Clarke v. City of Franklin

Citation639 S.W.3d 602
Decision Date24 May 2021
Docket NumberNo. M2020-00662-COA-R3-CV,M2020-00662-COA-R3-CV
Parties Jennifer CLARKE, et al. v. CITY OF FRANKLIN
CourtCourt of Appeals of Tennessee

J. Gerard Stranch, IV, and Benjamin A. Gastel, Nashville, Tennessee, for the appellants, Jennifer Clarke and Samuel Clarke.

Shauna R. Billingsley, City Attorney, and William E. Squires, Assistant City Attorney, Franklin, Tennessee, for the appellee, City of Franklin, Tennessee.

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

OPINION

Carma Dennis McGee, J.

This appeal arises from a class action lawsuit against the City of Franklin. The plaintiffs are the owners of 188 properties, in five subdivisions, whose properties are subject to liens in connection with improvement assessments for sanitary sewer services. The trial court granted partial summary judgment in favor of the plaintiffs, concluding that the City had filed notices of liens against the properties in amounts greater than authorized pursuant to the relevant statutes governing improvement assessments. The trial court declared the notices of liens null and void and directed the City to file amended notices of liens. The next phase of the proceeding focused on damages. The owners of eight properties filed claims for monetary damages allegedly caused by the City's error when the property owners had attempted to refinance or sell their properties. The trial court concluded that a hearing on damages was not necessary and denied all claims, finding that none of the claimants suffered an injury as a result of the City's actions. The trial court also denied the plaintiffsrequest for an award of the attorney fees they had incurred. The plaintiffs appeal, asserting that the trial court erred in denying their claims for damages and attorney fees. The City of Franklin argues that the trial court erred in granting partial summary judgment in favor of the plaintiffs on the substantive issue regarding the validity of the notices of liens. For the following reasons, we affirm in part, reverse in part, vacate in part, and remand for further proceedings.

I. FACTS & PROCEDURAL HISTORY

The City of Franklin is an incorporated municipality located in Williamson County, Tennessee. The City is governed by a mayor and board of aldermen. Beginning in 2009, the City passed a series of ordinances and resolutions attempting to recoup the cost of sanitary sewer improvements for various subdivisions in accordance with Tennessee Code Annotated section 7-33-301, et seq.

A brief overview of the detailed statutory scheme is helpful at the outset. Tennessee Code Annotated section 7-33-302(a) provides that "[m]unicipalities are authorized to provide for, construct, and finance improvements defined in § 7-33-301 according to the plan set forth in this part." The statutory scheme includes the following definition:

"Improvement assessment" means an assessment made each year against benefited property to pay the costs of an improvement, in the proportion that the assessed value of each parcel or lot of benefited property bears to the total assessed value of all benefited property according to the latest assessments of such property for purposes of municipal property taxation or as provided by this part[.]

Tenn. Code Ann. § 7-33-301(6) (emphasis added). Likewise, Tennessee Code Annotated section 7-33-310(a) provides, in pertinent part:

Improvement assessments shall be assessed annually against the benefited property in the proportion that the assessed value of each lot or parcel bears to the whole assessed value of the benefited properties.....

(emphasis added). The statutory scheme further provides:

The governing body by resolution may authorize properties other than the properties originally benefited by an improvement to receive the benefits of the improvement, and may make equitable provisions, which may be adjusted from year to year as bonds are retired, whereby the owners of such later benefited properties will assume a fair proportionate share of the improvement assessments, or otherwise be placed as nearly as practicable on a basis of financial equity with the owners of properties initially subject to the improvement assessments.

Tenn. Code Ann. § 7-33-311. The timing of the assessment is to occur as follows:

Annual improvement assessments for each improvement shall be made by the governing body when the levy of municipal property taxes is made; and such improvement assessments shall be due at the same time, or times, the municipal property taxes are due, and shall be subject to the same penalties and accrual of interest in the event of nonpayment as in the case of municipal property taxes. The governing body may permit owners of benefited property to pay improvement assessments in equal monthly installments, the first installment to be due and payable when the improvement assessment is due; in this event any monthly payment shall be delinquent thirty (30) days after it is due and payable, and the whole balance of the annual improvement assessment shall then become delinquent and be subject to all penalties and interest as provided in this part.

Tenn. Code Ann. § 7-33-313 (emphasis added). Finally, the governing statutes provide for liens associated with the improvement assessments:

Each improvement assessment, with any penalty or interest incident to the nonpayment of the assessment, shall constitute a lien upon the lot or parcel of benefited property against which it is assessed. The lien shall attach to each lot or parcel of benefited property at the time the annual improvement assessment is made, and then shall take precedence over all other liens, whether created prior to or subsequent to the making of such improvement assessment, except state, county and municipal property taxes, and prior special assessments....

Tenn. Code Ann. § 7-33-314 (emphasis added).

On May 26, 2009, the City passed the first of the resolutions and ordinances at issue. This resolution established an improvement assessment for the Highgate Subdivision. It provided that the sanitary sewer improvements for the Highgate Subdivision had been completed at a cost of $204,586.50. The resolution then calculated, for each of the benefited properties in the subdivision, a "Total Assessment" that would be owed by each property. The "Total Assessment" for each property varied, but the highest for any single property was $9,844. The resolution then designated the "Total Assessments" as "the 2009 Highgate Subdivision Area property assessments." The resolution then provided:

BE IT FURTHER RESOLVED by the Board of Mayor and Aldermen that, although the above property assessment for each property within the Special Assessment District is due February 28, 2010, Resolution 2008-21 has established the right of the property owners to pay off their assessment in monthly installments over a ten (10) year term, but such that, if any monthly payment shall become delinquent thirty (30) days after it is due and payable, then the whole balance of the improvement assessment shall become delinquent and be subject to all penalties and interest as provided.

The Highgate resolution never mentioned Tennessee Code Annotated section 7-33-301, et seq. Nevertheless, the City claims that the resolution was passed under the authority of these statutes.

Two months later, the City passed a separate resolution for the Hooper Lane Subdivision. This time, the resolution specifically invoked Tennessee Code Annotated sections 7-33-101 to 314 and closely tracked the language of many of the applicable statutes. The Hooper Lane resolution did not calculate any "total assessment" amounts that would be owed by each property. Instead, the Hooper Lane resolution listed only the total estimated cost of the sanitary sewer improvement for the entire subdivision, and it provided that one hundred percent of the cost of the improvement would be assessed against the benefited properties. The resolution listed the parcel numbers of the benefited properties and stated that the Board may authorize the addition of other properties at a later date, with any later-added properties bearing their proportional share of the costs of the improvements. The resolution stated that the benefited property owners would pay off the total assessments authorized by the resolution over a term of ten years. However, it expressly stated that "improvement assessments shall be assessed annually against the benefited property in the proportion that the assessed value of each lot or parcel bears to the whole assessed value of the benefited properties, pursuant to T.C.A. §§ 7-33-310 to 314." In accordance with the applicable statutes, the resolution provided that "[i]mprovement assessments shall be made annually by the Board when the levy of municipal property taxes is made and such assessments shall be due at the same time or times as the municipal property taxes are due , and shall be subject to the same penalties and interest, in the event of nonpayment, as are municipal property taxes." (emphasis added). Notably, the Hooper Lane resolution further provided that "[a]n unpaid annual assessment, with penalty and interest, shall constitute a lien against the property, lot, or parcel against which it is assessed, shall attach as of the date the improvement assessment is made, and shall take precedence over all other liens, save those for state, county, and municipal property taxes, and any prior special assessments." (emphasis added).

Thereafter, the City passed three ordinances addressing three additional subdivisions: Country Road Estates Subdivision, Boyd Mill Avenue Area, and Monticello Subdivision. Like the Hooper Lane resolution, each of these ordinances specifically invoked and tracked the language of Tennessee Code Annotated sections 7-33-101 to 314. The ordinances for...

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