Court Opinion

ID: 8171896
Source: CourtListenerOpinion
Date Created: 2022-09-09 21:20:33.937887+00
Date Added: 2024-06-11T16:39:46.926773
License: Public Domain

Morse, J.,
dissenting. Contrary to the Court, I do not believe that merely stepping through the motions of the administrative process by filing a timely notice of appeal comports with the exhaustion-of-remedies doctrine. The taxpayers’ total disregard of administrative procedure in failing to appear and present evidence or argument at the administrative hearing should result in a forfeiture of the right to judicial review on the merits. The Court’s holding to the contrary contradicts all of the policy reasons for having an exhaustion rule. Accordingly, I would affirm the well-reasoned decision of the superior court dismissing the taxpayers’ appeal for lack of subject matter jurisdiction.
After receiving notice that additional fuel taxes were owing, taxpayers filed an appeal with the Commissioner of Motor Vehicles pursuant to 23 V.S.A. § 3019. The Commissioner subsequently notified taxpayers that a hearing on their appeal had been scheduled and that they were to “appear through yourself and/or counsel to show why the . . . assessment . . . was not proper.” At taxpayers’ request, the hearing was twice rescheduled, each time followed by an identical notice. Taxpayers ultimately failed to appear at the hearing, *516either in person, through counsel, or by way of affidavit, resulting in an administrative decision upholding the assessment. Taxpayers thereupon appealed the Agency’s decision pursuant to 23 V.S.A. § 3023, which provides for a hearing de novo in superior court. The statutory appeal constitutes a taxpayer’s “exclusive remedy” from an adverse administrative decision. Id. § 3023(b).
The Agency moved to dismiss the taxpayers’ appeal on the ground that they had failed to exhaust their administrative remedies by declining to appear and argue their claim before the commissioner. The trial court granted the motion, ruling that taxpayers may not complain about an administrative hearing they elected not to attend, nor contest a result they might well have avoided had they chosen to appear at the hearing to address the merits. To hold otherwise, the court ruled, would circumvent the statutory scheme, and defeat the underlying purposes of the exhaustion doctrine.
The trial court’s ruling was correct. Exhaustion of administrative remedies is required to afford the parties and the courts the benefit of the administrative agency’s experience and expertise, and to afford the agency the opportunity to cure its own errors. Allowing complainants to bypass their administrative remedy would erode the agency’s authority and effectiveness. McKart v. United States, 395 U.S. 185, 193-95 (1969). Exhaustion serves the interests of the courts as well, inasmuch as a complaining party successful at the administrative level may never have to seek judicial review. Id. at 195. Indeed, the whole purpose of the administrative review process is to resolve the majority of complaints at that level, thereby relieving the courts of a task for which they are not nearly so well suited. Hence, the general rule is that a failure to exhaust deprives the court of subject matter jurisdiction. Stone v. Errecart, 165 Vt. 1, 6, 675 A.2d 1322, 1326 (1996).
Understood in the light of these purposes, it is readily apparent that exhaustion of remedies does not mean the mere initiation of administrative procedures. Rather, it means the initiation and pursuit of them to their appropriate conclusion by appearing, presenting evidence or argument, and receiving a final decision. Otherwise, the agency would effectively be frustrated in its ability to render informed and reliable decisions, and the courts would be burdened by unnecessary cases that might otherwise have been terminated below. Thus, affording judicial review where the complainant has requested an administrative hearing but failed to attend, contradicts the purposes of the exhaustion rule.
For these reasons, other jurisdictions have specifically held that the invocation of an administrative appeal followed by an unexcused *517failure to appear at the subsequent hearing amounts to a failure to exhaust administrative remedies and is fatal to the complainant’s judicial appeal. See, e.g., Purtill v. Harris, 658 F.2d 134, 138 (3d Cir. 1981) (allowing plaintiffs to abandon administrative remedies they initiated in order to take their claims to court would “frustrate the ability of the agency to deal with complaints . . . [and] unnecessarily burden courts with cases that otherwise might be terminated successfully”); Roth v. City of Los Angeles, 126 Cal. Rptr. 163, 169 (Ct. App. 1976) (property owners’ failure to attend administrative hearing “precluded [them] from attacking the . . . procedure in this judicial action”); Boyd v. Supervisor of Assessments, 471 A.2d 749, 751 (Md. Ct. Spec. App. 1984) (taxpayer’s failure to appear before tax board “frustrated totally its ability to play its part in the legislatively-established administrative process” and thereby failed “precondition for Tax Court jurisdiction”); Marquart v. Director of Revenue, 896 S.W.2d 716, 718 (Mo. Ct. App. 1995) (where “the licensee fails to exhaust his or her administrative remedies, . . . the circuit court lacks subject matter jurisdiction to hear a petition for review”); Mullenaux v. State, 651 P.2d 724, 727 (Or. 1982) (although plaintiffs requested an administrative hearing, “their failure to appear at the hearing or to offer any evidence or argument at all on their own behalf . . . forfeited their right of judicial review on the merits”); Webb County Appraisal Dist. v. New Laredo Hotel, Inc., 792 S.W.2d 952, 954-55 (Tex. 1990) (“[I]f the taxpayer is not required to appear at the protest hearing in order to appeal to district court, the administrative hearing process would become useless. . . . [Taxpayers . . . must appear ... as a prerequisite to an appeal to district court.”).
In some cases, as the Court notes, the agency may enter a default judgment against the complainants; in others, it may simply deny the protest. See, e.g., Webb, 792 S.W.2d at 952 (when tax protesters failed to appear, agency “denied the protest and left the valuation unchanged”). There is no requirement, however, that the agency enter a default judgment as a prerequisite to a finding of nonexhaustion. The onus is on the complainant, not the agency.
The Court is nevertheless persuaded that taxpayers were entitled to judicial review because, following the hearing at which they failed to appear, the agency wrote them a letter stating that it had found the assessment to be “proper.” The Court construes this as a “final” decision on the merits, and thus concludes that taxpayers “acted within their rights in appealing that decision to the superior court.” 166 Vt. at 515, 702 A.2d at 62. The reasoning is unpersuasive. As *518noted, a final administrative ruling is a necessary condition to judicial review, but it is not a sufficient condition. The agency’s ruling did not alter the fact that taxpayers abandoned the administrative process they had initiated. They never presented to the commissioner evidence they now claim would have shown that their taxes were paid “at the pump,” evidence which, if persuasive, would have made the instant appeal moot. The circumstances thus present a textbook example of the importance of exhaustion as a precondition to judical review. Accordingly, I would affirm the judgment dismissing the action for lack of subject matter jurisdiction.