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Friday, June 25, 2004

Indiana Decisions - Two Court of Appeals Decisions Today

Tracy Boatwright, et al. v. Celebration Fireworks (6/25/04 IndCtApp) [Administrative Law; Statutory Construction ]
Kirsch, Chief Judge

Tracy Boatwright, individually and as Indiana State Fire Marshal (the “Fire Marshal”) and the State of Indiana (collectively “State”) appeal the trial court’s decision in favor of Celebration Fireworks, Inc. (“Celebration”), raising the following issues for review: 1. Whether the trial court erred in issuing a judgment in favor of Celebration because Celebration failed to exhaust its administrative remedies prior to filing its action in court. 2. Whether Celebration’s claims for monetary relief are barred by governmental immunity. 3. Whether the Fire Marshal’s interpretation of the statutory certificate of compliance requirement is reasonable. We affirm. * * *

[1] A party need not comply with the exhaustion requirement when the remedy is inadequate or would be futile, or when some equitable consideration precludes application of the rule. Abner v. Dep’t of Health of State of Ind. ex rel. Ind. Soldiers’ & Sailors’ Children’s Home, 777 N.E.2d 778, 783 (Ind. Ct. App. 2002), trans. denied (2003). To prevail upon a claim of futility, the party must show that the administrative agency was powerless to effect a remedy or that it would have been impossible or fruitless and of no value under the circumstances. Id. Further, the requirement of exhaustion of administrative remedies is eased when there is grave doubt as to the availability of the administrative remedy. Id. Moreover, exhaustion of administrative remedies is not required if a statute is void on its face, and it may not be appropriate if an agency’s action is challenged as being ultra vires and void. Indiana Dep’t of Envtl. Mgmt. v. Twin Eagle LLC, 798 N.E.2d 839, 844 (Ind. 2003).

In Twin Eagle, 798 N.E.2d at 844, a developer challenged the validity of a process that affected its ability to discharge dredged and fill materials on its property. It claimed that the Indiana Department of Environmental Management (“IDEM”) did not have the authority to regulate its actions. Our supreme court explained that because the validity of the interim process, not merely its ultimate outcome, was one of the major issues in the case, exhaustion of administrative remedies was not required. It noted that the plaintiff’s claim, if valid, would obviate the need to go through the administrative process. The court explained that the central issue was whether IDEM did or did not have the legislative authority to regulate introduction of dredged and fill materials into certain bodies of water, and that this determination required statutory construction, a pure question of law. Accordingly, the court concluded that the claim was properly brought to the trial court and that the plaintiff was not required to first seek an administrative remedy. Id. at 843-45.

Similarly, here, the issue involved is a question of statutory construction, a pure question of law. The central issue is whether the Fire Marshal has the authority to impose a $1,000 fee and certificate of compliance requirement for each location from which restricted fireworks are sold. Thus, exhaustion of remedies is not required here.

Even if this were not the case, exhaustion of remedies is not required here because compliance would be futile, and there is doubt as to the availability of an administrative remedy. The Fire Marshal ignored requests to voluntarily change its policy interpreting the statute. Moreover, there is no evidence in the record before us of any formal mechanism in place for review of the Fire Marshal’s policies of general applicability. The trial court did not err in exercising subject matter jurisdiction over Celebration’s claims. * * *

[2] IC 34-13-3-3(8) and (11) provide that a governmental entity or an employee acting within the scope of the employee’s employment is not liable if a loss results from the adoption and enforcement of or failure to adopt or enforce a law (including rules and regulations), unless the act of enforcement constitutes false arrest or false imprisonment, or if a loss results from the issuance, denial, suspension, or revocation of, or failure or refusal to issue, deny, suspend, or revoke any permit, license, certificate, approval, order, or similar authorization, where the authority is discretionary under the law.

However, IC 34-13-3 applies only to a claim or suit in tort. IC 34-13-3-1. By contrast, Celebration’s claims arise under equity and quasi-contract theories. Moreover, it is not seeking reimbursement for losses from the grant or denial of licenses, but simply the return of moneys paid pursuant to the unlawful collection of fees. Because Celebration’s suit seeks to recoup monies unlawfully exacted, governmental immunity does not apply. See, e.g., Indiana Revenue Bd. v. State ex rel. Bd. of Comm’rs of Hendricks County, 270 Ind. 365, 369, 385 N.E.2d 1131, 1134 (1979) (noting rejection of claim of governmental immunity and trial court’s decision against State to award counties share of inheritance tax collected by State).

[3] Finally, the Fire Marshal maintains that the trial court erred in ordering judgment in favor of Celebration because his interpretation of the certificate of compliance requirement is reasonable. He contends that Celebration’s interpretation, adopted by the trial court, unnecessarily singles out a single word in the statute and ignores the legislative intent to reduce the number of children and adults injured by fireworks and to eliminate the sale of illegal fireworks to the general public. Because it is the agency charged with interpreting the statute, the Fire Marshal contends that its interpretation is entitled to great weight, particularly because its interpretation is a reasonable one that furthers legislative goals.

We agree with the trial court that the language of the statute is clear and unambiguous: it states that “[e]ach manufacturer, wholesaler, importer, or distributor must obtain a certificate of compliance.” IC 22-11-14-5 (emphasis added). This language indicates that the legislature intended each wholesaler to obtain a single certificate of compliance. The statute also imposes the requirement that a copy of this certificate be posted in each location where restricted fireworks are offered for sale to the public. Id. This requirement shows that each location need not have its own certificate of compliance, but must display a copy of the single certificate that applies to the wholesaling entity. This language clearly evidences the intent of the legislature. By comparison, IC 22-11-14-7 provides for the issuance of permits for stands selling retail fireworks. That statute contemplates permits for each location, and establishes a schedule of charges related to the number of stands a retailer operates. The legislature could provide for a scheme requiring a certificate for each wholesale location, as it has for retail locations, if it intended to do so. Clearly, it did not intend to require a wholesaler to obtain a certificate of compliance for each wholesale location. The trial court did not err in entering judgment in favor of Celebration. Affirmed.
NAJAM, J., and RILEY, J., concur.

Bernard & Rettie Hopper v. Roy Carey, et al (6/25/04 IndCtApp) [Insurance]
Ratliff, Senior Judge
The parties present the following restated issue for our review: Whether the trial court correctly granted summary judgment in favor of Continental on the issue of the application of the set-off provision in the insurance contract regarding underinsured motorist benefits, and whether that order also extinguished a bad faith claim against Continental. * * *

Conclusion. The trial court correctly determined that Continental was allowed to set off the sum recovered by the Hoppers from S & S from its potential UIM liability. Further, there was no bad faith claim before the trial court against Continental. Therefore, the alleged claim neither survives nor is extinguished by the trial court’s order on summary judgment. Affirmed.
BAKER, J., and VAIDIK, J., concur.

Posted by Marcia Oddi on June 25, 2004 01:50 PM
Posted to Indiana Decisions