Volunteer Princess Cruises, LLC v. Tennessee State Board of Equalization
M2016-00364-COA-R12-CV
| Tenn. Ct. App. | Oct 31, 2016Background
- Volunteer Princess Cruises, LLC ("Volunteer") operated the passenger vessel Volunteer Princess on the Tennessee River and was subject to OSAP (Comptroller) assessments for personal property taxes for 2008, 2010, and 2011.
- Volunteer did not file a 2008 reporting schedule; OSAP issued a back assessment for 2008 on August 29, 2011 (≈ $626,276). Volunteer did not timely appeal that back assessment within 60 days.
- OSAP issued regular assessments for 2010 ($741,000) and 2011 ($706,000). Volunteer filed initial exceptions to those assessments and attended no informal hearings, then did not file further exceptions after OSAP sent letters upholding the assessments in September of each year.
- The ALJ dismissed Volunteer’s challenges to the 2008 back assessment and the 2010/2011 assessments on procedural grounds; the Assessment Appeals Commission affirmed and Volunteer sought review in the Court of Appeals.
- The Court of Appeals found the record lacked sufficient findings on whether Volunteer actually received constitutionally adequate notice of OSAP’s exception-review determinations for 2010 and 2011, but upheld the 2008 back assessment as timely and supported by the record.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Comptroller actually provided notice of its exception-review determinations for 2010 and 2011 under Tenn. Code Ann. § 67-5-1327(c) | Volunteer: did not receive (or cannot recall receiving) the Comptroller’s September letters/orders and thus was denied due process and the opportunity to file further exceptions | Comptroller/ALJ: statutory requirement was satisfied by issuing the notices; Volunteer is deemed to have waived objections by not filing further exceptions | Court: vacated dismissal as to 2010/2011 and remanded for factfinding on whether Volunteer received constitutionally adequate notice (credibility determination to ALJ/Board) |
| Whether application of Tenn. Code Ann. § 67-5-1327(c) to bar Volunteer’s further exceptions (or its constitutionality) violates due process | Volunteer: applying the statute without requiring proof of actual notice violates due process; alternatively the statute is unconstitutional as applied | Comptroller: statute’s notice-and-waiver scheme controls and Volunteer waived rights by not filing timely further exceptions | Court: avoided declaring statute unconstitutional; construed statute to require the Board to determine whether constitutionally adequate notice was received (remand) |
| Whether the 2008 back assessment was untimely or arbitrary/capricious (statute of limitations and reliance on OSAP statements) | Volunteer: assessment was outside the statute of limitations and Volunteer reasonably relied on OSAP assurances not to assess 2008 | Comptroller/ALJ: Volunteer failed to file required 2008 reporting schedule, so the longer 3-year initiation window applied; documentary fax evidence and procedures show timely notice; credibility findings reject reliance defense | Court: affirmed dismissal of Volunteer’s challenge to the 2008 back assessment — assessment was timely under § 67-1-1005 and ALJ’s decision was supported by material evidence |
Key Cases Cited
- Freeman Indus., LLC v. Eastman Chem. Co., 172 S.W.3d 512 (Tenn. 2005) (statutory construction should avoid constitutional conflict when a reasonable construction exists)
- Davis-Kidd Booksellers, Inc. v. McWherter, 866 S.W.2d 520 (Tenn. 1993) (same principle of avoiding constitutional conflict in statutory construction)
- Wayne Cnty. v. Tenn. Solid Waste Disposal Control Bd., 756 S.W.2d 274 (Tenn. Ct. App. 1988) (explains deferential review and agency expertise; courts should not substitute their judgment for agency fact-weighting)
- City of Memphis v. Civil Serv. Comm’n, 239 S.W.3d 202 (Tenn. Ct. App. 2007) (substantial and material evidence standard applies to agency factual findings)
- Macon v. Shelby Cnty. Gov’t Civil Serv. Merit Bd., 309 S.W.3d 504 (Tenn. Ct. App. 2009) (definition and application of substantial and material evidence standard)