Ally Financial v. Tennessee Department of Safety & Homeland Security

06/07/2017
IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
May 16, 2017 Session
ALLY FINANCIAL v. TENNESSEE DEPARTMENT OF SAFETY &
HOMELAND SECURITY
Appeal from the Chancery Court for Davidson County
No. 14-1831-I Claudia Bonnyman, Chancellor
___________________________________
No. M2016-01894-COA-R3-CV
___________________________________
The Tennessee Department of Safety and Homeland Security forfeited a finance
company’s interest in a vehicle after determining that the finance company failed to
timely file a claim to contest the forfeiture after receiving notice. The finance company
thereafter filed a petition for judicial review. The trial court reversed the forfeiture on the
basis that the Tennessee Department of Safety and Homeland Security failed to prove
that it sent proper notice to the finance company. We vacate the judgment of the trial
court and remand for further proceedings before the administrative agency.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Vacated
and Remanded
J. STEVEN STAFFORD, P.J.,W.S., delivered the opinion of the court, in which ARNOLD B.
GOLDIN, and BRANDON O. GIBSON, JJ., joined.
Herbert H. Slatery, III, Attorney General and Reporter; Andrée S. Blumstein, Solicitor
General, Linda D. Kirklen, Assistant Attorney General, for the appellant, Tennessee
Department of Safety and Homeland Security.
Todd H. Hancock, Nashville, Tennessee, for the appellee, Ally Financial.
OPINION
Background
On March 18, 2014, the Shelby County Multi Agency Gang Unit (“MAGU”)
seized a 2008 Dodge Challenger CS8 (“the vehicle”) from its owner, Jacqueline
Chambers, as drug-related proceeds subject to forfeiture under Tennessee Code
Annotated section 53-11-451.1 Petitioner/Appellee Ally Financial (“Ally”) was listed as
lienholder on the vehicle’s certificate of title. Ally’s address displayed on the certificate
of title was “P.O. Box 8116, Cockeysville, MD 21030,” the same address shown on a
database printout containing the vehicle’s registration information dated March 25, 2014.
A MAGU detective obtained a forfeiture warrant for the vehicle on March 25,
2014, based upon allegations that the vehicle was used by Ms. Chambers and her co-
conspirators in a series of robberies and drug sales. According to the
Respondent/Appellant Tennessee Department of Safety and Homeland Security (“the
Department”), notice of the seizure and forfeiture warrant was sent the following day via
certified mail to “Ally Financial, ATTN Legal Advisor” at the P.O. Box listed on the
vehicle’s certificate of title. The notice stated that a forfeiture warrant had issued and the
vehicle “will be forfeited . . . after thirty . . . days from receipt of this notice unless the
secured party shall file with the Department . . . a copy of the title (front and back) and
the security agreement encumbering the seized vehicle.” The record contains a return
receipt indicating that the certified mail was delivered on March 31, 2014. A scanned
portion of the green card was returned to the Department noting that “Gaylord Wilson”
signed for the certified mail and handwrote his address as “PO Box 8100.”
On October 23, 2014, Ally sent a letter to the Department ostensibly to contest the
forfeiture of its interest in the vehicle. The letter explained that while the notice was
“mailed to Ally’s post office box in Maryland,” this post office box was “merely a call
station, rather than Ally’s legal offices[,] which are located in Lewisville, Texas.” Ally
therefore claimed that that its delay in responding to the notice was “a direct result of the
incorrect mailing.” The letter requested a hearing on the forfeiture of Ally’s interest in the
vehicle. Enclosed with Ally’s letter was the vehicle’s certificate of title and retail
installment contract establishing its interest in the vehicle. Ally sent a second letter on
November 14, 2014, again requesting that a hearing be held and requesting various
documents.
On November 17, 2014, the Department responded to Ally’s letter by denying
Ally’s request for a hearing. In explanation, the Department stated that Ally’s request was
untimely because it had not been filed within the requisite statutory thirty-day period.
Specifically, the letter noted that the Department’s records indicated that Ally “received
notification of the confiscation of the subject property on March 31, 2014” and that no
claim had been filed for more than six months after the notification. As such, Ally’s
“interest in the [vehicle] has not been protected.” The Department ordered Ally’s interest
forfeited on December 2, 2014, and sent the Order of Delegation and Forfeiture to Ally
with instructions for appealing.
1
Ms. Chambers’s interest in the property is not at issue in this appeal.
-2-
Ally timely filed a petition for judicial review in the Davidson County Chancery
Court. In the petition, Ally stated that the Department, “[b]y letter dated March 26, 2014,
. . . [the Department] forwarded notice to Ally that a forfeiture warrant had been issued”
and that “the forfeiture warrant was not properly obtained[.]” Both parties filed pretrial
briefs. In Ally’s brief, it admitted that “the Department sent a Notice of Seizure . . . to
Ally at Post Office Box 8116 in Cockeysville, Maryland 21030,” which Ally
characterized as “Ally’s Lockbox.” Ally asserted, however, that the notice was defective
because it was delivered to an incorrect address. Ally further asserted that the notice, if
delivered, was defective because it did not contain any supporting evidence or alleged
wrongful conduct by Ally that would make its interest subject to forfeiture.
The trial court held a hearing on the petition on March 29, 2016. No evidence was
presented during this hearing. Ally essentially argued that the time for filing its claim had
not expired because the notice of forfeiture was either mailed or delivered to the wrong
post office, P.O. Box 8100, rather than P.O. Box 8116, pointing to the discrepancy
between the address printed on the certified receipt (P.O. Box 8100) and the address on
the Department’s notice letter (P.O. Box 8116). As such, Ally argued that the
Department knew or should have known that the notice was delivered to the wrong
address and that the Department’s failure to take additional steps to correct the mistake
meant that it had not met its burden of proving when Ally received the notice. Ally’s
counsel was unable to explain how Ally eventually received the notice letter and was
unsure whether the person who signed the certified receipt worked for Ally.
On April 19, 2016, the trial court, citing State v. Sprunger, 458 S.W.3d 482
(Tenn. 2015), found that the Department had “the burden of proof to show by a
preponderance of the evidence that notice was in fact delivered to Ally on March 31,
2014 or on some other date that would preclude Ally from effecting compliance with its
duty to provide proof of its security interest.” The trial court ruled, however, that the
Department failed to “show that it gave notice on Ally [on] any particular date” because
“the only delivery of notice contained in the record was to a post office box that is not
connected to Ally and was to a person who is not shown to be connected to Ally in any
way.” The trial court also found that Ally met its statutory duty required to protect its
interest. Consequently, the trial court reversed the Order of Delegation and Forfeiture and
remanded the case for entry of a forfeiture order subject to Ally’s security interest.
The Department filed a motion to alter or amend or for remand to the
administrative agency for hearing on May 17, 2016. Specifically, the Department alleged
that new factual issues required that the trial court reconsider its decision. In support, the
Department cited a pleading in which Ally admitted to receiving a notice sent to a
different post office box than the two at issue in this case. A hearing on the motion to
alter or amend occurred on July 8, 2016. During the hearing, the Department’s counsel
asserted that Ally was the owner of several post office boxes in Cockeysville, Maryland,
including both P.O. Box 8116 and P.O. Box 8100. Counsel for the Department also
-3-
argued that the difference in the address handwritten on the return receipt was insufficient
to defeat its notice, as any recipient could write an improper address when certified mail
was delivered, thereby negating any notice that would otherwise have been achieved on
the recipient. The trial court subsequently denied the Department’s motion to alter or
amend on August 9, 2016.
Issues Presented
The Department raises a single issue, which we restate: Whether the trial court
erred in reversing the Department’s Order of Delegation and Forfeiture based on the
Department’s failure to prove notice to Ally. Based upon our review, we vacate the
judgment of the trial court and remand for further administrative proceedings.
Standard of Review
Both parties agree that our standard of review is governed by the Uniform
Administrative Procedures Act (“UAPA”), Tennessee Code Annotated section 4-5-322.
Under the UAPA, “[a] person who is aggrieved by a final decision in a contested case is
entitled to judicial review under this chapter, which shall be the only available method of
judicial review.” Tenn. Code Ann. § 4-5-322(a)(1). As is applicable in both the trial court
and this Court:
The court may affirm the decision of the agency or remand the case for
further proceedings. The court may reverse or modify the decision if the
rights of the petitioner have been prejudiced because the administrative
findings, inferences, conclusions or decisions are:
(1) In violation of constitutional or statutory provisions;
(2) In excess of the statutory authority of the agency;
(3) Made upon unlawful procedure;
(4) Arbitrary or capricious or characterized by abuse of discretion or clearly
unwarranted exercise of discretion; or
(5)(A) Unsupported by evidence that is both substantial and material in the
light of the entire record.
(B) In determining the substantiality of evidence, the court shall take
into account whatever in the record fairly detracts from its weight,
but the court shall not substitute its judgment for that of the agency
as to the weight of the evidence on questions of fact.
Tenn. Code Ann. § 4-5-322(h).
Analysis
-4-
This case involves the forfeiture of personal property found to have been used in
the commission of a crime. The Tennessee Supreme Court recently explained that
forfeiture is defined as “‘[t]he divestiture of property without compensation.” State v.
Sprunger, 458 S.W.3d 482, 492 (Tenn. 2015) (quoting Black’s Law Dictionary 722 (9th
ed. 2009)). In Sprunger, as in this case, “the divestiture occurs because of a crime and
title to the forfeited property is transferred to the government.” Sprunger, 458 S.W.3d at
492 (quoting Black’s Law Dictionary, at 722)). Although the Tennessee Supreme Court
recognized that asset forfeiture “is an extraordinary exercise of the State’s police power,”
Sprunger, 458 S.W.3d at 493 (quoting Calero-Toledo v. Pearson Yacht Leasing Co.,
416 U.S. 663, 682, 94 S. Ct. 2080, 40 L. Ed. 2d 452 (1974)), it remains a civil
proceeding subject only to the preponderance of the evidence burden of proof. Sprunger,
458 S.W.3d at 492–93 (citing U.S. v. Ursery, 518 U.S. 267, 274, 116 S. Ct. 2135, 135 L.
Ed. 2d 549 (1996); Stuart v. State Dep’t of Safety, 963 S.W.2d 28, 33–34 (Tenn. 1998)).
In spite of this “less onerous burden”—or perhaps because of it—forfeiture
proceedings must strictly comply with both the statutory authority authorizing the
divestment, as well as constitutional due process protections. Sprunger, 458 S.W.3d at
493 (noting that forfeiture is disfavored under Tennessee law). “‘Forfeiture or
confiscation is a proceeding of a harsh nature, and unless accomplished pursuant to the
law of the land is in violation of the 5th Amendment to the Constitution of the United
States. Consequently confiscation must be accomplished in the manner provided by
law.’” Sprunger, 458 S.W.3d at 493 (quoting Wells v. McCanless, 184 Tenn. 293, 198
S.W.2d 641, 642–43 (1947)). Furthermore, strict compliance with our state’s forfeiture
statutes is not excused simply because the failure involves only “technical violations” of
the applicable statutes or the fact that the property owner is not prejudiced by the failure.
Sprunger, 458 S.W.3d at 499. Rather,
the governmental authority seeking forfeiture must present affirmative
proof that it has complied with both the procedural and the substantive
requirements in the forfeiture statutes enacted by our Legislature.
Consistent with the civil nature of forfeiture proceedings, the State’s burden
of proof as to both the procedural and substantive statutory requirements is
by a preponderance of the evidence.
Id. at 499–500 (citing Stuart, 963 S.W.2d at 33).
Here, the issue involves whether the Department met its burden to establish it
complied with all statutory and constitutional requirements in providing notice to Ally.
Relevant to this case,2 Tennessee Code Annotated section 40-33-204 generally governs
the issuance of a forfeiture warrant. As an initial matter, any affidavit in support of a
2
For a more detailed analysis of the requirements of Tennessee’s forfeiture statutes, see
Sprunger, 458 S.W.3d at 494–99.
-5-
forfeiture warrant must state: (1) the legal and factual basis upon which the property is
seized; (2) information concerning co-owners of the property; and (3) information
concerning any secured interests in the property and the factual and legal basis that makes
the property subject to forfeiture notwithstanding the secured interest. See Tenn. Code
Ann. § 40-33-204(b)(1)(A)–(C). A judge shall only issue a forfeiture warrant if it finds
probable cause that the property is subject to forfeiture and the owner’s interest, if
recorded, is also subject to forfeiture. Id. § 40-33-204(c)(1). Once a forfeiture warrant has
been issued by a judge, the warrant is sent to the applicable agency, and the agency then
“shall provide notice” of the forfeiture to “any other owner, as may be determined from
public records of titles, registrations or other recorded documents, or secured party that
forfeiture warrant has been issued.” Id. § 40-33-204(g). If the other owner is a secured
party with “a duly perfected security interest,” the secured party “must submit proof of
the security interest to the applicable agency within thirty (30) days of receipt of the
notification in order for this subsection (a) to apply.” Id. § 40-33-205(a). If, however, a
secured party with a properly perfected security interest “does not receive notice of intent
to forfeit the interest pursuant to § 40-33-204(b)(1)(C),” the secured party “need not file a
claim to preserve any right the party may have to the property.” Id. “If the applicable
agency notifies a secured party that it intends to seek forfeiture of the secured party’s
interest, it shall seek a forfeiture warrant against the secured party as provided in § 40-33-
204(b).” Id. “Upon receiving notice that a forfeiture warrant has been issued, the secured
party is required to file a claim for the property as provided in this part.” Id.
The extent or method of the notice required by sections 40-33-204 and 40-33-205
is not specifically addressed in the statutes. Rather, the Department has promulgated
certain rules and regulations that govern this issue. As an initial matter, Tennessee
Compiled Rules & Regulations 1340-02-02-.06 requires that the Department take certain
steps to discover all potential claimants that are entitled to notice under section 40-33-
204(b)(1)(C). See Tenn. Comp. R. & Regs. 1340-02-02-.06(2) (discussing the actions the
Department must take). Once claimants have been identified, “[a]ll potential claimants
and secured parties shall be sent notification to their last known address that Forfeiture
Warrant has been issued.” Tenn. Comp. R. & Regs. 1340-02-02-.06(2)(b) & (c). The
notice must state:
[T]he name of the potential claimant or secured party, the name of the
person(s) in possession of the seized property, . . . a general description of
the seized property, the reasons for the seizure, the procedure by which
recovery of the property may be sought, including the time period in which
a claim or proof of security interest shall be filed . . . , and the consequences
of failing to file within the time period.
Tenn. Comp. R. & Regs. 1340-02-02-.06(2)(c). Additionally:
-6-
Notice to a potential claimant or secured party shall be given in accordance
with state and federal constitutional requirements. Such notice to a potential
claimant or a secured party may be proven by any method used by the
United States Postal Service to inform its users of the date of delivery of
certified mail.
1. When the potential claimant or secured party or an agent or other
representative of the potential claimant or secured party refuses to
accept delivery and it is so stated in the return receipt of the United
States Postal Service, the written return receipt if returned and filed
in the case shall be deemed an actual and valid service of the notice.
Service by mail is complete upon mailing. For purposes of these
rules, the United States Postal Service notation that a properly
addressed registered or certified letter is “unclaimed,” or other
similar notation, is sufficient evidence of the potential claimant’s
refusal to accept delivery.
Tenn. Comp. R. & Regs. 1340-02-02-.06(2)(e). Where “no claim or proof of security
interest is received by the conclusion of the thirtieth (30th) day after the date of the
potential claimant’s or secured party’s receipt of the Notice . . . , seized property shall be
forfeited to the state for disposition under the Act.” Tenn. Comp. R. & Regs. 1340-02-02-
.06(2)(f).
As noted above, notice in this case is also governed by both the Tennessee and
United States Constitutions. See Tenn. Comp. R. & Regs. 1340-02-02-.06(2)(e). The
Tennessee Supreme Court has explained the constitutional requirements applicable in this
situation as follows:
One of the basic constitutional guarantees, procedural due process under the
Fifth and Fourteenth Amendments of the United States Constitution and
Article I, Section 8 of the Tennessee Constitution, prohibit the forfeiture of
private property without first providing those with an interest in the
property to a hearing held at a reasonable time and in a meaningful manner.
Notice must be given in a manner reasonably calculated to notify all
interested parties of the pending forfeiture of the property in order to afford
the opportunity to object to the State’s taking. One of the essential elements
of due process in the confiscation and forfeiture of private property is
adequate notice to all interested parties.
Redd v. Tenn. Dep’t of Safety, 895 S.W.2d 332, 334–35 (Tenn. 1995). Thus, “[t]he
notice required by the Due Process Clause is that which is ‘reasonably calculated, under
all the circumstances, to apprise interested parties of the pendency of the action and
afford them an opportunity to present their objections.’” Wilson v. Blount Cnty., 207
-7-
S.W.3d 741, 748 (Tenn. 2006) (quoting Mullane v. Cent. Hanover Bank & Trust Co.,
339 U.S. 306, 314, 70 S. Ct. 652, 94 L. Ed. 865 (1950)). To effectuate the required
notice, “[t]he means employed must be such as one desirous of actually informing the
absentee might reasonably adopt to accomplish it.” Mullane, 339 U.S. at 315. Due
process, however, “does not require that a party receive actual notice; it requires only that
the government choose a method of notification that is reasonably calculated to provide
notice.” Wilson, 207 S.W.3d at 749 (citing Mullane, 339 U.S. at 314). When a party’s
name and address are reasonably ascertainable, notice by mail or by personal service is
typically required. Id. at 750 (“When the party’s name and address are ‘reasonably
ascertainable,’ constructive notice alone is not constitutionally adequate.”); see also
Toyota Motor Credit Corp. v. State Dep’t of Safety, No. M2003-00147-COA-R3-CV,
2003 WL 22519810, at *3 (Tenn. Ct. App. Nov. 7, 2003) (“When the State either knows
or could easily ascertain the identity of a party with an interest in the proceedings, it must
satisfy a more stringent notice standard, which at a minimum requires notification by
mail.”).
Here, the Department does not dispute that it bears the burden of presenting
evidence that it complied with statutory and constitutional due process requirements by
mailing notice of the forfeiture warrant. Rather, the Department asserts that it has met its
burden to show that it sent appropriate notice to Ally and that Ally therefore failed to file
a timely claim to contest the forfeiture. Citing Regulation 1340-02-02-.06(2)(e)(1), the
Department argues that notice was complete, and Ally’s thirty-day time period to file a
claim began to run, on March 26, 2014, the date the notice was mailed to Ally.
In contrast, Ally contends that the trial court correctly found that the Department’s
evidence was insufficient to “establish[] any date certain” with regard to the delivery of
the notice. Instead, Ally asserts that the only evidence presented by the Department was
that “[n]otice was delivered to an [i]ncorrect [a]ddress.” Accordingly, although somewhat
unclear, it appears that Ally’s argument is two-fold: (1) that the Department failed to
establish the date of delivery of the notice, a requirement to meet the Department’s
burden; and (2) that the notice was sent to an incorrect address. In response, the
Department asserts that these arguments are waived because they were not presented in
the administrative proceedings.
As an initial matter, we first dispense with the Department’s argument that notice
was completed in this case on March 26, 2014, the date the notice was allegedly mailed
by the Department. In support of its argument, the Department cites Regulation 1340-02-
02-.06(2)(e)(1). We recognize that this cited regulation indeed contains the statement that
“Service by mail is complete upon mailing.” This statement, however, appears in a
subsection of the regulation concerning unclaimed mailings. See Tenn. Comp. R. & Regs.
1340-02-02-.06(2)(e)(1) (bookending the above statement with rules that concern a
potential claimant’s refusal to accept delivery and the resulting return of an “unclaimed”
notice). Indeed, immediately prior to this statement, the Regulation specifically requires
-8-
that notice by mail be by a method that informs “its users of the date of delivery of
certified mail.” Such a requirement would be entirely superfluous were only the date of
mailing necessary to a determination of when notice was received. See Mann v. Grist,
No. 28, 1990 WL 120723, at *4 (Tenn. Ct. App. Aug. 22, 1990) (citing City of Caryville
v. Campbell Cnty., 660 S.W.2d 510, 512 (Tenn. Ct. App. 1983)) (“A well settled rule of
statutory construction is that all parts of the statute shall be deemed relevant and
operative and where possible we will avoid finding any language used by the legislature
to be superfluous, void or insignificant.”); see also Clear Channel Outdoors v. Tenn.
Dep’t of Transp., 337 S.W.3d 801, 806 (Tenn. Ct. App. 2010) (citing Houghton v.
Aramark Educ. Res., Inc., 90 S.W.3d 676, 679 (Tenn. 2002)) (“[T]he general rules of
statutory construction are used in construing rules and regulations drafted by
administrative agencies pursuant to a legislative delegation of power.”).
The statutes on this issue likewise appear to belie the Department’s argument. As
previously noted, the time for a secured party to file a claim under Tennessee Code
Annotated section 40-33-205(a) does not begin to run until “receipt of the notice.” Tenn.
Code Ann. § 40-33-205(a) (emphasis added). Black’s Law Dictionary defines “receipt”
as “the act of receiving something[.]” Black’s Law Dictionary 1382 (9th ed. 2009).
Indeed, if a secured party “does not receive notice,” then no time period begins to run to
deprive the secured party of his ability to file a claim. Id. (emphasis added) (“A secured
party with a duly perfected interest or any successor in interest to the secured party who
does not receive notice of intent to forfeit the interest pursuant to § 40-33-204(b)(1)(C),
need not file a claim to preserve any right the party may have to the property.”). As such,
we must apply the plain language of the statute indicating that the applicable time period
commences on the date the notice of forfeiture is received. See Holiday Inns, Inc. v.
Olsen, 692 S.W.2d 850, 853 (Tenn. 1985) (“If the rules and regulations promulgated by
the [agency] are inconsistent with the statute, then they are void.”); Kaylor v. Bradley,
912 S.W.2d 728, 734 (Tenn. Ct. App. 1995) (“Administrative regulations cannot be
inconsistent with statutes on the same subject.”). In sum, where a notice of forfeiture does
not go unclaimed, it is not the date of mailing that triggers the time period in which a
secured party must file a claim, but the date the notice was received by the recipient.
Only in the event that a potential claimant refuses to accept delivery and the notice is
returned “unclaimed” does the date of mailing commence the applicable time period.
Here, there is no allegation that Ally refused delivery or that the notice of
forfeiture sent to the address listed on the title was returned “unclaimed.” Accordingly,
the thirty-day time period in which Ally was required to file a claim to contest the
forfeiture began to run on the date that the notice was received by Ally. The trial court
determined, however, that the Department could not meet its burden to show an
identifiable date of receipt for purposes of section 40-33-205(a). In its brief, the
-9-
Department asserts that it met its burden to show a date of receipt of the notice, March
31, 2016, the date reflected on the return receipt.3
The record on appeal indeed contains a document dated April 7, 2014, indicating
that an item of certified mail was delivered on March 31, 2014, in Cockeysville,
Maryland 21030. The record also contains a copy of the Notice of Seizure prepared by
the Department, which is addressed to Ally at P.O. Box 8116, Cockeysville, Maryland,
21030. Finally, the Department notes that the address utilized to provide notice to Ally
was gleaned from public records of Ally’s lien on the property at issue, as well as an
internet printout again listing the above address for the lienholder of the property.
According to the Department, these documents together are sufficient to show that notice
reasonably calculated to apprise Ally of the forfeiture proceedings was received by Ally
on March 31, 2014. Because Ally did not file a claim to contest the forfeiture within
thirty days of March 31, 214, the Department asserts that Ally’s interest was properly
seized by the State pursuant to Tennessee Compiled Rules & Regulations 1340-02-02-
.06(2)(f).
We agree that the documents in the record show that a document was mailed to
Cockeysville, Maryland, and delivered on March 31, 2014. This proof, however, is not
without question. Instead, it is well-settled that “a presumption arises that a letter duly
mailed is received by the one to whom it is addressed.” MacDonald v. Smith, No. 88-
304-II, 1990 WL 3345, at *1 (Tenn. Ct. App. Jan. 19, 1990) (citing U.S. Life Title Ins.
Co. v. Dep’t of Commerce & Insurance, 770 S.W.2d 537, 538 (Tenn. Ct. App. 1988);
Southern Region Industrial Realty, Inc. v. Chattanooga Warehouse and Coal Storage
Co., Inc., 612 S.W.2d 162, 164 (Tenn. Ct. App. 1980) (“A presumption of the due receipt
of a letter arises upon proof that such letter was deposited in the post office, properly
stamped and correctly addressed.”)). Additionally, “a presumption that a letter was
mailed may arise from the testimony of an [individual] that he dictated and signed the
letter and placed it in the regular course for mailing.” Southern Region Industrial
Realty, 612 S.W.2d at 164 (citing Myers v. Moore-Kile Co., 279 F. 233 (5th Cir. 1922)).
These presumptions, however, may be rebutted. As the Tennessee Supreme Court has
explained:
To overcome this presumption, the addressee must present credible
evidence of non-receipt. See In re Adoption of S.A.W., No. M2007-01690-
COA-R3-PT, 2008 WL 820540, at *1 (Tenn. Ct. App. Mar. 26, 2008)
perm. app. denied (Tenn. June 23, 2008). Once rebuttal evidence is
presented, the question of receipt becomes an issue of fact for the trial court
to decide. U.S. Life [], 770 S.W.2d [at] 542 [].
3
Indeed, in its letter denying Ally’s request for a hearing, the Department noted this date as the
date the notice was received and therefore the date upon which the statutory period for Ally to assert a
claim began to run.
- 10 -
Bd. of Prof’l Responsibility v. Curry, 266 S.W.3d 379, 389 (Tenn. 2008).
Here, Ally submits that evidence in the record rebuts the Department’s assertion
that the notice was properly mailed in this case. In the first instance, Ally notes that the
Department failed to present evidence of the actual address to which the notice was sent,
as the envelope containing the notice is not contained within the record, nor does the
record contain testimony regarding the alleged mailing of the notice to Ally. Ally further
asserts that affirmative evidence in the record shows that regardless of whether the notice
was correctly addressed, it was not in fact delivered to Ally’s address. In support, Ally
points to the same return receipt relied upon by the Department, which contains the
notation that the document was delivered to P.O. Box 8100, rather than the P.O. Box
8116 address listed on the notice. Based upon this notation, Ally contends that the
Department was on notice as early as April 4, 2104 that its notice was ineffective,
triggering a duty on the part of the Department to take additional action to obtain proper
notice. See Toyota Motor Credit, 2003 WL 22519810, at *6 (“If . . . the State both knows
the name of the property owner and that the address to which it has sent notice is no
longer valid, due process requires that it make an effort to ascertain and notify the
property owner at a valid address.”).
We are troubled by the Department’s failure to present testimony or affidavits
concerning the mailing of the notice to Ally to show that the notice was in fact mailed to
the post office box listed on the notice. See Southern Region Industrial Realty, 612
S.W.2d at 164. Without this evidence, we cannot simply assume that the notice was in
fact mailed to the address listed on the notice of forfeiture. Were this the only evidence in
the record on this issue, we would conclude, like the trial court, that the Department did
not meet its burden to establish proper notice to Ally in this case. The dispute in this case,
however, is complicated by Ally’s October 23, 2014 letter indicating that the notice had
in fact been received by Ally at its Maryland post office box. In our opinion, this letter is
sufficient to show that the letter was in fact mailed to Ally’s post office box in Maryland.
In addition, Ally appears to admit in its pre-trial brief that the notice was sent to P.O. Box
8116, the same address listed on the notice of seizure and the certificate of title. Given
these facts, we must conclude that sufficient evidence in the record was presented that the
notice was mailed to P.O. Box 8116 and that a rebuttable presumption therefore arises
that it was delivered to whom it was addressed, i.e., Ally, on the date noted on the return
receipt. See Curry, 266 S.W.3d at 389. The burden then shifts to Ally to rebut this
presumption.
In an effort to rebut the Department’s proof, Ally asserts that evidence in the
record shows that the notice of forfeiture was not in fact delivered to Ally’s Maryland
post office box. We note that although Ally claimed in the trial court that it was not the
owner of P.O. Box 8100 or to know the identity of Gaylord Wilson, no testimony or
affidavits are contained in the record to support this assertion. The record does contain,
however, the return receipt suggesting that the notice was not delivered to the correct
- 11 -
address, but instead delivered to P.O. Box 8100. Although the record contains no
additional evidence that the handwritten notation on the return receipt is an accurate
reflection of the actual address of the individual who received the notice or that P.O. Box
8100 is not owned by Ally, given the Department’s ultimate burden to establish
compliance with statutory and constitutional notice requirements, we conclude that the
return receipt is sufficient to meet Ally’s burden to create a factual dispute regarding
whether the notice was in fact delivered to whom it was addressed. See Curry, 266
S.W.3d at 389.
The forgoing discussion illustrates the evidentiary deficiencies present in this case
hindering the arguments of both parties. Indeed, little of what could be categorized as
evidence was actually presented by either party. No hearing took place in the
administrative agency. Both parties relied on statements of counsel of matters outside the
record in the hearings before the trial court. Statements of counsel, however, are not
evidence and may not serve as “a substitute for testimony.” Elliott v. Cobb, 320 S.W.3d
246, 250 (Tenn. 2010) (citing Metro. Gov’t of Nashville & Davidson Cnty. v. Shacklett,
554 S.W.2d 601, 605 (Tenn. 1977); Hathaway v. Hathaway, 98 S.W.3d 675, 681 (Tenn.
Ct. App. 2002)). The Department asserts that this deficiency resulted from Ally’s failure
to raise the issue of the incorrect address before the Department. Respectfully, we do not
agree. Here, Ally sent a letter to the Department on October 23, 2014, in which it asserted
that it was not provided notice. Rather than holding a hearing allowing Ally to address
the issue of notice, or requiring the Department to affirmatively establish its compliance
with the statutory and constitutional notice requirements applicable to this action, the
Department chose to reach a somewhat conclusory decision that the notice was properly
sent and received by Ally more than thirty days prior to the date Ally sent notice of its
claim to contest the forfeiture. Accordingly, where the Department asserts in its brief that
Ally attempts to rely on matters outside the administrative record in support of its
arguments, some of the blame for this circumstance must be attributed to the
Department’s failure to hold a hearing on the issue of notice. Indeed, although the
Department attempts to rely on the limited standard of review applicable in appeals from
contested case hearings, no contested case hearing actually took place in the agency in
this case. See generally Tenn. Code Ann. § 4-5-322. As such, our directive to consider
only the administrative record except to show procedural irregularities before the agency
cannot be met where no evidence was presented to the agency. Id. § 4-5-322 (“The
review [of an agency decision] shall be conducted by the court without a jury and shall be
confined to the record.”)
The situation presented is therefore somewhat analogous to the situation wherein a
trial court refuses to set a hearing on a party’s motion to set aside a judgment pursuant to
Rule 60.02 of the Tennessee Rules of Civil Procedure, but instead dismisses the motion
without consideration for its contents. Such a procedure, however, has been held to be
inappropriate by this Court. See Gonzalez v. Gonzalez, No. W2012-02564-COA-R3-CV,
2013 WL 4774139, at *8–9 (Tenn. Ct. App. Sept. 5, 2013); Harper v. Harper, No. E-
- 12 -
2002-01259-COA-R3-CV, 2003 WL 192151 (Tenn. Ct. App. Jan 23, 2003); Duncan v.
Duncan, No. 85-264-II, 1986 WL 15666 (Tenn. Ct. App. 1986), perm. app. denied
(Tenn. Jan. 5, 1987). In these cases, this Court held that, because the allegations in the
moving party’s motions, if taken as true, could support relief from the judgment, the trial
court’s refusal to allow the movant a hearing to present proof constituted reversible error.
Gonzalez, 2013 WL 4774139, at *9; Harper, 2003 WL 192151, at *4–5. Likewise in this
case, Ally’s allegation that it did not receive proper notice of the forfeiture proceedings, if
true, would mean that its claim to contest the forfeiture was not untimely. See Tenn. Code
Ann. § 40-33-205(a).
Given that no evidentiary hearing was conducted in this case allowing each party
to present evidence on the issue of notice, we conclude that remanding to the
administrative agency for a hearing is appropriate. The administrators charged with
deciding contested cases for the Department are the fact-finders in this case. Indeed, it is
well-settled that this Court is not permitted to substitute its judgment regarding the
weight of the evidence “for that of the administrative fact-finder.” Price v. Tenn. Civ.
Serv. Comm’n, No. 01A01-9508-CH-00336, 1997 WL 203603, at *2 (Tenn. Ct. App.
Apr. 25, 1997) (citing McClellan v. Bd. of Regents, 921 S.W.2d 684, 693 (Tenn. 1996);
Sanifill of Tenn., Inc. v. Tenn. Solid Waste Disposal Control Bd., 907 S.W.2d 807, 810
(Tenn. 1995)). Rather, Tennessee Code Annotated section 4-5-322(g) and (h) require that
courts review only the administrative record to determine whether the agency’s decision
is based on the sort of relevant evidence that a reasonable person would accept to support
a rational conclusion or to furnish a reasonably sound basis for the action under
consideration. Southern Ry. v. State Bd. of Equalization, 682 S.W.2d 196, 199 (Tenn.
1984). Such a review is impossible in this case where the Department was not required to
present evidence to establish its compliance with the required notice rules, nor was Ally
allowed to present evidence in support of its argument that notice was not achieved. In
addition, remand will allow the parties to present evidence, if necessary, as to the other
deficiencies in notice alleged by Ally, specifically that the Department had a duty to more
fully investigate the address of Ally’s legal offices or agent for service of process both
initially and after the return receipt indicated the allegedly improper delivery of the
notice, as well as that the notice of seizure, if received, contained insufficient information
regarding Ally’s wrongdoing. Consequently, we vacate the judgment of the trial court
and remand to the Department for a hearing on whether the Department can establish its
compliance with statutory and constitutional notice requirements by a preponderance of
the evidence. See Sprunger, 458 S.W.3d at 493.
Conclusion
The judgment of the trial court is vacated, and this matter is remanded to the
Tennessee Department of Safety and Homeland Security for an evidentiary hearing to
resolve the factual issue of whether sufficient notice was properly sent to Ally Financial
for purposes of triggering the thirty-day time period for filing a claim to contest the
- 13 -
forfeiture. Costs of this appeal are taxed one-half to Appellant Tennessee Department of
Safety and Homeland Security, and its surety, and one-half to Appellee Ally Financial.
________________________________
J. STEVEN STAFFORD, JUDGE
- 14 -