A 25-year-old Blount County lawsuit remains an important Tennessee case on government contracting, conflicts of interest and the legal status of public authorities.

The case, Herman L. [Larry] Garner, Blount Excavating Inc. and Blount Contractors Inc. v. Blount County and the Public Building Authority of Blount County, Tennessee, was decided by the Tennessee Court of Appeals in Knoxville on January 28, 2000. Fast forward to 2026 and Larry Garner is active in Blount GOP politics and the Chairman of the Blount County Election Commission.

The case number was E1999-02525-COA-R3-CV, and the decision is reported at 2000 WL 116026. The Court of Appeals affirmed in part and remanded the case to the trial court.

At the center of the dispute was an unusual situation: a sitting Blount County commissioner had ownership interests in companies that obtained contracts connected with the county’s Public Building Authority and the construction of the Blount County Justice Center.

The appellate record establishes that Herman L. Garner was a sitting Blount County commissioner when the contracts at issue were executed in 1998. Garner was appointed to the County Commission on February 23, 1998, and the court stated that he had served continuously since that date. At the time of the contracts, Garner also held a 50% ownership interest in Blount Contractors, Inc. and served as a director. On November 20, 1998, Garner transferred his shares in Blount Contractors and resigned as a director of the company.

The litigation ultimately forced the appellate court to answer a fundamental question: Could a county official avoid Tennessee’s county conflict-of-interest purchasing law simply because the contract was handled through a separately incorporated public building authority?

The court’s answer was no.

A commissioner with interests in construction companies

According to stipulated facts in the appellate record, Garner had been appointed to the Blount County Commission on February 23, 1998.

At the same time, he was the majority shareholder and president of Blount Excavating Inc.

When the contracts at issue were executed, Garner also owned 50 percent of Blount Contractors Inc. and served as one of its directors.

The corporate interests were not merely theoretical.

On May 22, 1998, Blount Contractors entered into a contract with Miller Building Corporation, the general contractor for the Public Building Authority, to perform slab work at the Blount County Justice Center.

On October 4, 1998, Blount Excavating entered into another contract connected to the project.

The appellate record identified three contracts whose validity was placed before the courts. The trial court had determined that two violated Tennessee conflict-of-interest statutes, while the status of the third had not been directly addressed.

There was also an important subsequent development.

On November 20, 1998, Garner transferred his shares in Blount Contractors and resigned as a director of that corporation. That occurred after the contracts at issue had been executed.

The lawsuit was brought as a declaratory judgment action

Garner and the two companies did not file the case simply as a challenge to a government procurement decision.

They sought a declaratory judgment determining whether the contracts were legally valid.

The trial court concluded that two of the contracts were in “direct violation” of T.C.A. § 5-14-114 and T.C.A. § 12-4-101.

The plaintiffs appealed, asking the Court of Appeals to determine whether those statutes actually applied to contracts involving the Public Building Authority.

That question became the central legal issue.

The Public Building Authority argument

The Public Building Authority had been incorporated as a separate nonprofit corporation.

Its certificate of incorporation was filed with the Tennessee Secretary of State on July 1, 1998.

Its stated purposes included facilitating the construction, acquisition and enlargement of public buildings and facilities for use by the county and other public lessees and helping provide governmental, educational, health, safety and welfare services to county residents.

The plaintiffs argued that the Authority’s separate corporate status meant it was not a county “agency” for purposes of the conflict-of-interest statute.

The Court of Appeals rejected that interpretation.

The judges examined the broader Public Building Authorities Act of 1971, T.C.A. § 12-10-101 et seq., rather than looking only at the Authority’s corporate form.

The court noted several features of the statutory structure.

The county’s governing body had a role in approving the Authority’s certificate of incorporation and amendments. The governing body also confirmed appointments to the Authority’s board.

Most importantly, state law expressly characterized a public building authority as “a public instrumentality of the municipality with respect to which the authority is organized.”

The law also provided tax advantages to the authority, permitted a municipality to assign employees and provide facilities to it, and provided that property and funds would vest in the municipality upon dissolution.

Based on those provisions, the Court of Appeals concluded that the Public Building Authority was an agency of Blount County for purposes of T.C.A. § 5-14-114.

The statute at the heart of the case

At the time of the Garner litigation, T.C.A. § 5-14-114 prohibited county officials covered by the statute from having a financial or personal beneficial interest in contracts or purchase orders for supplies, materials, equipment or contractual services used by or furnished to a county department or agency.

The statute specifically covered members of the county legislative body — meaning county commissioners.

The version of the law cited in the 2000 opinion also provided that a violation was a Class D felony.

The Court of Appeals reasoned that the statute was directed at the conduct of the county official.

That distinction mattered.

The plaintiffs argued, in substance, that the Public Building Authority’s separate legal status insulated the contracts from the county purchasing law.

The appellate court disagreed.

The court explained that T.C.A. § 5-14-114 told a county official what the official could not do. It did not operate as a regulation of the Public Building Authority itself.

Consequently, the Authority’s statutory exemption from certain laws governing administration of its projects could not be used by a county official to escape the conflict-of-interest prohibition.

The court drew an important distinction involving another statute

One of the more significant details sometimes lost in summaries of the case is that the Court of Appeals did not find a violation of T.C.A. § 12-4-101.

The court acknowledged that Garner was “directly interested” in all three contracts because of his ownership and corporate positions.

But § 12-4-101 applied to officials whose duty it was to vote for, let out, overlook or otherwise supervise the particular work or contract.

The parties had stipulated that it was not Garner’s duty as a county commissioner to perform those functions with respect to the contracts.

The Court of Appeals therefore concluded that the contracts did not violate § 12-4-101.

That did not save the contracts.

The court had already determined that the Public Building Authority was an agency of the county for purposes of § 5-14-114.

Why the separate corporation did not change the result

The practical significance of the decision was the court’s treatment of form versus function.

The Public Building Authority existed as a separate nonprofit corporation. But the court looked at what the entity was created to do, how it was connected to the county, how its board was constituted and what happened to its property upon dissolution.

The result was that the separate corporate structure did not transform the Authority into a private entity for purposes of the county conflict-of-interest law.

The Tennessee Court of Appeals expressly concluded that the Authority was an “agency” of Blount County under § 5-14-114.

That principle subsequently appeared in other Tennessee appellate decisions.

In Allen v. Day, a 2006 Tennessee Court of Appeals decision involving management of Nashville’s public arena, the court cited Garner for the proposition that a public authority can be a government agency or instrumentality even though it is separately incorporated.

The same Garner language was later cited in a Nashville government legal opinion discussing the status of a public authority.

The case remains part of Tennessee’s ethics guidance

The case also made its way into Tennessee county-government ethics materials.

The University of Tennessee’s County Technical Assistance Service identifies Garner v. Blount County, 2000 WL 116026 in its ethics materials discussing the County Purchasing Law.

CTAS summarizes the case as holding that a contract between a county building authority and a corporation in which a county commissioner owned an interest was unlawful under T.C.A. § 5-14-114.

That makes Garner more than an isolated dispute involving a construction project in Blount County.

It has become a reference point for understanding how Tennessee’s county conflict-of-interest rules interact with public authorities.

The law has changed since 2000

There is another important historical distinction.

The language of T.C.A. § 5-14-114 has been amended since the Garner decision.

The current version expressly defines “direct interest” and “indirect interest” and provides specific consequences for an official who violates subsection (a), including forfeiture of compensation and removal from office, with a 10-year period of ineligibility for the same or similar position.

The statute’s current history includes amendments through 2022.

Those later statutory changes should not be retroactively attributed to the 1998 contracts considered in Garner.

The 2000 appellate decision must be understood under the law applicable at the time.

A case that began with a Blount County construction project

The Garner litigation began with contracts associated with construction of the Blount County Justice Center.

But the question ultimately decided by the appellate court reached well beyond the particular project.

The court established that a county-created public building authority could not be treated as a private corporation simply because it had its own corporate identity.

Where the authority was a public instrumentality of the county, the county’s conflict-of-interest purchasing restrictions could reach contracts involving a county commissioner.

The decision also illustrates an important legal distinction: ownership interest alone was enough to implicate § 5-14-114, while § 12-4-101 required an additional connection to the official’s duty to vote for, let out, oversee or supervise the contract.

The case was therefore not a ruling that every government contract involving a public official automatically violates every Tennessee conflict-of-interest statute.

It was a much more specific ruling — and one that continues to be cited decades later.

Case: Garner v. Blount County and the Public Building Authority of Blount County, Tennessee
Court: Tennessee Court of Appeals, Knoxville
Case No.: E1999-02525-COA-R3-CV
Decision: January 28, 2000
Citation: 2000 WL 116026
Disposition: Affirmed and remanded.