Ghost Player, L.L.C. and Ch Investors, L.L.C. v. State of Iowa
860 N.W.2d 323
Iowa
2015

Background

  • Ghost Player, L.L.C. (and third-party beneficiary CH Investors) contracted with the Iowa Department of Economic Development (IDED) for film tax credits under the Film, Television, and Video Project Promotion Program; the contract stated IDED determinations would be final under Iowa Code chapter 17A.
  • Ghost Player submitted a claim for tax credits after completing a documentary; IDED initially denied part of the claimed credits, Ghost Player submitted additional materials, IDED revised but still denied some credits, and issued a final determination in February 2012.
  • Ghost Player sued in Polk County District Court in 2013 for breach of contract, asserting IDED failed to issue the contracted credits; the State moved to dismiss for failure to exhaust administrative remedies.
  • The district court dismissed, holding IDED’s credit determinations constituted “other agency action” under Iowa Code chapter 17A and required exhaustion and administrative review before judicial action.
  • The Iowa Supreme Court affirmed: (1) IDED’s verification/issuance duty for film tax credits bears a discernible relationship to its statutory mandate, making the agency action "other agency action" requiring exhaustion; (2) the informal administrative process used did not violate state or federal due process.

Issues

Issue Plaintiff's Argument Defendant's Argument Held
Whether district court had authority to hear breach-of-contract suit without agency exhaustion Ghost Player: contract clause made IDED determinations final but did not require administrative exhaustion; could sue directly for breach State: IDED’s denial is "other agency action" under chapter 17A; administrative remedies must be exhausted before court Held: Dismissal affirmed — IDED action is "other agency action" and exhaustion required
Whether IDED’s lack of formal administrative rules deprived Ghost Player of due process Ghost Player: absence of administrative rules/hearing process denied full and fair hearing State: informal review and opportunity to submit materials sufficed; judicial review under 17A.19 available Held: Due process not violated; Mathews balancing supports informal procedures provided

Key Cases Cited

  • Keokuk County v. H.B., 593 N.W.2d 118 (Iowa 1999) (failure to exhaust administrative remedies deprives court of authority)
  • Reg'l Ret. Living, Inc. v. Bd. of Review, 611 N.W.2d 779 (Iowa 2000) (standard of review for court authority questions)
  • Sindlinger v. Iowa State Bd. of Regents, 503 N.W.2d 387 (Iowa 1993) (distinguishing rulemaking, contested cases, and other agency action; informal process can satisfy due process)
  • Allegre v. Iowa State Bd. of Regents, 319 N.W.2d 206 (Iowa 1982) (agency statutorily intended to resolve certain internal disputes first)
  • Jones v. Iowa State Bd. of Regents, 385 N.W.2d 240 (Iowa 1986) (contract dispute with no statutory agency role need not be administratively exhausted)
  • Jew v. Univ. of Iowa, 398 N.W.2d 861 (Iowa 1987) (claims unrelated to agency’s statutory mandate need not be presented to agency)
  • Genetzky v. Iowa State Univ., 480 N.W.2d 858 (Iowa 1992) (breach-of-contract claims tied to agency mandate require exhaustion)
  • Hornby v. State, 559 N.W.2d 23 (Iowa 1997) (statutory remedies for wage claims can displace agency exhaustion)
  • Papadakis v. Iowa State Univ. of Sci. & Tech., 574 N.W.2d 258 (Iowa 1997) (adopting discernible-relationship test for exhaustion)
  • Smith v. Iowa Bd. of Med. Exam’rs, 729 N.W.2d 822 (Iowa 2007) (definition of other agency action)
  • Hensler v. City of Davenport, 790 N.W.2d 569 (Iowa 2010) (constitutional claims reviewed de novo)
  • Mathews v. Eldridge, 424 U.S. 319 (U.S. 1976) (three-factor balancing test for procedural due process)
  • Bowers v. Polk Cnty. Bd. of Supervisors, 638 N.W.2d 682 (Iowa 2002) (other procedures may be fairer but not constitutionally required)
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