Swanger v. State, 88-693

• Decision Date: 16 August 1989
• Docket Number: No. 88-693,88-693
• Citation: 445 N.W.2d 344
• Parties: Terry SWANGER; Joan Swanger; Terry Swanger, as Parent and Next Friend of Jennifer Jo Swanger, a Minor; Terry Swanger, as Parent and Next Friend of Michael John Swanger, a Minor; Terry Swanger, as Parent and Next Friend of Chad Eric Swanger, a Minor, Appellants, v. STATE of Iowa, Appellee.
• Court: Iowa Supreme Court

Page 344

445 N.W.2d 344

Terry SWANGER; Joan Swanger; Terry Swanger, as Parent and Next Friend of Jennifer Jo Swanger, a Minor; Terry Swanger, as Parent and Next Friend of Michael John Swanger, a Minor; Terry Swanger, as Parent and Next Friend of Chad Eric Swanger, a Minor, Appellants, v. STATE of Iowa, Appellee.

No. 88-693.

Supreme Court of Iowa.

Aug. 16, 1989.

Dennis R. Ringgenberg of Crary, Huff, Clem, Raby & Inkster, P.C., Sioux City, and John H. Hinderaker and Paul W. Heiring of Faegre & Benson, Bloomington, Minn., for appellants.

Michael R. Hellige of Shull, Cosgrove, Hellige, Kudej & Du Bray, Sioux City, and Thomas J. Miller, Atty. Gen., and John Perkins, Deputy Atty. Gen., for appellee.

Considered by McGIVERIN, C.J., and HARRIS, SCHULTZ, CARTER and SNELL, JJ.

McGIVERIN, Chief Justice.

Terry Swanger was injured in an automobile collision involving a State-owned vehicle. Swanger, his wife, and their three children subsequently filed tort claims with the state appeal board. ¹ Five months later, they withdrew their claims and filed a lawsuit in district court against the State. The district court found Swangers failed to comply with the six-month waiting period under the Iowa Tort Claims Act, Iowa Code chapter 25A, ² and therefore dismissed their suit for lack of subject matter jurisdiction. Swangers appealed, contending: (1) that the State waived its governmental immunity and the requirements of Iowa Code chapter 25A by purchasing a liability insurance policy which stated the insurer would not assert the State's governmental immunity in defense of suits; and (2) that even if chapter 25A applied, they satisfied its requirements by submitting their claims to a private insurance adjuster more than six months before withdrawing them from the appeal board. Because we also believe Swangers failed to exhaust their administrative remedies under the Iowa Tort Claims Act, we affirm.

I. Background facts and proceedings. On October 17, 1983, a car driven by Terry Swanger collided with a car owned by the State of Iowa and driven by an employee of the Iowa Department of Transportation. All parties agree that the employee was acting in the course of her State employment at the time of the collision. Terry Swanger suffered serious injuries as a result of the collision.

At the time, the Department of Transportation was insured by a liability insurance policy issued by Employers Mutual Casualty Company. Shortly after the collision, the department reported the collision to Employers Mutual. Employers Mutual, in turn, hired Rick Molden, an independent insurance adjuster, to investigate the collision.

On October 28, Molden obtained a detailed written statement concerning the collision from Terry Swanger. On November 15, Molden entered into a property settlement with Terry and his wife for the damage to the Swanger automobile. None of Swangers' other claims were resolved at that time.

On February 7, 1984, Swangers filed tort claims with the state appeal board for Terry's personal injuries and his family's resulting loss of consortium. The next day, the appeal board wrote to Swangers to acknowledge receipt of the claims and specifically informed Swangers that if the claims were disapproved or not considered within six months from the date of their filing, then Swangers could bring suit on the claims in Iowa district court.

On July 11, Swangers sent a letter to the appeal board withdrawing their claims from its consideration. In their written notices of withdrawal, Swangers stated that six months had elapsed from the filing of their claims and, therefore, they were entitled to pursue their claims in district court. In fact, only approximately five months had elapsed from the filing of their claims with the appeal board. The appeal board withdrew Swangers' claims and acknowledged the same on July 16.

On July 18, Swangers filed suit in district court alleging negligence against the State. ³ In its answer, the State generally denied the material allegations of Swangers' petition and also asserted that Swangers were barred from any recovery because they had failed to exhaust the applicable administrative remedies provided by Iowa Code chapter 25A. Thereafter, the State moved to dismiss the suit, challenging the jurisdiction of the district court. Following a separate trial on the question, the district court found Swangers had failed to exhaust their administrative remedies and dismissed their suit for lack of subject matter jurisdiction.

Swangers appealed.

II. Iowa Tort Claims Act, Iowa Code chapter 25A. All parties agree that the Iowa Tort Claims Act, Iowa Code chapter 25A, governs this controversy.

Formerly, the doctrine of sovereign or governmental immunity deprived courts of jurisdiction over suits brought against the State sounding in tort. Hubbard v. State, 163 N.W.2d 904, 906 (Iowa 1969). In 1965, the general assembly abrogated, in part, this immunity by enacting the Iowa Tort Claims Act, Iowa Code chapter 25A. 1965 Iowa Act ch. 79.

The preamble to the tort claims act provides:

AN ACT to create and establish a state tort claims Act; defining terms and conferring upon the state appeal board on behalf of the state the power to determine certain claims against the state; permitting the state to be sued and waiving the state's immunity from liability to the extent provided herein; conferring jurisdiction in the district court to hear, determine and render judgment; and generally providing for the practice and procedure to establish liability of the state on tort claims.

Id. (emphasis added).

The State may now be sued in tort, but only in the manner and to the extent to which consent has been given by the legislature. Hansen v. State, 298 N.W.2d 263, 265 (Iowa 1980).

Under chapter 25A, "[a] tort claim against the State must, in the first instance, be presented for administrative consideration and disposition." Weisbrod v. State, 193 N.W.2d 125, 127 (Iowa 1971). Iowa Code section 25A.3 enables the state appeal board to conduct this administrative process and authorizes the appeal board "to consider, ascertain, adjust, compromise, settle, determine, and allow any claim as defined in this chapter."

Absent an administrative determination satisfactory to the claimant, Iowa Code section 25A.4 confers upon the claimant the right to bring an action at law. Weisbrod, 193 N.W.2d at 127. A section-25A.4 suit may not be brought, however, until the administrative remedy is exhausted. Id.; Iowa Code § 25A.5.

Iowa Code section 25A.5 governs as to when the State may be sued in tort and provides in part:

When suit permitted.

No suit shall be permitted under this chapter unless the state appeal board has made final disposition of the claim; except that if the state appeal board does not make final disposition of a claim within six months after the claim is made in writing to the state appeal board, the claimant may, by notice in writing, withdraw the claim from consideration of the state appeal board and begin suit under this chapter....

The remedies of chapter 25A are the exclusive remedies against the State for injuries caused by the negligent or wrongful acts of State employees acting within the scope of their employment. Iowa Code §§ 25A.16, 25A.2(5).

In light of the foregoing statutes, we have held that the state appeal board has primary or exclusive jurisdiction over tort claims against the State, and that the doctrine of exhaustion may be invoked where tort claimants have not properly submitted their claims to the board for consideration and disposition. Charles Gabus Ford, Inc. v. Iowa State Highway Comm'n, 224 N.W.2d 639, 648 (Iowa 1974); Cf. Reynolds v. United States, 748 F.2d 291, 292 (5th Cir.1984) (holding under the analogous provision of the Federal Tort Claims Act that the federal district court lacked subject matter jurisdiction in action where the claimant filed suit in district court before exhausting her administrative remedies). Exhaustion of the administrative process is jurisdictional, and a suit commenced without complying with this process is subject to dismissal. See, e.g., Brumage v. Woodsmall, 444 N.W.2d 68, 70 (Iowa 1989); Bennett, Handling Tort Claims and Suits Against the State of Iowa: Part I, 17 Drake L.Rev. 189, 192 (1968).

III. Liability insurance and the Iowa Tort Claims Act. In this case, the Iowa Department of Transportation exercised its authority under Iowa Code chapter 517A by procuring liability insurance for losses due to motor vehicle collisions. ⁴ Swangers contend that the existence of this insurance coverage, including a policy endorsement stating the insurer would not assert the State's governmental immunity defense, exempted their claims from compliance with the directives of chapter 25A; thus, Swangers claim they were not required to exhaust the available administrative remedies, and the district court had subject matter jurisdiction over their suit against the State.

Swangers rely on Iowa Code section 25A.20 which provides:

Whenever a claim or suit against the state is covered by liability insurance, the provisions of the liability insurance policy on defense and settlement shall be applicable notwithstanding any inconsistent provisions of this chapter. The attorney general and the state appeal board shall co-operate with the insurance company.

(Emphasis added.)

The State's automobile liability insurance policy provided that Employers Mutual would "pay all sums the insured legally must pay as damages ... to which this insurance applies...." The policy also contained the following endorsement:

At the request of the Insured, it is hereby agreed:

1. That the Company will not use, either in the adjustment of claims or in the defense of suits against the Insured the immunity of the Insured by reason of its governmental corporate nature from tort liability....

A. Iowa Code section 25A.20. The central issue in Swangers' appeal involves construction of Iowa Code...