United States of America upon the relation and for the use of the Tennessee Valley Authority v. 1.31 Acres of Land, More or Less, in Lauderdale County, Tennessee et al

Filing 33

ORDER granting 24 Motion for Summary Judgment. Signed by Judge S. Thomas Anderson on 5/23/13. (Anderson, S.)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TENNESSEE
WESTERN DIVISION
______________________________________________________________________________
UNITED STATES OF AMERICA,
upon the relative and for the use of the
TENNESSEE VALLEY AUTHORITY,

)
)
)
)
Plaintiff,
)
)
v.
)
No. 12-2845-STA-tmp
)
1.31 ACRES OF LAND, MORE OR
)
LESS, IN LAUDERDALE COUNTY,
)
TENNESSEE, et al.,
)
)
Defendants.
)
______________________________________________________________________________
ORDER GRANTING PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT
______________________________________________________________________________
Before the Court is the Tennessee Valley Authority (“TVA”)’s Motion for Summary
Judgment (D.E. # 24) filed on March 29, 2013. In response to TVA’s Rule 56 Motion, claimant
Internal Revenue Service (“IRS”) has filed an application for distribution of the condemnation
proceeds (D.E. # 27), claimant Bank of Ripley has filed an answer to the complaint (D.E. # 28), and
claimant the Tennessee Department of Revenue has filed a request for a distribution order (D.E. #
31). For the reasons set forth below, TVA’s Motion for Summary Judgment is GRANTED.
BACKGROUND
The following material facts are undisputed for purposes of summary judgment. On
September 26, 2012, pursuant to the Declaration of Taking Act, 40 U.S.C. §§ 3114-3118 (2006) and
the Tennessee Valley Authority Act of 1933, as amended, 16 U.S.C. §§ 831-831ee (2006 & Supp.

1

V 2011), Plaintiff filed this action for the acquisition in fee of 1.31+/- acres of land (subject property
and/or 1.31 acres) located in Lauderdale County, Tennessee. (Pl.’s Statement of Undisputed Fact
¶ 1.) The 1.31 acres is located east and within the city limits of Ripley, Tennessee, south of George
Brown Road, and east of Pine Street (a non-public road). (Id. ¶ 2.) The 1.31 acres has a
sloping/rolling topography, was vacant and overgrown at the time of the filing of the complaint on
September 26, 2012, and adjoins a TVA substation (comprising 4.2+/- acres) located to the south.
(Id. ¶ 3.)
Prior to the filing of this condemnation action, Ivan J. Antal, II, a Tennessee certified general
real property appraiser and program manager for electric system projects land transactions, in TVA’s
realty, GIS, and land records organization, performed a review of the appraisal reports which had
been prepared and submitted as part of TVA’s determination of the just and liberal compensation
required for acquisition of the 1.31 acres at issue. (Id. ¶ 4.) Mr. Antal’s review included a summary
appraisal report prepared by a TVA employee (also a Tennessee certified general real property
appraiser) and two restricted use appraisal reports prepared by non-TVA Tennessee certified general
real property appraisers. (Id.) Based on Mr. Antal’s review of these appraisals, as well as a further
review by the senior manager for the division, TVA determined the value of the 1.31 acres to be
$4,100. (Id.) At the time of the filing of this action, TVA tendered $4,100 to the Clerk of Court as
its determination of the just and liberal compensation for the 1.31 acres being acquired. (Id. ¶ 5.)
Upon motion by Plaintiff and order of the Court, the sum was deposited in an interest-bearing
account. (Id.)
After the commencement of this action, Mark Johnstone, a Tennessee certified general real
property appraiser and member of the Appraisal Institute, performed an independent appraisal of the
2

subject property. (Id. ¶ 6.) Mr. Johnstone physically inspected the subject property, determined the
highest and best uses of the subject property, and located and analyzed comparable sales. (Id.)
Without hypothetical conditions, Mr. Johnstone appraised the value of the 1.31 acres at $2,500. (Id.)
Based on the hypothetical conditions that the 1.31 acres was not landlocked and certain deed
restrictions regarding land use did not apply, Mr. Johnston valued the acquisition at $5,000. (Id.)
In the complaint, Plaintiff named as Defendants those persons who and/or entities which have
or may claim an interest in the just compensation awarded for acquisition of the 1.31 acres. (Id. ¶
7(a).) The 1.31 acres was part of a larger 33+/- acre tract owned by Defendants Anita Sue Williams,
David A. Williams, and Guilford Jerome Williams, III. (Id.) The following parties have or claim
some interest in the subject property:
(a) Defendants Jerome Williams & Sons, Inc., and Sandra Williams Bailey may have
and/or claim an interest in the 1.31 acres. (Id.)
(b) Defendant Bank of Ripley may claim encumbrances and/or liens on the subject
property by virtue of Deeds of Trust executed by Jerome Williams & Sons, Inc.;
Guilford Jerome Williams, III; Anita Sue Williams; David A. Williams; and others,
and recorded with the Register of Lauderdale County, Tennessee, on May 12, 2005,
at Record Book 530, pages 97-111 (loan amount of $366,030.54) and Record Book
530, pages 112-126 (loan amount of $125,476.99). (Id. ¶ 7(b).)
(c) Defendant State of Tennessee, Tennessee Department of Labor and Workforce
Development, may claim a lien on the subject property by virtue of a Notice of Tax
Lien (Account No. 0531-373 7— Lien No. 08-5079 in the amount of $11,181.47)
against Jerome Williams & Sons, Inc., and recorded on November 24, 2008, with the
Register in Lien Book 15, page 265. (Id. ¶ 7(c).)
(d) Defendant State of Tennessee, Tennessee Department of Revenue, may claim a
lien by virtue of a Notice of State Tax Lien (Entity Id. 001 62-0860970/000
—amount not specified) against Jerome Williams & Sons, Inc., and recorded on May
21, 2010, with the Register in Lien Book 16, page 371. (Id. ¶ 7(d).)
(e) Defendant United States of America, Department of the Treasury, IRS, may claim
a lien by virtue of a Notice of Federal Tax Lien (Serial No. 671862310 in the amount
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of $12,933.88) against Jerome Williams & Sons, Inc., and recorded on June 25, 2010,
with the Register in Lien Book 16, page 418. (Id. ¶ 7(e).)
(f) Defendant Bank of Ripley may claim a lien on said property by virtue of a Deed
of Trust and an Assignment of Rents executed by Jerome Williams & Sons, Inc.,
David Williams, Anita Sue Williams, Guilford Williams, and others, and recorded
on May 25, 2012, with the Register at Record Book 637, pages 467-485 (Deed of
Trust with a loan amount of $52,000) and pages 486-503 (Assignment of Rents). (Id.
¶ 7(f).)
In its Motion for Summary Judgment, Plaintiff seeks judgment as a matter of law that just
compensation for the fee acquisition of the 1.31+/- acres is $5,000. Plaintiff argues that it is proper
for the Court to determine the question of just compensation under Rule 71(h) of the Federal Rules
of Civil Procedure. The IRA was the only Defendant to file an answer, and the IRS has not
demanded a jury trial. As such, the Court can fix the amount of just compensation as a matter of
law. Based on the undisputed evidence, Plaintiff argues that the sum of $5,000 is just compensation
for the taking. Plaintiff has adduced a report from a certified general property appraiser concluding
that the highest possible value for the property at issue is $5,000. Plaintiff contends that in the
absence of any evidence to dispute this appraisal, summary judgment on the issue of just
compensation in the amount of $5,000 is warranted.
Plaintiff further argues that it is proper for the Court to determine to whom distribution of
the proceeds should be made. Plaintiff requests the entry of a distribution order which (1) requires
any Defendant claiming an interest in the just compensation awarded to submit proof by a date
certain of the specific interest claimed thereto (including the basis, amount, and priority thereof), and
(2) provides that Plaintiff personally serve said order upon non-ECF participating Defendants.
Pursuant to 40 U.S.C. § 3114(d), the Court has the authority to decide which claimants are entitled
to what amount from the proceeds. Plaintiff argues that while the interests of each claimant in the
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subject property are clear, the amount of the encumbrances and liens are not. For example, the Bank
of Ripley’s 2005 trust deeds have a face value of more than $360,000, and are secured by eight
different tracts of land (some with exclusions) totaling at least 123 acres. The 1.31 acres at issue
comprise a relatively small amount of the overall property securing the deed of trust. According to
TVA, the Court will need to determine the priority of the claims on the just compensation proceeds.
STANDARD OF REVIEW
Federal Rule of Civil Procedure 56(a) provides that a party is entitled to summary judgment
if the moving party “shows that there is no genuine dispute as to any material fact and the movant
is entitled to judgment as a matter of law.1 In reviewing a motion for summary judgment, the
evidence must be viewed in the light most favorable to the nonmoving party,2 and the “judge may
not make credibility determinations or weigh the evidence.”3 When the motion is supported by
documentary proof such as depositions and affidavits, the nonmoving party may not rest on his
pleadings but, rather, must present some “specific facts showing that there is a genuine issue for
trial.”4 It is not sufficient “simply [to] show that there is some metaphysical doubt as to the material
facts.”5 These facts must be more than a scintilla of evidence and must meet the standard of whether
a reasonable juror could find by a preponderance of the evidence that the nonmoving party is entitled

1

Fed. R. Civ. P. 56(a); see Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Canderm
Pharmacal, Ltd. v. Elder Pharms, Inc., 862 F.2d 597, 601 (6th Cir. 1988).
2

Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).

3

Adams v. Metiva, 31 F.3d 375, 379 (6th Cir. 1994).

4

Celotex, 477 U.S. at 324.

5

Matsushita, 475 U.S. at 586.
5

to a verdict.6 In this Circuit, “this requires the nonmoving party to ‘put up or shut up’ [on] the
critical issues of [her] asserted causes of action.”7
When determining if summary judgment is appropriate, the Court should ask “whether the
evidence presents a sufficient disagreement to require submission to a jury or whether it is so oneside that one party must prevail as a matter of law.”8 Summary judgment must be entered “against
a party who fails to make a showing sufficient to establish the existence of an element essential to
that party’s case, and on which that party will bear the burden of proof at trial.”9
ANALYSIS
Based on the undisputed evidence before the Court, Plaintiff is entitled to judgment as a
matter of law on the issue of just compensation. The term “just compensation” for a fee acquisition
means the fair market value of the subject property just before the acquisition.10 A party claiming
an interest in the condemned property has the burden to establish the value of the property.11 Rule
71.1(e) of the Federal Rules of Civil Procedure permits a defendant to present evidence on the
amount of compensation to be paid, even if the defendant has not previously appeared or answered

6

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986).

7

Lord v. Saratoga Capital, Inc., 920 F. Supp. 840, 847 (W.D. Tenn. 1995) (citing Street
v. J.C. Bradford & Co., 886 F.2d 1472, 1478 (6th Cir. 1989)).
8

Anderson, 477 U.S. at 251-52.

9

Celotex, 477 U.S. at 322.

10

United States v. Dow, 357 U.S. 17, 23 (1958); Olson v. United States, 292 U.S. 246,
255-56 (1934).
11

United States ex rel. Powelson, 319 U.S. 266, 273 (1943); Welch v. TVA, 108 F.2d 95,
101 (6th Cir. 1939); United States ex rel. TVA v. Hughes, 251 F. Supp. 930, 933 (W.D. Tenn.
1966).
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the complaint.12 Moreover, Rule 71.1(h) provides that “[i]n an action involving eminent domain
under federal law, the court tries all issues, including compensation.”13 As such, other courts have
held that summary judgment is the proper procedure to determine the issue of just compensation.14
A moving party is entitled to judgment as a matter of law on the issue of just compensation where
the moving party presents an appraisal by a credentialed property appraiser and the non-moving
parties do not contest it.15
Plaintiff has come forward with evidence that the market value of the 1.31 acres at issue is
$5,000. According to a report prepared by certified general property appraiser Mark G. Johnstone,
the property at its highest possible value is worth $5,000, assuming certain hypothetical conditions.16

12

Fed. R. Civ. P. 71.1(e)(3).

13

Fed. R. Civ. P. 71.1(h). Rule 71 does include two exceptions to the general rule,
neither of which apply in this case. In some instances, federal law requires that a specially
constituted tribunal determine just compensation. Fed. R. Civ. P. 71.1.(h)(1)(A). In all other
cases, a party may demand that a jury decide the just compensation for the taking but only if the
party makes its jury demand within the time to answer or within any additional time the court
sets. Fed. R. Civ. P. 71.1(h)(1)(B).
14

Transwestern Pipeline Co., LLC v. 46.78 Acres of Permanent Easement, 473 F. App’x
778, 779 (9th Cir. 2012) (“Summary judgment is appropriate in a condemnation case where there
is no disputed issue of material fact.”); United States v. 16,200 Sq. Ft., More or Less of Land,
791 F.2d 935, at *1 (6th Cir. 1986) (unpublished table decision) (finding no error in district
court’s grant of summary judgment on the issue of just compensation where motion was
unopposed).
15

Millennium Pipeline Co., LLC v. Certain Permanent & Temporary Easements, Etc., —
F. Supp. 2d —, 2013 WL 310403, at *5 (W.D. NY Jan. 25, 2013); Midwestern Gas Transmission
Co. v. 2.23 Acres in Trousdale Cnty., No. 3:06-0253, 2009 WL 3048387, at * 2 (M.D. Tenn.
Sept. 17, 2009) (granting summary judgment on the issue of just compensation for a taking
where the non-moving party did not contest the appraisal prepared by a licensed real estate
appraiser).
16

The hypothetical conditions are as follows: the property is not landlocked and is a
legally buildable lot and that certain deed restrictions about the use of the property do not apply.
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Plaintiff argues that the appraisal shows that $5,000 is just compensation for the property taken by
the TVA. No Defendant has challenged Johnstone’s appraisal. Plaintiff provided proper notice of
its Motion for Summary Judgment, including Johnstone’s appraisal, to all Defendants.17 No party
claiming an interest in the 1.31 acres at issue here has responded in opposition to Plaintiff’s Rule 56
Motion or shown that a genuine issue of material fact exists as to the amount of just compensation
for the property. The Court concludes then that Plaintiff is entitled to summary judgment on the
question of whether just compensation for the 1.31 acres is $5,000. Therefore, Plaintiff’s Motion
is GRANTED on this issue.
Plaintiff has also requested that the Court enter an order directing Defendants to submit briefs
in support of their claims to the compensation and determine the priority of the claims based on the
submissions by the Defendants. While conceding that it has no “advocacy position” on the issue,
Plaintiff points out that “[t]here is a strong likelihood that any just compensation awarded (whether
by summary judgment or otherwise) in this action will be significantly less than the amount owed
on the encumbrances and liens which may be asserted by Defendants . . . .”18 Under the
circumstances Plaintiff argues that the Court should order “any Defendant who claims an interest in
any just compensation awarded to submit the specific interest claimed thereto (including the basis,
amount, and priority thereof).”19 The Court finds Plaintiff’s Motion to be well taken.

Pl.’s Mot. for Summ. J., ex. 1, Johnstone Decl., Appraisal Report 8 (D.E. # 24-4).
17

Plaintiff served its Motion electronically on CM-ECF participants (D.E. # 25) and by
means of U.S. mail on all other parties (D.E. # 26).
18

Pl.’s Mot. for Summ. J. 8.

19

Id. at 9.
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Having now held that the just compensation for the taking is $5,000, any Defendant who
claims an interest in the just compensation award must submit a brief to the Court in support of its
claim.20 Each Defendant’s brief should include citations to relevant legal authority and establish the
basis for the Defendant’s claim to the just compensation, the amount of its claim, and the priority
of its claim. Upon entry of this Order, Plaintiff is ordered to serve a copy of the Order on all nonECF participating Defendants. Each Defendant’s brief is due within twenty-eight (28) days of
service of the Order.
IT IS SO ORDERED.
s/ S. Thomas Anderson
S. THOMAS ANDERSON
UNITED STATES DISTRICT JUDGE
Date: May 23, 2013.

20

In its response to Plaintiff’s Motion for Summary Judgment, the IRS explained the
basis for its claim, a tax lien in the amount of $15,641.07 for taxes owed by Jerome Williams &
Sons, the record landowners of the 1.31 acres taken. Def. IRS’s Resp. to Pl.’s Mot. 1-2 (D.E. #
27). The IRS asserted that “[i]n the absence of proof of any superior lien on the property
condemned by the Plaintiff, the [IRS] is entitled to all of the condemnation proceeds as
established by the Court.” Id. at 2. Likewise, Defendant Bank of Ripley has filed an answer in
which it asserts that its liens have priority. Def.’s Answer (D.E. # 28). However, neither the IRS
nor Bank of Ripley have cited any legal authority to support the priority of its claim on the funds.
Defendant Tennessee Department of Revenue has simply stated that it does not oppose the entry
of an order requiring the Defendants to brief the issues. Def. Tenn. Dept. of Revenue’s Resp 1
(D.E. # 31).
9