               IN THE COURT OF APPEALS OF TENNESSEE
                           AT NASHVILLE
                               October 23, 2014 Session

     ABDELRAHMAN AMROKBEER V. RICHARD ROBERTS, ET AL.

               Appeal from the Chancery Court for Davidson County
                  No. 131042I    Claudia Bonnyman, Chancellor




                No. M2013-02639-COA-R3-CV – Filed May 28, 2015




A corporate officer responsible for paying over the sales taxes collected by a corporation
pled guilty to attempted tax evasion under Tennessee Code Annotated § 67-1-1440. As
part of his plea agreement, the criminal court ordered the corporate officer to pay
restitution in the amount of $17,500. After completing probation, the Department of
Revenue notified the corporate officer of an individual sales tax assessment of
$137,493.76 arising from the corporation‟s operations. The corporate officer filed a
complaint in the Davidson County Chancery Court challenging the assessment. The
corporate officer argued that the amount of the criminal restitution, which he had already
paid, was the full amount of his individual liability to the Department. The Department
filed a motion to dismiss, which the trial court granted. Concluding that criminal
restitution and civil tax liability are separate and distinct, we affirm the dismissal.

 Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed

W. NEAL MCBRAYER, J., delivered the opinion of the Court, in which RICHARD H.
DINKINS and BRANDON O. GIBSON, JJ. joined.

Matthew R. Armour, Somerville, Tennessee, for the appellant, Abdelrahman Amrokbeer.

Robert G. Cooper, Attorney General and Reporter, and Joseph F. Whalen, Acting
Solicitor General, and R. Mitchell Porcello, Assistant Attorney General, Nashville,
Tennessee, for the appellee, Tennessee Department of Revenue.
                                          OPINION

                                I. FACTUAL BACKGROUND

       On November 5, 2010, Appellant, Abdelrahman Amrokbeer, pled guilty to one
count of attempting to evade sales tax, Tennessee Code Annotated § 67-1-1440(g)
(2013). The criminal action stemmed from the failure of E & A Inc., the owner and
operator of the Bull Market convenience store, to collect and remit sales tax. As part of
Appellant‟s plea agreement, the criminal court ordered him to pay $17,500 in restitution
to the Department of Revenue (the “Department”). Following the successful completion
of judicial diversion, Appellant sought and obtained an expungement of his criminal
record.

        On March 19, 2013, the Department notified Appellant of an individual
assessment of $137,493.76 for the sales and use taxes collected but not remitted by E &
A, Inc. The Department assessed the taxes against Appellant individually as a
responsible party under Tennessee Code Annotated § 67-1-1443(a) (2013). On July 23,
2013, Appellant challenged the assessment by filing a complaint in the Chancery Court
for Davidson County. Appellant‟s primary theory was that the payment of the $17,500 in
restitution ordered as part of his criminal sentence was the full extent of his liability to the
Department. Furthermore, he argued that “the March 19, 2013 assessment against
Plaintiff is „unjust, illegal or incorrect‟ because of the legal doctrines of release, breach of
contract, res judicata, judicial estoppel, unclean hands, waiver and the seizing of
Plaintiff‟s property without due process of law.”

        On August 26, 2013, the Department filed a motion to dismiss for failure to state a
claim for which relief can be granted under Tennessee Rule of Civil Procedure 12.02(6).
After conducting a hearing, the trial court dismissed the complaint “in its entirety.” In its
order, the trial court stated the following:

              The Court finds that the plaintiff‟s complaint fails to state a claim for
       which relief can be granted because the plaintiff‟s criminal plea agreement
       and payment of restitution to the Department of Revenue in the amount of
       $17,500 did not bar the Department of Revenue from assessing civil taxes,
       penalty, and interest against the plaintiff pursuant to Tenn. Code Ann. § 67-
       1-1443 in the amount of $137,493.

The trial court also found against Appellant on all other grounds for relief. The trial court
held that the Department was entitled to an award of attorneys‟ fees but reserved the
                                           -2-
determination of the amount of attorneys‟ fees until the conclusion of all appeals.
Appellant timely appealed.

                                              II. ANALYSIS

       This appeal arises from the grant of a Tennessee Rule of Civil Procedure 12.02(6)
motion to dismiss for failure to state a claim upon which relief can be granted. The
standards by which Tennessee courts are to assess a Rule 12.02(6) motion to dismiss are
well established. As our Supreme Court stated in Webb v. Nashville Area Habitat for
Humanity, Inc., 346 S.W.3d 422 (Tenn. 2011), “[a] Rule 12.02(6) motion challenges only
the legal sufficiency of the complaint, not the strength of the plaintiff‟s proof or
evidence.” Id. at 426. The motion is resolved “by an examination of the pleadings
alone.” Id. (citations omitted). By filing a motion to dismiss, the defendant “admits the
truth of all of the relevant and material allegations contained in the complaint, but . . .
asserts that the allegations fail to establish a cause of action.” Id. (citations omitted).

        When a complaint is challenged by a Rule 12.02(6) motion, the complaint should
not be dismissed for failure to state a claim unless it appears that the plaintiff can prove
no set of facts in support of his or her claim that would warrant relief. Doe v. Sundquist,
2 S.W.3d 919, 922 (Tenn. 1999) (citing Riggs v. Burson, 941 S.W.2d 44, 47 (Tenn.
1997)). Making such a determination is a question of law. Our review of a trial court‟s
determinations on issues of law is de novo, with no presumption of correctness. Id.
(citing Stein v. Davidson Hotel Co., 945 S.W.2d 714, 716 (Tenn. 1997)).

       Appellant argues that the theory of estoppel and detrimental reliance should
prevent the dismissal of his case because of the presence of representatives of the
Department at various stages of the criminal proceedings. According to Appellant,
during the negotiation of his plea agreement and when he paid the restitution in full, the
representatives of the Department knew full well that Appellant intended the restitution to
compromise and satisfy his individual tax liability.1 However, in Tennessee, detrimental
reliance and estoppel cannot be invoked against the State in the collection of revenues
based upon the actions of individuals who work for the Department. Tennessee Farmers
Assurance, Co. v. Chumley, 197 S.W.3d 767, 779-780 (Tenn. Ct. App. 2006); Exch. Mut.
Ins. Co. v. Olsen, 667 S.W.2d 62, 63 (Tenn. 1984) (citing Memphis Shoppers News, Inc.
v. Woods, 584 S.W.2d 196 (Tenn. 1979)). Therefore, Appellant‟s assertions lack merit.

        The trial court concluded that Appellant‟s criminal guilty plea and payment of
restitution “did not bar the Department of Revenue from assessing civil taxes, penalty,


1
    The plea agreement exhibited to Appellant‟s complaint did not reflect this understanding.
                                                     -3-
and interest against the plaintiff pursuant to Tenn. Code Ann. § 67-1-1443 in the amount
of $137,493.” We agree. Under Tennessee Code Annotated § 67-1-1443(a),

       Any person required to collect, truthfully account for, and pay over any tax
       collected from customers of any taxpayer, who willfully fails to truthfully
       account for and pay over any such tax collected, or who willfully attempts
       in any manner to evade or defeat any such tax or the payment of those
       taxes, shall, in addition to other penalties provided by law, be liable for the
       total amount of the tax evaded, or not accounted for and paid over, along
       with penalties and interest.

Tenn. Code Ann. § 67-1-1443(a) (emphasis added).             Criminal restitution certainly
qualifies as a penalty provided by law.

        Even absent the language of Tennessee Code Annotated § 67-1-1443(a),
Appellant‟s argument fails to recognize that criminal restitution is a separate and distinct
remedy from civil liability. Although a criminal court may consider the victim‟s
pecuniary loss in determining the amount of restitution, not all of a victim‟s damages
may be included as restitution. Tenn. Code Ann. § 40-35-304(e) (2014); see also State v.
Irick, 861 S.W.2d 375, 376-77 (Tenn. Crim. App. 1993) aff’d, 906 S.W.2d 440 (Tenn.
1995) (“basing the amount of restitution upon a civil judgment is palpable error because
personal injury judgments ordinarily include general damages.”). The amount of
criminal restitution, unlike civil liability, is also influenced by “the financial resources
and future ability of the defendant to pay or perform.” Tenn. Code Ann. § 40-35-304(d).
As a result, restitution does not “reflect the amount of damages that might be recoverable
in a civil action.” People v. Carbajal, 899 P.2d 67, 71 (Cal. 1995).

        Criminal restitution also serves different purposes than civil tax liability. “„The
purpose of restitution is not only to compensate the victim but also to punish and
rehabilitate the guilty.‟” State v. Bottoms, 87 S.W.3d 95, 106 (Tenn. Crim. App. 2001)
(quoting State v. Johnson, 968 S.W.2d 883, 885 (Tenn. Crim. App. 1997)). In addition,
criminal restitution acts as a deterrent. State v. Lewis, 917 S.W.2d 251, 257 (Tenn. Crim.
App. 1995). Taxes, on the other hand, “are usually motivated by revenue-raising, rather
than punitive, purposes.” Dep’t of Revenue of Mont. v. Kurth Ranch, 511 U.S. 767, 779-
80 (1994).

       Finally, Appellant‟s argument fails to recognize the separate and distinct roles of
and procedure applicable to criminal and civil courts. Criminal courts are ill-suited to
ascertain civil liability. As acknowledged by our Court of Criminal Appeals,
“[d]isposing of civil liability is not the function of the criminal process” and that “civil
process is far better suited” for such purposes. Lewis, 917 S.W.2d at 257.
                                            -4-
                                   III. CONCLUSION

        Based on the provisions of Tennessee Code Annotated §§ 67-1-1443(a) and 40-
35-304 and the purposes of criminal restitution, we conclude that the Department may
assess unremitted sales and use taxes, interest, and penalties notwithstanding an order of
criminal restitution for evasion of the same taxes. We affirm the judgment of dismissal
for failure to state a claim. This matter is remanded for further proceedings consistent
with this opinion.


                                                _________________________________
                                                W. NEAL MCBRAYER, JUDGE




                                          -5-
