                                                                                         08/21/2017
               IN THE COURT OF APPEALS OF TENNESSEE
                          AT KNOXVILLE
                                 June 20, 2017 Session

ROY ZUMSTEIN v. ROANE COUNTY EXECUTIVE/MAYOR, ASSESSOR
                  OF PROPERTY, TRUSTEE

                 Appeal from the Chancery Court for Roane County
                No. 2014-131      Frank V. Williams, III, Chancellor
                      ___________________________________

                           No. E2016-02037-COA-R3-CV
                       ___________________________________

This appeal arises from a taxpayer’s successful challenge of the appraisal value assigned
to his real property by the Roane County Property Assessor. The taxpayer filed a petition
for judicial review challenging an administrative decision that affirmed the assessor’s
valuation. The trial court ruled in favor of the taxpayer, overturning the administrative
decision and ordering Roane County to pay the taxpayer’s attorney’s fees. On appeal,
Roane County argues that the trial court had no authority to assess attorney’s fees against
it. We agree and reverse the trial court’s award of attorney’s fees.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court is Reversed
                                  and Remanded.

ARNOLD B. GOLDIN, J., delivered the opinion of the court, in which CHARLES D. SUSANO,
JR., and THOMAS R. FRIERSON, II, JJ., joined.

Greg Leffew, Rockwood, Tennessee, for the appellants, Roane County Executive Mayor,
Roane County Assessor of Property, and Roane County Trustee.

Jimmy G. Carter and Stephanie L. Prager, Knoxville, Tennessee, for the appellee, Roy
Zumstein.

Herbert H. Slatery III, Attorney General and Reporter, Andrée Sophia Blumstein,
Solicitor General, and James P. Urban, Assistant Attorney General, Nashville, Tennessee,
for the appellee, Tennessee State Board of Equalization.
                                             OPINION

                         BACKGROUND AND PROCEDURAL HISTORY

        Roy Zumstein owned three adjacent, separate tax parcels in Roane County. At the
request of Mr. Zumstein, in an effort to reduce the land value appraisal, the Roane
County Property Assessor combined the three parcels into one tax parcel. Mr. Zumstein
initiated these proceedings to challenge his 2013 county real property tax assessment on
the combined parcel. Specifically, Mr. Zumstein argued that the appraisal value of
$444,500 assigned to the land and improvements by the Roane County Property Assessor
was too high. Following a series of administrative appeals, the Tennessee State Board of
Equalization Assessment Appeals Commission issued a decision certifying the property’s
appraisal value as $338,700. Mr. Zumstein filed a petition for judicial review of that
decision in the Roane County Chancery Court. The trial court conducted an evidentiary
hearing and determined that the property’s appraisal value should be reduced to
$270,200. Shortly thereafter, Mr. Zumstein filed a motion requesting an award of his
attorney’s fees. Mr. Zumstein asserted that Tennessee Code Annotated section 67-1-
1803(d) mandates that attorney’s fees be awarded to prevailing parties in tax litigation.
While the trial court did not rule on the applicability of the statute, it concluded that
requiring Mr. Zumstein to incur attorney’s fees in the case “would be inequitable.” As
such, the trial court entered an order directing Roane County to pay Mr. Zumstein’s
attorney’s fees in the amount of $12,325. Roane County appealed.

                                            DISCUSSION

       The sole issue Roane County raises on appeal is whether the trial court erred in
granting Mr. Zumstein’s request for attorney’s fees. That issue involves a question of
law. We review trial court decisions on questions of law de novo with no presumption of
correctness. Knox Cnty. ex rel. Envtl. Termite & Pest Control, Inc. v. Arrow
Exterminators, Inc., 350 S.W.3d 511, 518 (Tenn. 2011).

       The Tennessee Supreme Court recently reaffirmed its long-standing adherence to
the “American Rule” in assessing attorney’s fees. Eberbach v. Eberbach, No. M2014-
01811-SC-R11-CV, --- S.W.3d ----, 2017 WL 2255582, at *3 (Tenn. May 23, 2017). The
American Rule provides that, absent a specific contractual or statutory provision that
creates a right to recover attorney’s fees, litigants are generally responsible for their own
attorney’s fees. Cracker Barrel Old Country Store, Inc. v. Epperson, 284 S.W.3d 303,
308 (Tenn. 2009). Tennessee’s adherence to the American Rule is based on public policy
considerations suggesting that society is best served by litigants bearing their own legal
fees regardless of the outcome of a case.1 Id. As is often the case with common law

       1
          The Tennessee Supreme Court has cited four specific public policy considerations that support
its adherence to the American Rule:
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rules, however, courts have recognized that equitable exceptions to the American Rule
should apply in certain circumstances. See, e.g., House v. Estate of Edmonson, 245
S.W.3d 372, 377 (Tenn. 2008) (explaining and applying the “common fund” exception to
the American Rule); Pullman Standard, Inc. v. Abex Corp., 693 S.W.2d 336, 339-40
(Tenn. 1985) (recognizing the “implied indemnity” and the “independent tort” exceptions
to the American Rule).

       In this case, the trial court did not cite any statutory or contractual provision that
established Mr. Zumstein’s right to recover his attorney’s fees from Roane County.
Rather, the trial court merely stated, “Requiring [Mr. Zumstein] to incur attorney fees in
this cause would be inequitable.” Thus, it appears that the trial court relied solely on
equitable considerations in assessing the cost of Mr. Zumstein’s attorney’s fees against
Roane County.

      Roane County contends that the trial court had no authority to assess attorney’s
fees against it based solely on equitable considerations. Specifically, Roane County
argues that a court may only assess attorney’s fees against a governmental entity when
such an award is expressly authorized by statute. For the reasons that follow, we agree.

       Roane County’s argument is based on the doctrine of sovereign immunity. The
doctrine of sovereign immunity has been a part of Tennessee common law for well over a
century and provides that a suit may not be brought against a governmental entity unless
that governmental entity has consented to be sued. Hawks v. City of Westmoreland, 960
S.W.2d 10, 14 (Tenn. 1997). Likewise, the Tennessee Constitution provides that no party
may bring a suit against “the State” except “in such a manner and in such courts as the
Legislature may by law direct.”2 Tenn. Const. art. 1, § 17; see also Tenn. Code Ann. §
20-13-102(a) (codifying the constitutional rule of sovereign immunity). Thus, at
common law and under the Tennessee Constitution, “governmental entities may prescribe
the terms and conditions under which they consent to be sued, . . . including when, in
what forum, and in what manner suit may be brought.” Sneed v. City of Red Bank, Tenn.,
459 S.W.3d 17, 23 (Tenn. 2014) (quoting Cruse v. City of Columbia, 922 S.W.2d 492,

                 First, since litigation is inherently uncertain, a party should not be penalized for
        merely bringing or defending a lawsuit. Second, the poor might be unjustly discouraged
        from instituting actions to vindicate their rights if the penalty for losing included paying
        the fees of their opponent’s lawyer. Third, requiring each party to be responsible for their
        own legal fees promotes settlement. Fourth, the time, expense, and difficulty inherent in
        litigating the appropriate amount of attorney’s fees to award would add another layer to
        the litigation and burden the courts and the parties with ancillary proceedings.

House v. Estate of Edmonson, 245 S.W.3d 372, 377 (Tenn. 2008) (internal citations omitted).
        2
         Although the constitutional provision specifically references suits against “the State,” sovereign
immunity also extends to “the departments, commissions, boards, institutions and municipalities of the
State.” Metro. Gov’t of Nashville & Davidson Cnty. v. Allen, 415 S.W.2d 632, 635 (Tenn. 1967).
                                                   -3-
495 (Tenn. 1996)). The “traditional construction” of Tennessee’s rule of sovereign
immunity “is that suits cannot be brought against the State unless explicitly authorized by
statute.” Colonial Pipeline Co. v. Morgan, 236 S.W.3d 827, 849 (Tenn. 2008) (emphasis
added). In other words, “legislation authorizing suits against the state must provide for
the state’s consent in ‘plain, clear, and unmistakable’ terms.” Northland Ins. Co. v. State,
33 S.W.3d 727, 729 (Tenn. 2000) (quoting State ex rel. Allen v. Cook, 106 S.W.2d 858,
861 (Tenn. 1937)). As such, Tennessee courts will not find a waiver of sovereign
immunity “unless there is a statute clearly and unmistakably disclosing an intent upon the
part of the Legislature to permit such litigation.” Davidson v. Lewis Bros. Bakery, 227
S.W.3d 17, 19 (Tenn. 2007) (quoting Scates v. Bd. of Comm’rs of Union City, 265
S.W.2d 563, 565 (Tenn. 1954)).

        The doctrine of sovereign immunity empowers the General Assembly to determine
not only what actions may be brought against a governmental entity but also what
remedies are available in those actions. See Emory v. Memphis City Schools Bd. of
Educ., 514 S.W.3d 129, 145 (Tenn. 2017) (“The remedy crafted by the Court of Appeals
is not contained in the [Teachers’] Tenure Act, and we are not at liberty to judicially
modify the Act.”). In Wells v. Tennessee Board of Regents, the trial court awarded back
pay to a tenured university professor whose employment had been wrongfully terminated
by the State. 231 S.W.3d 912, 913 (Tenn. 2007). The trial court reasoned that, although
the governing statute did not expressly authorize such an award, “the end result” of the
litigation was “not fair” without it. Id. at 915; see Tenn. Code Ann. § 49-8-304
(governing judicial review of termination decisions involving tenured state university
professors). The Tennessee Supreme Court reversed the trial court’s award, noting the
absence of express statutory language that authorized a monetary remedy. Wells, 231
S.W.3d at 917. The court explained, “Had the legislature intended for a wrongfully
terminated college or university professor to receive monetary damages, the statute
should have included that provision.” Id. The court therefore concluded, “[T]he General
Assembly has chosen not to waive sovereign immunity under these circumstances.” Id.
at 917-18.

       Notably, the General Assembly’s exclusive power to define the remedies available
to a party prevailing in litigation against the State extends to awards of attorney’s fees
and costs. See Matter of Harris, 849 S.W.2d 334, 336 (Tenn. 1993) (“[T]he statutory
power to assess costs against the state is in derogation of the state’s sovereignty and must
be strictly construed.”). The General Assembly has enacted statutes authorizing the
assessment of attorney’s fees against the State in certain types of cases, which the
Tennessee Supreme Court has characterized as “permissible impingement[s] on
sovereign immunity.” State v. Thompson, 197 S.W.3d 685, 691 (Tenn. 2006) (holding
that Tennessee Code Annotated section 39-37-104 authorizes awards of up to $10,000 in
reasonable and actual attorney’s fees to litigants prevailing against the State on claims
filed under the Equal Access to Justice Act). When the General Assembly has not
enacted such a statute with regard to a particular type of case, however, the courts may
                                             -4-
not assess attorney’s fees against a governmental entity on their own authority. See State
ex rel. Chanaberry v. Stooksbury, 145 S.W.2d 775, 776 (Tenn. 1940) (“The right here
asserted to collect costs from the State is not a common-law right, but dependent wholly
on statute[.]”). It is, after all, the legislature–and not the judiciary–that is specifically
empowered to waive the protections of sovereign immunity. Hughes v. Metro. Gov’t of
Nashville & Davidson Cnty., 340 S.W.3d 352, 360 (Tenn. 2011).

       Based on the foregoing, it is clear that the trial court had no authority to assess
attorney’s fees against Roane County based on equitable considerations alone. Roane
County is a political subdivision of the State and is therefore entitled to the protections
afforded by the doctrine of sovereign immunity. As such, any award of attorney’s fees
assessed against Roane County must have been expressly authorized by statute.

       Nevertheless, Mr. Zumstein contends that this Court should affirm the trial court’s
award because Tennessee Code Annotated section 67-1-1803(d) mandates that attorney’s
fees be awarded to prevailing parties in tax litigation. In pertinent part, Section 67-1-
1803(d) provides:

       The court shall award to the prevailing party reasonable attorneys’ fees and
       expenses of litigation up to twenty percent (20%) of the amount finally
       assessed or denied, including interest after payment.

To determine whether that statute demonstrates the legislature’s clear and unmistakable
intent to waive sovereign immunity in this case, we begin by considering the natural and
ordinary meaning of its words. See Lee Med., Inc. v. Beecher, 312 S.W.3d 515, 526
(Tenn. 2010). However, because words are known by the company they keep, we must
also remain cognizant of the context in which they appear in the statute and the statute’s
general purpose. Id. at 526-27. When a statutory provision is enacted as part of a larger
statutory scheme, we examine the entire statutory scheme with the goal of ascertaining
the intent of each section and the effect of the statutory scheme as a whole. Hill v. City of
Germantown, 31 S.W.3d 234, 238 (Tenn. 2000). If different sections appear to be in
conflict, we must harmonize them, if practicable, and construe them in a manner that will
render every word operative. Id. Notably, a specific provision or statute controls over a
more general provision in the same or a different statutory scheme. See State v. Turner,
193 S.W.3d 522, 526 (Tenn. 2006).

       Title 67 of the Tennessee Code governs the administration and collection of taxes
in Tennessee. Chapter 1 of Title 67 is titled “General Provisions” and contains statutes
that establish the offices and entities responsible for administering and collecting taxes,
the powers delegated to those offices and entities, and general procedures for resolving
tax disputes. Part 18 of Chapter 1, which includes Section 67-1-1803(d), is titled
“Taxpayer Remedies for Disputed Taxes.”

                                            -5-
        Roane County contends that the remedies set forth in Part 18 are not available to
taxpayers challenging a county’s property tax assessment. Roane County’s argument is
based, in large part, on an analysis of the sections that surround Section 67-1-1803. For
example, Roane County points out that Section 67-1-1801 provides taxpayer remedies
“[i]n all cases in which any officer, charged by law with the authority to assess taxes that
are collected or administered by the commissioner of revenue, shall finally assess a tax
alleged or claimed to be due.” Tenn. Code Ann. § 67-1-1801(a)(1) (emphasis added).
Similarly, Section 67-1-1802 states, “The commissioner of revenue . . . is empowered and
directed to refund to taxpayers all taxes collected or administered by the commissioner
that are . . . paid in error[.]” Tenn. Code Ann. § 67-1-1802(a)(1)(A) (emphasis added).
Section 67-1-1804 provides that the procedures established in Part 18 are “the sole and
exclusive jurisdiction for determining liability for all taxes collected or administered by
the commissioner of revenue[.]” Tenn. Code Ann. § 67-1-1804 (emphasis added). Roane
County contends that the legislature’s use of the phrase “by the commissioner of
revenue” in those sections reflects its intent to make all of the remedies in Part 18
available only in disputes involving taxes assessed and collected by the commissioner of
revenue on behalf of the State. As such, Roane County argues that Section 67-1-1803(d)
does not authorize an award of attorney’s fees to a party who successfully challenges a
property tax assessment because property taxes in Tennessee are assessed and collected
by local governments and not by the commissioner of revenue on behalf of the State. See
Tenn. Code Ann. § 67-5-102(a) (authorizing counties to levy taxes on property); Tenn.
Code Ann. § 67-5-103 (authorizing municipalities to levy taxes on property). Put another
way, Roane County contends that Section 67-1-1803(d) only waives sovereign immunity
with regard to the assessment of attorney’s fees against the State.

        Mr. Zumstein, on the other hand, contends that Section 67-1-1803(d) applies
generally to all tax disputes in Tennessee. In support of that argument, Mr. Zumstein
points out that Section 67-1-1803(d), unlike the sections surrounding it, does not contain
specific language that limits its application to disputes involving taxes assessed and
collected by the commissioner of revenue. He therefore contends that Section 67-1-
1803(d), by its plain meaning, mandates awards of attorney’s fees to prevailing parties in
all tax litigation.3



        3
          In his brief, Mr. Zumstein cites four Tennessee cases in support of his assertion that Section 67-
1-1803(d) mandates awards of attorney’s fees to the prevailing party in all tax litigation. We note,
however, that each of the cases cited by Mr. Zumstein involves a taxpayer challenge to the State’s
assessment of sales and use taxes. See Walker’s, Inc. v. Farr, 338 S.W.3d 887, 889 (Tenn. Ct. App.
2010); Davis Enters., LLC v. Farr, No. E2008-00140-COA-R3-CV, 2008 WL 4998411, at *1 (Tenn. Ct.
App. Nov. 25, 2008); Carson Creek Vacation Resorts, Inc. v. Tenn. Dep’t of Revenue, 865 S.W.2d 1, 2
(Tenn. 1993); Nutritional Support Servs., Ltd. v. Taylor, 803 S.W.2d 213, 214 (Tenn. 1991). Because
none of the cases involves a challenged property tax assessment, we conclude that they are not applicable
to the facts of this case.
                                                   -6-
        This Court recently held in Chuck’s Package Store v. City of Morristown that
Section 67-1-1803(d) applied in a taxpayer lawsuit contesting a municipal tax. No.
E2015-01524-COA-R3-CV, 2016 WL 3640063, at *12 (Tenn. Ct. App. June 30, 2016),
perm. app. granted (Tenn. Nov. 16, 2016). In that case, several taxpayers were
successful in challenging an alcohol inspection fee collected by the City of Morristown,
and the trial court held that they were entitled to an award of attorney’s fees pursuant to
Section 67-1-1803(d). Id. at *2. On appeal, the municipality argued that Part 18 only
applied in cases involving taxes collected or administered by the State. Id. at *6. This
Court rejected that argument and affirmed the trial court’s award, holding that the
procedures and remedies set forth in Part 18 governed the case. 4 Id. at *12. While that
holding may appear to lend some support to Mr. Zumstein’s position, Chuck’s Package
Store involved an alcohol inspection fee, not a real property tax. As we explain below,
that distinction is significant.

Tennessee Code Annotated section 67-5-2103(h) provides:

       Title 67, chapter 1, part 18, is not applicable to property tax proceedings,
       property tax liens, or the enforcement of such property tax liens.

Tenn. Code Ann. § 67-5-2103(h). Chapter 5 of Title 67 is titled “Property Taxes” and
contains specific statutes governing, among other things, the classification and
assessment of property, Tenn. Code Ann. §§ 67-5-501 to -1334, and the review of
property tax assessments by county boards of equalization, Tenn. Code Ann. §§ 67-5-
1401 to -1415, and by the state board of equalization. Tenn. Code Ann. §§ 67-5-1501 to
-1515. Part 21 of Chapter 5 is titled “Tax Liens.” Section 67-5-2101 provides that all
taxes on property “shall become and remain a first lien upon such property.” Tenn. Code
Ann. § 67-5-2101(a). In that vein, Section 67-5-2103(a) provides that “proceedings for
the enforcement of property tax liens, from the assessment to sale for delinquency, shall
be a proceeding in rem[.]” Tenn. Code Ann. § 67-5-2103(a) (emphasis added). Thus, by
providing that the remedies available in Title 67, chapter 1, part 18 do not apply in
“property tax proceedings,” Section 67-5-2103(h) makes it clear that Section 67-1-
1803(d) does not apply in property tax assessment challenges. Cf. Jones Oil Co., Inc. v.
Huddleston, No. 01A01-9308-CH-00381, 1994 WL 115868, at *4 (Tenn. Ct. App. Apr.
6, 1994) (holding that the specific petroleum tax refund provisions of Section 67-3-404
control over the general tax refund provisions of Section 67-1-1802 in cases involving
taxes paid pursuant to the petroleum tax statutes). As such, we conclude that Section 67-
1-1803(d) cannot serve as a basis for upholding the trial court’s assessment of attorney’s
fees against Roane County in this case.



       4
         We note that the Tennessee Supreme Court granted the City of Morristown’s application for
permission to appeal on November 16, 2016.
                                              -7-
        In sum, the trial court erred in granting Mr. Zumstein’s request for attorney’s fees.
Although courts may use their equitable powers to make an award of attorney’s fees in
certain circumstances, the doctrine of sovereign immunity requires that the legislature
expressly authorize the assessment of attorney’s fees against a governmental entity.
Because the General Assembly has not enacted a statute expressly authorizing the
assessment of attorney’s fees against a county in a property tax assessment challenge, the
trial court had no authority to assess attorney’s fees against Roane County in this case.

                                       CONCLUSION

            The trial court’s award of attorney’s fees is reversed. This case is
remanded for such further proceedings as may be necessary and consistent with this
opinion. Costs of this appeal are taxed to the appellee, Roy Zumstein, for which
execution may issue.



                                                  _________________________________
                                                  ARNOLD B. GOLDIN, JUDGE




                                            -8-
