Ramsay v. Kane County Human Resource Special Service District ( 2012 )

IN THE UTAH COURT OF APPEALS
‐‐‐‐ooOoo‐‐‐‐
Lori Ramsay and Dan Smalling, ) OPINION
)
Plaintiffs and Appellants, ) Case No. 20100659‐CA
)
v. )
) FILED
Kane County Human Resource Special ) (April 5, 2012)
Service District; Utah State Retirement )
System; Dean Johnson; and John ) 2012 UT App 97Hancock Life Insurance Company, )
)
Defendants and Appellees. )
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Third District, Salt Lake Department, 090921344
The Honorable L.A. Dever
Attorneys: Brian S. King, Salt Lake City, for Appellants
Timothy C. Houpt and Mark D. Tolman, Salt Lake City, for Appellee
Kane County Human Resource Special Service District
David B. Hansen and Liza J. Eves, Salt Lake City, for Appellee Utah
State Retirement System
Chad J. Utley and Brandon L. Kidman, St. George, for Appellee Dean
Johnson
Thomas R. Barton and Florence M. Vincent, Salt Lake City; and
H. Joseph Escher III, San Francisco, California, for Appellee John
Hancock Life Insurance Company
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Before Judges Voros, Davis, and Thorne.
DAVIS, Judge:
¶1 Lori Ramsay and Dan Smalling, individually and as representatives of a class of
similarly situated individuals (collectively, Plaintiffs), appeal the trial court’s dismissal
of their complaint for lack of subject matter jurisdiction. We affirm in part and reverse
in part. We affirm the trial court’s dismissal with respect to those claims that fall under
the Utah State Retirement and Insurance Benefit Act (the Act) and reverse and remand
with instructions for the trial court to stay the proceedings as to those claims that do not
fall under the Act pending resolution of the related administrative proceeding. Cf. Bar
Harbor Banking & Trust Co. v. Alexander, 411 A.2d 74, 79 (Me. 1980) (remanding “with
instructions to stay further action pending completion of the administrative
proceedings”).
BACKGROUND
¶2 Plaintiffs filed a complaint on December 16, 2009, alleging several claims against
the Kane County Human Resource Special Service District (the Hospital),1 the Utah
State Retirement System (URS), Dean Johnson, and John Hancock Life Insurance
Company (John Hancock). Plaintiffs allege that the Hospital failed “to fund [the
Plaintiffs’] retirement benefits in the amounts and manner required by Utah statute and
federal law” and that Johnson and John Hancock, who assisted the Hospital in setting
up its retirement benefits program, and URS, which administers the Act that the
Hospital’s retirement plan allegedly violated, either neglected to advise or inadequately
advised the Hospital regarding its duty. Plaintiffs also allege that URS failed to remedy
the situation when initially contacted by Plaintiffs. URS did eventually commence a
proceeding before the Utah State Retirement Board (the Board) against the Hospital “to
recover the unpaid benefit contributions from 1993 to 2009,” and Ramsay and Smalling,
as individuals and not as representatives of a class, were allowed to intervene in that
administrative proceeding.2 Plaintiffs filed their complaint several months after URS
1
According to the complaint, “Kane County Human Resource Special Service[]
District . . . is a governmental entity that for many years has operated the Kane County
Hospital” where Plaintiffs currently work or have worked.
2
Ramsay and Smalling joined the administrative proceeding eight months after
their complaint had been filed. URS filed its “Notice of Board Action” against the
(continued...)
20100659‐CA 2
commenced the administrative proceeding, raising five causes of action against
Defendants: “1) breach of contract; 2) breach of the covenant of good faith and fair
dealing; 3) breach of fiduciary duty; 4) negligence; and 5) declaratory and injunctive
relief.” Each of the defendants responded to Plaintiffs’ complaint individually,
asserting a similar argument that the trial court lacked subject matter jurisdiction based
on Plaintiffs’ failure to exhaust existing administrative remedies in light of the ongoing
proceeding before the Board. The trial court agreed and dismissed Plaintiffs’ complaint
for lack of subject matter jurisdiction. In its dismissal, the trial court also noted “that the
case was filed in the improper venue . . . [and] should have initially been filed in Kane
County,” not Salt Lake County. Plaintiffs appeal the trial court’s dismissal.
ISSUE AND STANDARD OF REVIEW
¶3 Plaintiffs argue that the trial court erred in dismissing their case for lack of
subject matter jurisdiction instead of staying the case while awaiting resolution of the
proceeding before the Board.3 “We review the district courts’ dismissals for lack of
subject matter jurisdiction for correctness and accord no deference to their legal
conclusions.” Strawberry Water Users Ass’n v. Bureau of Reclamation (In re Uintah Basin),
2006 UT 19, ¶ 7, 133 P.3d 410.
ANALYSIS
2
(...continued)
Hospital on August 11, 2009; Plaintiffs filed their complaint on December 16, 2009; and
Plaintiffs’ motion to intervene in the administrative proceeding was granted by the
Board as to Ramsay and Smalling, and denied as to their proposed class, on August 18,
2010.
3
Plaintiffs also argue that the trial court’s determination that the case was filed in
the wrong venue is erroneous. Because of the manner in which we rule on Plaintiffs’
subject matter jurisdiction argument, we do not reach this argument. Rather, we note
that on remand and after completion of the administrative proceedings, venue may
need to be reconsidered, with the relevant statutory provisions taken into consideration,
see, e.g., Utah Code Ann. §§ 78B‐3‐307 to ‐309 (2008); Utah Code Ann. § 63G‐7‐502
(2011).
20100659‐CA 3
¶4 Plaintiffs argue that the trial court incorrectly dismissed their case for failure to
exhaust administrative remedies in accordance with Utah Code section 49‐11‐613, see
Utah Code Ann. § 49‐11‐613 (Supp. 2011) (governing appeals procedures under the
Act), and the Utah Administrative Procedures Act (the UAPA). The Utah State
Retirement and Insurance Benefit Act provides that “any dispute regarding a benefit,
right, obligation, or employer right under this title is subject to the procedures provided
under this section,” which requires “[a] person who disputes a benefit, right, obligation,
or employment right . . . [to] request a ruling by the executive director [of the Board],”
that can then be appealed to a hearing officer. See id. § 49‐11‐613(1)(b)‐(d). The hearing
officer’s review shall comply with the “procedures and requirements” of the UAPA,
and “[t]he [B]oard shall review and approve or deny all decisions of the hearing
officer.” Id. § 49‐11‐613(2)(b), (3). “A party may file an application for reconsideration
by the [B]oard” based on various grounds and can obtain judicial review of that
decision in accordance with the UAPA. Id. § 49‐11‐613(7). Under the UAPA, “[a] party
may seek judicial review only after exhausting all administrative remedies available,
except [when] . . . (i) the administrative remedies are inadequate; or (ii) exhaustion of
remedies would result in irreparable harm disproportionate to the public benefit
derived from requiring exhaustion.” Utah Code Ann. § 63G‐4‐401(2), (2)(b)(i)‐(ii)
(2011).
¶5 The UAPA’s requirement that a party seeking review of an administrative
decision must first exhaust all available administrative remedies is a matter of subject
matter jurisdiction. See Nebeker v. Utah State Tax Commʹn, 2001 UT 74, ¶ 14, 34 P.3d 180(“As a general rule, parties must exhaust applicable administrative remedies as a
prerequisite to seeking judicial review.” (internal quotation marks omitted)); Republic
Outdoor Adver., LC v. Utah Dep’t of Transp., 2011 UT App 198, ¶ 30, 258 P.3d 619(upholding the trial court’s determination that the plaintiff’s “failure to exhaust its
administrative remedies left the [trial] court without subject matter jurisdiction to
review” the plaintiff’s claims). “Subject matter jurisdiction is the power and authority
of the court to determine a controversy and without which it cannot proceed. If a court
acts beyond its authority those acts are null and void.” Varian‐Eimac, Inc. v. Lamoreaux,
767 P.2d 569, 570 (Utah Ct. App. 1989) (citation and internal quotation marks omitted).
Accordingly, “subject matter jurisdiction cannot be waived,” Chen v. Stewart, 2004 UT
82, ¶ 34, 100 P.3d 1177, and when a court determines that “a matter is outside the
court’s jurisdiction it retains only the authority to dismiss the action,” Varian‐Eimac, 767
P.2d at 570.
¶6 Here, the trial court determined that it did not have subject matter jurisdiction
over any of Plaintiffs’ claims against any of the defendants in light of the ongoing
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administrative proceeding initiated by URS against the Hospital, which Ramsay and
Smalling joined. However, Plaintiffs contend that “the scope of the URS action before
the [B]oard . . . is limited under . . . the Act and under the terms of [URS’s] Notice of
Board Action.” They argue that the administrative proceeding is merely “a collection
proceeding against [the Hospital that] . . . does not attempt to obtain anything but a
ruling . . . that [the Hospital] was required to fund its employees’ retirement benefits at
the minimum levels outlined in the Act.” Plaintiffs note that URS does not “attempt to
bring claims based on contract, tort or breach of fiduciary duty nor does URS purport to
represent the interests of Ramsay, Smalling or any other employee of [the Hospital] per
se.” Additionally, Plaintiffs point out that “Johnson and John Hancock are not parties to
the [administrative proceeding].” In other words, Plaintiffs argue that “[a]t least some
of the causes of action in this case . . . fall outside the scope of the Act” and therefore
outside the scope of the administrative proceeding. As a result, Plaintiffs contend that
“the district court, and only the district court, has jurisdiction over those claims.”
¶7 We agree with Plaintiffs’ argument that “[a]t least some of the causes of action in
this case . . . fall outside the scope of the Act” and therefore should not have been
dismissed for lack of subject matter jurisdiction. While each of the claims alleged in
Plaintiffs’ complaint will be affected by the outcome of the administrative proceeding
irrespective of the result, the decision from that proceeding will not and cannot resolve
all of the claims contained in the complaint. Accordingly, the trial court erred when it
dismissed Plaintiffs’ complaint outright on jurisdictional grounds. Moreover, under the
unique facts and circumstances of this case, the scope and nature of most of the claims
that should have survived dismissal cannot be determined until the administrative
remedies are exhausted. We therefore do not attempt to identify which specific claims
should have survived dismissal and which were properly dismissed.
¶8 We conclude that to the extent Plaintiffs’ complaint raises issues “regarding a
benefit, right, obligation, or employment right under” the Act, see Utah Code Ann. § 49‐
11‐613(1)(b), Plaintiffs must first exhaust their administrative remedies before seeking
judicial review. See Patterson v. American Fork City, 2003 UT 7, ¶ 17, 67 P.3d 466 (“Where
the legislature has imposed a specific exhaustion requirement . . . , [courts] will enforce
it strictly.”). Thus, those claims were properly dismissed. See generally Varian‐Eimac,
767 P.2d at 570 (“When a matter is outside the court’s jurisdiction it retains only the
authority to dismiss the action.”). Conversely, to the extent Plaintiffs’ claims do not fall
under the Act, the trial court’s dismissal for lack of subject matter jurisdiction is
reversed. Nevertheless, because those claims may be affected by the outcome of the
administrative proceeding, we instruct the trial court to stay its proceedings until the
completion of the administrative hearing. We do not rule on the Plaintiffs’ challenge to
20100659‐CA 5
the trial court’s venue determination and, instead, invite the trial court to revisit the
venue issue, along with Plaintiffs’ remaining claims, once the administrative proceeding
is complete.
CONCLUSION
¶9 The trial court correctly dismissed those of Plaintiffs’ claims that fell under the
ambit of the Act for lack of subject matter jurisdiction in light of Plaintiffs’ failure to first
exhaust their administrative remedies before seeking judicial review. However, the
trial court incorrectly dismissed those of Plaintiffs’ claims that do not fall within the
ambit of the Act. Consequently, we affirm in part and reverse and remand in part, with
instructions for the trial court to stay the proceedings as to the claims that do not fall
under the Act, which can only be identified at the close of the administrative
proceeding.
____________________________________
James Z. Davis, Judge
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¶10 I CONCUR:
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William A. Thorne Jr., Judge
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¶11 I CONCUR IN THE RESULT:
____________________________________
J. Frederic Voros Jr.,
Associate Presiding Judge
20100659‐CA 6