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Ghost Player, L.L.C. v. State

Supreme Court of Iowa

February 27, 2015

GHOST PLAYER, L.L.C. and CH INVESTORS, L.L.C., Appellants,
v.
STATE OF IOWA, Appellee

Page 324

Appeal from the Iowa District Court for Polk County, Mary Pat Gunderson, Judge. Claimants of tax credits appeal a district court ruling dismissing their claim for tax credits because the claimants failed to exhaust their administrative remedies.

J. Campbell Helton and Van T. Everett of Whitfield & Eddy, P.L.C., Des Moines, for appellant Ghost Player, L.L.C.

Richard O. McConville of Coppola, McConville, Coppola, Carroll, Hockenberg & Scalise, P.C., West Des Moines, for appellant CH Investors, L.L.C.

Jeffrey S. Thompson, Solicitor Attorney General, and Adam P. Humes, Assistant Attorney General, for appellee.

OPINION

WIGGINS, Justice.

Page 325

Claimants of tax credits under Iowa Code sections 15.391-.393 (2009) brought an action in district court to collect certain tax credits it contended the State owed the claimants. The district court dismissed the claimants' petition on the grounds it did not have the authority to hear the case because the claimants failed to exhaust their administrative remedies. We agree with the district court decision dismissing the petition because the actions taken by the agency in denying the credits was other agency action, requiring the claimants to exhaust their administrative remedies. Failure to exhaust those administrative remedies deprives the district court of the authority to hear the case. We further conclude the district court was correct in finding the process used by the agency in processing the claimants' claim for tax credits did not offend Due Process Clauses of the Iowa or United States Constitutions. Accordingly, we affirm the decision of the district court.

I. Background Facts and Proceedings.

On January 8, 2009, the Iowa Department of Economic Development (IDED) and Ghost Player, L.L.C. executed a contract for tax credits under the Film, Television, and Video Project Promotion Program. See Iowa Code § 15.391. CH Investors, L.L.C. is a third-party beneficiary to the contract.[1] The contract included a " description of the project to be completed[,] . . . the terms and conditions for receipt of the tax credits[,] . . . and the repayment requirements or other penalties imposed in the event the [film producers failed to] fulfill its obligations" under the contract; all of these terms were required by Iowa Administrative Code 261-36.5(2) (2008). The contract included a clause stating, " Any IDED determinations with respect to compliance with the provisions of this Contract and the Funding Agreements shall be deemed to be final determinations pursuant to Section 17A of the Code of Iowa (2005)."

Under the contract, Ghost Player believed it would receive certain tax credits for the project Field of Dreams Ghost Player, a documentary film they produced highlighting the lives of the men who portrayed the ghost baseball players in the movie Field of Dreams filmed in Dyersville.[2] After completing the film, Ghost Player submitted its request for the film tax credits and supporting materials.

On December 20, 2010, the IDED declined to issue the contracted twenty-five

Page 326

percent tax credit for some of the expenditures and investments of Ghost Player. Ghost Player objected to the agency's decision and submitted additional information for the IDED's consideration. The IDED reviewed the materials and on June 29, 2011, revised its tax credit determination, but still did not provide a tax credit for all of Ghost Player's expenditures and investments. Ghost Player submitted further information after the IDED's second determination in an attempt to gain further tax credits. The IDED did not change its position after receiving this information and issued its final determination on the film tax credits the agency would issue to Ghost Player on February 22, 2012.

After receiving the final determination and believing the IDED had breached the parties' contract by failing to issue tax credits for all of Ghost Player's qualified expenditures, Ghost Player filed a breach of contract action in district court on November 6, 2013. The State filed a motion to dismiss, arguing the district court lacked authority to hear the claim because Ghost Player was first required to seek relief under the Iowa Administrative Procedure Act.

This district court granted the motion to dismiss. It held the action complained of by Ghost Player falls squarely within the definition of " other agency action," and Ghost Player would have a full and fair opportunity to raise the necessary issue and present evidence through a section 17A.19(7) hearing. See Iowa Code § 17A.19(7) (explaining the process for judicial review of an agency decision). Ghost Player appeals.

II. Issue.

The first issue we must decide is whether the district court correctly decided it did not have the authority to hear the case because Ghost Player failed to exhaust its remedies under the ...


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