John Charles Wilson v. Tennessee Department of Transportation

IN THE COURT OF APPEALS OF TENNESSEE

AT NASHVILLE

November 13, 2012 Session

JOHN CHARLES WILSON, ET AL. v. TENNESSEE DEPARTMENT OF

TRANSPORTATION

Direct Appeal from the Chancery Court for Davidson County

No. CH-10-1173-IV Russell T. Perkins, Chancellor

No. M2012-00675-COA-R3-CV - Filed January 17, 2013

The trial court dismissed Plaintiffs’ declaratory judgment action for lack of subject matter

jurisdiction. Plaintiffs’ appeal. We affirm.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed

and Remanded

D AVID R. F ARMER, J., delivered the opinion of the Court, in which A LAN E. H IGHERS, P.J.,

W.S., and H OLLY M. K IRBY, J., joined.

William H. Thomas, Jr., Memphis, Tennessee, Pro se.

Robert E. Cooper, Attorney General and Reporter, and Bruce M. Butler, Assistant Attorney

General, for the appellee, Tennessee Department of Transportation.

MEMORANDUM OPINION 1

Background

1

Rule 10 of the Rules of the Court of Appeals of Tennessee provides:

This Court, with the concurrence of all judges participating in the case, may affirm, reverse

or modify the actions of the trial court by memorandum opinion when a formal opinion

would have no precedential value. When a case is decided by memorandum opinion it shall

be designated “MEMORANDUM OPINION”, shall not be published, and shall not be cited

or relied on for any reason in any unrelated case.

In 2008, William H. Thomas, Jr. (“Mr. Thomas”) applied to the Tennessee

Department of Transportation (“TDOT”) for billboard permits at three locations on

properties he leased from John Charles Wilson (“Mr. Wilson”) (collectively with Mr.

Thomas as “Plaintiffs”). After TDOT denied the permits for failing to meet zoning

requirements, Mr. Thomas continued with construction of the billboards. Thereafter, Mr.

Thomas filed a request for a contested case hearing under the Uniform Administrative

Procedures Act (“UAPA”), Tennessee Code Annotated section 4–5–101 et seq., regarding

one of the three locations. The request for an administrative hearing was granted, heard and

decided by TDOT. Mr. Thomas then filed a petition for judicial review of TDOT’s decision

pursuant to Tennessee Code Annotated section 4-5-322 in the Chancery Court of Davidson

County. The petition was heard and decided adversely to Mr. Thomas, and he appealed.

That matter is currently pending on appeal to this Court.

On July 22, 2010, Plaintiffs filed a complaint for declaratory judgment concerning

TDOT’s denial of the two remaining billboard permits. In response, TDOT filed a motion

to dismiss arguing that a direct action for declaratory judgment was improper because the

Plaintiffs failed to petition TDOT for a declaratory order as required under the UAPA.

Before a hearing was held on TDOT’s motion to dismiss, the trial court granted Plaintiffs’

motion to amend their complaint to include the denial of other billboard permits on the

property of Kate Bond. According to the record, following the denial of the billboard permits

on the Kate Bond property, Plaintiffs requested a contested case hearing under the UAPA.

While that matter was pending before an Administrative Law Judge (“ALJ”), Plaintiffs filed

their amended complaint to include those permit denials as part of this action. In response,

the ALJ placed a stay on the administrative proceedings, and those proceedings have not yet

been concluded. Thereafter, TDOT filed a motion to dismiss the amended complaint, again

arguing that a direct action for declaratory judgment was improper because the Plaintiffs

failed to petition TDOT for a declaratory order as required under the UAPA. On March 19,

2012, after conducting a hearing on TDOT’s motion to dismiss, the trial court entered an

order dismissing the action for lack of subject matter jurisdiction based upon the doctrine of

sovereign immunity and the Tennessee Supreme Court’s decision in Colonial Pipeline Co.

v. Morgan, 263 S.W.3d 827 (Tenn. 2008).2 Plaintiffs timely filed a notice of appeal to this

Court.

2

In Colonial Pipeline, the Tennessee Supreme Court held that “(1) a party making a constitutional

challenge to the facial validity of a statute need not exhaust its administrative remedies, and that (2) the

doctrine of sovereign immunity does not bar a suit for declaratory judgment asking state officers to be

enjoined from enforcing such a statute so long as the action does not seek money damages.” Id. at 832.

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Discussion

The sole issue presented for our review is whether, in light of Plaintiffs’ failure to

petition TDOT for a declaratory order under the UAPA, the trial court erred in dismissing

Plaintiffs’ declaratory judgment action for lack of subject matter jurisdiction. Subject matter

jurisdiction involves a tribunal’s lawful authority to adjudicate the controversy brought

before it. Northland Ins. Co. v. State, 33 S.W.3d 727, 729 (Tenn. 2000); First Am. Trust Co.

v. Franklin-Murray Dev. Co., 59 S.W.3d 135, 140 (Tenn. Ct. App. 2001). The subject matter

jurisdiction of a tribunal in a particular case depends on the nature of the cause of action and

the relief sought, Landers v. Jones, 872 S.W.2d 674, 675 (Tenn.1994); SunTrust Bank v.

Johnson, 46 S.W.3d 216, 221 (Tenn. Ct. App. 2000), and can only be conferred on a tribunal

by the Constitution of Tennessee or a legislative act. Meighan v. U.S. Sprint Commc’ns Co.,

924 S.W.2d 632, 639 (Tenn. 1996); Kane v. Kane, 547 S.W.2d 559, 560 (Tenn. 1977). Since

the determination of whether subject matter jurisdiction exists is a question of law, our

standard of review is de novo, with no presumption of correctness given to the decision

below. Northland Ins. Co., 33 S.W.3d at 729 (citing Nelson v. Wal-Mart Stores, Inc., 8

S.W.3d 625, 628 (Tenn. 1999)).

As this Court discussed in State ex rel. Comm’r of Dep’t of Transp. v. Thomas, 336

S.W.3d 588 (Tenn. Ct. App. 2010):

By statute, [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. 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. 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.

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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 [UAPA], Tennessee Code Annotated § 4–5–101 et seq., and

the rules of the Administrative Division of the Tennessee Department of State.

Id.

Id. at 591-92.

A person dissatisfied with TDOT’s denial of a billboard permit may challenge the

denial, but the challenge must comply with the provision of the UAPA. Before filing a direct

action for a declaratory judgment, a person must first petition TDOT for a declaratory order.

Tenn. Code Ann. § 4–5–223(a) (“Any affected person may petition an agency for a

declaratory order as to the validity or applicability of a statute, rule or order within the

primary jurisdiction of the agency.”). Upon receipt of the petition, TDOT must either

convene a contested case hearing and issue a declaratory order or refuse to issue a declaratory

order. See Tenn. Code Ann. § 4-5-223(a)(1)–(2). Thereafter, if TDOT chooses not to

convene a contested case hearing or refuses to issue a declaratory order, a person may obtain

judicial review by seeking a declaratory judgment in the Chancery Court of Davidson

County. Tenn. Code Ann. §§ 4–5–223(a)(2), –225(a). The UAPA does not permit a person

to seek a declaratory judgment in the Chancery Court, however, unless the person has first

petitioned TDOT for a declaratory order and been refused. Tenn. Code Ann. § 4–5–225(b);

see also Colonial Pipeline Co. v. Morgan, 263 S.W.3d 827, 842 (Tenn. 2008) (“In no

uncertain terms, [section 4–5–225(b)] requires a prospective plaintiff to make a request for

a declaratory order with an agency before bringing an action for a declaratory judgment in

the Chancery Court.”). Accordingly, in the absence of proof that a person sought a

declaratory order from TDOT, the Chancery Court lacks subject matter jurisdiction over a

person’s declaratory judgment action.

Plaintiffs do not dispute that they failed to petition TDOT for a declaratory order

under the UAPA regarding the billboard permits at issue in this case. Instead, Plaintiffs

argue that TDOT was required to first file a declaratory judgment action in the county where

the properties are located for a determination of whether the local zoning ordinances were

valid before it refused to issue the billboard permits. Because TDOT failed to do so before

denying Plaintiffs’ billboard permits, Plaintiffs argue that TDOT’s implementation of its

zoning rules is unconstitutional. Thus, Plaintiffs’ insist that they did not have to petition

TDOT for a declaratory order under the UAPA before seeking a declaratory judgment in the

Chancery Court challenging the constitutionality of TDOT’s actions. We disagree.

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As explained by our Supreme Court in Colonial Pipeline Co. v. Morgan, 263 S.W.3d

827 (Tenn. 2008):

Administrative tribunals do not lack the authority to decide every

constitutional issue. It is essential, however, to distinguish between the

various types of constitutional issues that may arise in the administrative

context. In Richardson [v. Board of Dentistry, 913 S.W.2d 446 (Tenn.1995)],

we developed three broad categories of constitutional disputes: (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. Id.

at 454–55. Administrative tribunals have the power to decide constitutional

issues falling into the second and third categories, but the first category falls

exclusively within the ambit of the judicial branch. Id. The separation of

powers clause reserves for the judiciary constitutional challenges to the facial

validity of a statute. Id. (citing Hoover Motor Exp. Co., Inc. v. R.R. & Pub.

Util. Comm'n, 195 Tenn. 593, 261 S.W.2d 233, 238 (1953); Pharr v. Nashville,

C., & St. L. Ry., 186 Tenn. 154, 208 S.W.2d 1013, 1017 (1948)).

Id. at 843. Although it is difficult to discern the basis of Plaintiffs’ constitutional challenge,

it is clear that they are not challenging the facial constitutionality of a statute. In our opinion,

it appears that Plaintiffs’ argument targets TDOT’s implementation of its zoning rules. Since

Plaintiffs argument challenges either TDOT’s application of its zoning rules or the procedure

used by TDOT in making billboard permit decisions, they must first comply with the

provisions of the UAPA. See Colonial Pipeline Co., 263 S.W.3d 827, 842 (Tenn. 2008) (“In

no uncertain terms, [section 4–5–225(b)] requires a prospective plaintiff to make a request

for a declaratory order with an agency before bringing an action for a declaratory judgment

in the Chancery Court.”). In light of Plaintiffs’ failure to petition TDOT for a declaratory

order under the UAPA, the Chancery Court lacked subject matter jurisdiction over Plaintiffs’

declaratory judgment action. Accordingly, we affirm the judgment of the trial court.

Conclusion

For the foregoing reasons, we affirm the decision of the trial court. Costs of this

appeal are taxed to the Appellant, William H. Thomas, Jr., and his surety, for which

execution may issue if necessary.

_________________________________

DAVID R. FARMER, JUDGE

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