Opinion ID: 1277071
Heading Depth: 2
Heading Rank: 2

Heading: A. The Conflict

Text: ¶ 5 In Herzberg v. David, 27 Ariz.App. 418, 555 P.2d 677 (1976), judges of Division Two sitting in a Division One case held that a party aggrieved by an administrative decision must use a rehearing procedure as a condition precedent to judicial review. Drawing upon A.R.S. § 12-901(2)(1992) [1] and A.R.S. § 12-902(B)(1992), [2] the court concluded that an application for rehearing was an application for administrative review within the meaning of § 12-902(B), and therefore judicial review was foreclosed for the failure to file a motion for rehearing. Id. at 419, 555 P.2d at 678. ¶ 6 In Arizona Law Enforcement Merit System Council v. Dann, 133 Ariz. 429, 652 P.2d 168 (App.1982), Division One of the Court of Appeals agreed with Herzberg, which it characterized as a Division Two case. Id. at 432, 652 P.2d at 171. As recently as Rosen v. Board of Medical Examiners, 185 Ariz. 139, 143, 912 P.2d 1368, 1372 (App. 1995), Division One followed Dann to hold that a motion for rehearing was within the scope of A.R.S. § 12-902(B) such that the failure to file a motion for rehearing precludes judicial review. We granted review in Rosen, but ultimately dismissed the case because it had become moot. Rosen v. Board of Med. Exam'rs, 186 Ariz. 517, 924 P.2d 1036 (1996). ¶ 7 While Herzberg was governed by the court's understanding of the Administrative Review Act, A.R.S. §§ 12-901 to -914 (1992), see Foremost Life Insurance Co. v. Trimble, 119 Ariz. 222, 224, 580 P.2d 360, 362 (App. 1978), a 1976 amendment to the Administrative Procedure Act, A.R.S. § 41-1062(B)(1992), as amended by Laws 1976, ch. 104, § 4, produced similar outcomes. [3] See Oliver v. Arizona Dep't of Racing, 147 Ariz. 83, 86, 708 P.2d 764, 767 (App.1985); Oliver v. State Land Dep't, 143 Ariz. 126, 128, 692 P.2d 305, 307 (App.1984). ¶ 8 Against this historic backdrop, Division Two of the Court of Appeals in the instant case decided that the failure to seek rehearing was not a bar to judicial review. Southwestern Paint & Varnish Co. v. Arizona Dep't of Envtl. Quality, 191 Ariz. 40, 951 P.2d 1232 (App.1997). Relying upon our opinion in Campbell v. Chatwin, 102 Ariz. 251, 257, 428 P.2d 108, 114 (1967), the court noted that the doctrine of exhaustion of administrative remedies does not apply where the remedy is permissive. Southwestern Paint, 191 Ariz. at 42, 951 P.2d at 1233. It then rejected Herzberg 's reading of A.R.S. § 12-901(2) and § 12-902(B). Id. at 43, 951 P.2d at 1234. The court held that the delayed finality of § 12-901(2) applies only when an application for a rehearing or review is made, and thus the remedy is permissive. The court did not address Herzberg 's characterization of a rehearing as an application for administrative review within the meaning of § 12-902(B), but instead characterized that section as simply a timing provision. Id. The court then turned to A.A.C. R18-1-218(A) [4] and concluded that the agency rule was unambiguous in stating that rehearing is permissive. Id.