Court Opinion

ID: 1045510
Source: CourtListenerOpinion
Date Created: 2013-10-08 02:27:13.994694+00
Date Added: 2024-06-11T12:30:21.452007
License: Public Domain

IN THE COURT OF APPEALS OF TENNESSEE
                            AT NASHVILLE
                                   July 26, 2012 Session

        CHEYNEY MCCARTER, d/b/a USA SPORTS GRILL, LLC v.
                  CITY OF MT. JULIET, ET AL.

                 Appeal from the Chancery Court for Wilson County
                 No. 10C190 11C056    Charles K. Smith, Chancellor

                No. M2011-02547-COA-R3-CV - Filed February 4, 2013

The Mt. Juliet Beer Board suspended the beer permit of a restaurant, and the restaurant
owner appealed the suspension to the chancery court by filing a petition for writ of certiorari.
The City did not file an answer within the requisite time period because it did not believe
Tenn. Code Ann. § 57-5-108, which governs appeals of beer board decisions, required this.
The City actively participated in the case in other ways by filing a motion to set the case for
trial, filing a comprehensive pre-trial brief, and responding to discovery requests. The
restaurant owner moved for default judgment based on the City’s failure to answer the
petition, after which the City filed an answer. On the day set for trial, the trial court awarded
the restaurant owner a default judgment based on the City’s failure to file an answer in a
timely fashion and its failure to seek leave to file a late answer. We reverse and remand to
the trial court for further proceedings.

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

P ATRICIA J. C OTTRELL, P.J., M.S., delivered the opinion of the Court, in which A NDY D.
B ENNETT and R ICHARD H. D INKINS, JJ., joined.

Brandt M. McMillan, Nashville, Tennessee, for the appellants, City of Mt. Juliet, City of Mt.
Juliet Beer Board, and the following Individuals Serving in their capacity as members of the
Beer Board: Mike Wheeler, Gwen Sherman, Winston “Ted” Floyd, Mike Gallion, and Mark
Brewer.

G. Jeff Cherry, Lebanon, Tennessee; David Henry Veile, Franklin, Tennessee; James B.
Lewis, Nashville, Tennessee, for the appellee, Cheyney McCarter, d/b/a USA Sports Grill,
LLC.
                                           OPINION

                                       I. B ACKGROUND

       This case concerns an appeal from the Mt. Juliet Beer Board to the Chancery Court
in Wilson County. Cheney McCarter is the owner of USA Sports Grill, LLC (“Sports Grill”),
which is located in Mt. Juliet, Tennessee. At all relevant times Sports Grill operated with a
permit to sell beer for on-premises consumption that was issued by the City of Mt. Juliet Beer
Board (the “Beer Board”). The record indicates that in December 2009, an employee of
Sports Grill was cited for selling beer to an underage customer. The Beer Board
subsequently held a hearing and voted to suspend Sports Grill’s beer permit for 90 days.

        In May 2010 Sports Grill filed a Petition for Writ of Certiorari with the Chancery
Court in which it sought a writ and stay of execution of the suspension levied against it. The
trial court issued a writ to the City of Mt. Juliet (the “City”) and the Beer Board (both entities
will be referred to henceforth as the “City”) directing them to make, certify, and transmit to
the court within 30 days the entire record of proceedings relating to the suspension of Sports
Grill’s beer permit. The trial court also issued an order staying the suspension of Sports
Grill’s beer permit as well as a summons to the City and each individual serving on the Beer
Board directing them to serve upon Sports Grill’s attorney an Answer to the complaint filed
by Sports Grill within 30 days.

        Neither the City nor the Beer Board transmitted the record of proceedings to the court
or filed an Answer within the following 30 days. In October 2010 and again in January 2011
the City filed a motion to set the case for trial. The parties entered into an Agreed Order in
February 2011 setting the case for a non-jury trial on May 5, 2011. On April 28, just seven
days before the trial was scheduled, the City filed with the trial court the record of
proceedings before the Beer Board.

       On May 2 Sports Grill filed a motion for default judgment, or in the alternative, to
deem admitted all allegations contained in its petition. The grounds Sports Grill cited were
twofold: the City had not filed an Answer or other pleading responsive to its petition, and
the City filed the record of proceedings extremely late, just one week prior to the trial date.
The City filed a response to Sports Grill’s motion for default judgment and argued that it was
not required to file a responsive pleading to a writ for certiorari. The City argued that its only
requirement was to file the record from the Beer Board, which it had done. Out of an
abundance of caution, however, the City stated in its response that its decision to suspend
Sports Grill’s beer permit for 90 days was appropriate, legal, and not arbitrary, based on
Sports Grill’s failure to comply with the City’s beer ordinance then in effect (prohibiting the

                                               -2-
sale of alcohol to anyone under the age of 21).

        The City then filed a pre-trial brief on May 4 in which it defended its decision to
suspend Sports Grill’s beer permit. The parties thereafter reset the trial date from May 5 to
September 29. In August the parties engaged in discovery, wherein Sports Grill served
interrogatories and document requests on the City and the City responded in a timely fashion.
Sports Grill then renewed its motion for default on September 21 and filed a motion in limine
to preclude the City from introducing evidence at the trial because the City failed to respond
to its writ by filing an Answer or other responsive pleading.

        The City responded to Sports Grill’s second motion for default judgment two days
later, restating its position that no Answer is necessary when a petition for writ of certiorari
is filed. The City nevertheless filed an Answer to Sports Grill’s petition that same day.

        The parties appeared in trial court on September 29 with their witnesses and exhibits,
prepared to try the case. Rather than start the trial, however, the court addressed Sports
Grill’s motion for default judgment and motion in limine. The court found the City was
required to file an Answer to Sports Grill’s petition and, since the City failed to seek leave
from the court to file a late Answer, the court disregarded the City’s filing. The court then
granted Sports Grill’s motion for default judgment, writing in its Order:

               This Court finds that based upon Grigsby v. City of Plainview, 194
S.W.3d 408 (Tenn. Ct. App. 2005), Upper Norris Conservation Club, Inc. v.
       Town of Cumberland Gap, No. E2006-0193-COA-R3-CV, 2007 WL 1574286
       (Tenn. Ct. App. May 31, 2007), and Fentress County Beer Board v. Cravens,
       356 S.W.2d 260 (Tenn. 1962), the provisions of TCA 27-9-101 et seq. apply
       to this Writ of Certiorari matter dealing with the appeal of a beer board.
       Specifically, TCA 27-9-110 requires that an answer be filed.

              Moreover, an answer must give notice of the defenses relied upon. The
       answers in these cases were filed on September 23, 2011, just six (6) days
       before this trial. The Court finds that six (6) days notice is insufficient for a
       case as complex as this that has been pending for a year and a half.

               Although the Tenn. R. Civ. P. give this Court discretion to permit a late-
       filed answer at the request of the Defendant upon showing excusable neglect,
       there has been no motion or other request of Defendant to file a late-filed
       answer.

                                              -3-
               As such, the Defendant’s purported answer filed September 23, 2011,
       [is] not timely.
                      It is therefore ORDERED, ADJUDGED and
               DECREED that the Petitioner’s Motion in Limine and Motion
               for Default are GRANTED . . . and that a judgment is entered
               in favor of the Petitioner . . . .

       Rather than filing a motion to set aside the default judgment pursuant to Tenn. R. Civ.
P. 55.02, the City filed a Notice of Appeal pursuant to Rule 3 of the Tennessee Rules of
Appellate Procedure. The City argues on appeal that judicial review of the Beer Board’s
decision to suspend Sports Grill’s beer permit is governed by Tenn. Code Ann. § 57-5-108,
not by Tenn. Code Ann. § 27-9-110, as the trial court held, and that the procedure under
§ 57-5-108 does not require the respondent to file an Answer or other responsive pleading
to a petition for writ of certiorari.

        The City argues further that the trial court erred in granting Sports Grill a default
judgment because the City actively defended its decision to suspend Sports Grill’s beer
permit. Because of the specific dispute between the parties and the basis for the trial court’s
ruling, it is important to put the default judgment entered in this case into context, i.e., the
type of proceeding involved.

                    II. J UDICIAL R EVIEW OF B EER B OARD D ECISIONS

       Tennessee Code Annotated, §§ 57-5-101 et seq., govern the regulation of “Beer and
Alcoholic Beverages Containing Less Than Five Percent Alcohol.” Provisions within those
statutes establish the method for a party to seek and obtain judicial review of a city beer
board decision, including a decision to suspend a permit. The relevant portions provide:

       (d) The action of such agency [beer board] in connection with the issuance of
       any order of any kind, including the revocation or suspension of a license or
       permit, imposition of a civil penalty or the refusal to grant a license or permit
       under §§ 57-5-105, 57-5-106 and this section, may be reviewed by statutory
       writ of certiorari, with a trial de novo as a substitute for an appeal, the
       petition of certiorari to be addressed to the circuit or chancery court of the
       county in which any such order was issued.

                                             .....

       (f) The provisions of this section shall be the sole remedy and exclusive
       method of review of any action or order that may have been issued by any

                                              -4-
       county legislative body, or any committee appointed by any county legislative
       body, or from any board or commission authorized under §§ 57-5-105 and 57-
       5-106, including the refusal or failure to grant any license or permit or the
       imposition of a civil penalty. The provisions of the Tennessee Rules of Civil
       Procedure shall be applicable in connection with such review.

Tenn. Code Ann. § 57-5-108(d), (f) (Supp. 2011) (emphasis added).

        As the language makes clear, this statute provides the only method for judicial review
of a beer board decision. Suleiman v. City of Memphis Alcohol Comm’n, 290 S.W.3d 844,
848 (Tenn. Ct. App. 2008). It is generally stated that the revocation or suspension of a beer
permit is reviewable by the trial court under the statutory writ of certiorari with a trial de
novo. Metro Beer Permit Board v. Jones, 625 S.W.2d 267, 268 (Tenn. 1981). Thus, the
statute establishes both the procedural framework and the standard of review.

       In Tennessee, there are two types of writs of certiorari: (1) the common law writ,
codified at Tenn.Code Ann. § 27–8–101 and (2) the statutory writ, codified at Tenn. Code
Ann. § 27–8–102. Davison v. Carr, 659 S.W.2d 361, 363 (Tenn. 1983); Fairhaven Corp. v.
Tennessee Health Facilities Comm’n, 566 S.W.2d 885, 886 (Tenn. Ct. App. 1976). Although
the two statutes do not make the distinction clear, our courts have held that the writ of
certiorari described in Tenn. Code Ann. § 27-8-101 is the common law writ and the writ
described in Tenn. Code Ann. § 27-8-102 is the statutory writ. Boyce v. Williams, 389
S.W.2d 272, 276 (Tenn. 1965); Cooper v. Williamson County Board of Education, 746
S.W.2d 176, 179 (Tenn. 1987).

       While determining which writ applies to the appeal of an administrative body’s
decision may sometimes be a complex question, Tenn. Waste Movers, Inc. v. Loudon
County, 160 S.W.3d 517, 520 n.2 (Tenn. 2005), no such complexity exists where, as here,
a specific statute expressly grants review under the statutory writ. Cooper, 746 S.W.2d at
178-79.

       In State v. Lane, 254 S.W.3d 349 (Tenn. 2008), the Tennessee Supreme Court
explained that an important difference between the two writs is the scope of review employed
by the courts:

       [T]he “common-law writ of certiorari” should not be confused with the
       “statutory writ of certiorari.” See Tenn. Code Ann. § 27–8–102 (2000). The
       pertinent difference between these two writs is the scope of review used by
       courts. In Cooper, we noted that “‘cases, broadly speaking, recognize the
       distinction between the writ of certiorari as employed under the common-law,

                                             -5-
        for the review of the legality of the action of a board or inferior tribunal as
        within its jurisdiction or powers, and the same writ authorized by statute to be
        employed, in lieu of an appeal, to review and correct errors of fact and law
        committed by such inferior tribunal.’” Cooper, 746 S.W.2d at 179 (quoting
        Anderson v. City of Memphis, 72 S.W.2d 1059, 1060 (1934)). Thus, the
        common-law writ “does not ordinarily extend to a redetermination of the facts
        found by the administrative body”; whereas, the statutory writ generally allows
        for a trial de novo. Id.

State v. Lane, 254 S.W.3d at 354 n.4. In other words, the intrinsic correctness of the decision
of an inferior tribunal is not subject to judicial review under the common-law writ, Powell
v. Parole Eligibility Review Bd., 879 S.W.2d 871, 873 (Tenn. App. Ct. 1994), but if the
statutory writ lies, review under the writ is de novo and may be used to correct errors of fact
and law committed by the inferior tribunal. Boyce, 389 S.W.2d at 276. Hoover Motor Exp.
Co. v. R.R. Pub. Utilities Comm., 261 S.W.2d 233, 238-39 (Tenn. 1953).

        A. Standard of Review

        The statutes on beer regulation specifically establish the standard of review to be
applied by courts to a beer board decision. Tenn. Code Ann. § 57-5-108(d). The “trial de
novo as a substitute for an appeal” language was part of amendments in 1961 and “made
material changes in the scope of review.” Cantrell v. DeKalb County Beer Board, 376
S.W.2d 480, 481-82 (Tenn.1964). Courts have further explained that standard, stating that
the trial court is to conduct a review de novo of the beer board’s decision,1 which “means that
the cause is tried as if it originated in circuit or chancery court, and the trial judge is required
to make an independent judgment on the merits, substituting his or her judgment for that of
the Board.” Siegler v. Metropolitan Beer Permit Bd., 62 S.W.3d 732, 734 (Tenn. Ct. App.
2001); Cantrell, 376 S.W.2d at 482.

        An unsuccessful applicant may petition the circuit or chancery court of the
        county in which the denial occurred and receive a trial de novo as a
        substitute for an appeal. Tenn. Code Ann. § 57–5–108(d). The grant of the

        1
          Absent specific statutory language otherwise, in cases brought pursuant to the statutory writ of
certiorari any hearing “shall be on the proof introduced before the board or commission contained in the
transcript, and upon such other evidence as either party may desire to introduce.” Tenn. Code Ann. § 27-9-
111(b). Prior to 1961 amendments to the beer statutes, a trial court’s scope of review of a beer board’s
decision was limited to review under a common law writ of certiorari. Cantrell, 376 S.W.2d at 481. Under
such review, “the reviewing court is limited to inquiry as to whether the administrative agency acted
fraudulently, illegally or arbitrarily.” Watts v. Civil Serv. Bd. for Columbia, 606 S.W.2d 274, 276 (Tenn.
1980) (quoting Hoover Motor Express Co., 261 S.W.2d 233 (Tenn.1953)).

                                                   -6-
        writ requires certification and transmission of the proceedings before the
        board. Tenn.Code Ann. § 57–5–108(e). The trial court nevertheless presides
        over the trial de novo as if the dispute originated in that court. Suleiman,
        290 S.W.3d at 848 (citing Cantrell v. DeKalb Cnty. Beer Bd., 213 Tenn. 568,
        376 S.W.2d 480, 482 (1964)). Thus, the trial court may make an independent
        evaluation on the merits and substitute its judgment for that of the beer board.
        Id. (citing Cantrell, 376 S.W.2d at 482).

Boyd’s Creek Enterprises, LLC v. Sevier County, 362 S.W.3d 600, 604 (Tenn. Ct. App. 2010)
(emphasis added).

       Because the statute provides for a trial de novo, the case is tried as if it were an
original action in the trial court. Siegler, 62 S.W.3d at 374. Thus, judicial review of a beer
board decision is akin to an appeal of a general sessions court judgment2 or a juvenile court
judge’s review of a magistrate’s decision 3 .

        The trial judge is to try the case, weigh the evidence presented, and make his or her
own decision, without regard to any action the Beer Board may have taken, as opposed
to merely deciding whether the beer board acted arbitrarily or illegally. Richards v.
Lewisburg Alcoholic Beverage Comm’n, 543 S.W.2d 852, 854 (Tenn. 1977); see also PP &
C, Inc. v. Metropolitan Beer Permit Bd., 833 S.W.2d 90, 93 (Tenn. Ct. App. 1992) (holding
that any error in the hearing before the beer board was moot because the trial court heard the
case de novo and also stating, “[q]uestions raised before the board have all been tried again
and found against the appellants.”).

        In other words, once the petition for writ of certiorari has been granted, the writ

        2
         An appeal from general sessions court to the circuit court results in a de novo trial with no
presumption of correctness, and the matter is tried as if there had been no previous proceeding. Hohenberg
Bros. v. Missouri Pacific R.R. Co., 586 S.W.2d 117, 119 (Tenn. Ct. App.1979); JRM Investments, Inc. v.
National Standard, LLC, 2012 WL 1956421, at *2 (Tenn. Ct. App. May 31, 2012).
        3
          Under Rule 4(c) of the Tennessee Rules of Juvenile Procedure and Tenn. Code Ann. § 37–1–107(e),
a party may seek review of a magistrate’s decision in a juvenile case by way of a de novo hearing before the
Juvenile Court judge. Kelly v. Evans, 43 S.W.3d 514, 515 (Tenn. Ct. App. 2000). The de novo hearing is
not a review of the record presented to the magistrate, but is a full evidentiary hearing akin to a new trial, as
in an appeal from a general sessions court to a circuit court. Kelly, 43 S.W.3d at 515; see also Kissick v.
Kallaher, 2006 WL 1350999, at *3 (Tenn. Ct. App. May 18, 2006) (judgment of the juvenile court vacated
and remanded for a de novo trial because the juvenile court judge reviewed the referee’s decision without
a hearing or the presentation of any evidence).

                                                      -7-
issued, and further proceedings in the trial court have begun, anything done by the beer board
and any alleged errors or irregularities in proceedings before the board are irrelevant. Herein,
the proceedings before the trial court would involve proof of whether Sports Grill violated
the laws regarding sales to minors. The trial would involve no proof of whether the Beer
Board acted arbitrarily. The City would become, in essence, the plaintiff or prosecutor, and
be in the same position it was in when it brought charges before the Beer Board.

                                              -8-
        These particulars of the mechanism for review of a beer board decision have relevance
to the issue that the parties disputed below and upon which the trial court made its decision:
whether the Beer Board was required to file an answer.

       B. Procedural Framework

        The statutes governing both common law and statutory writs of certiorari include
some provisions on procedure, and those provisions, in general, apply to certiorari actions.
See, e.g., Tenn. Code Ann. § 27-8-106 (establishing requirements for petition). Additionally,
the procedural statutes found at Tenn. Code Ann. § 27-9-101 et seq., entitled “Review of
Boards and Commissions,” generally apply to both statutory and common law writs. Fallin
v. Knox County Bd. Of Comm’rs, 656 S.W.2d 338, 341 (Tenn. 1983); Hoover Motor Express
Co., 261 S.W.2d at 244; Fairhaven Corp., 566 S.W.2d at 886 (the procedural framework for
review under both the common law and statutory writs appears in ch. 9 of Title 27); see also,
Cantrell, Review of Administrative Decisions by Writ of Certiorari in Tennessee, 4 M EM. S T.
U NIV . L. R EV 19, 19 (1977) (Chapter 9 of Title 27 provides the procedural framework for
review under both the common-law and statutory writs of certiorari but does not affect the
availability of either writ).

        However, application of the provisions of any of the procedural statutes in chapter 9
is not automatic, as the first provision on review of boards and commissions states:

       Anyone who may be aggrieved by any final order or judgment of any board or
       commission functioning under the laws of this state may have the order
       reviewed by the courts, where not otherwise specifically provided, in the
       manner provided by this chapter.

Tenn. Code Ann. § 27-9-101.

        The parties disagree about whether the City was required to file an answer or other
responsive pleading to Sports Grill’s Petition for Writ of Certiorari. The trial court held that
the City was required to file an answer giving notice of the defenses relied upon; that the City
failed to timely file an answer; and that Sports Grill was consequently entitled to a default
judgment.

        Sports Grill argues that the general statute addressing the review of boards and
commissions, Tenn. Code Ann. § 27-9-101 et seq., entitled “Review of Boards and
Commissions,” required the City to file an Answer to its petition. The relevant provision
states:

                                              -9-
        (a) All defendants named in such petition, desiring to make defense, shall do
        so by answer (in which grounds of demurrer shall be incorporated) to such
        petition within thirty (30) days from the date of the filing of the transcript,
        unless the time be extended by the court.

Tenn. Code Ann. § 27-9-110(a).

       The City points out that unlike section 27-9-110, section 57-5-108 (the beer board
judicial review statute) does not require the respondent to file an answer. The City
acknowledges that the Tennessee Rules of Civil Procedure apply to trials de novo under
section 57-5-108, but contends that nothing in the Tennessee Rules of Civil Procedure
specifically requires a respondent to file an Answer in response to a petition for writ of
certiorari.4

        Sports Grill acknowledges that section 57-5-108 applies to the judicial review of the
Beer Board’s decision to suspend its beer permit, but argues that where there is no conflict
between the two statutes, sections 29-7-101 et seq. apply as well.5 As Sports Grill points out,
a number of cases involving judicial review of beer board decisions have applied both sets
of statutes.6 However, we have found no opinion dealing directly with the requirement of
an answer when the petition has already been granted and where review is by trial de novo.

        4
           While it is true that “T.R.C.P. 8 contemplates that every petition that sets forth a claim for relief
shall be met by an Answer in writing,” Smith v. Smith, 643 S.W.2d 320, 322 (Tenn. 1982), it is not clear that
the Rules require an answer here. First, the answer contemplated would be to the petition, not necessarily
to any request for relief after the petition is granted. Additionally, as discussed earlier, once the writ was
issued and proceedings began in the circuit court, the City became the plaintiff and had the burden of proving
the charges it had brought against the permit holder. In any event, the City ultimately filed an Answer before
the trial court granted Sports Grill a default judgment, so we are not required to decide that issue.
        5
          The City argues that the provisions of section 27-9-101 et seq. and section 57-5-108 are
contradictory and points out that whereas § 57-5-108 provides for a trial de novo, § 27-9-111 provides for
a review of the board’s decision based on the proof introduced before the board, in addition to other evidence
the parties may want to introduce.
        6
         See Fritts v. Wallace, 723 S.W.2d 948, 949 (Tenn. 1987); Captain v. Knox Cnty. Beer Bd., 1991 WL
119291 (Tenn. Ct. App. July 8, 1991); Shields v. Blount Cnty., Tennessee Beer Bd., 1993 WL 211768 (Tenn.
Ct. App. June 17, 1993); United Methodist Church v. Loudon Cnty. Beer Bd., 1998 WL 429641 (Tenn. Ct.
App. July 30, 1998); Grigsby v. City of Plainview, 194 S.W.3d 408 (Tenn. Ct. App. 2005); Grigsby v. City
of Plainview, 2007 WL 3171134 (Tenn. Ct. App. Oct. 30, 2007); and Upper Norris Conservation Club v.
Cumberland Gap, 2007 WL 1574286 (Tenn. Ct. App. May 31, 2007).

                                                     -10-
        The statute relied upon by both the trial court and Sports Grill requires an answer by
“all defendants named in such petition, desiring to make defense.” It is possible that a
defendant named in a petition for writ of certiorari may want to file a defense in opposition
to the issuance of the writ, which is merely an order for the record below to be filed in the
trial court. However, in this case, the writ was issued the same day the petition was filed.
Similarly, it is possible that a defendant may want to challenge the issuance of a writ even
after it has been granted, usually accomplished by a motion to dismiss. However, the
question is whether, after proceedings have begun in the circuit court on the merits of the
appeal, an answer is necessary.

        C. Application of Statutes Herein

       An examination of the actual filings made in the trial court in this case make the
probable answer more obvious. The petition for writ of certiorari filed by Sports Grill
alleged the Beer Board had acted arbitrarily and capriciously in “assessing an exorbitant
suspension of Petitioner’s permit.” It included specific allegations regarding the
insufficiency of proof at the hearing before the Board and asked the court to “reverse the
holding of the Mt. Juliet Beer Board based upon a violation of the arbitrary and capricious
standard.”

       As set out earlier in this opinion, in a proceeding for judicial review of a beer board
decision, the actions of the board, including whether the board acted arbitrarily or
capriciously, are not relevant to the review. Instead, if the writ is granted and not later
dismissed, the trial court conducts a new trial as if the beer board proceeding had not
occurred. Accordingly, we are not convinced that the City was required to file an answer
when it became, in fact, the plaintiff in the new trial.

       The trial court issued the writ of certiorari on the day the petition was filed.
Accordingly, presenting defenses to the issuance of the writ by answer may have been
inappropriate. In addition, Tenn. Code Ann. § 27-9-110(a) requires that those named in the
petition who desire to make a defense to the petition must file an answer. Here, the petition
had issued, and a defense based on the lack of arbitrariness, etc. in the Beer Board’s actions
was irrelevant to the trial de novo to be conducted in the trial court.7

       The City also argued that the petitioner was present at and participated in the beer
board hearing where all the evidence was laid out. Therefore, Sports Grill had ample notice

        7
         Nonetheless, “in an abundance of caution,” in two of its filings the City stated and restated a general
denial and asserted that the Board’s decision to suspend the permit for 90 days and to revoke the permit was
appropriate, legal, and not arbitrary.

                                                     -11-
of what the City was going to rely on at trial. In addition, the City asserted that its position
was clearly laid out in its trial brief which had been filed much earlier.

       In any event, the resolution of this appeal does not require us to determine whether
the City was required to file an Answer under the circumstances of the procedural posture
below.8

                                      III. D EFAULT J UDGMENT

       Rather than filing a motion to set aside the trial court’s grant of a default judgment
pursuant to Tenn. R. Civ. P. 55.02, the City filed a Notice of Appeal pursuant to Rule 3 of
the Tennessee Rules of Appellate Procedure.

       In addition to its argument regarding the requirement of an Answer, the City also
argues that the trial court erred in granting Sports Grill a default judgment because the City
actively defended its decision to suspend Sports Grill’s beer permit by filing a pre-trial brief,
engaging in discovery, and ultimately filing an Answer before the trial date. Moreover, the
City argues, the parties were ready to try the case, with exhibits in hand and witnesses
prepared to testify, on the day the trial court granted Sports Grill’s motion for default
judgment.

       Rule 55.01 of the Tennessee Rules of Civil Procedure provides for the entry of a
default judgment in the following circumstances:

        When a party against whom a judgment for affirmative relief is sought has
        failed to plead or otherwise defend as provided by these rules and that fact is
        made to appear by affidavit or otherwise, judgment by default may be entered
        ....

        A default judgment disposes of a case on its merits and is generally considered an
admission of the properly plead material allegations of fact set forth in the complaint. State
ex rel. Jones v. Looper, 86 S.W.3d 189, 194 (Tenn. Ct. App. 2000).

        The essence of a default judgment is that a nonmovant fails to take a step
        required by a rule of practice or of the court. A default judgment contemplates
        a lack of responsiveness by defendant such that plaintiff is entitled to judgment
        as a matter of policy; defendants are not to be allowed to prolong litigation by

        8
           Even if it were, we would conclude that the filings by the City sufficed as an Answer, regardless
of the titles.

                                                   -12-
        imposing procedural delays. The default judgment protects a diligent party
        from continual delay and uncertainty as to his or her rights.

Id. (quoting 49 C.J.S. Judgments § 196 (1997)),

        A trial court’s decision to enter a default judgment is reviewed for an abuse of
discretion. Looper, 86 S.W.3d at 193.9 This means we review the trial court’s decision to
enter a default judgment against the City to determine whether the trial court “applied
incorrect legal standards, reached an illogical conclusion, based its decision on a clearly
erroneous assessment of the evidence, or employed reasoning that causes an injustice to the
complaining party.” Discover Bank v. Morgan, 363 S.W.3d 479, 487 (Tenn. 2012) (quoting
State v. Jordan, 325 S.W.3d 1, 39 (Tenn. 2010) (further citation omitted)). In applying this
standard, a trial court cannot substitute its judgment for that of the trial court. Id. (citing
Eldridge v. Eldridge, 42 S.W.3d 82, 85 (Tenn. 2001)).

       The trial court in this case granted a default judgment against the City because the
City had not filed an Answer. That holding overlooked the remaining language in Tenn. R.
Civ. P. 55.01 that authorizes a default judgment when a defendant has “failed to plead or
otherwise defend” an action. See Howse v. Johnson, 2000 WL 758469, at *3 (Tenn. Ct. App.
June 13, 2000) (when defendant actively participates in case and plaintiff is aware of
defendant’s position, default judgment is not appropriate); Allen v. Allen, 2011 WL 198516,
at *4 n.6 (Tenn. Ct. App. Jan. 12, 2011) (default judgment will not be awarded where party
pleads her case, appears before court, and files motions).

       Herein, the City actively participated in the case by filing two different motions to set
the case for trial, entering into two agreed orders setting the case for trial, filing the record
of proceedings before the Beer Board, filing a comprehensive Pre-Trial Brief, filing two
responses to the motions for default judgment that set out the City’s position that the Beer
Board had not acted arbitrarily or beyond its jurisdiction, responding to Sports Grill’s
interrogatories and document requests, and finally filing a document called an Answer. The
City was late in filing the record of proceedings before the Beer Board, but the trial court did

        9
          There is authority from an unreported decision that when no Rule 60.02 motion is made in the trial
court to set aside a default judgment the trial court’s entry of default judgment is reviewed only for
fundamental errors apparent on the face of the record. First Union Nat’l Bank of Tennessee v. Abercrombie,
2003 WL 22251347 (Tenn. Ct. App. Oct. 2, 2003). Abercrombie was decided nine years ago, and we note
that only one case has relied on Abercrombie for this purpose in all this time, which decision was also
unreported. Based on the well-settled doctrine that relief from default judgments should be granted liberally
so that cases are decided on their merits, we decline to apply the fundamental errors standard and apply the
more widely accepted standard of abuse of discretion.

                                                    -13-
not appear to rely on this late filing to justify its entry of default judgment.10 In any event,
the record was filed well before the default judgment was requested and the delay in filing
it cannot have prejudiced Sports Grill. Cooper, 745 S.W.2d at 282 (holding trial court erred
in dismissing beer board appeals due to late filing of administrative record where plaintiffs
were not prejudiced by late filing).

       “[A]t every stage of the proceedings, courts are instructed to grant relief from default
judgments liberally because of the strong preference for deciding cases on their merits.”
Discover Bank v. Morgan, 363 S.W.3d 479, 490 n.20 (Tenn. 2012). Default judgments are
“drastic sanctions” and are not favored by the courts because they “run counter to the judicial
system’s general objective of disposing of cases on the merits.” Henry v. Goins, 104 S.W.3d
475, 481 (Tenn. 2003) (citations omitted). “The prime function and purpose of the judicial
system is to settle, determine and end differences between contending parties . . . and courts
are reluctant to give effect to rules of procedure which seem harsh and unfair, and which
prevent a litigant from having a claim adjudicated upon its merits.” Childress v. Bennett, 816
S.W.2d 314, 316 (Tenn. 1991).

        The trial court did not acknowledge the City’s filings or activity in the case, and the
parties appeared in court ready to try the case on the date set for trial. We hold that the trial
court applied an incorrect legal standard. Based on our conclusion that the trial court abused
its discretion in granting Sports Grill’s motion for default, we reverse the trial court’s entry
of default judgment and remand the case for further proceedings.

                                           IV. C ONCLUSION

        For the reasons set forth above, we hold the trial court erred in granting Sports Grill
a default judgment. We accordingly reverse the trial court’s judgment and remand this case
for further proceedings. Costs of appeal are assessed against Cheney McCarter, d/b/a USA
Sports Grill, LLC, for which execution shall issue if necessary.

                                                                   ____________________________
                                                                   PATRICIA J. COTTRELL, JUDGE

        10
         Even though the statutes require the filing of the record from the Beer Board, the Tennessee
Supreme Court has explained: “In reviewing a judgment of a trial court in cases involving beer permits, the
evidence before the beer board is of no consequence, since the matter is heard in a trial de novo in a circuit
or chancery court.” Cooper, 745 S.W.2d at 281 (citing McCarter v. Goddard, 609 S.W.2d 505, 508
(Tenn.1980)).

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