City of Corcoran, Respondent, vs. Headwaters Rural Utility Association, Inc., et al., Appellants.

City of Corcoran, Respondent, vs. Headwaters Rural Utility Association, Inc., et al., Appellants. A05-695, Court of Appeals Unpublished, February 7, 2006.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (2004).

 

STATE OF MINNESOTA

IN COURT OF APPEALS

A05-695

 

 

City of Corcoran,

Respondent,

 

vs.

 

Headwaters Rural Utility Association, Inc., et al.,

Appellants.

 

 

Filed February 7, 2006

Affirmed

Toussaint, Chief Judge

 

Hennepin County District Court

File No. 03-017022

 

 

Jeffrey A. Carson, Carson, Clelland & Schreder, 6300 Shingle Creek Parkway, Suite 305, Minneapolis, MN 55430 (for respondent)

 

Jon E. Kingstad, 260 Lake Elmo Bank Building, 600 Inwood Avenue North, Oakdale, MN 55128 (for appellants)

 

 

            Considered and decided by Toussaint, Chief Judge; Stoneburner, Judge; and Huspeni, Judge.*

U N P U B L I S H E D   O P I N I O N

 

TOUSSAINT, Chief Judge

 

Appellants, landowners and a utility association, challenge the denial of their motion for summary judgment and the summary judgment granted to respondent, a city.  Because we see no genuine issue of material fact and no error of law, we affirm.

FACTS

 

            Respondent City of Corcoran cited the individual septic tank systems (ISTS) on the properties owned by appellants Georgia Wigen and Steven Schmid (the landowners) as "imminent public health threats" (IPHT).  In 2001, after the citations, the landowners contracted with appellant Headwaters Rural Utility Association, Inc. (HRUA), a utility cooperative, to replace their ISTS.

            At the time it performed the work for the landowners, HRUA had a State Disposal System (SDS) permit granted by the Minnesota Pollution Control Agency (MPCA) but did not obtain the permit required by Corcoran's ordinance.[1]  By January 2002, HRUA had completed the installation of in-ground ISTS on the landowners' properties. After learning from the MPCA in April 2002 that its SDS permit "[did] not and was not intended to exempt the permitee (i.e., HRUA) from local regulations," HRUA, through its agent Ingleside Engineering, applied for after-the-fact city permits for the two ISTS it had already installed.

            In December 2002, Corcoran denied the permits because Corcoran's building official, the MPCA, the Minnesota Board of Water and Soil, and the Minnesota Onsite Treatment Contractors' Association concurred that in-ground trench systems were not appropriate for the sites.  In February 2003, Ingleside Engineering told the landowners they were not in compliance and would have to apply for permits and install mound systems. 

            By April 2003, no action had been taken.  Corcoran adopted Findings of Fact that the landowners' systems were failing and issued an order requiring the landowners to submit designs for new systems, to obtain permits before having any work done, and to repair or replace the existing systems by August 1 (the April 2003 order).  Appellants challenged the order by bringing an action against Corcoran in district court.  Corcoran moved for summary judgment; its motion was granted and appellants' suit was dismissed (the October 2004 order). 

            Corcoran then sued appellants in an enforcement action.  Appellants raised several defenses, arguing, inter alia, that the April 2003 order was not the result of quasi-judicial action and was subject to collateral attack and that Corcoran had acted in bad faith.  Both parties moved for summary judgment.  In February 2005, the district court[2] granted Corcoran's motion and denied appellants' motion, finding that Corcoran's April 2003 order had resulted from a quasi-judicial act and could be challenged only by certiorari review in the court of appeals, that the April 2003 order was not subject to collateral attack because appellants had not exhausted their administrative remedies, that Corcoran had subject matter jurisdiction over ISTS, that Corcoran had adequately explained its denial of the permits, and that there was no evidence of Corcoran's bad faith (the February 2005 order).

            Appellants challenge both the October 2004 order denying their motion for summary judgment and the February 2005 order granting summary judgment to Corcoran and requiring appellants to comply with Corcoran's April 2003 order.  They argue that the April 2003 order was not enacted under Corcoran's quasi-judicial authority, that the district court had subject-matter jurisdiction to review the April 2003 order, that state law preempts Corcoran's right to regulate ISTS, that Corcoran did not adequately explain its denial of the permits, and that the district court abused its discretion in denying appellants' motion for attorney fees.

D E C I S I O N

1.         Quasi-Judicial Authority

            Appellants' motion for summary judgment was denied on the ground that the district court lacked subject-matter jurisdiction.  Questions of subject-matter jurisdiction are reviewed de novo.  Johnson v. Murray, 648 N.W.2d 664, 670 (Minn. 2002).  Review of a Corcoran's quasi-judicial acts is available only by writ of certiorari to this court.  See In re Chisago Lakes School Dist., 690 N.W.2d 407, 409 (Minn. App. 2005) ("[J]udicial review of the quasi-judicial decisions of administrative bodies, if available, must be invoked by writ of certiorari."). 

            To determine whether an act was quasi-judicial, this court considers whether it involved "(1) investigation into a disputed claim and weighing of evidentiary facts; (2) application of those facts to a prescribed standard; and (3) a binding decision regarding the disputed claim."  Minn. Ctr. for Envtl. Advocacy v. Metro. Council, 587 N.W.2d 838, 842 (Minn. 1999). The April 2003 order found that work on appellants' ISTS had been done without obtaining a permit and that an inspection revealed that the work was inadequate because the systems did not "meet the requirements of MPCA, Rule 7080."  The order also required appellants to replace or repair their ISTS with "properly designed and approved systems no later than August 1, 2003."  Corcoran's April 2003 order weighed evidentiary facts, applied them to prescribed standards, and issued a binding decision: the order meets the criteria for a quasi-judicial action.  The district courts did not err in concluding that Corcoran "was acting within its quasi-judicial capacity when it denied [appellants'] permit applications."

2.         Subject-Matter Jurisdiction

            Appellants argue that, even if Corcoran's April 2003 order was quasi-judicial, they were entitled to challenge its validity by bringing an action in district court. The district court found that it lacked subject-matter jurisdiction.  Subject-matter jurisdiction is reviewed de novo.   Johnson, 648 N.W.2d at 670.

            Minn. Stat. § 115.05, subd. 11 (2004), provides that judicial review of a final decision of an agency or the commissioner is available pursuant to the statutes on judicial review of contested cases, and those statutes provide for certiorari review by this court.  Minn. Stat. §§ 14.63-.69 (2004).   Moreover, "[i]t is now the general rule that, absent an explicit statutory or appellate rule authorizing review in the district court, judicial review of all administrative quasi-judicial decisions must be invoked only by writ of certiorari to the court of appeals."  Tischer v. Housing & Redev. Auth. of Cambridge, 675 N.W.2d 361, 363 (Minn. App. 2004), aff'd, 693 N.W.2d 426, 429 (Minn. 2005).  Appellants cite no rule or statute authorizing district court review of Corcoran's order.

            Appellants rely on Carlson v. Chermak, 639 N.W.2d 886, 889-90, n.1 (Minn. App. 2002) ("In the distinct procedural posture of a county's action to enforce an ordinance against landowners, aggrieved parties may raise constitutional, equitable, and other defenses to enforcement whether or not they appealed denial of a variance within the statutory appeal period.").[3] But the footnote does not reference situations in which the legislature has explicitly provided for certiorari review, and the one Minnesota case on which the footnote relies, Freeborn County v. Claussen, 295 Minn. 96, 98, 203 N.W.2d 323, 325 (1972), predated the existence of the court of appeals and did not involve such a provision.  In light of the legislature's provision of certiorari review, appellants' reliance on Carlson is misplaced. 

            In any event, Carlson does not support appellants' view that the district court had subject-matter jurisdiction. 

            [Q]uasi-judicial decisions, like variances and special use permits, are appropriately subject to direct judicial review, whereas legislative decisions, like rezoning decisions, are properly reviewed by a declaratory-judgment action.  Deference to the authorizing statute that specifically provides for direct appeal of this variance decision, therefore, is appropriate.  Because it is undisputed that Carlson failed to appeal within the statutory period, the district court could exercise subject-matter jurisdiction over only those claims in the declaratory-judgment action that were independent of the denial of the variance.

           

                        We see no distinction between the issues raised in Carlson's declaratory-judgment action and those that could have been brought on appeal from the . . . action denying the variance. . . .  Therefore, we conclude the district court did not have subject-matter jurisdiction over the declaratory-judgment action.

 

Id. at 889-90 (citations omitted).[4]  Appellants alleged nothing in their action against Corcoran that could not have been raised in an appeal of Corcoran's order.  The district court lacked subject matter jurisdiction.

3.         Preemption

            Appellants argue that Corcoran lacked authority to bring an action to compel appellants to obtain a local permit because HRUA had already obtained an SDS permit from the MPCA pursuant to chapter 115 of the Minnesota Statutes.  "On appeal, when there are no disputed facts, the issue of whether a state statute renders a local law unenforceable is a question of law, which we review de novo."  In re Appeal of Rocheleau, 686 N.W.2d 882, 890 (Minn. App. 2004), review denied (Minn. Dec. 22, 2004).

            Rocheleau addressed the same issue, i.e., whether chapter 115 makes local ordinances unenforceable.  The landowners in that case argued that a county board lacked jurisdiction over inspection of their sewage treatment system because the county ordinance was preempted by Minn. Stat. § 115.55, subds. 5, 5a (2002).   Id.  "Because the statute [Minn. Stat. § 115.55] expressly provides for local regulation by permitting local governments to enact more restrictive ordinances, the legislature has made it clear that the doctrine of preemption does not preclude all local ordinances that cover the same subject matter as the statute controls."  Id. at 891.  HRUA's SDS permit from the MPCA did not make Corcoran's ordinance requiring a local permit unenforceable.

            Appellants argue that Rocheleau is not dispositive because it concerns preemption of the ordinance by the statute and they are arguing not preemption but rather a conflict between the ordinance and the statute.  They cite Canadian Connection v. New Prairie Twp., 581 N.W.2d 391 (Minn. App. 1998), review denied (Minn. Sept. 30, 1998), for the proposition that preemption and conflict are governed by different principles.  This is true, but it does not support appellants' argument.  Moreover, Canadian Connection found that "the township ordinance was not preempted by or in conflict with state law because:  (1) the ordinance was a valid exercise of the township's land use authority . . . ;  and (2) the ordinance did not conflict with or intrude upon the state's pollution control efforts."   Id. at  397 (emphasis added).  Here, Corcoran's ordinance is a valid exercise of its power and it does not conflict with or intrude on the state's efforts to control sewage disposal. 

4.         Adequate Explanation

            Appellants argue that Corcoran did not comply with the regulatory requirements for issuing a notice of their noncompliance.  The construction of a rule is a question of law subject to de novo review.  Kastner v. Star Trails Ass'n, 646 N.W.2d 235, 238 (Minn. 2002).

            Minn. R. 7080.0310 (2005) provides that a governmental unit reviews an ISTS permit application to see if the proposed system will meet all requirements and then grants or denies the permit.  Minn. R. 7080.0315 (2005) provides that newly constructed and replacement ISTS are inspected by a governmental unit for compliance with requirements and that the compliance inspector issues either a certificate of compliance or a notice of noncompliance.  Corcoran was not issuing a notice of noncompliance under Minn. R. 7080.0315; it was denying a permit under Minn. R. 7080.0310, and it followed the appropriate procedure, set out in Minn. Stat. § 15.99, subd. 2(a) (2004), for doing so. 

            Minn. Stat. § 15.99, subd. 2(a), provides in relevant part: "[A]n agency must approve or deny within 60 days a written request relating to . . . septic systems . . . .  Failure of an agency to deny a request within 60 days is approval of the request.  If an agency denies the request, it must state in writing the reasons for the denial at the time that it denies the request."  Corcoran claims that it denied the request in writing within 60 days with a letter that stated the reasons for the denial.  The record supports this claim.  Corcoran's building official wrote:

Your application is being denied for a standard system.  It does not meet the requirements of M.P.C.A. Rule 7080.  Soil borings were done at both sites by the undersigned and two other inspectors.  . . . [A] second set of borings was completed . . . .  All licensed and/or certified individuals that were in attendance agreed that the designed and installed system would not meet Rule 7080 for a standard system design or installation. 

Please redesign to meet the requirements for a standard system for both sites.

 

Corcoran's letter meets the statutory requirement of stating the reason for the denial of a permit.  Because Corcoran was not conducting a compliance inspection, it did not need to meet the requirements for issuing a notice of noncompliance.

5.         Evidence of Bad Faith

            This court does not reverse a district court's award or denial of attorney fees absent an abuse of discretion.  Becker v. Alloy Hardfacing & Eng'g Co., 401 N.W.2d 655, 661 (Minn. 1987).  Appellants claim that the district court abused its discretion in denying their motion for attorney fees on the ground that Corcoran was guilty of bad faith.

            Appellants' claim is based on their views that (1) Corcoran's April 2003 order was not based on the exercise of its quasi-judicial powers and (2) various representatives of Corcoran planned to deny the permit before the investigation was conducted.  The first is without merit; as the district court correctly found, Corcoran's order was an exercise of its quasi-judicial powers.   The second, even if true, would not be the basis for an award of attorney fees under Minn. Stat. § 549.211 (2004), which requires bad faith on the part of counsel, not of a party.

            Affirmed.

* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI § 10. 

[1] See City of Corcoran Code of Ordinances, Title V, § 50.05 ("No person, firm, or corporation shall install, alter, repair or extend any individual sewage disposal system in the city without first applying for obtaining [sic] a permit therefore from the Building Official for the specific installation, alteration or extension.") (repealing but not changing substance of Corcoran City Ordinance §156)

[2] This district court judge was not the same judge who had issued the October 2004 order dismissing appellants' suit.

[3] The other cases on which appellants rely predate the establishment of the court of appeals.

[4] Appellants also rely on State by Spannaus v. Lloyd A. Fry Roofing Co., 310 Minn. 528, 531, 246 N.W.2d 696, 698 (1976) (concluding that party's "collateral attack on the [M]PCA order in the present enforcement proceedings is not barred by [the party's] failure to challenge the order through some direct appeal procedure").  But Fry predates the existence of the court of appeals.  Moreover, Fry explicitly held that Minn. Stat. § 115.05, subd. 10, (1976) (predecessor to Minn. Stat. § 115.05, subd. 11, providing that, if no appeal was taken from an agency action, the action was deemed conclusive and could not be attacked in "any other action or proceeding") did not apply because "[chapter] 115 deals with water pollution whereas all air pollution matters, such as the instant one, are governed by [chapter] 116" and chapter 116 "contains no provision comparable to § 115.05, subd. 10, prohibiting collateral attacks . . . ." Id. at 530, 246 N.W.2d at 697.