                IN THE COURT OF APPEALS OF TENNESSEE
                            AT NASHVILLE
                                September 16, 2015 Session


         WEST WARREN-VIOLA UTILITY DISTRICT v. JARRELL
                      ENTERPRISES, INC.

                    Appeal from the Circuit Court for Coffee County
                         No. 40112 Vanessa Jackson, Judge

                          ________________________________

         No. M2013-02217-COA-R3-CV – Filed April 26, 2016
                     _________________________________


Utility district brought action to condemn a parcel of real property which was located outside
the district‟s boundaries in order to construct a water storage tank, associated piping, and an
access road. The trial court denied the petition, and the district appeals. Finding that the
district is given the power in the Utility District Law to construct and maintain its system, and
that the unrebutted evidence shows that the district was not attempting to expand the
boundaries of its service area, we reverse the judgment of the trial court and remand the case
for a hearing on the damages due the property owner.

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

RICHARD H. DINKINS, J., delivered the opinion of the court, in which FRANK G. CLEMENT,
JR., P. J., M. S., and ANDY D. BENNETT, J., joined.

Gregory L. Cashion, Kenneth S. Schrupp, Donald L. Scholes, Benjamin A. Gastel, Nashville
Tennessee, Ben Newman, McMinnville, Tennessee, for the appellant, West Warren-Viola
Utility District

James C. Cope, Murfreesboro, Tennessee, for the appellee, Jarrell Enterprises, Inc.
                                                OPINION

I. FACTUAL AND PROCEDURAL BACKGROUND

       This is an action brought by the West Warren-Viola Utility District of Warren and
Coffee Counties (“West Warren”) pursuant to Tenn. Code Ann. § 7-82-305 to condemn
property for the purpose of constructing a water storage tank.

       West Warren has operated a water and sewer system since July 28, 1982; as currently
configured, it adjoins the Hillsville Utility District (“Hillsville”), which provides services in
eastern Coffee County. In early 2008 West Warren filed a petition to expand the geographic
boundaries of the district to include portions of Coffee County, pursuant to Tenn. Code Ann.
§§ 7-82-201, -202, and -603 and on May 5, 2008, John Pelham, County Executive of Warren
County, and David Pennington, County Mayor of Coffee County, entered an order granting
the petition.1 The order recited that, at the time the petition was filed, “[p]ursuant to Tenn.
Code Ann. § 7-82-302(a), the District already provides water service to substantially all of
the areas within the proposed expanded boundaries in Coffee County.”

        On January 2, 2013, West Warren filed a petition pursuant to Tenn. Code Ann. §§ 7-
82-305 and 29-17-901 seeking to condemn a portion of land owned by Jarrell Enterprises,
Inc., (“Jarrell”) for purposes of constructing a water storage tank. Jarrell answered, denying
that the property should be condemned. A hearing was held on May 16, 2013 and an order
entered on May 23 denying possession. West Warren filed a Motion to Alter or Amend the
Order, in which it also sought to offer additional evidence; the court entered an order August
21 denying the motion.2 On September 24 the court entered an order granting attorney‟s fees
to Jarrell.

        West Warren appeals, raising the following issues:

        1. The trial court erred as a matter of law by ruling that building the proposed
        water tank would constitute “providing services.”


1
 The order also renamed the district as the West Warren-Viola Utility District of Warren and Coffee Counties,
Tennessee, the name in which this action was initiated. In the course of these proceedings, the name has been
shortened to West Warren-Viola Utility District; the legal name of the district remains that established in the
May 5, 2008 order.
2
  In an order entered August 5, the court stated “the pending motion to alter or amend will be decided upon
legal arguments and papers with no additional evidence and that the possession hearing and record of May 16,
2013 is closed so there will be no subsequent hearing or evidence on the possession.”
                                                      2
          2. The trial court erred as a matter of law in ruling that [West Warren] cannot
          condemn the property at issue.
          3. The trial court erred as a matter of law in deciding not to accept any
          additional evidence.
          4. The trial court‟s ruling that the proposed water tank site is not within [West
          Warren‟s] geographic boundary is not supported by a preponderance of the
          evidence.
          5. The trial court erred in awarding attorney‟s fees and costs to
          Defendant/Appellee.

Jarrell articulates the issues presented as follows:

          Whether the trial court was correct in denying [West Warren‟s] Petition for
          Condemnation where the evidence presented to the trial court failed to
          establish that the Appellee‟s property was within the territorial boundaries of
          [West Warren] and not within the boundaries of another utility district. In
          addition, Appellee raises the issue of whether [West Warren] should be bound
          by representations it made when seeking to expand into Coffee County and the
          2008 Recreation Order recreating [West Warren].

II. STANDARD OF REVIEW

        Review of the trial court=s findings of fact is de novo upon the record accompanied by
a presumption of correctness, unless the preponderance of the evidence is otherwise. See
Tenn. R. App. P. 13(d); Kaplan v. Bugalla, 188 S.W.3d 632, 635 (Tenn. 2006). Review of
the trial court=s conclusions of law is de novo with no presumption of correctness afforded to
the trial court=s decision. See Kaplan, 188 S.W.3d at 635.

III. DISCUSSION

        The Utility District Law of 1937 governs the creation, management, and operation of
utility districts, and is codified at Tenn. Code Ann. §§ 7-82-101-804; Part 3 of the statute sets
forth the operation and powers of such districts. Tenn. Code Ann. § 7-82-302 grants utility
districts the power and authority “to acquire, construct, reconstruct, improve, better, extend,
consolidate, maintain and operate such systems, within and without the district.” Districts are
granted the power of eminent domain by Tenn. Code Ann. §§ 7-82-304(a)(3)3 and -305.4

3
    Tenn. Code Ann. § 7-82-304(a)(3) provides:
          (a) Any district created pursuant to this chapter has the power to:
          ***
                                                        3
Pertinent to the issues presented in this case, Tenn. Code Ann. § 7-82-301(a)(1)(B) provides:

          So long as the district continues to furnish any of the services that it is
          authorized to furnish in this chapter, it shall be the sole public corporation
          empowered to furnish such services in the district, and no other person, firm or
          corporation shall furnish or attempt to furnish any of the services in the area
          embraced by the district, unless and until it has been established that the public
          convenience and necessity requires other or additional services;. . .

       The trial court acknowledged West Warren‟s right under Tenn. Code Ann. § 7-82-
304(a)(3) to condemn the Jarrell property; the court held, however, that the right was “limited
and may only be used in carrying out the purpose for which the utility district was created.”
With respect to that purpose the court stated:

          The purpose for which the expanded West Warren-Viola Utility District was
          created can be found in the Order (Exhibit No. 4), signed by the County
          Executive of Warren County and the County Mayor of Coffee County, which
          provides that the geographic boundaries of the District were expanded for the
          purpose of furnishing water and sewer services in those portions of Coffee
          County which were already being served by the District. There was no

          (3) Acquire by purchase, gift, devise, lease or exercise of the power of eminent domain or
          other mode of acquisition, hold and dispose of real and personal property of every kind within
          or without the district, whether or not subject to mortgage or any other liens;
4
    Tenn. Code Ann. § 7-82-305 states:

          Any district has the power to condemn either the fee, or such right, title interest, or easement
          in the property, as the board may deem necessary for any of the purposes mentioned in this
          chapter, and such property or interest in such property may be so acquired, whether or not the
          property or interest is owned or held for public use by corporations, associations or persons
          having the power of eminent domain, or otherwise held or used for public purposes; provided,
          that such prior public use shall not be interfered with by this use. Such power of
          condemnation may be exercised in the mode or method of procedure prescribed by title 29,
          chapter 16, or in the mode or method of procedure prescribed by any other applicable
          statutory provisions now in force or hereafter enacted for the exercise of the power of eminent
          domain; provided, that where title to any property sought to be condemned is defective, it
          shall be passed by decree of court. Where condemnation proceedings become necessary, the
          court in which such proceedings are filed shall, upon application by the district and upon the
          posting of a bond with the clerk of the court in such amount as the court may deem
          commensurate with the value of the property, order that the right of possession shall issue
          immediately or as soon and upon such terms as the court, in its discretion, may deem proper
          and just.

                                                         4
       evidence produced to establish that the Petitioner had ever furnished water or
       sewer services on the Defendant‟s property. As previously stated, the
       Defendant‟s farm is serviced by the Hillsville Utility District and has been for
       many years. Thus, the purpose for which the expanded West Warren-Viola
       Utility District was created does not include furnishing services on the
       Defendant‟s property, including the “Property” in question. As previously
       stated, the Court finds that the construction and maintenance of the water tank,
       water lines and access road are within the definition of utility services.
       Therefore, engaging in the construction and maintenance of utility services on
       Defendant‟s property exceeds the purpose for which the West Warren-Viola
       Utility District was created, and T.C.A. § 7-82-304 only permits the Defendant
       to use the power of eminent domain to condemn the Defendant‟s property in
       furtherance of purposes for which it was created.

       West Warren contends that the trial court erred in holding that the construction of the
water tank and piping on the property in question constituted “furnishing services” to that
property within the meaning of Tenn. Code Ann. § 7-82-301(a)(1)(B); and in interpreting the
2008 recreation order to mean that West Warren cannot build utility facilities outside of its
geographic boundaries as permitted by Tenn. Code Ann. § 7-82-302(a).

        With respect to the application of Tenn. Code Ann. § 7-82-301(a)(1)(B), the court
held that “the plain reading of this statute prohibits [West Warren] from invading or
encroaching upon the territory serviced by Hillsville Utility District to furnish any water
utility services unless and until it has been established that the public convenience and
necessity require additional services” and that West Warren had not established that it
followed the statutory procedure “to establish that public convenience and necessity require
the construction of the water tank, water lines and access road on the Defendant‟s property in
the area served by the Hillsville Utility District.” While the court‟s reading of the statute is
correct, we do not agree with the application of it. The evidence establishes that West
Warren does not plan to “invade or encroach” on Hillsville‟s service area; neither does it
support the determination that West Warren would be providing services on the site of the
tank or outside of its existing service area. Thus, the public necessity need not be
established.

        The court acknowledged that the Utility District Law does not “enumerate the
activities that fall within the definition of utility services provided by a utility district” and
held that “the construction and maintenance of a water tank for water storage purposes, as
well as the accompanying water lines and access road, are within the definition of utilities
services normally provided by a utility district.” We do not read Tenn. Code Ann. § 7-82-
301(a)(1)(B) as prohibiting West Warren from constructing the tank. As we consider this
                                                 5
issue, mindful that § 7-82-301 is part of the Utility District Law, we employ the principles of
statutory construction.

       Construction of a statute is a question of law which appellate courts review de novo,
without a presumption of correctness of the trial court‟s findings. Barge v. Sadler, 70
S.W.3d 683, 686 (Tenn. 2002). The statute should be read “without any forced or subtle
construction which would extend or limit its meaning.” Nat’l Gas Distributors, Inc. v. State,
804 S.W.2d 66, 67 (Tenn. 1991). As our Supreme Court has said, “[w]e must seek a
reasonable construction in light of the purposes, objectives, and spirit of the statute based on
good sound reasoning.” Scott v. Ashland Healthcare Center, Inc., 49 S.W.3d 281, 286
(Tenn. 2001) (citing State v. Turner, 913 S.W.2d 158, 160 (Tenn. 1995)). When construing
statutes that are part of a statutory scheme, we are also directed to look to the context of the
particular provision. Our Supreme Court has made the following observation:

       When statutory provisions are, as in this case, enacted as part of a larger Act,
       „we examine the entire Act with a view to arrive at the true intention of each
       section and the effect to be given, if possible, to the entire Act and every
       section thereof. Where different sections are apparently in conflict we must
       harmonize them, if practicable, and lean in favor of a construction which will
       render every word operative.‟

Hill v. City of Germantown, 31S.W.3d 234, 238 (quoting Bible & Godwin Constr. Co. v.
Faener Corp. 504 S.W.2d 370, 371 (Tenn. 1974)). In our analysis we are to “presume that
the General Assembly chose its words carefully,” Tenn. Manufactured Housing Ass’n. v.
Metro. Gov’t., 798 S.W.2d 254, 257 Tenn. Ct. App. 1990), and to “give effect to every word,
phrase, clause and sentence of the act in order to carry out the legislative intent.” Tidwell v.
Collins, 552 S.W.2d 674, 676-77 (Tenn. 1975).

        As noted earlier § 7-82-302(a)(1) gives utilities the power to “conduct, operate and
maintain a system for furnishing” water services; this power includes the authority to
“construct, reconstruct, improve, . . . maintain and operate such systems.” Tenn. Code Ann.
§ 7-82-301(a)(1)(B) protects the right of a district which is providing services to be the
exclusive provider until such time as it is not doing so or additional services are needed.
Reading these two statutes together, we are of the opinion that construction of the tank is
clearly allowed by § 7-82-302(a)(1) and, under the facts presented, is not in conflict with the
rights granted Hillsville in § 7-82-301. In including the construction of the tank within the
scope of activities covered by the statute, the trial court broadly interpreted the words
“furnish . . . services,” as that term is used in Tenn. Code Ann. § 7-82-301; the court


                                               6
extended the phrase and reached a construction that, in light of the entire statutory scheme, is
unreasonable. See Scott, 49 S.W.3d at 286.5

       The holding that Tenn. Code Ann. § 7-82-301(a)(1)(B) prohibits the construction of
the tank also runs counter to the trial testimony.

        Anthony Pelham, an engineer with the James C. Haley Company, which performed
consulting engineering work relative to the project, testified that West Warren had 1.5
million gallons of storage capacity and an average daily flow of water greater than 1.6
million gallons; that West Warren had been cited by the Tennessee Department of
Environment and Conservation for being in violation of the requirement that the minimum
storage capacity be the daily average of consumption for the district; and that the purpose of
the tank would be to provide the necessary storage capacity. Mr. Pelham testified that the
primary consideration in selecting the site was the elevation, which provided a “natural” and
“ideal” place for the construction of the tank; that, in addition to the elevation, locating the
tank on the property would allow service lines to run west on Highway 55; and that a portion
of the service lines would run parallel to existing Hillsville service lines but would also
extend to areas that had no water services available inside the district.6 Mr. Pelham further
testified that he advised the West Warren and Hillsville districts that customers that were
being served by Hillsville and any homes adjacent to the existing Hillsville lines would not
be able to be served by West Warren and that Hillsville would continue to provide the
services it was providing; and that “anything that extended into new areas would have to be
something to be handled between the two utility districts at that time.”

       Howard Pelham, General Manager of West Warren, testified that the utility served
approximately 3,100 customers in Warren County, 2,500 in Coffee County, and 400
collectively in Cannon and Grundy counties. When asked about discussions he had with
representatives of Hillsville regarding West Warren‟s operations after the tank was
constructed, Mr. Pelham testified:

        Q. However, did you have discussions with Hillsville about their serving
        within the boundaries as - -
        A. Verbal communication as they were told that we would not serve anyone
        they were serving. We would not attempt to serve anyone they were serving

5
 The legislature included “construction” in the specific powers delineated at Tenn. Code Ann. § 7-82-
302(a)(1); if it meant to include “construction” within the ambit of § 7-82-301(a)(1)(B), it could have done so.
6
 It is not apparent whether Anthony Pelham was referring to West Warren or Hillsville when he discussed
areas that have no water available to them “inside the utility district.”

                                                       7
           other than if we were in that area to provide fire protection where they were
           unable to benefit their customers. We will not sell water to, sell a tap to, or
           serve anyone in their service area.
           Q. Is it your intent to use the water line to serve present customers of
           Hillsville?
           A. No, sir.
           Q. Is it your intent to use the tank and the new line to serve customers within
           the boundaries of the Hillsville Utility?
           A. No, sir.

      This unrebutted testimony establishes that, in constructing the tank, West Warren
was not intending to violate Hillsville‟s rights as granted by § 7-82-301(a)(1)(B).7

       Based on the plain reading of “furnishing services” within the context of the Utility
District Law, and upon consideration of the evidence at trial, we conclude that Tenn. Code
Ann. § 7-82-301(a)(1)(B) does not prohibit the construction of the tank. For the same
reasons we hold that the construction of the storage tank outside West Warren‟s service area
does not exceed the powers granted West Warren in Tenn. Code Ann. § 7-82-304.

        Our holding in this regard pretermits the other issues raised by West Warren as well as
the Jarrell‟s contention that the 2008 order “prevents [West Warren] from providing services,
or constructing a water tank, on [Jarrell‟s] property.”

IV.CONCLUSION

       For the foregoing reasons, we reverse the judgment of the trial court denying the
petition and awarding attorneys‟ fees and costs to Jarrell, and remand the case for a hearing
on damages due Jarrell.



                                                               ________________________________
                                                               RICHARD H. DINKINS, JUDGE




7
    In this regard, we note that Hillsville did not seek to intervene in the case.
                                                          8
