James Davis d/b/a Davis Auto Repair v. Tennessee Board of Water Quality, Oil, & Gas, W2016-00870-COA-R3-CV

TDEC inspected Davis Auto Repair in March 2010 after a complaint and determined the facility required coverage under the Tennessee Multi-Sector Storm Water Permit; Davis applied and received permit coverage.
A August 2012 compliance inspection found multiple permit violations (missing quarterly inspection reports, missing sampling, missing stormwater pollution prevention plan, oil leaks and stained soil); TDEC set deadlines and extended them, but Davis failed to comply.
After continued noncompliance, the TDEC Commissioner issued a Director’s Order on February 15, 2013, assessing a $5,000 civil penalty; Davis appealed and an ALJ upheld the penalty following a hearing.
Davis sought judicial review in Shelby County Chancery Court and also asserted (but waived on appeal) a declaratory judgment claim; the Chancery Court affirmed the ALJ and penalty and dismissed the declaratory claim.
On appeal, Davis argued (1) he could attack the underlying permit’s necessity (claiming misclassification/mistake of fact) and (2) the $5,000 penalty was arbitrary and capricious. The Court of Appeals affirmed.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Davis may collaterally attack the validity/necessity of the previously issued stormwater permit in this proceeding	Davis: permit was unnecessary/misclassified (mistake of fact), so the penalty based on it is void	TDEC: permit issuance was within agency jurisdiction; challenge is a non-jurisdictional error and cannot be collateral attacked here	Court: barred collateral attack; permit issuance was within TDEC's jurisdiction and any error was non-jurisdictional (attack not allowed)
Whether the $5,000 civil penalty was arbitrary and capricious	Davis: penalty is arbitrary and capricious given circumstances	TDEC: penalty was calculated using agency’s uniform penalty matrix considering deviation and potential harm; violations were widespread over years	Court: not arbitrary or capricious; supported by substantial and material evidence and reasonable application of the penalty matrix

StarLink Logistics Inc. v. ACC, LLC, 494 S.W.3d 659 (Tenn. 2016) (describing the narrow, deferential standard for judicial review of agency decisions)
Jackson Mobilphone Co., Inc. v. Tenn. Public Serv. Comm’n, 876 S.W.2d 106 (Tenn. Ct. App. 1993) (defining arbitrary and capricious and its relation to substantial evidence)
Gentry v. Gentry, 924 S.W.2d 678 (Tenn. 1996) (distinguishing void from voidable judgments for collateral-attack purposes)
State ex rel. Ragsdale v. Sandefur, 389 S.W.2d 266 (Tenn. 1965) (administrative determinations in quasi-judicial capacity not subject to collateral attack when within jurisdiction)