2023 Tennessee Code › Title 46 - CEMETERIES (§§ 46-1-101 — 46-8-103) › Chapter 1 - REGULATION OF CEMETERIES (§§ 46-1-101 — 46-1-313) › Part 3 - RECORDS AND REPORT, VIOLATIONS, AND CRIMINAL AND CIVIL PENALTIES (§§ 46-1-301 — 46-1-313) › Section 46-1-312 - Requirements for appointing a receiver to manage a cemetery

(a)
(1)
The Davidson County chancery court, upon the petition of the commissioner, may appoint the commissioner as receiver to take charge of, control and manage a cemetery registered or required to be registered with the commissioner, upon determining that any of the following grounds exist:
(A)
The cemetery has not maintained trust funds in the manner required by this chapter;
(B)
The cemetery has allowed its registration to lapse, or the registration has been revoked;
(C)
The cemetery is impaired or insolvent;
(D)
The cemetery has refused to submit its books, records, accounts, or affairs to examination by the commissioner;
(E)
There is reasonable cause to believe that there has been embezzlement, misappropriation, or other wrongful misapplication or use of trust funds or fraud affecting the ability of the cemetery to perform its obligation to perform improvement care or deliver cemetery merchandise or services;
(F)
The cemetery has failed to file any report required by this chapter;
(G)
The cemetery cannot or will not be able to meet all of its contractual obligations when they come due;
(H)
A deficiency exists in the improvement care trust fund of any cemetery or separate geographical site of a cemetery; or
(I)
The cemetery is not being operated in compliance with the terms and conditions of an order of the commissioner then in force and effect.
(2)
For the purpose of this section, the Davidson County chancery court shall have exclusive jurisdiction over matters brought under this section, and that court is authorized to make all necessary or appropriate orders to carry out the purposes of this part.
(3)
Receivership proceedings instituted pursuant to this part shall constitute the sole and exclusive method of liquidating, rehabilitating, or conserving a cemetery, and no court shall entertain a petition for the commencement of the proceedings unless the petition has been filed in the name of the state on the relation of the commissioner.
(4)
The commissioner shall commence any such proceeding by application to the court for an order directing the cemetery to show cause why the commissioner should not have the relief prayed for in the application.
(5)
On the return of the order to show cause, and after a full hearing, the court shall either deny the application or grant the application, together with such other relief as the nature of the case and the interests of the public may require.
(6)
The commissioner may appoint one (1) or more special deputies, who have all the powers and responsibilities of the receiver granted under this section and the commissioner may employ such counsel, clerks and assistants as deemed necessary. The compensation of the special deputy, counsel, clerks and assistants, and all expenses of taking possession of the cemetery and of conducting the proceedings, shall be fixed by the commissioner, with the approval of the Davidson County chancery court, and shall be paid out of the funds or assets of the cemetery. The persons appointed under this subsection (a) shall serve at the pleasure of the commissioner.
(7)
The receiver may take such action as the receiver deems necessary or appropriate to reform and revitalize the cemetery. The receiver has all the powers of the owners and directors, whose authority shall be suspended, except as they are redelegated by the receiver. The receiver has full power to direct and manage, to hire and discharge any employees subject to any contractual rights they may have, and to deal with the property and business of the cemetery.
(8)
If it appears to the receiver that there has been criminal or tortious conduct, or breach of any contractual or fiduciary obligation detrimental to the cemetery by any owner, officer, director or other person, the receiver may pursue all appropriate legal remedies on behalf of the cemetery.
(9)
If the receiver determines that reorganization, consolidation, conversion, merger or other transformation of the cemetery is appropriate, the receiver shall prepare a plan to effect those changes. Upon application of the receiver for approval of the plan, and after such notice and hearings as the Davidson County chancery court may prescribe, the court may either approve or disapprove the plan proposed, or may modify it and approve it as modified. Any plan approved under this section shall be, in the judgment of the court, fair and equitable to all parties concerned, taking into consideration the overall operation of the cemetery, and the interests of the lot owners, next of kin of lot owners, and descendants of lot owners and the general public. If the plan is approved, the receiver shall carry out the plan.
(b)
The receiver so appointed may employ the proceeds from the sale of lots, and all other saleable items and the income from the operation of the cemetery, over and above that portion due the improvement care trust fund, and other special care funds, and the amount reasonably necessary for the operation and maintenance of the cemetery business, to reduce the deficiency in the improvement care trust fund, upon the terms and conditions and in the manner deemed appropriate by the chancellor, taking into consideration the overall operation of the cemetery, and the interests of the lot owners, next of kin of lot owners, and descendants of lot owners and the general public.
(c)
If the sole ground for a receivership was a deficiency in the improvement care trust fund, the chancellor shall, upon a showing that the deficiency in the improvement care trust fund has been eliminated, terminate the suspension of the certificate of registration, compensate the receiver, dissolve the receivership, and restore the management of the cemetery to its owner.
(d)
Should it appear to the court that it is impossible to correct the deficiency in the improvement care fund, the court may proceed to order the sale of the cemetery as provided in §
46-1-309
, or may otherwise order the termination of the use of the land as a cemetery as provided by law.
(e)
(1)
For purposes of this subsection (e), Davidson County chancery court has exclusive jurisdiction over matters brought under this subsection (e). In addition, any receiver appointed pursuant to this subsection (e) is authorized to use all remedies available to a receiver pursuant to title 56, chapter 9.
(2)
Notwithstanding any provision of this section to the contrary, and in addition to or in lieu of any other authority granted to the commissioner by this chapter, the commissioner may file in the Davidson County chancery court a petition alleging, with respect to a cemetery subject to registration pursuant to this chapter:
(A)
That there exists grounds that would justify a court order of a deficiency in either the improvement care or pre-need merchandise and services trust fund of a cemetery;
(B)
That the interests of the public will be endangered by delay; and
(C)
The contents of an order deemed necessary by the commissioner.
(3)
Upon a filing under subdivision (e)(2), the Davidson County chancery court may issue, ex parte and without a hearing, the requested order, which shall direct the commissioner to take possession and control of all or a part of the property, books, accounts, documents and other records of a cemetery, and of the premises occupied by it for transaction of its business, and until further order of the court, enjoin the cemetery and its owners, officers, directors, operators, managers, agents and employees from disposition of its property and from the transaction of its business, except with the written consent of the commissioner.
(4)
The Davidson County chancery court shall specify in the order what its duration shall be, which shall be such time as the court deems necessary for the commissioner to ascertain the condition of the cemetery. On motion of either party or on its own motion, the court may, from time to time, hold such hearings as it deems desirable after notice as it deems appropriate, and may extend, shorten or modify the terms of the seizure order. The court shall vacate the seizure order, if the commissioner fails to commence a contested case proceeding to impose any appropriate, lawful disciplinary action against the cemetery after having had a reasonable opportunity to do so. An order of the commissioner pursuant to a contested case proceeding under this chapter shall ipso facto vacate the seizure order.
(5)
Entry of a seizure order under this section shall not constitute an anticipatory breach of any contract of the cemetery.
(6)
(A)
The commissioner may appoint one (1) or more special deputies, who have all the powers and responsibilities of the receiver granted under this section and the commissioner may employ such counsel, clerks and assistants as deemed necessary. The compensation of the special deputy, counsel, clerks and assistants, and all expenses of taking possession of the cemetery company and of conducting the proceedings, shall be fixed by the commissioner, with the approval of the Davidson County chancery court, and shall be paid out of the funds or assets of the cemetery. The persons appointed under this section shall serve at the pleasure of the commissioner.
(B)
In the event that the property of the cemetery or its owners, officers, directors or operators does not contain sufficient cash or liquid assets to defray the costs incurred, the commissioner may advance the costs incurred out of any appropriation for the maintenance of the department of commerce and insurance. Any amounts advanced for expenses of administration shall be repaid to the commissioner for the use of the department out of the first available money of the cemetery.
(7)
The receiver may take such action as the receiver deems necessary or appropriate to reform and revitalize the cemetery. The receiver has all the powers of the owners, directors and operators, whose authority shall be suspended, except as they are redelegated by the receiver. The receiver has full power to direct and manage, to hire and discharge any employees subject to any contractual rights they may have, and to deal with the property and business of the cemetery.
(8)
If it appears to the receiver that there has been criminal or tortious conduct, or breach of any contractual or fiduciary obligation detrimental to the cemetery by any owner, officer, director, operator or other person, the receiver may pursue all appropriate legal remedies on behalf of the cemetery.
(9)
If the receiver determines that reorganization, consolidation, conversion, merger or other transformation of the cemetery is appropriate, the receiver shall prepare a plan to effect those changes. Upon application of the receiver of approval of the plan, and after such notice and hearings as the Davidson County chancery court may prescribe, the court may either approve or disapprove the plan proposed, or may modify it and approve it as modified. Any plan approved under this section shall be, in the judgment of the court, fair and equitable to all parties concerned. If the plan is approved, the receiver shall carry out the plan.
Amended by 2014 Tenn. Acts, ch. 560,Secs.s1, s2 eff. 3/21/2014.
Amended by 2016 Tenn. Acts, ch. 911,s 16, eff. 4/27/2016.
Acts 1976, ch. 773, § 10; T.C.A., §§ 46-223, 46-2-123; T.C.A., §
46-2-312
; Acts 2006, ch. 1012, § 4; 2010, ch. 665, § 1.