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Alabama Department of Transportation v. Lee Outdoor Advertising, LLC

Alabama Court of Civil Appeals

October 26, 2018

Alabama Department of Transportation
v.
Lee Outdoor Advertising, LLC Alabama Department of Transportation
v.
Lee Outdoor Advertising, LLC New South Outdoor, LLC
v.
Lee Outdoor Advertising, LLC

          Appeals from Montgomery Circuit Court (CV-17-902013)

          THOMPSON, Presiding Judge.

         The Alabama Department of Transportation ("ALDOT") and New South Outdoor, LLC ("New South"), appeal from a judgment of the Montgomery Circuit Court ("the circuit court") reversing ALDOT's decision to revoke an outdoor-advertising permit ("the permit") it had issued to Lee Outdoor Advertising, LLC ("Lee"). The circuit court further ordered ALDOT to reinstate the permit it had issued to Lee.

         The material facts in this case are undisputed. Shon Lee ("Shon") owns Lee. On Lee's behalf, he applied for a permit to erect an electronic billboard off Interstate 85 in Montgomery. At the time the application was completed, Lee had entered into an agreement to purchase the property where the billboard was to be located ("the property"). On the application, Shon indicated that Lee owned the property. However, it is undisputed that Shon disclosed to J.C. Atkins, ALDOT's permit manager, that Lee had a contract to purchase the property and that the closing had not yet taken place. In the purchase contract, Lee was given 90 days in which to obtain a billboard permit. ALDOT approved the application and issued Lee a billboard permit on March 15, 2017.

         Two days before Lee was to close on the property, Lee learned that the owner of land adjacent to the property, BFHK, LLC, had a right of first refusal to purchase the property. BFHK exercised that right and purchased the property on June 9, 2017. Lee did not inform ALDOT that it had not been able to close on the property. On June 28, 2017, ALDOT received a letter from BFHK stating that it had purchased the property and was negotiating with New South, a competitor of Lee's, to allow New South to erect a billboard on the property.

         On July 5, 2017, ALDOT notified Lee by letter that it was revoking the permit. Stacey Glass, the state maintenance engineer for ALDOT, testified that the "sole basis" for the revocation was that Lee had indicated it owned the property. It is undisputed that ALDOT did not notify Lee before revoking the permit.

         Lee appealed the revocation of the permit to ALDOT and requested a hearing before an administrative-law judge ("ALJ"). Among Lee's arguments was its assertion that ALDOT had not complied with the notice requirements of § 23-1-275(e), Ala. Code 1975, and § 41-22-19(c), Ala. Code 1975. Section 23-1-275(e), a part of the Alabama Highway Beautification Act--Outdoor Advertising ("the Highway Beautification Act"), § 23-1-270 et seq., Ala. Code 1975, provides, in pertinent part:

"Any permit may be revoked after a public hearing upon 30 days written notice if [ALDOT] finds that any statements made in the application thereof were false or misleading or that the advertising sign, display, or device covered thereby is not in good general condition and in reasonable state of repair or is otherwise in violation of [The Highway Beautification Act], provided such false or misleading statement has not been corrected and that the sign, display, or device has not been brought into compliance with [The Highway Beautification Act] prior to said public hearing."

As a state agency, ALDOT is subject to the Alabama Administrative Procedure Act (the "AAPA"), § 41-22-1 et seq., Ala. Code 1975. See, e.g., Rule 450-10-1-.11(4), Ala. Admin. Code (ALDOT). See also, e.g., Alabama Dep't of Transp. v. Blue Ridge Sand & Gravel, Inc., 718 So.2d 27, 28 (Ala. 1998). Section 41-22-19(c), a provision of the AAPA, provides:

"No revocation, suspension, or withdrawal of any license is lawful unless, prior to the institution of agency proceedings, the agency gave notice by certified mail to the licensee of facts or conduct which warrant the intended action, and the licensee was given an opportunity to show compliance with all lawful requirements for the retention of the license."

         On October 27, 2017, after a hearing during which the parties submitted oral and documentary evidence, the ALJ entered a recommended order in which he found, among other things, that ALDOT had "failed to properly notice Lee of a public hearing or give [it] an opportunity to respond to the allegations prior to revocation." After calling the applicable notice provisions "well-established Alabama law," the ALJ wrote: "However, the hearing conducted in this matter provided Lee an opportunity to present [its] evidence and argue [its] position. Lee's due process rights were cured during the administrative appeal."

         The ALJ also determined that, because Shon had informed Atkins that Lee had not yet closed on the property, the application was not misleading. However, the ALJ concluded, "Lee's representation on the application that [it] was the property owner was rendered false after the failed land purchase." Therefore, the ALJ recommended that ALDOT uphold the revocation of the permit.

         Lee filed a timely notice of appeal and sought judicial review in the circuit court of the decision to revoke the permit. New South was permitted to intervene in the matter. A special master was appointed to review the materials from the hearing held before the ALJ and the parties' briefs, and oral argument was held to clarify the parties' positions. The circuit court also reviewed the materials, and on April 11, 2018, it entered a judgment reversing ALDOT's revocation of Lee's permit.

         In the judgment, the circuit court discussed, among other things, the deprivation of Lee's due-process rights by the failure of ALDOT to provide it with notice and a hearing before ALDOT revoked the permit. The circuit court pointed out that ALDOT and New South conceded that Lee's right to due process was violated initially but that they asserted the violation was "cured" by the evidentiary hearing before the ALJ. The circuit court concluded that the authority cited by ALDOT, discussed below, was not persuasive and, further, that it was not convinced that the "post-deprivation hearing" cured the violation. The circuit court wrote: "Normally, the remedy would be reversal for notice and a hearing to be provided before the revocation." However, the circuit court explained, if it overturned the revocation of the permit on the merits, the due-process violation would become moot.

         The circuit court wrote that the issue before it was whether ALDOT had properly revoked the permit, not whether the permit had been properly issued in the first place. ALDOT conceded to the circuit court that it had never before revoked a permit on the basis that the permit holder did not have a legal right to the property where the billboard was to be erected, and the circuit court found that that reason was not a basis for revocation set forth in § 23-1-275(e). The circuit court found that the basis for the revocation was that the application was false or misleading, and, the circuit court found, "Lee's application was neither." Therefore, the circuit court concluded that, in revoking the permit on the ground that Lee did not own the property, ALDOT had acted beyond its statutory authority.

         Based on its findings, the circuit court determined that ALDOT's decision to revoke the permit was made upon unlawful procedure; was made in violation of both constitutional and statutory provisions; and was made in excess of the statutory authority of the agency. Accordingly, the circuit court reversed ALDOT's decision and ordered ...


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