Stogdill v. City of Windsor Heights

Docket Number21-1015
Decision Date09 June 2023
CourtUnited States State Supreme Court of Iowa

Submitted February 22, 2023

Appeal from the Iowa District Court for Polk County, Heather Lauber and Celene Gogerty, Judges.

Plaintiffs appeal from an order granting defendants' motion for summary judgment in challenge to municipality's use of an income tax refund offset program to enforce civil penalties issued pursuant to an automated traffic enforcement system. AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.

Claire M. Diallo (argued), James C. Larew, and Deborah Svec-Carstens of Larew Law Office, Iowa City, for appellants.

Michael C. Richards (argued) and Katelynn T. McCollough of Dentons Davis Brown, P.C., Des Moines, for appellee City of Windsor Heights.

Jessica L. Klander (argued) of Bassford Remele, P.A. Minneapolis, Minnesota, for appellee Municipal Collections of America, Inc.


The plaintiffs filed this suit to challenge a municipality's attempts to collect automated traffic citation fines not reduced to a judgment in a municipal infraction proceeding. The plaintiffs filed suit against the municipality and the municipality's collection agent. The district court dismissed all of the plaintiffs' claims. For the reasons set forth below, we affirm in part, reverse in part, and remand for further proceedings.

I. The City's Automated Traffic Enforcement Program.

The City of Windsor Heights uses "an automated traffic enforcement system for making video and/or photographic images of vehicles that fail to obey red light traffic signals . . . or fail to obey speed regulations." Windsor Heights, Iowa, Mun. Code § 60.02.08 (2017). Pursuant to the ordinance, the city must mail notice of an automated traffic citation to the vehicle owner within thirty days of the police department's determination that a violation occurred. Id. § 60.02.08(3)(A). It is the vehicle owner-rather than the driver-that is liable for the citation. Id. § 60.02.08(2)(A), (B). Fines for violations of the ordinance generally range from $65 to $160, with some additional fines assessed for excessive speeding. See id. § 60.02.08(3)(B), (C). Any violation of a city ordinance is a municipal infraction. Id. § 4.01. Thus, a violation of the city's automatic traffic enforcement (ATE) ordinance is a municipal infraction.

A vehicle owner receiving an automatic traffic citation may either pay the citation, contest the citation, or ignore the citation. Id. § 60.02.08(4). To contest the citation, the vehicle owner can submit a form to the city requesting "an administrative review to be held at the Police Department before an impartial administrative appeals board." Id. § 60.02.08(4)(A). The administrative appeals board shall either uphold or dismiss the citation and shall send notice of its decision to the vehicle owner. Id. If the board upholds the citation, the vehicle owner can either pay the fine or request the city file a municipal infraction citation in the small claims division of the district court. Id. § 60.02.08(4)(A), (B). The vehicle owner can also bypass the administrative appeals board process altogether and simply request the city file a municipal infraction citation, in lieu of the automatic traffic citation, in the small claims division of the district court. Id. § 60.02.08(4)(B). The vehicle owner must request the city pursue a municipal infraction within thirty days of receiving the board's decision, if the owner elects the board process, or within thirty days of notice of the citation, if the owner bypasses that process and requests the city pursue a municipal infraction. Id. If the vehicle owner ignores the citation and does nothing, then the city can take action. Id. § 60.02.08(6).

The city's ordinance provides several enforcement mechanisms against a vehicle owner that does not pay an automated traffic citation, whether the owner contested the citation or not. The city may attempt further collection efforts by issuing a second notice of the automatic traffic citation. Id. § 60.02.08(6)(A). Under the ordinance, if the owner does not pay within thirty days of receiving the second notice, the owner "shall be deemed guilty of the violation and be held liable for the fine amount plus any additional service fees." Id. The city may then refer these allegedly guilty vehicle owners to a private collection agency. Id. § 60.02.08(6)(B). The city may also "[r]efer the Vehicle Owner to the State's income offset billing program for payment." Id. § 60.02.08(6)(C). Finally, the city may file a municipal infraction and seek a judgment in the district court. Id. § 60.02.08(6)(D).

The ordinance states that a private contractor may provide services in the management and operation of the ATE system. Id. § 60.02.08. Here, the city contracted with Municipal Collections of America, Inc. (MCA) to collect certain debts and fines, including automated traffic citations. Under the contract, the city was not required to pay MCA any fees unless MCA successfully collected fines. With respect to automated traffic citations, the contract provides that the city will add a 25% "cost of collection" fee to citations referred to MCA. The contract then provides that MCA keeps 20% of the full balance recovered, while the remaining 80% is remitted to the city.

At issue in this case is the income offset program. The income offset program is authorized pursuant to statute. See Iowa Code § 8A.504 (2019). The statute allows the department of administrative services to "establish a debt collection setoff procedure for collection of debts owed to the public agency." Id. § 8A.504(1)(a). This includes money owed to a "political subdivision of the state," such as the city. Id. § 8A.504(1)(c). Use of the setoff procedure is limited to only those liabilities "in the form of a liquidated sum due, owing, and payable." Id. § 8A.504(1)(d)(3). Generally speaking, with respect to the collection of ATE penalties, the setoff procedure begins when the city refers the name of a vehicle owner to the department of administrative services. See id. § 8A.504(2)(b). If the vehicle owner is entitled to receive an income tax refund, the department provides notice to the owner that the refund will be offset by the unpaid amount of the ATE penalty. See id. § 8A.504(2)(f). The vehicle owner can either consent to the offset, pay the ATE penalty to the city directly and receive their full income tax refund, or contest the offset. See id. § 8A.504(2)(h).

The city entered into a memorandum of understanding with the department of administrative services to avail itself of the income offset program. The memorandum provided that only debts "in the form of a liquidated sum due, owing and payable" were eligible for placement in the program. The memorandum further provided that "[a]ll applicable remedies with regard to such a debt and claim must be exhausted . . . as a condition precedent for eligibility to participate in the offset program." It was the city's obligation to develop and maintain a system for reporting eligible debts to the department. According to the memorandum of understanding, the department charged an administrative fee of $7 for each debt placed in the offset program.

II. Background and Procedural Posture.

The procedural posture of this case is long and somewhat complicated. We discuss it at length to provide necessary context for resolving this appeal. Five plaintiffs-James A. Stogdill, Christopher Determan, Mathew D. Johnson, Alesha Smith, and Kirk Yentes-filed this suit against the City of Windsor Heights and MCA on December 19, 2019. The plaintiffs asserted the following claims: (1) the city's collection efforts, including use of the income offset program, violated the statute of limitations set forth in Iowa Code section 614.1(1); (2) the city's ATE ordinance was an unlawful property tax not authorized by the general assembly, in violation of Iowa Code section 364.3(4); (3) the city's ATE ordinance and the city's use of the income offset program was preempted by Iowa Code section 364.22; (4) the city's use of the income offset program to enforce automatic traffic citations not reduced to a judgment constituted unjust enrichment; (5) the city's use of the income offset program to enforce automatic traffic citations not reduced to a judgment constituted conversion; (6) the city's attempts to collect automatic traffic citations violated the Iowa Debt Collection Practices Act, Iowa Code §§ 537.7101-.7103; (7) the agreement between the city and MCA to collect ATE penalties constituted a civil conspiracy; and (8) the city's use of the income offset program violated their rights to due process under article I, section 9 of the Iowa Constitution.

The defendants filed several dispositive motions in the district court, including pre-answer motions to dismiss followed by two different motions for summary judgment. In several different rulings on each of the motions, the district court dismissed all of the plaintiffs' claims. Only two of the original five plaintiffs-Determan and Smith-seek appellate review. We set forth the facts and circumstances surrounding only their claims.

A. Plaintiff Christopher Determan.

On May 18, 2018, the city issued a notice of violation to Determan arising out of an alleged speeding violation on May 15. The fine was $65. The notice provided payment was due on June 17. The notice further provided that "[f]ailure to pay the penalty or contest liability by the due date is an affirmation of responsibility to pay the listed fine amount and will result in this penalty being forwarded to collections and...

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