Blount County Board Of Education v. City Of Maryville, Tennessee
E2017-00047-COA-R3-CV
| Tenn. Ct. App. | Dec 27, 2017Background
- Blount County (the County) sued the Cities of Maryville and Alcoa (the Cities) seeking declaratory relief and reimbursement, claiming the pre-2014 version of Tenn. Code Ann. § 57-4-306 required municipalities that adopted liquor-by-the-drink referenda to share half of their local liquor-by-the-drink gross-receipt tax with the county when the county had not approved such a referendum.
- Maryville and Alcoa had passed local liquor-by-the-drink referenda (1996 and 2004) and each operate their own K–12 school systems. The County had not adopted a countywide referendum; private clubs in unincorporated Blount County nonetheless paid liquor-by-the-drink taxes that the Commissioner distributed to the County.
- Under the pre-2014 § 57-4-306, 50% of gross-receipt liquor tax went to the state education fund and 50% to the “local political subdivision,” with further language dividing that local half into two halves and containing a proviso (added in 1982) addressing municipalities that do not operate separate school systems.
- The trial court granted summary judgment to the Cities on both the County’s primary claim (that municipalities with their own school systems must remit half their local share to the county) and the County’s alternative claim (seeking reimbursement of funds the County had distributed to city school systems from taxes collected in unincorporated areas). The County appealed.
- The Court of Appeals concluded the statutory text was ambiguous as to municipalities operating their own school systems, examined legislative history and AG opinions from 1980–1983, and held the 1982 amendment only required sharing by municipalities that do not operate separate school systems; it affirmed the trial court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether pre-2014 § 57-4-306(a)(2)(A) required municipalities with local liquor referenda and their own school systems to share one-half of local liquor-by-the-drink tax with the county when the county had not passed a referendum | County: statute requires one-half of local proceeds be expended and distributed like county property tax (i.e., shared among LEAs), so cities must remit half to county schools | Cities: proviso and legislative intent exclude municipalities that operate their own school systems from having to remit funds to county | Held for Cities: statute ambiguous but legislative history and AG opinions show 1982 amendment targeted only municipalities that do not operate separate school systems; Cities need not share their local proceeds with County |
| Whether pre-2014 § 57-4-306(a)(2) required that one-half of all liquor-by-the-drink revenue received by Cities be distributed in same manner as county property tax | County: local half is to be spent like county property tax, so distributions must follow WFTEADA apportionment | Cities: where city operates its own school system, local receipts go to city and city schools | Held for Cities: proviso limits remit requirement to municipalities without separate school systems; not all city receipts are subject to county-style distribution |
| Whether County must share with Cities the liquor-by-the-drink revenues it received from Commissioner for receipts collected in unincorporated areas | County: when county receives local half from unincorporated sales, it should distribute pro rata among all LEAs (including city LEAs) by ADA | Cities: county distributions to school funds were proper and not recoverable from cities | Held for Cities on appeal: County was required to expend and distribute the proceeds it received from unincorporated-area collections in the same manner as county property tax (i.e., apportion among LEAs), so County’s prior pro rata distributions were lawful and Cities need not reimburse county |
| Effect of the 2014 amendment on pre-2014 claims | County: 2014 amendment procedures show legislative recognition that municipalities owe counties funds | Cities: 2014 amendment is not retroactive and does not change original legislative intent; it provides procedures but does not contradict 1982 intent | Held: 2014 amendment not retroactive and does not alter the 1982 intent; it does not require reversal of the trial court’s rulings |
Key Cases Cited
- Copper Cellar Corp. v. Jackson, 762 S.W.2d 560 (Tenn. 1988) (describing liquor-by-the-drink tax context)
- In re Estate of Tanner, 295 S.W.3d 610 (Tenn. 2009) (statutory construction principles; consider whole act)
- Limbaugh v. Coffee Med. Ctr., 59 S.W.3d 73 (Tenn. 2001) (expression of one thing implies exclusion of others)
- City of Athens Bd. of Educ. v. McMinn Cty., 467 S.W.3d 458 (Tenn. Ct. App. 2014) (county apportionment of school funds under § 49-3-315)
- Rye v. Women’s Care Ctr. of Memphis, MPLLC, 477 S.W.3d 235 (Tenn. 2015) (summary judgment standards and procedural requirements)