                 IN THE COURT OF APPEALS OF TENNESSEE
                             AT NASHVILLE
                                     July 8, 2002 Session




      STATE OF TENNESSEE, ET AL. v. ROGER D. HAYWOOD, ET AL.

                    Appeal from the Circuit Court for Williamson County
                         No. II-2K082     J. Russ Heldman, Judge




                   No. M2000-01400-COA-R3-CV - Filed August 28, 2002




The Trial Court held that National City Mortgage Company (“National”), which services the
mortgage on the property at issue, and its attorneys violated Tenn. R. Civ. P. 11.02 and imposed
sanctions against them in this condemnation proceeding. National and its attorneys appeal the Trial
Court’s Rule 11.02 sanctions. We reverse and remand.


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


D. MICHAEL SWINEY, J., delivered the opinion of the court, in which HOUSTON M. GODDARD , P.J.,
and HERSCHEL P. FRANKS , J., joined.

Clifton E. Darnell and Larry W. Johnson, Atlanta, Georgia, for the Appellants, National City
Mortgage Co., Morris, Schneider & Prior, L.L.C., and Larry W. Johnson.

Robert H. Jennings, Jr., Nashville, Tennessee, and Roger Horner, Brentwood, Tennessee, for the
Appellees, State of Tennessee, on relation of The Commissioner of the Department of
Transportation, for and on behalf of Said Department, and The City of Brentwood.
                                                  OPINION

                                                 Background

               On February 11, 2000, the City of Brentwood and the State Department of
Transportation (“Petitioners”) filed a Petition for Condemnation (“Petition”), seeking to take, by
eminent domain, a portion of a tract of land (“Property”) located on Concord Road in Brentwood,
Tennessee. The Property is owned by Roger D. Haywood and Sonya M. Haywood. The Petition
also named National as a Defendant. National services the Haywoods’ mortgage for their mortgage
holder.1 The Petition cited the following eminent domain statutes as authority for the taking, Tenn.
Code Ann. §§ 29-17-201, et seq., 29-17-801, et seq., and 54-5-104, et seq. The Petition also stated
the condemnation was for a public purpose, specifically road work to widen Concord Road and a
relocation of public utilities along that road.

               On the same day the Petition was filed, Petitioners tendered $12,500 to the Trial
Court. This $12,500 was the amount Petitioners determined to be just compensation for the taking
of the Property. Petitioners also filed Notices, served upon each defendant, which informed the
defendants, pursuant to Tenn. Code Ann. § 29-17-803, that if they objected to Petitioners’ right to
condemn and take the Property, they should file a written objection within 5 days of the date
Petitioners gave the Notice. The Notice also informed the defendants that a hearing was set for
March 27, 2000, at which Petitioners would seek immediate possession of the Property.

                 The Notice addressed to National listed a Miamisburg, Ohio address, which was the
address listed on the Property’s Deed of Trust. The Notice was not sent to National’s registered
agent for service of process in Tennessee. The Statement of the Evidence provides that both
National and the Haywoods were served with the Petition and the Notice on February 17, 2000. The
record shows the Notice and Petition were served upon National by certified mail, return receipt
requested. The Statement of the Evidence also provides that National’s return receipt was signed
on behalf of National by an unidentified person and returned to the Circuit Court Clerk. Sometime
thereafter, the Notice and Petition were forwarded to National’s counsel. The record shows National
filed no objection to the Petition within 5 days of the date the Notice was served.

                 On March 7, 2000, National filed an Answer and Claim (“Answer”) in which
National raised several defenses, including: (1) the Petition failed to state a claim upon which relief
can be granted under Tenn. R. Civ. P. 12.02(6); (2) lack of in personam and subject matter
jurisdiction; (3) the Petition was invalid since the Petitioners failed to comply with the condemnation
statutes; and (4) the condemnation action violated the United States and Tennessee Constitutions
since it constituted a taking by a governmental entity without just compensation.




        1
          The Petition for Condemnation also named Williamson County as a defendant to determine what interest the
county may have in the Property.

                                                       -2-
                 On the same day it filed the Answer, National also filed a Motion for Payment of
Proceeds from Court Registry (“Motion for Payment of Proceeds”) in which it asked the Trial Court
to disburse to National “all funds paid into the registry . . . as just and adequate compensation for the
[P]roperty. . . .” In support of this motion, National filed a brief in which it cited language in the
Property’s Deed of Trust as the basis of its interest in the proceeds. The brief also stated that “[t]o
the best of Defendant National’s knowledge, no party-in-interest disputes that this sum represents
just and adequate compensation for the property and easements taken by [the Petitioners].”

                Soon thereafter, Petitioners filed a Motion to Strike National’s Answer. Petitioners
argued the Trial Court should strike all of National’s defenses because they were “unsupported by
any factual statement” and because the defenses were “conclusory, repugnant, contradictory and
without merit and should be stricken to permit this public improvement project to proceed without
further delay.” Petitioners further stated, in their Motion to Strike, that the issue of damages was not
before the Trial Court and that the only pending issue was “whether the project to widen Concord
Road and to relocate public utilities is for a public use and purpose and should a Writ of Possession
be granted.”

                National filed a Motion for Continuance of the March 27, 2000, hearing stating
National’s counsel had a conflict with the hearing date. The Trial Court, on March 27, 2000, held
the hearing as scheduled. The record shows that neither a representative of National nor its attorney
appeared at the hearing. The record shows that at the hearing, on behalf of the Petitioners, engineers
testified about the public purpose of the Concord Road project. One of the owners of the Property,
Roger Haywood, testified about the current dangerous condition of Concord Road and that he was
in favor of the project. The record shows the Haywoods did not file an objection to the taking.
Furthermore, the record shows that Roger Haywood testified he had received correspondence, dated
February 22, 2000, from National notifying him National had employed an attorney for the
condemnation proceedings and that the attorney’s fees would be added to the balance of the
Haywoods’ mortgage. This correspondence is not contained in the record on appeal.

                Thereafter, the Trial Court entered an Order granting Petitioners’ Motion to Strike
and denying National’s Motion for Payment of Proceeds. The Order also granted Petitioners a writ
of possession of the Property. Furthermore, and of most importance to this appeal, the Trial Court,
sua sponte, set a show-cause hearing for April 24, 2002, for National and its attorney to show cause
why they were not in violation of Tenn. R. Civ. P. 11.02. The Trial Court, in the Order (“Show-
Cause Order”), stated the grounds as follows:

                (1.)    Filing an Answer to dismiss the Petition for Condemnation
                        asserting a defense that the Circuit Court lacked jurisdiction
                        of the subject matter involving an Eminent Domain
                        proceeding. Further, said pleading stated the Court lacked
                        jurisdiction of the person, National, notwithstanding said
                        Defendant was served with Notice and the Petition for
                        Condemnation, by certified mail/return receipt requested,


                                                  -3-
                          through the . . . Circuit Court Clerk of Williamson County. .
                          ..

                                 The certificate of service was returned on
                          February 17, 2000 to the Circuit Court Clerk. The
                          Answer of the Defendant, National, to the Petition for
                          Condemnation was not filed until March 7, 2000.
                          Such defenses and other regal contentions made by
                          National has caused unnecessary delay and a needless
                          increase in the cost of litigation and are frivolous and
                          without merit.

                 (2.)     Filing an Answer to dismiss the Petition for
                          Condemnation alleging only that the Petition was
                          invalid and unconstitutional is without merit. The
                          Petition specifically sets out the public purpose i.e. the
                          widening of Concord Road and the relocation of the
                          public utility facilities. The Petition cites the Eminent
                          Domain statutes which authorize the Petitioners
                          T.D.O.T. and Brentwood to condemn private property
                          for these public purposes. The claims, defenses, and
                          other legal contentions contained in said Answer are
                          not warranted by existing law and violate Rule 11:02
                          [sic] [of the] Tennessee Rules of Civil Procedure.

                  (3.)    National files an Answer to dismiss the
                          Condemnation Petition and the property owners desire
                          and request that the public project proceed.
                          Defendant, National, has advised the property owners
                          that said owners will be required to pay the legal fees
                          for National’s attorney and said fees will be added to
                          the mortgage held by the Defendant, National. . . .

                The record on appeal shows that National’s attorney appeared for the show-cause
hearing. Thereafter, the Trial Court entered an Order (“Rule 11 Order”) holding that National and
its attorneys had violated Tenn. R. Civ. P. 11.02(1) and National’s attorneys also had violated Rule
11.02(2).2 The Rule 11 Order recounted the argument National made at the show-cause hearing
regarding the issue of just compensation as follows:




        2
            W e refer to the attorney who represented National in the condemnation proceeding, Larry W. Johnson, and
his law firm, Morris, Schneider & Prior, L.L.C ., as National’s attorneys.

                                                        -4-
                At the filing of its Answer and Claim, Defendant National was not
                sure that the proper compensation had been paid with respect to the
                property taken.

                Defendant National City had a mere five days to respond to the
                Petition to contest the right of the Petitioners to condemn the
                property.

                The undersigned had insufficient time to obtain an appraisal of the
                property and wanted to preserve Defendant National City’s rights to
                dispute value at a later date. . . .

                  In holding that National and its attorneys violated Rule 11.02(1), the Trial Court made
the following findings: (1) the Petition and Notice were served on National on February 17, 2000;
(2) the Notice stated the March 27, 2000, hearing would not cover the issues of the value of the
Property or just compensation for the taking of the Property; (3) National did not file a written
objection to the taking within 5 days of service of the Notice as required by statute; (4) National filed
an Answer on March 7, 2000, in which it contended that the condemnation constituted a taking
without just compensation in violation of the United States and Tennessee Constitutions; (5)
National also filed, on March 7, 2000, a Motion for Payment of Proceeds in which it stated that “‘no
party-in-interest disputes that this sum [$12,500] represents just and adequate compensation for the
[P]roperty . . .’”; (6) National sent correspondence to the Haywoods on February 22, 2000, in which
it advised the Haywoods that the legal expenses incurred by National in this matter would be added
to the balance of the Haywoods’ mortgage; and (7) Roger Haywood testified he did not dispute the
condemnation proceeding.

                The Rule 11 Order also contained the following determinations of the Trial Court:

                        It is the opinion of the Court that the Defendant National . . .
                and its attorney received adequate and sufficient notice and the
                Petition for Condemnation and the taking of the property is for a
                public use and purpose. The Petition for Condemnation is valid and
                the Court has jurisdiction of this condemnation proceedings [sic].

                         The Court is of the further opinion that the representations,
                conduct and the type of action taken by the National . . . and its
                attorney . . . created delay and caused a needless increase in the cost
                of litigation and violated Rule 11.02(1) T.R.C.P. It is also the opinion
                of the Court that the claims, defenses and legal contentions made and
                taken by [National’s] attorney . . . were misleading, frivolous and not
                warranted. . . .




                                                  -5-
                In addition, the Statement of the Evidence provides the basis for the Trial Court’s
rationale for finding a Rule 11 violation by National and its attorneys, stating in pertinent part, as
follows:

                  [The] legal position taken and stated above at the sanction hearing
                  was contrary and entirely different than the previous position taken by
                  National and its attorney when they represented to the Court in
                  support of their claim for the condemnation proceeds that the
                  deposited funds were “just and adequate” compensation for the
                  property and easement taken by the Petitioners. . . .

                With respect to the sanctions imposed upon National and its attorneys for violating
Rule 11.02(1), the Rule 11 Order held that National and its attorneys should pay a penalty of $5,000
and the Petitioners’ attorneys’ fees at a rate of $150 per hour which totaled approximately $5,360
for the Petitioners’ two attorneys.3 Furthermore, the Trial Court, in the Rule 11 Order, ordered
National’s attorneys to pay treble the amount of the Petitioners’ attorneys’ fees as a sanction for
violating Rule 11.02(2).

                  National and its attorneys appeal.

                                                    Discussion

                 On appeal and although not exactly stated as such, National and its attorneys raise the
following issues for our consideration: (1) whether the Trial Court erred in holding that National and
its attorneys violated Tenn. R. Civ. P. 11.02(1) and 11.02(2); (2) if National and its attorneys violated
Rule 11.02(1), whether the Trial Court abused its discretion in imposing a penalty of $5,000 against
them and awarding Petitioners’ attorneys’ fees; and (3) if National’s attorneys violated Rule
11.02(2), whether the Trial Court abused its discretion in imposing a penalty of treble attorneys’ fees
upon them.


                 This Court reviews all aspects of a Trial Court’s Rule 11 determination under an
abuse of discretion standard. McGaugh v. Galbreath, 996 S.W.2d 186, 194 (Tenn. Ct. App. 1998);
Project Creation, Inc. v. Neal, M1999-01272-COA-R3-CV, 2001 Tenn. App. LEXIS 624, at * 37
(Tenn. Ct. App. Aug. 21, 2001), no appl. perm. app. filed. This standard of review is applied
because of the fact-intensive inquiry the Trial Court must make in Rule 11 determinations. Id. We
should not reverse for “‘abuse of discretion a discretionary judgment of a trial court unless it
affirmatively appears that the trial court’s decision was against logic or reasoning, and caused an
injustice or injury to the party complaining.’” Marcus v. Marcus, 993 S.W.2d 596, 601 (Tenn. 1999)
(quoting Ballard v. Herzke, 924 S.W.2d 652, 661 (Tenn. 1996)).



        3
            For simplicity’s sake, we use round numbers in this opinion as much as possible.

                                                         -6-
                First, we address National’s issues on appeal regarding whether the Trial Court erred
in finding that National and its attorneys violated Tenn. R. Civ. P. 11.02(1) & (2). As discussed, the
Trial Court found National and its attorneys violated Rule 11.02(1) and held that the attorneys also
violated Rule 11.02(2). Therefore, applying the appropriate standard of review, we must examine
all of the conduct at issue to determine whether the Trial Court erred in holding the conduct
sanctionable under Rule 11.02(1) & (2).

                Tenn. R. Civ. P. 11.01 provides that “[e]very pleading, written motion, and other
paper shall be signed by at least one attorney of record . . . or, if the party is not represented by an
attorney, shall be signed by the party.” The requirement of a signature “‘is directed at the three
substantive prongs of Rule 11: its factual basis, its legal basis, and its legitimate purpose. . . .’”
McGaugh v. Galbreath, 996 S.W.2d at 194 (quoting Andrews v. Bible, 812 S.W.2d 284, 287 (Tenn.
1991)). “‘A signature signifies to the Court that the signer has read the pleading, motion, or other
paper, has conducted a reasonable inquiry into the facts and the law, and is satisfied that the
document is well-grounded in both, and is acting without any improper motive.’” Id.

                 Tenn. R. Civ. P. 11.02(1) & (2) provide, in pertinent part, as follows:

                 By presenting to the court (whether by signing, filing, submitting or
                 later advocating) a pleading, written motion, or other paper, an
                 attorney or unrepresented party is certifying that to the best of the
                 person’s knowledge, information, and belief, formed after an inquiry
                 reasonable under the circumstances, –

                         (1) it is not being presented for any improper purpose, such as
                 to harass or to cause unnecessary delay or needless increase in the
                 cost of litigation;

                         (2) the claims, defenses, and other legal contentions therein
                 are warranted by existing law or by a nonfrivolous argument for the
                 extension, modification, or reversal of existing law or the
                 establishment of new law. . . .

               When determining whether an attorney’s or party’s conduct violates Rule 11.02, the
test to be applied is “‘one of objective reasonableness under all the circumstances . . . and the
reasonableness of the attorney’s belief must be assessed in light of the circumstances existing at the
time the document in question was signed.’” McGaugh v. Galbreath, 996 S.W.2d at 194 (quoting
Andrews v. Bible, 812 S.W.2d at 288).4

        4
           Courts also use the following analysis to determine whether an attorney’s conduct is sanctionable conduct
under Rule 11:

                 “1.      An attorney m ust RE AD every p aper before signing it.
                                                                                                      (continued...)

                                                        -7-
               Because this matter involves a taking of private property by governmental entities
through eminent domain, we must examine Tennessee’s eminent domain statutes and cases to
determine whether the Trial Court erred in finding that National’s and its attorneys’ conduct was not
objectively reasonable in light of the then-existing circumstances. See id. The Tennessee
Constitution provides the state government an inherent right of eminent domain, the power to take
a person’s property for public purposes, stating:

                    That no man’s particular services shall be demanded, or property
                    taken or applied to public use, without the consent of his
                    representatives, or without just compensation being made therefor.

Tenn. Const. art. I, § 21. See also Tenn. Code Ann. § 7-34-104(a)(1), § 29-16-101, et seq., § 29-17-
801, et seq. (providing the power of eminent domain to counties and municipalities). The

        4
            (...continued)
                     2.      He must make a reasonable pre-filing investigation of the FACTS.

                    3.       He must research the LA W , unless he is certain he knows it.

                    4.       The law as applied to the facts must REASO NAB LY W ARR ANT the
                             legal positions and steps he takes. If existing law does not warrant these
                             positions, a plausible argument for the extension of the law to the facts of
                             the case is required.

                    5.       It must be demo nstrated, as the basis of pre-filing investigation and
                             research, that there is a REASONABLE BASIS to name each Defendant
                             named, and to support each claim asserted. The shotgun complaint or
                             answer, filed in the hope that discovery will produce the justification for
                             it, is improper.

                    6.       The adequacy of an attorney’s investigation, research and legal analysis
                             will be evaluated by the court under an OBJECTIVE STANDARD,
                             namely, whether the attorney acted as a reasonably competent attorney
                             admitted to . . . practice. Except as to improper purpose, subjective good
                             faith is not a defense to Rule 11 sanctions. A pure heart but an empty head
                             is no avail.

                                                        ******

                    8.       An attorney must not have an IMP ROP ER P URP OSE , such as harassment
                             or intimidation, in naming any defendant, asserting any legal position or
                             taking any legal step.

                    9.       If an attorney violates Ru le 11, the impo sition of some sanction is
                             MANDATORY, although the nature and extent of the sanction is
                             discretionary w ith the [trial] court.”

Wh ite v. Mye rs, E1999-02642-COA-R3-CV, 2001 Tenn. App. LEXIS 814, at * 20-21 (Tenn. Ct. App. Oct. 31, 2001 ),
no appl. perm. app. filed, (quoting Andrew s v. Bib le, 812 S.W .2d at 288) (alterations in original).

                                                            -8-
government’s eminent domain power is a limitation on a person’s ownership of his property. City
of Chattanooga v. Classic Refinery, Inc., No. 03A01-9712-CV-00552, 1998 Tenn. App. LEXIS 854,
at * 9 (Tenn. Ct. App. Dec. 17, 1998), no appl. perm. app. filed, (citing Harper v. Trenton Hous.
Auth., 274 S.W.2d 635, 641 (Tenn. Ct. App. 1954)). “‘[B]ecause the power of eminent domain is
against common right,’. . . statutes granting such power are to be strictly construed against the
condemnor, . . . and the procedures prescribed by those statutes ‘must be followed. . . .’” Roane
County v. Christmas Lumber Co., Inc., No. E1999-00370-COA-R9-CV, 2000 Tenn. App. LEXIS
493, at * 7 (Tenn. Ct. App. July 27, 2000), no appl. perm. app. filed, (citations omitted) (quoting
Vinson v. Nashville, Chattanooga & St. Louis Ry., 321 S.W.2d 841, 844 (Tenn. Ct. App. 1958); (City
of Chattanooga v. State, 272 S.W. 432, 434 (Tenn. 1925)).

                The government’s eminent domain power is considerable. Even in the face of this
considerable power, a property owner faced with the government’s taking of her property for a public
purpose still has a right to question the government’s actions. A court should be cautious before
taking action, particularly sua sponte, that restricts a property owner’s right to question the actions
of her government in taking her property. The right of an individual to question the eminent domain
actions of the government, without fear of retaliation by the government, is fundamental under our
Constitution. See Tenn. Const. art. I, §21. This fundamental right serves as the foundation for our
analysis of the Trial Court’s Rule 11 sanctions.

                The record on appeal shows the Trial Court apparently based its determination that
National and its attorneys violated Rule 11.02(1) and that National’s attorney’s also violated Rule
11.02(2) by the following conduct: (1) raising the defenses of subject matter and in personam
jurisdiction; (2) objecting to the Petitioners’ right to take the Property under eminent domain; (3) the
positions National took in the Answer, in the Motion for Payment of Proceeds and at the show-cause
hearing regarding the issue of just compensation; and (4) the correspondence National sent to the
Haywoods regarding its decision to add National’s attorney’s fees to the balance of the Haywoods’
mortgage. We will address each of these matters to determine whether the Trial Court erred in
finding, sua sponte, that this conduct constituted sanctionable conduct under Rule 11.02(1) & (2).

                In the Answer, National and its attorneys raised the defenses of lack of subject matter
jurisdiction and lack of in personam jurisdiction. Although not specifically stated as such in the
Answer, the record shows National and its attorneys based these defenses upon claimed insufficient
service of process since the Notice and Petition were not sent to National’s registered agent for
service of process in Tennessee. Under Tenn. R. Civ. P. 12.02(1) & (2), defenses to lack of
jurisdiction shall be asserted in a responsive pleading or in a written motion. Moreover, the Notice
provided, consistent with Tenn. Code Ann. § 29-17-803(c), that National had only 5 days from the
date the Notice was given to file a written objection to the taking. The Notice also stated that if no
written objection was given within the 5-day period, Petitioners would have the right to take
possession of the Property. See Tenn. Code Ann. § 29-17-803(c). The record shows the Notice was
addressed to National’s Miamisburg, Ohio, address instead of National’s registered agent for service
of process in Tennessee. The record also shows National did not file an objection within the 5-day
period to the Petition. In light of the constraints placed on National by the 5-day rule set forth by


                                                  -9-
Tenn. Code Ann. § 29-17-803(c) and the requirement of Tenn. R. Civ. P. 12.02(1) & (2) that
jurisdiction defenses be raised in a responsive pleading or motion, we hold that National and its
attorneys acted with objective reasonableness, even if in error, in raising these jurisdiction defenses
in the Answer. See McGaugh v. Galbreath, 996 S.W.2d at 194. Accordingly, we hold it was error
for the Trial Court to find National and its attorneys violated Rule 11.02(1) and that the attorneys
violated Rule 11.02(2) by raising these defenses, and we reverse this holding of the Trial Court.

                  Next, we address whether National and its attorneys violated Rule 11.02(1) & (2)
when, in the Answer, they objected to Petitioners’ right to take the Property under eminent domain
and contended the Petition should be dismissed. As discussed, one of the eminent domain statutes
under which the Petitioners proceeded, Tenn. Code Ann. § 29-17-803, provides that notice of the
filing of a petition for condemnation shall be given to the property owner “at least five (5) days prior
to the taking of any additional steps in the case.” Tenn. Code Ann. § 29-17-803(a) & (b). The
statute also contemplates an objection by the property owner to the condemnor’s right to take the
property, stating that “[a]fter the expiration of [5] days from the date of the giving of such notice if
the right to take is not questioned, the condemnor shall have the right to take possession of the
property or property rights. . . .” Tenn. Code Ann. § 29-17-803(c) (emphasis added); see also Town
of Collierville v. Norfolk S. Ry. Co., 1 S.W.3d 68, 73 n.5 (Tenn. Ct. App. 1998) (noting that Tenn.
Code Ann. § 29-17-803(c) “implicitly, if not explicitly, [entitles] Norfolk Southern to question the
Town’s right to take”). In light of this statute, National had the right, at least, to raise an objection
in its Answer to Petitioners’ right to take the Property and acted with objective reasonableness in
raising this objection. To impose Rule 11 sanctions under these circumstances, including the severe
time constraints, against a property owner for objecting to the government’s right to take property
effectively would eliminate a property owner’s right to object to the already-vast power of eminent
domain. Consequently, we hold it was error for the Trial Court to hold that National’s objecting to
Petitioners’ right to take the Property constituted a violation of Rule 11.02(1) & (2), and we reverse
this determination.

                We next determine whether National and its attorneys engaged in sanctionable
conduct under Rule 11.02(1) & (2) regarding the issue of the proceeds the Petitioners deposited with
the Trial Court Clerk for the taking of the Property. As grounds for finding Rule 11.02 violations
by National and its attorneys, the Trial Court cited National’s position regarding the issue of just
compensation for the taking of the Property. The Statement of the Evidence, as discussed,
characterized the argument National made at the show-cause hearing regarding this issue as being
contrary to the position National previously took in its Motion for Payment of Proceeds.

                Tenn. Code Ann. § 29-17-802 requires a governmental entity that is exercising its
eminent domain powers under Tenn.Code Ann. § 29-17-801, et seq., to deposit with the Trial Court
Clerk the amount of compensation it determines the property owner is entitled to for the taking of
the property. Thereafter, the property owner has three options regarding the deposit which are,
generally stated: (1) accept the amount of the deposit as full settlement for the taking of the property;
(2) not accept the deposit and appear for trial to determine the issue of just compensation; or (3)
obtain the deposit, while disputing the amount deposited, and try the issue of just compensation.


                                                  -10-
Tenn. Code Ann. §§ 29-17-804, 29-17-805, & 29-17-806. The record shows National sought to
proceed under the third option as it raised the defense, in its Answer, that the condemnation was an
unconstitutional taking without just compensation while also filing a Motion for Payment of
Proceeds in which it stated that no party disputed that the amount Petitioners had deposited was just
compensation. While the language used in the Answer and Motion for Payment of Proceeds
certainly could have been better worded to properly reflect National’s choice to obtain the deposit
while disputing the issue of just compensation, National had the right to choose this option.
Therefore, while National’s positions in the Answer and Motion for Payment of Proceeds and at the
show-cause hearing may have been inartfully stated, they were not necessarily inconsistent and were
objectively reasonable under the then-existing circumstances. Accordingly, we hold it was error for
the Trial Court to find this conduct violated Rule 11.02(1) & (2), and we reverse the Trial Court’s
determination on this issue.

                Finally, we must determine whether it was error for the Trial Court to hold that
National and its attorneys violated Rule 11.02 because of the February 22, 2000, correspondence
National sent to the Haywoods regarding National’s attorney’s fees incurred in this matter. As
discussed, this letter is not a part of the record on appeal but, according to Roger Haywood’s
testimony, this correspondence stated that National had hired an attorney to protect its interest and
that the attorney’s fees would be added to the Haywoods’ mortgage balance. The language contained
in Rule 11 shows that the rule applies to pleadings, written motions and other papers which are
presented to the court “whether by signing, filing, submitting, or later advocating. . . .” Tenn. R. Civ.
P. 11.02. See also State v. Miller, E2000-03038-CCA-R3-CD, 2001 Tenn. Crim. App. LEXIS 582,
at * 6 (Tenn. Crim. App. Aug. 2, 2001), no appl. perm. app. filed, (holding that Rule 11 “clearly
applies only to pleadings, motions, or other papers filed by a party or the party’s attorney”). The
record on appeal shows the February 22, 2000, correspondence was never filed, submitted or
otherwise relied upon by National and its attorneys in court. Accordingly, due to the facts and
circumstances presented by the record on appeal, we hold it was error for the Trial Court to hold that
National and its attorneys violated Rule 11.02(1) & (2) by sending this correspondence to the
Haywoods, and we reverse this determination.

                 We believe the Trial Court’s decision to impose Rule 11 sanctions, sua sponte, under
the facts and circumstances presented in the record before us, places an unnecessary chill on all
property owners’ right to question the eminent domain actions of the government. We believe such
a result is neither desirable as policy nor appropriate under the law.

               The remaining issues on appeal concern the Rule 11 sanctions the Trial Court
imposed upon National and its attorneys. Since we hold that National and its attorneys did not
engage in any sanctionable conduct under Rule 11.02(1) & (2), these issues are pretermitted.




                                                  -11-
                                           Conclusion

                The judgment of the Trial Court is reversed, and this cause is remanded to the Trial
Court for such further proceedings as may be required, if any, consistent with this Opinion and for
collection of the costs below. The costs on appeal are assessed against the Appellees, the City of
Brentwood and the State of Tennessee.




                                                      ___________________________________
                                                      D. MICHAEL SWINEY, JUDGE




                                               -12-
