TN Supreme Court Holds Vacatur and Remand to Trial Court was Warranted to Determine Mootness in Action Challenging Use of Home Occupations After City Repealed Ordinance

This post was authored by Matthew Loescher, Esq.

Plaintiff Elijah “Lij” Shaw, a professional record producer who has lived in East Nashville for a number of years, renovated the detached garage at his home to create a recording studio called The Toy Box Studio. For several years, Mr. Shaw operated The Toy Box Studio out of his home. Plaintiff/Appellant Patricia Raynor also lives in Nashville, in the Donelson area, and is a licensed cosmetologist. She operated a single-chair beauty salon in the garage of her home. The municipal code for Defendant/Appellee Metropolitan Government of Nashville and Davidson County (“Metro”) allows residents to operate businesses out of their homes, subject to regulation. Homeowners brought this action against the municipality, challenging an ordinance that prohibited them from having clients visit their home-based businesses under the substantive due process and equal protection provisions of the Tennessee Constitution. The Chancery Court granted summary judgment to the City of Traverse City and the municipality, and the homeowners appealed. While the appeal was pending, the municipality repealed the ordinance, and consequently, the Court of Appeals dismissed the case for mootness and remanded to the trial court to vacate the judgment and dismiss.

At oral argument, the Homeowners argued that, despite Metro’s clarification of the effect of the sunset provision, their claims were not moot because the Six-Client Ordinance still unfairly limited their home businesses while other home businesses such as home day care businesses remain exempt. Following this, Metro further amended the Six-Client Ordinance by removing the sunset provision and extending the new ordinance “indefinitely.” Thereafter, the Homeowners conceded that, by removing the sunset provision and extending the Six-Client Ordinance indefinitely, Metro had adopted a permanent policy change by a government entity that was not likely to be abandoned once the immediate threat of litigation was passed. In reply to the Homeowners’ contention that they remain disadvantaged by the Six-Client Ordinance, only to a lesser degree, Metro reiterated that Homeowners’ complaint never challenged the Six-Client Ordinance; it only challenged the now-repealed Client Prohibition. Metro argued that the Homeowners were free to file a new lawsuit challenging the Six-Client Ordinance, but could not do so in this lawsuit.

The court found that because Metro repealed and replaced the Client Prohibition after the trial court proceedings were completed, the record contained no information on whether or how the new Six-Client Ordinance would affect the Homeowners, or whether they “may have some residual claim under the new framework that was understandably not asserted previously.” The court therefore vacated the judgments of the lower courts and remanded the case to the trial court, to permit the parties to amend their pleadings.

Shaw v Metropolitan Government of Nashville and Davidson County, 651 SW3d 907 (TN 8/18/2022)