RACHEL ANDERSON, ET AL.
METROPOLITAN GOVERNMENT OF NASHVILLE AND DAVIDSON COUNTY, TN
Session August 15, 2017
from the Circuit Court for Davidson County No. 15C3212Kelvin
D. Jones, Judge
case involves various issues related to an ordinance the
Metropolitan Government of Nashville and Davidson County
enacted to address short-term rental properties. Among other
things, the enacted ordinance provided that no more than 3%
of non-owner-occupied single-family or two-family residential
units would be granted short-term rental permits in each
census tract. The plaintiffs, who previously listed their
home on Airbnb.com, filed suit against the Metropolitan
Government challenging the enforceability of the ordinance on
several fronts. In addition to asserting that the enacted
ordinance was unconstitutionally vague, the plaintiffs
contended that the 3% cap on certain short-term rentals was
an unlawful monopoly. After competing motions for summary
judgment were filed, the trial court held that the definition
of a "short-term rental property" was
unconstitutionally vague as-applied to the plaintiffs, but it
also held that the 3% cap did not constitute a monopoly.
Given the plaintiffs' success on their constitutional
"vagueness" claim, the trial court found them to be
prevailing parties under 42 U.S.C. § 1988 and awarded
them certain attorney's fees. On appeal, both sides raise
issues asserting error. Because several definitions contained
within the governmental ordinance have been amended since the
filing of this appeal, we conclude that the plaintiffs'
constitutional "vagueness" claim is now moot.
Concerning the propriety of the 3% cap on non-owner-occupied
short-term rentals, we have determined that the cap is
constitutionally permissible even assuming that it
constitutes a monopoly. For reasons discussed herein, we
vacate the award of attorney's fees and remand the issue
R. App. P. 3 Appeal as of Right; Judgment of the Circuit
Court Affirmed in Part, Vacated in Part and Remanded
Barkenbus Fox and Catherine J. Pham, Nashville, Tennessee,
for the appellant, Metropolitan Government of Nashville &
H. Boucek, Nashville, Tennessee, for the appellees, Rachel
Anderson, and P. J. Anderson.
B. Goldin, J., delivered the opinion of the Court, in which
Brandon O. Gibson and Kenny Armstrong, JJ., joined.
B. GOLDIN, JUDGE
AND PROCEDURAL HISTORY
and P.J. Anderson ("the Andersons") moved from
Chicago to Nashville in August 2013 due to Mr. Anderson's
career as an aspiring musician. The couple bought a home in
the Germantown neighborhood of Nashville and began listing
their home on Airbnb.com in the fall of that year.
2014, the Metropolitan Council, the legislative body for the
Metropolitan Government of Nashville and Davidson County
("Metro"), began debating laws to address
short-term rental properties. This process resulted in the
passage of two ordinances in February 2015, Substitute
Ordinance No. BL2014-909 and Ordinance No. BL2014-951. Under
the ordinances, a "Short Term Rental Property, " or
"STRP, " was defined to mean "a residential
dwelling unit containing not more than four sleeping rooms
that is used and/or advertised for rent for transient
occupancy by guests as those terms are defined in Section
5.12.010 of the metropolitan code." Substitute Ordinance
No. BL2014-909; Ordinance No. BL2014-951. The ordinances also
specifically stated that "[r]esidential dwelling units
rented to the same occupant for more than 30 continuous days,
Bed and Breakfast establishments, boarding houses, hotels,
and motels shall not be considered Short Term Rental
Property." Substitute Ordinance No. BL2014-909;
Ordinance No. BL2014-951. The primary ordinance implicated in
this appeal, Ordinance No. BL2014-951, imposed a number of
requirements and restrictions on homeowners seeking to
operate a STRP. Among other things, it required operators of
a STRP to obtain a permit, to obtain proof of liability
insurance coverage, and to obey certain fire safety
requirements. Ordinance No. BL2014-951. Advertising
restrictions were also implemented. First, homeowners were
prohibited from advertising their property for use as a STRP
without having first obtained a permit. Id. However,
even with a permit, homeowners were not allowed to display
signs or other advertising on the property indicating that
the dwelling unit was being utilized as a STRP. Id.
of particular relevance to this appeal, Ordinance No.
BL2014-951 also placed a limit on the number of
non-owner-occupied STRPs allowed. Specifically, it
provided that no more than 3% of the single-family or
two-family residential units within each census tract shall
be permitted as non-owner-occupied STRPs. Id. No
limitation was implemented regarding the overall number of
Andersons obtained an owner-occupied permit in June
2015, and the following month, enforcement of the ordinances
began. At the time they obtained their owner-occupied permit,
the Andersons had no intention of moving from Nashville.
However, things soon changed. After the Andersons obtained
their permit, Mrs. Anderson's employer proposed promoting
her to an executive level position. The opportunity was
appealing and offered several benefits, but in order to take
the position, the Andersons would have to move back to
various reasons, the Andersons decided that they would like
to move but still keep their home in Nashville. Because they
also desired to continue offering short-term rentals of their
Nashville home, they intended to convert their STRP permit
from an owner-occupied permit to a non-owner-occupied permit.
Although Mr. Anderson attempted to get a non-owner-occupied
permit on August 19, 2015, his efforts proved unsuccessful.
Because the 3% cap on non-owner-occupied permits had already
been reached in the Andersons' census tract, the request
for a permit was denied.
present litigation commenced shortly thereafter on August 26,
2015, when the Andersons filed suit against Metro in the
Davidson County Circuit Court. The suit was brought in part
under 42 U.S.C. § 1983 and asserted several claims,
nearly all of which alleged constitutional infirmities with
portions of the Metro Code. Most of the raised concerns
related to alleged invalidity of Ordinance No. BL2014-951
(the "STRP ordinance"). First, the Andersons
contended that there was an overlap between the definitions
for hotels, bed and breakfast establishments, and
boardinghouses, which were exempt from the STRP ordinance,
and the definition for STRPs. Assuming they were not
determined to be exempt from Metro's new STRP ordinance,
the Andersons alleged that the ordinance must be deemed
unconstitutionally vague when measured against the due
process clause of the Fourteenth Amendment to the federal
Constitution and Article 1, Section 8 of the Tennessee
Constitution. The Andersons also raised state and federal
constitutional claims with respect to the advertising
restrictions contained in the STRP ordinance. According to
the Andersons, the advertising restrictions unlawfully
abridged their free speech rights.
Andersons' attack on the new STRP ordinance was not
limited to advertising and definitional concerns but also
included challenges to the 3% cap. According to the
Andersons, the 3% cap on non-owner-occupied STRPs violated
equal protection, was a substantive due process violation,
and was an unlawful monopoly in violation of Article 1,
Section 22 of the Tennessee Constitution. In specific
regards to their anti-monopoly claim, the Andersons contended
that the cap had "no legitimate relation to any valid
addition to contesting the validity of the new STRP
ordinance, the Andersons took issue with another Metro
ordinance codified at Metro Code § 6.28.010, which
required every person "engaged in the business of
lodging transients" to keep a register of its guests and
to show such register to the police upon written request.
According to the Andersons, this requirement ran afoul of
Article 1, Section 7 of the Tennessee Constitution and the
Fourth Amendment to the federal Constitution. In requesting
relief stemming from the aforementioned claims, the complaint
sought declaratory relief, injunctive relief, and the
recovery of attorney's fees pursuant to 42 U.S.C. §
September 2015, the Andersons filed a motion for a
preliminary injunction concerning a minority of the claims
they had asserted in their complaint, and in October 2015,
Metro filed a motion to dismiss the lawsuit. Both motions
were heard by the trial court on October 30, 2015, and later
resolved in a series of orders entered on November 12, 2015.
The trial court's November 12 orders granted partial
relief to both sides. In finding that the Andersons were
likely to succeed on the merits of their free speech and
search and seizure claims, the trial court entered an
injunction "prohibiting enforcement of either the
prohibition on STRP signage or the obligation to keep and
surrender guest records." The Andersons' substantive
due process claim, however, was dismissed.
parties' dispute over the Andersons' free speech and
search and seizure claims hinged, in part, on the
applicability of the United States Supreme Court's
decisions in Reed v. Town of Gilbert, ___ U.S. ___,
135 S.Ct. 2218, 192 L.Ed.2d 236 (2015), and City of Los
Angeles v. Patel, ___ U.S. ___, 135 S.Ct. 2443, 192
L.Ed.2d 435 (2015). Whereas the Andersons suggested that
these decisions strongly casted doubt on the
constitutionality of the prohibition on signage included in
the STRP ordinance and the requirement to surrender guest
records codified at Metro Code § 6.28.010, Metro
initially disclaimed this notion. In 2016, however, Metro
took steps to amend the ordinances related to the
Andersons' free speech and search and seizure claims,
citing both Reed and Patel as a basis for
first change that occurred was in relation to the
requirements contained in Metro Code § 6.28.010. As
previously noted, that section mandated that those
"engaged in the business of lodging transients"
must show a register of its guests to the police upon written
request. As amended in May 2016 by Ordinance No. BL2016-177,
Metro Code § 6.28.010 now includes the following
If inspection of the book or register is refused, the
operator, manager, or person in charge shall secure the book
or register in the manner required by the requesting police
officer, so that its contents are preserved. The book or
register shall be kept in the secured location until such
time as an administrative or judicial search warrant,
subpoena, or order can be granted or denied, and any appeal
to the amendment of Metro Code § 6.28.010, an ordinance
was introduced in July 2016 to amend the ban on advertising
included within the STRP ordinance. Specifically, the
ordinance proposed deleting Metro Code § 6.28.030.E,
which had prohibited homeowners from displaying STRP
advertising on their property, and replacing it with the
following language: "Signage. Any sign, as defined in
M.C.L. 17.32.030.B, on a property used as a short term rental
property shall be governed by the provision of M.C.L[.]
Chapter 17.32 Sign Regulations." The ordinance passed
its second reading on August 2, 2016.
light of the changes to Metro Code § 6.28.010 and the
impending changes to Metro Code § 6.28.030.E, Metro
filed a motion on August 12, 2016 to dissolve the preliminary
injunction that had been granted by the trial court and to
dismiss the Andersons' free speech and search and seizure
claims. According to Metro, the Andersons' free speech
and search and seizure claims were rendered moot by the
changes (and imminent changes) to the Metro Code. On August
17, 2016, subsequent to the filing of Metro's motion, the
ordinance amending the STRP advertising restrictions was
finally approved. The following week, on August 25, 2016, the
trial court entered an agreed order dismissing the
Andersons' free speech and search and seizure claims as
moot. Incident to its dismissal of these claims, the trial
court dissolved its preliminary injunction.
the dissolution of the preliminary injunction, four primary
claims remained pending in the trial court: (1) the
Andersons' claim for an exemption under the STRP
ordinance; (2) the constitutional "vagueness"
claim; (3) the equal protection claim; and (4) the
anti-monopoly claim. These claims were subsequently the
center of competing motions for summary judgment, and on
October 28, 2016, the trial court entered an order with
respect to each side's request for summary judgment.
Although the trial court concluded that the "STRP"
definition was unconstitutionally vague as had been argued by
the Andersons, it granted Metro's motion for summary
judgment with respect to the Andersons' equal protection
and anti-monopoly claims. The trial court later amended its
October 28 order by clarifying that the STRP definition was
unconstitutionally vague "as-applied" to the
Andersons, and in an order entered on January 23, 2017,
awarded the Andersons over $100, 000.00 in attorney's
fees. This appeal followed.
the parties' principal appellate briefs raise the
1. Did the trial court err in determining that the STRP
definition was unconstitutionally vague?
2. Did the trial court err in failing to conclude that the 3%
cap represented an unlawful monopoly?
3. Did the trial court err in awarding attorney's fees
and costs to the Andersons based on its "vagueness"
4. Did the trial court err in concluding that the Andersons
only prevailed on their constitutional "vagueness"
judgment is appropriate when there is no genuine issue as to
any material fact and the moving party is entitled to
judgment as a matter of law. Robinson v. Baptist
Mem'l Hosp., 464 S.W.3d 599, 606 (Tenn. Ct. App.
2014) (citations omitted). "The resolution of a motion
for summary judgment is a matter of law, which we review
de novo with no presumption of correctness."
Id. at 607 (citing Martin v. Norfolk S. Ry.
Co., 271 S.W.3d 76, 84 (Tenn. 2008)). In general, an
award of attorney's fees will be reversed or altered only
if the trial court has abused its discretion. Sunburst
Bank v. Patterson, 971 S.W.2d 1, 7 (Tenn. Ct. App. 1997)
(citations omitted). "A court abuses its discretion when
it causes an injustice to the party challenging the decision
by (1) applying an incorrect legal standard, (2) reaching an
illogical or unreasonable decision, or (3) basing its
decision on a clearly erroneous assessment of the
evidence." Lee Med., Inc. v. Beecher, 312
S.W.3d 515, 524 (Tenn. 2010) (citations omitted).
Andersons' Constitutional ...