Court Opinion

ID: 1067647
Source: CourtListenerOpinion
Date Created: 2013-10-09 19:27:09.387442+00
Date Added: 2024-06-11T15:21:31.957991
License: Public Domain

IN THE COURT OF APPEALS OF TENNESSEE
                               AT KNOXVILLE
                                       December 9, 2002 Session

 DENISE ASHWORTH, ET AL. v. GREENE COUNTY, TENNESSEE, ET AL.

                        Appeal from the Chancery Court for Greene County
                        No. 97000074    Thomas R. Frierson, II, Chancellor

                                       FILED FEBRUARY 10, 2003

                                      No. E2002-00500-COA-R3-CV

Denise Ashworth, the proprietress of a bed and breakfast in Greene County, filed a declaratory
judgment action challenging the constitutionality of a hotel/motel privilege tax authorized by private
act of the General Assembly (“the Act”) and approved by the Greene County Commission. Among
other relief, she seeks the return of approximately $3,000 in taxes collected by her from patrons and
paid by her under protest to Greene County. While her suit was pending, the trial court permitted
an individual who had stayed one night at a local motel to intervene in this case. The gravamen of
his complaint was the same as that of Ashworth’s. The trial court granted the defendants1 summary
judgment as to Ashworth’s claim, finding that she was not the taxpayer under the Act and,
consequently, did not have standing to pursue her claim. As to the intervenor’s claim, the trial court
held that the Act was unconstitutional and ordered that he be refunded the sum of $1.61, the amount
of the tax that he had paid under protest, plus interest. Only Ashworth appeals. She contends that
the traditional concept of standing should be broadened to permit her to pursue her claim. We affirm
the judgment of the trial court.

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

CHARLES D. SUSANO, JR., J., delivered the opinion of the court, in which in which HOUSTON M.
GODDARD , P.J., and D. MICHAEL SWINEY, J., joined.

K. Kidwell King, Jr., Greeneville, Tennessee, for the appellants, Denise Ashworth doing business
as Hilltop House Bed & Breakfast.

Roger A. Woolsey, Greeneville, Tennessee for the appellee, Greene County, Tennessee.

Ronald S. Range, Jr. and Jennifer P. Keller, Johnson City, Tennessee, for the appellee, Greene
County Partnership, Inc.

        1
         The defendants are Greene C ounty, G reene County Partnership, Inc., and the Attorney Genera l of the State
of Tennessee. T he Attorney G enera l is not a party to this ap peal.
                                            OPINION

                                                 I.

       The defendants acknowledge that the Statement of Facts as set forth in Ashworth’s brief are
accurate. For this reason, we adopt those facts in toto:

               The private act authorizing Greene County, Tennessee, to levy a
               privilege tax on the occupancy of rooms, lodging, and similar
               accommodations (a hotel/motel tax) was signed into law on March
               24, 1986, by Governor Alexander as Private Chapter 127 of the
               Private Acts of 1986. Private Chapter 127 was approved by the
               Greene County Commission on April 21, 1986, and the county began
               collecting the tax. The Private Act contained the following material
               provisions . . . :

                      SECTION 2. The legislative body of Greene County
                      is authorized to levy a privilege tax upon the privilege
                      of occupancy in any hotel of each transient in an
                      amount not to exceed two percent (2%) of the
                      consideration charged by the operator. Such tax is a
                      privilege tax upon the transient occupying such room
                      and is to be collected as provided by this Act.

                      SECTION 3. Such [tax] shall be added by each and
                      every operator to each invoice prepared by the
                      operator for the occupancy of his hotel, such invoice
                      to be given directly or transmitted to the transient and
                      shall be collected by such operator from the transient
                      and remitted to the county.

                      When a person has maintained occupancy for ninety
                      (90) continuous days, he shall receive from the
                      operator a refund or credit for the tax previously
                      collected from or charged to him, and the operator
                      shall receive credit for the amount of such tax if
                      previously paid or reported to the county.

                      SECTION 4. The tax hereby levied shall be remitted
                      by all operators who lease, rent or charge for any hotel
                      room within the county to the county clerk, such tax
                      to be remitted to such officer not later than the 20th

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      day of each month for the preceding month. The
      operator is hereby required to collect the tax from the
      transient at the time of the presentation of the invoice
      for such occupancy whether prior to occupancy or
      after occupancy as may be the custom of the operator,
      and if credit is granted by the operator to the
      transient; then the obligations to the county entitled to
      such tax shall be that of the operator.

      SECTION 8. The county clerk in administering and
      enforcing the provisions of this Act shall have as
      additional powers, those powers and duties with
      respect to collecting taxes as provided in Title 67 of
      Tennessee Code Annotated or otherwise provided by
      law for the county clerks.

      Upon any claim of illegal assessment and collection,
      the taxpayer shall have the remedy provided in the
      Tennessee Code Annotated, Section 67-1-912, it being
      the intent of this act that the provisions of law which
      apply to the recovery of taxes illegally assessed and
      collected shall apply to the tax collected under the
      authority of this Act; provided, the county clerk shall
      possess those powers and duties as provided in
      Tennessee Code Annotated, Section 67-1-707(a) and
      (b) with respect to adjustment and settlement with
      taxpayers of all the errors of taxes collected by him
      under the authority of this act and to direct the
      refunding of same. Notice of any tax paid under
      protest shall be given the county clerk, and suit for
      recovery shall be brought against such county clerk.

      SECTION 9. The proceeds from this tax levied
      herein shall be retained by the county government in
      the county general fund and distributed to the
      Greeneville - Greene County Area Chamber of
      Commerce at the discretion of the county legislative
      body for exclusive use for the direct promotion of
      tourism and tourism-related activities in Greene
      County.

[(Emphasis added).]

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On March 17, 1997, the Greene County legislative body approved an
amendment to its hotel/motel tax by which it increased from two
percent (2%) to three percent (3%) the consideration charged by the
operator and the allocation provisions of Section 9 were changed to
require distribution of county tax funds to the [Greene County
Partnership, Inc.] without an appropriation of the tax revenues as
required by T.C.A. § 5-9-109 dealing with payment of government
funds to charitable and civic organizations.

The Plaintiff Bewley, as a citizen and resident of Greene County,
purchased a room at the Holiday Inn in Greene County and notified
the County Court Clerk of his payment of that tax under protest. Mr.
Bewley intervened in the declaratory judgment which Mrs. Ashworth
had previously filed, and the Court in its memorandum opinion ruled
in Mr. Bewley’s case that: a) He did have standing to challenge this
tax as a taxpayer asserting his remedy under Section 8 of the Act,
supra; b) hotel/motel taxes are not per se unconstitutional, but; c) the
Court did find and held that Chapter 127 of the Private Acts of 1986
as amended by Chapter 10 of the Private Acts of 1997 contravenes
the general law adopted pursuant to T.C.A. § 5-9-109 and, therefore,
the Private Act with its 1997 amendment is violative of Article XI,
Section 8, of the Tennessee Constitution and is invalid. Summary
judgment on this issue was granted in Mr. Bewley’s favor
substantiating the theory of the original case as filed by Mrs.
Ashworth. Mr. Bewley received a refund of the taxes paid by him in
the amount of [$1.61 plus interest].

The Plaintiff Denise Ashworth is the owner and proprietress of the
Hilltop House Bed & Breakfast in Greene County, Tennessee. She
has collected the tax as required by law throughout her tenure and has
turned it over to the County Clerk. She began paying under protest
in April of 1997 following the passage of the 1997 amendment to the
hotel/motel tax requiring the direct pass-through of County tax funds
to the [Greene County Partnership, Inc.]. The 1997 amendment to the
hotel/motel tax, styled as Chapter 10 of the Private Acts of 1997,
struck out the allocation provisions of the 1986 act in Section 9 and
replaced them with the new formula which raised rates and required
payment to the [Greene County Partnership, Inc.]. Mrs. Ashworth is
the only Appellant in this appeal and bases her appeal solely on the
issue of her standing to participate in and receive remedies in this
action including, but not limited to, refund of tax proceeds paid.
Because Mrs. Ashworth was dismissed from the action, the exact
amount of any potential tax return was never determined, but is

                                  -4-
               believed to be approximately Three Thousand Dollars ($3,000.00).
               Mrs. Ashworth and Mr. Bewley are the only two individuals who paid
               taxes under protest and objected to this tax.

(References in the brief to the record omitted).

                                                   II.

        In her brief, Ashworth recognizes what is clear from the language of the Act, i.e., that the
“transient” is the taxpayer and she is not:

               Within the context of the Greene County hotel/motel tax, however,
               Mrs. Ashworth accepts money from her customers and delivers a
               portion of it to the appropriate governmental agency and is not a
               taxpayer.

(Emphasis in Ashworth’s brief). Ashworth points out that she is the taxpayer with respect to
“business taxes pursuant to T.C.A. § 67-4-701, et seq.” and “sales taxes pursuant to T.C.A. § 67-6-
101, et seq.” She correctly contends that all of these taxes – including the local hotel/motel privilege
tax – come from the revenues from her patrons. She argues that it makes no sense for her to be the
taxpayer on the “breakfast” revenue but not as to the “bed” portion of her income.

       Ashworth is essentially asking that we broaden the concept of standing. Again, this is clear
from her brief:

                If the previous rulings and judicial determination of standing were
                changed to reflect that for sales taxes, business taxes, use taxes, and
                hotel/motel taxes that the tax would be on the transaction and the
                consideration passed therefore, then any party to the transaction
                would be considered a taxpayer and would have standing to contest
                an illegal tax.

(Emphasis added). Finally, she argues that the Act “places her in such risk of economical [sic]
and/or personal harm that she has a personal stake in the outcome of this controversy.” She bases
this argument on her contention that if a patron pays his or her bill with a check or credit card and,
for some reason, the bank or credit card company fails to honor the transaction, she is nevertheless
obligated to remit the “collected” but unfunded payment to the county. She argues that in such a
case, she would become the taxpayer. She concludes by asserting that the “doctrine of standing
should be broadened to include individuals like [herself].” She refers to herself as “rationally the
only person to assert these rights” of unconstitutionality.

                                                   -5-
                                                           III.

        The only issue before us is the propriety of the trial court’s grant of summary judgment
dismissing Ashworth’s complaint for lack of standing.2 The issue presented is one of law. Gonzales
v. Alman Constr. Co., 857 S.W.2d 42, 44 (Tenn. Ct. App. 1993). Therefore, we review the trial
court’s judgment as to Ashworth de novo with no presumption of correctness attaching to that
judgment. Planters Gin Co. v. Federal Compress & Warehouse Co., 78 S.W.3d 885, 889 (Tenn.
2002).

                                                           IV.

        “Standing is a judge-made doctrine used to determine whether a party is entitled to judicial
relief.” Metropolitan Air Research Testing Auth., Inc. v. Metropolitan Gov’t of Nashville and
Davidson County, 842 S.W.2d 611, 615 (Tenn. Ct. App. 1992). “To establish standing, a party must
demonstrate (1) that it sustained a distinct and palpable injury, (2) that the injury was caused by the
challenged conduct, and (3) that the injury is apt to be redressed by a remedy that the court is
prepared to give.” Id. When analyzing standing, the court’s primary focus is on the position of the
party rather than the merits of the action. See id.; see also, e.g.,,Valley Forge Christian College v.
Americans United for Separation of Church and State, Inc., 454 U.S. 464, 484, 102 S. Ct. 752,
765, 70 L. Ed. 2d 700 (1982).

        It is well settled in Tennessee that a party does not have standing to challenge a tax unless
that party is the taxpayer. Brodbine v. Torrence, 545 S.W.2d 743, 744 (Tenn. 1977). This follows
from the fact that one who is not the party against whom a given tax is assessed does not sustain an
injury distinct and palpable from the general population with respect to that tax.

                                                            V.

       The Act explicitly states that “[s]uch tax is a privilege tax upon the transient occupying such
room and is to be collected as provided by this Act.” The Act defines the term “transient” as
follows:

                   “Transient” means any person who exercises occupancy or is entitled
                   to occupancy for any rooms, lodgings or accommodations in a hotel
                   for a period of less than ninety (90) continuous days.

Under this definition, it is clear that Ashworth is not the taxpayer. The Act imposes an obligation
on an innkeeper to collect and remit the tax. The Act does not designate the operator as the taxpayer.

       The following language from the Brodbine opinion is instructive:

       2
           The defendants do not challenge the trial court’s hold ing that the Act is unconstitutional.

                                                           -6-
               Of course, [a] plaintiff cannot have “refunded” to [her] taxes [she]
               has not paid. And, to be considered the “taxpayer” it is not enough
               to show that in the course of business the economic burden of the tax
               was passed on to [her] by the true taxpayer; [she] must show that the
               taxing statute, in terms, imposes the tax upon [her] and creates
               obligations owing by [her] to the taxing authority.

Brodbine, 545 S.W.2d at 744 (citations omitted). This rationale is applicable to the instant appeal.
The Act does not require Ashworth to personally pay the tax. Rather, she is merely an agent for the
purpose of collecting the tax from her guests. The position of the intervenor highlights the
distinction. The intervenor had standing because he paid the tax when he paid his hotel bill. The
money damages Ashworth seeks are not hers to claim. Since she was not required to pay any taxes,
any reimbursement to her would be a windfall to which she is not entitled. We decline to “broaden”
Tennessee’s well-established definition of standing just because of a possibility that an operator
might be required to remit a charged, but uncollected tax. We note, in passing, that Ashworth does
not allege, nor is there any proof in the record showing, that any portion of the taxes paid by her
under protest were, in fact, not collected by her.

       We hold that Ashworth lacks standing to seek the relief set forth in her complaint.

                                                  VI.

        The judgment of the trial court is affirmed. This matter is remanded to the trial court for such
further proceedings, if any, as may be necessary and for collection of costs assessed below, all
pursuant to applicable law. The costs on appeal are taxed to Denise Ashworth.

                                                        _______________________________
                                                        CHARLES D. SUSANO, JR., JUDGE

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