Tennessee Business Litigation Lawyers Blog
Any joint owner of real estate has the right to file a lawsuit to have the property sold and to have the proceeds distributed or to have the property divided (if that is even possible which, in my experience, most of the time it is not). So, who pays the attorney’s fees in a partition case? Does the owner who hires the lawyer who files the partition case get to recover the attorney’s fees which that owner incurs? What about attorney’s fees incurred by joint owners who did not file the partition case, but who hired different lawyers and who also incurred attorney’s fees?
In Tennessee, the trial court may award attorney’s fees out of the “common fund” to any party who incurred legal fees in the partition case. The “common fund” refers to the money received when the property is sold. That authority is granted in a statute, T.C.A. §29-27-121.
In a 1968 opinion, the Supreme Court of Tennessee, in the case of Montgomery v. Hoskins, ruled that the Tennessee statute which provides Tennessee trial courts with discretion to award attorney’s fees in partition cases is not to be interpreted as permitting the trial court to award attorney’s fees to an owner who hired the attorney who filed the partition case while denying them to another owner who hired his or her attorney to represent him or her after the partition lawsuit was filed.
In Hoskins, one owner hired a lawyer to file a partition case to have property which he owned with another person sold. The other person, a co-owner, hired his own lawyer after the partition case was filed.
Although the opinion does not make it clear exactly what position the lawyer for the owner who did not file the partition case took, it seems to indicate that that lawyer resisted the efforts of the other owner to have the property sold by arguing that the property should not be sold, but should be divided. The trial court ruled the property should be sold and that the fees of the attorney who filed the partition suit should be paid out of the common fund. It also ruled that the fees incurred by the attorney who represented the party who did not file the suit should not be paid out of the common fund.
The Supreme Court reversed the trial court. In doing so, it laid out the most comprehensive set of guiding principles that can be found in Tennessee case law about the award of attorney’s fees in partition cases.
In Hoskins, the Supreme Court made it clear that the trial court had discretion to decide whether or not attorney’s fees should be awarded from the common fund. The court stated that, once the trial court decided that an award of attorney’s fees was proper, then it had a duty to award reasonable fees to both parties.
The Court also warned that attorney’s fees should not be denied to the party who did not bring the partition case just because the attorney he or she hired unsuccessfully resisted the efforts of the other party to have the property partitioned by sale. (A partition by sale refers to a partition case where the property is sold and the proceeds are divided: A partition in kind occurs where the property is divided, but not sold).
The fact that an owner who does not file the partition lawsuit, but incurs attorney’s fees, should have an equal right to be paid from the common fund does not mean that a court has to award equal amounts of attorney’s fees to all of the attorneys in the partition case. Hoskins does not stand for that proposition. The Court of Appeals of Tennessee held the same in Chaille v. Warren (1985).
Two last points. First, there is some language in Hoskins to the effect that, if an attorney for a party has provided no value to any party, the fees of that attorney may be denied. I doubt there are many situations in which a court would hold that circumstance had arisen, but it could happen.
Second, owners who want to have jointly owned property sold, in many circumstances, will not need to come up with money on the front end to pay attorney’s fees for a partition lawyer. For many partition cases which my firm handles, we reach an agreement where our fees and expenses are deferred until the property is sold and proceeds are available to pay fees.