Teresa McEwen v. Dept. of Safety

IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
Assigned on Briefs August 11, 2003
TERESA McEWEN v. TENNESSEE DEPARTMENT OF SAFETY
Appeal from the Chancery Court for Davidson County
No. 01-1165-I Irvin H. Kilcrease, Jr., Chancellor
No. M2002-02884-COA-R3-CV - Filed March 22, 2005
This appeal involves the forfeiture of personal property seized incident to a criminal investigation
into the illegal sale of controlled substances. The owner of the property filed a claim for its recovery
with the Tennessee Department of Safety. The Appeals Division of the Department of Safety,
overruling an administrative law judge’s initial order, ordered the forfeiture of all the seized property
except a pickup truck. Thereafter, the owner filed a petition in the Chancery Court for Davidson
County seeking judicial review of the Appeals Division’s forfeiture order. The trial court affirmed
the forfeiture order, and the owner of the property appealed. Although we disagree with the trial
court’s reasoning,1 we likewise affirm the forfeiture order.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed
WILLIAM C. KOCH , JR ., J., delivered the opinion of the court, in which WILLIAM B. CAIN and
PATRICIA J. COTTRELL, JJ., joined.
Charles R. Ray and Jeffery S. Frensley, Nashville, Tennessee, for the appellant, Teresa McEwen.
Paul G. Summers, Attorney General and Reporter, and Michael A. Meyer, Assistant Attorney
General, for the appellee, Tennessee Department of Safety.
OPINION
I.
Between October 3 and December 4, 1997, a confidential informant working with the
Metropolitan Nashville Police Department purchased controlled substances from Teresa McEwen
and William Robert Allen on eight separate occasions. The informant wore a recording device
during these transactions and recorded telephone calls involving other illegal drug transactions
1
The Court of Appeals may affirm a judgment on different grounds than those relied on by the trial court when
the trial court reached the correct result. Continental Cas. Co. v. Smith, 720 S.W .2d 48, 50 (Tenn. 1986); Arnold v. City
of Chattanooga, 19 S.W .3d 779, 789 (Tenn. Ct. App. 1999); Allen v. National Bank of Newport, 839 S.W .2d 763, 765
(Tenn. Ct. App. 1992); Clark v. Metropolitan Gov’t, 827 S.W .2d 312, 317 (Tenn. Ct. App. 1991).
between Ms. McEwen and Mr. Allen and other customers. The informant also personally observed
drug transactions between Ms. McEwen and Mr. Allen and other customers. At one point, Ms.
McEwen bragged to the informant that she and Mr. Allen could obtain and sell as many illegal drugs
as the informant desired.
On December 5, 1997, Officer Greg Jones arrested Ms. McEwen two blocks from her home.
Officer Jones discovered $455 in cash and Schedule IV controlled substances in her purse. The
authorities then arrested Mr. Allen at the residence he shared with Ms. McEwen. When Mr. Allen
was arrested, he possessed $1,505 in cash and a quantity of marijuana. The authorities searched the
residence pursuant to a search warrant and seized marijuana, Diazepam and Clonazepam, various
items of drug paraphernalia, two firearms, $1,960 in currency, many pieces of gold and silver
jewelry, audio and video equipment, a coin collection, other items of personal property, and financial
records belonging to Ms. McEwen and Mr. Allen. They also searched Mr. Allen’s garage adjacent
to the residence and seized eight vehicles, two race cars, two trailers, a go-cart, various automobile
parts, and automotive tools and equipment.
When Ms. McEwen was arrested, she was working for Keepsake, Inc. and was earning
approximately $3,800 per year. She also earned $35 per week helping Shelley Phillips clean her
house.2 Ms. McEwen was also receiving food stamps and was on TennCare. Mr. Allen apparently
earned some money repairing motor vehicles, drag racing, moving houses, and other odd jobs. The
amount of his income was unclear because he had not filed an income tax return for twenty years.
Despite their meager incomes, their household records indicated that they had spent approximately
$64,000 from January through June 1997, over and above their expenditures for food, fuel and other
vehicle expenses, clothing, healthcare expenses, and other similar expenses.
On January 2, 1998, Ms. McEwen filed a petition with the Tennessee Department of Safety
seeking to recover all of the property seized on December 5, 1997. An administrative law judge
conducted hearings on September 7 and November 19, 1999, and on April 20, 2000 filed an initial
order directing the forfeiture of $1,960 in currency and a .22 caliber pistol and ordering the return
of the remainder of the property. On May 5, 2000, the State appealed the initial order to the Appeals
Division of the Department of Safety.3 On February 13, 2001, the Appeals Division issued an order
reversing the administrative law judge and directing the forfeiture of all of the seized property except
for a 1989 Chevrolet pickup truck that Ms. Phillips had given Ms. McEwen.
2
Ms. McEwen apparently worked for M s. Phillips off and on for nine years. According to Ms. Phillips, she paid
Ms. McEwen $500 per month for two of those years, but Ms. Phillips, who was “really bad on dates,” could not
remember when those years were. Ms. Phillips testified that she loaned Ms. McEwen money to purchase clothes for Ms.
McEwen’s children. She also stated that she gave valuable gifts to Ms. McEwen, including $3,000 to replace the roof
on her house and a pickup truck to replace her old automobile.
3
Agencies may designate others to review initial orders. Tenn. Code Ann. § 4-5-315(a)(2)(C) (Supp. 2004).
The Commissioner of Safety has designated the Appeals Division as the entity responsible for reviewing initial orders
entered in forfeiture cases. Tenn. Comp. R. & Regs. 1340-2-2-.21(1) (2001).
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On April 12, 2001, Ms. McEwen filed a petition in the Chancery Court for Davidson County
seeking judicial review of the Appeals Division’s February 13, 2001 order. On April 26, 2002, the
trial court filed an agreed order directing the Commissioner to order the Metropolitan Police
Department to return all of the seized property except for (1) $1,960 in currency, (2) certain items
of gold and silver jewelry,4 (3) the .22 caliber pistol, (4) a 1994 Chevrolet pickup truck, and (5) a
Yamaha scooter.5 Thereafter, on October 23, 2002, the trial court entered an order upholding the
forfeiture of all of the items of personal property that had not already been returned to Ms. McEwen.
Ms. McEwen has appealed.
II.
THE STANDARD OF REVIEW FOR FORFEITURE PROCEEDINGS
We turn our attention first to the proper standard of review for this case. Ms. McEwen
asserts that judicial review of final agency decisions in forfeiture cases like this one should be
governed by Tenn. Code Ann. § 27-8-101 (2000), the standard of review associated with petitions
for common-law writs of certiorari. The trial court, however, assessed the sufficiency of the State’s
evidence using the “substantial and material evidence” standard in Tenn. Code Ann. § 4-5-322(h)(5)
(Supp. 2004). Both Ms. McEwen and the trial court have chosen the wrong standard of review.
Prior to 1994, the courts reviewed administrative forfeiture decisions using the Uniform
Administrative Procedures Act’s now familiar standard of review found in Tenn. Code Ann. § 4-5-
322(h) (Supp. 2004). This standard required reviewing courts to ascertain whether an agency’s
decision is supported by substantial and material evidence. Tenn. Code Ann. § 4-5-322(h)(5). When
the Tennessee General Assembly rewrote the procedures governing the forfeiture of personal
property in 1994,6 it replaced the “substantial and material evidence” standard with the
“preponderance of the evidence” standard. Tenn. Code Ann. § 40-33-213(a) (2003). Except for this
change, the remaining provisions of Tenn. Code Ann. § 4-5-322(h) continue to govern the judicial
review of forfeiture proceedings. Tenn. Code Ann. § 40-33-213(b).
One of the chief purposes of the Uniform Administrative Procedures Act was to provide a
single method for obtaining judicial review of the decisions of state agencies. Accordingly, with
several exceptions not applicable here, petitions for review have, for over thirty years now, replaced
petitions for a common-law writ of certiorari as the procedural device for obtaining judicial review.
Thus, in forfeiture proceedings, the standard of review in Tenn. Code Ann. § 4-5-322(h), as modified
4
The items of gold and silver jewelry included sixteen gold and silver necklaces, two gold bracelets, twenty-
seven pairs of gold and silver earrings, and seven gold pendants.
5
On July 5, 2002, Ms. M cEwen filed a contempt petition against the Department and the Metropolitan Police
Department because the Metropolitan Police Department had not returned the property covered by the April 26, 2002
order. Five days later, the Commissioner directed the M etropolitan Police Department to return the property. On August
8, 2002, the trial court entered an order directing the Metropolitan Police Department to return the property in five
business days.
6
Act of April 20, 1994, 1994 Tenn. Pub. Acts 848.
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by Tenn. Code Ann. § 40-33-213(a), has supplanted the standard of review in Tenn. Code Ann. §
27-8-101. Ms. McEwen cites no authority, and we can find none, for her assertion that Tenn. Code
Ann. § 27-8-101 still governs judicial review of an agency’s forfeiture decisions. Accordingly, we
find that her reliance on Tenn. Code Ann. § 27-8-101 is misplaced.
By the same token, the trial court apparently overlooked the change in the standard of review
wrought by Tenn. Code Ann. § 40-33-213(a). The “preponderance of evidence” standard now
applies to all seizures occurring after the effective date of the amendment.7 Because the seizure at
issue in this case occurred on December 5, 1997 – well after the effective date of Tenn. Code Ann.
§ 40-33-213(a) – the trial court erred by employing the “substantial and material evidence” standard
in Tenn. Code Ann. § 4-5-322(h)(5).
Tenn. Code Ann. § 4-5-322 requires courts to engage in a three-step analysis when they
review a final administrative order. The court must first determine whether the agency has identified
the appropriate legal principles applicable to the case. Then, the court must examine the agency’s
factual findings to determine whether they are supported by substantial and material evidence.8
Finally, the reviewing court must examine how the agency applied the law to the facts. This step is,
of course, a highly judgmental process involving mixed questions of law and fact, and great
deference must be accorded to the agency.9 At this stage, the court must determine whether a
reasoning mind could reasonably have reached the conclusion reached by the agency, consistent with
a proper application of the controlling legal principles. State Comm’n on Human Relations v.
Kaydon Ring & Seal, Inc., 818 A.2d 259, 275 (Md. Ct. Spec. App. 2003).
Courts reviewing administrative forfeiture orders use essentially the same three-step analysis.
However, instead of reviewing the agency’s findings of fact using the substantial and material
evidence standard in Tenn. Code Ann. § 4-5-322(h)(5), the courts must review the sufficiency of the
State’s evidence using the preponderance of the evidence standard required by 40-33-213(a). The
trial court used the wrong standard to review the Appeals Division’s final order. We will not
7
The courts continued to use the standard of review in Tenn. Code Ann. § 4-5-322(h)(5) for forfeitures
occurring before October 1, 1994. See, e.g., Ware v. Greene, 984 S.W .2d 610 (Tenn. Ct. App. 1998); Cunningham v.
Dep’t of Safety, No. 01A01-9509-CH-00411, 1997 W L 266851, at *1 (Tenn. Ct. App. May 21, 1997) (No Tenn. R. App.
P. 11 application filed); Gordon v. Greene, No. 01A01-9511-CH-00522, 1996 W L 346674 (Tenn. Ct. App. June 26,
1996) (No Tenn. R. App. P. 11 application filed); Murphy v. State Dep’t of Safety, No. 01A01-9507-CH-00322, 1996
W L 71916 (Tenn. Ct. App. Feb. 21, 1996) (No Tenn. R. App. P. 11 application filed); Young v. State Dep’t of Safety,
911 S.W .2d 729 (Tenn. Ct. App. 1995); Kyte v. Tennessee Dep’t of Safety, No. 01A01-9504-CH-00150, 1995 W L
581069 (Tenn. Ct. App. Oct. 4, 1995) (No Tenn. R. App. P. 11 application filed).
8
“Substantial and material evidence” consists of such relevant evidence as a reasonable mind might accept as
adequate to support a rational conclusion. Substantial and material evidence furnishes a reasonably sound basis for the
agency’s decision. Freedom Broadcasting of Tenn., Inc. v. Tenn. Dep’t of Revenue, 83 S.W .3d 776, 781 (Tenn. Ct. App.
2002); Martin v. Sizemore, 78 S.W.3d 249, 276 (Tenn. Ct. App. 2001).
9
See Bobbitt v. Shell, 115 S.W .3d 506, 512 (Tenn. Ct. App. 2003) (courts must defer to an agency’s decision
when there is a sound basis for it); Martin v. Sizemore, 78 S.W .3d at 268 (courts customarily defer to adjudicatory
determinations made by agencies acting within their area of specialized knowledge, experience, and expertise).
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compound the error on appeal, and accordingly, we will employ the “preponderance of evidence”
standard as required by Tenn. Code Ann. § 40-33-213(a).10
III.
JUDICIAL REVIEW OF AN AGENCY ORDER THAT DIFFERS FROM AN INITIAL ORDER
Ms. McEwen takes issue with the Appeals Division’s refusal to defer to the administrative
judge’s factual findings. She points out that it was the administrative judge, not the Appeals
Division, who observed the demeanor of the witnesses at the hearing, and she asserts that the
Appeals Division’s refusal to accept the administrative law judge’s findings and conclusions was
“not only clearly self-serving but likewise arbitrary, capricious and thus illegal.” Ms. McEwen’s
argument overlooks the fact that Tennessee’s Uniform Administrative Procedures Act does not
require an agency to defer to the fact-finding or legal conclusions in an administrative law judge’s
initial order.
Tennessee’s version of the Uniform Administrative Procedures Act allocates the bulk of the
decision-making authority to the agencies themselves. Even though the original 1974 version of the
Act11 authorized the use of “hearing examiners” and “administrative judges,” their primary
responsibility was to assist the agency in conducting contested case hearings in which the agency
members themselves also participated. Tenn. Code Ann. § 4-5-120(b)(1) (repealed 1982). These
hearing examiners and administrative judges lacked independent decision-making authority. While
they could prepare “proposed decisions” for an agency’s consideration, Tenn. Code Ann. § 4-5-
120(a), (b)(2), the agencies themselves retained the sole authority to render final orders. The 1974
Act contained no provision permitting a proposed decision to become a final decision without first
being reviewed and adopted by an agency.
The 1982 revisions to the Uniform Administrative Procedures Act12 modestly expanded the
decision-making authority of the hearing officers and administrative judges. These revisions
authorized the hearing officers and administrative judges to issue “initial orders,” Tenn. Code Ann.
§ 4-5-314(b) (1998), and these initial orders could become final orders by operation of law without
being reviewed and approved by the agency. Tenn. Code Ann. § 4-5-315(a). However, if the agency
reviewed an initial order, either at the request of a party or on its own motion, the agency itself was
required to prepare and file its own final order. Tenn. Code Ann. §§ 4-5-314(a), -315(g).
10
The “preponderance of evidence” standard mandated by Tenn. Code Ann. § 40-33-213(a) actually places a
heavier burden on the State than does the “substantial and material evidence” standard in Tenn. Code Ann. § 4-5-322.
See Ware v. Greene, 984 S.W .2d at 614 (substantial and material evidence is something less than a preponderance of
the evidence but greater than a scintilla or glimmer).
11
Act of Mar. 29, 1974, ch. 725, 1974 Tenn. Pub. Acts 945.
12
Act of Apr. 8, 1982, ch. 874, 1982 Tenn. Pub. Acts 606.
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In Tennessee’s administrative decision-making hierarchy, like the hierarchy in most states,
the agencies remain superior to the hearing officers and administrative judges. See In re Denial of
Eller Media Co.’s Applications for Outdoor Advertising Device Permits in City of Mounds View, 664
N.W.2d 1, 6-7 (Minn. 2003). An agency’s decision-making authority is not circumscribed in any
way by an initial order. See In re Appeal of Dell, 668 A.2d 1024, 1032 (N.H. 1995).13 Because an
agency possesses its own fact-finding authority, it may make its own factual determinations, Moore
v. Ross, 687 F.2d 604, 608-09 (2d Cir. 1982); Faulkner Radio, Inc. v. Federal Communications
Comm’n, 557 F.2d 866, 870 n.23 (D. C. Cir. 1977); 2 CHARLES H. KOCH , JR., ADMINISTRATIVE LAW
AND PRACTICE § 5.28[1], at 94 (2d ed. 1997) (“ADMIN . LAW & PRAC .”), and it may substitute its
judgment for that of the hearing officer or administrative judge. Valkering, U.S.A., Inc. v. USDA,
48 F.3d 305, 208 (8th Cir. 1993); Mattes v. United States, 721 F.2d 1125, 1129 (7th Cir. 1983);
Dep’t of Health & Mental Hygiene v. Shrieves, 641 A.2d 899, 908 (Md. Ct. Spec. App. 1994). Thus,
when an agency reviews an initial order, it renders its own decision, Jackson Mobilphone Co. v.
Tenn. Pub. Serv. Comm’n, 876 S.W.2d 106, 111 (Tenn. Ct. App. 1993), and it is the agency’s final
order, not the initial order, that is the subject of judicial review. Parker v. Sullivan, 891 F.2d 185,
189 (7th Cir. 1989); State Comm’n on Human Relations v. Kaydon Ring & Seal, Inc., 818 A.2d at
275; 2 ADMIN . LAW & PRAC. § 5.27[7], at 91.
Tennessee’s version of the Uniform Administrative Procedures Act provides only general
guidance regarding the procedure that an agency must follow when reviewing an initial order. While
the agency must give the parties an opportunity to submit briefs, it is not required to permit them to
present oral argument. Tenn. Code Ann. § 4-5-315(e). An agency must base its findings of fact
exclusively on the evidence introduced during the contested case hearing or on matters that have
been officially noticed, Tenn. Code Ann. § 4-5-314(d); however, it is not required to prepare a
transcript of the contested case proceeding before rendering its own final order. Tenn. Code Ann.
§ 4-5-315(f). An agency’s final order must also identify any differences between its findings of fact
and conclusions of law and those in the initial order. Tenn. Code Ann. § 4-5-315(i).14 Finally, an
13
Several other states have amended their administrative procedures acts to broaden the decision-making
authority of administrative law judges and to increase the effect of their decisions on the agencies’ fact-finding. In
M ontana, an agency may not modify or reject an administrative law judge’s findings of fact “unless the agency first
determines from a review of the complete record and states with particularity in the order that the findings of fact were
not based upon competent substantial evidence . . ..” Mont. Code Ann. § 2-4-621(3) (2003). In North Carolina, an
agency must now “adopt each finding of fact contained in the administrative law judge’s decision unless the finding is
clearly contrary to the preponderance of the admissible evidence, giving due regard to the opportunity of the
administrative law judge to evaluate the credibility of witnesses.” N.C. Gen. Stat. § 150B-36(b) (2003); Charles E. Daye,
Powers of Administrative Law Judges, Agencies, and Courts: An Analytical and Empirical Assessment, 79 N.C.L. Rev.
1571, 1581-87 (2001). Finally, the Texas Solid W aste Disposal Act provides that the agency may overturn an
administrative law judge’s findings of fact “only if . . . [it is] not supported by the great weight of the evidence.” Texas
Health & Safety Code Ann. § 361.0832(c) (2001); F. Scott McCown & Monica Leo, When Can an Agency Challenge
the Findings and Conclusions of an Administrative Law Judge?, 50 Baylor L. Rev. 65, 80-84 (1998) (“McCown &
Leo”).
14
This requirement is intended to encourage the agency to consider carefully its reasons for changing the
findings of fact in the initial order. See McCown & Leo, 50 Baylor L. Rev. at 89.
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agency’s final order must include all of the provisions required by Tenn. Code Ann. § 4-5-314(c).15
Tenn. Code Ann. § 4-5-315(i).
A reviewing court’s task becomes somewhat more complicated when an agency disagrees
with the findings of fact in an initial order. See 3 ADMIN . LAW & PRAC. § 11.10[3](b), at 73. In that
context, it is still the agency’s final order, not the initial order, that is reviewed. Parker v. Sullivan,
891 F.2d at 189; Drexel Burnham Lambert, Inc. v. Commodities Futures Trading Comm’n, 850 F.2d
742, 747 (D. C. Cir. 1988). An agency is not bound by the hearing officer’s or administrative
judge’s credibility determinations and, in fact, may make its own independent credibility
determinations without hearing live testimony. Ryan v. Commodities Futures Trading Comm’n, 145
F.3d 910, 918 (7th Cir. 1998); Dep’ t of Health & Human Servs. v. Maxwell, 576 S.E.2d 688, 691
(N.C. Ct. App. 2003); 2 ADMIN . LAW & PRAC. § 5.64[5](d), at 240.
However, an agency should expect closer judicial scrutiny of its findings of fact when the
agency disagrees with a hearing officer’s or administrative judge’s findings of fact. Dantran, Inc.
v. United States Dep’t of Labor, 171 F.3d 58, 73 n.8 (1st Cir. 1999), rev’d on other grounds, 246
F.3d 36 (1st Cir. 2000); 2 Admin. Law & Prac. §§ 5.27[7], at 91, 5.64[5](d), at 241. While the
courts will not abandon the substantial and material evidence standard of review,16 they may view
the evidence supporting the agency’s findings of fact as less substantial than it would otherwise be
had the agency and the hearing officer or administrative judge reached the same conclusion.
Universal Camera Corp. v. NLRB, 340 U.S. 474, 496, 71 S. Ct. 456, 469 (1951); Dep’t of Health
& Mental Hygiene v. Shrieves, 641 A.2d at 906. The courts are particularly inclined to question an
agency’s disagreements with a hearing officer or administrative law judge as to credibility
determinations. 3 ADMIN. LAW & PRAC. § 11.10[3](b), at 741.
An agency should not ignore the findings of fact and credibility determinations contained in
an initial order. See Universal Camera Corp. v. NLRB, 304 U.S. at 496, 71 S. Ct. at 468-69; 2
ADMIN . LAW & PRAC. 5.28[2], at 94-95. It should give appropriate deference to the hearing officer’s
or administrative law judge’s credibility determinations because of their opportunity to observe the
demeanor of the witnesses. Dep’t of Health & Mental Hygiene v. Shrieves, 641 A.2d at 906; 3
ADMIN . LAW & PRAC. § 12,23[4], at 213. While virtually all fact-finding involves an assessment of
credibility in its broadest sense, only demeanor-based credibility determinations are entitled to
special deference. Universal Camera Corp. v. NLRB, 340 U.S. at 496, 71 S. Ct. at 469; Drexel
Burnham Lambert, Inc. v. Commodities Futures Trading Comm’n, 850 F.2d at 747 n.7; Dep’t of
Health & Mental Hygiene v. Shrieves, 641 A.2d at 907; In re Hopkinton Sch. Dist., 862 A.2d 45, 49
(N.H. 2004); Flores v. Employees Retirement Sys. of Texas, 74 S.W.3d 532, 539 (Tex. App. 2002).
15
Compliance with Tenn. Code Ann. § 4-5-314(a) is mandatory. Levy v. State Bd. of Examr’s for Speech
Pathology & Audiology, 553 S.W .2d 909, 911 (Tenn. 1977). The statute requires final orders to include (1) findings
of fact, (2) conclusions of law, (3) policy reasons for the decision, (4) an explanation of the procedures for obtaining
reconsideration or further administrative review, and (5) a description of the procedures for judicial review.
16
W e have already pointed out in Section II that the standard for reviewing the sufficiency of the evidence in
forfeiture cases is the “preponderance of the evidence standard” required by Tenn. Code Ann. § 40-33-213(a) rather than
the customary “substantial and material evidence” standard found in Tenn. Code Ann. § 4-5-322(h)(5).
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The significance of the hearing officer’s or administrative judge’s credibility determinations
depends largely on the importance of credibility in the particular case. Universal Camera Corp. v.
NLRB, 340 U.S. at 496, 71 S.Ct. at 468-69; 2 ADMIN . LAW & PRAC. § 5.64[5](d), at 241-42. If
credibility is not a central ingredient of the agency’s decision, then the hearing officer’s or
administrative judge’s credibility determinations are not very significant. If, however, credibility
plays a pivotal role, then the hearing officer’s or administrative judge’s credibility determinations
are entitled to substantial deference. Dep’t of Health & Mental Hygiene, 641 A.2d at 907.
The initial order is a relevant and important part of the administrative record. In re Appeal
of Dell, 668 A.2d at 1032. While a reviewing court must focus its attention on the agency’s final
order, it may consider the initial order when determining whether the agency’s final order has
sufficient evidentiary support. See 3 ADMIN . LAW & PRAC. § 11.10[3](a), (b), at 73. If the record
contains evidence sufficient to support the conflicting findings of the agency and the hearing officer
or the administrative judge, the agency’s findings must be allowed to stand even though the court
might have reached a different conclusion on its own. Kopack v. NLRB, 668 F.2d 946, 952 (7th Cir.
1982); Dep’t of Health & Mental Hygiene v. Shrieves, 641 A.2d at 908.
IV.
THE EVIDENTIARY SUPPORT FOR THE APPEALS DIVISION ’S ORDER
Ms. McEwen’s principal issue on this appeal is that evidence does not support the Appeals
Division’s conclusion that the items of disputed property were subject to forfeiture and confiscation.
She argues that the reviewing courts, like the administrative judge, should accredit her testimony
regarding how she and Mr. Allen acquired this property. We have determined that the State
presented sufficient direct and circumstantial evidence to prove by a preponderance of the evidence
that the property claimed by Ms. McEwen had been received in an illegal exchange of a controlled
substance or was the proceeds of such an exchange.
A.
The State is seeking to confiscate the personal property claimed by Ms. McEwen pursuant
to Tenn. Code Ann. § 53-11-451(a)(6)(A) (1999). Accordingly, the State must prove by a
preponderance of the evidence17 that each seized item of property was either “furnished, or intended
to be furnished, in exchange for a controlled substance in violation of the Tennessee Drug Control
Act of 1989” or that each item was “proceeds traceable to such an exchange.”18 Tenn. Code Ann.
§ 53-11-451(a)(6)(A). If the State failed to make out a prima facie case, the forfeiture of this
17
Tenn. Code Ann. § 40-33-210(a) (2003); Tenn. Code Ann. § 53-11-201(d)(2) (1999).
18
The State is not, and indeed could not, proceed under Tenn. Code Ann. § 39-11-703(a) (2003), which permits
the forfeiture and confiscation of property “traceable to the proceeds from” a violation of any statute. That forfeiture
proceeding is applicable only to property seized on or after June 27, 1998. State v. A Tract of Land Known as 141 Belle
Forest Circle, No. M2000-01827-CCA-R3-CD, 2001 W L 1517028, at *3 (Tenn. Crim. App. Nov. 29, 2001) (No Tenn.
R. App. P. 11 application filed). The seizure in this case occurred on December 5, 1997.
-8-
property is barred, and the property must be returned immediately. Tenn. Code Ann. § 40-33-
210(b)(1).
To carry its burden by a preponderance of the evidence, the State must establish that each
item of disputed property, more likely than not,19 was exchanged or intended to be exchanged in an
illegal drug transaction or that each item was traceable to such a transaction. The State may use both
direct20 and circumstantial21 evidence to carry its burden of proof. Direct and circumstantial evidence
is equally relevant, NEIL P. COHEN ET AL., TENNESSEE LAW OF EVIDENCE § 4.01[5], at 4-10 (4th ed.
2000), and equally probative. See, e.g., State v. Kirchner, 600 N.W.2d 330, 334 (Iowa Ct. App.
1999); State v. Marsh, 102 P.2d 445, 450 (Kan. 2004); State v. Jenks, 574 N.E.2d 492, 502 (Ohio
1991); State v. Cherry, 606 S.E.2d 475, 481 (S.C. 2004); see also 1A JOHN H. WIGMORE , EVIDENCE
§ 26 (Tillers rev. 1983). Accordingly, litigants may prove any material fact by direct or
circumstantial evidence or a combination of both, State v. Phillips, 138 S.W.3d at 230; Brown v.
Daly, 83 S.W.3d 153, 160 (Tenn. Ct. App. 2001), and in certain situations, circumstantial evidence
may be more convincing than direct evidence. United States v. Robinson, 177 F.3d 643, 648 (7th
Cir. 1999); Estate of Brock ex rel. Yaden v. Risi, 63 S.W.3d 729, 731 (Tenn. Ct. App. 2001).
B.
Ms. McEwen’s credibility played a central role in this case, and it accounts, at least in part,
for the differences between the initial order and the final order. This is not a case, however, in which
the administrative judge found Ms. McEwen to be completely credible while the Appeals Division
did not. In fact, both the administrative judge and the Appeals Division found significant portions
of Ms. McEwen’s testimony to be incredible.22 The administrative judge and the Appeals Division
differed as to the credibility of Ms. McEwen’s explanation regarding the acquisition of the gold and
silver jewelry, the .22 caliber pistol, the Yamaha scooter, and the 1994 Chevrolet pickup truck.
19
Proving an allegation by a preponderance of the evidence requires a litigant to convince the trier-of-fact that
the allegation is more likely true than not true. Austin v. City of Memphis, 684 S.W .2d 624, 634-35 (Tenn. Ct. App.
1984). A party has proven an allegation by a preponderance of the evidence when the aggregate weight of the evidence
demonstrates that the allegation is more probably true than any other factual alternative. See Rawlings v. John Hancock
Mut. Life Ins. Co., 78 S.W .3d 291, 296 (Tenn. Ct. App. 2001).
20
Direct evidence is evidence which, if believed, establishes the main fact at issue without inference or
presumption. State v. Phillips, 138 S.W.3d 224, 231 (Tenn. Ct. App. 2003).
21
Circumstantial evidence is evidence of collateral facts and circumstances from which the trier-of-fact may
infer that the main fact at issue is based on reason and common experience. State v. Phillips, 138 S.W .3d at 231.
22
Even the administrative judge disbelieved Ms. McEwen’s testimony regarding (1) the acquisition of the drugs
that she and Mr. Allen were selling illegally, (2) the source of the $455 found in her possession, and (3) the source of
the $1,505 seized from Mr. Allen. The administrative judge also noted that Ms. McEwen had lied to the Department
of Human Services and the Internal Revenue Service and that she had used a false address to avoid being required to
register the Yamaha scooter when she purchased it.
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Ms. McEwen’s credibility is inherently suspect. Her property was confiscated after she was
caught selling illegal drugs. She is now seeking to recover as much of her property as she can, and
she has every reason to lie and little reason to tell the truth about the acquisition of the property.
After observing her demeanor, the administrative judge concluded that much of her testimony was
not believable. In light of the lack of specifics in Ms. McEwen’s testimony, her failure to provide
documents or other corroboration of her claims, and her other clearly unbelievable testimony, we
decline to find that the Appeals Division acted arbitrarily or capriciously when it refused to believe
Ms. McEwen’s testimony regarding the acquisition of the currency, the gold and silver jewelry, the
.22 caliber pistol, the Yamaha scooter, and the 1994 Chevrolet pickup truck.
We have also concluded that Ms. McEwen’s testimony regarding her and Mr. Allen’s
legitimate income is not credible. Their own financial records reveal expenditures far greater than
their reported income. Ms. McEwen tried to explain this discrepancy by testifying that she and Mr.
Allen were actually earning more income than they reported. However, Ms. McEwen could produce
no corroboration for this testimony. In fact, one of her witnesses conceded that she had purposely
overstated Ms. McEwen’s income to help her obtain a loan. Thus, instead of establishing that Ms.
McEwen and Mr. Allen were using legitimate income to support themselves, their evidence
underscores their untruthfulness. The record provides ample basis for a trier-of-fact to conclude that
the bulk of Ms. McEwen’s and Mr. Allen’s purchases during late 1997 were not being made with
funds that they had legitimately earned.
C.
We now turn to the adequacy of the State’s evidence justifying the confiscation of the
property ordered forfeited by the Appeals Division. To succeed, the State’s evidence must prove that
each item of property, more likely than not, was either furnished in exchange for an illegal controlled
substance or that it was traceable to the illegal exchange of a controlled substance. We have
concluded that the State carried its burden of proof with regard to all the seized property at issue on
this appeal.
We turn first to the $455 seized from Ms. McEwen and the $1,505 seized from Mr. Allen.
These funds were seized shortly after both Ms. McEwen and Mr. Allen had sold illegal drugs, and
both Ms. McEwen and Mr. Allen were also possessing illegal drugs when the money was seized.
Ms. McEwen herself conceded that half of the $455 was proceeds from the sale of illegal drugs.
Because commingling the proceeds from the sale of illegal drugs with legitimate funds subjects the
entire amount to forfeiture, United States v. One Single Family Residence, 933 F.2d 976, 982 (11th
Cir. 1991), the record contains sufficient evidence to support the Appeals Division’s decision to
confiscate the $455 seized from Ms. McEwen.
The fact that Mr. Allen possessed both marijuana and $1,505 when he was arrested is not
sufficient by itself to establish that the money had been received in exchange for a controlled
substance. However, it is relevant and may be considered along with other circumstantial evidence.
Lettner v. Plummer, 559 S.W.2d 785, 786 (Tenn. 1977). The additional evidence is supplied by the
testimony of the State’s undercover officer that he purchased illegal drugs from Mr. Allen the
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previous day. Mr. Allen himself never explained why he possessed such a large amount of cash, and
both the administrative judge and the Appeals Division disbelieved Ms. McEwen’s explanation
regarding the source of these funds.23 Accordingly, the record contains sufficient evidence to support
the Appeals Division’s decision to confiscate the $1,505 seized from Mr. Allen.
The State seized large amounts of silver and gold jewelry from a footlocker in Ms. McEwen’s
closet. One of the officers testified that jewelry of this sort is frequently used to pay for illegal drugs.
Ms. McEwen claimed that the pieces of jewelry were either gifts to her fifteen-year-old daughter or
part of her own inheritance. However, she provided few specifics regarding when the jewelry was
purchased for her daughter or the circumstances surrounding her inheritance. Even though the
administrative judge believed Ms. McEwen’s testimony about the jewelry, we have already
determined that the Appeals Division could appropriately conclude that Ms. McEwen was lying
about the jewelry in the same way that she was lying about other property. Accordingly, we have
concluded that the State proved that the jewelry had, more likely than not, been used by Ms.
McEwen’s and Mr. Allen’s customers to purchase illegal drugs.
When the authorities searched Ms. McEwen’s house, they found a .22 caliber North
American Arms revolver in the master bedroom. The weapon contained three live rounds. One of
the officers testified that weapons were commonly seized along with illegal drugs because it was a
common practice for drug dealers to keep firearms, presumably to enable them to protect the drugs
and money earned from the sale of drugs. Ms. McEwen provided little specific information
regarding when she purchased the revolver, but she insisted that she purchased it for self-protection
because she and her daughter lived alone. She undermined the credibility of this explanation when
she admitted that Mr. Allen, her daughter’s father, lived with them sporadically. In light of the fact
that Ms. McEwen was a proven drug dealer, the Appeals Division could appropriately conclude that
this weapon was subject to forfeiture.
Ms. McEwen claimed that the 1994 Chevrolet pickup truck was purchased on December 1,
1997 for $5,000 in cash. She insists that the State failed to prove by a preponderance of the evidence
that proceeds from the sale of illegal drugs were used to purchase this truck. Because the State
presented evidence of only eight drug transactions during late 1997 for far less than $5,000, Ms.
McEwen asserts that the truck must have been purchased with legitimate income. We have already
pointed out that Ms. McEwen’s testimony regarding the extent of her and Mr. Allen’s legitimate
income is not believable. In addition, the State is not required to prove which specific illegal
transaction provided the funds to purchase a particular item of property. It is sufficient to prove that
proceeds of illegal drug sales were the most likely source of the funds used to purchase the seized
property. See United States v. Four Parcels of Real Property, 941 F.2d 1428, 1440 (11th Cir. 1991);
United State v. Thomas, 913 F.2d 1111, 1114 (4th Cir. 1990). This record supports a conclusion that
Ms. McEwen and Mr. Allen sold illegal drugs on more than eight occasions during late 1997 and that
they used the proceeds from these transactions to purchase the truck. Accordingly, we find that the
23
Ms. McEwen claimed that M r. Allen had sold a truck to her employer for $1,500. However, her employer
did not corroborate this story when she testified, and Ms. McEwen did not produce any documents, such as a bill of sale
or title, to corroborate her testimony.
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State’s evidence is sufficient to support the Appeals Division’s decision to confiscate the 1994
Chevrolet pickup truck.
Finally, Ms. McEwen insists that she purchased the 1996 Yamaha scooter for her daughter
in December 1997 using funds that she had borrowed from the Bank of Goodlettsville. While the
record contains evidence that Ms. McEwen borrowed $3,130.00 from the Bank of Goodlettsville on
November 19, 1997, it also reveals that she purchased a large screen television nine days later for
$3,116.82 in cash. This evidence provides the trier-of-fact with a reasonable basis to disbelieve Ms.
McEwen’s testimony regarding the source of the funds used to purchase the scooter. The undisputed
evidence that Ms. McEwen and Mr. Allen were selling drugs illegally during this period of time,
coupled with the absence of other credible evidence regarding the sources of Ms. McEwen’s
legitimate income, provided the Appeals Division with sufficient evidence to conclude that the
scooter had been purchased with the proceeds of illegal drug transactions.
V.
Like the trial court, we have concluded that the Appeals Division did not act arbitrarily and
capriciously by disagreeing with the administrative judge’s credibility determinations. We have also
concluded that the State proved by a preponderance of the evidence that the $1,960 in currency, the
various pieces of jewelry, the North American Arms .22 caliber pistol, the 1994 Chevrolet pickup
truck, and the 1996 Yamaha scooter seized at the residence of Teresa McEwen on December 5, 1997
were subject to forfeiture under Tenn. Code Ann. § 53-11-451(a)(6)(A). Accordingly, we affirm the
judgment and remand the case to the trial court for whatever further proceedings may be required.
We tax the costs of this appeal to Teresa McEwen and her surety for which execution, if necessary,
may issue.
______________________________
WILLIAM C. KOCH, JR., JUDGE
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