477 S.W.3d 763
Tenn. Ct. App.2015Background
- NAJO Equipment Leasing, LLC owned trucks and trailers and leased them to JNJ Express, a common carrier operating in interstate commerce and a "public utility."
- The Tennessee Department of Revenue assessed NAJO for business taxes (2001–2009 period), based solely on NAJO’s lease receipts from JNJ Express; NAJO paid under protest and sued.
- NAJO argued it was exempt under Tenn. Code Ann. § 67-4-708(3)(C)(xiii) as a "lessor" of public utility property; the Department treated NAJO’s leasing as taxable "sales" under Classification 2.
- The parties stipulated the operative facts and filed cross-motions for summary judgment; the trial court granted judgment for the Department.
- The Court of Appeals found the statutory phrase "sales of services" ambiguous but applied canons of construction and agency regulations to resolve the ambiguity against NAJO.
- Because NAJO bore the burden to prove an exemption and the court found a well‑founded doubt as to its applicability, the court affirmed summary judgment for the Department.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether NAJO’s lease receipts are exempt under § 67-4-708(3)(C)(xiii) (lessors of public utility property) | NAJO: exemption covers lessors of public utility property, including lessors of tangible personal property (leases of trucks/trailers) | Department: exemption is within the "sales of services" classification and applies to services/lessors of real property, not leases (sales) of tangible personal property | Court: statute ambiguous; canons, surrounding provisions, and Dept. regulations show exemption applies to services/real-property lessors; NAJO failed to carry burden to prove exemption, so tax upheld. |
Key Cases Cited
- Bain v. Wells, 936 S.W.2d 618 (Tenn. 1997) (standard of appellate review for summary judgment)
- Abshure v. Methodist Healthcare–Memphis Hosps., 325 S.W.3d 98 (Tenn. 2010) (de novo review of summary judgment requirements)
- Byrd v. Hall, 847 S.W.2d 208 (Tenn. 1993) (identifying material fact and genuine issue standards for summary judgment)
- Crown Enters., Inc. v. Woods, 557 S.W.2d 491 (Tenn. 1977) (exemptions construed against taxpayer; tax statutes construed against taxing authority)
- Tibbals Flooring Co. v. Huddleston, 891 S.W.2d 196 (Tenn. 1994) (well‑founded doubt fatal to taxpayer claiming exemption)
- Sallee v. Barrett, 171 S.W.3d 822 (Tenn. 2005) (explaining ejusdem generis canon used to construe lists)