Coconino County v. Antco, Inc., 1 CA-CV 05-0674.

• Decision Date: 19 December 2006
• Docket Number: No. 1 CA-CV 05-0674.,1 CA-CV 05-0674.
• Citation: 148 P.3d 1155
• Parties: COCONINO COUNTY, Arizona, a political subdivision of the State of Arizona, Plaintiff-Counterdefendant-Appellant-Cross-Appellee, v. ANTCO, INC., an Arizona corporation dba Eden Organics, Defendant-Counterclaimant-Appellee-Cross-Appellant, Richard Twidwell and Chris Twidwell, Defendants-Appellees.
• Court: Arizona Court of Appeals

148 P.3d 1155

COCONINO COUNTY, Arizona, a political subdivision of the State of Arizona, Plaintiff-Counterdefendant-Appellant-Cross-Appellee, v. ANTCO, INC., an Arizona corporation dba Eden Organics, Defendant-Counterclaimant-Appellee-Cross-Appellant, Richard Twidwell and Chris Twidwell, Defendants-Appellees.

No. 1 CA-CV 05-0674.

Court of Appeals of Arizona, Division 1, Department A.

December 19, 2006.

COPYRIGHT MATERIAL OMITTED

Terry Hance, Coconino County Attorney, by Timothy G. McNeel, Deputy County Attorney, Flagstaff, Attorneys for Appellant Coconino County.

Thaddeus G. Baker, Jr., Flagstaff, Attorney for Appellees.

OPINION

WEISBERG, Judge.

¶ 1 Coconino County appeals from the trial court's dismissal of its complaint against Antco, Inc. and its owners, Richard and Chris Twidwell (collectively, "Antco"). The dismissal was premised on the doctrine of primary jurisdiction. Antco cross-appeals, requesting that we vacate the trial court's dismissal of its counterclaim for declaratory relief. For the reasons set forth below, we reverse both dismissals.

FACTS AND PROCEDURAL HISTORY

¶ 2 The Twidwells are the sole shareholders, directors, and officers of Antco Inc., an Arizona corporation. They also own twenty acres of land in Coconino County, Arizona, five acres of which they lease to Eden Organics, a dba of Antco, for the composting of domestic septage and grease. Between January 1998 and September 2001, Eden Organics ran a commercial fertilizer operation for the production and sale of composted materials to the public. Its operation involved the open air composting of domestic septage and restaurant grease, and was conducted pursuant to a conditional use permit issued by the Coconino County Planning and Zoning Commission (the "Commission"). The Arizona Department of Environmental Quality ("ADEQ") inspected the site several times, partly in response to complaints filed by Coconino County, but did not find any violations. In September 2001, however, the Commission determined that Antco was not in compliance with the conditional use permit and ordered it to apply for a modified use permit.¹

¶ 3 With its composting business under scrutiny by Coconino County, Antco attempted to qualify for newly-amended statutory protections available to agricultural composting operations. See A.R.S. §§ 11-830(A)(3) (2001) (restricting, under certain conditions, local regulation of "use or occupation of land or improvements for agricultural composting"), 3-112(B) (2002) (presumption that lawful agricultural operations do not adversely affect public health and safety). Accordingly, Antco notified the Coconino County Board of Supervisors and the Summit Fire Department that, as of September 1, 2001, it had changed its operations from commercial composting to agricultural composting.

¶ 4 On April 5, 2002, Coconino County filed a complaint and motion for temporary restraining order against Antco, alleging that Antco's "open dumping and use of septage and restaurant grease" violated various ADEQ regulations and therefore constituted a "per se public health nuisance" and a "public health, safety and welfare hazard." On August 27, 2002, Antco filed an answer and a counterclaim for declaratory judgment, seeking a judicial declaration that, inter alia, its activities qualified as "agricultural composting," and that A.R.S. § 11-830(A)(3) precluded Coconino County from "regulating the use or occupation of land" for that purpose.

¶ 5 The parties subsequently filed cross-motions for summary judgment. Antco's motion for partial summary judgment requested among other things that, pursuant to the doctrine of primary jurisdiction, the trial court "abstain from taking any action . . . and dismiss the complaint until [Coconino] County has gone through [ADEQ's] administrative process." Relying on the doctrine of primary jurisdiction, the trial court granted Antco's motion for partial summary judgment by dismissing Coconino County's complaint without prejudice in deference to ADEQ "for an initial decision" on the matter. The trial court, however, did not establish a timeframe for ADEQ action or identify the precise issues that it expected ADEQ to resolve. In light of its order dismissing the complaint, the trial court declined to rule on any other issue, including Antco's counterclaim and dismissed the entire case without prejudice. Coconino County filed a timely appeal, and Antco filed a timely cross-appeal. See ARCAP 9(a). We have jurisdiction pursuant to A.R.S. § 12-2101(B) (2003).

STANDARD OF REVIEW

¶ 6 We will not overturn a trial court's order dismissing a complaint absent an abuse of discretion. Keenen v. Biles, 199 Ariz. 266, 267, ¶ 4, 17 P.3d 111, 112 (App. 2001); see also Campbell v. Mt. States Tel. & Tel., Co., 120 Ariz. 426, 427-28, 586 P.2d 987, 988-89 (App.1978) (reviewing dismissal without prejudice based on the doctrine of primary jurisdiction). An abuse of discretion exists when the court commits an error of law in reaching a discretionary conclusion that is "manifestly unreasonable, or exercised on untenable grounds, or for untenable reasons." Torres for and on Behalf of Torres v. N. Am. Van Lines, Inc., 135 Ariz. 35, 40, 658 P.2d 835, 840 (App.1983).

DISCUSSION

¶ 7 Our analysis will include the three legal doctrines that, given the cases cited by the parties, might have influenced the trial court's decision: exhaustion of remedies, primary jurisdiction, and preemption. Because these doctrines are frequently confused and sometimes overlap in their application, we discuss each of them separately.

Exhaustion of Remedies²

¶ 8 When a statute grants an administrative agency original jurisdiction over a dispute, the exhaustion of remedies doctrine compels the parties to avail themselves of all available administrative processes before seeking the aid of a court. See Campbell, 120 Ariz. at 429, 586 P.2d at 990; Moulton v. Napolitano, 205 Ariz. 506, 511, ¶ 10, 73 P.3d 637, 642 (App.2003) (citation omitted); U.S. v. W. Pac. R.R. Co., 352 U.S. 59, 63, 77 S.Ct. 161, 1 L.Ed.2d 126 (1956) (exhaustion of remedies doctrine applies "where a claim is cognizable in the first instance by an administrative agency alone"). The exhaustion of remedies doctrine determines the point at which a court may properly review an administrative action. Campbell, 120 Ariz. at 429, 586 P.2d at 990; Moulton, 205 Ariz. at 511, ¶ 9, 73 P.3d at 642. The doctrine does not apply, however, when the administrative remedy prescribed by statute is merely permissive, when the jurisdiction of the agency is being contested, when the agency's expertise is unnecessary, or when exhausting administrative remedies would cause irreparable harm or be futile. Moulton, 205 Ariz. at 512-13, ¶ 18, 73 P.3d at 643-44.

¶ 9 The purpose of the exhaustion of remedies doctrine is "to allow an administrative agency to perform functions within its special competence—to make a factual record, to apply its expertise, and to correct its own errors so as to moot judicial controversies." Id. at 511, ¶ 9, 73 P.3d at 642 (citation omitted). In this way, the exhaustion of remedies doctrine promotes judicial economy as well as administrative agency autonomy, preventing "premature judicial intervention in inchoate administrative proceedings." Id.

¶ 10 In Southwest Soil Remediation, Inc. v. City of Tucson, for example, we concluded that the exhaustion of remedies doctrine precluded a soil recycling company from filing suit to overturn the decision of a city zoning administrator because it had not first appealed to the city's board of adjustment as required by statute. 201 Ariz. 438, 442, ¶ 16, 36 P.3d 1208, 1212 (App.2001); see A.R.S. § 9-462.06 (1996). On the other hand, in Bentivegna v. Powers Steel & Wire Products, Inc., we held that the exhaustion of remedies doctrine did not preclude a lawsuit against a construction company for alleged defects. 206 Ariz. 581, 585, ¶ 13-14, 81 P.3d 1040, 1044 (App.2003). We held that the trial court could address the merits of the action even though the owners did not appeal a corrective order issued by the Arizona State Registrar of Contractors because that administrative procedure was merely permissive and therefore did not trigger the exhaustion of remedies doctrine. Id.

¶ 11 In the instant case, the exhaustion of remedies doctrine is clearly inapplicable. No administrative action was pending with respect to Antco at the time the trial court dismissed Coconino County's complaint. Indeed, the record reflects that Coconino County filed its complaint at least in part because ADEQ had failed to act as Coconino County had requested. Although the trial court's dismissal of its complaint did not prevent Coconino County from filing further complaints with ADEQ, see A.R.S. § 41-1010 (2004), such complaints could not compel action by ADEQ and would likely have been futile in light of the results of ADEQ's previous investigations, which found no existing violations of its environmental regulations. See A.R.S. §§ 49-141(A) (2005) (ADEQ director has discretion to act where there is "reasonable cause to believe from information furnished to the director or from the director's own investigation that a person is maintaining an environmental nuisance"),-287.01(A) (2005) (director may conduct preliminary investigation),-781(A) (2005) (if director determines that a person is creating an imminent and substantial endangerment to the public health or the environment, he may issue an order requiring immediate compliance).

¶ 12 Moreover, in the 2001 delegation agreement between ADEQ and Coconino County, ADEQ specifically acknowledged Coconino County's statutory right to initiate related enforcement actions independently.³ Consequently, the exhaustion of remedies doctrine could not have prevented Coconino County from pursuing its complaint against Antco.

Primary Jurisdiction

¶ 13 Antco did not directly argue below that Coconino County was without statutory power to act or...