Sullivan County, Tennessee v. The City Of Bristol, Tennessee, E2016-02109-COA-R3-CV

Background

Cities of Bristol and Kingsport passed liquor-by-the-drink referendums (1984) and have long operated independent municipal school systems; Sullivan County had not enacted a countywide liquor-by-the-drink referendum.
Tennessee levies a 15% liquor-by-the-drink gross receipts tax; statute (Tenn. Code Ann. § 57-4-306, pre-2014 version) directs distribution: 50% to state education fund and 50% to "local political subdivision," with that 50% split into two equal parts subject to subsections (A) and (B).
Subsection (A) required that one-half of the local fifty percent "be expended and distributed in the same manner as the county property tax for schools" but included a proviso requiring municipalities that do not operate separate school systems to remit half of their proceeds to the county school fund.
Sullivan County sued Bristol and Kingsport seeking declaratory relief and alleged the Cities must share one-half of their liquor-by-the-drink receipts with the county; Cities counterclaimed for amounts the county had received from private-club receipts.
Trial court granted summary judgment to the Cities dismissing the County’s claims, and later granted the Cities money judgments on their counterclaims; the County appealed only the dismissal of its claims.
The Court of Appeals affirmed, holding the pre-2014 statutory language ambiguous but, after reviewing the statutory scheme and legislative history (including contemporaneous Attorney General opinions and legislative debate surrounding the 1982 amendment), concluding the 1982 amendment was intended to require sharing only by municipalities that do not operate separate school systems.

Issues

Issue	Plaintiff's Argument (County)	Defendant's Argument (Cities)	Held
Whether pre-2014 §57-4-306(a)(2)(A) required municipalities with their own school systems to remit half of their local share to the county that had not enacted a referendum	County: statute requires that one-half of local proceeds be expended "in the same manner as the county property tax for schools," so municipalities’ proceeds must be distributed into the county school fund for apportionment among LEAs	Cities: proviso excludes municipalities that operate separate school systems; where city has its own LEA the city keeps its funds and need not remit to county	Held: Affirmed for Cities. Statute ambiguous but legislative history and AG opinions show 1982 amendment intended to require remittance only from municipalities that do not operate separate school systems.
Whether pre-2014 §57-4-306(a)(2) required that municipal half be distributed exactly as county property tax (i.e., apportioned among all LEAs by county trustee)	County: one-half must be expended and distributed in same manner as county property tax, meaning county fund apportionment among all LEAs	Cities: municipalities with separate LEAs may apply the county-property-tax phrasing to their own municipal school fund; the proviso shows intent to treat municipalities that do not operate schools differently	Held: Court found statutory scheme allows municipal retention for cities operating their own LEAs; not required to funnel municipal receipts into county apportionment scheme.
Whether enforcing County’s view would violate Tenn. Const. art. II, §29 (Cities’ constitutional defense)	—	Cities: forcing redistribution to another jurisdiction for purposes not benefiting the city would violate constitutional restrictions on appropriations or local control	Held: Constitutional claim was moot because statute was interpreted in Cities’ favor; court did not reach merits.

Key Cases Cited

Copper Cellar Corp. v. Jackson, 762 S.W.2d 560 (Tenn. 1988) (describing the liquor-by-the-drink tax)
Rye v. Women’s Care Ctr. of Memphis, MPLLC, 477 S.W.3d 235 (Tenn. 2015) (summary judgment standard and Rule 56 requirements)
Dick Broad. Co., Inc. of Tenn. v. Oak Ridge FM, Inc., 395 S.W.3d 653 (Tenn. 2013) (standards for appellate review of summary judgment)
Kinsler v. Berkline, LLC, 320 S.W.3d 796 (Tenn. 2010) (summary judgment principles)
In re Estate of Tanner, 295 S.W.3d 610 (Tenn. 2009) (statutory construction principles)
Houghton v. Aramark Educ. Res., Inc., 90 S.W.3d 676 (Tenn. 2002) (legislative intent and plain-meaning rules)
Abels ex rel. Hunt v. Genie Indus., Inc., 202 S.W.3d 99 (Tenn. 2006) (enforce the written language of statutes)
Bryant v. HCA Health Servs. of N. Tenn., Inc., 15 S.W.3d 804 (Tenn. 2000) (definition of statutory ambiguity)
Limbaugh v. Coffee Med. Ctr., 59 S.W.3d 73 (Tenn. 2001) (expression of one thing implies exclusion of others maxim)
City of Athens Bd. of Educ. v. McMinn Cty., 467 S.W.3d 458 (Tenn. Ct. App. 2014) (county apportionment of school funds and scope of §49-3-315)
Beacon4, LLC v. I & L Invs., LLC, 514 S.W.3d 153 (Tenn. Ct. App. 2016) (weight to be given Attorney General opinions as persuasive authority)
State v. Black, 897 S.W.2d 680 (Tenn. 1995) (deference to Attorney General opinions as persuasive guidance)
Tenn. Elec. Power Co. v. City of Chattanooga, 114 S.W.2d 441 (Tenn. 1937) (avoid interpretations rendering sections repugnant)