Case Name: IES UTILITIES INC., Midwest Power Systems, Inc., Iowa-Illinois Gas and Electric Company, and Interstate Power Company, Appellants, v. IOWA DEPARTMENT OF REVENUE AND FINANCE, Appellee
Court: Iowa Supreme Court
Jurisdiction: Iowa
Decision Date: 1996-03-20
Citations: 545 N.W.2d 536
Docket Number: No. 94-1987
Parties: IES UTILITIES INC., Midwest Power Systems, Inc., Iowa-Illinois Gas and Electric Company, and Interstate Power Company, Appellants, v. IOWA DEPARTMENT OF REVENUE AND FINANCE, Appellee.
Judges: All justices concur, except CARTER, J., who concurs and specially concurs, and HARRIS, J., joined by NEUMAN and SNELL, JJ., who dissent.
Reporter: North Western Reporter 2d
Volume: 545
Pages: 536–548

Head Matter:
IES UTILITIES INC., Midwest Power Systems, Inc., Iowa-Illinois Gas and Electric Company, and Interstate Power Company, Appellants, v. IOWA DEPARTMENT OF REVENUE AND FINANCE, Appellee.
No. 94-1987.
Supreme Court of Iowa.
March 20, 1996.
Rehearing Denied April 17, 1996.
Linda S. Weindruch and Rebecca Boyd Parrott of Dickinson, Mackaman, Tyler & Hagen, P.C., Des Moines, for appellants.
Thomas J. Miller, Attorney General, Harry M. Griger, Special Assistant Attorney General, and James D. Miller, Assistant Attorney General, for appellee.

Opinion:
McGIVERIN, Chief Justice.
The controlling issue here is whether the district court correctly sustained defendant Iowa Department of Revenue's (DOR) motion to dismiss plaintiff utilities' petition for declaratory judgment in this agency action case for failing to exhaust all adequate administrative remedies. Due to lack of district court jurisdiction over the original action filed by the utilities, we affirm.
I. Background facts and proceedings. Plaintiff utilities brought an original petition in district court for declaratory judgment under Iowa rule of civil procedure 261 and a motion for a temporary injunction against defendant DOR. The petition for declaratory judgment alleged, in substance, that the DOR in an agency action failed to follow statutory rulemaking procedures concerning implementation of certain accounting meth odologies employed by DOR for valuing plaintiffs' property throughout the state. See Iowa Code § 17A.4(1), (3) (1995). Utilities requested, in part, that the district court enjoin DOR from using the challenged accounting methodologies when valuing their property for tax purposes. Plaintiffs alleged they had not exhausted their administrative remedies at the DOR or agency level.
In their petition, plaintiffs attempted to establish jurisdiction of the district court for this original action on two grounds: (1) our holding in Lundy v. Iowa Department of Human Services, 376 N.W.2d 893, 894 (Iowa 1985), and (2) the potential of economic harm to themselves in the event they are required to pay property taxes assessed under the challenged accounting methodologies. See Salsbury Lab. v. Iowa Dep't of Envtl. Quality, 276 N.W.2d 830, 837 (Iowa 1979).
DOR filed a motion to dismiss the plaintiff utilities' petition for declaratory judgment alleging lack of district court subject matter jurisdiction over the case. See Iowa R.Civ.P. 104(a). In its motion, DOR argued the court had no jurisdiction to rule on the merits of the petition because the utilities, concerning an agency action, failed to exhaust all adequate administrative remedies available under chapters 17A and 429 of the Iowa Code before bringing a petition in district court. Even though DOR's motion to dismiss phrased its argument in terms of lack of "subject matter jurisdiction," the present case concerns whether the district court has "jurisdiction" or "authority" to entertain plaintiff utilities' declaratory judgment action based on the particular procedural status of the case, not whether the court has subject matter jurisdiction to entertain declaratory judgment actions in general. See City of Des Moines v. Des Moines Police Bargaining Unit Ass'n, 360 N.W.2d 729, 730 (Iowa 1985); cf. Linn County Sheriff v. Iowa Dist. Ct., 545 N.W.2d 296, 298 (Iowa 1996) (in certiorari action challenging district court action, court had "jurisdiction of the case" when it entered orders granting inmate work release privileges outside the county); Anderson v. W. Hodgeman & Sons, Inc., 524 N.W.2d 418, 420-21, 421 n. 2 (Iowa 1994) (in judicial review of industrial commissioner decision, compliance with statutory prerequisites is required to establish district court "jurisdiction" over the particular matter); Christie v. Rolscreen Co., 448 N.W.2d 447, 450 (Iowa 1989) (in appeal of district court dismissal for want of subject matter jurisdiction over two age discrimination lawsuits, court lacked "authority" in the particular situation to resolve the disputes).
The district court dismissed plaintiffs' petition for declaratory judgment and motion for a temporary injunction because, among other reasons, utilities failed to exhaust all adequate administrative remedies prior to proceeding to district court. Utilities appeal from this ruling.
II. Standard and scope of review. Our review is for correction of errors at law. Iowa R.App.P. 4. Because we are reviewing a district court ruling sustaining a motion to dismiss, we view plaintiff utilities' allegations in their petition for declaratory judgment in a light most favorable to them, resolve doubts in their favor, and will uphold the ruling only if the utilities cannot establish jurisdiction under any state of facts provable under the allegations in the petition. See Lundy, 376 N.W.2d at 894.
Accordingly, the proper record for our review is limited to the averments contained within plaintiff utilities' petition for declaratory judgment and judgments therefrom. See Salsbury, 276 N.W.2d at 833.
III. The Iowa administrative procedure act and the exhaustion requirement. The carefully crafted framework of Iowa Code chapter 17A, the Iowa Administrative Procedure Act (APA), requires litigants affected by the actions of state agencies to follow the rules as a prerequisite to obtaining proper access to the district court for judicial review. This voyage has been time and time again referred to as the "exhaustion" requirement set forth in section 17A.19(1). Exhaustion has several purposes, including honoring agency expertise, handling matters within an agency and not in the courts, and preserving precious judicial resources. See Pro Farmer Grain, Inc. v. Iowa Dep't of Agric. & Land Stewardship, 427 N.W.2d 466, 469 (Iowa 1988). The very purpose of an administrative agency, such as DOR, is to expertly perform various functions in a general area of the law for the benefit of the general public (the taxpayers that fund the operation of all administrative agencies). See City of Des Moines, 360 N.W.2d at 730-32 (emphasizing the benefits of resolving specialized disputes first at the agency level, as opposed to in district court); see also Iowa Dep't of Transp. v. Iowa Dist. Ct., 534 N.W.2d 457, 459 (Iowa 1995).
The APA generally allows, as an exclusive form of relief, judicial review from an agency action to district court whether the action is rulemaking, a contested case, or "other agency action." See Polk County v. Iowa State Appeal Bd., 330 N.W.2d 287, 276 (Iowa 1983). Exhaustion of adequate administrative remedies is generally required prior to permitting a party to seek relief via judicial review in district court. See Iowa Code § 17A.19(1); City of Des Moines, 360 N.W.2d at 731. Normally, the district court sits as an appellate court in judicial review of a final agency action. The doctrine of exhaustion is not absolute, however. In the following limited situations, we have allowed a litigant to bypass the exhaustion requirement:
(1) plaintiff challenges, by way of judicial revieiv under Ioiva Code section 17A. 19, an agency action as in violation of the rulemak-ing procedures set forth under the APA, see Lundy, 376 N.W.2d at 894;
(2) plaintiff claims an adequate administrative remedy does not exist for the claimed wrong, see Rowen v. LeMars Mut. Ins. Co., 230 N.W.2d 905, 909 (Iowa 1975), or stated otherwise, plaintiff will suffer "irreparable injury of substantial dimension" if not allowed access to district court prior to exhausting all administrative remedies, see Salsbury Lab., 276 N.W.2d at 837; or
(3) plaintiff claims the applicable statute does not expressly or implicitly require that all adequate administrative remedies be exhausted prior to bringing an action in district court, see Rowen, 230 N.W.2d at 909.
Plaintiffs pled and readily admit they have not exhausted their administrative remedies prior to filing their petition for declaratory judgment in district court. See Iowa R.Civ.P. 261. Plaintiffs rely mainly on Lun-dy, cited in (1) above, to avoid having to exhaust all adequate administrative remedies that plaintiffs admit exist in this case, such as taxpayer remedies under Iowa Code chapter 429 and administrative remedies under Iowa Code section 17A.19. Plaintiffs here do not rely on the exception cited in (3).
IV. Application of the Lundy and Sals-bury exhaustion exceptions to the facts of the present case. The plaintiff utilities must satisfy either the Lundy or Salsbury exceptions to the exhaustion requirement in order for the district court to have jurisdiction over their petition for declaratory judgment and to avoid going through the normal chapter 17A and judicial review of final agency action steps. We conclude they have not met this burden.
The present action was commenced when plaintiff utilities filed a petition for declaratory judgment in district court pursuant to rule of civil procedure 261. This was an original action. Plaintiffs did not first exhaust taxpayer remedies available under Iowa Code chapter 429 and, within that chapter, did not file a petition for judicial review pursuant to the APA. See Iowa Code § 17A.19, 429.3.
Plaintiffs' petition states that certain accounting methodologies were used by DOR in determining valuations of plaintiffs' property without previously following rulemaking procedures set out in Iowa Code section 17A.4. Thus, plaintiffs contend that valuations and tentative tax assessments imposed by DOR on plaintiffs' property using these methodologies were invalid.
In their petition, plaintiff utilities alleged they had received 1994 tentative assessment notices from DOR. Plaintiffs' next procedural steps within the agency would be to request informal conferences with DOR, see Iowa Admin.Code r. 701-7.11 (1995), receive their final assessments, see Iowa Code § 428.29, 429.1, and then appeal the final assessments to the state board of tax review. See id. § 429.2. At all agency levels, plaintiffs could urge the invalidity of the assessments and any valuation methodologies inhering therein including challenges to allegedly improper rulemaking by DOR.
In the event of an adverse ruling from the state tax board at the final level, plaintiffs could then seek judicial review in the normal process in district court. See id. § 429.3, 17A.19. At that time, judicial resources would be tapped for the first time and the appeal from a final agency action would proceed in an orderly fashion as provided and envisioned by the APA.
This procedural framework set forth in Iowa Code chapters 428 and 429 and the APA was raised in defendant DOR's motion to dismiss raising the above statutory steps, stating plaintiffs failed to exhaust all adequate administrative remedies, prior to requesting judicial relief, as required by chapter 429 and section 17A.19(1). As before stated, plaintiffs' petition itself affirmatively alleged plaintiffs had not exhausted their administrative remedies prior to filing the petition for declaratory judgment in district court.
1. No petition for judicial review filed in order to avoid exhaustion requirement. Plaintiff utilities first attempt to establish district court jurisdiction over their petition for declaratory judgment by relying on Lundy v. Iowa Department of Human Services, 376 N.W.2d 893 (Iowa 1985), as grounds for seeking relief from alleged improper rulemaking procedures without first exhausting all adequate administrative remedies. Such reliance is in error.
The Lundy decision allows an aggrieved party to initiate a judicial review proceeding-in district court pursuant to Iowa Code section 17A.19 to challenge alleged procedural irregularities in agency rulemaking in violation of section 17A.4(3) prior to exhausting all adequate administrative remedies. Id. at 896; see Hollinrake v. Monroe County, 433 N.W.2d 696, 699 (Iowa 1988). In Lundy, the petitioner did just that. He filed a judicial review petition under chapter 17A and not a rule of civil procedure 261 declaratory judgment petition as plaintiffs did in the present case.
We have stated that
when a party seeks a declaratory judgment on a matter "entrusted exclusively in the first instance to an administrative agency," the court must refuse to issue a ruling unless the action "is indistinguishable in substance from a petition for judicial review and all of the jurisdictional prerequisites for judicial review of agency action" have been met. Declaratory relief is not appropriate "when there is a complete remedy otherwise provided by law that is intended to be exclusive."
Iowa Dep't of Transp., 534 N.W.2d at 459 (quoting City of Des Moines, 360 N.W.2d at 730-31).
The petition filed by plaintiff utilities was not in substance a petition for judicial review. Unlike the petition in Lundy, plaintiffs here never alleged then- substantial x-ights were affected by any agency violations of the standards set forth in Iowa Code section 17A.19(8). We agree with the district court's summary of the pi'oeedural erroi*s attributable to plaintiff utilities in this case:
The original action filed in the instant matter is not the equivalent to and does not constitute a petition for judicial l-eview contemplated in [Iowa Code] section 17A.19(2), nor did [plaintiffs] intend as much. Section 17A.19 is the exclusive means in which to seek judicial review of agency action.
The instant case . does not constitute a labeling issue. Instead, this is a case where the plaintiff [utilities] did not intend to bring a judicial review of agency action [as was the case in Lundy ], but rather a new, original action [as in Salsbury ] with additional plaintiffs in an attempt to have this court exercise original, and not appellate, jurisdiction.
(Citations omitted.)
The Lundy case shows the present plaintiffs, for reasons best known to them, chose to follow the wrong procedural avenue to seek original relief by a declaratory judgment action through the court system before exhausting all adequate administrative remedies at the agency level. Plaintiffs did not follow Lundy by filing a petition for judicial or appellate revieio in district court and, therefore, cannot properly rely on that case to establish district court jurisdiction over them present declaratory judgment petition.
2. Economic harm not sufficient to avoid exhaustion requirement. Second, plaintiff utilities contend the district court has jurisdiction to enter judgment on their petition for declaratory judgment because they alleged they will suffer "economic harm" if access to the court is denied prior to exhausting all administrative remedies. We have stated "a litigant who would suffer irreparable harm from administrative litigation delay may proceed to [district] court without exhausting administrative remedies." See Salsbury, 276 N.W.2d at 837.
The plaintiff in Salsbury, who sought to challenge the constitutionality of a statute in district court, failed to show irreparable injury of substantial dimension and, therefore, we concluded its petition for declaratory judgment was premature. Id. at 837-38. We stated monetary losses were insufficient under most circumstances to be considered irreparable injury. Id. at 837; see Riley v. Boza, 542 N.W.2d 519, 522 (Iowa 1996) (in zoning ease, neither an administrative fee nor loss of rental income were sufficient to be considered irreparable injury justifying judicial intervention prior to exhaustion of administrative remedies). We concluded the plaintiff in Salsbury should have taken the judicial review path as required by applicable statutes.
Like the plaintiffs in Salsbury and Riley, plaintiff utilities would not suffer irreparable injury should they be required to exhaust their administrative remedies by appealing the alleged improper rulemaking actions of DOR and their tax assessments to the state board of tax review and from there, if necessary, take judicial review under Iowa Code section 429.3 and chapter 17A to district court.
The district court was correct to reject plaintiffs' unsupported contention that the state tax board would fail to provide an adequate or timely administrative hearing and remedy on this matter. Also, as observed by the district court, plaintiffs have sufficient recourse to obtain any refund of taxes erroneously paid if they are ultimately successful in pursuing their claim. See Iowa Code § 445.60.
3. The injunction request. As a final matter, we conclude plaintiffs' motion for temporary injunction against DOR from issuing final tax assessments based on the questioned valuations was properly dismissed by the district court. The request for injunction was dependent on plaintiffs' petition for declaratory judgment, which we have concluded was improperly brought.
V. Disposition. For reasons best known to plaintiffs, they failed to seek judicial review from the DOR's actions prior to seeking declaratory relief in the district court. The plaintiffs' procedural failures prohibit us from considering any other issues briefed by the parties.
Accordingly, we conclude the district court properly dismissed plaintiffs' petition for declaratory judgment and motion for temporary injunction in this agency action case for failure to exhaust all adequate administrative remedies at the agency level.
AFFIRMED.
All justices concur, except CARTER, J., who concurs and specially concurs, and HARRIS, J., joined by NEUMAN and SNELL, JJ., who dissent.
ANDREASEN and TERNUS, JJ., take no part.
. The following is an excerpt from the Lundy case petition for judicial review showing the petition was filed pursuant to section 17A.19, not pursuant to rule of civil procedure 261. The petition alleged:
There is no adequate administrative remedy available to Petitioners in light of the Respondent's actions in adopting a rule without complying with the Administrative Procedures Act. The judicial review provisions of Chapter 17A.19, Code of Iowa, provide [an] appropriate means for reviewing the procedural rulemak-ing errors of administrative agencies which cannot be corrected by the administrative process after the procedural infraction.
The Respondent Agency has prejudiced substantial rights of Petitioners insofar as its actions as set forth in this Petition:
(a) violate statutory provisions of Iowa law;
(b) exceed the statutory authority of the agency;
(c) establish rules upon unlawful procedures;
(d) constitute unreasonable, arbitrary and capricious procedures impermissible under Iowa law.
See Iowa Code § 17A.19(8)(a), (b), (d), (g).