Court Opinion

ID: 1046159
Source: CourtListenerOpinion
Date Created: 2013-10-08 02:33:34.202759+00
Date Added: 2024-06-11T15:16:10.699884
License: Public Domain

IN THE COURT OF APPEALS OF TENNESSEE
                            AT NASHVILLE
                                August 21, 2012 Session

                CYNTHIA FARRAR v. STATE OF TENNESSEE

        Appeal from the Tennessee Claims Commission for Davidson County
               No. T20101516 Hon. Robert Hibbett, Commissioner

               No. M2011-02559-COA-R3-CV - Filed September 7, 2012

This appeal involves the forfeiture of property that had been either used or furnished in
violation of the Drug Control Act. The property at issue was subject to a lien held by
Citizens Bank. Following the forfeiture of the seized property, Citizens Bank notified the
State of its lien and requested the return of the property. The State directed Citizens Bank
to file an appeal with the chancery court. Instead, Citizens Bank sued Claimant for the
balance owed on the property and an order of judgment was entered against Claimant.
Claimant filed suit against the State in the Claims Commission, alleging that the State was
negligent because it failed to notify the proper lienholder of the forfeiture. The State filed
a motion for summary judgment, which was granted by the Claims Commission. Claimant
appeals. We affirm the decision of the Claims Commission.

      Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Tennessee Claims
                      Commission Affirmed; Case Remanded

J OHN W. M CC LARTY, J., delivered the opinion of the court, in which H ERSCHEL P. F RANKS,
P.J., and D. M ICHAEL S WINEY, J., joined.

Peter J. Strianse, Nashville, Tennessee, for the appellant, Cynthia Farrar.

Robert E. Cooper, Jr., Attorney General and Reporter; William E. Young, Solicitor General;
and Rebecca Lyford, Senior Counsel, Civil Rights and Claims Division, Nashville,
Tennessee, for the appellee, State of Tennessee.
                                         OPINION

                                    I. BACKGROUND

       On April 23, 2006, the 18th Judicial District Drug Task Force (“Seizing Agency”)
seized 25 items of personal property, including a 2004 Freightliner motor home (“the
Freightliner”), from Cynthia Farrar (“Claimant”) and her husband. After finding that there
was probable cause that the Freightliner had been used in violation of the Drug Control Act
or was obtained with proceeds traceable to a violation of the Drug Control Act, the court
issued a forfeiture warrant, providing that there was probable cause to believe that Claimant,
her husband, and Chase Bank (“Chase”), the only lienholder listed on the certificate of title,
“had knowledge of or participated in the use of the [Freightliner] in violation of the” Drug
Control Act. On May 3, 2006, the Tennessee Department of Safety (“the TDOS”) mailed a
notice to Chase, providing that the Freightliner

       will be forfeited and subject to public sale or other lawful disposition after
       thirty (30) days from receipt of this notice unless the secured party shall file
       with the [TDOS] a copy of the title and the security agreement encumbering
       the seized vehicle.

Chase did not respond to the notice. Shortly thereafter, Claimant filed a proposed settlement
and release of liability (“the Settlement Agreement”), agreeing to the forfeiture of the
Freightliner to the Seizing Agency. The Settlement Agreement provided, in pertinent part,

       Claimant by [] counsel WAIVES AND RELEASES any legal claim or cause
       of action which he might otherwise have as a result of any acts underlying this
       forfeiture proceeding against the 20th Judicial District Drug Task Force or
       Metro Nashville Police Department or its agents, officers, or employees, and
       RELEASES them from all civil liability.

While Claimant and her husband did not sign the Settlement Agreement, an attorney listed
as the legal representative for both parties signed for them. Likewise, a final order of
compromise and settlement (“the Order”) was also entered. The Order provided that the
property had been seized from Claimant’s husband by the Seizing Agency and the 20th
Judicial District Drug Task Force. The accompanying release provided,

       [T]he Petitioner and the State of Tennessee, Department of Safety, mutually
       release each other and all their agents, officers, employees, servants,
       successors, assigns, executors, heirs and administrators from all claims for

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       injuries or damages, whether now known or what may accrue in the future,
       arising out of the above referenced seizure.

The Order did not mention Claimant by name. The Freightliner was subsequently sold at an
auction for $145,000. On July 19, 2007, Citizens Bank (“Citizens”) informed the TDOS that
it was the current lienholder, that it had a lien against the Freightliner for $161,403, and that
it sought possession of the Freightliner. The TDOS advised Citizens that the time had passed
to appeal the Order through the TDOS appeals division but that it could file a petition for
review in the chancery court.

        Instead of filing a petition for review in the chancery court, Citizens sued Claimant
for the balance owed. Claimant responded by asserting that she was not liable for the entire
amount owed because Citizens had failed to mitigate its damages by enforcing its rights
against the TDOS as lienholder of the Freightliner. Citizens filed a motion for summary
judgment, and the court granted the motion and entered an order of judgment against
Claimant.

        Approximately five months later, Claimant filed a complaint against the State in the
Claims Commission, specifically the Seizing Agency and the TDOS. Claimant alleged that
the State was negligent by failing to satisfy the lien obligation pursuant to Tennessee Code
Annotated sections 40-33-107, -110(a) and that as a result of that negligence, a judgment was
entered against her. Claimant also alleged that the State’s failure to notify the proper party
of the forfeiture was a due process violation of the Tennessee Constitution and the United
States Constitution and that the State was negligent per se in its handling of the forfeiture of
the Freightliner. Claimant requested damages in the amount of the order of judgment entered
against her. The State responded that its “duty to pay off any lien only arises if the lien
holder timely files notice of the lien with [the seizing agency].” The State also asserted that
Claimant had released the State from any liability arising out of the seizure and forfeiture.

        The State filed a motion for summary judgment, arguing that it was not negligent in
its care, custody or control of the Freightliner, that the Claims Commission did not have
subject matter jurisdiction over the alleged due process violations, and that Claimant had
released any claim she could have properly asserted. The State argued that the code sections
cited by Claimant did not apply to forfeitures pursuant to the Drug Control Act and that even
if the cited sections applied to the property, the property was not retained as anticipated by
the statute but had been sold. Claimant responded by asserting that Citizens was not required
to file a claim because it was a successor in interest that had not received notice of the
forfeiture and that the State did not satisfy its obligation to give reasonable notification
because it failed to conduct a Vehicle Identification Number (“VIN”) search. Claimant

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opined that the release contained in the Order was ineffective because the State failed to
fulfill its statutory obligations. The State responded that it had conducted a VIN search,
which listed Chase as the only lienholder. The State asserted that it fulfilled its obligations
by notifying the only lienholder it found.

         After considering the arguments of counsel, the Claims Commission granted the
motion for summary judgment. The Claims Commission found that Citizens was required
to file a claim to preserve its interest because it had failed to notify anyone of its lien and that
the State fulfilled its obligation of notification when it notified Chase, the only entity listed
in the certificate of title and found through the VIN search, of the forfeiture. The Claims
Commission further found that Claimant did not have standing to assert a due process claim
on behalf of Citizens regarding the State’s alleged failure to notify Citizens and that she had
“knowingly and willingly through her counsel waived any claims arising out of this
forfeiture.” This timely appeal followed.

                                           II. ISSUES

       Claimant raises several issues on appeal that we consolidate and restate as follows:

       A. Whether the Claims Commission erred in holding that Claimant had
       waived her claim against the State.

       B. Whether the Claims Commission erred in holding that Claimant did not
       have standing to assert a due process claim on behalf of Citizens.

       C. Whether the Claims Commission erred in holding that the State was not
       negligent in the care, custody, or control of the property.

                               III. STANDARD OF REVIEW

        Summary judgment is appropriate where: (1) there is no genuine issue with regard to
the material facts relevant to the claim or defense contained in the motion and (2) the moving
party is entitled to judgment as a matter of law on the undisputed facts. Tenn. R. Civ. P.
56.04. A properly supported motion for summary judgment “must either (1) affirmatively
negate an essential element of the nonmoving party’s claim; or (2) show that the nonmoving
party cannot prove an essential element of the claim at trial.” Hannan v. Alltel Publ’g Co.,
270 S.W.3d 1, 9 (Tenn. 2008). When the moving party has made a properly supported
motion, the “burden of production then shifts to the nonmoving party to show that a genuine
issue of material fact exists.” Id. at 5; see Robinson v. Omer, 952 S.W.2d 423, 426 (Tenn.
1997); Byrd v. Hall, 847 S.W.2d 208, 215 (Tenn. 1993). The nonmoving party may not

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simply rest upon the pleadings but must offer proof by affidavits or other discovery materials
to show that there is a genuine issue for trial. Tenn. R. Civ. P. 56.06. If the nonmoving party
“does not so respond, summary judgment, if appropriate, shall be entered.” Tenn. R. Civ.
P. 56.06.

       On appeal, this court reviews the grant of summary judgment de novo with no
presumption of correctness. See City of Tullahoma v. Bedford Cnty., 938 S.W.2d 408, 412
(Tenn. 1997). In reviewing a decision to grant summary judgment, we must view all of the
evidence in the light most favorable to the nonmoving party and resolve all factual inferences
in the nonmoving party’s favor. Luther v. Compton, 5 S.W.3d 635, 639 (Tenn. 1999);
Muhlheim v. Knox. Cnty. Bd. of Educ., 2 S.W.3d 927, 929 (Tenn. 1999). If the undisputed
facts support only one conclusion, then the grant of summary judgment will be upheld
because the moving party was entitled to judgment as a matter of law. See White v.
Lawrence, 975 S.W.2d 525, 529 (Tenn. 1998); McCall v. Wilder, 913 S.W.2d 150, 153
(Tenn. 1995).

                                     IV. DISCUSSION

                                              A.

       Claimant asserts that she did not release the State, the TDOS, and the Seizing Agency
from claims arising out of the forfeiture because those entities were purposefully excluded
from the Settlement Agreement that she approved. She claims that the Settlement Agreement
only waived future claims against the 20th Judicial District Drug Task Force, the Metro
Nashville Police Department, and the underlying agents, officers, and employees of those
two entities. She notes that she specifically filed her complaint against the State, the Seizing
Agency, and the TDOS, the entities that she did not specifically release from liability for
claims arising out of the seizure. She admits that the Order purports to release the Seizing
Agency but asserts that she was purposefully excluded from the Order that only listed her
husband as a party. The State responds that Claimant is precluded from advancing this
argument because she admitted that the Order was representative of the Settlement
Agreement when she responded to the statement of undisputed facts. The State asserts that
Claimant should have raised her objection to the Order’s legitimacy when responding to the
statement of undisputed facts.

       Pursuant to Rule 56.03 of the Tennessee Rules of Civil Procedure, the State offered
several statements of undisputed facts for Claimant’s approval. The fact at issue provides,

       On June 4, 2007, Debra Martin of the TDOS Appeals Division, based on the
       agreement between the parties, entered an Order of Compromise and

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       Settlement providing as follows: . . . “It is hereby ORDERED that the
       Petitioner [Claimant] and the State of Tennessee, Department of Safety,
       mutually release each other and all their agents, officers, employees, . . . , from
       all claims for injuries or damages, whether now known or what may accrue in
       the future, arising out of the above referenced seizure . . .” A copy of this
       order was sent by first class mail, postage prepaid to Glenn Funk, claimant’s
       attorney in the forfeiture proceeding.

Claimant responded to this alleged undisputed fact by stating,

       Admitted for the purposes of this motion only.

        Claimant by responding in the affirmative to the aforementioned statement of
undisputed fact, did not object to the reference to her as a party to the release entered in the
Order and agreed that the Order was “based on the agreement between the parties.” The
Claims Commission relied upon that fact in granting the motion for summary judgment.
Summers v. Cherokee Children and Family Servs., Inc., 112 S.W.3d 486, 510 (Tenn. Ct.
App. 2002) (“[W]hen the opposing party agrees that a fact is not disputed pursuant to Tenn.
R. Civ. P. 56.03, the court may rely upon that admission in determining whether a genuine
issue of material fact exists.”) Claimant cannot now dispute that fact on appeal.
Additionally, in response to the motion for summary judgment, Claimant asserted that the
Order was ineffective because the State failed to fulfill its corresponding statutory
obligations. She never called into question the Order’s applicability to her as a party or its
alleged misrepresentation of the Settlement Agreement she approved. A party may not offer
a new issue for the first time on appeal. See Lane v. Becker, 334 S.W.3d 756, 764 (Tenn. Ct.
App. 2010) (citing Campbell Cnty. Bd. of Educ. v. Brownlee-Kesterson, Inc., 677 S.W.2d
457, 466-67 (Tenn. Ct. App. 1984)). “The jurisprudential restriction against permitting
parties to raise issues on appeal that were not first raised in the trial court is premised on the
doctrine of waiver.” Fayne v. Vincent, 301 S.W.3d 162, 171 (Tenn. 2009) (citations
omitted). If Claimant had raised this issue, the Claims Commission could have addressed
the issue and provided a record for this court’s review. Accordingly, we conclude that this
issue is waived.

                                               B.

       Claimant asserts that the court erred in holding that she did not have third-party
standing to bring due process claims on behalf of Citizens. She alleges that she was injured
by the State’s failure to perform its statutory duties, that she had a contractual relationship
with Citizens, and that Citizens was hindered in its ability to protect its interest because the
State failed to promptly notify Citizens of the forfeiture. The State responds that dismissal

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of the constitutional claims was proper because “regardless of [Claimant’s] standing to assert
any such claims, there is no jurisdiction in the Claims Commission over constitutional
claims.”

       The Tennessee Constitution provides that “[s]uits may be brought against the State
in such manner and in such courts as the Legislature may direct.” Tenn. Const. art. 1, § 17.
“This constitutional provision reflects sovereign immunity, the notion that a sovereign
governmental entity cannot be sued in its own courts without its consent.” Northland Ins.
Co. v. State, 33 S.W.3d 727, 729 (Tenn. 2000) (citations omitted); Stewart v. State, 33
S.W.3d 785, 790 (Tenn. 2000). “The rule of sovereign immunity in Tennessee is both
constitutional and statutory. It is not within the power of the courts to amend it.” Jones v.
L & N Railroad Co., 617 S.W.2d 164, 170 (Tenn. Ct. App. 1981).

        The legislature has waived its sovereign immunity as to certain actions brought before
the Claims Commission. See Tenn. Code Ann. § 9-8-301, et seq. The relevant code section
provides that “[t]he commission or each commissioner sitting individually has exclusive
jurisdiction to determine all monetary claims against the [S]tate based on the acts or
omissions of ‘[S]tate employees’” that fit within one of several categories. Tenn. Code Ann.
§ 9-8-307(a)(1). Outside of these categories, no jurisdiction exists for claims against the
State. The category at issue here provides that monetary claims may be brought against the
State based upon the State’s “[n]egligent care, custody or control of personal property.”
Tenn. Code Ann. § 9-8-307(a)(1)(F).

       In addition to barring claims filed in the Claims Commission that do not involve acts
or omissions of State employees, the Claims Commission does not have jurisdiction over
claims involving federal law. See Tenn. Code Ann. § 9-8-307(a)(1)(N). Additionally,
Tennessee “has not recognized [an] implied cause of action for damages based upon
violations of the Tennessee Constitution.” See Bowden Bldg. Corp. v. Tenn. Real Estate
Comm’n, 15 S.W.3d 434, 446 (Tenn. Ct. App. 1999); see also Lee v. Ladd, 834 S.W.2d 323,
325 (Tenn. Ct. App. 1992). With these considerations in mind, we conclude that the Claims
Commission did not err in granting the motion for summary judgment relative to the
constitutional claims because it did not have subject matter jurisdiction to consider those
claims.

                                              C.

       Claimant asserts that the State was negligent in its care, custody or control of her
personal property because the State failed to notify Citizens of the forfeiture. She argues that
the State’s meager attempts at notification were inadequate given the unique circumstances
of this case, namely the period of time between the seizure, forfeiture, and auction; the

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amount owed on the Freightliner; Chase’s failure to respond to the notice; and questions
regarding the time in which Citizens became the lienholder. She also alleges that the Claims
Commission erred in essentially placing the burden upon Citizens to secure its interest so that
it could be properly notified. The State responds that it was not required to provide notice
to Citizens and that Citizens’ interests were forfeited once it failed to file a claim.

        There is no dispute that Citizens was not listed on the certificate of title and that a VIN
search did not reveal that Citizens held a lien against the Freightliner. Claimant contends that
given the unique circumstances of this case, the State should have at least contacted Chase
directly and ascertained whether Chase was the current lienholder of the Freightliner.
Claimant is essentially arguing that the notice procedure employed by the State did not
comply with constitutional due process standards. See generally Toyota Motor Credit Corp.
v. State Dept. of Safety, No. M2003-00147-COA-R3-CV, 2003 WL 22519810, at *3-4 (Tenn.
Ct. App. Nov. 7, 2003). As previously determined, the Claims Commission did not have
subject matter jurisdiction to consider constitutional due process claims. Notably, Citizens
could have raised this issue in the chancery court had it chosen to appeal the forfeiture of the
Freightliner. Moreover, Claimant did not have third-party standing to bring this claim on
behalf of Citizens when Citizens was not hindered in its ability to protect its interest. See
Gray’s Disposal Co., Inc. v. Metro. Gov’t of Nashville, 122 S.W.3d 148, 158 (Tenn. Ct. App.
2002) (listing the three criteria that a third-party must satisfy in order to bring a claim on
another party’s behalf). Citizens could have challenged the forfeiture sale of the Freightliner
through the chancery court. Instead, Citizens chose to recoup its loss from Claimant.

        Lastly, Claimant argues that Citizens did not need to file a claim to preserve its right
to the Freightliner and that once the State became aware of the lien, it should have halted the
forfeiture proceedings. We disagree. Claimant’s argument is premised upon the following
provision:

       A secured party with a duly perfected interest or any successor in interest to
       the secured party who does not receive notice of intent to forfeit the interest
       pursuant to § 40-33-204(b)(3), need not file a claim to preserve any right the
       party may have to the property.

Tenn. Code Ann. § 40-33-205(a). Admittedly, Citizens did not receive notice of the
forfeiture proceedings. Claimant asserts that as the successor in interest of a perfected party,
Citizens’ interest was perfected automatically. While Citizens obtained all of the rights
assigned to Chase when it became the successor in interest, it was still tasked with
“forward[ing] the assignment, together with the certificate of title and proper fee for the
notation of a lien to the department.” Tenn. Code Ann. § 55-3-124(a). To hold that a
successor’s interests are perfected automatically would render the filing requirements useless.

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Additionally, section 40-33-205(a) anticipates that the interest sought to be forfeited was “a
duly perfected security interest as reflected in the public records of titles, registrations or
other recorded documents.” Tenn. Code Ann. § 40-33-204(b)(3) (emphasis added). Thus,
recovery pursuant to section 40-33-205(a) is premised on the fact that notice should have
been provided because the identity of the lienholder was easily ascertainable through public
records. Here, the identity of the proper lienholder was not ascertainable through public
records. Consequently, in order to protect its interest, Citizens was required to file a claim
within 30 days of the issuance of the forfeiture warrant. Tenn. Code Ann. § 40-33-205(b).
When Citizens failed to file a claim or proof of its security interest within that time, its
interest was properly forfeited. Tenn. Code Ann. § 40-33-206(c). Accordingly, we conclude
that the Claims Commission did not err in granting the motion for summary judgment.

                                    V. CONCLUSION

       The judgment of the Claims Commission is affirmed, and the case is remanded for
such further proceedings as may be necessary. Costs of the appeal are taxed to the appellant,
Cynthia Farrar.

                                           _____________________________________
                                           JOHN W. McCLARTY, JUDGE

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