In 2008, William H. Thomas Jr. petitioned the Tennessee Department of Transportation (TDOT) for permits to maintain billboards on three sites he leased from John Charles Wilson. Despite the fact that TDOT denied the permits, citing a failure to adhere to zoning requirements, Thomas continued with construction of the billboards, then filed a request for a contested case hearing on one of the permits pursuant to the Uniform Administrative Procedures Act (UAPA). TDOT granted the request, held the administrative hearing, then decided against issuing the permit applications. Thomas appealed to the Chancery Court of Davidson County, Tennessee, for review of TDOT’s decision. The Chancery Court found in TDOT’s favor; Thomas appealed, and that action is still pending.
In the meantime, Thomas and landowner Wilson (hereafter, “Plaintiffs”) filed a declaratory judgment action on the TDOT’s denial of the remaining two permit applications. TDOT opposed the action, arguing that the plaintiff had failed to obtain a final determination on the matter by appealing to the TDOT itself. Before the court acted on TDOT’s motion to dismiss, additional declaratory judgment actions were added challenging TDOT’s denial of permits for billboards on land owned by Kate Bond; permit denials for which Plaintiffs had also requested a contested case hearing, which had not been resolved at the time Plaintiffs sought to add those permit denials to his prior declaratory judgment action. TDOT again moved to dismiss the action, urging that the matter had not yet come to final determination before the agency, as contested case hearings had not been held. In March 2012, after a hearing on TDOT’s motion to dismiss, the court dismissed the action for lack of subject matter jurisdiction, citing both sovereign immunity and a 2008 decision by the Tennessee Supreme Court, Colonial Pipeline Co. v. Morgan, 263 S.W.3d 827 (Tenn. 2008). Plaintiffs here appeal.
On appeal, the sole matter before the Tennessee Court of Appeals was whether the Chancery Court had acted improperly in dismissing the action for lack of subject matter jurisdiction. In a Memorandum Decision, the Court noted that TDOT is authorized by state statute to control the placement, use, and maintenance of billboards adjacent to highways and main thoroughfares throughout the state. Appealing a permit denial requires following the administrative requirements of the state’s UAPA. As such, a declaratory order from the TDOT is required before an aggrieved applicant may bring a declaratory judgment in state court requesting review of the denial. Until Plaintiffs complied with the contested case hearing process with TDOT, the court held that a declaratory judgment action was premature, and the lower court had been correct in dismissing the complaint on that basis.
Plaintiffs claimed they did not need to comply with the UAPA procedures in this case because they had, in their declaratory judgment action, raised constitutional challenges to the TDOT’s application of zoning restrictions. However, the court held that the Colonial Pipeline case contradicted plaintiffs’ arguments. The essence of the Colonial Pipeline case was the creation of three classes of constitutional challenges—“(1) challenging the facial constitutionality of a statute authorizing an agency to act or rule, (2) challenging the agency’s application of a statute or rule as unconstitutional, or (3) challenging the constitutionality of the procedure used by an agency.” The second and third types of challenges could be heard by administrative agencies, but the Colonial Pipeline court held that the first type of challenge was within the sole province of the judiciary. In this case, the court held that the plaintiffs’ claim, while difficult to discern, was not a facial constitutional challenge, meaning that the TDOT could hear the challenge within the established hearing procedure. Thus, the plaintiffs needed first to go through with the procedurally mandated contested case hearing process before seeking judicial review of the TDOT’s final order.
Wilson v. Tennessee Dept. of Transportation, 2013 WL 209048 (Tenn. Ct. App. 1/17/2013)
The opinion can be accessed at: http://www.tncourts.gov/sites/default/files/wilsonjohncharlesopn.pdf