Opinion ID: 1822058
Heading Depth: 1
Heading Rank: 1

Heading: The Sua Sponte Dismissal of the Petition for Judicial Review.

Text: Teleconnect maintains the district court erred in dismissing its petition for judicial review without notice of its intention to do so and without affording it a hearing and opportunity to resist. It also raises an issue of procedural due process in respect to that action. Iowa Code section 17A.9 deals with agency declaratory rulings. It provides: Each agency shall provide by rule for the filing and prompt disposition of petitions for declaratory rulings as to the applicability of any statutory provision, rule or other written statement of law or policy, decision or order of the agency. Rulings disposing of petitions have the same status as agency decisions or orders in contested cases. The commerce commission has adopted rules governing declaratory rulings. See I.A.C. § 2504.1-.7. (There is no contention that Teleconnect did not comply with these rules in filing its petition for declaratory ruling with that agency.) The commission also has rules defining the conditions for dismissal of petitions for declaratory rulings. These rules, in pertinent part, state: 2504.6(17A,474) Dismissal. The commission may, in its discretion, dismiss the petition for any reason which it deems just and proper, including, but not limited to, the following: .... 12. The petitioner requests a declaratory ruling which, though technically binding only upon the commission and the petitioner, would necessarily determine the legal rights of other persons who have not filed such a petition and whose position on the issue may fairly be presumed to be adverse to the petitioner, or who are unrepresented in the declaratory ruling proceeding. Citing subsection 12 of its rule, the commerce commission refused to issue a ruling in this case, pointing out that other long distance carriers, such as AT & T, MCI, and GTE Sprint, would be affected by any ruling made on behalf of Teleconnect. Iowa Code section 17A.19 provides the exclusive means of judicial review of agency action. Public Employment Relations Board v. Stohr, 279 N.W.2d 286, 289 (Iowa 1979) (citing Richards v. Iowa State Commerce Commission, 270 N.W.2d 616, 619 (Iowa 1978) ). `Agency action' includes a declaratory ruling or a refusal to issue such a ruling. See § 17A.2(9); Burlington Community School District v. Public Employment Relations Board, 268 N.W.2d 517, 521 (Iowa 1978). Cf. Schmitt v. Iowa Department of Social Services, 263 N.W.2d 739, 743 (Iowa 1978) (refusal to adopt rules requested by citizen was reviewable agency action). Because, in this case, the commission's refusal to issue a declaratory ruling was a final action, all administrative remedies were exhausted. See Iowa Code §§ 17A.15, .19(1). The commission's dismissal of Teleconnect's petition for a declaratory ruling was thus reviewable under the standards furnished by section 17A.19(8). A district court, reviewing agency action, exercises only appellate jurisdiction. Campbell v. Iowa Beer and Liquor Control Department, 366 N.W.2d 574, 576 (Iowa 1985); Stohr, 279 N.W.2d at 290; Iowa Public Service Company v. Iowa State Commerce Commission, 263 N.W.2d 766, 768-69 (Iowa 1978). As we have previously noted, [w]hen resolution of a controversy has been delegated to an administrative agency, the district court has no original authority to declare the rights of parties or the applicability of any statute or rule. Stohr, 279 N.W.2d at 290. See also Bonfield, The Iowa Administrative Procedure Act: Background, Construction, Applicability, Public Access to Agency Law, The Rulemaking Process, 60 Iowa L.Rev. 731, 806 n. 271 (1975). The court's power to decide such issues is derived from and is completely dependent upon its authority to review agency actions. Stohr, 279 N.W.2d at 290. The commission in this case stated in its order dismissing Teleconnect's petition that it was considering initiating other proceedings to address the competition issue. It was obviously of the opinion that a declaratory ruling was not the proper vehicle to make a determination of competition as set forth in Iowa Code section 476.1. The general rule with regard to decisions of this type is that the choice made between proceeding by general rule or by individual, ad hoc litigation is one that lies primarily in the informed discretion of the administrative agency. Bonfield, supra, at 925 (citing Security Exchange Commission v. Chenery Corp., 332 U.S. 194, 203, 67 S.Ct. 1575, 1580, 91 L.Ed. 1995, 2002 (1947)). This court has similarly held: Absent statutory guidance, the choice of whether to develop policy by rule, contested case, or both, lies [within] the informed decision of the administrative agency, S.E.C. v. Chenery Corp., 332 U.S. 194, 203, 67 S.Ct. 1575, 1580, 91 L.Ed. 1995, 2002 (1947). Either means may be used so long as the statutory procedure is complied with. See Bonfield, supra, at 924-927. Of course, a rule has the binding effect of law, whereas the decision of a contested case is but of precedential value. Young Plumbing and Heating Co. v. Iowa Natural Resources Council, 276 N.W.2d 377, 382 (Iowa 1979). Hence, the commission's decision to dismiss appellant's petition for declaratory ruling was within its discretion. This action merely required Teleconnect, or other interested parties, to initiate proceedings other than those for a declaratory ruling. It did not amount to an implicit ruling on the merits as argued by Teleconnect. Teleconnect strenuously objects to the summary procedure in the district court on judicial review of that ruling. It argues that it was denied notice of the court's intent to dismiss the case and that the dismissal was not in response to any motion filed by the commission, thereby catching Teleconnect by surprise. We have noted the authority of a court to sua sponte dismiss a case, although we have emphasized the need to exercise this authority sparingly. See Motz v. Motz, 207 N.W.2d 580 (Iowa 1973) ([O]ur rules and statutes do not expressly authorize trial courts on their own initiative, to dismiss actions such as this one, except for failure to prosecute.); Rush v. Sioux City, 240 N.W.2d 431, 439 (Iowa 1976) (The more logical approach is to allow trial courts to exercise the power to sua sponte dismiss actions in a `restrained' manner.). At the outset, however, it does not appear that the court's actions here were beyond the contemplation of the parties. This is apparent from the colloquy between the court and the lawyers at the time of the hearing on the commission's application for the procedural schedule under rule 333(b). At one point, this exchange took place: THE COURT: No doubt but the issue at the moment appears to be what in the world are we supposed to do next. The issue at this pointthe first issue is not whether or not Teleconnect is subject to competition. The first issue is what do I do. Do I decide am I supposed to hold the trial or not hold a trial so I don't know how long it's going to take you to depose these people. How long will it take you to present if you want anything else on this issue, if I decide I'm not supposed to do what you want me to do, there is no point in having the schedule for doing the depositions. MR. COLLINS: That's right. .... THE COURT: The first thing isthe first issue I have to resolve is what I'm supposed to do, then we can worry about whether or not if I decide I'm supposed to conduct a hearing like you wanted, then that's fine, we have a schedule to do that. It's not fine with you, I understand, but if I decide that they're [the commission] right, then I'm not sure what you want me to do with this, dismiss the whole thing or whatever, if I decide what you want to do is the right thing to do, then your depositions schedule doesn't mean anything. MR. COLLINS: That's right except that we're here today. I don't think you need to say depose Varley on a certain day or submit on another day. I'm saying as long as we're here we could say if there is going to be a hearing, let's have it on a given day. We're all sitting here. We might as well shoot toward a date rather than having you decide which I don't mean to be presumptuous at all but when you have read the whole pleading in sequence of things here, then we wouldn't be back again to say now let's get together and decide when, so it would be only if you decide that you are going to have the hearing which I think will be the case we've got a date; and if you decide we don't, so what, why take another trip to do that. [Emphasis added.] At another point, this colloquy occurred: THE COURT: I understand. Okay. Now, it seems to me the first thing we have to do is to decide on the preliminary stuff. I'm not going to set any further hearing date or any discovery deadlines or anything else. How faris there anything else you want me to have before I decide the first issue which is what in the world I'm supposed to do next, is it all here? MR. COLLINS: I think it's all here. THE COURT: If I read this from cover to cover and understand all of it and read all the cases and decide what we're to do next, this is all I need? MR. COLLINS: I believe so. MR. NUGENT: Just the transcript. From this colloquy, it appeared that the parties were at least aware that a dispositive ruling might be made on the basis of the arguments at the time of the scheduling hearing and the authorities cited to the court. In addition, under the unique posture of this case, it was proper for the district court to dismiss the petition for judicial review without further notice and hearing because ultimately the court had no choice but to dismiss it. No additional hearing, presentation of evidence, legal arguments, or presentation of legal authorities could change that. This is so because, as the district court pointed out in its ruling, Division I could not be sustained; the commission had discretion to summarily dismiss the petition and did not in fact rule on the merits of the controversy as argued by Teleconnect. In connection with Division II, the court had no authority, in the event it determined the issue had not been resolved on the merits, to require the commission to do so. It is clear from a reading of the statutes and commission rules quoted above, that the means by which Teleconnect would be permitted to urge its jurisdiction argument were within the discretion of the commission. It was not required to do so by declaratory ruling but could, as it did in this case, require it to be done by some other means. The district court would be without authority to order otherwise. We conclude the district court did not act improperly in dismissing the petition for judicial review. While it would, perhaps, have been more appropriate to provide Teleconnect with a clearer notice that immediate dismissal was an option being considered by the court, counsel for Teleconnect should have been aware from the comments made at the hearing that this could in fact happen. Moreover, as we have discussed, the court's hands were tied. At some point, either at the outset of the proceedings or later, the petition would have to have been resolved against Teleconnect.