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In re Tennessee Walking Horse Forfeiture Litigation

Court of Appeals of Tennessee, Jackson

August 31, 2017

IN RE TENNESSEE WALKING HORSE FORFEITURE LITIGATION

          Session Date: June 28, 2017

         Appeal from the Circuit Court for Fayette County No. 13-CV-61 J. Weber McCraw, Judge

         This is the second appeal involving the attempted forfeiture of horses that had allegedly been the victims of animal abuse. The State appeals the trial court's finding that Appellee owners had standing to contest the forfeiture and the grant of summary judgment to Appellee owners on the ground that the State failed to comply with applicable procedural requirements. We conclude that because Appellees are "owners" as defined by Tennessee Code Annotated section 39-11-702(3), they have standing to contest the forfeiture. We also conclude that the undisputed facts establish that the attempted forfeiture did not comply with the substantive and procedural requirements of the applicable forfeiture statutes. The trial court's ruling is, therefore, affirmed.

         Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Affirmed and Remanded

          Herbert H. Slatery, III, Attorney General and Reporter; Andrée S. Blumstein, Solicitor General; Linda D. Kirklen, Assistant Attorney General; Scott C. Sutherland, Assistant Attorney General, for the appellant, State of Tennessee.

          J. Houston Gordon, Covington, Tennessee, for the appellees, Kelly Sherman, and Beverly Sherman.

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

          OPINION

          J. STEVEN STAFFORD, JUDGE

         Background

          This is the second appeal of this case. See In re Tennessee Walking Horse Forfeiture Litig., No. W2013-02804-COA-R3-CV, 2015 WL 1636704, at *1 (Tenn. Ct. App. Apr. 8, 2015) ("Walking Horse I"). The material facts at issue in this case are largely undisputed and were detailed in this Court's prior Opinion. As we previously explained:

On March 1, 2012, officials from the Fayette County Sheriff's Office and the United States Department of Agriculture seized two Tennessee Walking Horses, named "Paroled in the Night" and "Mucho Bueno, " incident to the arrests of the horses' trainers, employees of Whitter Stables, for animal cruelty. The officials placed the horses into the custody of the Humane Society of the United States ("HSUS"). HSUS is not chartered with the State of Tennessee.
On May 16, 2012, Beverly Sherman and Kelly Sherman ("Appellees"), the purported owners of the horses at issue, filed a Complaint for Possession or in the Nature of Replevin, seeking to recover the horses. The State of Tennessee ("State") filed an answer, denying that the Appellees were entitled to the return of the property.
On May 22, 2012, the horse trainers pleaded guilty in the United States District Court for the Eastern District of Tennessee to soring[1] the horses at issue in violation of the Federal Horse Protection Act. The trainers also pleaded guilty to State animal cruelty charges involving the subject horses on July 10, 2013. According to the State, the trainers admitted, as part of their state-law guilty pleas, to having sored and abused the subject horses.
The State filed an ex parte application for a forfeiture warrant for the horses on July 10, 2013. On the same day, the Fayette County Circuit [C]ourt issued an ex parte Forfeiture Warrant and Order placing the horses in the custody of the HSUS pending a final forfeiture determination.
On August 9, 2013, the State filed a forfeiture complaint. The forfeiture complaint indicated that the State had information to believe that the Appellees were the owners of two of the horses.[2] However, the forfeiture complaint specifically reserved the issue of the Appellee's standing to contest the forfeiture. On September 2, 2013, the Appellees filed a motion to dismiss the forfeiture complaint or in the alternative, to consolidate the forfeiture litigation with the previously filed Replevin Lawsuit. The motion to dismiss was based upon the assertion that both the Replevin and the State's Forfeiture lawsuits dealt with identical issues, namely, the custody of the horses. The Appellees also argued that the forfeiture warrant was not properly issued because the State failed to obtain it within five (5) working days of March 1, 2012, as required by Tennessee Code Annotated Section 39-11-707(c). On the same day, the Appellees[] filed a motion to dismiss the forfeiture warrant, arguing generally the same basis as the motion to dismiss the forfeiture complaint.

Walking Horse I, 2015 WL 1636704, at *1 (footnotes in original).

         The trial court eventually granted Appellees' motion to dismiss on the ground that the State had "violated certain procedural requirements contained in the forfeiture statutory scheme in taking possession of the subject horses." Id. at *2. An appeal to this Court followed, in which we ruled that the "threshold matter" of Appellees' standing to contest the forfeiture had never been decided by the trial court and had not been waived by the State. Id. at *5. As such, we vacated the judgment and remanded the case back to the trial court for a determination of standing. Id. at *6-*7.

         The parties returned to the trial court, and Appellees filed a motion to show cause why their horses should not be returned to them in order to establish standing under Tennessee Code Annotated section 39-11-709(d). The parties later agreed that Appellees were the owners of the horses. The State argued, however, that in order to have standing to contest the forfeiture, Appellees were required to show that they were "innocent owners" under Tennessee Code Annotated section 39-11-701, discussed in detail, infra. Nevertheless, the trial court eventually ruled in favor of Appellees on the issue of standing, reasoning that Appellees sufficiently established that they were "innocent owners" because they had never been convicted of the crime of abusing horses. Immediately following the trial court's ruling on standing, Appellees filed a motion to deem admitted certain requests for admission that had been filed prior to the first appeal. Shortly thereafter, on November 4, 2015, Appellees filed a motion for summary judgment arguing that the State's forfeiture attempt should be dismissed due to its failure to follow certain procedural requirements. Appellees' motion was accompanied by a statement of undisputed material facts concerning the taking of the horses and the notice provided to Appellees. The State responded in opposition on January 21, 2016, generally admitting the procedure utilized by the State in seizing the horses, but including additional facts alleging that Appellees were aware of the abuse of their animals.

         The State later filed a response to Appellees' motion to deem requests for admission admitted, arguing that it was not required to respond to the requests because they had not been refiled following the first appeal. The State also argued that this matter was criminal and therefore the Tennessee Rules of Civil Procedure regarding requests for admission were inapplicable.

          The trial court entered an order on April 2, 2016, denying Appellees' motion to deem requests for admission admitted but granting Appellees' motion for summary judgment, ruling that the State failed to comply with procedural requirements under Tennessee Code Annotated section 39-11-701, et seq. and section 39-14-202(e). The State thereafter filed a timely notice of appeal to this Court.[3]

         Issues Presented

         The State raises two issues, which are restated from its appellate brief:

1. Whether the trial court erred in determining that Appellees had standing to challenge the forfeiture under Tennessee Code Annotated section 39-11-701, et seq.?
2. Whether the trial court erred in granting Appellees' motion for summary judgment due to the State's failure to comply with applicable procedural requirements?

         In the posture of appellee, Appellees contend that the trial court erred in denying Appellees' motion to have requests for admission deemed admitted.

         Discussion

         Standing

         As an initial matter, we must first determine whether the trial court correctly concluded that Appellees had standing to intervene in this forfeiture proceeding and contest the forfeiture of the subject horses. The issue of whether a party has standing is a question of law. Massengale v. City of E. Ridge, 399 S.W.3d 118, 123 (Tenn. Ct. App. 2012) (citing Cox v. Shell Oil Co., 196 S.W.3d 747, 758 (Tenn. Ct. App. 2005)). Therefore, "our review is de novo upon the record with no presumption of correctness accompanying the trial court's conclusions of law." Cox, 196 S.W.3d at 758.

         As we explained in Walking Horse I, standing is a threshold matter that must be determined before a party may contest the forfeiture of property. See Walking Horse I, 2015 WL 1636704, at *2-*3. Standing in this case is governed by Tennessee Code Annotated section 39-11-701, et seq. Id. at *2 (holding that although the forfeiture of animals allegedly abused is governed by section 39-14-202(e), section 39-11-709 governs the procedure for establishing standing) (citing State v. Siliski, No. M2004-02790-CCA-R3-CO, 2006 WL 1931814, at *3 (Tenn. Crim. App. July 10, 2006) ("We recognize that animals forfeited under the animal cruelty statutes are not property acquired or received as a result of the offense, but absent any forfeiture procedures within Part 2 on Animals, we look to the general provisions of this title for the proper procedure.")).

         In interpreting the statutes governing standing, we apply the familiar rules of statutory construction. As explained by our supreme court:

"The most basic principle of statutory construction is to ascertain and give effect to the legislative intent without unduly restricting or expanding a statute's coverage beyond its intended scope." Owens v. State, 908 S.W.2d 923, 926 (Tenn. 1995) (citing State v. Sliger, 846 S.W.2d 262, 263 (Tenn.1993)). "The text of the statute is of primary importance." Mills v. Fulmarque, 360 S.W.3d 362, 368 (Tenn. 2012). A statute should be read naturally and reasonably, with the presumption that the legislature says what it means and means what it says. See BellSouth Telecomms., Inc. v. Greer, 972 S.W.2d 663, 673 (Tenn. Ct. App. 1997).
Statutes that relate to the same subject matter or have a common purpose must be read in pari materia so as to give the intended effect to both. "[T]he construction of one such statute, if doubtful, may be aided by considering the words and legislative intent indicated by the language of another statute." Graham v. Caples, 325 S.W.3d 578, 582 (Tenn. 2010) (quoting Wilson v. Johnson Cnty., 879 S.W.2d 807, 809 (Tenn. 1994)). We seek to adopt the most "reasonable construction which avoids statutory conflict and provides for harmonious operation of the laws." Carver v. Citizen Utils. Co., 954 S.W.2d 34, 35 (Tenn.1997). Issues of statutory interpretation present a question of law, which we review de novo on appeal, giving no deference to the lower court decision. Mills, 360 S.W.3d at 366; Lind v. Beaman Dodge, Inc., 356 S.W.3d 889, 895 (Tenn. 2011).

In re Kaliyah S., 455 S.W.3d 533, 552 (Tenn. 2015). As such, we first consider the text of the statute.

         To begin, the forfeiture statute at issue here "mandates that '[o]nly an owner or interest holder may make a claim for return of property seized for forfeiture or otherwise contest the forfeiture under this part.'" Walking Horse I, 2015 WL 1636704, at *4 (quoting Tenn. Code Ann. § 39-11-709(a)). Tennessee Code Annotated section 39-11-708(d) therefore provides that: "The claimant must first establish by a preponderance of the evidence that the claimant is an owner in the property seized before other evidence is taken. The claimant has the burden of establishing standing to assert the claim." Thus, section 39-11-709(a) and (d) make clear that to have standing to contest the forfeiture of property under the general forfeiture statutory scheme, the claimant must establish that he or she is an owner or interest holder in the subject property. See also Tenn. Code Ann. § 39-11-708(c) ("Any party who claims an interest in the property subject to forfeiture must first establish by a preponderance of the evidence that the party is an owner or interest holder in the property seized before other evidence is taken. The claimant has the burden of establishing standing to assert the claim."). An owner of property for purposes of the general forfeiture statute is expressly defined by the statute as "a person, other than an interest holder, who has an interest in the property." Tenn. Code Ann. § 39-11-702(3). In contrast, an interest holder is defined as "a secured party within the meaning of § 47-9-102(a), a mortgagee, lien creditor, one granted a possessory lien under law, or the beneficiary of a security interest or encumbrance pertaining to an interest in property, whose interest would be perfected against a good faith purchaser for value." Tenn. Code Ann. § 39-11-702(2).

         In this case, there can be no dispute that Appellees "ha[ve] an interest" in the subject horses. Tenn. Code Ann. § 39-11-702(3). Indeed, in response to Appellees' later filed statement of undisputed facts in support of the motion for summary judgment, the State admitted that Appellees are the "title-holders" of the subject horses.[4] As such, they clearly qualify as "owners" ...


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