Administrative Law

• Publication year: 2014

Administrative Law

Martin M. Wilson

Jennifer A. Blackburn

Courtney E. Ferrell

Erin G. Watstein

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Administrative Law

by Martin M. Wilson^* Jennifer A. Blackburn^** Courtney E. Ferrell^*** and Erin G. Watstein^****

I. Introduction

This Article surveys cases from the Georgia Supreme Court and the Georgia Court of Appeals from June 1, 2013 through May 31, 2014 in which principles of administrative law were a central focus of the case.¹ The Article begins with a discussion of cases on exhaustion of administrative remedies, followed by a series of cases discussing statutory construction. The next topic discussed will be the standard of review of an agency decision, with a review of sovereign immunity cases to follow, and the Article concludes with a brief review of enactments from the 2014 regular session of the Georgia General Assembly.

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II. Exhaustion of Administrative Remedies

While this year saw no major changes in the well-established doctrine of exhaustion of administrative remedies, the courts had the opportunity to reaffirm the doctrine across a wide range of topics including commercial loans, the firing of a school superintendent, and the Cavalia traveling horse show. Two cases, Olde Towne Tyrone, LLC v. Multibank 2009-1 CRE Venture, LLC² and Gravitt v. Bank of the Ozarks,³ both decided within three days of each other, re-examined the limitation on judicial review imposed by the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA).⁴

In Olde Towne Tyrone, LLC, the court of appeals noted that in enacting FIRREA, Congress established an administrative review process for claims against failed banks for which the Federal Deposit Insurance Corporation (FDIC) has been appointed as receiver.⁵ Anticipating the large number of claims the FDIC would receive from various parties, Congress included limitations on judicial review of such claims.⁶ Claimants who fall within the scope of these limitations must first exhaust their administrative remedies through the FDIC prior to appealing to the court.⁷ Failure to do so divests courts of subject matter jurisdiction over the claim.⁸ Furthermore, these protections are available to an entity that purchases a failed lending institution's assets from the FDIC, thereby allowing them to pursue dismissal of the case for failure to exhaust administrative remedies.⁹ While the claimant argued that FIRREA was not applicable because the FDIC chose not to assign the purchasing entity its "other rights, powers or privileges"¹⁰ under 12 U.S.C. § 1821(d),¹¹ the court clarified that FIRREA's administrative exhaustion provision is a jurisdictional prerequisite that is binding on the courts and not a "right, power or privilege" at the discretion of the FDIC to assign.¹²

In Gravitt, the appellants urged the court to adopt an alternative approach used by the United States Court of Appeals for the District of

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Columbia Circuit and the United States Court of Appeals for the Ninth Circuit that does not recognize FIRREA as a jurisdictional bar for claims brought against a purchasing entity for its own actions after purchasing a failed lending institution's assets and liabilities from the FDIC. The court rejected this request and instead relied on the United States Court of Appeals for the Eleventh Circuit's broad construction of FIRREA, holding that because appellants asserted their counterclaims after the appointment of the FDIC as receiver, the claims were within the scope of FIRREA's protections.¹³ Since the appellants failed to exhaust their administrative remedies regarding such claims, the superior court lacked subject matter jurisdiction, and the counterclaims were properly dismissed.¹⁴

In Miller County Board of Education v. Mcintosh,¹⁵ interpretation of the administrative remedies available under an employment agreement (the Employment Agreement)'s termination clause was at issue.¹⁶ The Miller County Board of Education (the Board) terminated Robert Mcintosh as superintendent of the Miller County Schools by letter on November 13, 2012. The letter stated there would be a hearing before a Board-appointed tribunal, provided that Mcintosh requested such a hearing by December 7, 2012. Otherwise, his right to a hearing would be waived. In his reply on November 21, 2012, Mcintosh disputed the basis for his termination and stated that both parties would have to work together to obtain a mutually agreeable hearing date. No tribunal was ever appointed and no hearing date was ever set. Following the filing of a suit by Mcintosh against the Board on January 29, 2013, alleging breach of the Employment Agreement, the Board responded that Mcintosh failed to exhaust his administrative remedies because his response was both late and substantively insufficient.¹⁷

While the Board asserted the Employment Agreement's seven-day response period to the written statement of charges commenced with their mailing of the letter, the clause provided Mcintosh was to be given the written statement of charges and then must respond within seven days. The Board's interpretation that Mcintosh was given the charges on the date the letter was mailed would put him at the mercy of the vagaries of the mail regarding the time he had to respond once the letter was received.¹⁸ The court warned that "any interpretation of the

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termination provision that possibly results in Mcintosh being prevented from filing a timely response is patently absurd and will not be adopted by this Court."¹⁹ Instead, the date Mcintosh was given the charges would be the date he received the letter.²⁰ Since the last day Mcintosh was permitted to file his response fell on a holiday, the response was not due until the following business day.²¹ Mcintosh met this filing deadline, and therefore, his response was timely.²²

Regarding the sufficiency of the response, nothing in the Employment Agreement required Mcintosh to provide a detailed response to the Board's statement of charges.²³ As such, the court held that Mcintosh's response was sufficient to meet his contractual obligations under the Employment Agreement.²⁴ Since Mcintosh's response was both timely and sufficient, the Board's contention that he failed to exhaust his administrative remedies was incorrect, and the superior court properly dismissed it.²⁵

The final case discussed in this section involves an unsuccessful, albeit creative, argument asserting the defendant was barred from defending an action brought by a third party for failure to exhaust its administrative remedies with the city.²⁶ The dispute arose from Noble Parking, Inc. (Noble)'s non-conforming use of a parking lot as a park-for-hire lot following the use of the lot for the Cavalia USA, Inc.'s traveling horse show. The City of Atlanta Office of Buildings informed Noble that the legal non-conforming use of the parking lot as a park-for-hire facility had been superseded by the permitted use of the parking lot for the horse show. Centergy North and Tuff Parking, the owners of the property where the parking lot was located, subsequently filed for injunctive relief seeking to enjoin Noble from operating its park-for-hire business on the property. The city intervened in the action and similarly filed a complaint for injunctive relief. The trial court ruled that Noble's claim was barred for failure to exhaust administrative remedies because they did not appeal the city's zoning decision regarding the non-conforming use within thirty days as required under the city code.²⁷

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The court of appeals noted that it found no authority, nor did the appellees cite any cases, holding that a defendant is barred from defending an action brought initially by a third party for failure to exhaust its administrative remedies with the city.²⁸ Here, the action arose over a dispute between two private parties, with one party seeking to enjoin the other party's use of its property.²⁹ While the city later intervened in the action, Noble did not seek a "declaration [by] a court of equity,"³⁰ nor did it "circumvent the review process" by issuing a collateral attack of the city's zoning decision.³¹ Noble could have appealed the city's zoning decision to the Board of Zoning Appeals, but instead chose not to pursue an appeal; thus, Noble became subject to penalty for violating the city's zoning ordinance.³² The court held that Noble was under no obligation to exhaust its administrative remedies with the city in order to defend itself in an action brought by private parties.³³

III. Statutory Construction

An agency's construction of the governing statute that it is charged with administering and a court's interpretation of that agency's construction can at times become the central issue in a case. For example, in Georgia Department of Revenue v. Moore,³⁴ the court of appeals denied the Georgia Department of Revenue (the Department attempt to collect sales taxes from a second responsible party after the Department voluntarily settled a refund action with the first responsible party.³⁵ The voluntary payment doctrine, section 13-1-13 of the Official Code of Georgia Annotated (O.C.G.A.),³⁶ was the basis for the court's decision.³⁷ The Georgia Supreme Court reversed and remanded, holding that the voluntary payment doctrine is a concept applicable to contracts, not tax indebtedness.³⁸

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In Fulton County Board of Education v. D.R.H.,³⁹ the Georgia Court of Appeals dealt with the parameters of judicial review of local board decisions.⁴⁰ In this case, the court of appeals determined that the trial court overstepped its authority when it failed to confine its review of a student's expulsion to the record.⁴¹ As O.C.G.A. § 20-2-1160(e)⁴² requires review to be confined to the record, the court of appeals ruled that the superior court's consideration of future injury (evidence of which was not presented during the hearing before the local school board) was improper and in violation of the statute.⁴³

The last case in...