al-h-thomas-on-behalf-of-himself-and-the-citizens-and-taxpayers-of-the ( 2012 )

IN THE COURT OF APPEALS OF TENNESSEE
AT JACKSON
March 20, 2012 Session
AL H. THOMAS, ON BEHALF OF HIMSELF AND THE CITIZENS AND
TAXPAYERS OF THE CITY OF MEMPHIS
v.
JOSEPH LEE, III, ROBERT L. J. SPENCE, JR., AND HALBERT E.
DOCKINS, JR.
Appeal from the Chancery Court of Shelby County
No. CH–09-1495-2 Arnold B. Goldin, Chancellor
No. W2011-01645-COA-R3-CV - Filed May 29, 2012
This appeal involves a lawsuit by a taxpayer. The taxpayer filed this action on behalf of the
citizens of the municipality to prevent a disputed disbursement of funds, naming as
defendants the municipality, the municipality’s utility district, and three private citizens. By
the time the initial hearing in this matter took place, the only defendants who remained in the
suit were the three private citizens. Finding that the taxpayer lacked standing to pursue this
action, the trial court dismissed the case. The taxpayer then filed a motion to alter or amend,
seeking to continue to pursue the lawsuit, pursuant to Bennett v. Stutts, 521 S.W.2d 575(Tenn. 1975). The trial court denied the motion to alter or amend. The taxpayer appeals. We
affirm, finding the exception in Bennett v. Stutts inapplicable.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court
is Affirmed and Remanded
H OLLY M. K IRBY, J., delivered the opinion of the Court, in which A LAN E. H IGHERS, P.J.,
W.S., and D AVID R. F ARMER, J., joined.
Ronald D. Krelstein, Germantown, Tennessee for Plaintiff/Appellant, Al Thomas.
Ricky E. Wilkins & Sharon Harless Loy, Memphis, Tennessee for Defendant/Appellees,
Joseph Lee, III and Robert L. J. Spence, Jr.1
1
On January 20, 2012, Defendant/Appellee Halbert E. Dockins, Jr. filed a notice of joinder in the brief of
appellees Joseph Lee, III and Robert L. J. Spence Jr. with this Court and incorporated by reference all facts
and arguments contained therein.
OPINION
F ACTS AND P ROCEEDINGS B ELOW
This appeal involves one of the avenues by which Plaintiff/Appellant Al Thomas (“Thomas”)
sought to attack the decision by the City of Memphis to pay funds to Defendant/Appellee
Joseph Lee, III (“Lee”) in settlement of Lee’s lawsuit against the City.2
This case arises from a lawsuit filed by Lee in December 2008 against the City of Memphis and
members of the Memphis City Council (“Lee v. City of Memphis”). Lee was appointed by the
former Mayor of the City of Memphis, Mayor W. W. Herenton, as the president of
Memphis’s utility district, Memphis, Light, Gas & Water (“MLGW”). While serving in that
capacity, Lee was named in criminal charges. He hired Defendant/Appellee Robert L. J.
Spence, Jr. (“Spence”), an attorney, to defend him. After the charges were dismissed, Lee
sought payment of his legal fees by the City, in the amount of $426,422. When the fees were
not paid, Lee filed the lawsuit against the City and MLGW, asserting that the Memphis City
Council voted to deny his request for payment of his legal fees on the basis of his race or
another protected category. Eventually, the City of Memphis made an offer of judgment to
Lee in the full amount of legal expenses Lee requested. Not surprisingly, Lee accepted the
offer. On June 30, 2009, the trial court entered a final judgment in Lee’s favor in the amount
of $426,422.
On July 9, 2009, taxpayer Thomas sent a notice to the City of Memphis and MLGW,
informing them of his belief that any payment of legal fees to Lee pursuant to the settlement
agreement would be unlawful and contrary to the public policy of Tennessee. On July 15,
2009, Thomas filed the instant lawsuit seeking a declaratory judgment and injunctive relief
“on behalf of himself and the citizens and taxpayers of the City of Memphis.” 3 Thomas
sought to enjoin the City of Memphis and MLGW from making any payments to Lee,
2
For a more comprehensive recitation of the facts which led to the instant appeal, see Joseph Lee, III v. City
of Memphis, et al., No. W2011-01643-COA-R3-CV, 2012 WL 1245665, at *1-2; 2012 Tenn. App. LEXIS
230, at *1-6 (Tenn. Ct. App. Apr. 11, 2012).
3
At the same time, Thomas also filed a motion to intervene in Lee v. City of Memphis, seeking to have the
final judgment vacated pursuant to Rule 60.02(3). Lee v. City of Memphis, 2012 WL 1245665, at *2; 2012
Tenn. App. LEXIS 230, at *5. Thomas asserted that the judgment was void because MLGW was a necessary
party and was not joined in the action. Id. at *2. This motion lay dormant for two years. Id. at *2. On June
23, 2010, the trial court entered an order denying Thomas’s motion to intervene on grounds that it was not
timely filed and that Thomas lacked standing. Id. at *2. This order was appealed. On April 11, 2012, this
Court released a Memorandum Opinion finding that the trial court did not err in denying Thomas’s motion
to intervene on the basis that it was untimely. The Court did not address whether Thomas had standing to
intervene. Id. at *4.
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Spence, or another of Lee’s attorneys, Defendant/Appellee Halbert E. Dockins, Jr.
(“Dockins”)4 (collectively “Defendants”) pursuant to the settlement agreement in Lee v. City
of Memphis. Although Thomas was apparently aware that the funds had already been paid
to Lee, his lawsuit also sought a restraining order to prevent the distribution of funds. In
August 2009, Lee, Spence, Dockins, and the City of Memphis filed motions to dismiss.5
In August 2009, at a hearing on Thomas’s request for a restraining order, the trial court
determined that the funds in question had already been distributed to the appropriate parties,
so a restraining order was inappropriate. At this time, the District Attorney General asked
the trial court for thirty days to review Thomas’s complaint to determine whether the
Attorney General would participate in it.
Subsequently, Thomas took a voluntary non-suit as to the City of Memphis and MLGW. The
City of Memphis was permitted to intervene as a plaintiff in Thomas’s lawsuit. The lawsuit
remained pending against individual Defendants Lee, Spence, and Dockins.
On December 1, 2009, the trial court held a hearing on the Defendants’ individual motions
to dismiss. On December 14, 2009, the trial court entered an order granting the motions to
dismiss, holding that, “as a matter of law [Thomas], does not have standing to sue the
individual defendants to make a recovery for the benefit of the City of Memphis.”
Two days later, Thomas filed a motion to alter and amend the order. He asked the trial court
to permit him to proceed on behalf of the District Attorney General, citing Bennett v. Stutts,
521 S.W.2d 575 (Tenn. 1975). Thomas asked the trial court to amend its prior order, conduct
an in limine hearing pursuant to Bennett, and authorize Thomas to pursue his action “not as
a mere taxpayer, but on behalf of the State.”
In May 2011, the District Attorney General filed a notice with the trial court that he declined
to participate in Thomas’s lawsuit. The District Attorney General indicated that their office
was pursuing a separate ouster suit on the same subject matter as Thomas’s lawsuit. Shortly
after that, the City of Memphis, as intervening plaintiff, filed a voluntary non-suit. This left
Thomas as the only plaintiff pursuing his claim against individual Defendants Lee, Spence,
and Dockins.
On June 23, 2011, the trial court entered an order denying Thomas’s motion to alter or
amend. In this order, the trial court reiterated that Thomas did not have standing because he
4
Defendant Dockins is an attorney who represented Lee in Lee v. City of Memphis.
5
In August 2009, MLGW filed an answer asserting, inter alia, failure to state a claim and lack of standing.
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could not claim a special interest or injury, and then addressed Thomas’s request to be
permitted to proceed pursuant to Bennett v. Stutts.
The trial court first found that the District Attorney General acted within his prosecutorial
discretion in declining to participate in Thomas’s lawsuit. It also said that Thomas’s lawsuit
was filed as a quo warranto action, alleging wrongful acts by a public official. However,
Thomas had taken a voluntary non-suit against the City of Memphis, leaving only private
citizens as defendants,6 and the trial court held that a quo warranto action cannot stand
against private citizens. On this basis, the trial court denied Thomas’s motion to alter or
amend. Thomas now appeals.
I SSUES ON A PPEAL AND S TANDARD OF REVIEW
Thomas presents three issues for review by this Court. First, Thomas argues that the trial
court erred in holding that Thomas, acting on behalf of the City of Memphis, did not have
standing under Bennett v. Stutts to recover the funds paid to the individual defendants.
Thomas also argues that the trial court erred in not conducting an in limine hearing to
determine whether his action was meritorious. Finally, he contends that the District Attorney
General abused his discretion in refusing to prosecute this action.
A NALYSIS
Initially, we must clarify the procedural posture of this case and the issues raised. We note
that all of the issues that Thomas raises on appeal arise from his request for authorization to
proceed as a private citizen in the name of the State of Tennessee to rectify a public wrong,
under Bennett v. Stutts. This authorization was requested by Thomas in the context of his
motion to alter or amend the trial court’s order granting the motions to dismiss filed by
Defendants Lee, Spence, and Dockins. Thus, Thomas does not appeal the trial court’s
original grant of the motions to dismiss, only the trial court’s order on the motion to alter or
amend. On appeal, we review a trial court’s denial of a motion to alter or amend for an abuse
of discretion. Chambliss v. Stohler, 124 S.W.3d 116, 120 (Tenn. Ct. App. 2003). A l l o f
Thomas’s issues on appeal are premised on whether he can proceed under Bennett v. Stutts
in the subject lawsuit. Therefore, as a threshold matter, we examine the ruling in Bennett
v. Stutts.
Thomas does not dispute the overall principle set forth in Bennett: “It is the settled law in
this state that private citizens, as such, cannot maintain an action complaining of the
6
Lee was no longer the president of MLGW at the time Thomas’s lawsuit was filed; thus, Lee was sued in
his individual capacity as opposed to his official capacity.
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wrongful acts of public officials unless such private citizens aver special interest or a special
injury not common to the public generally.” Bennett, 521 S.W.2d at 576 (citing Badgett v.
Broome, 409 S.W.2d 354, 356 (Tenn. 1966); Skelton v. Barnett, 227 S.W.2d 774, 775
(Tenn. 1950); Patton v. City of Chattanooga, 65 S.W. 414, 421-22 (Tenn. 1901)). See also
DeSelm v. Tenn. Peace Officers Stand. and Training Comm. (“Tenn. Peace Officers”), No.
M2009-01525-COA-R3-CV, 2010 WL 3959627, at *21 (Tenn. Ct. App. Oct. 8, 2010). The
trial court below found that Thomas had alleged no such special interest or special injury, and
Thomas has not appealed that ruling. Nevertheless, Thomas seeks a narrow basis for a
taxpayer to proceed set forth in Bennett, discussed below.
In Bennett, residents and taxpayers of Dyer County filed a lawsuit against the Dyer County
Quarterly Court and its members. Bennett, 521 S.W.2d at 576. The plaintiffs alleged that
the Quarterly Court conducted an unlawful secret ballot. Id.; Tenn. Peace Officers, 2010
WL 3959627, at *21. They sought a declaration voiding the election that resulted from the
secret ballot. Bennett, 521 S.W.2d at 576. The trial court held that the action should have
been filed as a quo warranto proceeding, so the plaintiffs amended their complaint to state
a quo warranto claim for relief. Id. The trial court dismissed the lawsuit for lack of
standing, finding that a quo warranto action must be filed by the Attorney General, not by
private citizens. Id.; Tenn. Peace Officers, 2010 WL 3959627, at *21. The plaintiffs
appealed to the Tennessee Supreme Court.
On appeal, the Supreme Court in Bennett largely agreed with the trial court’s holding, but
carved out a narrow exception to the broad principle on which the trial court relied. Bennett,
521 S.W2d at 577. It acknowledged that requiring quo warranto actions against public
officials to be brought by the Attorney General “can create insurmountable problems” and
may “stifle” citizens who are “public spirited” if the Attorney General fails to take action.
Id.; Tenn. Peace Officers, 2010 WL 3959627, at *22. The Bennett Court held:
If the District Attorney General. . . should act arbitrarily or capriciously or
should be guilty of palpable abuse of his discretion in declining to bring such
an action, or in authorizing its institution, the courts will take jurisdiction upon
the relation of a private citizen, in the name of the State of Tennessee.
When citizens sue to rectify a public wrong, under these circumstances, a copy
of the complaint shall be served upon the District Attorney General. It shall be
the duty of the trial court forthwith to conduct an in limine hearing designed
to determine whether to permit plaintiffs to proceed. If it be determined that
the District Attorney General's refusal to bring the action, or to authorize the
use of his name in its institution, was improper or unjustified, or that plaintiff's
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case is prima facie meritorious, the trial court shall permit the action to
proceed.
Bennett, 521 S.W.2d at 577 (Tenn. 1975) (citations omitted); Tenn. Peace Officers, 2010
WL 3959627, at *22. In this appeal, Thomas argues that the trial court erred, for several
reasons, in not permitting him to proceed under the above Bennett exception.
Thomas’s argument fails for at least two reasons. First, the situation for which the Bennett
exception was established is not present in this case. In Bennett, the “public spirited
citizens” sought to proceed against public officials for wrongdoing in their public actions.
In the case at bar, Thomas voluntarily dismissed his claims against the City of Memphis and
MLGW. All that is left are claims against private citizens, namely, Lee, Spence, and
Dockins. Thomas cites no authority for application of Bennett v. Stutts in a lawsuit by one
private citizen against other private citizens.7
In addition, Thomas’s argument fundamentally misapprehends the nature of the exception
established in Bennett v. Stutts. In his appellate brief, Thomas states: “Bennett allows a very
narrow exception to the general rule that a citizen like Thomas does not have standing to sue
unless he alleges a specific harm to himself as opposed to the public generally.” Bennett,
however, did not establish an exception to the rule requiring a special interest or injury; it
only established an exception to the rule that a quo warranto proceeding must be pursued by
the Attorney General. Indeed, the plaintiffs in Bennett v. Stutts were not permitted to
proceed under the Bennett exception because they lacked standing. Bennett, 521 S.W.2d
at 578.
This issue was addressed by this Court in DeSelm v. Owing, 310 S.W.3d 353 (Tenn. Ct. App.
2009). The plaintiffs in DeSelm contended that the trial court should have held an in limine
hearing to determine whether the plaintiffs should be permitted to proceed under the Bennett
exception “regardless of whether the plaintiffs have standing under the general principle
reiterated in Bennett.” DeSelm, 310 S.W.3d at 359. The DeSelm court explained:
Bennett’s reference to the district attorney general is simply a recognition of
the unique role of the attorney general in suits of this nature. However, despite
this unique role, Bennett makes clear that the attorney general cannot “act
7
Thomas attempts to argue that he has standing to bring a quo warranto action against private defendants,
based on Bonner v. Andrews, 175 S.W. 563 (Tenn. 1914). He argues that Bonner establishes that standing
is not necessary because an individual taxpayer has the right to sue private citizen defendants to recover
funds for the benefit of the municipality in the absence of a statute vesting the taxpayer with that right. After
reviewing Bonner, we find that it is inapposite and that this argument is without merit.
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arbitrarily or capriciously” or “be guilty of palpable abuse of his discretion in
declining to” pursue or allow such a suit to be pursued in the attorney general’s
name. Bennett does not expressly say that the failure to act of a recalcitrant
attorney general will, ipso facto, convert a plaintiff, without standing in the
traditional sense, into a plaintiff with standing. In the absence of such an
express holding by the High Court, we conclude that the failure of an attorney
general to act or allow his or her name to be used, simply means that the
attorney general’s preeminent role in this area will give way to a plaintiff with
standing.
We find no error in the trial court’s failure to conduct a hearing on the
“attorney general” issue discussed in Bennett. . . . The record clearly reflects
that the plaintiffs do not “aver special interest or a special injury not common
to the public generally.” We do not doubt that these plaintiffs are “public
spirited citizens,” active in the political and public affairs of the community,
“politically associated persons,” and that they have participated in the filing of
many lawsuits in an effort to remedy and correct what they perceive to be
wrongful and illegal conduct by public officials. None of this, however, vests
them with standing. In the absence of standing, they cannot proceed with this
action.
DeSelm, 310 S.W.3d at 359 (emphasis in original) (referencing Bennett, 525 S.W.2d at 576-
77). See also Tenn. Peace Officers, 2010 WL 3959627, at *23.
In granting the motions to dismiss filed by the individual Defendants, the trial court below
found that Thomas has failed to allege any personal stake or any “special interest or a special
injury not common to the public generally.” This ruling was not appealed. Thus, it is
undisputed that Thomas does not have a “special interest or a special injury not common to
the public generally,” and does not have standing to proceed with a quo warranto action
under Bennett v. Stutts.
These holdings pretermit any other issues raised on appeal. We agree with the holding of the
trial court and find no error.
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C ONCLUSION
The decision of the trial court is affirmed. Costs on appeal are taxed to the Appellant Al H.
Thomas and his surety, for which execution may issue if necessary.
___________________________
HOLLY M. KIRBY, JUDGE
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