Court Opinion

ID: 4154636
Source: CourtListenerOpinion
Date Created: 2017-03-22 15:07:30.846492+00
Date Added: 2024-06-11T14:37:45.078812
License: Public Domain

IN THE COURT OF APPEALS OF IOWA

                                   No. 16-0301
                              Filed March 22, 2017

JOHN JOSEPH FILIPELLI,
     Petitioner-Appellant,

vs.

IOWA RACING AND GAMING COMMISSION,
     Respondent-Appellee,

and

IOWA GREYHOUND ASSOCIATION,
     Intervenor.
________________________________________________________________

      Appeal from the Iowa District Court for Pottawattamie County, James S.

Heckerman, Judge.

      John Filipelli appeals the district court’s finding he lacked standing to

challenge the Iowa Racing and Gaming Commission’s action regarding the

distribution of an escrow account created by an arbitration agreement.

AFFIRMED.

      Kyle J. McGinn of McGinn, Springer & Noethe, P.L.C., Council Bluffs, for

appellant.

      Thomas J. Miller, Attorney General, and David M. Ranscht and Jeffrey C.

Peterzalek, Assistant Attorneys General, for appellee.

      Nicholas J. Mauro of Crawford & Mauro Law Firm, Des Moines, for

intervenor.

      Considered by Vogel, P.J., and Tabor and Mullins, JJ.
                                        2

MULLINS, Judge.

       John Filipelli appeals the district court’s grant of the Iowa Racing and

Gaming Commission (IRGC) and Intervenor Iowa Greyhound Association’s (IGA)

joint motion to dismiss. Filipelli argues the court erred in determining he lacked

standing to challenge the IRGC’s action concerning the distribution of an escrow

fund created by an arbitration agreement. We affirm.

       I.     Background Facts and Proceedings

       The Iowa Legislature created the IRGC to have regulatory jurisdiction over

all gambling operations governed by Iowa Code chapters 99D (2015) (pari-

mutuel racing) and 99F (gambling structures).          The Iowa West Racing

Association (IWRA) is a nonprofit organization that held a pari-mutuel license to

conduct gambling at the Horseshoe/Bluffs Run Casino in Council Bluffs. Prior to

2014, Iowa law required the casino to conduct live greyhound racing and to

contribute to the purses for these races from its slot machine revenue.       The

IWRA and the IGA, a nonprofit corporation organized to promote the breeding

and racing of greyhounds in Iowa for sport, were required by law to reach an

agreement as to the amount of slot machine revenues that should be used to

supplement purses at the racetrack each year.          The IWRA and the IGA

frequently failed to reach an agreement, and as a result, they often submitted the

matter to binding arbitration.

       In 1995, the IWRA and the IGA failed to reach an agreement regarding the

amount the casino would contribute to supplement purses at Bluffs Run in 1996

and submitted the matter to an arbitration panel. The panel issued a decision

and award setting the 1996 purse supplement at four million dollars. The panel
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also established an escrow account comprised of an additional four million

dollars contributed from slot machine revenue at the casino to be used to

supplement purses in future years as a result of the casino’s underpayment of

purses in previous years due to underestimated adjusted gross receipts as

projected by the IWRA. The escrow fund was held in the name of the IGA and

the IWRA, and the IGA maintained exclusive control regarding its investment. In

1998, an arbitration panel suspended contributions to the escrow account after

the IWRA and the IGA failed to develop a specific plan for the funds in the

account.

      In 2014, the Iowa Legislature discontinued live greyhound racing at the

casino, effective in December 2015. See Iowa Code § 99D.9A. The legislature

provided the IGA the opportunity to obtain a pari-mutuel license and operate its

own live greyhound racing in Dubuque. See Iowa Code §§ 99D.9B, .9C. The

IGA subsequently applied for and received such a license and began racing.

      The IGA and the IWRA attempted to negotiate an agreement for the

disbursement of the funds in the escrow account. They were unable to agree on

how to distribute the funds and submitted the matter to the IRGC for

consideration. On March 5, 2015, the IRGC moved to distribute the escrow fund:

“[O]ne-half [(roughly 2.6 million dollars)] for purses at Bluffs Run based upon the

past five years, 2011–2015, and one-half . . . to the [IGA] to be used for purses in

the operation of the Dubuque track.” The IRGC approved the motion with four

“yes” votes and one “no” vote. Neither the IWRA nor the IGA challenged the

IRGC’s decision.
                                              4

       On October 27, 2015, Filipelli, a licensed dog breeder and kennel owner-

operator who began participating in racing at Bluffs Run in 2010, filed a petition

for judicial review of the IRGC’s March 5 action, pursuant to Iowa Code chapter

17A.19, claiming the decision was contrary to Iowa law and the prior arbitration

awards. In his petition, Filipelli alleged he had standing to challenge the IRGC’s

action because (1) “[h]e ha[d] a personal interest in the illegal transfer of funds

out of the Purse Escrow account,” (2) “[t]he illegal transfer of 2.6 million dollars

has a direct adverse effect on [him] in the loss of funds in excess of $60,000.00,”

(3) “[t]he actions of the [IRGC] in allowing the transfer of the funds contrary to

statute directly caused the injury to [him],” and (4) “this issue is more likely than

not to be redressed by a favorable decision for [him].” Filipelli requested the

court enter “an order that the purse escrow funds be paid only to the authorized

recipients who were operating on the date of cessation of racing at the Bluffs Run

Track.”

       On November 30, the IRGC filed a pre-answer motion to dismiss Filipelli’s

petition, arguing Filipelli did not have proper standing to challenge the IRGC’s

action. On December 1, the IGA petitioned for leave to intervene and participate

as a party to this matter and join in the IRGC’s motion to dismiss.1

       On January 25, 2016, the district court granted the IRGC and IGA’s joint

motion to dismiss based on Filipelli’s lack of standing.             The court concluded

Filipelli had no specific personal or legal interest in the prior arbitration awards

1
  In its joinder, the IGA alternatively claimed Filipelli’s petition should be dismissed for
failure to state a claim upon which relief may be granted. Because the district court
dismissed Filipelli’s petition on the jurisdictional issue of standing, it did not rule on this
claim.
                                        5

that established the escrow account because he was never a party to those

proceedings. The court also determined that even if Filipelli had an interest, he

had not shown that any interest had been adversely affected. Further, the court

noted the dispute arose because the IWRA and the IGA were unable to reach an

agreement regarding the disbursement of the funds in the account, not because

of any action taken by the IRGC in resolving the disputed issues between the

parties. The court noted none of the arbitration proceedings involved Filipelli,

who began racing in Iowa fifteen years after the escrow account was created.

The court further dismissed Filipelli’s claim that Iowa Code section 99D.9A(6)

specifically provides the entirety of the funds in the escrow account should be

distributed to kennel owners who raced dogs at the casino, concluding “[t]he only

reference to the escrow fund within the new sections of the code enacted in 2014

is for the explicit purpose of providing both the IGA and IWRA with immunity from

any claims arising from distributions made or not made from the escrow fund.”

The court determined that section “merely identifies the parties and the funds,

and implicates the immunity the parties enjoy with respect to the distribution of

the funds so identified.”

       Filipelli appeals.

       II.    Standard of Review

       “We review a decision by the district court to dismiss a case based on the

lack of standing for errors at law.” Godfrey v. State, 752 N.W.2d 413, 417 (Iowa

2008); see also Iowa Code § 17A.20 (allowing appellate review of a final

judgment of the district court in an action for judicial review of an agency

decision). “When reviewing a motion to dismiss, we accept the facts alleged in
                                         6

the petition as true.” Hawkeye Foodserv. Distrib., Inc. v. Iowa Educs. Corp., 812

N.W.2d 600, 604 (Iowa 2012). “Dismissal is proper ‘only if the petition shows no

right of recovery under any state of facts.’” Id. (quoting Southard v. Visa U.S.A.

Inc., 734 N.W.2d 192, 194 (Iowa 2007)).

       III.   Analysis

       Filipelli claims the district court erred in determining he lacked standing to

challenge the IRGC’s March 5, 2015 decision. In order to have standing to bring

this action for judicial review under the Iowa Administrative Procedure Act, Iowa

Code chapter 17A, Filipelli “must (1) have a specific personal or legal interest in

the litigation and (2) be injuriously affected.”    Godfrey, 752 N.W.2d at 418

(quoting Alons v. Iowa Dist. Ct., 698 N.W.2d 858, 864 (Iowa 2005)). These two

elements “are separate requirements for standing, both of which must be

satisfied.” Citizens for Responsible Choices v. City of Shenandoah, 686 N.W.2d

470, 475 (Iowa 2004).

       In cases such as this, “when the ‘asserted injury arises from [an] allegedly

unlawful regulation (or lack of regulation) of someone else,’ as opposed to cases

in which the ‘plaintiff is himself an object of the action (or foregone action) at

issue,’” we must consider two additional elements. Godfrey, 752 N.W.2d at 421

(quoting Lujan v. Defs. of Wildlife, 504 U.S. 555, 561–62 (1992)). “[T]he plaintiff

must establish ‘a causal connection between the injury and the conduct

complained of’ and that the injury is ‘“likely,” as opposed to merely “speculative,”

to be “redressed by a favorable decision.”’” Id. (quoting Lujan, 504 U.S. at 561–

62). “Whether litigants have standing does not depend on the legal merit of their

claims, but rather whether, if the wrong alleged produces a legally cognizable
                                         7

injury, they are among those who have sustained it.” Citizens, 686 N.W.2d at

475.

       The dispute at the heart of this case is over an arbitration award between

the IWRA and the IGA, decided over two decades ago and fifteen years before

Filipelli began breeding and racing in Iowa. Filipelli received a portion of the

funds that had been held in the escrow account since 1996 because he

participated in live greyhound racing at Bluffs Run between the years of 2011–

2015. Filipelli was never a party in the underlying proceedings and thus clearly

did not “exhaust[] all adequate administrative remedies.” Iowa Code § 17A.19(1)

(providing only “[a] person or party who has exhausted all adequate

administrative remedies and who is aggrieved or adversely affected by any final

agency action is entitled to judicial review”); see also Pub. Emp’t Relations Bd. v.

Stohr, 279 N.W.2d 286, 292 (Iowa 1979) (directing the district court “to strike the

names of those individual petitioners who did not participate in the proceedings

before the agency”).    He, therefore, does not have standing to seek judicial

review of the IRGC’s March 5 decision disposing of the escrow account. See

Iowa Code § 17A.19(1). We need not consider the other elements in the test for

standing. See Citizens, 686 N.W.2d at 475.

       Filipelli also claims he has proper standing to seek judicial review of the

IRGC’s action because he is a third-party beneficiary of the 1995 arbitration

award establishing the escrow account. Filipelli did not raise this claim before

the district court, and the court did not rule on it. Consequently, this claim is not
                                            8

preserved for our review.2 See Meier v. Senecaut, 641 N.W.2d 532, 537 (Iowa

2002) (“It is a fundamental doctrine of appellate review that issues must ordinarily

be both raised and decided by the district court before we will decide them on

appeal.”).

       Accordingly, we conclude the district court correctly determined Filipelli

lacks standing to challenge the IRGC’s March 5, 2015 action.

       AFFIRMED.

2
   In his brief, Filipelli maintains error was preserved for our review because he timely
filed a notice of appeal.          Thomas A. Mayes & Anuradha Vaitheswaran, Error
Preservation in Civil Appeals in Iowa: Perspectives on Present Practice, 55 Drake L.
Rev. 39, 48 (2006) (footnote omitted) (explaining, “[a]s a general rule, the error
preservation rules require a party to raise an issue in the trial court and obtain a ruling
from the trial court”). The purpose behind our error-preservation rules is to ensure the
district court had an opportunity to avoid or correct errors and to provide the appellate
court with an adequate record to review any purported errors. State v. Pickett, 671
N.W.2d 866, 869 (Iowa 2003). Filipelli’s timely notice of appeal, without more, is not
sufficient to preserve this alleged error for our review.