State Ex Rel. the Comm'r of The Dep't of Transp. v. Thomas

• Decision Date: 17 November 2009
• Docket Number: No. W2008–00853–COA–R3–CV.,W2008–00853–COA–R3–CV.
• Citation: 336 S.W.3d 588
• Parties: STATE of Tennessee ex rel. The COMMISSIONER OF the DEPARTMENT OF TRANSPORTATIONv.William H. THOMAS, Jr.
• Court: Tennessee Court of Appeals

336 S.W.3d 588

STATE of Tennessee ex rel. The COMMISSIONER OF the DEPARTMENT OF TRANSPORTATION

v.William H. THOMAS, Jr.

No. W2008–00853–COA–R3–CV.

Court of Appeals of Tennessee, Western Section, at Jackson.

Nov. 17, 2009 Session.April 27, 2010.Petition to Rehear Denied June 8, 2010.Permission to Appeal Denied by

Supreme Court Nov. 18, 2010.

Robert E. Cooper, Jr., Attorney General; Michael E. Moore, Solicitor General; and George G. Boyte, Jr., Jackson, Tennessee, for the appellant, State of Tennessee.William L. Hendricks, Jr., and Clayton C. Chandler, Memphis, Tennessee, for the appellee, William H. Thomas, Jr.¹

OPINION

HOLLY M. KIRBY, J., delivered the opinion of the Court, in which ALAN E. HIGHERS, P.J., W.S., and DAVID R. FARMER, J., joined.HOLLY M. KIRBY, J.

This appeal involves subject matter jurisdiction with respect to billboard permits. The defendant's application for a State permit to erect a billboard in Shelby County was denied, so he filed an administrative appeal from this decision. Meanwhile, the defendant proceeded to erect the billboard in Shelby County without a State permit. The State filed this petition in Shelby County to enjoin the defendant from erecting the billboard pending resolution of the administrative appeal. The defendant argued that the State was not entitled to injunctive relief because he had unfairly been denied a State permit. The defendant also filed a counterclaim based on alleged improper conduct by State officials, seeking to enjoin the State from improperly enforcing its regulations against him in all cases in which he had been denied a State billboard permit. The trial court entered an order enjoining the State from improper enforcement of the billboard regulations. Later, after lengthy evidentiary hearings, the trial court ordered the State to grant the defendant State permits for various billboard sites and assumed continuing jurisdiction over certain administrative proceedings in which the defendant had appealed the denial of billboard permits. The State now appeals. We find that, by statute, the trial court in Davidson County has exclusive subject matter jurisdiction over the matters asserted by the defendant in response to the petition for injunctive relief and in his counterclaims. Therefore, we reverse the decision of the trial court based on lack of subject matter jurisdiction, dismiss the counterclaim in its entirety, and remand.

Facts and Proceedings Below

Background

By statute, the Plaintiff/Appellant Tennessee Department of Transportation (“TDOT”), by and through its Beautification Division, is charged with the responsibility for overseeing Tennessee's requirements and regulations for erecting and maintaining outdoor advertising, commonly referred to as billboards.² The Billboard Regulation and Control Act of 1972, codified at Tennessee Code Annotated § 54–21–101 et seq. (“the Act”), governs the construction, operation, and maintenance of billboards adjacent to interstate or primary highway systems in Tennessee.³ TDOT enforces the Act through the Rules of the Tennessee Department of Transportation (“TDOT Rules”), Chapter 1680–02–03, and in accordance with the applicable federal regulations, 23 C.F.R. § 750, Subpart G, Outdoor Advertising Control.

Under the Act, no person may construct, erect, or operate a billboard adjacent to an interstate or primary highway without a State permit. T.C.A. § 54–21–104(a) (Supp.2009). To qualify for a State billboard permit, an applicant must satisfy the TDOT and federal regulations in four general categories: zoning of the site, spacing from the nearest existing billboard, size of the structure, and the lighting of the structure. See TDOT Rules, Chapter 1680–02–03–.03.

Permit applications are made to the TDOT Commission or through the Beautification Division. Id. at 1680–02–03–.03(1)(a)(6). An applicant who is denied a permit may request an administrative hearing. Id. at 1680–02–03–.03(1)(a)(10). The administrative proceedings are conducted pursuant to the Uniform Administrative Procedures Act (UAPA), Tennessee Code Annotated § 4–5–101 et seq. , and the rules of the Administrative Division of the Tennessee Department of State. Id.

Billboard Construction Without Permits

Defendant/Appellee William H. Thomas, Jr. (“Thomas”), became significantly involved in the outdoor advertising/billboard business in 2004. In 2006, Thomas owned as many as thirty legally permitted billboards subject to the Act.

Thomas applied for State permits on at least four other billboard sites in Shelby County, Tennessee, but these applications were denied. These sites are referred to as Southern Millworks (1 permit), Kate Bond P.D. (2 structures, 4 permits), Perkins Road ⁴ (2 permits), and Crossroads Ford (1 permit). As to each site, Thomas was denied a State billboard permit based on either the proximity of the site to an existing billboard or zoning issues.

On each of those four sites, despite having been denied a State permit, Thomas proceeded with construction of the billboard structures. On the Southern Millwork site, Thomas requested an administrative hearing to challenge the denial of the permit. The administrative proceedings culminated into an order requiring Thomas to remove the Southern Millworks billboard, because he had no State permit for it.⁵ This was not done. On the Kate Bond P.D. site, TDOT obtained an order from an administrative law judge to the effect that Thomas could not erect a billboard in the absence of a valid permit, and requiring him to remove the billboard from the site. Thomas appealed the ALJ's ruling to the Davidson County Chancery Court, and did not remove the billboard. On the Perkins Road site, Thomas met with local officials but the permit was not issued, and TDOT issued Thomas a notice of violation.⁶

Finally, on the Crossroads Ford site,⁷ Thomas's permit application number 5848 was denied because it was less than 1,000 feet from an existing permitted billboard owned by Thomas's competitor, Clear Channel Outdoor, which was not permitted under TDOT regulations. See TDOT Rules, Chapter 1680–02–03–.03(1)(a)(4). Thomas requested a contested case hearing for a declaratory order under the UAPA, arguing that his proposed billboard site qualified for an exception to the proximity rule and that his permit application should therefore be granted. On November 27, 2006, after a hearing, an administrative law judge ruled that Thomas was not entitled to the billboard permit. Thomas appealed that ruling to the Commissioner of TDOT (“Commissioner”).

In early 2007, while his appeal on the Crossroads Ford site was pending, Thomas began construction of a billboard structure at the site, despite the fact that his permit application had been denied. To erect the billboard structure at the Crossroads Ford site, Thomas's contractor excavated a roadway over a box culvert on the State-owned right-of-way at the Interstate 40/Interstate 240 interchange, without permission to do so.⁸

Trial Court Proceedings

State Petition

In light of Thomas's history of constructing billboards without a permit, TDOT decided to seek injunctive relief against him in Shelby County with respect to the Crossroads Ford site. Thus, on March 2, 2007, the State of Tennessee (“State”), on behalf of TDOT, filed a Petition for Restraining Order, Temporary Injunction, Declaratory Judgment, and Permanent Injunction against Thomas in the Shelby County Chancery Court below. Given the fact that Thomas did not have a permit for the billboard, the State alleged, completion and use of the billboard structure for outdoor advertising would violate the Billboard Regulation and Control Act, specifically Tennessee Code Annotated § 54–21–104. Under the Act, the structure would be deemed a public nuisance, pursuant to Section 54–21–105, and any profits Thomas gained from its use would be unjust profits from a public nuisance. The State asked the trial court to issue an order prohibiting Thomas from completing the Crossroad Ford billboard structure, and further asked the trial court to declare the billboard structure a public nuisance under the Act and to require Thomas to dispose of whatever had been constructed at his own expense. If Thomas used the structure for outdoor advertising, the State asked that his revenues be held in a constructive trust. The trial court issued a temporary restraining order and set a show cause hearing March 19, 2007.

On March 16, 2007, Thomas filed his answer. In the answer, Thomas admitted ongoing construction of a billboard structure at the Crossroads Ford site, admitted that his application for a State permit had been denied, and admitted that he did not have a TDOT permit to erect a billboard at that location. Nevertheless, Thomas denied that the State was entitled to the relief requested, because the denial of his permit application on the Crossroads Ford site “is currently the subject of an administrative appeal.” ⁹ Thomas averred that TDOT's denial of his permit application was based on selective and vindictive enforcement of the applicable billboard regulations. Asserting that the State had “unclean hands,” Thomas claimed TDOT had engaged in a series of actions intended to discriminate against him, to harm him, to harm his property ownership, and to provide assistance to his competitors. Thomas averred that TDOT systematically denied him a due process hearing after denying his permit application.

Counterclaim

In addition to an answer, Thomas filed a counterclaim which contained similar allegations. In the counterclaim, Thomas asserted that TDOT had adopted a policy of selective enforcement and hostile and discriminatory action against Thomas favoring his business competitors. As evidence of TDOT's animosity, Thomas submitted emails written by TDOT officials with comments he said were hostile toward him. He cited instances in which his competitors were allegedly treated more favorably, and claimed that he was “singled out” for...