                   IN THE COURT OF APPEALS OF TENNESSEE
                               AT NASHVILLE
                                    February 21, 2013 Session

               WILLIAM D. STALKER AND STEPHEN L. YOUNG v.
                 DAVID R. NUTTER AND TAMARA D. NUTTER

                    Appeal from the Chancery Court for Sumner County
                         No. 2008C1    Tom E. Gray, Chancellor


                    No. M2012-00170-COA-R3-CV - Filed April 19, 2013


This appeal arises out of a breach of contract action. Following the presentation of the
plaintiffs’ proof, the court granted defendants’ motion to dismiss. We vacate the decision
of the trial court and remand the case for findings of fact required by Tenn. R. Civ. P.
41.02(2) and 52.

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

R ICHARD H. D INKINS, J., delivered the opinion of the court, in which P ATRICIA J. C OTTRELL,
P. J., M. S., and F RANK G. C LEMENT, J R., J., joined.

Stephen E. Grauberger and Derrick H. Green, Mt. Juliet, Tennessee, for the Appellants,
William D. Stalker and Stephen L. Young.

John D. Kitch, Nashville, Tennessee; and John Ray Phillips, Jr., Gallatin, Tennessee, for the
Appellees, David R. Nutter and Tamara D. Nutter.

                                   MEMORANDUM OPINION 1




       1
           Tenn. R. Ct. App. 10 states:

       This Court, with the concurrence of all judges participating in the case, may affirm, reverse
       or modify the actions of the trial court by memorandum opinion when a formal opinion
       would have no precedential value. When a case is decided by memorandum opinion it shall
       be designated “MEMORANDUM OPINION”, shall not be published, and shall not be cited
       or relied on for any reason in any unrelated case.
                                 I. Facts and Procedural History

        William Stalker and Stephen Young (“Plaintiffs”) and David and Tamara Nutter
(“Defendants”) entered into a Purchase and Sale Agreement in April 2007 whereby
Defendants agreed to purchase a home which was under construction by Plaintiffs upon its
completion; the purchase price was $1,800,000. The contract provided that closing was to
occur by September 30, 2007, and that time was of the essence; the closing date could be
extended for a maximum of thirty days due to delays caused by Defendants or by agreement
of the parties. Defendants paid a $10,000 earnest money deposit. The parties did not close
on the sale by the closing date.

        On January 3, 2008, Plaintiffs filed suit alleging that Defendants breached the contract
by failing to remit payment for change orders which Defendants requested; by failing to
provide proof of financing; and by failing to close on the property in a timely manner.
Plaintiffs sought specific performance of the contract, damages, and attorney’s fees. 2
Defendants duly filed their answer.3

       Defendants filed a counter-complaint on May 26, 2011, alleging breach of contract
and anticipatory breach of contract and seeking damages for out-of-pocket expenditures they
made on the home, a refund of the earnest money deposit, attorneys’ fees, and discretionary
costs.

       Trial was set for September 28 and November 16, 2011; Plaintiffs presented and
concluded their proof on September 28. On November 1, Defendants filed a motion to
dismiss which was heard on November 7. The court entered an order on November 16
granting Defendants’ motion, holding that Plaintiffs “did not establish a valid cause of action
for breach of contract against the original Defendants.”

        Defendants subsequently filed a motion for discretionary costs. On December 22 the
court issued a Final Order and Judgment ordering a refund of Defendants’ $10,000 deposit




        2
          Defendants filed a motion for temporary injunction on January 15 seeking to enjoin Plaintiffs from
conveying or otherwise transferring ownership of the home. Plaintiffs responded by requesting that the
temporary injunction be denied. The record does not contain an order with respect to Defendants’ request
for a temporary injunction.
        3
           On June 18, 2010, Defendants moved to dismiss the case for failure to prosecute and because the
property at issue had been sold. Plaintiffs filed a response on June 25 and requested that the matter be set
for trial. No order on this motion is in the record.

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and entering a judgment awarding Defendants attorneys’ fees in the amount of $31,252.50.4
On January 9, 2012, the court entered an order awarding Defendants discretionary costs in
the amount of $3,240.50. Plaintiffs filed a timely appeal.5

        Plaintiffs’ appeal, raising the following issues:

        1. Whether the Trial Court erred in allowing Defendants to file a Counter-
        Complaint more than three years after service of the complaint.
        2. Whether the Trial Court erred in finding the Plaintiffs failed to prove a
        breach of contract by the Defendants.
        3. Whether the Trial Court erred in finding that Plaintiffs breached the
        contract.
        4. Whether the Trial Court erred in awarding Defendants discretionary costs
        and attorney fees.

                                             II. Discussion

        With respect to Plaintiffs’ first issue, we address whether the court properly exercised
its discretion in allowing Defendants to amend their pleadings to assert a counterclaim.
Plaintiffs contend that trial court erred in granting Defendants’ motion because Defendants
did not state any facts justifying an amendment and because the Court did not state the basis
for its ruling in the order allowing filing of the counter-complaint.

        Rule 13.06 of the Tennessee Rules of Civil Procedure provides that “[w]hen a pleader
fails to set up a counterclaim through oversight, inadvertence or excusable neglect, or when
justice requires, the pleader may by leave of court set up the counterclaim by amendment.”
Amendments to the pleadings are governed by Tenn. R. Civ. P. 15.01, which states that leave
to amend the pleadings “shall be freely given when justice so requires.” The determination
whether or not to grant a motion to amend a pleading lies within the sound discretion of the
trial court. Burton v. Carroll County, 60 S.W.3d 821, 832 (Tenn. Ct. App. 2001); State Dept.
of Human Servs. v. Hauck, 872 S.W.2d 916, 919 (Tenn. Ct. App. 1993); Merriman v. Smith,
599 S.W.2d 548 (Tenn. Ct. App. 1979). A trial court’s discretionary ruling on amendments
to pleadings will not be disturbed on appeal unless there is a showing of abuse of discretion.

        4
         At a hearing on December 14, Defendants reiterated the fact that in their supplemental trial brief
they waived all claims in their counter-complaint with the exception of attorney’s fees and the refund of the
earnest money deposit.
        5
          All proceedings on appeal were stayed pursuant to a June 4 order of this court due to the fact that
bankruptcy petitions were pending on behalf of Plaintiffs. The record shows that Mr. Stalker received a
discharge in bankruptcy on August 27, 2012, and Mr. Young received a discharge on September 24, 2012.

                                                    -3-
George v. Bldg. Materials Corp., 44 S.W.3d 481, 486 (Tenn. 2001); Harris v. St. Mary’s
Med. Ctr., Inc., 726 S.W.2d 902, 904 (Tenn. 1987). A court abuses its discretion when it
“applie[s] an incorrect legal standard, or reache[s] a decision which is against logic or
reasoning that cause[s] an injustice to the party complaining.” Eldridge v. Eldridge, 42
S.W.3d 82, 85 (Tenn. 2001).

        We have examined Defendants’ motion to file the counter-complaint in light of the
standards stated above, the nature of this proceeding and the issues involved and hold that
the trial court did not abuse its discretion in granting the motion. The record shows that the
home sold while the case was pending and the relief sought by Defendants in the counter-
complaint consisted of a refund of the earnest money deposit and amounts Defendants had
paid for interior design services; it was appropriate for Defendants to seek refund of these
amounts because they did not purchase the home. Moreover, Plaintiffs have failed to identify
any harm or prejudice occasioned by the allowance of the amendment.

       With respect to their second issue, Plaintiffs contend that the trial court erred in
finding that Plaintiffs failed to prove a breach of contract by Defendants.

       The order dismissing Plaintiffs’ case states in full:

              This matter came before the Court on the 7th day of November, 2011
       on Motion to Dismiss made by the original Defendants and Counter-Plaintiffs,
       David R. Nutter and Tamara D. Nutter, with respect to claims made upon them
       by the original Plaintiffs, William D. Stalker and Stephen L. Young, and it
       appearing to the Court that the proof and evidence presented by the Plaintiffs
       Stalker and Young on the day of trial conducted in this matter on September
       28, 2011 did not establish a valid cause of action for breach of contract against
       the original Defendants, David R. Nutter and Tamara D. Nutter,

              IT IS THEREFORE ORDERED, ADJUDGED AND DECREED that
       the Action of the original Plaintiffs, William D. Stalker and Stephen L. Young,
       against the original Defendants, David R. Nutter and Tamara D. Nutter, is
       DISMISSED WITH PREJUDICE.

Neither this order nor the Final Order and Judgment gives the basis of the court’s ruling.

       Rule 41.02(2) of the Tennessee Rules of Civil Procedure, as amended effective July
1, 2010, provides as follows:




                                              -4-
        After the plaintiff in an action tried by the court without a jury has completed
        the presentation of plaintiff’s evidence, the defendant . . . may move for
        dismissal on the ground that upon the facts and the law the plaintiff has shown
        no right to relief. . . . If the court grants the motion for involuntary dismissal,
        the court shall find the facts specially and shall state separately its conclusions
        of law and direct the entry of the appropriate judgment.

Tenn. R. Civ. P. 41.02(2) (emphasis added).

       The Advisory Commission Comment regarding the amendment provides: “The final
sentence of Rule 41.02(2) deletes the requirement of a request for written findings of fact and
conclusions of law. Instead, in conformity with Rule 52.01, findings of fact and conclusions
of law are required without request.” Tenn. R. Civ. P. 52.01 mandates that trial courts are
to issue findings of fact and conclusions of law in all actions tried upon the facts without a
jury. Barnes v. Barnes, No. M2011-01824-COA-R3-CV, 2012 WL 5266382, at *8 (Tenn.
Ct. App. Oct. 24, 2012). In discussing the implications of this mandate for appellate review
with respect to Rule 52.01, this Court has stated:

        This Court has previously held that the General Assembly’s decision to require
        findings of fact and conclusions of law is “not a mere technicality.” Instead,
        the requirement serves the important purpose of “facilitat[ing] appellate review
        and promoting the just and speedy resolution of appeals.” “Without such
        findings and conclusions, this court is left to wonder on what basis the court
        reached its ultimate decision.”

Heritage Operating, LP v. Henry Cnty. Propane Gas, Inc., No. W2011-01162-COA-R3-CV,
2012 WL 2989120, at *8 (Tenn. Ct. App. July 23, 2012) (quoting In re Estate of Thompson,
No. M2011-00411-COA-R3-CV, 2012 WL 912859, at *19 (Tenn. Ct. App. Mar. 14, 2012)
(Stafford, J., concurring)) (citations omitted).

       The determination of whether the court erred in granting Defendant’s motion requires
that we review the trial court’s findings of fact; such review is not possible in this case.
Accordingly, we vacate the decision of the trial court and remand for detailed findings of fact
and conclusions of law.6


        6
          In cases involving a court’s failure to make finding of fact as required by Tenn. R. Civ. P. 52.01,
this Court has vacated the decision of the trial court and remanded the case for entry of such findings. See
Pandey v. Shrivastava, No. W2012-00059-COA-R3-CV, 2013 WL 657799 (Tenn. Ct. App. Feb. 22, 2013);
Barnes, 2012 WL 5266382; Leo v. Gardner, No. M2010-02616-COA-R3-CV, 2012 WL 440720 (Tenn. Ct.
                                                                                                (continued...)

                                                    -5-
        In their third and fourth issues, Plaintiffs contend that the trial court erred in finding
that they breached the contract and in awarding Defendants discretionary costs and attorneys
fees.

       The trial resumed on December 14. After determining that neither party intended to
introduce additional proof, the court ruled: “In this matter, the court finds a breach of
contract by William B. Stalker and Steven L. Young.” This holding, however, was not
incorporated into the December 22 order that the earnest money be returned to Defendants;
neither did the order state the factual basis upon which the court made the determination.

         The court’s order that the escrow funds be returned to Defendants and the award of
attorneys fees to Defendant is predicated upon its determination that Plaintiffs breached the
Purchase and Sale Agreement.7 As discussed above, Tenn. R. Civ. P. 52.01 requires the
court to enter findings of fact in cases tried without a jury; in the absence of such findings
it is necessary for us to vacate the December 22 order and remand the case for entry of same.8

       In Defendants’ motion to place this case on the active docket, Defendants stated that
the bankruptcy proceedings had been concluded with Mr. Stalker receiving a discharge on
August 27, 2012, and Mr. Young receiving a discharge on September 24, 2012. This is the
extent of this Court’s knowledge with respect to the bankruptcy proceedings of Plaintiffs.9

       “Discharge in bankruptcy operates to void a debtor’s personal liability for any
judgment obtained prior to the debtor’s bankruptcy filing.” Ford Consumer Fin. Co., Inc.
v. Clay, 984 S.W.2d 615 (Tenn. Ct. App. 1998). Based upon the provisions of 11 U.S.C.
524(a)(2), a creditor may not act to enforce a pre-petition debt that has been discharged as
a personal liability of the debtor. Id. In remanding the case for the entry of factual findings


        6
            (...continued)
App. Feb. 10, 2012); Lake v. Haynes, No. W2010-00294-COA-R3-CV, 2011 WL 2361563 (Tenn. Ct. App.
June 9, 2011); Clement Homes, Inc. v. Chilcutt, No. W2009-02277-COA-R3-CV, 2010 WL 2812574 (Tenn.
Ct. App. July 16, 2010); Cf. Wall v. Wall, No. W2010-01069-COA-R3-CV, 2011 WL 2732269 (Tenn. Ct.
App. July 14, 2011).
        7
          Section 26 of the Purchase and Sale Agreement provides for disbursement of the earnest money
upon default of one of the parties. If the buyer defaults, the money is forfeited and paid to the seller as partial
liquidated damages; if the seller defaults, the deposit is returned to the buyer.
        8
         For the same reason, we vacate the January 9, 2012 order awarding Defendants discretionary costs
of $3,240.50.
        9
          In their brief on appeal, Defendants state that they are “prohibited from any effort to attempt
collection” under 11 U.S.C. § 524(a)(1) and (2).

                                                       -6-
in accordance with Tenn. R. Civ. P. 41 and 52 we do not preclude the trial court or the parties
from addressing the impact of Plaintiffs’ discharge in bankruptcy on the underlying claims.

                                       III. Conclusion

      The decision of the trial court is vacated and the cause is remanded for further
proceedings in accordance with this opinion.




                                           ___________________________________
                                           RICHARD H. DINKINS, JUDGE




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