author: E. RILEY ANDERSON, J., FRANK F. DROWOTA, III, C.J.,

text:
    CITY OF KNOXVILLE v. ENTERTAINMENT RESOURCES, LLC.
    Supreme Court of Tennessee, at Knoxville.
    Jan. 4:, 2005 Session.
    June 29, 2005.

      Angela R. Bolton and W. Morris Kizer, Knoxville, Tennessee, for the Appellant, City of Knoxville.
    Philip N. Elbert and W. David Bridgers, Nashville, Tennessee, and Richard L. Gaines, Knoxville, Tennessee, for the Ap-pellee, Entertainment Resources, LLC.
   OPINION

E. RILEY ANDERSON, J.,

delivered the opinion of the court, in which

ADOLPHO A. BIRCH, JR., JANICE M. HOLDER, and WILLIAM M. BARKER, JJ., joined. FRANK F. DROWOTA, III, C. J., filed a concurring opinion.

We granted this appeal to determine the constitutionality of a Knoxville city ordinance regulating the location of adult businesses. The chancery court upheld the ordinance and enjoined operation of the defendant’s video store after finding that it fit the definition of an adult bookstore and was located within 1,000 feet of prohibited areas and therefore was operating in violation of the ordinance. The Court of Appeals reversed on the grounds that the ordinance’s definition of adult bookstores is unconstitutionally vague. Because we have also determined that the ordinance is unconstitutionally vague under the United States and Tennessee Constitutions, we affirm the decision of the Court of Appeals but on the separate grounds set forth herein. We remand to the trial court for an assessment of the amount of damages incurred by the defendant as a result of the chancery court’s injunction.

In 1979, the Knoxville City Council adopted an ordinance regulating, among other things, the location of “adult businesses.” At all times relevant to this appeal, Knoxville City Code section 16-468 (“the ordinance”) provided that adult businesses could not be located within 1,000 feet of: a residentially-zoned district; an area devoted to recreational activity; or an establishment selling alcoholic beverages. The ordinance included adult bookstores in its definition of adult businesses. An adult bookstore was defined as:

an establishment having as a substantial or significant portion of its stock and trade books, magazines and other periodicals, videotapes or other electronic media which are distinguished or characterized by their emphasis. on matter depicting, describing or relating to specified sexual activities or specified anatomical areas, or an establishment with a segment or a section devoted to the sale or display of such material.

Knoxville City Code § 16-468(a) (emphasis added). The parties dispute whether the phrase “substantial or significant portion of its stock and trade” is impermissibly vague under the United States and Tennessee Constitutions.

Background

The City of Knoxville filed a complaint in Knox County Chancery Court seeking to enjoin the defendant, Entertainment Resources, from operating its store in alleged violation of the ordinance. The following facts were developed before the chancery court and stipulated by the parties.

On August 3, 1998, Entertainment Resources opened a store called Fantasy Video at 6422 Papermill Road in Knoxville, Tennessee. Entertainment Resources also operated two stores in Nashville and one in Columbia, Tennessee. It planned to open two Knoxville stores in addition to Fantasy Video.

Fantasy Video, like Entertainment Resources’ other stores, rented and sold videotapes for off-site viewing. When Fantasy Video opened, its inventory consisted of 80% adult or sexually explicit, “X-rated” videos and 20% family or general videos. General videos were displayed in the store’s “front room.” Adult videos were displayed in the store’s “back room,” which was restricted to patrons 18 years of age and older.

Under the spacing provisions of the Knoxville ordinance, an “adult business” could not legally locate at the site of the Fantasy Video store. It was stipulated that the site was located next door to the New Mexicali Rose restaurant, which sold beer and liquor; within 1,000 feet of a Boy Scouts administrative building, and within 1,000 feet (as the crow flies) of a residen-tially zoned district, although the residential district was separated from the store by Interstate 40. Entertainment Resources did not believe that the Boy Scouts building qualified as a building devoted to recreational activity and did not believe it was within 1,000 feet of a residential district. Although Entertainment Resources had full knowledge that the New Mexicali Rose restaurant sold beer and liquor, it chose to locate Fantasy Video on Papermill Road because its lawyer had advised the company that the Knoxville ordinance was unconstitutional.

Shortly after Fantasy Video opened in August 1998, the Knoxville Police Department began inspecting the store and issuing citations for violation of the ordinance on an almost daily basis. The citations alleged that Fantasy Video was an adult bookstore within the meaning of the ordinance because a substantial or significant portion of its stock and trade constituted videotapes containing material within the ambit of the ordinance.

In response to the citations, Entertainment Resources attempted to gain clarification from the police and from the City’s law director as to what constituted a “substantial or significant” portion of stock and trade under the ordinance, but no guidance was provided.

At a hearing on some of the citations in Knoxville City Court, three of the officers involved in the inspections of Fantasy Video testified that they had received no guidance or training in interpreting the ordinance. When asked to define the terms in the ordinance, Sergeant Ferguson testified that he could not define “substantial” other than, “substantial means substantial as red means red; I know red when I see it, but I can’t describe red.” He further testified that “significant to me means a quantity of something that, compared to something else [sic].” Officer Major testified that “substantial is substantial. I don’t really have an opinion on the definition of substantial, it is self-explanatory.” He further explained, “significant is just like substantial, I mean, significant is significant, just as substantial is substantial.” Officer Shelton similarly testified that “substantial means substantial just like the color blue means the color blue. I can’t provide any other [sic].” He also testified that “significant means significant.” It was stipulated that if called to testify further, the officers would testify that in making the evaluation of “substantial” and “significant” they would look to what appeared to them to be the “important part of the business.”

By November 1998, Entertainment Resources had altered the composition of Fantasy Video’s inventory. A police inventory on November 17, 1998, revealed that approximately 57% of the stock was general feature videos and approximately 43% of the stock was adult-oriented videos. The balance was later adjusted again; the tally from a count on December 8, 1998, was 70% general feature and 30% adult feature. Despite these alterations, the City police continued to issue citations up until the date that the preliminary injunction was entered. As of November 1998, Entertainment Resources had been cited and found guilty of fifty-three separate violations of the ordinance. As of November 16, 1998, at least 75% of Fantasy Video’s revenues were generated by the “back room” videos.

The record indicates that at least one other business in Knoxville rents and sells videos that fall within the purview of the ordinance. It was stipulated that Gemstone Video Stores have separate back rooms devoted to adult-oriented videotapes and magazines. It was stipulated that the City takes the position that Gemstone Video Stores are not “adult bookstores” within the meaning of the ordinance and that the back room stock is not a substantial or significant portion of Gemstone Video’s stock and trade, but the record does not show the percentage breakdown between adult videos and general videos.

In spite of the repeated citations, Entertainment Resources continued to operate Fantasy Video. Therefore, on November 4, 1998, the City of Knoxville filed a complaint for injunctive relief seeking to enjoin Entertainment Resources from operating in violation of the ■ ordinance. In its answer, Entertainment Resources averred numerous defenses, including the claim that the ordinance is impermissibly vague under the United States and Tennessee Constitutions.

On December 10, 1998, the chancery court granted the City’s motion for a temporary injunction restraining Entertainment Resources from operating an adult bookstore at the Papermill Road location. The chancery court reasoned that a temporary injunction was appropriate because Entertainment Resources had opened the Fantasy Video store on Papermill Road with full knowledge of the ordinance, and it was not disputed that the adult videos offered for sale and rental at Fantasy Video were within the purview of the ordinance. The chancery court further noted that over 75% of the store’s revenue and at least 85% of its customers were attributable to the adult videos. The court opined that the general video inventory was, “despite its number ... insignificant and insubstantial to this business’s stock in trade.”

For two years after the entry of the temporary injunction there was little movement on the merits of the case. Fantasy Video’s general video business eventually dwindled to the point that it was only open two hours per week. In January 2001, Entertainment Resources lost its lease on the Papermill Road location and the City moved to dismiss the suit as moot. The chancery court granted that motion on July 9, 2001, except with respect to Entertainment Resources’ claim for damages. Entertainment Resources argued that it was entitled to damages not only as to the Fantasy Video store, which had only operated for four months on Papermill Road prior to entry of the injunction, but also as to the two additional stores it had planned to open in Knoxville.

Nine months later, on April 15, 2002, the chancery court entered an order upholding the injunction and denying damages. The court held that because Entertainment Resources was in “direct violation” of the ordinance, it was not entitled to challenge it as vague. The court also held that the ordinance was a constitutional time, place and manner restriction aimed at combating the secondary effects of adult businesses.

Entertainment Resources appealed. The Court of Appeals reversed the chancery court, reasoning that because neither the City nor the enforcing officers could define the terms “substantial” or “significant,” and because the imprecision of the terms prevented “ ‘men of common intelligence’ ” from understanding the ordinance, the ordinance was “unconstitutionally vague and, therefore, unenforceable.” The Court of Appeals remanded to the trial court for a determination of damages and attorney’s fees. The appellate court rejected the City’s argument that Entertainment Resources’ damages as to the Fantasy Video store were too speculative for recovery. The court declined, however, to instruct the trial court to award damages for the second and third planned, but unopened, stores, finding that those damages were too speculative to permit recovery. We granted review and now affirm the Court of Appeals on the separate grounds set forth below.

Analysis

Standard of Review

Interpretation of statutes and ordinances is a question of law which we review de novo. See State ex rel. Pope v. U.S. Fire Ins. Co., 145 S.W.3d 529, 533 (Tenn.2004).

The Vagueness Doctrine

The Fourteenth Amendment to the United States Constitution prohibits states from “depriv[ing] any person of life, liberty, or property, without due process of law.” Article I, section 8 of the Tennessee Constitution provides an identical protection; as we have often observed, “the ‘law of the land’ proviso of our constitution is synonymous with the ‘due process of law* provisions of the federal constitution.” State ex rel. Anglin v. Mitchell, 596 S.W.2d 779, 786 (Tenn.1980) (citing Daugherty v. State, 216 Tenn. 666, 393 S.W.2d 739 (1965)).

Due process of law requires, among other things, notice of what the law prohibits. Laws must “give the person of ordinary intelligence a reasonable opportunity to know what is prohibited, so that he may act accordingly.” Grayned v. City of Rockford, 408 U.S. 104, 108, 92 S.Ct. 2294, 33 L.Ed.2d 222 (1972). Criminal statutes “must ‘define the criminal offense with sufficient definiteness that ordinary people can understand what conduct is prohibited....’ ” Davis-Kidd Booksellers, Inc. v. McWherter, 866 S.W.2d 520, 532 (Tenn. 1993) (quoting Kolender v. Lawson, 461 U.S. 352, 358, 103 S.Ct. 1855, 75 L.Ed.2d 903 (1983)). A statute is unconstitutionally vague, therefore, if it does not serve sufficient notice of what is prohibited, forcing “ ‘men of common intelligence [to] necessarily guess at its meaning.’ ” DavisKidd, 866 S.W.2d at 532 (quoting Broadrick v. Oklahoma, 413 U.S. 601, 607, 93 S.Ct. 2908, 37 L.Ed.2d 830 (1973)); see also Leech v. Am. Booksellers Ass’n, Inc., 582 S.W.2d 738, 746 (Tenn.1979).

In addition to the requirement of notice, the vagueness doctrine requires that statutes provide “minimal guidelines to govern law enforcement.” Davis-Kidd, 866 S.W.2d at 532. Because “[a] vague law impermissibly delegates basic policy matters to policemen, judges, and juries for resolution on an ad hoc and subjective basis, with the attendant dangers of arbitrary and discriminatory application,” Grayned, 408 U.S. at 108-09, 92 S.Ct. 2294, “the requirement that a legislature establish minimal guidelines to govern law enforcement” is the more important aspect of the vagueness doctrine. Smith v. Goguen 415 U.S. 566, 574, 94 S.Ct. 1242, 39 L.Ed.2d 605 (1974).

Vague laws implicating the First Amendment to the United States Constitution and Article I, section 19 of the Tennessee Constitution are subject to a more stringent standard than laws in other contexts because of the danger of chilling protected speech. Davis-Kidd, 866 S.W.2d at 531. “Where a statute’s literal scope, unaided by a narrowing state court interpretation, is capable of reaching expression sheltered by the First Amendment, the doctrine demands a greater degree of specificity than in other contexts.” Smith, 415 U.S. at 573, 94 S.Ct. 1242.

With these principles in mind, we turn to the question of whether the ordinance is unconstitutionally vague.

Validity of the Ordinance

The City argues that the terms “substantial” and “significant” are familiar terms capable of ready understanding by persons of ordinary intelligence. Moreover, argues the City, we must construe “substantial” and “significant” in the context of the statute as a whole. Entertainment Resources argues that “substantial” and “significant” are unconstitutionally vague because the terms have no fixed meaning.

In evaluating a law, such as the Knoxville ordinance, that “affects communication protected by the First Amendment,” we may consider a challenge to its facial validity regardless of whether or not the law is vague as applied to the defendant if “the statute’s deterrent effect on legitimate expression is ... both real and substantial and if the statute is [not] readily subject to a narrowing construction by the state courts.” Young v. American Mini Theatres, 427 U.S. 50, 60, 96 S.Ct. 2440, 49 L.Ed.2d 810 (1976) (internal quotations omitted); see also U.S. v. Mazu-rie, 419 U.S. 544, 550, 95 S.Ct. 710, 42 L.Ed.2d 706 (1975); NAACP v. Button, 371 U.S. 415, 432-33, 83 S.Ct. 328, 9 L.Ed.2d 405 (1963). Here, the deterrent effect was indeed substantial; Entertainment Resources was forced to close its doors and abandon its plans to open a second and third store. Moreover, as we explain below, the ordinance is not susceptible to a narrowing construction. For the reasons that follow, we conclude that the Knoxville ordinance is vague and invalid on its face.

First, the inability of the officers charged with enforcing the ordinance to define-its key terms weighs heavily against the ordinance’s constitutionality. Knoxville Police Officers Ferguson, Major, and Shelton all testified that they were unable to define “substantial.” The officers testified that the City had not instructed them as to what constituted a substantial portion of sexually-explicit material but that they, personally, knew what “substantial” meant. As Entertainment Resources points out, however, “I know it when I see it” is not a constitutionally-sound standard. Particularly when speech is being regulated, the Constitution demands that government bodies make a greater attempt to define what conduct is prohibited to avoid chilling protected speech.

As written, the determination of what constitutes a “substantial or significant portion” of a business’s “stock and trade” under the ordinance is an entirely subjective one. The ordinance gives no objective guidance to businesses regulated by the ordinance or officials charged with its enforcement. “Accordingly, it neither gives notice to ordinary people ... nor sufficient guidance to law enforcement officials to prevent arbitrary law enforcement.” Davis-Kidd, 866 S.W.2d at 532. This type of vague, “standardless” drafting is precisely what the Due Process clause prohibits, because it “allows policemen, prosecutors, and juries to pursue their personal predilections. Legislatures may not so abdicate their responsibilities for setting the standards of the criminal law.” Smith, 415 U.S. at 575, 94 S.Ct. 1242.

We note that the City objects to using the testimony of Officers Ferguson, Major, and Shelton to demonstrate that the ordinance is unconstitutionally vague. The City points out that the content, meaning and application of the ordinance is not a matter of fact to be proven by witness testimony but is rather a matter of law to be construed by the Court. State ex rel. Pope, 145 S.W.3d at 533; see also Dempsey v. Correct Mfg. Corp., 755 S.W.2d 798, 806 (Tenn.Ct.App.1988). As the Court of Appeals correctly held, however, here the witnesses’ testimony illustrates the issue at the very heart of the vagueness challenge: enforcement of the ordinance was left to the “personal predilections” of the police. Smith, 415 U.S. at 575, 94 S.Ct. 1242. The officers’ confusion demonstrates that the ordinance fails to provide ascertainable standards for law enforcement.

Second, the terms as used in the context of the ordinance cannot be defined with any degree of precision. In our view, the fact that the terms “substantial” and “significant” are common and familiar terms does not support the argument that they are constitutional as used in the ordinance. The words “big” and “small” are certainly common and familiar as well, but if used to describe prohibited conduct, they would no more pass constitutional muster than do the terms in this ordinance. For it is not the words themselves that must be capable of ready understanding by persons of ordinary intelligence, but the conduct that is prohibited that must be readily understood.

To bolster its argument that “substantial” and “significant” are constitutional when used in statutes, the City points out that the terms appear hundreds of times in state and federal statutes. See 15192 Thirteen Mile Rd., Inc. v. City of Warren, 626 F.Supp. 803, 820 (E.D.Mich.1985). As the City itself notes, however, we must read those terms in the context of the ordinance. The terms “substantial” and “significant” in this ordinance merely tell us that if a business has a certain, undefined amount of sexually-explicit material, then it is subject to the location restrictions of the ordinance. What is “substantial” or “significant” to one person may just as easily be “unsubstantial” or “insignificant” to another. The fact that the City itself was unsure what amount of material the terms were intended to reach is demonstrated both by the City’s failure to offer guidance to Entertainment Resources and by the confusion of the officers charged with enforcing the ordinance.

Third, the City declined to give any limiting construction to the ordinance, and we are unable to impose a narrowing definition to salvage its constitutionality. As the concurring opinion notes, this Court has cautioned that “[c]ourts should consider any limiting instructions of the challenged statute that state authorities have proffered.” State v. Burkhart, 58 S.W.3d 694, 697 (Tenn.2001). In this case, however, no such instruction has been proffered, either to Entertainment Resources or to this Court. Entertainment Resources, requested that the City tell it how to reapportion its stock in order to comply with the ordinance. The City refused. Entertainment Resources then altered the composition of the Fantasy Video stock from 80% adult-oriented material to 57%, and finally to 30%. After each alteration, the City continued to maintain that Fantasy Video was in violation of the ordinance. In our view, requiring a party to engage in this sort of guessing game is a clear violation of due process. The “absence of any ascertainable standard for inclusion and exclusion is precisely what offends the Due Process Clause.” Smith, 415 U.S. at 578, 94 S.Ct. 1242.

The concurring opinion states that we failed to “consider whether the ordinance is readily susceptible to a narrowing construction which would alleviate any perceived unconstitutional vagueness.” But in the absence of any hint from the City, we are at a loss as to how to impart meaning to the terms “substantial” and “significant” without rewriting the ordinance. The concurring opinion points out that a similar Nashville ordinance defines an adult video store as an “establishment having a majority of its stock or a majority of its floor space dedicated to” adult material, A previous version of that ordinance, invalidated as unconstitutionally vague in Ellwest Stereo Theater, Inc. v. Boner, 718 F.Supp. 1553, 1581 (M.D.Tenn.1989), had used the terms “substantial” and “significant.” While we agree that “majority” is clearer than “substantial,” such a drastic revision by this Court would amount to impermissible judicial legislation. “[Cjourts may supply words when reasonably called for. Nevertheless, it is the prerogative of the legislature, and not the courts, to amend statutes.” In re Swanson, 2 S.W.3d 180, 186-87 (Tenn.1999) (citations omitted). In the Nashville case, it was the Nashville City Council, a legislative body, that supplied the narrowing construction, not the courts.

It is difficult to understand the City’s reluctance to further clarify the ordinance. “Although due process does not require impossible standards of clarity, this is not a ease where further precision in the statutory language is either impossible or impractical.” Kolender, 461 U.S. at 361, 103 S.Ct. 1855 (internal quotation and citation omitted). Surely the City must have had some idea of what amount of sexually-explicit material was tolerable under the ordinance, particularly given the fact that the record shows that the City takes the position that Gemstone Video Stores, which also stock sexually-explieit videotapes, was not in violation of the ordinance. See, e.g., Vill. of Hoffman Estates v. Flip-side, Hoffman Estates, Inc., 455 U.S. 489, 503-04, 102 S.Ct. 1186, 71 L.Ed.2d 362 (1982) (ordinance regulating sale of drug paraphernalia not vague, in part because village attorney issued guidelines to businesses affected by ordinance).

In the absence of any articulable standards from the City, we must conclude that the ordinance is vague “not in the sense that it requires a person to conform his conduct to an imprecise but comprehensible normative standard, but rather in the sense that no standard of conduct is specified at all.” Coates v. City of Cincin nati, 402 U.S. 611, 614, 91 S.Ct. 1686, 29 L.Ed.2d 214 (1971).

Finally, the City argues that Entertainment Resources may not challenge the ordinance as facially vague because the Fantasy Video store was clearly within the purview of the ordinance: Burkhart, 58 S.W.3d at 699. As we have explained, however, in some circumstances even a party who is within the ambit of an ordinance may challenge it as facially vague if protected communication is at issue. Young, 427 U.S. at 59-60, 96 S.Ct. 2440. Moreover, the facts of this case belie the City’s insistence that Entertainment Resources fell within the purview of the ordinance, because, as we have explained, the ordinance has no boundaries. Entertainment Resources reduced its stock from 80% adult videos to 30% without, evidently, locating the upper edge of what constituted an acceptable portion of stock devoted to adult-oriented material. Given the City’s inability to articulate any constitutionally-meaningful standards for the ordinance’s definition of adult bookstores, we conclude that the ordinance is unconstitutionally vague and unenforceable.

Remaining Issues

Having determined that the definition of “adult bookstores” in Knoxville City Code section 16-468 is void for vagueness, we need not reach the parties’ arguments as to the validity of the injunction entered by the trial court. We also decline to reach Entertainment Resources’ arguments that such an ordinance is not a valid time, place and manner regulation, that it failed to provide reasonable alternative avenues of communication, that such an ordinance may never be justified using the “secondary effects” doctrine under Article 1, section 19 of the Tennessee Constitution, and that the injunction was an unconstitutional prior restraint.

Damages

Because the chancery court held that Entertainment Resources had been properly enjoined from operating Fantasy Video pursuant to the ordinance, it did not address Entertainment Resources’ damages. We agree with the Court of Appeals that Entertainment Resources is entitled to a determination of damages as to the Fantasy Video Store on Papermill Road, but that it is not entitled to damages as to the planned, but unopened, second and third Knoxville stores. We remand to the chancery court to assess the amount of Entertainment Resources’ damages and to determine the propriety of awarding attorney’s fees.

Conclusion

Having considered the record and applicable authority, we hold that Knoxville City Code section 16-468 is vague and unenforceable under the United States and Tennessee Constitutions. We remand to the chancery court for a determination of Entertainment Resources’ damages flowing from that court’s injunction. Costs of the appeal are taxed to the appellant, City of Knoxville, and its surety, for which execution may issue if necessary.

FRANK F. DROWOTA, III, C.J., filed a concurring opinion.

FRANK F. DROWOTA, III, C.J.,

concurring in results.

I concur with the result reached by the majority. However, I am unable to join the majority’s analysis and conclusion that Knoxville Code section 16-468 (“the Ordinance”) is unconstitutionally vague on its face. In my view, we need not and should not consider whether the Ordinance is unconstitutionally vague on its face because this appeal may be resolved on the basis that it was unconstitutionally vague as applied to Fantasy Video.

I. Vague As Applied

When Fantasy Video opened on August 3, 1998, its inventory consisted of 80% adult or sexually explicit, x-rated videos and 20% family or general videos. After police officers for the City of Knoxville (“City”) began inspecting the store and issuing citations on an almost daily basis, Entertainment Resources changed the inventory and layout of Fantasy Video in an attempt to avoid continued classification as an adult bookstore under the Ordinance. A November 17, 1998, police inventory revealed that Fantasy Video’s stock consisted of 57% general feature videos and 43% sexually explicit adult-oriented videos. The tally from a December 8, 1998, count revealed that Fantasy Video’s stock consisted of 70% general feature videos and 30% sexually explicit adult-oriented videos. Thus, Entertainment Resources attempted to alter the balance of its inventory to avoid the reach of the Ordinance.

Entertainment Resources also- sought guidance from -various officials of the City of Knoxville as to what specific additional changes would be necessary for Fantasy Video to avoid the adult bookstore classification so that it could lawfully operate at the Papermill Road location without being subject to the Ordinance’s restrictions. Neither the police who conducted inspections and issued citations to Fantasy Video nor the City’s Law Department or the City Court judge assigned to hear the citations provided the guidance that Entertainment Resources sought. In addition to seeking a declaratory judgment finding the Ordinance unconstitutional, Entertainment Resources sought in its counterclaim a declaratory judgment construing “adult bookstore” in a manner that would make it possible to know what additional changes would be necessary for Fantasy Video to avoid the adult bookstore classification and to operate lawfully at the Papermill Road location. The injunction did not provide additional guidance but instead merely enjoined Entertainment Resources “during the pendency of this action from operating an adult .bookstore at 6422 Papermill Road, Knoxville, Tennessee.” Thus, upon reviewing the facts and procedural history of this case, I am fully convinced that the Ordinance is unconstitutionally vague as it has been applied to Fantasy Video; therefore, I concur with the result reached by the majority.

II. Facial Vagueness Challenge

Having concluded that this appeal may be resolved on the basis of how the Ordinance has been applied, I cannot agree with-the majority decision holding the Ordinance vague on its face and thus unconstitutional in all its applications. This Court has recognized that “ ‘[a] facial challenge to a legislative Act is ... the most difficult challenge to mount successfully since the challenger must establish that no set of circumstances exist under which the Act would be valid.’ ” Davis-Kidd Booksellers, Inc. v. McWherter, 866 S.W.2d 520, 525 (Tenn.1993) (quoting United States v. Salerno, 481 U.S. 739, 745, 107 S.Ct. 2095, 95 L.Ed.2d 697 (1987)). Striking down a statute on its face therefore is “‘strong medicine’ ” which should be employed “ ‘with hesitation, and then only as a last resort.’ ” Id. (quoting New York v. Ferber, 458 U.S. 747, 769, 102 S.Ct. 3348, 73 L.Ed.2d 1113 (1982)). Administering such “strong medicine” is not necessary in this appeal because, as previously explained, the record illustrates that the Ordinance has been unconstitutionally applied to Fantasy Video.

Nonetheless, the majority states: “In evaluating a law, such as the Knoxville ordinance, that is capable of reaching protected expression, we inquire only whether the law is vague on its face. We need not consider whether it is vague as applied to the defendant. NAACP v. Button, 371 U.S. 415, 432-33, 83 S.Ct. 328, 9 L.Ed.2d 405 (1963); see also U.S. v. Mazurie, 419 U.S. 544, 550, 95 S.Ct. 710, 42 L.Ed.2d 706 (1975).” First, the decisions cited in support of the majority’s statement predate United States Supreme Court decisions which appear to require precisely the opposite analysis. For example, in Young v. American Mini Theatres, Inc., 427 U.S. 50, 59-61, 96 S.Ct. 2440, 49 L.Ed.2d 310 (1976), the Court began its analysis by considering whether the challenged Detroit ordinance was vague as applied to the defendants, stating:

It is clear, therefore, that any element of vagueness in these ordinances has not affected these respondents. To the extent that their challenge is predicated on inadequate notice resulting in a denial of procedural due process under the Fourteenth Amendment, it must be rejected.

Young, 427 U.S. at 59, 96 S.Ct. 2440. Only after considering and rejecting the as-applied vagueness challenge did the Court consider and also reject the facial vagueness challenge. The Court explained:

We are not persuaded that the Detroit zoning ordinances will have a significant deterrent effect on the exhibition of films protected by the First Amendment. As already noted, the only vagueness in the ordinances relates to the amount of sexually explicit activity that may be portrayed before the material can be said to be “characterized by an emphasis” on such matter. For most films the question will be readily answerable; to the extent that an area of doubt exists, we see no reason why the ordinances are not “readily subject to a narrowing construction by the state courts.” Since there is surely a less vital interest in the uninhibited exhibition of material that is on the borderline between pornography and artistic expression than in the free dissemination of ideas of social and political significance, and since the limited amount of uncertainty in the ordinances is easily susceptible of a narrowing construction, we think this is an inappropriate case in which to adjudicate the hypothetical claims of persons not before the Court.

Young, 427 U.S. at 60-61, 96 S.Ct. 2440. Thus, the Court in Young did not consider the facial vagueness challenge until it had first considered and rejected the as-applied vagueness challenge.

Furthermore, I do not believe the cited authority supports the .proposition for which it has been cited. The Court in Button stated:

We have no doubt that the opinion of the [Virginia Supreme Court] in the instant case was intended as a full and authoritative construction of Chapter 33 as applied in a detailed factual context. That construction binds us. For us, the words of Virginia’s highest court are the words of the statute, [citation omitted] We are not left to speculate at large upon the possible implications of bare statutory language.

371 U.S. at 432, 83 S.Ct. 328 (emphasis added); see also Mazurie, 419 U.S. at 550, 95 S.Ct. 710. Neither Button nor Mazurie involved facial constitutional challenges to zoning ordinances of the type at issue in this appeal. Indeed, constitutional challenges to such ordinances are evaluated pursuant to a distinct First Amendment analysis. See, e.g., City of Los Angeles v. Alameda Books, Inc., 535 U.S. 425, 122 S.Ct. 1728, 152 L.Ed.2d 670 (2002); City of Renton v. Playtime Theatres, Inc., 475 U.S. 41, 106 S.Ct. 925, 89 L.Ed.2d 29 (1986) (citing Clark v. Community for Creative Non-Violence, 468 U.S. 288, 104 S.Ct. 3065, 82 L.Ed.2d 221 (1984)).

Moreover, the majority’s willingness to hold the Ordinance facially unconstitutional cannot be justified as a proper application of the overbreadth doctrine. The overbreadth doctrine is an exception to normal standing principles which, despite the general rule disfavoring facial constitutional challenges, permits a litigant “to challenge the [facial] constitutionality of a statute which is not unconstitutional as applied but which may be unconstitutional in some cases in order to protect the right of free speech.” 16 Am.Jur.2d Constitutional Law § 140 (1998) (emphasis added); see also Davis-Kidd Booksellers, Inc., 866 S.W.2d at 525. However, the overbreadth doctrine does not dispense with the general principle that courts consider facial challenges to the constitutionality of statutes only as a last resort. Indeed, “the [over-breadth] doctrine should be applied sparingly and used only as a last resort. And for it to apply, there must be a realistic danger that the statute will significantly compromise the recognized First Amendment rights of persons not before the court.” 16 Am.Jur.2d Constitutional Law § 140 (1998); see also Davis-Kidd Booksellers, Inc., 866 S.W.2d at 525. In this appeal, the “last resort” overbreadth doctrine need not be applied because the case may be resolved by finding that the Ordinance has been unconstitutionally applied to Entertainment Resources.

Even assuming it were necessary to evaluate Entertainment Resources’ facial vagueness challenge to the constitutionality of the Ordinance, I would be unable to agree with the analysis which the majority employs and the result which the majority reaches. Before a statute is held unconstitutionally vague on its face, courts have a duty to consider whether the challenged law is “readily susceptible” to a narrowing construction that would make it constitutional, and if so, courts have a duty to adopt the narrowing construction and to uphold the constitutionality of the statute. Davis-Kidd Booksellers, Inc., 866 S.W.2d at 529.

A statute is not vague which by orderly processes of litigation can be rendered sufficiently definite and certain for purposes of judicial decision. Courts should consider any limiting instructions of the challenged statute that state authorities have proffered. In fact, it is the duty of the courts to adopt a construction which will sustain a statute and avoid constitutional conflict if its recitation permits such a construction.

State v. Burkhart 58 S.W.3d 694, 697-98 (Tenn.2001) (internal quotations and citations omitted). When determining whether an ordinance is unconstitutionally vague, courts must consider any regulatory refinements or limiting constructions. See Village of Hoffman Estates, 455 U.S. at 494 n. 5, 102 S.Ct. 1186; Grayned v. City of Rockford, 408 U.S. 104, 110, 92 S.Ct. 2294, 33 L.Ed.2d 222 (1972); see also, State v. Lyons, 802 S.W.2d 590, 592 (Tenn.1990) (rejecting the facial vagueness challenge by adopting and applying to a Tennessee statute the interpretation of “lawful order” which the New York Court of Appeals had adopted and applied to a similar New York statute).

Rather than proffering a limiting instruction, the City has maintained that the Ordinance is constitutional without a limiting instruction because the terms “substantial” and “significant” are words ordinarily used and easily understood by “men of common intelligence.” The City has argued that when the challenged phrase is considered “in the context of the Ordinance as a whole, and in light of other cases construing the phrase, the phrase cannot be said to be devoid of meaningful legislative standards.” In support of its assertions, the City has pointed to other cases which have rejected vagueness challenges to language identical or nearly identical to the language at issue in this appeal. See, e.g. Golden Triangle News, Inc. v. Corbett, 689 A.2d 974, 984-985 (Pa. Commw.Ct.1997)(“[T]he terms ‘substantial’ and ‘significant’ have recognized meanings in the English language and the use of such in the definition of ‘adult bookstore’ does not render it vague merely because a percentage of business in one type of item is not specified.”); City of Chicago v. Scandia Books, Inc., 102 Ill.App.3d 292, 58 Ill.Dec. 72, 430 N.E.2d 14, 18 (1981) (“In support of their claim that the provision of the Ordinance which defines adult bookstores is vague, defendants point to the words, ‘substantial or significant’ as being unconstitutionally vague. We find defendants’ argument without merit. The word, ‘substantial’ as used in the definition of adult bookstores is not so indefinite as to render the Ordinance void and unenforceable. That term has been construed as having an ascertainable meaning in numerous statutory schemes, (citations omitted)”); Mom N Pops, Inc. v. City of Charlotte, 979 F.Supp. 372, 393 (W.D.N.C.1997) (“Applying th[e] reasoning [of Young] to the challenged phrases, construing them in light of this detailed ordinance as a whole, and in light of cases either construing those very phrases or affording principles for so doing, the undersigned concludes that the challenged definitions and phrases are not devoid of meaningful legislative standards and are reasonably specific and precise, ‘bearing in mind that unavoidable imprecision is not fatal and celestial precision is not necessary.’ ”). Additionally, the City has pointed out that the Ordinance uses the exact same terminology which many state and federal statutes employ. As the City notes in its brief, the word “substantial” appears 419 times in the Tennessee Code and the word “significant” appears 221 times. Similarly, the terms “substantial” and “significant” each appear over 2,000 times in the United States Code. For all these reasons, the City maintains that the Ordinance is not unconstitutionally vague.

The City is correct in its assertion’that the terms used in the Ordinance are commonly used in many statutes and ordinances. As a result, courts have often applied context-appropriate definitions to these terms. See 38 Tenn. Digest 2d. Substantial (West 1999 & Supp 2004) (citing cases which defined the terms “substantial,” “substantial abuse,” “substantial and material evidence,” “substantial and material change in circumstances,” “significant part,” and “significant state involvement”).

Indeed, this Court recently defined the word “substantial” by referencing Black’s Law Dictionary. See In re Valentine, 79 S.W.3d 539, 548-49 (Tenn.2002). We adopted a meaning appropriate to the context of the statute in which the term had been used, stating as follows:

Substantial noncompliance is not defined in the termination statute. The statute is clear, however, that noncompliance is not enough to justify termination of parental rights; the noncompliance must be substantial. Black’s Law Dictionary defines “substantial” as “[o]f real worth and importance.” Black’s Law Dictionary 1428 (6th ed.1990). In the context of the requirements of a permanency plan, the real worth and importance of noneompliance should be measured by both the degree of noncompliance and the weight assigned to that requirement. Terms which are not reasonable and related are irrelevant, and substantial noncompliance with such terms is irrelevant.

Id. I agree with the majority that this definition of “substantial” makes little sense in the context of the Ordinance. That is true because “[t]he background, purpose, and general circumstances under which words are used in a statute must be considered, and it is improper to take a word or a few words from its context and, with them isolated, attempt to determine their meaning.” Eastman Chemical Co. v. Johnson, 151 S.W.3d 503, 507 (Tenn.2004). However, our willingness to apply a context-appropriate definition to one of the terms which appears in the Ordinance suggests that the challenged terms are “readily susceptible” to context-appropriate narrowing definitions which would alleviate any perceived unconstitutional vagueness. See, e.g., Lyons, 802 S.W.2d at 592 (“The concept of ‘lawfulness’ is not inherently unconstitutionally vague, and people of common intelligence need not always guess at what a statute means by ‘lawful’ inasmuch as that term must be considered in the context of the statements of law contained in relevant statutes and court rulings.”). Given the common usage of these terms and the fact that this Court, and other courts, have applied context-appropriate definitions, the majority’s conclusion that the Ordinance is not “readily susceptible” to a limiting, context-appropriate construction is puzzling. See State v. Netto, 486 S.W.2d 725, 729-30 (Tenn.1972) (rejecting the facial vagueness challenge and stating that the statute used “ordinary terms to express ideas which find adequate usage and understanding. The use of common experience as a glossary is necessary to meet, the practical demands of legislation.”).

Indeed, even Entertainment Resources recognizes that any perceived vagueness problem in the Ordinance could have been cured. As an example of “constitutionally sufficient” specificity, Entertainment Resources points to a Nashville zoning ordinance which defines “Adult video store” as “a commercial establishment having a majority of its stock or a majority of its floor space dedicated to adult videos.” In my view, the phrase, “substantial or significant portion of its stock and trade,” used in the City’s Ordinance is readily susceptible to a narrowing construction similar to the definition used in the Nashville ordinance. Indeed, construing the phrase “substantial or significant portion of its stock and trade” to mean “a majority portion of its stock and trade” would be wholly consistent with the commonly recognized meanings of the terms used in the Ordinance and would hardly constitute a “drastic revision,” as the majority suggests.

III. Conclusion

Although I agree with the majority that “this is not a case where further precision in the statutory language is either impossible or impractical,” Kolender v. Lawson, 461 U.S. 352, 361, 103 S.Ct. 1855, 75 L.Ed.2d 903 (1983), in my view, we need not and should not consider whether the Ordinance is unconstitutionally vague on its face. This appeal can and should be resolved on the basis that the Ordinance was unconstitutionally vague as applied to Fantasy Video. Even assuming it were necessary to consider the facial vagueness challenge, I would be unable to agree with the majority’s analysis and conclusion because I am of the opinion that the Ordinance is readily susceptible to a narrowing construction. For all these reasons, I concur only in the result reached by the majority.

      . The concurring opinion suggests that this is a case involving an overbreadth analysis. The issue before this Court, however, is not whether the ordinance reaches both protected and unprotected conduct, but whether the ordinance is unclear in its prohibitions. Although "vagueness and overbreadth [are] logically related and similar doctrines,” Kolender, 461 U.S. at 358 n. 8, 103 S.Ct. 1855, they are distinct concepts. See, e.g., Davis-Kidd, 866 S.W.2d at 523-29, 531-32.

      . The concurring opinion notes that the Court in Young refused to consider the defendants' vagueness challenge because the challenged ordinances "unquestionably” applied to the defendants. The Court so held, however, only after first concluding that the ordinances at issue did not create a significant deterrent effect and were "readily subject to a narrowing construction by the state courts.” Young, 427 U.S. at 60-61, 96 S.Ct. 2440. The concurring opinion also notes that the ordinance upheld by the Court in Young contained the same "substantial or significant” definition with regard to adult bookstores as does the Knoxville ordinance we consider here. However, Young addressed a challenge to an entirely separate section of the ordinance, and the Court in Young did not pass on the constitutionality of the definition at issue in this case.

      . The concurring opinion asserts that "substantial" is capable of definition, noting that this Court defined "substantial” in In re Valentine, 79 S.W.3d 539, 548-49 (Tenn.2002). The definition of substantial offered in that case was " 'of real worth and importance. ” Id. at 548 (quoting Black's Law Dictionary 1428 (6th ed.1990)). It is difficult to see how substituting "of real worth and importance” for "substantial” would clarify what portion of adult-oriented stock and trade a business could carry without being subject to the ordinance.

      . Why the City failed to provide guidelines to businesses affected by the Ordinance is unclear, particularly when the United States Supreme Court has considered such guidelines relevant in rejecting a vagueness challenge to an ordinance. See, e.g., Village of Hoffman Estates v. Flipside, Hoffman Estates, Inc,, 455 U.S. 489, 503-04, 102 S.Ct. 1186, 71 L.Ed.2d 362 (1982). The City's refusal to respond to Entertainment Resources specific requests for guidance also is inexplicable. As the majority points out, the City must have had some notion of what amount of sexually-explicit material was tolerable under the Ordinance because the City had taken the position that Gemstone Video Stores was not in violation of the Ordinance.

      . Notably, the Ordinance Entertainment Resources challenges as unconstitutionally vague in this appeal uses language identical to that in the Detroit ordinance at issue in Young, which defined "adult bookstore” as “[a]n establishment having as a substantial or significant portion of its stock in trade, books, magazines, and other periodicals which are distinguished or characterized by their emphasis on matter depicting, describing or relating to ‘Specified Sexual Activities’ or 'Specified Anatomical Areas’ (as defined below), or an establishment with a segment or section devoted to the sale or display of such material.” Young, 427 U.S. at 53 n. 5, 96 S.Ct. 2440 (emphasis added). Unlike the majority, the United States Supreme Court in Young refused to find this language unconstitutionally vague, stating “the only vagueness in the ordinances relates to the amount of sexually explicit activity that may be portrayed before the material can be said to be 'characterized by an emphasis’ on such matter.” Id. at 61, 96 S.Ct. 2440.

      . Although the majority expressly disavows reliance upon the overbreadth doctrine, at page thirteen, the majority, quoting Young, sets out the standard that it later applies to strike down the Ordinance, and this is the same standard applied by courts to evaluate overbreadth challenges. See Young, 427 U.S. at 59 n. 17, 96 S.Ct. 2440 (citing cases and discussing the circumstances in which the Court had considered facial overbreadth challenges even though the statutes had been constitutionally applied to the challengers).

      . See, e.g., Webster’s Third New Int’l Dictionary of the English Language Unabridged, 1768, 2116, 2280 (Philip Babcock Gove ed.1971) (defining "substantial” as "considerable in amount, value, or worth”; defining "significant” as "important, weighty, notable”; and defining "portion” as "a part of a whole”).


source: Caselaw Access Project

author: ADOLPHO A. BIRCH, JR., J„

license: Public Domain

text:
    James L. MILLIGAN, Jr. v. BOARD OF PROFESSIONAL RESPONSIBILITY OF THE SUPREME COURT OF TENNESSEE.
    Supreme Court of Tennessee, at Nashville.
    Feb. 2, 2005 Session.
    June 28, 2005.

      William Walter Hunt, III, Nashville, Tennessee, for the appellant, Board of Professional Responsibility.
    Stephen W. Gibson and Ronald L. Grimm, Knoxville, Tennessee, for the ap-pellee, James L. Milligan, Jr.
   OPINION

ADOLPHO A. BIRCH, JR., J„

delivered the opinion of the court, in which

FRANK F. DROWOTA, III, C.J., and E. RILEY ANDERSON, JANICE M. HOLDER, and WILLIAM M. BARKER, JJ., joined.

Pursuant to the provisions of Tennessee Supreme Court Rule 9, section 1.3, the Tennessee Board of Professional Responsibility (“the Board”) appeals from an order of the Chancery Court for Knox County imposing the sanction of public censure upon James L. Milligan, Jr., Esq. (“Milli-gan”). The Board contends that the Chancery Court erred in concluding that: (1) Milligan did not misappropriate funds; (2) Milligan’s use of a client’s funds for personal purposes was not a serious violation; and (3) public censure is the appropriate sanction. Because we conclude that Müligan did misappropriate funds and did otherwise conduct himself in a manner inconsistent with the Rules of Professional Conduct, as will be hereinafter detailed, we have determined that suspension for a period of two years is appropriate.

I. Facts and Procedural History

Müligan is an attorney whose practice in Knoxville consists, in the main, of personal injury and malpractice matters. This case involves three disciplinary complaints-two that allege misappropriation of clients’ funds and one that alleges fraudulent conduct in representing a client.

Initially, two complaints were lodged against Müligan. The first, herein referred to as the “Howard Matter,” alleged that Müligan had misappropriated funds from his client trust account. According to the complaint, Milligan wrote a check in the amount of $216.67 from his client trust account to his then-associate, G. Turner Howard, as commission for settlement of a client’s lawsuit. Upon presentment to the bank, the check was dishonored, and the reason given was “insufficient funds.” Müligan later paid Howard by cashier’s check.

The second complaint, herein referred to as the “Johnson Matter,” alleged that Mü-ligan settled Kerry Johnson’s personal injury claim for $16,000 without having first consulted Johnson, forged the signatures on the release and the check, procured a Notary Public in his office to falsely notarize the release, and deposited the funds into his personal account. Based on these two complaints, the Board, on April 26, 2000, filed a Petition for Temporary Suspension of Milligan’s law license. On May 5, 2000, this Court granted the petition.

On June 19, 2000, this Court reinstated Milligan’s license, pending a full disciplinary hearing. The reinstatement was conditioned upon Milligan employing Terry Hall, a Certified Public Accountant, to oversee the ongoing finances of Milligan’s law practice and upon Milligan employing Leroy Bible, a Certified Fraud Examiner, to review some of Milligan’s law office accounts. It was agreed that Bible would report those findings to the Board.

On August 17, 2000, the Board filed a Petition for Discipline against Milligan. The petition alleged, in pertinent part, the substance of the Howard and Johnson Matters.

On May 22, 2001, a third complaint, herein referred to as the “Bible Matter,” was lodged. That complaint was based on a report submitted to disciplinary counsel by Leroy Bible; the report summarized Bible’s review of Milligan’s office accounts for the year 1999. According to Bible, there were financial improprieties in the firm’s accounts, including its client trust account. He stated further that Milligan' had not cooperated with his review. On August 23, 2001, the Board filed a Supplemental Petition for Discipline, essentially asserting the allegations in the Bible Matter.

A full disciplinary hearing before a panel of the Board was held on August 19-20, 2002. In the Howard Matter, the Hearing Panel concluded that Milligan had, in fact, misappropriated funds. Although the Panel acknowledged that the check to G. Turner Howard had been later paid by cashier’s check, it rioted that Milligan did not deny that the check had been returned for insufficient funds. Accordingly, the Hearing Panel found that Milligan had violated Tennessee Supreme Court Rule 8, Disciplinary Rule (“DR”) 1-102(A)(4), (5), and (6); and DR 9-102(B)(3).

In the Johnson Matter, the Hearing Panel found that in April 1999, Kerry Johnson retained Milligan in a personal injury matter arising out of an automobile accident. Milligan later settled the suit for $16,000. Milligan admitted that he affixed the Johnsons’ names to the settlement check and release. He further admitted that he procured a notary in his office to falsely notarize the release document. Moreover, he admitted that in January 2000, he placed the settlement funds directly into his personal account and used the funds for his personal use.

Although Milligan claimed that he had prior oral authorization to settle Johnson’s case in the range of $12,000 to $20,000, to deposit the funds into his personal account, and to personally use the settlement funds in their entirety with the payment of interest, the Hearing Panel found that Milli-gan’s testimony was not credible and that Milligan’s actions and office records were inconsistent with and contradictory to the claimed prior authorization. Specifically, the Panel found that there was no documentation authorizing him to settle Johnson’s case and sign the settlement check and release. In addition, the Panel found that Milligan had later directed an employee to inform a medical creditor of Johnson that there had been no recovery and that no payment of the claim was possible. This was done despite the fact that Milli-gan had settled the case himself, whether with authority or without. Finally, the Hearing Panel alleged that Milligan procured affidavits from the Johnsons, ratifying the previous oral agreement.

Based on the foregoing, the Hearing Panel concluded that Milligan: (1) had settled the Johnson case without the client’s authority; (2) had forged the signatures of Kerry and Kesha Johnson on the settlement check; (8) had forged the Johnsons’ signatures on the release document tendered by opposing counsel; (4) had procured an employee to falsely notarize, after the fact, the forged signatures on the release document; (5) had deposited 100% of the settlement funds into his personal account despite having been previously advised by a law practice consultant to deposit all settlement proceeds into the trust account; and (6) had “procured false affidavits from the Johnsons in an effort to conceal his misconduct.” Thus, the Panel found that Milligan had violated DR 1-102(A)(3), (4), (5), and (6); DR 7-102(A)(8), (4), (5), (6), and (7); and DR 9-102(A) and (B).

In the Bible Matter, the Hearing Panel found that Milligan had overdrawn his client trust account on at least twenty-four occasions during 1999, thereby incurring $806 in overdraft charges against the client trust account. It noted that Bible’s audit of forty-six cases from 1999 revealed thirty-two separate occasions upon which Milligan had withdrawn funds from the client trust account prior to the deposit of settlement proceeds related to the funds. These “early withdrawals” ranged from as far as 210 days prior to the settlement deposit to as recent as one day prior to the settlement deposit. Milligan admitted withdrawing attorney’s fees in a number of cases prior to the time when the settlement proceeds were actually deposited in the trust account.

The Hearing Panel concluded that Bible’s audit of Milligan’s accounts “fully demonstrated that [Milligan had] failed to maintain adequate records and that Milli-gan persisted in maintaining an inadequate accounting system to support the client trust accounts.” The Panel also determined that Bible’s report documented the inappropriate deposit of settlement proceeds into Milligan’s personal checking account instead of the client trust account. Bible’s testimony was not controverted by Milligan. Based on the foregoing, the Hearing Panel found that Milligan had violated DR 1-102(A)(1), (4), (5), and (6); DR 2-106(A); DR 7-101(A)(4)(b) and (c); and DR 9-102(A)(2) and (B)(3).

Based on the above-described violations and the applicable aggravating and mitigating circumstances, the Hearing Panel ordered Milligan disbarred. Milligan appealed to the Chancery Court for Knox County pursuant to Tennessee Supreme Court Rule 9, section 1.3.

On appeal, the trial court did not take proof on the Howard matter. In its memorandum opinion, the court stated that Howard, in consultation with Milligan, had advised the Board of the matter and that Howard had taken responsibility for not having waited long enough for the check to clear. The court noted that a new accounting procedure had been implemented in Milligan’s office since this incident. Thus, the trial court opined as follows: “This matter is de minimis, and need not be further noticed; it did not involve fraud or dishonesty or deceit.”

In the Johnson. Matter, the trial court accepted Milligan’s testimony and rejected the Johnsons’ testimony. The fact that Kerry Johnson is a convicted felon made for heightened drama regarding credibility decisions, but credibility aside, the trial court, addressing the Johnson Matter rather obliquely, suggested that Milligan had misappropriated funds in the Johnson case. Nevertheless, the court stated that according to Milligan, he had an oral agreement with the Johnsons which authorized Milligan to use his discretion and experience to enter into settlement negotiations with the insurance adjustor and to resolve the matter on their behalf. The court acknowledged that Milligan had signed the Johnsons’ names to the release and deposited the money in his personal account but stated that the Johnsons were ultimately pleased with the settlement and executed affidavits ratifying the previous oral agreement. The court gave no weight to Kerry Johnson’s recantation of his previous ratification of the agreement. In sum, the trial court found that Milligan had merely “exercised poor judgment” in his handling of the Johnson case.

Regarding the Bible Matter, the trial court stated that Milligan had made errors in judgment, but it emphasized that he had corrected those errors. The court acknowledged that the disciplinary rule addressing the need for preserving the identity of funds and property of a client “was violated on occasion” and that those violations were “unacceptable and sanctiona-ble.” However, the court made much of the fact that Bible never found a client who had received less than what he or she was due, a fact which “greatly lessen[s]” the seriousness of the violation, according to the trial court. Finally, the court pointed out that Milligan had been required to pay Bible approximately $85,000 for his services.

Based on the trial court’s determinations, it concluded that public censure, not disbarment, was the appropriate sanction. The Board appealed pursuant to Tennessee Supreme Court Rule 9, section 1.8.

II. Standard of Review

This matter is before this Court as a result of the Board’s appeal pursuant to Tennessee Supreme Court Rule 9, section 1.3, which provides the following:

Either party dissatisfied with the decree of the circuit or chancery court may prosecute an appeal direct to the Supreme Comb where the cause shall be heard upon the transcript of the record from the circuit or chancery court, which shall include the evidence before the hearing committee.

This Court’s standard of review is de novo upon the record of the trial court with a presumption of correctness given to the trial court unless the evidence preponderates against those findings. Bd. of Prof'l Responsibility v. Slavin, 145 S.W.3d 538, 546 (Tenn.2004).

III. Analysis

In this appeal, the Board contends that the public censure recommended by the trial comb is an insufficient sanction. According to the Board, at a minimum, Milli-gan is guilty of misappropriating client funds, forging a Ghent’s signature on a settlement check and a release, causing a notary to falsely notarize a client’s signature, and placing client funds in his personal account. Milligan, on the other hand, makes no serious factual contest. Instead, he contends, with regard to the handling of trust funds, that he simply made a series of accounting mistakes that do not implicate a serious disciplinary violation. As to the Johnson Matter, Milligan continues to insist that Johnson orally authorized the settlement and the “loan” of the proceeds to Milligan. He emphasizes that no client suffered monetary loss. He does not, however, deny that he signed the Johnsons’ names to the settlement check and release, caused a notary public to falsely notarize the Johnsons’ signatures, and placed the Johnsons’ funds in his personal account, all in violation of ethical rules.

We conclude that Milligan did misappropriate funds in the Howard Matter. The record establishes, and Milligan did not deny, that he wrote a check 6n his client trust account that was later returned for insufficient funds. The check was written as payment for Howard’s work on a case that had settled. Thus, the funds for payment should have been in the client trust account before any disbursements were made. In this regard, Milligan violated DR 1-102(A)(1), (4), (5), and (6); and DR 9—102(B)(3).

Next, we consider the Johnson Matter. Even were we to assume, as Mil-ligan urges, that Johnson authorized Milli-gan to settle the case within a specified range, Milligan’s conduct bears close examination. It is undisputed that Milligan used Johnson’s money for personal purposes. Further, it is undisputed that Milli-gan signed both the Johnsons’ names to a release and had a notary falsely notarize the signatures. Clearly, such conduct involves dishonesty, fraud, deceit, or misrepresentation in violation of DR 1-102(A)(4), whether or not he acted with the Johnsons’ permission. In addition, such conduct is clearly “conduct that is prejudicial to the administration of justice” in violation of DR 1—102(A)(5); and “conduct that adversely reflects on his fitness to practice law” in violation of DR 1-102(A)(6). We find these violations to be very serious and indicative of conduct that should not and will not be tolerated.

Also, in the Bible Matter, the record establishes, and Milligan did not deny, that Milligan had overdrawn his client trust account on at least twenty-four occasions during 1999. Most egregious is the case of Michael Overton, a client. The record indicates that Milligan settled Over-ton’s case on May 7, 1999, for the amount of $50,000. This amount was deposited in Milligan’s trust account on the same day. Milligan disbursed to Overton $29,924.21 on May 28, 2002. Between May 7, 1999, and May. 28, 2002, the balance in Milligan’s trust account dipped below $29, 924.21. Indeed, after depositing the proceeds, Mil-ligan incurred overdraft charges of $766 from May 8, 1999, through December 31, 1999, on this trust account.

Moreover, Milligan admitted that he had used client funds before the settlement proceeds had been deposited in the client trust account. Milligan also did not deny that he had placed client funds in accounts other than the client trust account-one of such accounts was his personal account. Thus, we conclude that Milligan did, in fact, misappropriate funds in violation of DR 1—102(A)(1), (4), (5), and (6); DR 2-106(A); DR 7—101(A)(4)(b) and (c); and DR 9-102(A)(2) and (B)(3).

Because we have concluded that the record before us establishes that Milli-gan misappropriated funds and otherwise conducted himself in a manner inconsistent with the Code of Professional Conduct, as we have detailed, we must now determine the appropriate sanction. The Hearing Panel concluded that the appropriate sanction required by the record was disbarment. On review, however, the trial court concluded that public censure was appropriate. Thus, we are offered two conclusions-one imposing the maximum sanction possible, and the other a sanction close to the minimum. Milligan chiefly insists that his conduct does not support the sanction of disbarment.

The Board has adopted the Standards for Imposing Lawyer Sanctions promulgated by the American Bar Association. Bd. of Prof'l Resp. v. Maddux, 148 S.W.3d 37, 40 (Tenn.2004). Those standards provide that “disbarment is an appropriate sanction for conduct involving dishonesty, fraud, deceit, or misrepresentation when the lawyer engages in serious criminal conduct or any other intentional conduct that ‘seriously adversely’ reflects on the lawyer’s fitness to practice law.” Id. (citing Standards for Imposing Lawyer Sanctions § 5.11 (Am. Bar. Ass’n ed.1986)). The Standards further provide that suspension is appropriate when “ ‘a lawyer knowingly engages in criminal conduct ... that seriously adversely reflects on the lawyer’s fitness to practice.’ ” Maddux, 148 S.W.3d at 41 (quoting Standards for Imposing Lawyer Sanctions § 5.12 (Am. Bar Ass’n ed., 1986)).

In determining the appropriate sanction, this Court recognizes that “[w]e must evaluate each instance of attorney discipline in light of its particular facts and circumstances.” Maddux, 148 S.W.3d at 40. However, “we must also consider the sanctions that have been imposed in prior cases that present similar circumstances so as to maintain consistency and uniformity in disciplinary proceedings.” Id.

The misuse and misappropriation of clients’ funds is, indeed, a serious violation. This Court has previously reviewed similar cases of misappropriation, and in one, Board of Professional Responsibility v. Bonnington, 762 S.W.2d 568, 571 (Tenn.1988), an attorney served as the administrator of an estate and improperly withdrew funds from the estate for his personal use. Although the attorney self-reported the misappropriations to his firm, the probate judge, and the Board of Professional Responsibility, as well as made restitution to the client, the trial court imposed, and we affirmed, a four-year suspension based on the misappropriation of funds. Id. at 568, 571.

In Disciplinary Board of the Supreme Court v. Banks, 641 S.W.2d 501, 502 (Tenn.1982), an attorney entered into an agreement with a client whereby he would invest a sum of money for the client and advise the client of any transactions made. Without notice to the client, the attorney loaned the funds to two different corporations in which he, the attorney, held the controlling stock. In his defense, the attorney claimed that the client had made an outright loan to him and that he had agreed to pay her ten percent interest on those funds. The trial court concluded, as did we, that the preponderance of the evidence did not support the attorney’s contention. This Court noted that the attorney never intended to embezzle the funds from the client, but the mishandling of funds warranted a one-year suspension. Id. at 504.

In Dockery v. Board of Professional Responsibility, 937 S.W.2d 863 (Tenn.1996), the attorney negotiated an automobile accident claim to settlement and deposited the funds in his escrow account. The attorney had previously agreed to withhold and remit the doctor’s fees. Upon settlement, the attorney failed to remit any of the funds to the doctor. In addition, the attorney failed to provide the client with an accounting or other statement showing how the funds had been disbursed. The Hearing Panel found that the attorney had commingled entrusted funds with his personal funds, had misapplied and misappropriated to his own use and benefit the funds entrusted to him, and had failed to maintain his records in a professional manner and imposed a two-year suspension. The trial court approved the two-year suspension imposed by the Hearing Panel, and this Court affirmed. Id. at 865, 867.

Whether one concludes that Milligan’s conduct was “criminal,” as the Hearing Panel found, or a series of inadvertent mistakes, as the trial court found, it is apparent to us, on de novo review, that Milligan’s conduct seriously and adversely reflected on the lawyer’s fitness to practice law. Not only did Milligan misappropriate client funds, he also procured a false notarization of the release in the Johnson Matter. This conduct involves dishonesty and deceit. Such conduct also seriously and adversely reflects on his fitness to practice law. Based on the violations and the relevant case law, it is apparent that Milligan’s sanction must involve a period of suspension.

In determining the appropriate period of suspension, we consider also any applicable aggravating and mitigating circumstances. “Aggravating and mitigating circumstances are any considerations or factors that may justify an increase or reduction in the degree of discipline to be imposed.” Maddux, 148 S.W.3d at 41. In the case at bar, the Hearing Panel found and applied the following five aggravating factors: (1) Milligan received a public censure in 1994; (2) Milligan received a public admonition in 1995; (3) Milligan received a private informal admonition in 1987; (4) in 1999, Milligan (as required by the Board) consulted with and was advised by Suzanne Rose, the “Tennessee Bar Law Practice Management Consultant,” about recommended changes in his accounting procedures and failed to comply with her recommendations; and (5) Milligan failed to fully cooperate with Leroy Bible in direct violation of a Supreme Court order.

After a thorough review of the record, we are unable to conclude that Milli-gan did not cooperate with Leroy Bible’s audit. Although there is testimony that Milligan was evasive in response to Bible’s questioning, there is insufficient evidence showing that he deliberately thwarted Bible’s investigation. However, the evidence does support the remaining four aggravating factors (his three prior sanctions and his failure to properly comply with Suzanne Rose’s recommendations).

The Panel also found and applied one mitigating factor: that Milligan “ultimately made good the checks returned for insufficient funds and there is no evidence that any individual lost money as a result of [Milligan’s] actions.” We agree that this factor should mitigate any sanction we impose, and we have considered it as a mitigating factor.

Accordingly, based on the severity of Milligan’s violations, the applicable aggravating and mitigating circumstances, the relevant case law, and the entire record, we conclude that a two-year suspension from the practice of law is appropriate. It is further ordered that Milligan shall comply in all respects with Tennessee Supreme Court Rule 9, and specifically with section 18 regarding the obligations and responsibilities of suspended attorneys. Costs of this review are taxed to the appel-lee, James L. Milligan, Jr., or his surety, for which execution may issue if necessary.

      . The proceedings in this case are governed by the Code of Professional Responsibility previously set forth in Rule 8 of the Tennessee Supreme Court Rules (2002). The Code was replaced on March 1, 2003, by the Rules of Professional Conduct.

      . DR 1 — 102(A)(4) (2002) provides: "A lawyer shall not ... [e]ngage in conduct involving dishonesty, fraud, deceit, or misrepresentation.”

      . DR 1-102(A)(5) (2002) provides: "A lawyer shall not ... [ejngage in conduct that is prejudicial to the administration of justice."

      . DR 1 — 102(A)(6) (2002) provides: "A lawyer shall not ... [e]ngage in any other conduct tíiat adversely reflects on his fitness to practice law.”

      . DR 9-102(B)(3) (2002) provides: "A lawyer shall ... [mjaintain complete records of all funds, securities and other properties of a client coming into the possession of the lawyer and render appropriate accounts to the client regarding them."

      . The check was apparently made payable to Kerry and Kesha Johnson.

      . DR 1-102(A)(3) (2002) provides: "A lawyer shall not ... [e]ngage in conduct involving moral turpitude.”

      . DR 7 — 102(A)(3) (2002) provides: "In the representation of a client, a lawyer shall not ... [c]onceaI or knowingly fail to disclose that which the lawyer is required by law to reveal.”

      . DR 7 — 102(A)(4) (2002) provides: "In the representation of a client, a lawyer shall not ... [k]nowingly use perjured testimony or false evidence.”

      . DR 7 — 102(A)(5) (2002) provides: "In the representation of a client, a lawyer shall not ... [kjnowingly make a false statement of law or fact.”

      . DR 7 — 102(A)(6) (2002) provides: "In the representation of a client, a lawyer shall not ... [participate in the creation or preservation of evidence when the lawyer knows or it is obvious that the evidence is false."

      . DR 7 — 102(A)(7) (2002) provides: "In the representation of a client, a lawyer shall not ... [cjounsel or assist the client in conduct that the lawyer knows to be illegal or fraudulent.”

      . DR 9-102(A) (2002) provides: "All funds of clients paid to a lawyer or law firm, including advances for costs and expenses, shall be deposited in one or more identifiable insured depository institutions maintained in the state in which the law office is situated."

      . DR 9-102(B) (2002) provides:
      A lawyer shall:
      (1) Promptly notify a client of the receipt of the client’s funds, securities, or other properties.
      (2) Identify and label securities and properties of a client promptly upon receipt and place them in a safe deposit box or other place of safekeeping as soon as practicable.
      (3) Maintain complete records of all funds, securities and other properties of a client coming into the possession of the lawyer and render appropriate accounts to the client regarding them.
      (4) Promptly pay or deliver to the client as requested by a client the funds, securities or other properties in the possession of the lawyer which the client is entitled to receive.

      . The Hearing Panel, as well as the trial court, did not address in their findings any specific cases in Leroy Bible's Report. However, one matter involving Milligan's client, Michael Overton, was addressed in Bible's deposition and report, which was before both the Hearing Panel and the trial court. In addition, Bible testified regarding the Michael Overton case during the proceeding in the trial court.

      . DR 1-102(A)(1) (2002) provides: "A lawyer shall not ... [v]iolate a disciplinary rule.”

      . DR 2-106(A) (2002) provides: “A lawyer shall not enter into an agreement for, charge, or collect an illegal or clearly excessive fee.”

      . DR 7-101 (A)(4)(b) (2002) provides: "A lawyer shall not intentionally ... [flail to carry out a contract of employment entered into with a client for professional services, but a lawyer may withdraw as permitted under DR 2-110, DR 5-102, and DR 5-105.”

      . DR 7-101(A)(4)(c) (2002) provides: "A lawyer shall not intentionally ... [prejudice or damage the client during the course of the professional relationship, except as required under DR 7-102(B).”

      . We are willing to assume that $20,075.79 of the $50,000 represents Milligan’s fees and costs.