State of Tennessee Ex Rel. Claiborne County v. Delinquent Taxpayer, Albertano Alvarez

07/22/2019
IN THE COURT OF APPEALS OF TENNESSEE
AT KNOXVILLE
May 22, 2019 Session
STATE OF TENNESSEE EX REL. CLAIBORNE COUNTY v.
DELINQUENT TAXPAYER ALBERTANO ALVAREZ, ET AL.
Appeal from the Chancery Court for Claiborne County
No. DT-6018666 Elizabeth C. Asbury, Chancellor
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No. E2018-01710-COA-R3-CV
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This appeal arises from the redemption of a parcel of real property purchased at a
delinquent taxpayer sale. The appellants were lienholders on a parcel of real property
sold to a third party purchaser at a delinquent tax sale. Within days after the tax sale, the
lienholders filed a petition for redemption of the property. In response, the purchaser
filed a motion to protest the validity of the lien or, alternatively, a claim to recover the
expenses that had been incurred to preserve the value of the property by clearing debris
and personalty from the property. The lienholders then filed a cross-claim alleging
conversion and trespass to chattels. After the purchaser withdrew his objection to the
validity of the lien, a bench trial was conducted, and the trial court granted the
lienholders’ petition for redemption upon the following conditions relevant to this appeal:
that they reimburse the purchaser in the amounts of $8,579.60 for expenses incurred in
cleaning up the property and an additional $600.00 for the storage of personalty. The
lienholders’ conversion and trespass to chattels claims were subsequently dismissed.
Having determined that the expenses were incurred to prevent permissive waste on the
property—and concluding that such expenses are recoverable despite having been
incurred prior to the entry of the order confirming the sale—we affirm the judgment of
the trial court.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed
and Remanded
ARNOLD B. GOLDIN, J., delivered the opinion of the court, in which. D. MICHAEL
SWINEY, C.J., and JOHN W. MCCLARTY, J., joined.
Lewis S. Howard, Jr. and Erin J. Wallen, Knoxville, Tennessee, for the appellants, E. G.
Meek, Sr., and Shirley T. Meek.
David H. Stanifer, Tazewell, Tennessee, for the appellees, Shane Evans, and Nathan Earl
Gilliam.
OPINION
BACKGROUND AND PROCEDURAL HISTORY
This cause of action originated in the Claiborne County Chancery Court (the “trial
court”) as an action for delinquent property taxes filed by the State of Tennessee ex rel.
Claiborne County, Tennessee. E.G. Meek and Shirley Meek (together, “Appellants”) are
the beneficiaries of a deed of trust dated August 20, 2011 by Alberto Alvarez, pursuant to
which a parcel of real property located at 2248 Old Highway 63, Speedwell, Tennessee
(the “Property”) was pledged to secure an indebtedness owed by Mr. Alvarez to
Appellants. On April 1, 2017, Nathan Gilliam purchased the Property at a delinquent tax
sale for the benefit of his friend, Shane Evans (together, “Appellees”). On April 11,
2017, Mr. Meek, as the lienholder under the deed of trust, filed a motion to redeem the
Property pursuant to Tennessee Code Annotated section 67-5-2701. On April 26, 2017,
twenty-five days after Mr. Gilliam purchased the Property at the tax sale, the trial court
entered the order confirming the sale. Mr. Gilliam filed a motion to protest the
redemption on May 9, 2017, asserting that Appellants did not have a proper lien on the
Property. Alternatively, Mr. Gilliam filed a verified motion for lawful charges, seeking
$8,579.60 in expenses he and Mr. Evans incurred in cleaning up the Property and for
storage of chattels. Appellants filed a cross-claim against Appellees on June 22, 2017,
asserting conversion and trespass to chattels claims with respect to a number of items,
including, but not limited to, tools and a steel shed (the “Personalty”). Appellees filed an
answer to the cross-claim on July 14, 2017, denying the claims.
The trial court conducted a bench trial on the competing claims and, on July 28,
2017, entered an order finding that Appellants’ authority to redeem the Property was
conditioned upon—as is relevant to the appeal before us—two factors: (1) reimbursement
for the clean-up expenses incurred by Appellees in the amount of $8,579.60 and (2)
reimbursement of a storage fee to Mr. Gilliam in the amount of $600.00. Appellants
appealed the trial court’s judgment, and, on July 24, 2018, this Court dismissed the
appeal for lack of subject matter jurisdiction, having determined that the trial court had
“made no express findings regarding [Appellants’] claims of conversion and trespass to
chattels.” State ex rel. Claiborne Cty. v. Alvarez, No. E2017-01683-COA-R3-CV, 2018
WL 3546783, at *4 (Tenn. Ct. App. July 24, 2018). On August 22, 2018, the trial court
entered a second order, reiterating the holdings set forth in the original order, but also
dismissing Appellants’ conversion and trespass to chattel claims and providing that
Appellants would be permitted to obtain from Appellees the property that was being held
in storage upon payment of the requisite sums. Appellants timely filed their second
notice of appeal on September 20, 2018.
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ISSUES PRESENTED
Appellants raise two issues for review, which we restate as follows:
1. Whether the trial court erred in finding that Appellees are entitled to
reimbursement for the expenses and storage fees incurred by them in
connection with the Property.
2. Whether the trial court erred in dismissing Appellants’ conversion and
trespass to chattels claims.
STANDARD OF REVIEW
In non-jury cases, appellate courts review the trial court’s factual findings de novo
upon the record, accompanied by a presumption of the correctness of the findings, unless
the preponderance of the evidence is otherwise. See Tenn. R. App. P. 13(d); Armbrister
v. Armbrister, 414 S.W.3d 685, 692 (Tenn. 2013). We review the trial court’s resolution
of questions of law de novo with no presumption of correctness. See Armbrister, 414
S.W.3d at 692.
DISCUSSION
A. Appellees’ Expenses
The record on appeal reflects that, on April 1, 2017, Mr. Gilliam purchased the
Property at a delinquent tax sale and that, on April 26, 2017, the trial court entered the
order confirming the sale. During the twenty-five intervening days, Appellees incurred
the expenses in dispute. Appellants argue on appeal that the trial court erred in finding
that Appellees were entitled to reimbursement for such expenses because they were
incurred prior to the trial court’s entry of the order confirming the sale and, thus, prior to
the passage of legal title to Mr. Gilliam.1
1
Appellants also argued in their reply brief and at oral argument that there is no proof in the
record on appeal to support the trial court’s order that Appellees are entitled to reimbursement for their
expenses in the amount of $8,579.60. Appellants, however, failed to raise this argument in their original
appellate brief. See In re Kentavious M., No. W2010-00483-COA-R3-PT, 2010 WL 5140598, at *7
(Tenn. Ct. App. Dec. 14, 2010) (citing Tenn. R. App. P. 27(a)(7)) (“Generally, this Court will not
consider an argument raised for the first time at oral arguments.”); see also Owens v. Owens, 241 S.W.3d
478, 499 (Tenn. Ct. App. 2007) (citing Tenn. R. App. P. 27(c)) (“A reply brief is a response to the
arguments of the appellee. It is not a vehicle for raising new issues.”). Therefore, we conclude
Appellants’ argument regarding the lack of proof is waived. Regardless, the record does contain a
verified Redemption Protest Waiver—attached to which are receipts—in which Appellees averred under
oath that a total of $8,579.60 was incurred in order to preserve the value of the Property.
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Tennessee Code Annotated section 67-5-2701(a) provides the following procedure
regarding the statutory right of redemption for owners of property sold to recover
delinquent taxes:
Upon entry of an order confirming a sale of a parcel, a right to redeem shall
vest in all interested persons. The right to redeem shall be exercised within
the time period established by this subsection (a) beginning on the date of
the entry of the order confirming sale, but in no event shall the right to
redeem be exercised more than one (1) year from that date.
Tenn. Code Ann. § 67-5-2701(a)(1). Moreover, it is well-settled that, in addition to any
applicable statutory requirements, a tax-sale purchaser has a common-law obligation to
refrain from committing permissive waste during the one-year redemption period. State
v. Delinquent Taxpayers, No. M2004-00951-COA-R3-CV, 2006 WL 3147060, at *7
(Tenn. Ct. App. Nov. 2, 2006). Therefore, it follows—and the statute provides—that, if
the property is redeemed before the expiration of the one-year redemption period, the
purchaser may recover from the redeeming party the “[r]easonable cost paid by the
purchaser to avoid permissive waste of the parcel[.]” Tenn. Code Ann. § 67-5-
2701(e)(3). The statute, however, does not address the explicit issue before this Court:
namely, whether the tax-sale purchaser may recover such expenses incurred prior to the
entry of the order confirming the sale and, thus, prior to the start of the one-year
redemption period. While the statute is silent on this matter, we are guided by cases that
indirectly address the issue.
In State v. Delinquent Taxpayers, the appellee purchased a home at a delinquent
tax sale on June 19, 2002, but the trial court did not enter the order confirming the sale
until August 9, 2002. State v. Delinquent Taxpayers, 2006 WL 3147060, at *2. In the
intervening days, the appellee made several repairs and improvements to the home and,
after receiving the notice of redemption, sought reimbursement from the redeemer for the
expenses she incurred repairing and improving the property. Id. On appeal, we
concluded that “[w]hether particular work is compensable under Tenn. Code Ann. § 67-
5-2704(a)[2] depends on the condition and use of the property at the time of the tax sale.”
Id. at *9 (emphasis added). Additionally, we concluded that the appellee “may recover
all or part of her expenditures” if she proved that such expenditures were compensable
under Tennessee Code Annotated section 67-5-2704(a). Id. Accordingly, our ruling
2
Tennessee Code Annotated section 67-5-2704(a) was repealed and reenacted in 2014 by Pubic
Chapter 883, which took effect July 1, 2014. Prior to its repeal, Tennessee Code Annotated section 67-5-
2704(a) required the party redeeming the property to pay the tax-sale purchaser any moneys “expended to
preserve the value of the property.” As reenacted—and in its current form—Tennessee Code Annotated
section 67-5-2701 now requires the redeemer to pay, inter alia, the “[r]easonable cost paid by the
purchaser to avoid permissive waste of the parcel.” Tenn. Code Ann. § 67-5-2701(e)(3). See also Tenn.
Op. Att’y Gen., No. 15-40, 2015 WL 1953700, at *1 (Tenn. A.G. Apr. 23, 2015).
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necessarily implies that expenses incurred prior to the entry of the order confirming the
sale are recoverable, so long as they are proven pursuant to the statute.
We reached a similar conclusion in Rutherford County v. Delinquent Taxpayers of
Rutherford County, where a tax-sale purchaser sought reimbursement for funds expended
to prevent permissive waste on the subject property. Rutherford Cty. v. Delinquent
Taxpayers of Rutherford Cty., No. M2016-01254-COA-R3-CV, 2017 WL 5495401, at *1
(Tenn. Ct. App. Nov. 15, 2017). There, the appellant purchased a parcel of vacant
property on June 20, 2013, but the trial court did not enter the order confirming the sale
until July 17, 2013. Id. The trial court ultimately denied the appellant reimbursement on
the basis that he had not obtained a writ of possession before incurring the expenses. Id.
at *4. On appeal, however, we concluded that the appellant was not required to obtain a
writ of possession before entering the property because the property was vacant.3 Id. at
*5. After concluding that the trial court erred in denying the appellant reimbursement,
we additionally concluded that the condition and use of the property at the time of the tax
sale determines whether expenses are compensable under Tennessee Code Annotated
section 67-5-2704(a). See id. at *7 (citing State v. Delinquent Taxpayers, 2006 WL
3147060, at *9). Specifically, we noted the following:
[The appellant’s] testimony indicates that the Property was dilapidated and
uninhabitable when he purchased it at the tax sale. [The appellant’s] duty
to refrain from committing permissive waste obligated him to make the
Property “wind tight and air tight” and to stabilize the house in order to
prevent additional deterioration.
Id. at *8 (emphasis added). Because determining whether the expenses incurred to
preserve the value of and to avoid permissive waste on the property are recoverable
depends on the condition and use of the property at the time of the tax sale, we conclude
that a tax-sale purchaser’s duty to prevent permissive waste attaches at the time of the tax
sale; consequently, a tax-sale purchaser’s statutory right to recover from the redeeming
party the “[r]easonable cost paid by the purchaser to avoid permissive waste of the
parcel” relates back to the time of the tax sale, as well.4
3
We concluded that Tennessee Code Annotated section 67-5-2503
obligates a tax sale purchaser to obtain a writ of possession before entering the
property when the taxpayer continues to occupy the property. This interpretation is
consistent with the function of a writ of possession: to prevent violence and breaches of
the peace caused when a person uses self-help to gain possession of property occupied by
another.
Id. at *6 (emphasis added).
4
This approach is more equitable and practicable compared to that argued by Appellants—that a
tax-sale purchaser can recover the expenses incurred to avoid permissive waste so long as those expenses
were incurred subsequent to the entry of the order confirming the tax sale. Appellants’ position, however,
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Here, the record reflects that, prior to Mr. Gilliam’s purchase of the Property on
April 1, 2017, it had already been abandoned by the delinquent taxpayer. Appellees
testified that, upon visiting the Property, they were concerned about its condition, noting
the debris scattered across the Property. Additionally, Franklin Russell, a downstream
neighbor, testified that he had contacted the Environmental Protection Agency and the
Claiborne County Sheriff’s Department “regarding dead animals in the creek and live
animals caged or chained and was concerned about a health hazard.” As this Court has
noted, permissive waste “results from the failure of the possessor of property to exercise
the reasonable care to preserve and protect the future estate or interest of another.” Id. at
*4 (citing State v. Delinquent Taxpayers, 2006 WL 3147060, at *7). The presence of
debris scattered across the Property, dead animals in the creek, and living animals
chained and caged up on the Property constitutes permissive waste. Accordingly,
Appellees’ duty to refrain from committing permissive waste obligated them to take
reasonable action in order to prevent additional deterioration to the abandoned and vacant
Property. Therefore, we conclude that the trial court did not err in finding that Appellees
are entitled to reimbursement for the expenses incurred in satisfying that duty.
Appellants also argue that the trial court erred in finding that Appellees were
entitled to reimbursement for their expenses because Appellees incurred such expenses of
their own volition rather than as a result of an official order or other authorization.
Tennessee Code Annotated section 67-5-2701(e)(4) provides that a tax-sale purchaser
may recover from the redeemer the “[r]easonable expenses paid by the purchaser as a
result of a judicial or administrative order or other official notice requiring the purchaser
to immediately bring the property into compliance with applicable building code or
zoning regulations[.]” Tenn. Code Ann. § 67-5-2701(e)(4). Tennessee Code Annotated
section 67-5-2701(e)(4), however, is just one of six possible expenses a tax-sale
purchaser may recover from a redeemer. See Tenn. Code Ann. § 67-5-2701(e)(1)-(6).
Accordingly, our conclusion that Appellees are entitled to reimbursement for the
“[r]easonable cost paid by the purchaser to avoid permissive waste of the parcel[,]” Tenn.
Code Ann. § 67-5-2701(e)(3), pretermits this issue.
B. Conversion and Trespass to Chattels Claims
Appellants also argue that the trial court erred in finding that they were not entitled
to damages, including punitive damages, associated with the removal of the Personalty
from the Property by Appellees. We disagree. The Statement of the Evidence provides
that, at trial, Appellees
neglects the possibility—and what appears to be the reality—that a lag time exists between the tax sale
and the entry of the order confirming the sale. Indeed, in State v. Delinquent Taxpayers and Rutherford
County v. Delinquent Taxpayers of Rutherford County, fifty-two and twenty-eight days, respectively,
passed between the tax sale and the entry of the orders confirming the sales. Appellant’s position is
incongruous with a tax-sale purchaser’s duty to prevent permissive waste and that purchaser’s right to be
reimbursed for satisfying that duty.
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testified upon contacting the Sheriff’s Department they began to clean up
the subject property as to the debris[,] and what was considered to be of no
value was taken to the Claiborne County Landfill and what personal
property was considered to be of any value was put in storage by Mr.
Evans.
As discussed in the previous section, a tax-sale purchaser’s duty to prevent permissive
waste attaches at the time of the tax sale. By removing the debris from the Property,
Appellees acted pursuant to their duty to prevent permissive waste. Similarly, with
regard to the Personalty, Appellees held items with any value in safekeeping while they
improved the condition of the Property.5 With respect to the circumstances before us,
this Court is of the opinion that conversion and trespass to chattels claims cannot be
maintained against a tax-sale purchaser who is doing no more than acting in accordance
with his or her common law duties. Moreover, in dismissing Appellants’ conversion and
trespass to chattels claims against Appellees, the trial court ordered that Appellants “shall
be permitted to obtain from [Appellees] the property that is being held in storage[.]”
Accordingly, we conclude that the trial court did not err in dismissing Appellants’
conversion and trespass to chattels claims.
CONCLUSION
For the foregoing reasons, the judgment of the trial court is affirmed.
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ARNOLD B. GOLDIN, JUDGE
5
Our review of the record on appeal does not indicate that Appellants offered any proof at trial
that either identified or reflected the value of the disposed chattels. As a result, we conclude that this
issue is waived.
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