Legacy Found. Action Fund v. Citizens Clean Elections Comm'n

• Decision Date: 20 January 2022
• Docket Number: 1 CA-CV 19-0773
• Citation: 62 Arizona Cases Digest 16,505 P.3d 292
• Parties: LEGACY FOUNDATION ACTION FUND, Plaintiff/Appellant, v. CITIZENS CLEAN ELECTIONS COMMISSION, Defendant/Appellee.
• Court: Arizona Court of Appeals

62 Arizona Cases Digest 16

505 P.3d 292

LEGACY FOUNDATION ACTION FUND, Plaintiff/Appellant,

v.CITIZENS CLEAN ELECTIONS COMMISSION, Defendant/Appellee.

No. 1 CA-CV 19-0773

Court of Appeals of Arizona, Division 1.

FILED January 20, 2022

AS AMENDED January 21, 2022

Bergin Frakes Smalley & Oberholtzer PLLC, Phoenix, By Brian M. Bergin, Co-counsel for Plaintiff/Appellant

Holtzman Vogel Josefiak PLLC, Warrenton, VA, By Jason Brett Torchinsky, Co-counsel for Plaintiff/Appellant

Osborn Maledon PA, Phoenix, By Mary R. O'Grady, Joseph N. Roth, Counsel for Defendant/Appellee

Presiding Judge Randall M. Howe delivered the opinion of the court, in which Chief Judge Kent E. Cattani joined. Judge Cynthia J. Bailey dissented.

HOWE, Judge:

¶1 Legacy Foundation Action Fund appeals the trial court's dismissal of its special-action complaint and granting summary judgment to the Citizens Clean Election Commission in the Commission's separate enforcement action. Legacy argues that its special-action complaint was an appropriate collateral attack on the Commission's jurisdiction. The Commission argues that because Legacy had challenged its jurisdiction in the administrative proceeding and failed to seek timely review of that decision, Legacy is precluded from collaterally attacking its jurisdiction now.

¶2 We hold that an administrative agency's jurisdiction cannot be collaterally attacked by a party that challenged the agency's jurisdiction administratively but failed to timely appeal the agency's decision. Accordingly, we affirm the trial court's dismissal of Legacy's special-action complaint and its granting the Commission summary judgment.

FACTS AND PROCEDURAL HISTORY

¶3 Legacy is a non-profit corporation that aired political advertisements in Arizona in 2014. The Commission then received a complaint alleging that Legacy had violated the Citizens Clean Elections Act, A.R.S. §§ 16–940 to –961. The Commission believed that Legacy had violated the Act's independent reporting requirements, and—after holding a hearing—assessed Legacy $95,460 in penalties. See §§ 16–941(D), –957(A)–(B). Legacy sought administrative review, arguing in part that the Commission lacked subject-matter jurisdiction to assess the penalty. The Commission, however, rejected that argument and, in March 2015, entered a final administrative order imposing a civil penalty of $95,460 against Legacy.

¶4 Eighteen days after the Commission issued its final administrative order, Legacy sought judicial review, arguing that the Commission lacked personal and subject-matter jurisdiction. The trial court dismissed the appeal, concluding that it lacked jurisdiction because Legacy missed the 14-day deadline to appeal under A.R.S. § 16–957(B). Legacy appealed the trial court's dismissal of its appeal, but this court and our supreme court upheld the dismissal. See Legacy Found. Action Fund v. Citizens Clean Elections Comm'n , 243 Ariz. 404, 408 ¶¶ 19–20, 408 P.3d 828, 832 (2018) ( Legacy I ). In doing so, our supreme court noted that it "express[ed] no view on whether Legacy [could] pursue alternative procedural means to challenge the Commission's penalty order as void." Id. at ¶ 19.

¶5 On remand, the Commission sought judgment in the trial court against Legacy for the full amount of the final administrative order. The same day, Legacy brought a special action in the trial court, alleging in part that the Commission lacked subject-matter jurisdiction over the matter, and the court consolidated the two cases. Both parties moved to dismiss, and the trial court granted the Commission's motion, dismissed Legacy's special-action complaint, and denied Legacy's motion to dismiss.

¶6 The parties then each moved for summary judgment on the Commission's enforcement of the final administrative order. In ruling on the motions, the trial court characterized Legacy's arguments as asking the court to set aside the Commission's factual findings. The court concluded that the findings could not be set aside and granted the Commission summary judgment. Legacy timely appealed.

DISCUSSION

¶7 Legacy argues that the trial court erred in dismissing its special-action complaint and granting the Commission summary judgment, thereby enforcing the Commission's final administrative order. Legacy contends that its special-action complaint was an appropriate collateral challenge to the Commission's subject-matter jurisdiction. We review the dismissal of a complaint de novo, assuming as true the complaint's well-pleaded facts, and we will affirm when, as a matter of law, the plaintiffs would not be entitled to relief under any interpretation of the facts susceptible of proof. Hopi Tribe v. Ariz. Snowbowl Resort Ltd. P'ship , 245 Ariz. 397, 400 ¶ 8, 430 P.3d 362, 365 (2018).

¶8 Legacy is precluded from collaterally attacking the Commission's exercise of subject-matter jurisdiction. "[A]dministrative decisions which go beyond an agency's statutory power are vulnerable for lack of jurisdiction and may be questioned in a collateral proceeding." Ariz. Bd. of Regents for & on Behalf of Univ. of Ariz. v. State , 160 Ariz. 150, 156, 771 P.2d 880, 886 (App. 1989). However, "[f]ailure to appeal a final administrative decision makes that decision final and res judicata ." Gilbert v. Bd. of Med. Exam'rs , 155 Ariz. 169, 174, 745 P.2d 617, 622 (App. 1987), superseded on other grounds by statute as stated in Goodman v. Samaritan Health Sys. , 195 Ariz. 502, 508 ¶ 25 n.7, 990 P.2d 1061, 1067 (App. 1999).

¶9 Under the doctrine of res judicata (now referred to as "claim preclusion"), "a final judgment on the merits bars further claims by parties or their privies based on the same cause of action." In re Gen. Adjud. of All Rights to Use Water in Gila River Sys. & Source , 212 Ariz. 64, 69 ¶ 14, 127 P.3d 882, 887 (2006) (quoting Montana v. United States , 440 U.S. 147, 153, 99 S.Ct. 970, 59 L.Ed.2d 210 (1979) ). Final administrative orders are final judgments for purposes of claim preclusion. See Hawkins v. State , 183 Ariz. 100, 104, 900 P.2d 1236, 1240 (App. 1995) ("Where a party does not appeal a final administrative decision that decision becomes final and res judicata ."). The principles of claim preclusion "apply to jurisdictional determinations—both subject matter and personal." Ins. Corp. of Ireland, Ltd. v. Compagnie des Bauxites de Guinee , 456 U.S. 694, 702 n.9, 102 S.Ct. 2099, 72 L.Ed.2d 492 (1982). "A party that has had an opportunity to litigate the question of subject-matter jurisdiction may not ... reopen that question in a collateral attack upon an adverse judgment." Id. ; see also Restatement (Second) of Judgments § 12 (1982) (parties are precluded from litigating the court's subject-matter jurisdiction in subsequent litigation except in limited circumstances).

¶10 Legacy and the Commission were parties to the administrative proceeding, and Legacy challenged the Commission's subject-matter jurisdiction in that proceeding. Eighteen days after the Commission issued its final order, Legacy appealed to the trial court, arguing that the Commission had lacked personal and subject-matter jurisdiction over the matter. But the trial court dismissed the appeal as untimely because Legacy had appealed after the 14-day deadline under A.R.S. § 16–957(B). The Commission's administrative order became final after our supreme court affirmed the trial court's dismissal of Legacy's untimely appeal.

¶11 Having litigated subject-matter jurisdiction in the administrative proceeding and having failed to timely appeal the final ruling on the merits by direct review, Legacy cannot raise the issue again in a new proceeding. See Gilbert , 155 Ariz. at 176, 745 P.2d at 624 ("No timely appeal having been taken, the decision of the board is conclusively presumed to be just, reasonable[,] and lawful."); see also Restatement (Second) of Judgments § 17 (1982) (a final judgment in a civil defendant's favor on a claim "bars a subsequent action on that claim"). This is no less true when the collateral attack targets the Commission's subject-matter jurisdiction because "[e]ven subject-matter jurisdiction ... may not be attacked collaterally" once the decision becomes final on direct review. See Travelers Indem. Co. v. Bailey , 557 U.S. 137, 152, 129 S.Ct. 2195, 174 L.Ed.2d 99 (2009) (quoting Kontrick v. Ryan , 540 U.S. 443, 455 n.9, 124 S.Ct. 906, 157 L.Ed.2d 867 (2004) ). "[T]he need for finality forbids a court called upon to enforce a final order to ‘tunnel back ... for the purpose of reassessing prior jurisdiction de novo.’ " Id. at 154, 129 S.Ct. 2195 (quoting In re Optical Techs., Inc. , 425 F.3d 1294, 1308 (11th Cir. 2005) ); see Willy v. Coastal Corp. , 503 U.S. 131, 137, 112 S.Ct. 1076, 117 L.Ed.2d 280 (1992) ("[T]he practical concern with providing an end to litigation justifies a rule preventing collateral attack on subject-matter jurisdiction.").

¶12 Legacy points to our supreme court's Legacy I opinion in arguing that its special-action complaint was a proper collateral attack on the Commission's subject-matter jurisdiction. Our supreme court, however, noted that it expressed no view whether Legacy could pursue alternative procedural means to challenge the Commission's penalty order as void. This question was not before the court at that time. Our supreme court's statement, therefore, does not support Legacy's argument.

¶13 Legacy also cites this court's prior decisions to argue that its special-action complaint is a proper collateral attack on the Commission's subject-matter jurisdiction. But those decisions do not support allowing Legacy to collaterally attack the Commission's subject-matter jurisdiction after it failed to properly seek appellate review of the Commission's ruling rejecting Legacy's argument. While this court previously stated in those decisions that a collateral attack on jurisdictional grounds is allowed, each involved a situation in which the party did not have an opportunity to raise that issue in the prior proceeding. Se...