Town of Smyrna v. Mun. Gas Auth. of Ga.

129 F.Supp.3d 589

TOWN OF SMYRNA, TENNESSEE, Plaintiff,

v.The MUNICIPAL GAS AUTHORITY OF GEORGIA, Defendant.

No. 3:11–00642.

United States District Court, M.D. Tennessee, Nashville Division.

Filed Sept. 10, 2015.

Jeffrey L. Peach, Smyrna, TN, Charles G. Jarboe, Jessalyn H. Zeigler, Kathryn Hannen Walker, L. Wearen Hughes, Bass, Berry & Sims, Nashville, TN, for Plaintiff.

Andrew Hatchett, Matthew L.J.D. Dowell, Edward P. Bonapfel, Nowell D. Berreth, Alston & Bird LLP, Atlanta, GA, Brian D. Boone, Emily C. McGowan, Alston & Bird LLP, Charlotte, NC, Paul Savage Davidson, Waller, Lansden, Dortch & Davis, LLP, Nashville, TN, for Defendant.

MEMORANDUM

KEVIN H. SHARP, District Judge.

In this case, set for trial at the end of the month, Defendant Municipal Gas Authority of Georgia ("the Gas Authority" or "MGAG") has filed a Motion to Dismiss Plaintiff Town of Smyrna's ("Town's" or "Smyrna's") claims under the Tennessee Consumer Protection Act and False Claims Act (Docket No. 143), and a Motion for Summary Judgment (Docket No. 149) on those claims and others. Both motions have been exhaustively briefed¹ with the last sur-reply filed on July 24, 2015.

On at least four occasions, the Court has had the opportunity to review this file in the context of MGAG's Motions to Dismiss, and finds it unnecessary to set forth a detailed exposition of the parties' respective position on the facts. Instead, the Court will reference the factual contentions in the context of ruling on the specific legal issues presented.

Further, while MGAG' has chosen to file both a Motion to Dismiss under Rule 12(c) and a Motion for Summary Judgment under Rule 56(c), the two overlap to some extent, the parties have briefed the issues in the context of both motions, and Plaintiff relies upon facts not pled in its Complaint. Accordingly, the Court will treat all arguments as if raised in the context of the Motion for Summary Judgment. See, Max Arnold & Sons, LLC v. W.L. Hailey & Co., 452 F.3d 494, 503 (6th Cir.2006) ("Rule 12(c) requires only one action by the district court for the conversion to a summary judgment motion to occur: failure to exclude presented outside evidence").

The standards governing summary judgment motions are, of course, well known. A party may obtain summary judgment if the evidence establishes there are no genuine issues of material fact for trial and the moving party is entitled to judgment as a matter of law. See FED. R. CIV. P. 56(c) ; Covington v. Knox Cnty. Sch. Sys., 205 F.3d 912, 914 (6th Cir.2000). A genuine issue exists "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party."

Anderson v. Liberty Lobby, 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). In ruling on a motion for summary judgment, the Court must construe the evidence in the light most favorable to the nonmoving party, drawing all justifiable inferences in his or her favor. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). With those standards in mind, the Court turns directly MGAG's arguments.

I. Tennessee Consumer Protection Act

"The Tennessee Consumer Protection Act, Tennessee Code Annotated Sections 47–18–101 et seq. (‘TCPA’), prohibits, among other things, ‘unfair or deceptive acts or practices affecting the conduct of any trade or commerce’ Tenn.Code Ann. § 47–18–104(a),' " and characterizes "[a] ‘deceptive’ act or practice [a]s ‘one that causes or tends to cause a consumer to believe what is false or that misleads or tends to mislead a consumer as a matter of fact.’ " Borla Performance Indus., Inc. v. Universal Tool & Eng., Inc., 2015 WL 3381293, at *13–14 (Tenn.Ct.App. May 26, 2015) (quoting Tucker v. Sierra Builders, 180 S.W.3d 109, 116 (Tenn.Ct.App.2005) ). Actions under the TCPA "shall be brought within one (1) year from a person's discovery of the unlawful act or practice," with a five-year statute of repose. Tenn.Code Ann. § 47–18–110.

MGAG argues that Smyrna's TCPA claim is untimely. It asserts that, as alleged in the Second Amended Complaint, Smyrna knew "shortly after February 23, 2010" that MGAG was placing allegedly unauthorized longer-term hedges on the Town's behalf. (Docket No. 144 at 4). At the very latest, MGAG argues, "Smyrna knew by April 2, 2010, that MGAG had placed the disputed hedges and that the Town was obligated to pay for them because the Gas Authority sent Smyrna a written response that day saying as much." (Id. ).

In response, Smyrna first argues that the one-year statute of limitations is inapplicable under the nullum tempus doctrine. The Court is unpersuaded by that argument.

" ‘The ancient rule quod nullum tempus occurit regi —that the sovereign is exempt from the consequences of its laches ... has enjoyed continuing vitality for centuries.’ " United States v. Mandycz, 447 F.3d 951, 964 (6th Cir.2006) (quoting United States v. Peoples Household Furnishings, Inc., 75 F.3d 252, 254 (6th Cir.1996) ). "[L]iterally translated as ‘time does not run against the king,’ " the doctrine is recognized in Tennessee and "prevents an action brought by the State from being dismissed due to the expiration of the statutory period of limitations normally applicable to the specific type of action," with the rationale being " ‘that the public should not suffer because of the negligence of its officers and agents [.]’ " City of Elizabethton v. N. Am. Fibers, Inc., 2004 WL 2636710, at *3 (Tenn.Ct.App. Nov. 19, 2004) (quoting State ex rel. Bd. of Univ. & Sch. Lands v. Andrus, 671 F.2d 271, 274 (8th Cir.1982) ). " ‘This doctrine is not to be lightly regarded [because] statutes of limitation are looked upon with disfavor in actions brought by the State, and will not be enforced in the absence of clear and explicit statutory authority to do so.’ " Hamilton Cnty. Bd. of Educ. v. Asbestospray Corp., 909 S.W.2d 783, 785 (Tenn.1995) (quoting Dunn v. W.F. Jameson & Sons, Inc., 569 S.W.2d 799, 802 (Tenn.1978) ).

In "certain case," the nullum tempus doctrine applies "to subordinate organs of the state, such as counties or municipalities." Id. Specifically,

The statute of limitations does not run against the sovereign or the state, or against a county, when [the county is seeking] to enforce a demand arising out of, or dependent upon, the exercise of its governmental functions as an arm of the state. But the statute does run against a county or municipality in respect of its rights or claims which are of a private or corporate nature and in which only its local citizens are interested, as distinguished from a public or governmental matter in which all the people of the state are interested.

Id. (quoting Wood v. Cannon Cnty., 25 Tenn.App. 600, 166 S.W.2d 399, 401 (1942) ).

In support of its position on the nullum tempus doctrine, the Town relies upon a number of cases, none of which involved the supply of natural gas to the local citizenry. Several of the cases have to do with suits involving schools and, in this vein, it is important to recognize "that the State of Tennessee has accepted, both in its constitution and statutory code, the duty of providing a free public education to its citizens" and, "[b]ecause of education's inclusion in both the fundamental law and legislation of this state, its provision is a quintessential governmental, not a private, function." Hamilton Cnty., 909 S.W.2d at 786 (collecting cases).

The case which appears to have the farthest reach, one of the two on which the Town of Smyrna primarily relies, is City of Elizabethton. There, the city recovered damages against a landowner for breach of a sewer easement that was part of the path for the city's underground sewer line and on which the landowner dumped cinders and fly ash.

On appeal, the court recognized that, even though the damages that were awarded benefited the city's residents because the cost of a new sewer system would be paid for by defendant landowner, "the problem which resulted in the award of damages—the problem which prompted the prosecution of th[e] case—was the fact that a significant portion of the City's sewage system was rendered inaccessible as a result of the overburden placed upon it by [defendant]." 2004 WL 2636710, at *4. This was hardly a small matter, as the city's wastewater manager testified that, had there been blockage or collapse of the sewer line, the potential existed for "an environmental catastrophe with millions of gallons of wastewater going into the Watauga River and spilling into the fields upstream[.]" Id.

Inasmuch as the Tennessee Water Control Act states "that the waters of Tennessee are the property of the state and are held in public trust for the use of the people of the state" and "declare[s it] to be the public policy of Tennessee that the people of Tennessee as beneficiaries of this trust, have a right to unpolluted waters," which "the government of Tennessee has an obligation ... to secure, protect, and preserve," Tenn.Code Ann § 69–3–102(a), the court found that the suit "benefit[ed] not only the citizens of Elizabethton, but the general population of this state by securing, protecting and preserving the ‘right to unpolluted waters.’ " Id. at *4. As a consequence, "[t]he City was engaged in the exercise of a governmental function as an arm of the state" in bringing suit, and the nullum tempus doctrine applied. Id.

The other case, Knox Cnty. ex rel. Schumpert v. Perceptics Corp., 1998 WL 668721 (Tenn.Ct.App. September 30, 1998) involved the alleged breach of a contract with the Register of Knox County relating to the provision of computer hardware and software. Noting that a Register of Deeds is a constitutional office and that his or her duties require the keeping of records to be "exhibit [ed] ... to all persons wishing to inspect them," the court held that "[t]he point need not be labored that the Register's office is a vital function of government affecting all citizens of the state." Id. at *3 & 4.

This is not a case about taking...