                IN THE COURT OF APPEALS OF TENNESSEE
                             AT JACKSON
                                   May 22, 2012 Session

      HUBERT MORRISON, ET AL. v. THE CITY OF BOLIVAR, ET AL.

                  Appeal from the Circuit Court for Hardeman County
                     No. 07-02-0264     J. Weber McCraw, Judge


                  No. W2011-01874-COA-R9-CV - Filed June 14, 2012


We granted this Tennessee Rule of Appellate Procedure 9 interlocutory appeal to answer the
question of whether the Tennessee Revenue Bond Law, Tennessee Code Annotated Section
7-34-101, et seq., permits a private right of action on behalf of Appellees, utility rate payers,
against Appellants, the City of Bolivar and its utility. The trial court denied Appellants’
motion to dismiss for failure to state a claim on the ground that Appellees could maintain a
private cause of action because Tennessee Code Annotated Section 7-34-115(f) did not
provide the sole remedy for violation of the statutory scheme. We hold that the Revenue
Bond Law does not expressly create an individual private right of action, and that Appellees
have not carried their burden to establish that the legislature intended to imply such a right.
Accordingly, we reverse the judgment of the trial court and remand for entry of judgment in
favor of Appellants. Reversed and remanded.

  Tenn. R. App. P. 9. for an Interlocutory Appeal; Judgment of the Circuit Court
                              Reversed and Remanded

J. S TEVEN S TAFFORD, 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.

William B. Hubbard and Marc R. Jenkins, Nashville, Tennessee, for the appellants, The City
of Bolivar and the Bolivar Utility Department f/k/a Bolivar Gas System and Bolivar Water
& Wastewater System.

George E. Barrett, Nashville, Tennessee and Charles H. Farmer, Jackson, Tennessee, for the
appellees, Hubert Morrison, Robin Baker, Jackie Cox, Kenneth Kowen, and Whiteville Auto
Parts.

                                          OPINION
                                         Background

        On October 3, 2007, Plaintiffs/Appellants Hubert Morrison, Robin Baker, Jackie Cox,
Kenneth Kowen, and Whiteville Auto Parts (together, “Class Members,” or “Appellees”)
filed this class action lawsuit in the Circuit Court at Hardeman County. The complaint
alleged that the Defendants/Appellants City of Bolivar, Tennessee, and the Bolivar Utility
Department f/k/a Bolivar Gas System and Bolivar Water & Wastewater System (together,
“Appellants”) had violated the Revenue Bond Law as codified at Tennessee Code Annotated
Section 7-34-101 et seq. (the “Act”). Specifically, the Class Members asserted that
Appellants had illegally transferred, or had overpaid, utility revenues to the city in violation
of the Act. The Class Members’ original complaint averred conversion. On November 9,
2007, Appellants moved to dismiss the complaint or, in the alternative, for summary
judgment.

        On December 21, 2009, the Class Members filed an amended complaint. The
amended complaint reiterates the allegations that the Appellants violated the Act by making
illegal transfers of surplus funds to the City of Bolivar, rather than using those funds to
reduce rates. According to the amended complaint, the allegations of overpayments rely on
a letter dated January 30, 2006, from Dennis Dycus, the Director of the Division of
Municipal Audit of the State of Tennessee’s Comptroller of the Treasure. As set out in the
amended complaint, the letter provides:

              In reviewing the city’s audited financial statements for the year
              ended June 30, 2005, I noted your independent auditor included
              a finding to the fact that the city had no supporting
              documentation for the in-lieu-of-tax payments received from the
              water/sewer and gas systems. Per the audited financial
              statements, each utility paid the city a $200,000 in-lieu-of-tax
              payment.

              Sections 7-34-115(a)(9) and 7-39-403, Tennessee Code
              Annotated (TCA), provide[] formulas and methods for
              determining the tax equivalency payments for water/sewer and
              gas systems respectively. Using the guidelines set forth in the
              TCA, the Municipal Technical Advisory Service (MTAS),
              developed schedules to assist local governments in calculating
              in-lieu-of-tax payments.

              Using the schedules and the information obtained from each
              utility’s audited financial statements, we calculated what the in-


                                              -2-
              lieu-of-tax payments should have been. Per the calculations, the
              maximum amount of such tax the water/sewer system could
              have paid was $79,032. The maximum amount of such tax the
              gas system could have paid was $40,250. Assuming our
              calculations are correct, the water/sewer system paid $170,968
              and the gas system paid $159,750 in excess of the maximum
              amount allowed under the statutes, for a total overpayment of
              $330,718.

       Instead of a claim for conversion, the amended complaint asserts that the Class
Members are entitled to monetary relief due to the Appellants’ alleged violations of the Act.
The amended complaint also contains claims for breach of express or implied contract,
declaratory judgment, and unjust enrichment all based on violations of Tennessee Code
Annotated Section 7-34-115. In response to the amended complaint, on February 8, 2010,
Appellants renewed their motion to dismiss or, in the alternative, for summary judgment. On
July 21, 2010, the trial court denied the motion.

        On August 23, 2010, the Class Members filed a motion for class certification, seeking
to certify the following class:

              All residential and commercial customers of Defendant
              Municipal Utility System, who from July 1, 1993 through the
              present, paid for utility services, from any of the Defendant
              Municipal Utility Systems, and who were denied the benefits of
              the law by Defendants’ actions (the “Class”). Excluded from
              this definition are any “industrial” or “special” customers as
              defined by Defendant Municipal Utility Systems.

       The trial court granted the Class Members’ motion for class certification, finding that
the class was maintainable under Tennessee Rule of Civil Procedure 23.02(3). The court
further determined that there was no antagonism between the Class Members.

       On January 7, 2011, Appellants moved the trial court to reconsider the July 21, 2010
order denying the motion to dismiss, or in the alternative, for summary judgment, based upon
the subsequently issued authority in Brown v. Tennessee Title Loans, Inc., 328 S.W.3d 850
(Tenn. 2010). On May 10, 2011, the trial court denied the motion to reconsider.

       On June 6, 2011, Appellants filed a motion for interlocutory appeal of the order
denying the motion to reconsider in the circuit court. This motion was granted by the trial
court. On September 2, 2011, Appellants filed a motion for permission to appeal the order


                                             -3-
granting class certification in the circuit court; the trial court also granted this motion. On
September 19, 2011, Appellants filed, with this Court, separate applications for permission
to file an interlocutory appeal of the denial of its motion for dismissal or, in the alternative,
for summary judgment, and denial of its motion to reconsider, and an application for
interlocutory appeal of the trial court’s grant of class certification. By Order of September
21, 2011, this Court consolidated the two applications for permission to appeal. By Order of
October 18, 2011, this Court granted the consolidated applications.

       Appellants raise three issues for review as stated in the brief:

              1. Whether the trial court erred in finding that T.C.A. §7-34-
              115(f) is not the exclusive remedy.

              2. Whether the trial court erred in finding that [Appellees] have
              a cause of action.

              3. Whether the trial court erred in granting class certification
              because the interests and injuries of the class members are at
              odds.

                                     Standard of Review

        It is well settled that a Tennessee Rule of Civil Procedure 12.02(6) motion to dismiss
for failure to state a claim tests only the legal sufficiency of the complaint itself. Cook v.
Spinnakers of Rivergate, Inc., 878 S.W. 2d 934, 938 (Tenn. 1994). The grounds for such a
motion are that the allegations of the complaint, if considered true, are not sufficient to
constitute a cause of action as a matter of law. Id. A motion to dismiss should be granted
only if it appears that the plaintiff cannot establish any facts in support of the claim that
would warrant relief. Doe v. Sundquist, 2 S.W.3d 919, 922 (Tenn. 1999). We review a trial
court's denial of a motion to dismiss de novo, with no presumption of correctness. Stein v.
Davidson Hotel Co., 945 S.W.2d 714, 716 (Tenn. 1997). Accordingly, our review of the trial
court’s legal conclusion that the Revenue Bond Act creates a private cause of action is de
novo, with no presumption of correctness. Tenn. R. App. P. 13(d); Stein v. Davidson Hotel
Co., 945 S.W.2d 714, 716 (Tenn. 1997).

    Overview and Legislative History of the Revenue Bond Law, Tennessee Code
                        Annotated Section 7-34-101 et seq.

      The Revenue Bond Law was established in 1935. 1935 Tenn. Pub. Acts (Extra
Session) Ch. 33. At that time, the Act contained a declaration of policy, which remains in


                                               -4-
the current manifestation of the Act, see infra, and provides:

              (a) That it is hereby declared to be the policy of this State that
              any municipality acquiring, purchasing, constructing,
              reconstructing, improving, bettering or extending any public
              works pursuant to this Act, shall manage such public works in
              the most efficient manner consistent with sound economy and
              public advantage to the end that the services of the public works
              shall be furnished to the customer at the lowest possible cost.

              (b) No municipality shall operate such public works for gain or
              profit or primarily as a source of revenue to the municipality, but
              shall operate such public works for the use and benefit of the
              consumer served by such public works and for the promotion of
              the welfare and for the improvement of the health and safety of
              the inhabitants of the municipality.

1935 Tenn. Pub. Acts (Extra Session) Ch. 33, § 3; Tenn. Code Ann. § 7-34-103.

       When it was originally enacted, the Act contained no remedial provisions for
municipalities that violated the Act. Id. Although the Act was subsequently amended in
1949, 1969, and 1986, these amendments did not include remedial provisions. 1949 Tenn.
Pub. Acts. Ch. 43; Tenn. Pub. Acts Ch. 335; 1986 Tenn. Pub. Acts Ch. 533. The 1969
amendment allowed municipalities that had retired all bonds issued to devote surplus
revenues to “any municipal purpose.” 1969 Tenn. Pub. Acts. Ch. 335 §§ 2–3. Consequently,
after 1969, it was acceptable for a municipal utility to devote surplus revenues to the
municipality, rather than to devote those surplus revenues solely to the reduction of rates.

       A remedial provision was added to the Act by the 1993 amendments. 1993 Tenn. Pub.
Acts. Ch. 509 § 1. This remedial provision is at issue in the instant appeal, and is set out at
Tennessee Code Annotated Section 7-34-115(f) as follows:

              (f) If a municipality violates this section, it must repay any funds
              illegally transferred. If the municipality does not have sufficient
              funds to repay any funds illegally transferred, the municipality
              is required to submit a plan covering a period not to exceed five
              (5) years in which to repay the funds. The plan shall be
              submitted to and approved by the comptroller of the treasury or
              the comptroller’s designee. Upon discovery of such violation
              through an audit, any city official in violation of this section is


                                              -5-
              subject to ouster under title 8, chapter 47.

The 1993 amendment also added language similar to that found in the declaration of policy
at Tennessee Code Annotated Section 7-34-103. Specifically, that the “municipal utility
systems shall be operated on sound business principles as self-sufficient entities. . . . [N]o
public works shall operate for gain or profit or as a source of revenue to a governmental
entity, but shall operate for the use and benefit of the consumers served by such public works
and for the improvement of the health and safety of the inhabitants of the area served.” 1993
Tenn. Pub. Acts. Ch. 509 §1; Tenn. Code Ann. § 7-34-115(a).

      Since its enactment, the Act has permitted utilities and municipalities to spend funds
generated by the utilities on nine separate categories, namely:

              Any municipality shall devote all revenues derived from a public
              works to or for:

              (1) The payment of all operating expenses;
              (2) Bond interest and retirement or sinking fund payments, or
              both;
              (3) The acquisition and improvement of public works;
              (4) Contingencies;
              (5) The payment of other obligations incurred in the operation
              and maintenance of the public works and the furnishing of
              services;
              (6) The redemption and purchase of bonds, in which case such
              bonds shall be cancelled;
              (7) The creation and maintenance of a cash working fund;
              (8) The payment of an amount to the general fund of the
              municipality not to exceed a cumulative return of six percent
              (6%) per annum of any equity invested from the general fund,
              if any, of the municipality. Equity investment includes any
              contributions or purchases made by the municipality from the
              general fund, including, but not limited to, cash contributions,
              retirement of debt service and purchases of equipment, so long
              as these contributions are reflected in the utility's financial
              statement; provided, that such definition of equity investment
              shall not change the status under this section of any payments
              made pursuant to any provision of a city charter in existence on
              or before July 1, 1993; and
              (9) If the governing body of the municipality by resolution so


                                             -6-
              requests, payments to the municipality in lieu of ad valorem tax
              on the property of the public works within the corporate limits
              of the municipality not to exceed the amount of taxes payable on
              privately owned property of similar nature.

Tenn. Code Ann. § 7-34-115(a).

        The 1993 amendments closed the loophole that had allowed municipalities that had
retired all bonds to devote surplus revenues to “any municipal purpose,” and instead require
that: “Any surplus remaining, after establishment of proper reserves, if any, shall be devoted
solely to the reduction of rates.” Tenn. Code Ann. § 7-34-115(b). The Senate debated this
particular amendment on May 4, 1993. The transcript of the debate, which is included in our
appellate record, provides, in relevant part, as follows:

              [Comptroller] Morgan: As it related to in lieu of taxes, I really
              don’t think we’re creating a problem, but we certainly don’t
              intend to affect any of the other sections that provide for in lieu
              of tax payments. What happens is: The only thing we’re
              changing that relates to payments from a utility to a general
              government is that we’re just deleting the ability of a general
              government to reach into a utility and transfer surplus monies.
              Current law provides, the sections we’re amending, that after the
              application of excess surpluses to a whole range of purposes, the
              final purpose is it can be used for any lawful municipal purpose.
              That’s what the business tax study committee was quite
              concerned with, and that has been the mechanism by which
              utilities have been tapped to support general government
              operations. That is what this bill seeks to close, is that last
              purpose which would be any other municipal purpose that would
              be.

The Senate continued its debate on May 17, 1993, with Senator Henry stating, in relevant
part, as follows:

              [Senator] Henry: Mr. Speaker, amendment n[umber] one by the
              State and Local Government committee is a rewrite of the bill
              and is set out in considerable detail the nature of the payments
              which a municipality owned utility may make to its
              municipality. It provides that it can pay them for items one two
              three four and so forth, down, but anything over that has to be


                                              -7-
                 used for rate reduction and if a municipality violates this
                 provision, puts too much in the general fund, does not use it
                 for rate reductions it must repay the utility and therefore to
                 the people who patronize the utility the amount improperly
                 transferred to the general fund.

(emphasis added).

        Having discussed the relevant provisions of the Act and the legislative history, we
now turn to address the Appellants’ first issue: whether the Act creates a private right of
action.

                                        Private Right of Action

       The determination of whether a statute creates a private right of action is a matter of
statutory construction. Premium Fin. Corp. of Am. v. Crump Ins. Servs. of Memphis, Inc.,
978 S.W.2d 91, 93 (Tenn. 1998).1 It is well settled that our essential duty in statutory



        1
           In Premium Finance, the Tennessee Supreme Court held that, under the Premium Finance
Company Act, Tennessee Code Annotated Section 56-37-101 et seq., the legislature did not impliedly grant
a statutory right of action to premium finance companies against insurance companies for the failure to return
an unearned premium to the finance company after cancellation of the underlying insurance contract.
Premium Finance, 978 S.W.2d at 92. Like the Act at issue here, the Premium Finance Company Act
contains special remedies for its enforcement. Id. Because the act contained specific remedies for its
enforcement, the Court found that it should not imply a private right of action unless such legislative intent
was “manifestly clear.” Id.
         Likewise, in Petty v. Daimler/Chrysler Corp., 91 S.W.3d 765 (Tenn. Ct. App. 2002), perm. app.
denied (Tenn. Sept. 9, 2002), plaintiff brought an action for violation of the Tennessee motor vehicle glass
safety statutes. These statutes did not contain an express private right of action, Id. at 768, but did provide
the Commissioner of the Tennessee Department of Safety with the authority to approve certain types of glass.
Id. The remedy for violations of the statute was the commissioner’s suspension of the registration of any
motor vehicle not in compliance with the statute. Id. Accordingly, the Court found that “the only remedy
provided by statute is to be had by the state,” and did not imply a private right of action. Id.
         In Reed v. Alamo Rent-A-Car, Inc., 4 S.W.3d 677 (Tenn. Ct. App. 1999), perm. app. denied (Tenn.
Oct. 4, 1999), plaintiff sought to recover damages for Alamo’s alleged violation of Tennessee Code
Annotated Section 50-6-123, a portion of the Tennessee Workers’ Compensation Law that establishes a
system of case management for coordinating the medical care provided to employees under law. Id. at
688–89. This Court concluded that Tennessee Code Annotated Section 50-6-123 did not provide a private
right of action for negligent case management. Id. at 689–90. The Court acknowledged that the plaintiff was
an intended beneficiary, Id., but also recognized that the primary duty was imposed on the Commissioner
of the Tennessee Department of Labor. Id. Furthermore, the Workers’ Compensation Law provided special
remedies for its enforcement. Accordingly, this Court declined “to engraft additional requirements onto the
enforcement scheme designed by the legislature.” Id.

                                                     -8-
construction is to determine and implement the legislature's intent without limiting or
expanding the statute's coverage beyond what the legislature intended. Id.; Hawks v. City of
Westmoreland, 960 S.W.2d 10, 16 (Tenn. 1997). When the existence of a private right of
action depends on the contents of the statute, “our courts are not privileged to create such a
right under the guise of liberal interpretation of the statute.” Premium Fin. Corp., 978
S.W.2d at 93; see Hogan v. McDaniel, 319 S.W.2d 221, 223 (Tenn. 1958) (“Judicial
legislation has long been regarded by the legal profession as unwise, if not dangerous
business.”). The authority to create a private right of action pursuant to statute is the province
of the legislature. Premium Fin. Corp., 978 S.W.2d at 93; Reed v. Alamo Rent–A–Car, Inc.,
4 S.W.3d 677, 689 (Tenn. Ct. App.1999).

       To determine whether the legislature intended to create a private right of action for
violation of the Revenue Bond Law, we begin with the express statutory language. See
Ergon, Inc. v. Amoco Oil Co., 966 F. Supp. 577, 584 (W.D. Tenn. 1997); Premium Fin.
Corp., 978 S.W.2d at 93. Here, there is no dispute that the express language of the Act does
not create such a right of action on behalf of a rate payer against the municipality or its
utility—whether in the specific section prescribing the remedy for violation of the Act (i.e.,
Tenn. Code Ann. §7-34-115(f), or in the sections outlining the use of utility revenues (i.e.,
Tenn. Code Ann. §7-34-115(a)(1)–(9) and (b)).2

        In Brown v. Tennessee Title Loans, Inc., 328 S.W.3d 850 (Tenn. 2010), our Supreme
Court found that the legislature did not expressly create a right of action, nor did it imply
such a right permitting pledgors to bring private actions against title pledge lenders who
allegedly charged excessive interest and fees under the Tennessee Title Pledge Act,
Tennessee Code Annotated Section 45-15-101 et seq.. Like the Act at issue here, the Title
Pledge Act contains specific remedies for its enforcement. The Supreme Court found that
the implication of allowing a private cause of action would be inconsistent with the purposes
set forth by the legislature. In reaching its decision, the Supreme Court succinctly outlined
the law applicable to questions of whether a private cause of action may exist in cases, such
as the one at bar, where the statute does not expressly create that right:

                 If a statute does not expressly create a private right of action, our
                 next inquiry is whether the legislature otherwise indicated an
                 intention to imply such a right in the statute. Premium Fin.

        2
            By contrast, the Tennessee Consumer Protection Act is one in which the legislature expressly
grants a private right of action. Under that statute, “[a]ny person who suffers an ascertainable loss . . . as a
result of the use or employment by another person of an unfair or deceptive act or practice declared to be
unlawful by this part, may bring an action individually to recover actual damages.” Tenn. Code Ann. § 47-18-
109(a)(1) (2001); see also Myint v. Allstate Ins. Co., 970 S.W.2d 920, 925 (Tenn. 1998).


                                                      -9-
                 Corp., 978 S.W.2d at 93; Reed, 4 S.W.3d at 689. In this
                 analysis, we look to the statutory structure and legislative
                 history. Id. Appropriate factors to consider include (1) whether
                 the party bringing the cause of action is an intended beneficiary
                 within the protection of the statute, (2) whether there is any
                 indication of legislative intent, express or implied, to create or
                 deny the private right of action, and (3) whether implying such
                 a remedy is consistent with the underlying purposes of the
                 legislation. Ergon, 966 F.Supp. at 583–84; Buckner v. Carlton,
                 623 S.W.2d 102, 105 (Tenn. Ct. App. 1981).3

Brown, 328 S.W.3d at 855-56. The Brown Court further noted that “[t]he burden ultimately
falls on the plaintiff to establish that a private right of action exists under the statute.” Id.
(citing Premium Fin. Corp., 978 S.W.2d at 93).4


        3
            As noted by the Court:

                  These factors originally appeared in the United States Supreme Court's
                 opinion in Cort v. Ash, which set forth the standard for determining
                 whether a private right of action is implicit in a federal statute. See 422
                 U.S. 66, 78, 95 S.Ct. 2080, 45 L.Ed.2d 26 (1975). Cort also articulated a
                 fourth factor—whether the cause of action is traditionally relegated to state
                 law—which is inapplicable to the interpretation of state statutes and,
                 therefore, omitted from the analysis. See Ergon, 966 F.Supp. at 584 n.9.
                 Buckner was the first Tennessee decision to analyze the three applicable
                 Cort factors to determine whether a Tennessee statute implied a private
                 right of action.

Brown, 328 S.W.3d at 856 n. 4 .
        4
         We note that the Tennessee legislature has voted (Pub. Act Ch. 759) to amend Tennessee Code
Annotated, Title 1, Chapter 3, Part 1, effective July 1, 2012 (SB2140, HB 2809), to include Section 1-3-119,
which will provide, in relevant part, as follows:

                 (a) In order for legislation enacted by the general assembly to create or
                 confer a private right of action, the legislation must contain express
                 language creating or conferring the right.
                 (b) In the absence of the express language required by subsection (a), no
                 court of this state, licensing board or administrative agency shall construe
                 or interpret a statute to impliedly create or confer a private right of action
                 except as otherwise provided in this section.
                 (c) Nothing in this section shall be construed in any way to impair the
                 ability of a court to:
                                                                                                  (continued...)

                                                     -10-
       Having determined above that the Act does not expressly create a private cause of
action, we now turn to apply the Brown factors to the instant case to determine whether a
private cause of action is implicitly available to these plaintiffs. As we apply each factor, we
are cognizant of the fact that the burden of proof is on the Class Members on this issue.

       A. Whether the Class Members are Intended Beneficiaries under the Act.

         From the plain language of Tennessee Code Annotated Section 7-34-115(f), supra,
it is clear that any violation of the statutory scheme will result in the municipality having to


        4
            (...continued)
                    (1) Recognize a private right of action that was recognized before the
                    effective date of this section by the courts of this state as arising under a
                    statute, unless the statute is amended after the effective date of this section
                    to expressly bar the private right of action;
                    (2) Create or confer a private right of action in the absence of a
                    controlling statute on each cause of action contained in the complaint if
                    such action is based on the common law;
                    (3) Utilize the doctrine of negligence per se; or
                    (4) Recognize a private right of action commenced by a state or
                    local governmental entity to collect fees owed for a governmental service
                    or to recover such fees from a party that is obligated to bill and collect fees
                    owed others for a governmental service.
                    (d) Nothing in this section shall be construed in any way to impair the
                    ability of a state or local regulatory or licensing agency to enforce rules
                    pursuant to the Uniform Administrative Procedures Act, codified in Title
                    4, Chapter 5, if such rules were duly enacted through the rulemaking
                    authority granted to any such agency by statute.

         Although the legislature specifically adopted this amendment for prospective application to those
lawsuits filed on or after July 1, 2012, the debate that occurred on the Senate floor indicates the legislative
intent to attempt to clarify when a private cause of action is granted by requiring that the statute expressly
grant that private cause of action. Senator Kelsey, the proponent of the bill, explained that, to date, courts
have had difficulty in determining whether the legislature intended to confer a private right of action in
statutes where there is no explicit grant of that right. In explanation, Senator Kelsey quoted Brown to the
Judicial Committee, stating that “implied rights, by definition, must be found from what was intended but
not specifically stated.” The amendment will relieve courts from this analysis. When Section 1-3-119 is
added to our statutes, courts will be precluded from implying a private right of action unless the legislative
intent to do so is explicit in the statute’s text. If a statute is silent, then Section (b) of the amended statute
will preclude courts from creating a private right of action by inference, unless certain criteria are met.
Because the amendment is not applicable to the instant appeal, we are not relieved from applying the Brown
factors to determine whether a private right of action is implicitly available to these plaintiffs. However, if
this statute had been in effect and applicable to the instant appeal, we would not have engaged in the Brown
analysis, but would have clearly known that the legislative intent was to preclude private rights of action
because the right is not explicit in the Act.

                                                         -11-
pay back any misapplied funds to the utility. The statute does not contemplate that these
funds will automatically be used to reduce rates. Rather, Tennessee Code Annotated Section
7-24-115(a) lists several appropriate options for use of utility revenues. Only when these
criteria are satisfied and the utility has adequate reserves, is it required to apply surplus funds
to reduce rates. Consequently, the rate payer is not the direct beneficiary of the statutory
remedy; rather, it is the utility that is to receive any misapplied funds from the municipality
and it is the utility’s decision how it will apply those funds to the expenses, contingencies,
improvements, etc. set out in Subsection (a) of Tennessee Code Annotated Section 7-34-115.

      Although, as set out above, Senator Henry correctly states that the rate payers will be
indirect beneficiaries of the statutory scheme: “If a municipality violates this provision, puts
too much in the general fund, does not use it for rate reductions it must repay the utility and
therefore to the people who patronize the utility the amount improperly transferred to the
general fund,” there is nothing in the Act from which we can infer that the rate payers are the
direct beneficiaries. However, even if we allow that they are indirect beneficiaries under the
statute, this fact is not sufficient to establish a private cause of action under the Brown
analysis. Brown, 328 S.W.3d at 858 (“The mere fact that the legislature enacted the TTPA
to protect and benefit pledgors is not alone sufficient, however, to imply a private right of
action. . . . We must also consider the remaining two factors in the inquiry”).

                                     B. Legislative Intent

      The second Brown factor is whether there is any indication of legislative intent,
express or implied, to create or deny a private right of action. Again, Appellees bear the
burden of establishing the evidence of legislative intent to create such a right.

       We have reviewed the Act’s legislative history, some of which is set out above. We
find nothing therein that would support the trial court’s finding that the legislature intended
to imply a private right of action in the Act. As discussed above, Section (f) of Tennessee
Code Annotated Section 7-34-115 provides a remedy for violation of the Act. The remedy
includes repayment of funds transferred to the municipality in violation of the Act, and the
possibility of ouster of city officials in connection with the disallowed transfer of funds.

       In Tennessee, “if a statute creates a new right and prescribes a remedy for its
enforcement, then the prescribed remedy is exclusive.” Guy v. Mutual of Omaha Ins. Co.,
79 S.W.3d 528, 536 (Tenn. 1999); Hodges v. S.C. Toof & Co, 833 S.W.2d 896, 899 (Tenn.
1999); Turner v. Harris, 281 S.W.2d 661, 665 (Tenn. 1955). Regarding the issue of
exclusive remedies, Tennessee rulings are consistent with those of the United States Supreme
Court. In Transmerica Mortgage Advisors, Inc. v. Lewis, 444 U.S. 11, 19, 100 S.Ct. 242,
247 (1979), the Supreme Court stated, in relevant part, that, “when a statute expressly


                                               -12-
provides a particular remedy or remedies, a court must be chary of reading others into it.
When a statute limits a thing to be done in a particular mode, it includes the negative of any
other mode [of recovery].” Id.

        According to the amended complaint, in the instant case, the Appellees are not seeking
ouster of city officials for violation of the Act. Rather, they are seeking a transfer of funds
from the City of Bolivar and/or from the municipal utility. However, under Section (f), the
remedy is clear and limited, requiring a municipality to repay the funds to the utility (if the
municipality cannot pay the funds immediately, it is required to fashion a repayment plan not
to exceed five years). There is nothing in the Act from which to infer that a rate payer has
any private right to seek monetary damages for violation of the Act. Concerning the
enactment of specific remedies under Tennessee Code Annotated Section 7-34-115(f),
Comptroller Morgan explained that “[t]he only thing we’re changing . . . is we’re just
deleting the ability of the general government to reach into a utility and transfer surplus
monies . . . after the application of excess surpluses for a whole range of purposes, the final
purpose is it can be used for any lawful municipal purpose.” When asked, by Senator
Gilbert, about the remedy of ouster, Comptroller Morgan explained that the ouster provision
was an attempt to make “it clear that the law in Tennessee is not that you can divert monies
from a utility system and use it to finance general government.” However, Comptroller
Morgan specifically stated that the purpose of the amendment was “not to impair [the
utility’s] ability to issue debt and do other things that they have to do.”

        In their brief, Appellees rely upon two cases, Pope v. Dykes, 93 S.W. 85 (Tenn. 1904),
and Badgett v. Rogers, 436 S.W.2d 292 (Tenn. 1968) for the proposition that they have a
cause of action to protect monies paid into the municipal utility. Both Pope and Badgett
address a taxpayers right to bring suit when those taxes are misapplied by the municipality.
In Pope, our Supreme Court recognized that “a taxpayer himself and other taxpayers, might
maintain an action to prevent the commission of an unlawful act, the effect of which would
be to increase his burden of taxation, or to divert a public fund from the purpose for which
it was intended by law.” Pope, 93 S.W.85 at 88. In Badgett, the Supreme Court addressed
whether an “individual citizen and taxpayer of a municipality [has] standing to seek relief
against municipal officials for alleged misappropriation or misuse of tax funds.” Badgett,
436 S.W. 2d at 293. These cases are distinguishable from the instant appeal. This case deals
particularly with the Revenue Bond Law, which has nothing to do with tax payments. Unlike
the case-at-bar, Pope and Badgett dealt with general misuse of taxes by municipalities; here,
the actions of the utility are governed by a specific statutory schemes. Here, we are dealing
only with the question of whether the Revenue Bond Law contains an implied right of private
action. As discussed above, in order to make that determination, we must look to the
contents of the Act and not to general principals of equity or standing. Accordingly, if the
Act does not implicitly give a right to private action, we cannot assume that the legislature,


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nonetheless, meant to allow citizens to file suit for violations of the Act in order to protect
the monies those citizens may have paid for services.

        From the foregoing legislative history, it is clear that the remedial scheme set out in
Tennessee Code Annotated Section 7-34-115(f) was chosen because it did not endanger the
utility’s ability to meet the obligations necessary to ensure its ability to continue to provide
utilities to the rate payers. The utility and the rate payers cannot recover the same funds. If
the rate payers are allowed a private right to seek repayment of revenues for violation of the
Act, this would be antagonistic to the remedial scheme envisioned by the legislature, whereby
a right to recover these funds is solely granted to the utility, which then may exercise its
autonomy to apply the recovered funds as it deems necessary in the management of the
utility. See also Premium Finance, 978 S.W.2d at 994; Petty, 91 S.W.3d at 768; Reed, 4
S.W.3d at 690.

    C. Whether an Implied Right to Private Action would be Consistent with the
                         Underlying Purpose of the Act

        The third Brown criterion is whether an implied right of action would be consistent
with the underlying purposes of the statute. From our reading of the plain language of the
Act, we conclude that the legislature intended dual purposes, namely: (1) to operate the
public utilities on sound business principles as self-sufficient entities so that services may be
furnished to consumers at the lowest rate; and (2) to prevent municipalities from operating
their public utilities as a source of gain or revenue for the municipality. Tenn. Code Ann. §§
7-34-103 and 7-34-115(a). The question, then, is whether the remedial scheme, as set out
at Tennessee Code Annotated Section 7-34-115, achieves both of these purposes. We
conclude that it does. First, the municipality is required to apply utility revenues to nine
enumerated categories, Tenn. Code Ann. §7-34-115(a). This requirement is in furtherance
of the goal of operating the utilities on sound business principles and the goal of self-
sufficiency. Under this scheme, the utility is required to establish reserves and funds for
other contingencies before issuing rate reductions. The remedial scheme for violation of
Section (a) is set out at Tennessee Code Annotated Section 7-34-115(f). Under Section (f),
the municipality must repay funds to the utility, thereby ensuring that the public works is not
operating as a source of revenue for the municipality.

         The requirement that funds transferred in violation of the Act must be repaid to the
utility illustrate the legislature’s intent to meet the purpose of the statute that utilities maintain
self-sufficiency, operate at the lowest possible cost to consumers, and do not operate as a
source of revenue for the municipality. The existence of a private right of action would
undermine these goals. Direct payment to rate payers would, necessarily, result in less
operating funds for use by the utility. This fact would make it more difficult for the utility


                                                -14-
to be self-sufficient, and would usurp the utilities’ ability to operate at the lowest possible
cost to consumers and on “sound business principles as self-sufficient entities.” Tenn. Code
Ann. § 7-34-1159(a).

       Having determined that the Revenue Bond Law does not expressly create an
individual private right of action, and that Appellees have not carried their burden to
establish that the legislature intended to imply such a right, we pretermit the remaining issue
concerning the certification of the class.

       For the foregoing reasons, we reverse the judgment of the trial court and remand for
entry of judgment in favor of Appellants. Costs of this appeal are assessed, in equal part, to
the Appellees, Hubert Morrison, Robin Baker, Jackie Cox, Kenneth Kowen, and Whiteville
Auto Parts, for all of which execution may issue if necessary.




                                                    _________________________________
                                                    J. STEVEN STAFFORD, JUDGE




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