ELVIS PRESLEY ENTERPRISES, INC., ET AL.
CITY OF MEMPHIS, ET AL.
Session November 14, 2019
from the Chancery Court for Shelby County No. CH-18-0972 Jim
appeal the trial court's grant of Appellees'
Tennessee Rule of Civil Procedure 12.02 motions in this
declaratory judgment action. The trial court dismissed
Appellants' complaint on the ground that Appellants had
no standing to seek a declaratory judgment interpreting a
contract, to which Appellants were neither parties nor
third-party beneficiaries. We affirm the dismissal of
Appellants' complaint for declaratory judgment on the
ground that the complaint is barred as res judicata.
R. App. P. 3 Appeal as of Right; Judgment of the Chancery
Court Affirmed and Remanded
Clarence A. Wilbon, and J. Bennett Fox, Jr., Memphis,
Tennessee, for the appellants, Guesthouse at Graceland, LLC,
Elvis Presley Enterprises, Inc., and EPPF, LLC.
Jonathan P. Lakey, and John J. Cook, Memphis Tennessee, for
the appellee, City of Memphis.
Wade, Clayton C. Purdom, and Rebecca K. Hinds, Memphis,
Tennessee, for the appellee, Shelby County, Tennessee.
Marshall Jones, and Bruce D. Brooke, Memphis, Tennessee, for
the appellee, Memphis Basketball, LLC.
Armstrong, J., delivered the opinion of the court, in which
Carma Dennis McGee, J., joined. J. Steven Stafford, P.J.,
W.S., filed a separate opinion, dissenting.
29, 2001, the City of Memphis ("City"), Shelby
County, Tennessee ("County"), and Hoops, LP, the
predecessor of Memphis Basketball, LLC ("Memphis
Basketball," and together with the City and County,
"Appellees") entered into the Memphis Arena Use and
Operation Agreement (the "Agreement") for
construction and use of the FedEx Forum and the relocation of
the Vancouver Grizzlies to Memphis. As is relevant to this
appeal, the Agreement provides that ". . . neither the
City/County . . . shall . . . design, develop, construct or
otherwise fund, provide economic or tax benefits or
incentives to . . . any new Competing Facility." The
Agreement defines a "Competing Facility," in
relevant part, as "any new indoor or covered sports or
entertainment arena, indoor or covered performance facility
or other indoor or covered facility that (i) could compete
with the [FedEx Forum] for the booking of any event, or (ii)
has or will have a seating capacity of more than 5, 000
persons and fewer than 50, 000 persons . . . ."
City and County have an industrial development corporation,
Economic Development Growth Engine ("EDGE"), which,
among other things, considers applications of property
developers for tax incentive funding ("TIF").
EDGE's decisions require subsequent approval by the
Memphis City Council, County Commission, and, ultimately, the
State of Tennessee.
2014, Elvis Presley Enterprises, Inc., EPPF, LLC, and
Guesthouse at Graceland, LLC (together, "EPE," or
"Appellants") presented, to EDGE, its Graceland
Economic Plan, under which EPE proposed to construct a
450-room hotel, and convention, theater, concert, and museum
facilities. EPE was granted a TIF, under which 50% of the
excess property taxes over the Base Tax (as defined in
EPE's agreement with EDGE) would be captured and
allocated to EPE's project.
2017, EPE advised EDGE that it would be submitting a
supplement to the Graceland Economic Plan, which would amend
the scope of the original plan to include construction of a
6, 200-seat arena. To finance the arena, EPE sought an
adjustment of the TIF to increase the captured and allocated
taxes to 65% above the Base Tax (as opposed to the original
50%). While EPE's supplemental plan was pending, it
alleges that Memphis Basketball contacted EDGE claiming that
the supplemental plan violated the Agreement, which prohibits
the City or County from providing economic or tax benefits or
incentives for construction of competing facilities.
November 15, 2017, EPE filed a complaint for declaratory
judgment and intentional interference with business relations
against Appellees (the "First Complaint"). By order
of February 16, 2018, the trial court granted Appellees'
separate motions to dismiss the complaint. In relevant part,
the trial court held:
EPE has a legislative and governmental issue but seeks a
judicial solution . . . .
In essence, the underlying issue is one of tax divergence,
which is a matter for the legislative branch of government in
cooperation with the executive branch of government . . . .
Before this Court should consider the issue, EPE must have
EDGE formally rule that they have rejected the Supplemental
Plan and that the City Council and County Commission formally
deny EPE's appeal of EDGE's decision . . . .
Therefore, since EPE has not exhausted its administrative
remedies, EPE lacks standing to bring this matter before the
Court and all three motions to dismiss are hereby GRANTED in
their entirety . . . .
March 7, 2018, the City filed a Tennessee Rule of Civil
Procedure 59.04 motion, asking the trial court to amend
certain portions of its February 16, 2018 order. EPE did not
file a response to the Rule 59.04 motion.
the City's Rule 59.04 motion was pending, on April 5,
2018, EDGE voted to conditionally approve EPE's
supplemental economic plan. Specifically, EDGE approved the
supplemental economic plan contingent on
either (i) a final, binding, non-appealable ruling . . . or
(ii) a binding agreement by the parties . . . which binding,
non-appealable ruling or settlement agreement has the effect
of providing that either (A) the Arena is not a Competing
Facility under the Memphis Arena Use and Operating Agreement
. . . or (B) the Arena does not violate the Non-Competition
covenant in the [Agreement], or (C) that the actions of EDGE,
the City of Memphis and County of Shelby, Tennessee in
approving the Arena conform with [the Agreement]. . . .
on June 4, 2018, the County Commission voted to conditionally
approve EPE's supplemental economic plan. The
contingencies stated in the County's resolution were
identical to those contingencies set out in EDGE's
conditional approval, supra. On June 12, 2018, the City
voluntarily withdrew its Rule 59.04 motion.
not appeal the trial court's February 16, 2018 order.
Rather, on June 29, 2018, EPE filed a complaint (the
"Second Complaint") in the trial court. In its
Second Complaint, EPE omitted the intentional interference
with business relations claim it had lodged in the First
Complaint and asked only for a declaratory judgment to
satisfy the EDGE/Shelby County resolution contingency.
Appellees filed separate Tennessee Rule of Civil Procedure
12.02 motions to dismiss the Second Complaint on the ground
that EPE had no standing to bring a declaratory judgment
action on an Agreement to which it was neither a party nor a
third-party beneficiary. In the alternative, Appellees'
asserted that the Second Complaint was barred as res