### IN THE COURT OF APP EALS OF TENNESS EE AT JAC KSON January 19, 201 0 S es sio n
NA OMI SC HUT TE, AS AD MIN ISTR ATO R O F T HE ES TAT E OF WI LLI AM ANTHONY LUCY, dece as ed v . CHEYENNE J OHNS ON,

SHE LBY COUNTY ASSE SSOR ET AL 

### .
D irec t A p p ea l f

ro m th e C h a n ce ry C o u rt fo r S h elb y C o u n ty N o. C H

- 07- 0180- 3 K enny A rm s t rong, C hancel l or

N o. W 2009- 01453- C O A

- R 3- C V - F i l ed M arch 2, 2010

T hi s appea l ar i s es outof an a ct i on t o r efund t angi b le p erso nal pr oper t yt axes
. T he
a d m in istra to r o f a d e c e d e n t’s e sta te f iled su it a g a in st th e S h e lb yC o u n tyA ss e ss o r o f P ro p e rty and t he Shel byC ount yT r us t ee f ol l ow i ng t he paym ent of del i nquent t axes
. T he admi ni s t r at or al l eged thatpr i or for ced a s s es s m ent s of t he dec edent ’ s pr oper t yw er e i l l egal , arbi t r ar y , and undul yexce s s i ve. T he cha ncerycour tdet er m i ned i tdi d nothave s ubj ectm at t erj ur i s di ct i on t o h e a rt h e c a s e
. W e a f f i r m.

Tenn. R
. A pp. P. 3 Appeal as of R i ght ; Judg m e nt of

t he C hanc e r y C our t A f f i r m e d; and R em anded

D AV I D R. F AR MER , J

. , del i ver ed t he opi ni on of t he C our t , i n w hi ch A L AN E. H I GHERS , P .J ., W

. S

. , and J. S TEV EN S TAFF ORD , J

. , j oi ned.

J er r yH

. Schw ar t z, M emphi s , T ennes s ee, fort he appe l l ant , N aomi Schut t e, as A dm i ni s t r at or o f t h e E s t a t e o f

W i l l i a m A n t h o n y L u c y.

B r i an L. Kuh n , Sh e l b yCou n t yAt t o r n e y , Th o ma s E. W i l l i a ms , As s i s t a n tCou n t yAt t o r ney and D edr i k B r i t t enum, J r
. A s s i s t antC ount yA t t or ney , M emphi s , T en n es s ee, fort he
a p p e llee (s) , C h e y e n n e Jo h n so n , S h e lb yC o u n tyA ss e ss o r a n d P a u l M a til la, S h e lb yC o u n ty T r us t ee.
OP I NI ON

T h e p l a i n t i f

f / a p p e l l a n t , t h e a d m i n i s t r a t o ro f t h e e s t a t e o f

W i l l i a m A n t h o n y L u c y, d e c e a se d , file d su it a g a in st th e S h e lb y C o u n ty A ss e ss o r o f P ro p e rty a n d th e S h e lb yC o u n ty T rustee to ch all en g e f

o rce d asse ssm en ts of

tang ible p erso n al p rop erty u sed in the d ec ed en t’ sRule 06 00- 5- .06 (5) of the Tenne ssee S tate B oard of E qualiz ation prov ides: 1 (5) In m aking forced assessm ents on non- reportingacco unts, the follow ingfactors sha ll be consid ered: (a ) pr ev io us d at a on

f il e fo r th at

a cc ount ; (b) data from

com parable accounts; (c) data collec ted d

uringany field v isits.
-2- to w in g c o m p a n yf

ro m 2 0 0 1 to 2 0 0 4 . T h e d e c e d e n t in d isp u tab lyf a iled to f

ile ta n g ib le per s onal pr oper t y s chedul es for t he af fec t ed per i od, nece s s i t at i ng for ced a s s es s m ent s of t he pr oper t ypur s uantt o T ennes s ee Code A nnot at ed s ect i on 67- 5- 903. T he gr avamen of t he compl ai ntand amended compl ai ntw as t hatt he r es u l t i n g a s s e s s m ent s di d notacc ur at el yval ue t he decede nt ’ s pr oper t y ; r at her , t he ass es s or appl i ed a y ear l yi ncr eas e i n val ue of thi r t y - fi ve per centw i t houtcons i der i ng p r evi ous dat a on fi l e fort he dec edent ’ s acc ount , dat a fr om c o m p a ra b le a ccou nts , or dat a coll ect ed d uri ng any fi el d v i si t s – factor s t he assessorm ust
cons i derpur s uan t to R u le 0600-5-

. 06( 5) of t he R ul es of t he Tennes s ee St at e B oar d of E qual i zat i on. T he admi ni s t r at or al l eged t hat t he fai l ur e t o compl y w i t h R ul e 0600- 5-

. 06( 5)

1 amount ed t o “fr audul ent , r eckl es s , m al i ci ous and i nt ent i onal behavi oron t he part o f t he A ss e ss o r . . . .” T h e a m e n d e d c o m p lain t as k e d th e c h a n c e ryc o u rt to re v iew th e a ss e ss m e n t, det er m i ne t he appr opr i at e t ax l i abi l i t y , and r efund a nym oni es pai d i n exce s s of t he corr ect amount

. T he amended compl ai nt al s o s ought puni t i ve damages not t o exce ed $2, 000, 000 on th e b a sis o f

th e a lleg e d f

ra u d u len t, rec k les s, m a licio u s, a n d in ten tio n a l co n d u c t.

T h e a sses so r co u n tered w ith a m o ti o n to d ism iss o r, in th e alt ern ati v e, fo r sum m ary j udgm entar gui ng t hatt he cour tw as w i t houtj ur i s di ct i on over t he cl ai m beca us e t he dec edent and/ ort he admi ni s t r at orfai l ed t o ex h austavai l abl e admi ni s t r at i ve r emedi es
. T he admi ni s t r a t o r r e s p o n d e d t o t h e mot i o n a s s e r t i n g t h a t j u r i s d i c t i o n was p r o p e r u n d er t he deci s i on of t hi s C our ti n R os ew ood, I nc. v. G ar ner , 4 7 6 S

. W

. 2 d 2 7 3 (T en n
. C t. A p p
. 1 9 7 2 ),
a n d th e su b se q u e n t d e c isio n o f th e T e n n e ss e e S u p re m e C o u rt in F entr es s C ount y Bank v. H o lt , 535 S. W

. 2d 854 ( T enn. 1976) , beca us e the am ended c om pl ai ntr ai s ed pur el yl egal ques t i ons r egar di ng t he asse ssment

. T he cour ti ni t i al l yagr eed, hol di ng t hatt he amended
c o m p lain t sta ted a p u re ly leg a l q u e stio n w ith re g a rd to w h e th e r th e a ss e ss o r f a iled to c o m p ly
w ith th e g o v e r n in g a d m in istra tiv e ru les . T h e c o u rt n e v e rth e les s re v isited th e iss u e a t a
s ubs equenthear i ng on com pet i ng m ot i ons fors um m ar yj udgm entand r ever s ed i t s pr i or deci s i on. T he cha ncel l orconcl uded t hatt he amended compl ai nti ncl uded a c hal l enge t o t he val uat i on of t he pr oper t yati s s ue – a f actual ques t i on r equi r i ng admi ni s t r at i ve re vi ew
. T he
c o u rt d is m is s e d th e a d m in is tr a to r’ s c la im f o r l a c k o f

ju ri s d ic tio n a n d th is a p p e a l e n s u e d

.
T he s ol e i s s ue on appeal i s w het her t he chance r y cour t cor r ect l y hel d i tdi d nothave
su b jec t m a tter ju risd ictio n . S u b jec t m a tter ju risd ictio n c o n c e r n s a c o u rt’s la w f u l au th o rity t o a dj ud i c a t e a c o n t r o v e r s ya n d d e r i v e s i n a l l c a s e s , e i t h e re x p l i c i t l yo ri mp l i c i t l y , f r o m aThe l eg islature re cently am ended Tennesse e C ode Ann otated section 67- 5- 903, which address es 2 the co nsequ ences of failingto file a tang ible p ersonal prope rty sch edule and the remedies av ailable to thos e ag ainst who m a force d as sessm ent is m ade. 2009 T enn. Pub. Acts Ch . 163, §1 (codified at Tenn. C ode Ann

. § 6 7- 5- 903(c )–(d) (S upp. 20 09)). T he am ended statute prov ides th at “[a] taxpay er who fails, re fuses or neg lects to com

plete, sign and file the sc hedu le w ith the assesso r of prope rty as prov ided in su

bsection (b) sh al l b e de em ed

to h av e w ai v ed ob

ject io ns to th e fo rc ed as se ss m ent de te rmin ed by th e as se ss or , s ub ject o nl y to th e re m ed ie s pr ov id ed

in s ub se ct io n (d). ” Tenn. C od e Ann
. § 67

- 5- 90 3( c) (S up p. 20 09 ). In th e ch an ce ry co urt, th e part ie s deb at ed whe th er th e am en de d st at

ut e g ov er ne d th is c as e an d whe th er it e ff ec ti v el y el imin at ed juri sd ic ti on

und er Rose woo d and F

en tress C ou nt y
. We do no t interpre t the am ended pro v isions, whic h b ecam e effectiv e sh ortly befo re the chan c e l l or entered a final order in this case, as eliminatingthe right to challeng e an

illeg al or v oid a ssessm e nt i n t he chancery court, ev en if the taxpay er did no t file a tang ible p ersonal prope rty sch edule. B ecause the applicatio n of the am ended statute wou ld no t chan g e our analy sis, we need not a ddress whe ther it retroactiv ely app lied to the ev ents in

qu estion.
-3- c o n s titu tio n a l o r l e g is la tiv e a c t. N o rth la n d I

n s . C o . v. S ta te , 33 S. W

. 3d 727, 729 ( T enn. 2 0 0 0 ) (c itatio n s o m itt e d ); St aat s v. McK i nnon , 206 S. W

. 3d 532, 542 ( T enn. C t

. A pp. 2006) ( c i t a t i o n s o mi t t e d )

. “ Th e e x i s t e n c e o f s u b j e c t ma t t e r j u r i s d i c t i o n d e p e n d s o n t h e n a t ur e of the ca us e of a ct i on and t he r el i ef s ought

. ” S ta a ts , 206 S. W

. 3d at542 ( ci t i ng La n d e rs v. Jones , 872 S. W

. 2d 674, 675 ( T enn. 1994) )

. T he r es ol ut ion o f w h ether a cour thas s ubj ect
ma t t e r j u r i s d i c t i o n i s a q u e s t i o n o f l a w, wh i c h we r e v i e w de novo w i t h no pr es um pt i on of
c o rr e c tn e s s
. Id

. (cit ati o n o m it ted).

“ T w o m et hods ar e ava i l abl e t o chal l enge a cour t ’ s s ubj ectm att er jur i s di ct i on. ” I d. (cit ati o n s o m it ted). T he most comm on m et hod i s a “fa ci al ” cha l l enge, w hi ch “makes w aron t he com pl ai nt i t s el f. ” I

d. A fac i al chal l enge “as s er t s t hat t he compl ai nt , cons i der ed fr om t op t o bot t om , fai l s t o al l ege f act s t hats how t hatt he cour thas pow ert o h ear t he ca s e. ” I d. (c itatio n o m itt e d )

. T h e se c o n d m e th o d o f a ttac k , a “ f

a c tu a l” c h a llen g e , d if

f e rs in th a t it “deni es t hatt he cour tactual l yhas s ubj ectm at t erj ur i s di ct i on as a m at t erof fa cteven though t he compl ai ntal l eges fac t s t endi ng to show j ur i s di ct i on. ” Id

. at543. T he s econd met hod at t acks t he fa ct s s er vi ng as t he bas i s for j ur i s di ct i on, w her eas t he fi r s t ques t i ons w het hert he
a lle g e d f a c ts , if a c c e p te d a s tr u e , e s ta b lis h g ro u n d s f o r s u b je c t m a tte r j u ri s d ic tio n
. S e e id

. at 5 4 2 -4 3 . T h e a ss e ss o r’s c h a llen g e to su b jec t m a tt e r ju risd ictio n , alth o u g h re so lv e d a t a h ea ri n g o n su m m aryjud g m en t, is be st co n side red a f ac ial ch all en g e. W e w il l th er e f o re r e v i e w de novo w h ethe r, ac ce p ti n g the fa cts asse rt ed in the co m p lai n t as t rue , the c h an ce ry cour tcor r ect l yconcl uded i tdi d nothave j ur i s di ct i on.
C hance r ycour t s , i n l i m i t ed ci r cumst ance s , have j ur i s di ct i on t o heardi r ectchal l enges to th e le g a lity o f a p ro p e rt y a s s e s s m e n t. S e e F e n tre ss C o u n ty B a n k v . H o lt , 535 S. W

. 2d 854, 8 5 7 (T e n n . 1 9 7 6 ); R os ew ood, I nc. v. G ar ner , 4 7 6 S

. W

. 2 d 2 7 3 , 2 7 6 (T en n
. C t. A p p
. 1 9 7 2 ). In c a ses i nv olvi ng forci blyasses sed t ang i ble per sonal pr op erty , a t axp ay er general l ym ust fi r s t cont es t t he val uat i on of ass es s ed prope r t y befor e t he count y boar d of equa l i zat i on. See 2The admin is tr at or m ai nt ai ne d th is po si ti on thro ugho ut th e pr oc ee di ng s be fo re th e ch an ce ry c ourt

. 3 In a m em orand

um sub mitted to the co urt, the ad ministrator argued:
4. The issu e concerningthe v alue of the tang ible p ersonal prope rty is a qu estion of fa ct le ftto the fac t- fi nd er , no t fo r lit ig at io n ina Mot io n fo r Sum m ar y Jud gm ent. Th e on ly dispute d fac ts are those conce rningthe correct v aluation of the property

. A determination of this fact sh ould be left for later inquiry and resolution b y

the Court.

. . . I f the assessm ent is not determined to be v oid as a m atter of law in the Motion [for] Sum m ary J udgm ent, then a hearing before the fact- finder shou ld be h eld to determine at what v alue th e pro perty sho uld h av e be en a ssessed

.

-4- T enn
. C od e A nn
. §§ 67 -5- 90 3, -1401 , -1407 (2006 ). T axp ay ers , ho w ever, are abl e t o b ypass t he admi ni s t r at i ve pr oces s i f t he s ui tdoes noti nvol ve a que s t i on o f v aluat i on and i ns t ead
c o n c e rn s a “ p u re ly le g a l q u e s tio n ” re g a rd in g th e v a lid ity o f th e a s s e s s m e n t. F e n tre ss C o u n ty , 535 S. W

. 2d at857.

T he admi n i s tr at orar gues t hatt he cha ncerycour thas s ubj ectm at t erj ur i s di ct i on t o hear t hi s cas e bec aus e t he compl ai ntr ai s es pur el yl egal i s s ues , namel y , w h et hert he appl i cat i on of t he t hi r t y - fi ve per centr ul e w as i l l egal orot her w i s e i nco n sis t entw i t h s t at e pol i cy
. T he admi ni s t r at orhas done an admi r abl e j ob of fr ami ng t he i s s ue as s uch on appe al ; how ever , t he amended compl ai ntt el l s a di ffe r ent s t or y
. T he am ended com pl ai nt cl ear l ydi s put es bot h t he
m et hod of val uat i on us ed fr om 2002 t o 2004 and t he act ualval ue of the deced ent’ s busi ness t angi bl e per s o n al p rop ertyfr om 2001 t o 2004. T he amended compl ai ntas ks t he cour tnot onl yt o hol d t hatt he met hod of val uat i on w as i ncor r ect but al s o t o det er m i ne t he corr ectval ue of t he pr oper t y admi t t edl y s ubj ect t o t axat i on. Fur t her , t he admi ni s t r at ors peci fi cal l yal l eged 3 th a t th e a ss e ss o r f

ra u d u len tly , rec k les sly , m a licio u sly , an d in ten tio n a llyre f u se d to c o m p ly
w i t h R ul e 0600- 50. 06( 5) , t her ebyover val ui ng t he dec edent ’ s pr oper t y
. T hes e i s s ues ar e not p u re ly le g a l iss u e s ; th e y a re f a c tu a l iss u e s b e s t le f

t to th e e x p e rt is e o f

th e c o u n ty b o a rd

. See R os ew ood, I

nc. v. G ar ner , 4 7 6 S

. W

. 2 d 2 7 3 , 2 7 6 (T en n
. C t. A p p
. 1 9 7 2 ). T h u s, the c h an ce ry cour tcor r ect l ydet er m i ned i tdi d nothave j ur i s di ct i on t o heart hi s cas e.

T he admi ni s t r at orar gues , i n t he al t er nat i ve, t hatt he cha ncerycour thas j ur i sd i ct i on beca us e t he for ced a s s es s m ent s w er e unauthor i zed c i vi l penal t i es
. T he cont ent i on i s t hatt he
as s es s or , t hr ough t he appl i cat i on of a f l att hi r t y - fi ve per centi ncr eas e, i nt ended t o penal i ze t axpay er s w ho fai l ed t o fi l e t angi bl e per s onal pr oper t y s chedul es r at hert han ac countforan incre ase in the v alue o f th eir bu sine ss pro p erti es. T h e ad m inist rator arg u es th at t h e c h an ce ry cour t has s u b

j e c tma t t e rj u r i s d i c t i o n t o r e v i e w t h e i mpo s i t i o n o f p e n a l t i e s
. Butt he admi ni s t r at orci t es no cas e, s t atut or y , or cons t i t ut i onal aut hor i t y i n s uppor t of t hi s pos i t i on. Fur t her , t he admi ni s t r at ordi d nots eek r el i ef i n t he chanc er y cour t on t he bas i s t hatt he for ced
as s es s m ent amount ed t o a ci vi l penal t y
. W e ar e notconvi nced unde rt he ci r cumst ance s t hat-5-

des cr i bi ng t he for ced as s es s m ent as a ci vi l penal t y i s s uffi ci ent t o pr ovi de an e nd- r un ar ound
s t atut or ypr ovi s i ons r equi r i ng t axpay er s t o fi r s tchal l enge the val uat i on of for ci bl yas s es s ed p ro p e rtyb e f

o re a n a d m in istra tiv e b o a rd . T h is a rg u m e n t is w ith o u t m e rit.

C oncl usi on
For t he for egoi ng r eas ons , w e af fi r m t he dec i s i on of t he cha ncerycour t

. C os t s of th is a p p e a l ar e tax e d to th e a p p e llan t, th e E sta te o f W ill iam A n th o n yL u c y , an d its su re ty f o r w h ic h e x e c u tio n m a yis s u e if n e c e s s a ry.

_________________________________

DAVI D R

. F AR M E R, J UDGE