Cheyney McCarter, owner of USA Sports Grill, LLC, appealed the suspension of his restaurant's beer permit by the Mt. Juliet Beer Board to the Chancery Court in Wilson County. The suspension followed an incident where an employee sold beer to a minor. McCarter filed a Petition for Writ of Certiorari seeking to challenge the suspension and secure a stay of the enforcement. The trial court directed the City of Mt. Juliet and the Beer Board to provide the relevant records and respond to the petition within 30 days. However, the City did not file an answer within this timeframe, believing it was not required to do so under Tennessee law. Although the City engaged in the case by filing pre-trial motions and briefs, it was ultimately late in responding. McCarter moved for a default judgment due to the City's failure to answer, which the trial court granted on the day of the trial. The Court of Appeals reversed the trial court's decision, remanding the case for further proceedings, indicating that the City should have been allowed to file a late answer.
The City responded to Sports Grill's motion for default judgment, asserting it was not obligated to file a responsive pleading to the writ of certiorari but had submitted the required record from the Beer Board. The City defended the 90-day suspension of Sports Grill's beer permit, citing non-compliance with the municipal beer ordinance regarding underage sales. On May 4, the City filed a pre-trial brief supporting its suspension decision. The trial date was postponed from May 5 to September 29, during which discovery occurred, with Sports Grill serving interrogatories and document requests that the City answered promptly.
On September 21, Sports Grill renewed its motion for default judgment and filed a motion in limine to exclude the City's evidence, claiming the City failed to file a necessary Answer. The City reiterated its position against needing to file an Answer but submitted one on the same day. During the trial on September 29, instead of starting, the court addressed Sports Grill's motions. The court determined that an Answer was mandatory and, since the City did not request permission for a late filing, it disregarded the City's submission. Consequently, the court granted Sports Grill's default judgment, referencing precedent that required an Answer and adequate notice of defenses.
The court noted the insufficient notice provided by the City, which filed its Answer just six days before trial, and highlighted that no motion for late filing was presented. The City then appealed, contesting the trial court's interpretation that TCA 27-9-110 governed the certiorari proceedings, arguing instead that TCA 57-5-108 applied and did not necessitate an Answer. The City further claimed the trial court erred in granting the default judgment, maintaining that it actively defended its permit suspension decision. Context surrounding the default judgment's entry was emphasized due to the nature of the proceedings involved.
Tennessee Code Annotated 57-5-101 et seq. regulates beer and alcoholic beverages with less than five percent alcohol, outlining the process for judicial review of city beer board decisions, including permit suspensions. The statute allows for review of agency actions, such as license revocations or civil penalties, through a statutory writ of certiorari, with a trial de novo in the relevant county's circuit or chancery court. This process is the exclusive remedy for reviewing actions taken by county legislative bodies or their committees, as well as boards or commissions under specific sections of the code. The Tennessee Rules of Civil Procedure apply to these reviews.
The statute establishes both procedural guidelines and the standard of review, confirming that the revocation or suspension of a beer permit can be contested in court via the statutory writ. Tennessee recognizes two types of writs of certiorari: the common law writ and the statutory writ, with specific statutes codifying each type. Courts have clarified the distinctions, noting that the common law writ reviews the legality of actions within jurisdiction, while the statutory writ corrects factual and legal errors made by inferior tribunals. The Tennessee Supreme Court has emphasized the differing scopes of these writs, reinforcing the statutory writ's use in this context.
The common-law writ does not allow for a reevaluation of facts determined by an administrative body, while a statutory writ permits a trial de novo, enabling courts to correct factual and legal errors made by lower tribunals. Specifically, Tennessee statutes governing beer regulation outline that judicial review of beer board decisions is a trial de novo, meaning the trial court reviews the case as though it originated there, making independent judgments without regard to the beer board's prior actions. Unsuccessful applicants may seek this review in the circuit or chancery court, which requires the certification and transmission of the board's proceedings. The trial judge evaluates evidence and makes a decision on the merits, similar to an appeal from general sessions or juvenile courts, and any prior errors or irregularities from the beer board are deemed irrelevant after the trial court proceedings commence. In this context, the trial would focus on whether Sports Grill violated laws on sales to minors, and the city would act as the plaintiff, paralleling its role during the initial beer board charges. This procedural framework is significant in addressing whether the Beer Board was obligated to file an answer in the underlying dispute.
Procedural statutes regarding writs of certiorari in Tennessee, both common law and statutory, include specific provisions that generally apply to certiorari actions, as outlined in Tenn. Code Ann. 27-8-106 and 27-9-101 et seq. These statutes establish that individuals aggrieved by decisions of boards and commissions may seek judicial review. The trial court ruled that the City was obligated to file an answer to Sports Grill’s Petition for Writ of Certiorari within a specified timeframe, and its failure to do so resulted in Sports Grill being awarded a default judgment. Sports Grill contends that the general review statute required the City to respond, specifically citing Tenn. Code Ann. 27-9-110(a), which mandates that defendants answer within 30 days unless the court allows an extension. The City argues that the relevant beer board judicial review statute, section 57-5-108, does not impose a similar requirement to file an answer. While both statutes can apply without conflict in judicial reviews of beer board decisions, the court found no direct opinions addressing the necessity of an answer post-petition approval in a de novo trial. Although the Tennessee Rules of Civil Procedure generally require an answer, it remains ambiguous whether such a requirement applies in this context. Ultimately, the City filed an answer before the default judgment was granted, rendering the question of the answer's necessity moot.
The City contends that sections 27-9-101 et seq. and 57-5-108 are at odds, particularly noting that section 57-5-108 allows for a trial de novo, while section 27-9-111 permits review based on evidence presented before the board, plus additional evidence from the parties. The statute mandates that all defendants named in a petition for a writ of certiorari must respond, especially if they wish to contest the writ's issuance. In this instance, the writ was issued on the same day the petition was submitted, raising questions about the necessity of a response. The City argues that since the trial court has already begun reviewing the case on its merits, an answer is not required.
The petition filed by Sports Grill claimed that the Beer Board acted arbitrarily by imposing an excessive suspension on its permit. However, in judicial reviews of Beer Board decisions, the focus is not on whether the board acted arbitrarily; rather, if the writ is granted, the trial court treats the case as if the board proceedings never happened. Therefore, the City was not obligated to file an answer, as it effectively became the plaintiff in the new trial. Despite this, the City filed general denials and asserted the legality of the Beer Board's actions.
Regarding the default judgment, instead of moving to set aside the trial court's judgment under Tenn. R. Civ. P. 55.02, the City opted to appeal under Rule 3. The City argues that the trial court erred in granting a default judgment as it had actively participated in the case, including filing a pre-trial brief and being prepared for trial. According to Rule 55.01, a default judgment can be entered when a party fails to plead or defend against a claim. The City maintains that it was ready for trial, with evidence and witnesses prepared, when the default judgment was issued.
A default judgment is a legal ruling that resolves a case based on the merits, effectively admitting the material allegations in the complaint due to the nonmovant's failure to respond as required. This judgment serves to prevent defendants from causing undue delays in litigation, thereby protecting diligent plaintiffs from ongoing uncertainty regarding their rights. The standard for reviewing a trial court's decision to grant a default judgment is whether there was an abuse of discretion, which includes evaluating if incorrect legal standards were applied or if the conclusion was illogical or unjust.
In the case at hand, the trial court issued a default judgment against the City for not filing an Answer, neglecting the broader provision in Tenn. R. Civ. P. 55.01 that allows for a default when a defendant fails to plead or defend. The City had actively participated in the proceedings, including filing motions, agreed orders, and responses, which indicated that a default judgment was inappropriate. Although the City was late in filing a record of proceedings, this delay did not prejudice the plaintiff, Sports Grill. Courts prefer to resolve cases based on their merits and are generally reluctant to impose default judgments, viewing them as severe sanctions that contradict the judicial goal of fair adjudication.
The trial court failed to recognize the City's engagement in the case and, thus, applied an incorrect legal standard. Consequently, the appellate court reversed the trial court's default judgment and remanded the case for further proceedings, with costs of appeal assigned to Sports Grill.
