Opinion ID: 2565571
Heading Depth: 1
Heading Rank: 2

Heading: the district court lacked authority to hear the property owners' claims

Text: The threshold issue is whether the Property Owners' claims were properly before the district court. Pursuit of statutory administrative remedies is a condition precedent to judicial review. Fairway Dev. Co. v. Bannock County, 119 Idaho 121, 124, 804 P.2d 294, 297 (1990). [T]he doctrine of exhaustion generally requires that the case run the full gamut of administrative proceedings before an application for judicial relief may be considered. Regan v. Kootenai County, 140 Idaho 721, 724, 100 P.3d 615, 618 (2004). The doctrine of exhaustion serves important policy considerations, including providing the opportunity for mitigating or curing errors without judicial intervention, deferring to the administrative process established by the Legislature and the administrative body, and the sense of comity for the quasi-judicial functions of the administrative body. Regan, 140 Idaho at 725, 100 P.3d at 619 (quoting White v. Bannock County Commissioners, 139 Idaho 396, 401-02, 80 P.3d 332, 337-38 (2003)). Consistent with these principles, courts infer that statutory administrative remedies implemented by the Legislature are intended to be exclusive. See, e.g., Castrigno v. McQuade, 141 Idaho 93, 96, 106 P.3d 419, 422 (2005); cf. I.R.C.P. 84(a)(1) (providing that actions of a local government or its officers are not subject to judicial review unless expressly authorized by statute). 1. Overview of administrative procedures The administrative remedies for property tax assessments are provided in Chapters 5 and 38 of Title 63 of the Idaho Code, which respectively govern the county board of equalization and the board of tax appeals. A taxpayer may appeal an assessment to the county board of equalization, subject to certain procedural requirements. I.C. § 63-501A(1). The board of equalization may consider an appeal only if it is timely filed, normally by the fourth Monday of June. I.C. §§ 63-501(1)(c), 63-501A(2). The board must examine and act upon all complaints filed with the board in regard to the assessed value of any property entered on the property rolls and must correct any assessment improperly made. I.C. § 63-502. Within 30 days after the board's decision the taxpayer may appeal to the board of tax appeals. I.C. §§ 63-511(1), 63-3811. The board of tax appeals may affirm, reverse, modify or remand any order of the board of equalization, and shall grant other relief, invoke such other remedies, and issue such orders in accordance with its decision, as appropriate. I.C. § 63-511(4). From the decision of the board of tax appeals, the taxpayer may appeal to the district court in accordance with Idaho Rule of Civil Procedure 84. I.C. § 63-3812. Prior to 1985 taxpayers were generally required to pursue their claims first to the board of equalization and then to the board of tax appeals before bringing an action in district court. In 1985 the Legislature amended the predecessor of section 63-511 by the addition of a new subsection (3), which provides as follows: Any appeal that may be taken to the board of tax appeals may, during the same time period, be taken to the district court for the county in which the property is located. 1985 Idaho Sess. Laws ch. 219, § 1. The time period referred to is the 30-day limit specified in section 63-511(1). [1] The purpose of the amendment was to allow taxpayers to elect to bypass a portion of the administrative appeal process that would otherwise be required under the doctrine on exhaustion. See Statement of Purpose, 1985 Idaho Sess. Laws ch. 219 (The purpose of the amendment to Section [63-511's predecessor] will allow a taxpayer to bypass the Board of Tax Appeals and go directly to District Court in appealing property values.). The amendment did not remove the exhaustion requirement but provides a limited mechanism for direct appeal to a district court by which a claimant can bypass one step in the administrative process, namely the board of tax appeals. The Property Owners appealed their assessments to the county board of equalization, which denied their claims on July 12, 2004. Rather than appeal to either the board of tax appeals or the district court under section 63-511, the Property Owners filed a complaint in the district court on August 12, 2004, 31 days after the decision of the board of equalization. They do not argue that the complaint should be considered timely; rather they contend their claims constitute an independent action for which exhaustion is not required because the administrative body (i.e. the board of tax appeals) would be incapable of rendering the relief requested. 2. The district court's ruling The district court denied the motion to dismiss for failure to exhaust, commenting on the exception for futility and a belief that the board of tax appeals would not take up constitutional issues. The district court also noted the bypass procedure available in section 63-511(3). The right to pursue an appeal to the district court is limited in duration. The existence of that right which was not utilized, does not support the availability of a direct action bypassing administrative remedies. In fact the bypass procedure provides access to a court of general jurisdiction in an orderly process, circumscribed by a 30 day limit. In McCuskey v. Canyon County, 123 Idaho 657, 660, 851 P.2d 953, 956 (1993), the Court held that a district court had authority to issue a declaratory judgment regarding the validity of a zoning ordinance in spite of failure to exhaust, but the Court recognized that appeals regarding the issuance of a particular permit should still be reviewed under the statutory procedures. In this case the Property Owners maintain that the procedures utilized in Valley County are contrary to state statutes and regulations by considering neighborhoods instead of the categories of property. Clearly interpretation of state statutes and regulations would fall within the jurisdiction of either the board of tax appeals or the district court. Failure to pursue either avenue in the established administrative procedure precludes challenge in an independent action. See Bone v. City of Lewiston, 107 Idaho 844, 847-48, 693 P.2d 1046, 1049-50 (1984) (allowing applicants to bypass the statutory administrative procedure would render that procedure meaningless). 3. Exceptions to Exhaustion Requirement The rule that administrative remedies must be exhausted before the district court will hear a case is a general rule and has been deviated from in some cases. Fairway Dev., 119 Idaho at 125, 804 P.2d at 298. Specifically, the requirement will be dispensed with when the interests of justice so require or when the agency has acted outside its authority. Regan, 140 Idaho at 725, 100 P.3d at 619 (citing Arnzen v. State, 123 Idaho 899, 906, 854 P.2d 242, 249 (1993)); accord Fairway Dev., 119 Idaho at 125, 804 P.2d at 298; Grever v. Idaho Tel. Co., 94 Idaho 900, 903, 499 P.2d 1256, 1259 (1972). Styled differently, courts will not require exhaustion when exhaustion will involve irreparable injury and when the agency is palpably without jurisdiction. Sierra Life Ins. Co. v. Granata, 99 Idaho 624, 627, 586 P.2d 1068, 1071 (1978); see also Regan, 140 Idaho at 726, 100 P.3d at 620; Fairway Dev., 119 Idaho at 125, 804 P.2d at 298. There is no basis to conclude that the Assessor or the Board of Equalization lacked authority to assess the Property Owners' properties or impose the property tax. See Castrigno, 141 Idaho at 98, 106 P.3d at 424; V-1 Oil Co. v. Bannock County, 97 Idaho 807, 809, 554 P.2d 1304, 1306 (1976) (Those allegations simply allege excessive assessments. . . . There is no contention that the assessor lacked authority to assess the property in some amount. . . .). That an assessment may be erroneous does not render the tax absolutely void. Washburn-Wilson Seed Co. v. Jerome County, 65 Idaho 1, 8, 138 P.2d 978, 981 (1943). The Property Owners claim that the interests of justice required immediate judicial intervention. Typically this situation occurs where irreparable harm results from the administrative process itself. See Sierra Life, 99 Idaho at 629, 586 P.2d at 1073 (excusing failure to exhaust where the subject matter of the action involved alleged proposed unlawful action by the agency that would cause irreparable harm to the plaintiff); Owsley v. Idaho Indus. Comm'n, 141 Idaho 129, 135, 106 P.3d 455, 461 (2005) (recognizing an exception to the exhaustion requirement where bias or prejudgment by the decisionmaker can be demonstrated because due process entitles a person to an impartial tribunal and requiring exhaustion before a biased decision maker would be futile). The standard may also be satisfied by showing that the agency lacks power to grant the requested relief, i.e., that exhaustion would be futile. This Court has decided that [t]he exceptions to the exhaustion doctrine do not apply . . . where the issue is the correctness of the tax assessments. Fairway Dev., 119 Idaho at 125, 804 P.2d at 298; accord Castrigno, 141 Idaho at 96, 106 P.3d at 422. The Property Owners, however, contend that this rule does not apply in their case because the agency lacked authority to grant the relief requested, relying on Idaho Code section 63-502, which states that the Board of Equalization's function is  confined strictly to assuring that the market value for assessment purposes of property has been found by the assessor and to ensuring the proper application of any exemptions. I.C. § 63-502 (emphasis added). The Property Owners maintain that they did not seek a determination by the district court of whether their individual assessments were proper or whether they received appropriate exemptions. They sought a ruling that the improper assessment methods and procedures had an unequal impact on them, requiring that all properties in Valley County be re-assessed using proper methods. They assert that the administrative agency could not grant the remedies they sought, and exhaustion should not be required. The limited powers of the Board of Equalization would not preclude either the board of tax appeals or the district court from reviewing the methods and procedures for assessing property in Valley County to assure that proper methods and procedures were followed. The board of tax appeals or the court may affirm, reverse, modify or remand any order of the board of equalization, and shall grant other relief, invoke such other remedies, and issue such orders in accordance with its decision, as appropriate.