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Ally Financial v. Tennessee Department of Safety & Homeland Security

Court of Appeals of Tennessee, Nashville

June 7, 2017


          Session May 16, 2017

         Appeal from the Chancery Court for Davidson County No. 14-1831-I Claudia Bonnyman, Chancellor

         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

          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.

          J. Steven Stafford, P.J., W.S., delivered the opinion of the court, in which Arnold B. Goldin, and Brandon O. Gibson, JJ., joined.




         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.

         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 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 ...

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