Phillips v. Tennessee Department of Transportation, No. M2006-00912-COA-R3-CV (Tenn. App. 4/26/2007), M2006-00912-COA-R3-CV.
| Decision Date | 26 April 2007 |
| Docket Number | No. M2006-00912-COA-R3-CV.,M2006-00912-COA-R3-CV. |
| Parties | RICK PHILLIPS, ET AL. v. TENNESSEE DEPARTMENT OF TRANSPORTATION. |
| Court | Tennessee Court of Appeals |
Appeal from the Chancery Court for Davidson County; No. 04-886-III; Ellen Hobbs Lyle, Chancellor.
Judgment of the Chancery Court Affirmed.
Irma Merrill Stratton, Memphis, Tennessee, for the appellants, Rick Phillips, Lamar Advertising and William H. Thomas, Jr.
Michael E. Moore, Acting Attorney General; Larry M. Teague, Deputy Attorney General, for the appellee, Tennessee Department of Transportation.
William B. Cain, J., delivered the opinion of the court, in which William C. Koch, Jr., P.J., M.S., and Frank G. Clement, Jr., J., joined.
The landowner sought a zoning change, from residential to commercial, of two tracts of land located adjacent to the interstate, which the local planning commission granted. The landowner then filed billboard applications with the Tennessee Department of Transportation. The inspector for the agency determined that the land had been illegally spot zoned for the purpose of outdoor advertising, and therefore denied the two billboard applications. The landowner requested an administrative hearing, after which the Administrative Law Judge instructed that the agency grant the applications. The agency appealed the ruling to its Commissioner. The case was remanded back to the Administrative Law Judge, who then found that the property was spot zoned for the purpose of outdoor advertising and upheld the denial of the landowner's applications. The landowner appealed, and the Commissioner of the Tennessee Department of Transportation affirmed the decision. The landowner then appealed to the Chancery Court of Davidson County. The trial court affirmed the agency's decision to deny the billboard applications. The landowner appealed. We affirm.
On June 18, 1998, Appellant1 filed applications with the Tennessee Department of Transportation ("Appellee") to erect two billboards on two tracts of land (approximately two acres each) adjacent to I-40 in Fayette county. Prior to filing such applications, on May 12, 1998, Appellant sought approval from the Fayette County Regional Planning Commission to rezone the property from R-1 (Rural Residential) to B-3 (Community Business). The Commission rezoned the property to commercial. On June 29, 1998, Appellee sent one of its inspectors, Robert Shelby ("Shelby") to inspect the land on which Appellant wished to erect the billboards. Upon inspection, Shelby concluded that the tracts of land had been illegally spot zoned for commercial use for outdoor advertising purposes. On July 9, 1998, Appellee denied Appellant's applications.
On July 16, 1998, Appellant requested an administrative hearing on the matter. The hearing took place on May 4 and 21, 1999, before an Administrative Law Judge ("ALJ"). Following the trial on the merits, the ALJ made several findings of fact and conclusions of law, and issued an Initial Order, dated August 17, 1999, instructing Appellee to issue the permits for both billboard applications. Such Order was based on the ALJ's conclusion that Shelby relied solely on his field inspection and did not consider the Fayette County Regional Planning Commission's reasons for rezoning the property, thereby making his decision and recommendation to deny the applications arbitrary and capricious. The ALJ further concluded that as a matter of law, Appellee did not have legal authority to determine whether a piece of property had been spot zoned for outdoor advertising purposes.
On August 20,1999, Appellee appealed the ALJ's Initial Order. While such appeal was pending, Appellant erected billboards on the property without permits. On December 17, 1999, the Commissioner of the Tennessee Department of Transportation remanded the case back to the ALJ. In his Order, the Commissioner made several conclusions of law and instructions on remand, including, but not limited to: (1) Appellee's authority to regulate billboards is established under state and federal law (, Tenn. Code Ann. § 54-21-101 et seq. and 23 U.S.C. § 131); (2) Appellee has established criteria for the effective control of outdoor advertising through its internal rules2; (3) Appellee has the right to look beyond the local zoning ordinance in making its outdoor advertising determinations; and (4) state agencies responsible for regulating outdoor advertising are not required to accept a zoning ordinance on its face, and should examine the actual and contemplated land uses of the location and the motivation behind the zoning action. The Commissioner specifically stated that the ALJ erred in: (1) holding that Appellee does not have the authority to look beyond a zoning ordinance to determine whether a piece of property has been spot zoned, and (2) that Shelby's determinations were arbitrary and capricious.
The matter was again heard before the ALJ on February 26, 2001. By Order dated October 17, 2001, the ALJ overruled his August 17, 1999 Order and ruled that Appellant's property was spot zoned for the purpose of outdoor advertising and upheld the denial of Appellant's permits. Further, the ALJ held that Appellants must remove the billboards that had been erected on the land without permits, as they were in violation of Tennessee law3. On October 31, 2001, Appellant filed a Petition for Reconsideration, which the ALJ denied on November 14, 2001. On November 29, 2001, Appellant filed an appeal from the ALJ's October 17, 2001 Order. The Commissioner affirmed the ALJ's second ruling by a Final Order issued January 29, 2004, stating that Appellant's "application for an outdoor advertising permit is DENIED and that [Appellant] shall REMOVE the outdoor advertising structure at issue in this matter as provided in the Initial Order."
On February 9, 2004, Appellant filed a Petition for Stay of Final Order, on the basis that the outdoor advertising structures had been in place for approximately six years following the ALJ's Initial Order ruling that the area had not been spot zoned, and that removing the structures prior to a final disposition of the matter would be costly, as would rebuilding them if Appellant was successful on appeal. On February 5, 2004, the Order was stayed pending Appellant's timely filing of judicial review. Appellant filed a Petition for Judicial Review in the Chancery Court of Davidson County on March 24, 2004.
On September 15, 2005, Appellant filed a Motion to Consider Additional Evidence on the basis that Appellee The trial court issued its Order regarding Appellant's Motion to Consider Additional Evidence on November 8, 2005, in which it denied the motion and ruled that the proposed evidence did not meet the materiality standard of 4-5-322(h). The trial court issued its final Order on March 7, 2006, in which it found:
Consequently, the Court finds that substantial and material evidence exists in the record to support [Appellee]'s findings, as [Appellee] acted within its authority in disregarding the rezoning of the tracts at issue in this case. Both federal law and state law vest [Appellee] with the authority to deny billboard permit applications upon grounds such as those which the Court finds to be present in this case. The Court thus finds that [Appellee] acted pursuant to that authority and pursuant to applicable laws and regulations, both state and federal. The Court also finds that petitioner has not provided sufficient proof to overcome those findings and show that [Appellee]'s findings were in any way unsupported by substantial and material evidence.
In denying [Appellant]'s request for judicial review, the Court affirms [Appellee]'s decision to deny [Appellant]'s request for the billboard permits.
Appellant appeals four issues: (1) the trial court's ruling that Appellee did not exceed its authority when it denied the billboard applications due to spot zoning; (2) the trial court's affirmance of the ALJ's decision that the billboard applications should be denied when the ALJ had clear and convincing evidence that the locations were properly zoned for billboards, and that Appellee's decision was (a) in violation of statutory provisions, (b) in excess of Appellee's statutory authority, (c) arbitrary or capricious or characterized by abuse of discretion or unwarranted exercise of discretion, or (d) unsupported by substantial and material evidence; (3) the trial court's denial of Appellant's motion to consider additional evidence, which wrongly excluded evidence and resulted in an erroneous decision; and (4) the Commissioner's misapplication of relevant law to the facts.
The standard of review of administrative proceedings is governed by Tenn. Code Ann. § 4-5-322(h):
The court may affirm the decision of the agency or remand the case for further proceedings. The court may reverse or modify the decision if the rights of the petitioner have been prejudiced because the administrative findings, inferences, conclusions or decisions are:
(1) In violation of constitutional or statutory provisions;
(2) In excess of the statutory authority of the agency;
(3) Made upon unlawful procedure;
(4) Arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion; or
(5) (A) Unsupported by evidence that is both substantial and material in the light of the entire record.
(B) In determining the substantiality of evidence, the court shall take into account whatever in the record fairly detracts from its weight, but the court shall not substitute its judgment for that of the agency as to the weight...
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