Bridgewater, Town of, v. Dept. of Taxes

Town of Bridgewater v. Department of Taxes (2001-031); 173 Vt. 509; 
787 A.2d 1234

[Filed 08-Nov-2001]

                                 ENTRY ORDER

                      SUPREME COURT DOCKET NO. 2001-031

                             OCTOBER TERM, 2001


Town of Bridgewater, et al.	       }	APPEALED FROM:
                                       }
                                       }
     v.	                               }	Rutland Superior Court
                                       }	
Vermont Department of Taxes	       }
                                       }	DOCKET NO. S0715-99RcC

                                                Trial Judge: David A. Jenkins

             In the above-entitled cause, the Clerk will enter:


       Plaintiffs are several towns and five individual taxpayers who
  challenged the assessment  methods used by the director of the Division of
  Property Valuation and Review to calculate the  equalized education
  property tax grand list required by the Equal Educational Opportunity Act
  of  1997 (Act 60).  The State brought a motion to dismiss pursuant to
  V.R.C.P. 12(b)(1) on the ground  that the court lacked subject matter
  jurisdiction.  The Rutland Superior Court granted the motion on  the
  grounds that plaintiffs failed to exhaust administrative remedies provided
  under 32 V.S.A. §  5408.  We affirm.

       Act 60 funds the state's education expenses through a general state
  support grant and local  property tax.  Each municipality must contribute
  an amount based on the equalized education  property tax grand list.  That
  amount, as well as the coefficient of dispersion, is determined by the 
  director of the Division of Property Valuation and Review in the Department
  of Taxes.  These  calculations are based on the aggregate fair market value
  of all real property in each municipality.   Plaintiffs brought suit in
  Rutland Superior Court claiming that the methods used by the director to 
  determine the equalized education property tax grand lists in the
  municipalities do not comply with  accepted industry standards of
  appraisal.  Based on this argument, the suit alleges numerous state and 
  federal constitutional violations as well as statutory violations.

       The State brought a motion to dismiss on the ground that the superior
  court did not have  subject matter jurisdiction.  The State claimed that
  plaintiffs lacked standing, that their claims were  moot and that
  plaintiffs failed to exhaust administrative remedies.  The court granted
  the State's  motion, finding that 32 V.S.A. § 5408 provides an
  administrative process by which municipalities  can contest their equalized
  education grand list value as determined by the director.  Because the 
  court determined that the administrative process was an adequate forum for
  plaintiffs' claims, the  court required that plaintiffs exhaust
  administrative remedies before seeking review in the superior  court.  This
  appeal followed.

 

       Plaintiffs raise two challenges to the court's ruling.  Primarily they
  argue that exhaustion is not  required because the administrative remedy is
  not exclusive.  If exhaustion is not the exclusive  remedy, then, according
  to plaintiffs, exhaustion can be required only through the exercise of
  judicial  discretion.  Plaintiffs' second argument is that judicial
  discretion does not justify the court's decision  not to entertain the
  action for several reasons.  First, they claim that the administrative
  process does  not provide a remedy for the municipality plaintiffs. 
  Similarly, they argue that there is no  administrative relief that will
  satisfy the claims of the individual taxpayer plaintiffs.  Plaintiffs also 
  contend that the administrative process is inappropriate where
  constitutional challenges are raised.   Finally, plaintiffs assert that
  requiring exhaustion of administrative remedies is inconsistent with  goals
  of judicial economy.

       We review a trial court's dismissal for lack of subject matter
  jurisdiction "de novo, with all  the uncontroverted factual allegations of
  the complaint accepted as true and construed in light of the  nonmoving
  party."  Jordan v. State, 166 Vt. 509, 511, 702 A.2d 58, __ (1997);
  V.R.C.P. 12(b)(1).   The relevant statute in this case sets forth a
  detailed process by which a municipality may appeal its  grand list value:

    (a)  Not later than 30 days after the receipt by its clerk of a
    notice under  section 5406 of this title, a municipality may
    petition the director of the  division of property valuation and
    review for a redetermination of the  municipality's equalized
    education property value and coefficient of  dispersion.  Such
    petition shall be in writing and shall be signed by the  chair of
    the legislative body of the municipality or its designee.

  32 V.S.A. § 5408(a).  The statute goes on to specify that "the director
  shall, after written notice, grant  a hearing upon the petition to the
  aggrieved town."  Id. § 5408(b).  Should a municipality disagree  with the
  director's redetermination of the equalized education property value, "a
  municipality . . .  may appeal the redetermination to the valuation appeal
  board . . . .  The appeal shall be heard de  novo."  Id. § 5408(c).  Only
  after this appeal does the statute authorize that "a municipality or 
  division of property valuation and review may appeal . . . to the superior
  court."  Id. § 5408(d).

       Plaintiffs' first argument is that § 5408 does not present an
  exclusive remedy to aggrieved  municipalities, and that they may pursue the
  appeal directly in superior court.  Plaintiffs rely  principally on Stone
  v. Errecart, 165 Vt. 1, 675 A.2d 1322 (1996), which held that 32 V.S.A. §
  5887  outlines the exclusive procedure to pursue a refund for certain
  taxes.  In Stone, the statute requiring  exhaustion specified that it was
  the "exclusive" remedy for taxpayers seeking that refund.  165 Vt. at  3,
  675 A.2d  at 1324; 32 V.S.A. § 5887.  Plaintiffs argue that because § 5408
  does not contain such  specific language, their remedy is not limited to
  the one outlined in the statute.

       Our paramount goal in statutory construction is to give effect to the
  Legislature's intent,   Burlington Elec. Dep't v. Vermont Dep't of Taxes,
  154 Vt. 332, 335, 576 A.2d 450, 452 (1990), and  we apply the plain meaning
  of a statute where the language is clear and unambiguous, Reed v. 


 

  Glynn, 168 Vt. 504, 506, 724 A.2d 464, 465 (1998).  Where a statute creates
  administrative  remedies, "a party must pursue or 'exhaust,' all such
  remedies before turning to the courts for relief."   Rennie v. State, __
  Vt. __, __, 762 A.2d 1272, 1274 (2000).  In Stone, we stated that "where
  the  Legislature specifically mandates, exhaustion is required."  165 Vt.
  at 4, 675 A.2d at __.  The  question presented in this case, therefore, is
  whether § 5408 specifically mandates exhaustion.  While  it is true that §
  5408 does not state explicitly that it is the "exclusive" remedy, it is
  difficult to  conceive that the Legislature intended this section to be one
  of several methods of appeal.  The  remedy outlined in § 5408 is narrow,
  circumscribed and highly specific.  Plaintiffs' formalistic  argument is
  unpersuasive because we have required exhaustion in cases where the statute
  does not  contain the word "exclusive."  See In re D.A. Assocs., 150 Vt.
  18, 20, 547 A.2d 1325, 1326 (1988)  ("when an administrative remedy is
  established by statute or regulation, relief must not only be  sought in
  accordance therewith, but must first be exhausted before recourse to the
  courts is  available"); Choquette v. Perrault, 144 Vt. 218, 224, 475 A.2d 1078, 1082 (1984) ("The doctrine of  exhaustion of administrative remedies
  requires that if an administrative remedy is provided by  statute, relief
  must be sought by exhausting this remedy before the court will act.").

       Plaintiffs offer no explanation as to when or why the prerequisite
  appeals to the director or the  valuation appeal board ought to be waived,
  or provide any evidence that the Legislature even  contemplated beginning
  appeals in the superior court.  In other words, plaintiffs have given us no 
  reason to conclude that the Legislature intended anything but that § 5408
  would be the sole method  of raising plaintiffs' challenge.  In effect,
  plaintiffs are arguing that §5408(a), (b), and (c) are merely  advisory and
  that should a municipality choose, it may skip directly to § 5408(d) and
  present its  appeal to the superior court.  We decline to adopt a
  construction of § 5408 that would undermine the  very scheme set out by the
  statute.  We therefore reject plaintiffs' claims that exhaustion was the 
  result of the exercise of judicial discretion.  Rather, the statute
  required exhaustion and the court  properly granted the State's motion to
  dismiss on the grounds of lack of subject matter jurisdiction.

       Our interpretation of the statute is consistent with legislative
  intent even in the face of the  particular nature of plaintiffs' challenge
  to the assessment methods.  Plaintiffs argue that because  neither the
  municipalities or the individual taxpayers can get the requested relief
  through the  administrative process it serves no purpose to follow a
  procedure designed to challenge individual  assessments.  That is, what the
  municipalities and individual taxpayers seek is not a redetermination  of a
  town's assessment and coefficient of dispersion, but rather a change in the
  methodology by  which the assessments are calculated across the board. 
  Although there may be cases where  exhausting administrative remedies may
  be futile, this is not such an instance.  Plaintiffs cannot  supplant the
  administrative procedure of § 5408 simply by raising a systemic argument to
  challenge  their grand list values and coefficients of distribution rather
  than a fact-specific one.  We have stated,  "[t]he futility doctrine has
  been adopted as part of that discretion to dispense with unnecessary 
  exhaustion of administrative remedies.  It has no place, however, in the
  face of a clear legislative  command that exhaustion is required."  Stone,
  165 at 4, 675 A.2d  at 1325.  As established above, the  Legislature has
  established a clear route by which plaintiffs' appeal may be raised, and
  the superior  court has no jurisdiction to consider this suit before that
  route has been traveled.

 

       Plaintiffs' argument that exhaustion is not required when a
  constitutional challenge has been  raised fails even though the
  administrative decision makers do not have the authority to strike down 
  the valuation methods as unconstitutional.  Administrative processes serve
  vital functions more  substantial than mere adjudication of the dispute. 
  Primarily, administrative processes develop the  record "according to the
  more informal procedures of the administrative procedure act . . . rather
  than  through the more formal procedures and rules of evidence applicable
  in court proceedings."  Id. at 5,  675 A.2d  at 1325.  This function is
  especially valuable in a case such as this that will likely involve 
  detailed findings regarding property values and complex formulas for
  calculating coefficients of  distribution.  Thus, "[t]he Legislature may
  decide that even in a constitutional challenge, the relevant  facts should
  be determined by the [administrative agency]."  Id.  If administrative
  hearings could be  circumvented every time a complaint raises a
  constitutional issue, the public would lose the benefit  of agency
  expertise, undermining the goal of agency review.  See Chevron U.S.A. Inc.
  v. Natural  Res. Def. Council, Inc., 467 U.S. 837, 844 (1984); see also
  Stone, 165 Vt. at 4, 675 A.2d  at 1325;  Rennie, __ Vt. at __, 762 A.2d  at
  1274 (exhaustion required to protect the administrative agency's 
  authority, to use the agency's expertise, and to promote judicial
  efficiency through the development  of the record).

       Plaintiffs' final claim that requiring exhaustion is inconsistent with
  the goal of judicial  efficiency carries no weight for the reasons outlined
  above.  Efficiency is not a goal for which we  strive at the expense of the
  Legislature's clear intent, or in lieu of agency fact-finding, or the
  exercise  of agency expertise.  That plaintiffs' challenge is facial in
  nature with multiple complainants, and that  the administrative process has
  several layers of appeal are similarly irrelevant.

       Affirmed.



                                       BY THE COURT:


                                       _______________________________________
                                       Jeffrey L. Amestoy, Chief Justice

                                       _______________________________________
                                       John A. Dooley, Associate Justice

                                       _______________________________________
                                       James L. Morse, Associate Justice

                                       _______________________________________
                                       Denise R. Johnson, Associate Justice

                                       _______________________________________
                                       Marilyn S. Skoglund, Associate Justice