Ghost Player, L.L.C. v. State, No. 14–0339.

CourtUnited States State Supreme Court of Iowa
Writing for the CourtWIGGINS, Justice.
Citation860 N.W.2d 323
PartiesGHOST PLAYER, L.L.C. and CH Investors, L.L.C., Appellants, v. STATE of Iowa, Appellee.
Decision Date27 February 2015
Docket NumberNo. 14–0339.

860 N.W.2d 323

GHOST PLAYER, L.L.C. and CH Investors, L.L.C., Appellants
v.
STATE of Iowa, Appellee.

No. 14–0339.

Supreme Court of Iowa.

Feb. 27, 2015.


860 N.W.2d 325

J. Campbell Helton and Van T. Everett of Whitfield & Eddy, P.L.C., Des Moines, for appellant Ghost Player, L.L.C.

Richard O. McConville of Coppola, McConville, Coppola, Carroll, Hockenberg & Scalise, P.C., West Des Moines, for appellant CH Investors, L.L.C.

Jeffrey S. Thompson, Solicitor Attorney General, and Adam P. Humes, Assistant Attorney General, for appellee.

Opinion

WIGGINS, Justice.

Claimants of tax credits under Iowa Code sections 15.391 –.393 (2009) brought an action in district court to collect certain tax credits it contended the State owed the claimants. The district court dismissed the claimants' petition on the grounds it did not have the authority to hear the case because the claimants failed to exhaust their administrative remedies. We agree with the district court decision dismissing the petition because the actions taken by the agency in denying the credits was other agency action, requiring the claimants to exhaust their administrative remedies. Failure to exhaust those administrative remedies deprives the district court of the authority to hear the case. We further conclude the district court was correct in finding the process used by the agency in processing the claimants' claim for tax credits did not offend the Due Process Clauses of the Iowa or United States Constitutions. Accordingly, we affirm the decision of the district court.

I. Background Facts and Proceedings.

On January 8, 2009, the Iowa Department of Economic Development (IDED) and Ghost Player, L.L.C. executed a contract for tax credits under the Film, Television, and Video Project Promotion Program. See Iowa Code § 15.391. CH Investors, L.L.C. is a third-party beneficiary to the contract.1 The contract included a “description of the project to be completed[,] ... the terms and conditions for receipt of the tax credits[,] ... and the repayment requirements or other penalties imposed in the event the [film producers failed to] fulfill its obligations” under the contract; all of these terms were required by Iowa Administrative Code 261–36.5(2) (2008). The contract included a clause stating, “Any IDED determinations with respect to compliance with the provisions of this Contract and the Funding Agreements shall be deemed to be final determinations pursuant to Section 17A of the Code of Iowa (2005).”

Under the contract, Ghost Player believed it would receive certain tax credits for the project Field of Dreams Ghost Player, a documentary film they produced highlighting the lives of the men who portrayed the ghost baseball players in the movie Field of Dreams filmed in Dyersville.2 After completing the film, Ghost Player submitted its request for the film tax credits and supporting materials.

On December 20, 2010, the IDED declined to issue the contracted twenty-five

860 N.W.2d 326

percent tax credit for some of the expenditures and investments of Ghost Player. Ghost Player objected to the agency's decision and submitted additional information for the IDED's consideration. The IDED reviewed the materials and on June 29, 2011, revised its tax credit determination, but still did not provide a tax credit for all of Ghost Player's expenditures and investments. Ghost Player submitted further information after the IDED's second determination in an attempt to gain further tax credits. The IDED did not change its position after receiving this information and issued its final determination on the film tax credits the agency would issue to Ghost Player on February 22, 2012.

After receiving the final determination and believing the IDED had breached the parties' contract by failing to issue tax credits for all of Ghost Player's qualified expenditures, Ghost Player filed a breach of contract action in district court on November 6, 2013. The State filed a motion to dismiss, arguing the district court lacked authority to hear the claim because Ghost Player was first required to seek relief under the Iowa Administrative Procedure Act.

This district court granted the motion to dismiss. It held the action complained of by Ghost Player falls squarely within the definition of “other agency action,” and Ghost Player would have a full and fair opportunity to raise the necessary issue and present evidence through a section 17A.19(7) hearing. See Iowa Code § 17A.19(7) (explaining the process for judicial review of an agency decision). Ghost Player appeals.

II. Issue.

The first issue we must decide is whether the district court correctly decided it did not have the authority to hear the case because Ghost Player failed to exhaust its remedies under chapter 17A, the Iowa Administrative Procedure Act.

Because we decide this issue adverse to Ghost Player, we must also deal with Ghost Player's constitutional issues raised on appeal. The only issue Ghost Player raised in the district court was that the failure of the IDED to have administrative rules in place deprived it of due process. Thus on appeal, while Ghost Player raised other challenges, we will only decide the due process issue.

III. Scope of Review.

The State moved to dismiss Ghost Player's petition on the grounds Ghost Player did not exhaust its administrative remedies. When a party fails to exhaust all of its required administrative remedies, the court has no authority to hear the case, and if a party properly raises the challenge, the court must dismiss the case. Keokuk County v. H.B., 593 N.W.2d 118, 123 (Iowa 1999). We review the authority of the district court to hear a case for correction of errors at law. Reg'l Ret. Living, Inc. v. Bd. of Review, 611 N.W.2d 779, 781 (Iowa 2000) (per curiam). We review Ghost Player's constitutional claim de novo. Hensler v. City of Davenport, 790 N.W.2d 569, 578 (Iowa 2010).

IV. Whether the District Court Had the Authority to Hear This Case in Light of the State's Claim that Ghost Player Should Have Exhausted Its Administrative Remedies.

Iowa began the Film, Television, and Video Project Promotion Program in 2007. See 2007 Iowa Acts ch. 162 §§ 1–13 (codified

860 N.W.2d 327

at Iowa Code §§ 15.391 –.393).3 The program offered two transferable tax credits, a qualified expenditure tax credit and an investment tax credit. Id. § 15.393(2)(a )(1)–(3), (b )(1)–(2).

To obtain a tax credit, the taxpayer must register the project with the IDED. See id. § 15.393(1). The Code sets up minimal criteria for registration and allows the IDED to establish other criteria by rule. See id. After a project is registered, the taxpayer may qualify for credits if the expenditures and investments meet the conditions set forth in the Code. Id. § 15.393(2), (4).

To administer the program, the IDED passed a rule requiring a taxpayer to enter into a contract with the IDED setting forth the terms and conditions under which the tax credit would be issued. Iowa Admin. Code r. 261–36.5. The Code gave the IDED the obligation to verify the eligibility of the credit, and if verified issue the credit. Iowa Code § 15.393(2)(a )(3), (b )(2).

Consistent with the IDED's obligation to verify and issue the tax credit, the contract entered into between Ghost Player and the IDED stated:

Final Authority. The IDED shall have the authority to reasonably assess whether the Recipient has complied with the terms of this Contract. Any IDED determinations with respect to compliance with the provisions of this Contract and the Funding Agreements shall be deemed to be final determinations pursuant to Section 17A of the Code of Iowa (2005).

The IDED did not promulgate any rules dealing with the procedures for claiming a credit, for the IDED to verify a credit, or for a party to contest a decision concerning a credit within the agency.

Chapter 17A of the Code classifies three types of agency action. They are rulemaking, contested cases, or other agency action. Sindlinger v. Iowa State Bd. of Regents, 503 N.W.2d 387, 389 (Iowa 1993). Neither party contends the IDED's refusal to honor all the tax credits claimed involves rulemaking. Both the Code and this court have defined a contested case proceeding as one “in which the legal rights, duties or...

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12 practice notes
  • Behm v. City of Cedar Rapids, No. 16-1031
    • United States
    • United States State Supreme Court of Iowa
    • January 25, 2019
    ...these issues, they are waived on appeal. Meier v. Senecaut , 641 N.W.2d 532, 541 (Iowa 2002).9 Nothing in Ghost Player, L.L.C. v. State , 860 N.W.2d 323 (Iowa 2015), is to the contrary. In Ghost Player , the court recognized that if the legislature established a higher standard than require......
  • Bonilla v. Iowa Bd. of Parole, No. 18-0477
    • United States
    • United States State Supreme Court of Iowa
    • June 28, 2019
    ...a court acquires authority to hear that claim on judicial review." In support, the Board points to Ghost Player, L.L.C. v. State , 860 N.W.2d 323, 326 (Iowa 2015). The as-applied challenges are not before us, the Board continues, because Bonilla’s administrative appeal only addressed t......
  • Endress v. Iowa Dep't of Human Servs., No. 18-1329
    • United States
    • United States State Supreme Court of Iowa
    • May 29, 2020
    ...522, 530 (Iowa 2017). Second, Endress's constitutional claims in agency proceedings are reviewed de novo. Ghost Player, L.L.C. v. State , 860 N.W.2d 323, 326 (Iowa 2015). Finally, with respect to whether attorney fees are available, we apply the standard of correction of errors at law. Colw......
  • Weizberg v. City of Des Moines, No. 17-1489
    • United States
    • United States State Supreme Court of Iowa
    • August 31, 2018
    ...determining what process is due can first be judged by what process is required by statute. See Ghost Player, L.L.C. v. State , 860 N.W.2d 323, 330 (Iowa 2015). The plaintiffs assert the general assembly determined the minimal process due to those challenging municipal infractions is contai......
  • Request a trial to view additional results
12 cases
  • Behm v. City of Cedar Rapids, No. 16-1031
    • United States
    • United States State Supreme Court of Iowa
    • January 25, 2019
    ...these issues, they are waived on appeal. Meier v. Senecaut , 641 N.W.2d 532, 541 (Iowa 2002).9 Nothing in Ghost Player, L.L.C. v. State , 860 N.W.2d 323 (Iowa 2015), is to the contrary. In Ghost Player , the court recognized that if the legislature established a higher standard than require......
  • Bonilla v. Iowa Bd. of Parole, No. 18-0477
    • United States
    • United States State Supreme Court of Iowa
    • June 28, 2019
    ...before a court acquires authority to hear that claim on judicial review." In support, the Board points to Ghost Player, L.L.C. v. State , 860 N.W.2d 323, 326 (Iowa 2015). The as-applied challenges are not before us, the Board continues, because Bonilla’s administrative appeal only addressed......
  • Endress v. Iowa Dep't of Human Servs., No. 18-1329
    • United States
    • United States State Supreme Court of Iowa
    • May 29, 2020
    ...522, 530 (Iowa 2017). Second, Endress's constitutional claims in agency proceedings are reviewed de novo. Ghost Player, L.L.C. v. State , 860 N.W.2d 323, 326 (Iowa 2015). Finally, with respect to whether attorney fees are available, we apply the standard of correction of errors at law. Colw......
  • Weizberg v. City of Des Moines, No. 17-1489
    • United States
    • United States State Supreme Court of Iowa
    • August 31, 2018
    ...determining what process is due can first be judged by what process is required by statute. See Ghost Player, L.L.C. v. State , 860 N.W.2d 323, 330 (Iowa 2015). The plaintiffs assert the general assembly determined the minimal process due to those challenging municipal infractions is contai......
  • Request a trial to view additional results

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