CBS Outdoor, Inc. v. Tennessee Department of Transportation

IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
August 18, 2015 Session
CBS OUTDOOR, INC. v. TENNESSEE DEPARTMENT OF
TRANSPORTATION
Appeal from the Chancery Court for Davidson County
No. 13238I Claudia Bonnyman, Chancellor
________________________________
No. M2014-01677-COA-R3-CV – Filed November 6, 2015
_________________________________
Owner of back-to-back billboards filed a petition for review challenging the decision of
the Tennessee Department of Transportation (“TDOT”) to revoke his billboard permits
on the ground that the billboards were not in compliance with the TDOT spacing
requirements. We find substantial and material evidence to support the decision of the
TDOT Commissioner and, therefore, affirm the chancellor‟s decision.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed
ANDY D. BENNETT, J., delivered the opinion of the court, in which RICHARD H. DINKINS,
and W. NEAL MCBRAYER, JJ., joined.
Garrett E. Asher and Jennifer C. Surber, Nashville, Tennessee, for the appellant, CBS
Outdoor, Inc.
Herbert H. Slatery, III, Attorney General and Reporter, and Bruce M. Butler, Senior
Counsel, for the appellee, Tennessee Department of Transportation.
OPINION
FACTUAL AND PROCEDURAL BACKGROUND
In September 2005, William Thomas filed applications with the Tennessee
Department of Transportation (“TDOT” or “the Department”) for billboard permits for
both sides of a proposed billboard (a back-to-back billboard) on property he owned on
Jackson Avenue in Memphis. On his applications, Mr. Thomas acknowledged
preexisting signs to the east and west and stated that those signs were more than 1000 feet
from the proposed site. A TDOT field inspector performed a pre-construction inspection
to verify the accuracy of the information in the permit applications. The permit
applications were approved, and the permits were issued on October 18, 2005. A TDOT
inspector also did a post-construction inspection to ensure that the billboard was built
according to the permits. The inspector determined that the billboard had been built
where it had been permitted to be built.
In July 2006, CBS Outdoor (“CBS”) bought the Jackson Avenue back-to-back
billboard from Mr. Thomas for $145,200.00. Prior to making this purchase, CBS
confirmed that the billboard was properly permitted by TDOT. CBS also relied upon a
previous survey conducted by Mr. Thomas.
In February 2010, Clear Channel, the owner of the billboard to the west of the
billboard owned by CBS, notified TDOT that the Jackson Avenue sign was actually less
than 1000 feet from Clear Channel‟s billboard. It submitted a survey showing that CBS‟s
billboard was 968 feet from Clear Channel‟s billboard. TDOT did an investigation and
ordered its own survey, which showed that the CBS billboard was 966.5 feet from the
Clear Channel billboard. The Department gave CBS notice of revocation of its permits.
CBS stipulated that the Jackson Avenue billboard is located less than 1000 feet from the
Clear Channel billboard, which received its permit before the Jackson Avenue billboard.
CBS requested a contested case hearing before an administrative law judge
(“ALJ”). Both parties filed motions for summary judgment. CBS relied, in part, upon
the depositions of Connie Gilliam, Chester Reid, and Robert Shelby, and the affidavit of
David Hogue. The Department relied, in part, upon the affidavit of Mr. Shelby, and the
depositions of Ms. Gilliam, Mr. Shelby, and Mr. Reid. We will, therefore, briefly
summarize these documents.
Ms. Gilliam was the TDOT employee in charge of regulating and permitting
billboards in the state. She was the person who decided to approve the two original
applications for permits for Mr. Thomas‟s back-to-back billboards. Mr. Reid performed
the field inspection; he reported that there were at least 1000 feet between Mr. Thomas‟s
billboard location and the existing billboards on either side.
Mr. Reid was a retired TDOT field inspector from the Memphis office. He
described how he walked with the measuring wheel to measure between signs. He would
measure from the stake to the closest sign. Mr. Reid also discussed the post-construction
inspection to “make sure the sign is at the location where the stake was.” The inspector
took pictures of the stake at the original inspection and, then, at the post-construction
inspection verified from the pictures that the sign was where it should be. If there was
2
any question, the inspector might measure again with the measuring wheel to verify the
location and the proper spacing.
Mr. Reid had no independent memory of doing the inspection report for Mr.
Thomas‟s original billboard permits. Asked about the accuracy of the wheel, Mr. Reid
stated that, if he were going to measure something for himself, he would not use the
wheel. He would use a tape measure or an electronic device. Mr. Reid stated that he did
not trust the wheel because “it may roll a little bit further each time it bounces than what
it‟s supposed to, so to get a true, accurate measurement, I‟d say a survey crew actually
needs to do it.” Because of the curves in the road, a tape measure or laser instrument
would not work for the field inspection, and it was not practical for TDOT to have a
survey for every application.
Mr. Reid described how he used the wheel to measure the distance between the
signs:
Q. When you use the wheel to do the measurements, how do you know
exactly—well, where do you measure? And let me ask: I‟ve heard the 90
rule talked about. Is that how you would do the measurements?
A. Yes. I would get out here on the side of the road facing the sign and try
to get equal distance on the sign post or on the—well, at this time, we
wouldn‟t have nothing but a stake, so I‟d try to get equal distance on that
stake, set my wheel to zero and then start walking it whichever direction I
need to measure.
Q. And it would be based only on your eyeballing where that stake is?
A. Right?
Q. And you would eyeball it as close to a 90-degree angle as you could
get?
A. 90 degree. Uh-huh (affirmative response).
...
Q. . . . And then where would you then walk with the wheel?
A. Try to walk—of course, we had to walk in a safe area or try to get in a
safe area, but we would try to walk and run the wheel right at the edge of
the pavement of the highway and walk that distance to the next existing
sign or to the—or until we get 1,000 feet. Now, if there‟s no sign erected
beyond this sign (indicating), then all we need to do is measure 1,000 feet
and it would be legal, but then you‟d have to measure from the post sign
back to the sign that‟s already erected.
...
Q. Did you ever measure, when you were doing this job, along the white
strip of the interstate, or is it that you measured on the end of the pavement
3
of the shoulder?
A. End of the pavement. Yeah. Yeah, that would—if you measure on that
white strip, it will lengthen your distance a little bit.
Robert Shelby was a regional TDOT manager for beautification based in Jackson,
the office that oversaw billboard permits for the Memphis area. He reported to Ms.
Gilliam. The applications for new billboard locations came to him, and he distributed
them to inspectors. When the final permits were issued, he recorded them in inventory
and assigned an inspector to do a final inspection. He described the permitting and
inspection process.
Mr. Shelby was asked a hypothetical question as to what TDOT would have done
if it had received a complaint that the spacing between the CBS billboard and the Clear
Channel board was only 968.6 feet based upon a wheel measurement rather than a
survey. He opined that TDOT probably would not act upon such a complaint without
more evidence to go on in light of the lack of accuracy of a wheel measurement:
A. This particular location is in a curve. To get an accurate reading, based
on how measurements are supposed to be taken, with simply a wheel, if it‟s
that close, it‟s probably not going to be accurate with a wheel.
Q. And that‟s something that TDOT was aware of even in 2005?
A. Yes.
Q. Why is it, then, your inspectors, in 2005, used only wheels to measure
the distance between billboards?
A. Because the application—the applicant certified on the application that
there was 1,000 feet between the signs.
Q. And do you ask how the applicant in the application came up with the
measurements?
A. How he came up with those measurements?
Q. Yes, sir.
A. No.
Mr. Shelby also gave the following testimony concerning the purpose of TDOT‟s
inspection:
A. [Y]ou‟ll have to remember that that measurement taken by the inspector
is not a survey. The 90-degree that‟s called for in the rules and regs is—it‟s
an estimate. You can‟t be sure, and then when it‟s this close, you‟re relying
on the information given in the application.
Q. Which doesn‟t contain any specifications of how you have to measure,
correct?
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A. No. It just says if any information is found to be false, the permit will
be voided.
If anyone called wanting to know if a particular billboard in West Tennessee was
properly permitted, Mr. Shelby would likely be the one to take their call. He testified
that, if the billboard was properly permitted, his response would be, “Our records show it
to be legal.”
In his affidavit, Mr. Shelby testified, in part, as follows:
3. I have known and worked with David Hogue [real estate manager for
CBS] with respect to his outdoor advertising business activities since
approximately 1985 when he worked for Naegele Outdoor Advertising in
Memphis.
4. I have no recollection that David Hogue called or wrote to me in 2005 or
2006 asking to verify the status of permits 79-3075 and 79-3076, or any
other permits. I have searched and found no notes indicating that any such
call was ever made or letter ever written to me by David Hogue. I do not
believe that any such call or inquiry was ever made.
...
6. The Department inspects proposed billboard sign locations for purposes
of issuing permits once only. This inspection includes measuring spacing
from a proposed location and the location and area is photographed. Once
a permit is issued the Department revisits the location to make sure that the
proposed sign is actually built within 180 days as required by the applicable
Rules and Regulations. . . .
CBS submitted the affidavit of David Hogue, its real estate manager and the
person who verified that the billboards purchased by CBS from Mr. Thomas had valid
permits. Mr. Hogue testified, in pertinent part:
10. Prior to purchasing the Jackson Avenue Exit sign, I verified that the
sign was properly permitted. Through my investigation, I learned that the
Tennessee Department of Transportation issued permits for the sign in
October of 2005. Having knowledge of the permitting process, I knew that
for a new sign to be permitted by the Tennessee Department of
Transportation, an independent investigation of the proposed site for the
structure would be performed by an investigator from the Tennessee
Department of Transportation. I knew that the investigation would include
a measurement of the spacing of the sign before the sign would be allowed
to be constructed. I also knew that an inspection of the sign would be
5
performed after it was constructed to ensure that the sign was built
according to the initial application for the permit. I knew that if there had
been any problems with the spacing, the permit would not have been
granted.
...
13. . . . The Tennessee Department of Transportation did not provide any
information that would indicate that the sign was not legal. Any person
who researched the legality of the sign would reasonably come to the
conclusion, based on the steps that TDOT is required to take before
allowing a billboard to be built and maintained, that the Jackson Avenue
Exit sign was legal.
14. I, and through me, CBS Outdoor, Inc., relied on the representations of
the Tennessee Department of Transportation that the billboard was legal. I,
and through me, CBS Outdoor, Inc., relied on the representation of the
Tennessee Department of Transportation that the spacing between the
Jackson Avenue Exit sign was 1000 ft. or greater.
...
25. It is the standard in the billboard industry to rely on representations of
the government bodies that there exist valid legal permits on billboards
such as the Jackson Avenue Exit sign when deciding whether to purchase a
billboard. When CBS Outdoor, Inc. relied on representations of the
Tennessee Department of Transportation through its permitting process that
the sign was legal, CBS Outdoor, Inc. complied with the standards in the
industry. CBS Outdoor, Inc., based on standards in the industry, was not
required to do anything else to determine whether the sign was legal prior
to purchasing it. It would not be reasonable to investigate the legality of
every billboard to be purchased when valid permits exist. . . . Based on my
experience in this business, the employees of the Tennessee Department of
Transportation are aware that billboard companies such as CBS Outdoor,
Inc. rely on the existence of permits in deciding whether to purchase
billboards.
Agency decision
The ALJ granted TDOT‟s motion for summary judgment and denied CBS‟s
motion for summary judgment. The ALJ concluded that the Department had shown by a
preponderance of the evidence that the Jackson Avenue billboard was in violation of the
applicable spacing laws, and that the Department properly voided CBS‟s permits.
Furthermore, the ALJ determined that CBS failed to show that it was entitled to equitable
relief.
6
The ALJ‟s findings of fact include the following:
3. Thomas‟ signature appears on the application just below the following
language:
I hereby certify that I have personally examined and understand the “Rules
and Regulations for the Control for Outdoor Advertising” and this
application is made in compliance with same, and further certify that the
statements made on the application are accurate and true to the best of my
knowledge and understand that if investigation reveals that any of the
information on the application is false the permit will be voided, tag
confiscated, and the Outdoor Advertising Devices will be declared illegal.
Emphasis added.
...
6. CBS did not independently verify the spacing of the Jackson Avenue
billboard. CBS instead relied upon the Department‟s issuance of a permit
for the sign in determining it to be legally constructed.
The ALJ‟s analysis includes the following statements: “It is not disputed the Jackson
Avenue billboard violates spacing requirements. Nor is it disputed Thomas negligently
or intentionally misrepresented the spacing between the Jackson Avenue billboard and
the sign immediately to its west.”
CBS filed a petition for reconsideration, which was denied by the ALJ. CBS then
appealed to the Commissioner, who entered a final order on January 3, 2013 adopting the
ALJ‟s findings and affirming his decision.
Petition for review
CBS filed a petition for judicial review in chancery court on February 25, 2013
alleging that it was entitled to relief from the Commissioner‟s final order. Both sides
filed briefs, and oral argument was held on May 28, 2014. On July 15, 2014, court was
reconvened, and the chancellor announced her ruling containing her findings of fact and
conclusions of law from the bench. On August 13, 2014, the court entered an order
affirming the Commissioner‟s final order.
Issues on appeal
On appeal, CBS asserts that the trial court erred: (1) in finding that the
Commissioner‟s decision was supported by substantial and material evidence in light of
the entire record; (2) in finding that the doctrine of equitable estoppel did not apply to
prevent TDOT from revoking the billboard permits; and (3) in finding that the doctrine of
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unclean hands did not apply to prevent TDOT from revoking the billboard permits.
STANDARD OF REVIEW
The applicable standard of review is found at 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 of
the evidence on questions of fact.
Under the Uniform Administrative Procedure Act (“UAPA”), this court, like the
trial court, must apply the substantial and material evidence standard to the agency‟s
factual findings. City of Memphis v. Civil Serv. Comm’n, 239 S.W.3d 202, 207 (Tenn. Ct.
App. 2007); Bobbitt v. Shell, 115 S.W.3d 506, 509-10 (Tenn. Ct. App. 2003). Substantial
and material evidence is “„such relevant evidence as a reasonable mind might accept to
support a rational conclusion and such as to furnish a reasonably sound basis for the
action under consideration.‟” Macon v. Shelby Cnty. Gov’t Civil Serv. Merit Bd., 309
S.W.3d 504, 508 (Tenn. Ct. App. 2009) (quoting Pruitt v. City of Memphis, No. W2004-
01771-COA-R3-CV, 2005 WL 2043542, at *7 (Tenn. Ct. App. Aug. 24, 2005)). It is
“„something less than a preponderance of the evidence, but more than a scintilla or
glimmer.‟” Id. (quoting Wayne Cnty. v. Tenn. Solid Waste Disposal Control Bd., 756
S.W.2d 274, 280 (Tenn. Ct. App. 1988)). We may overturn the administrative agency‟s
factual findings “only if a reasonable person would necessarily reach a different
conclusion based on the evidence.” Davis v. Shelby Cnty. Sheriff’s Dep’t, 278 S.W.3d
256, 265 (Tenn. 2009) (citing Martin v. Sizemore, 78 S.W.3d 249, 276 (Tenn. Ct. App.
2001)). This narrow standard of review for an administrative body‟s factual
determinations “suggests that, unlike other civil appeals, the courts should be less
confident that their judgment is preferable to that of the agency.” Wayne Cnty., 756
8
S.W.2d at 279.
With respect to questions of law, our review is de novo with no presumption of
correctness. Cnty. of Shelby v. Tompkins, 241 S.W.3d 500, 505 (Tenn. Ct. App. 2007).
Issues of statutory construction present questions of law and are therefore reviewed de
novo with no presumption of correctness. Carter v. Bell, 279 S.W.3d 560, 564 (Tenn.
2009).
ANALYSIS
Substantial and material evidence
CBS argues that the trial court erred in finding that the Commissioner‟s decision
was supported by substantial and material evidence.
Congress enacted the Federal Highway Beautification Act of 1965 to control the
erection and maintenance of billboards along interstate and primary highways, to “protect
the public investment in such highways, to promote the safety and recreational value of
public travel, and to preserve natural beauty.” 23 U.S.C.A. § 131(a). This act requires
states to provide for “effective control of the erection and maintenance” of billboards. 23
U.S.C.A. § 131(b). In compliance with the federal act, Tennessee enacted the Billboard
Regulation and Control Act of 1972, codified at Tenn. Code Ann. §§ 54-21-101 through
-123, which confers full authority upon the TDOT Commissioner to enforce the
provisions of both the federal and state acts. See Tenn. Code Ann. §§ 54-21-112 and -
116.
The Department has responsibility for enforcement of the provisions of the
Billboard Regulation and Control Act. See Tenn. Code Ann. §§ 54-21-112, 54-21-116.
Department rules provide that, with respect to outdoor advertising on interstate highway
systems and controlled access primary highways, “[n]o two structures shall be spaced
less than 1000 feet apart on the same side of the highway.” TENN. COMP. R. & REGS.
1680-02-03-.03(1)(a)(4)(i)(I). In the present case, there is no dispute that the Jackson
Avenue billboard was less than 1000 feet from the Clear Channel billboard. Thus, there
was a violation of the TDOT regulations.
The main thrust of CBS‟s argument is that substantial and material evidence does
not support the ALJ‟s conclusion, adopted by the Commissioner, that the permits could
be revoked based upon the negligent or intentional misrepresentation of Mr. Thomas, the
builder of the billboard. Section 1680-02-03-.03(1)(a)(9) of the Tennessee
Comprehensive Rules and Regulations provides:
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(i) The Commissioner has the authority to void an outdoor advertising
permit under the following conditions:
(I) Any negligent or intentional misrepresentation of material fact on
any application submitted pursuant to these Rules;
(II) Any violation of one or more of the requirements for a permit
under Federal or State law or these Rules.
Thus, the regulations contemplate that the Commissioner can void an advertising permit
for any violation of the requirements for a permit under state or federal law or the agency
rules and regulations.
In light of the fact that there is substantial and material evidence to support the
trial court‟s decision based upon subsection (II) of Tenn. Comp. R. & Reg. 1680-02-03-
.03(1)(a)(9)(i), we need not determine whether there was also substantial and material
evidence to support a decision pursuant to subsection (I), concerning a negligent or
intentional misrepresentation on the application. We note, however, that Mr. Thomas‟s
ability to conduct a survey prior to purchasing the property would suggest that he was
negligent in representing on his application that the billboard site met the spacing
requirements.1
Estoppel
CBS also asserts that the trial court erred in failing to find that equitable estoppel
prevented TDOT from revoking CBS‟s billboard permits. CBS argues that, when it
purchased the Jackson Avenue billboards, it relied upon TDOT‟s determination that
spacing requirements were met as a result of the Department‟s issuance of permits to Mr.
Thomas.
In Tennessee, the rule is that “the doctrine of estoppel generally does not apply to
the acts of public officials or public agencies.” Bledsoe Cnty. v. McReynolds, 703
S.W.2d 123, 124 (Tenn. 1985). Only under “very exceptional circumstances” does
equitable estoppel apply against the state and its subdivisions. Id. The elements a party
must show to invoke the doctrine of equitable estoppel are the following:
(1) his or her lack of knowledge and of the means of knowledge of the truth
as to the facts in question;
1
Moreover, as noted above, the ALJ found that there was no dispute that Mr. Thomas
“negligently or intentionally misrepresented the spacing between the Jackson Avenue billboard and the
sign immediately to its west.”
10
(2) his or her reliance upon the conduct of the party who is estopped; and
(3) action by the invoking party based thereon of such a character as to
change that party‟s position prejudicially.
Sexton v. Sevier Cnty., 948 S.W.2d 747, 751 (Tenn. Ct. App. 1997). In those cases where
estoppel has been applied against a public body, “the public body took affirmative action
that clearly induced a private party to act to his or her detriment, as distinguished from
silence, non-action or acquiescence.” Bledsoe, 703 S.W.2d at 125; see also Carpenter v.
State, 838 S.W.2d 525, 528 (Tenn. 1992).
In order “[f]or estoppel to arise, the act must have been done with the knowledge
that it would be relied upon and the other party has acted in reliance without either
knowledge of the true state of affairs or the means of learning the true state of affairs.”
City of Lebanon v. Baird, 756 S.W.2d 236, 244 (Tenn. 1988). Thus, “„[w]here both
parties have the same means of ascertaining the truth, there can be no estoppel.‟” Id.
(quoting Early Co. v. Williams, 186 S.W. 102, 105 (Tenn. 1916)).
On the issue of equitable estoppel, the chancellor reached the following
conclusions in her oral ruling:
And here the Court applies the principles of law as the appellate
Court has explained and finds that CBS had the opportunity, and actually a
strong motivation, to discover the billboard spacing illegality before its
purchase of the billboard, and for some reason CBS did not independently
verify the spacing of the billboard that it was purchasing from Mr. Thomas.
As the Supreme Court stated [in City of Lebanon v. Baird, 756 S.W.2d at
236], where parties have equal opportunity to discern a particular problem
or a particular fact, then estoppel would not apply, and this Court would
think that that would be especially true for applying the estoppel doctrine to
government. Now, whether it‟s government or not, CBS had an equal
opportunity to discover the billboard spacing illegality as equal as available
as [sic]—as did Mr. Reid for TDOT.
Did CBS change its position and reliance on TDOT‟s issuance of
permits and then suffer unjust financial hardship? This issue or this
subissue is another reason why the estoppel doctrine cannot apply to the
facts in this case and the grant of summary judgment to TDOT was proper
and lawful. CBS did not suffer unjust financial hardship. This is not to say
that it doesn‟t matter that CBS buys a billboard and then finds out later that
the spacing is not as it should be. . . . However, CBS did not suffer unjust
financial enrichment [sic] because, fortunately, even though this mistake
was made by TDOT, even though CBS spent $145,000 in its purchase of
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the billboard, CBS has generated $20,000 in net income per year since
2006. And I know and understand that CBS would like to continue to do
that, and I have sympathy with that. But CBS has been able, if not
completely bring itself even and—and repay itself its purchase price—and
I‟m not even addressing all the good facts, options, and opportunities that
are available to CBS in terms of depreciations and that sort of thing.
The real—the real price is probably not $145,000, but be that as it
may, it was an expensive billboard, and billboards are expensive. But CBS
was able to generate enough funds that this Court cannot find . . . that there
has been the kind of unjust financial damage to CBS as there was in the
Needham[2] case in which Needham had actually either rebuilt—either built
a building for its beer marketing—for its beer market or it has remodeled an
older building. . . . [T]here was no proof in the Needham case that—that
Needham had been able to generate enough money to pay itself back and
make its loss—and mitigate its losses.
As stated above, a central requirement of the doctrine of equitable estoppel is the
plaintiff‟s lack of knowledge and lack of a “„convenient and available means of acquiring
such knowledge.‟” Far Tower Sites, LLC v. Knox Cnty., 126 S.W.3d 52, 67 (Tenn. Ct.
App. 2003) (quoting Haymon v. City of Chattanooga, 513 S.W.2d 185, 189 (Tenn. Ct.
App. 1973)). CBS had the means to conduct a survey to confirm the billboard‟s
compliance with the spacing requirements; it chose instead to rely upon TDOT‟s
permitting process. Moreover, CBS signed a statement on the permit application stating
that it was familiar with the rules and regulations and was aware that any noncompliance
would result in revocation of the permit.
The primary Tennessee case3 relied upon by CBS is Needham v. Beer Board of
2
Needham v. Beer Bd. of Blount Cnty., 647 S.W.2d 226 (Tenn. 1983), a case relied upon by CBS,
will be discussed below.
3
CBS also relies upon the Illinois appellate court case of Drury Displays, Inc. v. Brown, 715
N.E.2d 1230 (Ill. Ct. App. 1999), a case in which a property owner sought a writ of mandamus to compel
the reissuance of billboard permits and an injunction prohibiting the removal of the billboard. Drury, 715
N.E.2d at 1233. The Court of Appeals found no abuse of discretion in the trial court‟s issuance of a writ
of mandamus on the theory that the officials were equitably estopped from revoking the property owner‟s
permits. Id. at 1234-35. We find this case distinguishable from the present case by the “substantial loss”
the court found that the billboard permittee would suffer if estoppel were not applied. Id. at 1235.
Furthermore, we do not find the reasoning of this opinion persuasive.
The Department cites Eller Media Co. v. City of Los Angeles, No. B159378, 2003 WL 21744316
(Cal. Ct. App. 2 Dist. July 29, 2003), a case that reached the opposite conclusion from Drury. In Eller,
Eller constructed a billboard after receiving a permit, and the Department later revoked the permit on the
ground that it was issued in error because Eller‟s billboard violated the spacing requirements by being too
close to a previously permitted billboard. Eller, 2003 WL 21744316, at *1. The previous permit, for
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Blount County, 647 S.W.2d 226 (Tenn. 1983). The petitioners in Needham, the Henrys,
filed a petition for writ of certiorari seeking a declaration that the county‟s rule
prohibiting the sale of beer within 2000 feet of schools, churches, and other places of
public gathering was invalid due to the beer board‟s actions in issuing permits to previous
applicants whose premises were less than 2000 feet from a church or school. Needham,
647 S.W.2d at 227. When the petitioners received their permits, the beer board measured
the distance between a site and a church or school by driving in a car between the two
places and relying on the car‟s odometer to determine the distance. Id. at 228. By the
time the petitioners‟ permits were revoked, the board had changed its rules to require a
straight line method of measuring distances. Id. at 229-30. Using this new method, the
petitioners‟ properties were less than 2000 feet from the closest church or school. Id. at
230.
The Needham court determined that the petitioners, who had expended significant
amounts of money in reliance on the permits, “relied on the license to their detriment and
. . . that the revocation of their licenses would create a significant hardship and would be
unjust.” Id. at 231. As the court noted in Far Tower, the Supreme Court in Needham did
not base its decision on estoppel. Far Tower, 126 S.W.3d at 68. Rather, the court held
that the petitioners “established a sufficient hardship and detrimental reliance to warrant
an exception to the Blount County 2,000 foot rule.” Needham, 647 S.W.2d at 231.
Needham is distinguishable from the case at bar. The method used to measure the
distance from the permitted property to the church or school in Needham changed
between the time of the original permit and the revocation. Id. at 230. When they
received their original permits, the petitioners did all they could to confirm that their
property complied with the spacing requirements using the measuring methodology in
use at that time. Id. at 229. Two of the petitioners in Needham established that they
would suffer significant hardship if their permits were revoked. Id. at 231. They spent
large amounts of money constructing or remodeling buildings and would not have done
so without the issuance of the beer permit. Id. In the present case, the chancellor found
that CBS had recouped the money it had put into buying the billboard. Moreover, there
was no change in the rules of measurement as in Needham.
which the billboard had not yet been constructed at the time of the issuance of Eller‟s permit, was not
discovered by the Department until after Eller constructed its billboard. Id. The California court stated:
“Although the injustice to Eller is substantial, the law does not support estopping [the] Department to
enforce the billboard ordinance.” Id. at *9. The Court found Drury unpersuasive. Id. Weighing the
effect on public policy of applying estoppel against the injustice to Eller, the court concluded that the
public policy must prevail. Id. The court stated that this was “not the „extraordinary case‟ in which to
apply estoppel against the government.” Id. (quoting Smith v. Cnty. of Santa Barbara, 7 Cal. App. 4th 770,
775 (1992)).
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CBS spends a large portion of its brief arguing that TDOT should be estopped
from enforcing its regulations because of the conduct of one of its employees, Mr. Reid.
CBS argues:
The trial court, however, disregarded and omitted from its analysis and
ruling Mr. Reid‟s substantial and material testimony that inspectors will, at
times, when they perform a post-construction inspection, misstate the
measurement numbers on purpose. Mr. Reid testified that, as an inspector,
he had the discretion to deem a sign legal, even when the sign did not meet
spacing requirements. Mr. Reid felt that it would be too expensive and
cause a hardship on a billboard company if the company would have to
move a sign if he reported the sign to be less than 1000 feet away from
another one post-construction. Therefore, if he measured a sign to be less
than 1000 feet, he would write down that it was 1000 feet or greater to
avoid legal problems for the company that constructed the sign.
Mr. Reid‟s specific testimony was that he would consider a sign to be 1000 feet if it was
within a “reasonable tolerance of the correct measurements.”
There is no evidence that Mr. Reid or any inspector exercised this type of
discretion in the present case. In fact, the evidence shows that the post-construction
inspection typically consisted of taking pictures to establish that the billboard was built in
the proper place. Unless there was a question as to the location of the billboard,
measurements would not be taken.
As stated by the court in Bledsoe, estoppel should be applied against public
agencies only in very exceptional circumstances. Bledsoe, 703 S.W.2d at 124. In this
case, CBS had equal access to the means of finding out whether the billboard met the
spacing requirements before it purchased the billboard. We find no error in the trial
court‟s decision not to apply the doctrine of estoppel.
Unclean hands
CBS asserts as its final argument that the trial court erred in failing to apply the
doctrine of unclean hands to prevent TDOT from revoking CBS‟s permits. Specifically,
CBS argues that TDOT, through its employee Mr. Reid, has unclean hands: “Whether
Mr. Reid simply mismeasured the distance between the Jackson Avenue Billboard and
the billboards to the east and west of it, or intentionally indicated on the inspection report
that the spacing requirement was met when his investigation revealed otherwise . . . , his
actions were inequitable and illegal.” According to CBS, it would therefore be “unjust
for TDOT to be allowed to undo its wrongdoings . . . at the expense of innocent parties . .
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. who have relied to their detriment on official TDOT actions and decisions.”
Addressing this argument, the trial court stated:
There was no proof in the record, and no fact in dispute presented by any
party, to show that Mr. Reid had treated this particular transaction in a way
that would be unfair to CBS or in a way that would be intentionally
inaccurate or in a way that would cause Mr. Reid to do less work. And so
in this particular transaction there is no indication, there‟s no dispute in
fact, about Mr. Reid‟s conduct. There‟s no implication, there‟s no fact
presented, to show that Mr. Reid somehow was involved in misconduct in
his measuring or reporting the situation for Mr. Thomas‟ plans to erect the
billboard where he did ultimately erect it. And so this Court finds that the
unclean hands doctrine, equitable doctrine, applied as the appellate courts
have directed the trial courts to apply, is not available to CBS as a way to
attack the voiding of its billboard permit.
We find no error in the trial court‟s analysis and conclusion. The doctrine of
unclean hands “provides the court with a basis to decline to grant relief to parties who
have willfully engaged in unconscionable, inequitable, immoral, or illegal acts with
regard to the subject matter of their claims.” In re Estate of Boote, 265 S.W.3d 402, 417
(Tenn. Ct. App. 2007) (footnote omitted). There is no evidence of conduct by Mr. Reid
rising to the level required to invoke the doctrine of unclean hands. Moreover, as
discussed above, CBS could have verified the distance between the billboards before
purchasing the Jackson Avenue billboard.
CONCLUSION
We affirm the decision of the trial court in all respects. Costs of appeal are
assessed against the appellant, and execution may issue if necessary.
_________________________
ANDY D. BENNETT, JUDGE
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