yet [q]uantum [m]eruit is not available in this case
because there were fee agreements.” In an amended order filed on January 3, 2020, the
trial court held, “This court is of the opinion that [the McMichaels] were coerced as a result
of the unethical conduct of [Mr. Harris][,] but, because there was consideration for the
services to be rendered, the agreements are not void.” On January 7, 2020, the trial court
entered an order on Mr. Harris’ motion to alter or amend, wherein it found that
[w]hen considering all the evidence and weighing it accordingly, the court is
of the opinion that [Mr. Harris] has failed to present any new evidence or law
that the court should consider amending its ruling. However, the court is of
the opinion that [Mr. Harris] did attend some hearings, was somewhat
prepared for some of them, did correspond with opposing counsel and the
[McMichaels], and should be compensated for some of his time. As the court
stated, it is impossible for the court to make a clear determination as to the
amount that the [Mr. Harris] should receive. As a result, the court is of the
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opinion that [Mr. Harris] should receive the initial five thousand ($5,000.00)
retainer for his services and that [his] Motion to Alter or Amend should be
Denied in all other respects.
In response to the trial court’s orders of January 3 and 7, Mr. Harris filed a second motion
to alter or amend judgment on February 2, 2020, wherein he argued, inter alia, that “the
trial court’s rationale for disgorgement of fees is no longer sustainable after its finding that
the fee agreements were valid contracts.” By order of May 13, 2020, the trial court denied
the motion. Mr. Harris filed his notice of appeal on June 11, 2020.
II. ISSUES
Mr. Harris presents the following issues for review:
1. Does this Court have jurisdiction over this appeal, since [Appellant] filed
a Second Motion to Alter or Amend Judgment based upon the trial court
entering an Amended Judgment and the second Motion to Alter or Amend
raised new issues related to the Amendment?
2. Did the trial court err in finding that [Appellant] breached his fiduciary
duty to [Appellees] by requiring them to sign a vague initial Limited
Appearance fee agreement and not giving them sufficient notice of his
intention to terminate his representation?
3. Did the trial court err in finding that [Appellant] breached his fiduciary
duty to [Appellees] by not compiling his billing records
contemporaneously?
4. Did the trial court err in finding that [Appellant] breached his fiduciary
duty by not sending out billing statements on a regular basis?
5. Did the trial court abuse its discretion by initially finding that there were
no valid fee agreements and no quantum meruit available, and then
amending its judgment to find that the fee agreements were valid but that
Appellant was only entitled to $5,000.00 for his legal work?
6. Did the trial court err in holding that [Appellant] [v]iolated his [e]thical
[d]uty in increasing his hourly rate and asking for a substantial retainer in
the June 4, 2014 Attorney[-]Client Representation Agreement?
7. Did the trial court abuse its discretion by ordering disgorgement of
attorney fees by [Appellant] where disgorgement is not an appropriate
remedy under the facts and circumstances of this case?
8. Did the trial court err in ordering that [Appellant] disgorge attorney fees
to both Gary and Lisa McMichael where [Appellant’s] agreement was
only with Gary McMichael and no evidence was presented at trial that
Lisa McMichael directly paid any attorney fees?
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III. STANDARD OF REVIEW
We review the trial court’s findings of fact de novo on the record of the trial court,
accompanied by a presumption of the correctness of these findings, unless the evidence
preponderates otherwise. Tenn. R. App. P. 13(d); Kelly v. Kelly, 445 S.W.3d 685, 691–92
(Tenn. 2014). Contract interpretation is a question of law that we review de novo on the
record, with no presumption of correctness. Guiliano v. Cleo, Inc., 995 S.W.2d 88, 95
(Tenn. 1999). The decision to award equitable relief is generally within the discretion of
the trial court. Morrow v. Jones, 165 S.W.3d 254, 258 (Tenn. Ct. App. 2004) (citing Early
v. Street, 241 S.W.2d 531, 536 (Tenn. 1951)). We review a trial court’s discretionary
decisions under the “abuse of discretion” standard of review. Lee Med., Inc. v. Beecher,
312 S.W.3d 515, 524 (Tenn. 2010).
IV. ANALYSIS
Before turning to the substantive issues, we first note that the appellants are
responsible for providing this Court with a record that is sufficient for review of their
issues. Williams v. Williams, 286 S.W.3d 290, 297 (Tenn. Ct. App. 2008) (citing Tenn. R.
App. P. 24; McDonald v. Onoh, 772 S.W.2d 913, 914 (Tenn. Ct. App. 1989)). Here, the
appellate record contains no transcript of the September 17, 2018 hearing. When a
transcript is not available, the Rules of Appellate Procedure require that appellants prepare
a statement of the evidence that “convey[s] a fair, accurate and complete account of what
transpired with respect to those issues that are the bases of appeal.” Tenn. R. App. P. 24(c).
Mr. Harris submitted a statement of the evidence to the trial court; however, by order of
October 28, 2020, the trial court refused to adopt Mr. Harris’ statement because it “is full
of statements that are neither accurate, fair, nor complete, and include statements that were
not evidence admitted in this case.” Rather, the trial court adopted the factual findings in
its January 3, 2020 amended order as the Statement of Evidence. Hall v. Hall, 772 S.W.2d
432, 435 (citing Tenn. R. App. P. 24(c), (e) (“Any question as to the accuracy of a . . .
statement of the evidence is to be submitted to and settled by the [t]rial [c]ourt, whose
determination is conclusive absent extraordinary circumstances.”)). In his appellate brief,
Mr. Harris makes factual assertions that are not corroborated in the record.3 Because this
Court “may consider [only] those facts established by the evidence in the trial court and set
forth in the record,” Tenn. R. App. P. 13, we will not consider extraneous factual assertions
that are not contained in the record or in the trial court’s January 3, 2020 amended order.
Furthermore, facts that are not ascertainable through a review of the Statement of Evidence
in combination with the remainder of the record are presumed to favor Appellee. See
Tanner v. Whiteco, L.P., 337 S.W.3d 792, 796 (Tenn. Ct. App. 2010) (“[I]n the absence
of a transcript or statement of the evidence, we must conclusively presume that every fact
3
For example, Mr. Harris states that his expert witness “testified that she had reviewed Appellant’s
billing statements and had not seen anything in the statements that appeared to reflect excessive or
unreasonable billing.” This was not part of her testimony as described by the Statement of Evidence.
-8-
admissible under the pleadings was found or should have been found favorably to the
appellee.” (quoting In re Rockwell, 673 S.W.2d 512, 516 (Tenn. Ct. App.1983); Wilson v.
Hafley, 226 S.W.2d 308, 311 (Tenn. 1949); Kyritsis v. Vieron, 382 S.W.2d 553 (Tenn. Ct.
App. 1964))); see also Williams, 286 S.W.3d at 297 (“[W]e must assume that the record,
had it been preserved, would have contained sufficient evidence to support the trial court’s
factual findings.” (quoting Sherrod v. Wix, 849 S.W.2d 780, 783 (Tenn. Ct. App. 1993))).
With this in mind, we turn to Mr. Harris’ arguments on appeal.
A. Waiver of issues
In addition to the inclusion of facts not contained in the record, Mr. Harris’ brief
also fails to comply with certain briefing requirements as set out in the Rules of Appellate
Procedure and the Rules of the Court of Appeals. Rule 27 of the Tennessee Rules of
Appellate Procedure provides:
The brief of the appellant shall contain . . . [a]n argument . . . setting forth . . .
the contentions of the appellant with respect to the issues presented, and the
reasons therefor, including the reasons why the contentions require appellate
relief, with citations to the authorities and appropriate references to the
record (which may be quoted verbatim) relied on[.]
Tenn. R. App. P. 27(a)(7)(A). Furthermore, the Rules of the Court of Appeals require that
“[w]ritten argument in regard to each issue on appeal shall contain . . . [a] statement of each
determinative fact relied upon with citation to the record where evidence of each such fact
may be found,” Tenn. Ct. App. R. 6(a)(4), and “[n]o assertion of fact will be considered on
appeal unless the argument contains a reference to the page or pages of the record where
evidence of such fact is recorded,” Tenn. Ct. App. R. 6(b); e.g., Flowers v. Bd. of Prof’l
Responsibility, 314 S.W.3d 882, 899 (Tenn. 2010) (“Parties are required to provide citation
and support identifying where in the record evidence can be found” as “judges are not
like pigs, hunting for truffles buried in the record.” (quotation omitted)). We have “held
on several occasions that where a party in its brief on appeal has . . . set forth what he or
she alleged to be facts without any citation to the record, this court is not under a duty to
minutely search the record to verify these unsupported allegations.” Long v. Long, 957
S.W.2d 825, 828 (Tenn. Ct. App. 1997).
Here, Mr. Harris’ appellate brief contains only sporadic citations to the record.
Indeed, there is a full page and a half in Mr. Harris’ “Statement of the Facts” that contains
no citations to the record. More significant, however, is Mr. Harris’ failure to cite authority,
which is required by Rule 27. In his discussion of issues 2, 4, 5, and 6, Mr. Harris cites no
legal authority whatsoever. It is well settled that failure to cite authority for propositions
in arguments submitted on appeal constitutes waiver of the issue. E.g., Cleveland Custom
Stone v. Acuity Mut. Ins. Co., No. E2013-02132-COA-R3-CV, 2014 WL 2586374, at *8
(Tenn. Ct. App. June 10, 2014); SecurAmerica Bus. Credit v. Schledwitz, No. W2012-
-9-
02605-COA-R3-CV, 2014 WL 1266121, at *14 (Tenn. Ct. App. Mar. 28, 2014); McGarity
v. Jerrolds, 429 S.W.3d 562, 566 n.1 (Tenn. Ct. App. 2013); Messer Griesheim Indus.,
Inc. v. Cryotech of Kingsport, Inc., 131 S.W.3d 457, 474 (Tenn. Ct. App. 2003); Lett v.
Collis Foods, Inc., 60 S.W.3d 95, 105 (Tenn. Ct. App. 2001); see also Forbess v. Forbess,
370 S.W.3d 347, 355 (Tenn. Ct. App. 2011) (“[A] party’s failure to cite authority for its
arguments or to argue the issues in the body of its brief constitute a waiver on appeal.”);
Newcomb v. Kohler Co., 222 S.W.3d 368, 401 (Tenn. Ct. App. 2006) (failure “to cite to
any authority or to construct an argument regarding [a] position on appeal” constitutes a
waiver of the issue); Bean v. Bean, 40 S.W.3d 52, 55 (Tenn. Ct. App. 2000) (“[F]ailure to
comply with the Rules of Appellate Procedure and the rules of this Court waives the issues
for review.”). Therefore, those issues for which Mr. Harris has cited no legal authority,
i.e., issues 2, 4, 5, and 6, are deemed to be waived. We now turn to address the remaining
issues.
B. Subject-matter jurisdiction
We ordered the parties to brief the issue of whether this Court has jurisdiction to
consider this appeal considering the timing of the filing of appeal and the requirements of
the Tennessee Rules of Civil Procedure and the Tennessee Rules of Appellate Procedure.
In order to be timely, a notice of appeal “shall be filed with the clerk of the appellate
court within 30 days after the date of entry of the judgment appealed from.” Tenn. R. App.
P. 4(a). “The thirty-day time limit for filing a notice of appeal is mandatory and
jurisdictional in civil cases.” Albert v. Frye, 145 S.W.3d 526, 528 (Tenn. 2004). Rule 59
of the Tennessee Rules of Civil Procedure, which allows for the filing of a motion to alter
or amend, provides: “Motions to reconsider [Rule 59] motions are not authorized and will
not operate to extend the time for appellate proceedings.” Tenn. R. Civ. P. 59.01.
The trial court entered the final order on June 21, 2019. Mr. Harris then timely filed
a motion to alter or amend. The trial court sua sponte amended its judgment on January 3,
2020. The trial court then entered its order on Mr. Harris’ motion to alter or amend on
January 7, 2020. On February 5, 2020, Mr. Harris filed a second motion to alter or amend,
which the trial court denied by order entered May 13, 2020. Mr. Harris then filed a notice
of appeal on June 11, 2020.
Mr. Harris’ second Rule 59 motion was based on the trial court’s findings in its
amended order and on the trial court’s order on Mr. Harris’ first Rule 59 motion.
Specifically, Mr. Harris argued in his second motion that “[t]he trial court’s rational for
disgorgement of fees is no longer sustainable after its finding that the fee agreements were
valid contracts.” This Court has held that when a party files a second Rule 59 motion in
response to an amended judgment, the time period for filing the notice of appeal is tolled
if the second motion addresses issues raised by the amended decision and is not simply a
motion to reconsider previously asserted grounds. Legens v. Lecornu, No. W2013-01800-
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COA-R3-CV, 2014 WL 2922358, at *13–14 (Tenn. Ct. App. June 26, 2014); Davis v.
Wells Fargo Home Mortgage, No. W2016-02278-COA-R3-CV, 2018 WL 1560077, at *3
(Tenn. Ct. App. Mar. 29, 2018). We conclude that Mr. Harris’ second Rule 59 motion was
not simply a motion to reconsider previously asserted grounds because it addresses issues
raised by the amended order; therefore, Mr. Harris’ second Rule 59 motion operated to toll
the period for filing his notice of appeal. Thus, Mr. Harris’ June 11, 2020 notice of appeal
was effective to confer jurisdiction this Court with jurisdiction over the appeal.
C. Breach of fiduciary duty
Mr. Harris asserts that the trial court erred in finding that he breached his fiduciary
duty to the McMichaels “by not compiling his billing records contemporaneously.”
Specifically, he argues:
The trial court erred in finding that it was necessary for [Mr. Harris] [to]
compile his billing contemporaneously. Florida law does not so require.
Florida law allows reconstruction of the time billed through notes taken
contemporaneously, which is what [Mr. Harris] did.
Mr. Harris’ argument mischaracterizes the trial court’s findings and ignores the fact that
Mr. Harris did not comply with the requirements outlined in the fee agreements. The trial
court’s amended order notes that,
[a]lthough Florida imposes no absolute requirement of contemporaneous
records, Mr. Harris’ fee agreement states that the [McMichaels] would
receive a billing statement setting forth time expended in quarter hour
increments. This did not happen.
Furthermore, the trial court held that Mr. Harris breached the duty to “be competent,
prompt, and diligent . . . [and to] maintain communication with a client concerning the
representation.” R. Regulating Fla. Bar, Preamble. The Florida Bar recommends that:
Billing should be done promptly after the work for which the bill is sent is
completed, and should be detailed. The client is entitled to know what items
are covered by the bill and to have current billing so that the cost of the
litigation can be overseen as it progresses.
***
When billing a client, the lawyer should detail the legal services performed
in the matter and the expenses incurred for each legal service. The “narrative”
statements assist the client in understanding the reason for the amount of the
bill.
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The Fla. Bar, Florida Civil Practice Before Trial, ch.3 (13th ed. 2020), available at
Westlaw CIVPRAC FL-CLE 1-1.
Contrary to Mr. Harris’ assertion, the trial court did not hold that Mr. Harris
breached his fiduciary duty due to his failure to abide by any Florida rule that required
contemporaneous billing; rather, the court held “that [Mr. Harris’] failure to comply with
the provisions of his fee agreement was a breach of his duty under the rules of professional
conduct.” (Emphasis added). We agree. All three fee agreements provide, “Time billed
shall be in increments of one quarter of an hour.” The Florida Supreme Court has stated
that “although there is no fixed construction of the word ‘shall,’ it is normally meant to be
mandatory in nature.” Allstate Ins. Co. v. Orthopedic Specialists, 212 So. 3d 973, 978
(Fla. 2017) (quoting S.R. v. State, 346 So.2d 1018, 1019 (Fla. 1977)) (brackets omitted).4
Nothing in the parties’ agreements indicates that this Court should construe the word
“shall” contrary to its normal usage. In his brief, Mr. Harris argues that he “did provide
billing in quarter hour increments.[,] [a]lthough such billing was not contemporaneous[.]”
It is true that, in addition to several “skinny bills,” the record contains three detailed billing
statements that bill in quarter-hour increments: the first covers the period of February 26,
2014 through March 6, 2014; the second covers the period of March 7, 2014 through May
27, 2014; and the third covers the period of June 4, 2014 through August 7, 2014. At the
September 2018 hearing, Mr. Harris testified that he: (1) prepared these statements just
prior to the hearing; (2) had not submitted them when he sent the “skinny bills” to the
McMichaels; and (3) submitted the detailed bills to the McMichaels shortly before the
hearing. This belated and ad hoc compliance with the billing provisions of the parties’
agreements simply does not reflect the promptness, diligence or appropriate
communication required of a Florida attorney, or any other attorney. We conclude that the
trial court did not err in holding that Mr. Harris’ failure to comply with the terms of his fee
agreement constitute a breach of the fiduciary duty he owed to the McMichaels.5
4
The trial court applied Florida’s substantive law to this dispute. This decision was correct because
there is no choice of law provision in the parties’ agreements, the contracts were executed in Florida, and
the place of performance was Florida. See Williams v. Smith, 465 S.W.3d 150, 153 (Tenn. Ct. App. 2014)
(“Tennessee follows the rule of lex loci contractus[,] [which] provides that a contract is presumed to be
governed by the law of the jurisdiction in which it was executed absent a contrary intent.”); Edgington v.
Edgington, 162 S.W.2d 1082, 1086 (Tenn. 1942) (“[W]here there is nothing to show that the parties had in
view, in respect to the execution of the contract, any other law than the law of the place of performance,
that law must determine the rights of the parties.”). We apply Tennessee’s procedural law, which includes
the standard of review. See Boswell v. RFD-TV the Theater, LLC, 498 S.W.3d 550, 556–7 (Tenn. Ct.
App. 2016). Neither party raised a choice of law issue on appeal.
5
The trial court also concluded that Mr. Harris breached his fiduciary duty in other respects: for
example, the duty to “provide competent representation to a client[,] . . . [which] requires the legal
knowledge, skill, thoroughness, and preparation reasonably necessary for the representation.” R.
Regulating Fla. Bar 4-1.1. Mr. Harris does not raise any issue concerning these additional findings, and
we will not address them on appeal.
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D. Disgorgement of attorney fees
Mr. Harris asserts that the trial court abused its discretion by ordering disgorgement
of attorney fees. In its Amended Order, the trial court ordered that Mr. Harris “is disgorged
of all fee charges” to the McMichaels. The trial court reconsidered this remedy in its Order
on Motion to Alter or Amend, filed January 7, 2020, wherein it held that although “the fee
agreements are vague and ambiguous as to the work to be performed by the attorney for
the fees charged and that [Mr. Harris] failed to meet his obligations as an attorney,” he was
entitled to some of his fees because he “did attend some hearings, was somewhat prepared
for some of them, did correspond with opposing counsel and the [McMichaels], and should
be compensated for some of his time.” However, the trial court gave “very little weight”
to Mr. Harris’ testimony with respect to “whether the amounts [he] charged accurately
reflect the work performed, 6 [and] . . . . [t]here is no way for the court to make such a
finding based on the weight of the evidence.” Therefore, the trial allowed Mr. Harris to
retain five thousand dollars but disgorged him of all other payments received from the
McMichaels.
Disgorgement is an equitable remedy. See King Mountain Condo. Ass’n v.
Gundlach, 425 So. 2d 569, 572 (Fla. Dist. Ct. App. 1982). As such, our review is limited
to whether the trial court abused its discretion in granting or denying disgorgement. See
Morrow, 165 S.W.3d at 258. The abuse of discretion standard “reflects an awareness that
the decision being reviewed involved a choice among several acceptable alternatives.” Lee
Med., Inc., 312 S.W.3d at 524. Thus, there is a lower likelihood of reversal of discretionary
decisions on appeal. Id. Indeed, the Tennessee Supreme Court has directed that we “allow
discretionary decisions to stand even though reasonable judicial minds can differ
concerning their soundness.” Tatham v. Bridgestone Americas Holding, Inc., 473 S.W.3d
734, 743 (Tenn. 2015). A trial court abuses its discretion only when it “applies an incorrect
legal standard, or reaches a decision which is against logic or reasoning that causes an
injustice to the party complaining.” Eldridge v. Eldridge, 42 S.W.3d 82, 85 (Tenn. 2001)
(quotation marks and brackets omitted). With these principles in mind, we turn to the issue.
The trial court considered the testimony of two expert witnesses. Mr. Harris called
Florida attorney Nancy Lynn Hartjen.7 The trial court found her credible but did not find
6
“The trial court’s determinations regarding witness credibility are entitled to great weight on
appeal and shall not be disturbed absent clear and convincing evidence to the contrary.” Duke v. Duke,
563 S.W.3d 885, 894 (Tenn. Ct. App. 2018) (citing Morrison v. Allen, 338 S.W.3d 417, 426 (Tenn. 2011)).
This includes such determinations as are “implicit in its holdings.” Williams v. City of Burns, 465 S.W.3d
96, 120 (Tenn. 2015). We have identified no evidence—and certainly not clear and convincing evidence—
in the instant case that the trial court’s credibility determinations were in error.
7
Her surname also appears as “Harchin” in the record. For purposes of this appeal, we will use
“Hartjen,” with apologies if this is the incorrect spelling.
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her testimony of much aid due to her limited experience. Notably, however, the Statement
of Evidence reveals that Ms. Hartjen testified that “the retainer agreements were vague,
and [that] she could see how they could be confusing as to when the representation ended.”
Ms. Hartjen further testified that “the statements that [Mr. Harris] gave to her conflicted
with other statements.” The McMichaels called University of Tennessee College of Law
Professor Paula Schaefer, whom the trial court qualified as an expert in the area of legal
ethics. Professor Schaefer testified that: (1) an attorney has the ethical obligation to “make
sure that their fee agreements are fair, fully explained, and easily understandable”; (2)
“liens must be fair and explained to the client, and there is a presumption that they are
voidable”; and (3) “[n]on-refundable retainers still must be earned and are therefore
problematic.” Professor Schaefer opined that Mr. Harris breached his fiduciary duty to his
clients. The trial court found “this witness to be the most credible of all of the witnesses
as she had no financial interest in the outcome of case as well as [due to] her credential[s].”
The trial court also based its disgorgement decision on the following factual
findings:
[Mr. Harris] failed to follow the most basic of terms of his own agreement
by failing to keep a record of his time and provide that record to his clients
to account for the time he spent in his representation of them as was set out
in the retainer agreement that he authored. He did not explain what he meant
in the Agreement by “limited appearance.” His fee agreements are vague
according to the testimony of his own witness, the [McMicheals’] expert
witness . . . , and in the opinion of this Court, thus creating confusion between
himself and his clients. He further failed to put his clients’ needs before his
own by demanding additional payments close to deadlines or due dates or
close to the time of a court appearance. Additionally, he took advantage of
his clients’ situation by changing the fee agreement, demanding more money,
and never justifying the work he had performed even though he promised
that he would supply [the] documents [that] he [had] produced and a “plan
of attack.” [Mr. Harris] was in a superior position which put his clients in an
extremely difficult position considering all the surrounding
circumstances. . . .
[Mr. Harris] waited for deadlines to be close, at which time he
demanded additional funds and promised, but never fully delivered, the
representation that he convinced [the McMichaels] that [he] could perform.
This created a situation for [the McMichaels] that put them in an
unmanageable position after already having been put in a problematic
position by [their previous counsel].
The trial court found credible the McMichaels’ testimony that they were pressured into
signing the second and third agreements due to Mr. Harris’ unwillingness to speak to
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them about their case until they signed. Accordingly, the court held that the McMichaels
“were coerced as a result of the unethical conduct of [Mr. Harris].” The trial court further
concluded that Mr. Harris did not comply with the duties imposed by the Rules of
Professional Conduct to represent clients with the “thoroughness and preparation
reasonably necessary for the representation” and to “make reasonable efforts to ensure that
the client . . . possesses information reasonably adequate to make an informed decision.”
See R. Regulating Fla. Bar, Rule 4-1.1 and Preamble, Comments. Based on the available
evidence, we conclude that the trial court’s findings are supported by the evidence and are
not otherwise contrary to logic or reasoning. See Eldridge, 42 S.W.3d at 85.
Under Florida law, when a fiduciary commits a breach of his or her duty, “the
beneficiary can obtain redress either at law or in equity for the harm done[,] [or]. . . . is
entitled to obtain the benefits derived by the fiduciary through the breach of duty,” i.e.,
disgorgement. King Mountain Condo. Ass’n, 425 So. 2d at 571 (citing Restatement of
Restitution § 138 cmt a (Am. Law Inst. 1937); Restatement (Second) of Torts § 874 cmt b
(Am. Law Inst. 1979)). Although the trial court recognized that Mr. Harris completed some
work on behalf of the McMichaels, it ultimately concluded that
there was no competent evidence of what [Mr. Harris] did in this case based
on all of the circumstances surrounding this matter: specifically, that [Mr.
Harris] failed or refused to comply with his own contract and supply a
breakdown of his “skinny bill” until some 4 years after suit was brought in
this matter.
The trial court’s equitable solution was to allow Mr. Harris $5,000, the amount
contemplated in the First Agreement, and to disgorge him of the remainder of the fees paid
him. Under the specific facts of this case, the trial court’s decision constitutes an acceptable
resolution, see Lee Med., Inc., 312 S.W.3d at 524; as such, we conclude that the trial court
did not abuse its discretion or otherwise err in allowing Mr. Harris to retain only $5,000.00.
E. Lisa McMichael
Finally, Mr. Harris asserts that “the trial court err[ed] in ordering that [he] disgorge
attorney fees to both Gary and Lisa McMichael where [his] agreement was only with Gary
McMichael and no evidence was presented at trial that Lisa McMichael directly paid any
attorney fees[.]” Mr. Harris argues that because Mrs. McMichael “didn’t pay any attorney
fees, or even contract to pay attorney fees to [Mr. Harris] there are no demonstrable
attorney fees to ‘disgorge’ to her.” The McMichaels maintain that in view of Mr. Harris’
joint representation of them, the trial court did not err in ordering the return of the fees to
them jointly.
Our review of the record did not yield any evidence that Mr. Harris raised this issue
at trial. It is well-settled that issues not raised before the trial court may not be raised for
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the first time on appeal. Baugh v. Novak, 340 S.W.3d 372, 381 (Tenn. 2011); see also
Tenn. Ct. App. R. 6(a)(2). However, even allowing, arguendo, that the trial court erred in
entering judgment for the McMichaels jointly, having concluded, supra, that the trial court
did not err in disgorging Mr. Harris of fees over $5,000, its decision to award those fees to
both appellees was, at most, harmless error; as such, the joint award does not constitute
reversible error.
IV. CONCLUSION
For the foregoing reasons, we affirm the judgment of the trial court. The case is
remanded to the trial court for further proceedings as may be necessary and are consistent
with this opinion. Costs of this appeal are assessed to the Appellant, W. Douglas Harris,
for which execution may issue if necessary.
s/ Kenny Armstrong
KENNY ARMSTRONG, JUDGE
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