               IN THE SUPREME COURT OF IOWA
                              No. 14–0339

                        Filed February 27, 2015


GHOST PLAYER, L.L.C. and CH INVESTORS, L.L.C.,

      Appellants,

vs.

STATE OF IOWA,

      Appellee.


      Appeal from the Iowa District Court for Polk County, Mary Pat

Gunderson, Judge.



      Claimants of tax credits appeal a district court ruling dismissing

their claim for tax credits because the claimants failed to exhaust their

administrative remedies. AFFIRMED.



      J. Campbell Helton and Van T. Everett of Whitfield & Eddy, P.L.C.,

Des Moines, for appellant Ghost Player, L.L.C.
      Richard O. McConville of Coppola, McConville, Coppola, Carroll,

Hockenberg & Scalise, P.C., West Des Moines, for appellant CH

Investors, L.L.C.



      Jeffrey S. Thompson, Solicitor Attorney General, and Adam P.

Humes, Assistant Attorney General, for appellee.
                                                2

WIGGINS, Justice.

         Claimants of tax credits under Iowa Code sections 15.391–.393

(2009) brought an action in district court to collect certain tax credits it

contended the State owed the claimants.                    The district court dismissed

the claimants’ petition on the grounds it did not have the authority to

hear     the      case    because       the   claimants       failed   to    exhaust   their

administrative remedies.              We agree with the district court decision

dismissing the petition because the actions taken by the agency in

denying the credits was other agency action, requiring the claimants to

exhaust their administrative remedies.                      Failure to exhaust those

administrative remedies deprives the district court of the authority to

hear the case.           We further conclude the district court was correct in

finding the process used by the agency in processing the claimants’ claim

for tax credits did not offend Due Process Clauses of the Iowa or United

States Constitutions. Accordingly, we affirm the decision of the district

court.

         I. Background Facts and Proceedings.

         On      January      8,   2009,      the   Iowa    Department        of   Economic

Development (IDED) and Ghost Player, L.L.C. executed a contract for tax

credits under the Film, Television, and Video Project Promotion Program.

See Iowa Code § 15.391. CH Investors, L.L.C. is a third-party beneficiary

to the contract. 1 The contract included a “description of the project to be

completed[,] . . . the terms and conditions for receipt of the tax credits[,]

. . . and the repayment requirements or other penalties imposed in the

event the [film producers failed to] fulfill its obligations” under the

contract; all of these terms were required by Iowa Administrative Code


         1For   the sake of brevity we will refer to both parties as “Ghost Player.”
                                            3

261—36.5(2) (2008). The contract included a clause stating, “Any IDED

determinations with respect to compliance with the provisions of this

Contract and the Funding Agreements shall be deemed to be final

determinations pursuant to Section 17A of the Code of Iowa (2005).”

      Under the contract, Ghost Player believed it would receive certain

tax credits for the project Field of Dreams Ghost Player, a documentary

film they produced highlighting the lives of the men who portrayed the

ghost baseball players in the movie Field of Dreams filmed in Dyersville. 2

After completing the film, Ghost Player submitted its request for the film

tax credits and supporting materials.

      On December 20, 2010, the IDED declined to issue the contracted

twenty-five percent tax credit for some of the expenditures and

investments of Ghost Player.              Ghost Player objected to the agency’s

decision   and      submitted       additional     information       for   the     IDED’s

consideration. The IDED reviewed the materials and on June 29, 2011,

revised its tax credit determination, but still did not provide a tax credit

for all of Ghost Player’s expenditures and investments.                    Ghost Player

submitted further information after the IDED’s second determination in

an attempt to gain further tax credits.              The IDED did not change its

position   after     receiving     this    information      and     issued       its   final

determination on the film tax credits the agency would issue to Ghost

Player on February 22, 2012.

      After receiving the final determination and believing the IDED had

breached the parties’ contract by failing to issue tax credits for all of

Ghost Player’s qualified expenditures, Ghost Player filed a breach of

contract action in district court on November 6, 2013. The State filed a


      2Upon   release, the project was titled Ghost Player: Relive the Magic.
                                     4

motion to dismiss, arguing the district court lacked authority to hear the

claim because Ghost Player was first required to seek relief under the

Iowa Administrative Procedure Act.

      This district court granted the motion to dismiss.         It held the

action complained of by Ghost Player falls squarely within the definition

of “other agency action,” and Ghost Player would have a full and fair

opportunity to raise the necessary issue and present evidence through a

section 17A.19(7) hearing.    See Iowa Code § 17A.19(7) (explaining the

process for judicial review of an agency decision). Ghost Player appeals.

      II. Issue.

      The first issue we must decide is whether the district court

correctly decided it did not have the authority to hear the case because

Ghost Player failed to exhaust its remedies under the chapter 17A, the

Iowa Administrative Procedure Act.

      Because we decide this issue adverse to Ghost Player, we must

also deal with Ghost Player’s constitutional issues raised on appeal. The

only issue Ghost Player raised in the district court was that the failure of

the IDED to have administrative rules in place deprived it of due process.

Thus on appeal, while Ghost Player raised other challenges, we will only

decide the due process issue.

       III. Scope of Review.

      The State moved to dismiss Ghost Player’s petition on the grounds

Ghost Player did not exhaust its administrative remedies. When a party

fails to exhaust all of its required administrative remedies, the court has

no authority to hear the case, and if a party properly raises the

challenge, the court must dismiss the case. Keokuk County v. H.B., 593

N.W.2d 118, 123 (Iowa 1999).       We review the authority of the district

court to hear a case for correction of errors at law. Reg’l Ret. Living, Inc.
                                          5

v. Bd. of Review, 611 N.W.2d 779, 781 (Iowa 2000) (per curiam).                  We

review Ghost Player’s constitutional claim de novo.              Hensler v. City of

Davenport, 790 N.W.2d 569, 578 (Iowa 2010).

     IV. Whether the District Court Had the Authority to Hear This
Case in Light of the State’s Claim that Ghost Player Should Have
Exhausted Its Administrative Remedies.

       Iowa began the Film, Television, and Video Project Promotion

Program in 2007. See 2007 Iowa Acts ch. 162 §§ 1–13 (codified at Iowa

Code §§ 15.391–.393). 3 The program offered two transferable tax credits,

a qualified expenditure tax credit and an investment tax credit.                  Id.

§ 15.393(2)(a)(1)–(3), (b)(1)–(2).

       To obtain a tax credit, the taxpayer must register the project with

the IDED. See id. § 15.393(1). The Code sets up minimal criteria for

registration and allows the IDED to establish other criteria by rule. See

id. After a project is registered, the taxpayer may qualify for credits if the

expenditures and investments meet the conditions set forth in the Code.

Id. § 15.393(2), (4).

       To administer the program, the IDED passed a rule requiring a

taxpayer to enter into a contract with the IDED setting forth the terms

and conditions under which the tax credit would be issued. Iowa Admin.

Code r. 261—36.5. The Code gave the IDED the obligation to verify the

eligibility of the credit, and if verified issue the credit.             Iowa Code

§ 15.393(2)(a)(3), (b)(2).

       Consistent with the IDED’s obligation to verify and issue the tax

credit, the contract entered into between Ghost Players and the IDED

stated:


       3The   legislature repealed the Film Program in 2012.   See 2012 Iowa Acts ch.
1136, § 38.
                                     6
      Final Authority. The IDED shall have the authority to
      reasonably assess whether the Recipient has complied with
      the terms of this Contract. Any IDED determinations with
      respect to compliance with the provisions of this Contract
      and the Funding Agreements shall be deemed to be final
      determinations pursuant to Section 17A of the Code of Iowa
      (2005).

The IDED did not promulgate any rules dealing with the procedures for

claiming a credit, for the IDED to verify a credit, or for a party to contest

a decision concerning a credit within the agency.

      Chapter 17A of the Code classifies three types of agency action.

They are rulemaking, contested cases, or other agency action. Sindlinger

v. Iowa State Bd. of Regents, 503 N.W.2d 387, 389 (Iowa 1993). Neither

party contends the IDED’s refusal to honor all the tax credits claimed

involves rulemaking.     Both the Code and this court have defined a

contested case proceeding as one “in which the legal rights, duties or

privileges of a party are required by Constitution or statute to be

determined by an agency after an opportunity for an evidentiary

hearing.”   Iowa Code § 17A.2(5); accord Smith v. Iowa Bd. of Med.

Exam’rs, 729 N.W.2d 822, 826 (Iowa 2007). There is no claim in this

appeal the IDED actions were a contested case proceeding.

      The dispute in this appeal is whether the IDED’s refusal to honor

all the tax credits Ghost Player claimed is other agency action. Other

agency action is action taken by an agency that is “neither rulemaking

nor a contested case.”     Smith, 729 N.W.2d at 826.       In other words,

“agency action taken without a hearing required by a statute or

constitution or action taken after a required hearing that does not rise to

the level of an evidentiary hearing is other agency action.” Id.

      We begin our analysis with a brief review of our prior cases

applying the definition of other agency action.      In an early case, we
                                          7

decided whether a professor’s claim for payment of unused and

accumulated sick leave, and another faculty member’s claim that the

Iowa State Board of Regents (Regents) violated the collective bargaining

agreement by refusing to arbitrate tenure rights was other agency action

requiring the claimants to exhaust their administrative remedies prior to

bringing an action in district court. Allegre v. Iowa State Bd. of Regents,

319 N.W.2d 206, 207 (Iowa 1982).              There we held the legislature, by

statute, intended the board to first pass on the payment of unused or

accumulated sick leave. Id. at 208. Therefore, the Regents must first

pass on the issue and the claimants were required to exhaust their

administrative remedies prior to bringing an action in district court. Id.

As to the collective bargaining issue, we held the employee also had to

exhaust his administrative remedies before going to district court

because the legislature, by statute, recognized the Regents’ right to carry

out the responsibilities regarding collective bargaining. Id. at 209. 4

       In a 1986 opinion, we held a contract dispute between an outside

contractor    and    the   Regents     concerning     overage     charges    on    the

construction of a basketball arena was not other agency action. Jones v.

Iowa State Bd. of Regents, 385 N.W.2d 240, 240, 242 (Iowa 1986). We
distinguished Jones from Allegre because Jones did not involve an

intrafamily dispute with an ongoing relationship.                  Id.    It is also

interesting to note that neither party cited any legislative procedure

requiring the Regents to pass on overage charges as part of its statutory

duty or expertise.




       4In  a later case, we disapproved of any suggestion made in Allegre that any
action or inaction by an agency is reviewable only under the procedures of chapter 17A.
Papadakis v. Iowa State Univ. of Sci. & Tech., 574 N.W.2d 258, 260 (Iowa 1997).
                                    8

      In 1987, we decided a University of Iowa employee’s claim under

the Iowa Civil Rights Act could proceed to district court without first

exhausting her administrative remedies by presenting the claim to the

Regents. Jew v. Univ. of Iowa, 398 N.W.2d 861, 865 (Iowa 1987). In

reaching this conclusion, we agreed with the employee that the civil

rights claim bore little relation to the Regents’ statutory mandate or

supposed area of expertise.    Id. at 864–65.    We also emphasized the

legislature devised a separate statutory procedure designed to process

civil rights claims in the Code. Id. at 865. Notably, both parties agreed

the employee needed to exhaust her administrative remedies by

presenting her breach of contract claims to the Regents’ before filing in

district court. Id. at 863.

      For the same reasons we articulated in Jew, we held a university

professor must exhaust his administrative remedies by presenting his

breach-of-contract claim to the Regents before filing with the district

court. Genetzky v. Iowa State Univ., 480 N.W.2d 858, 861 (Iowa 1992).

However, in 1997, we allowed a university employee to bring a claim for

failure to pay long-term disability without first presenting it to the

Regents. Hornby v. State, 559 N.W.2d 23, 25 (Iowa 1997). As in Jew, we

decided this case on the basis that the legislature devised a separate

statutory procedure designed to process wage claims. Id. We held the

employee’s claim was a wage claim and the employee was not required to

exhaust her administrative remedies by presenting her wage claim to the

Regents prior to filing in district court under the wage payment collection

statues. Id. at 25–26.

      Finally, in the most recent case on this issue, we held a university

faculty member must exhaust his administrative remedies by presenting

his employment contract dispute to the Regents, prior to filing with the
                                             9

district court. Papadakis v. Iowa State Univ. of Sci. & Tech., 574 N.W.2d

258, 260 (Iowa 1997). In reaching this conclusion, we held if the action

or inaction of the agency in question bears a discernible relationship to

the statutory mandate of the agency as evidenced by express or implied

statutory authorization, a party must first present the claim to the

agency for other agency action before the party can proceed to district

court. Id. Here, we replaced the intrafamily test applied in Jones with

the discernable relationship test.

       Applying our caselaw to the present appeal, we find the review of

the tax credits by the IDED is other agency action requiring Ghost

Players to seek judicial review under chapter 17A of the Iowa Code. The

legislature mandated the IDED to verify the eligibility of the credit and if

verified issue the credit.          Iowa Code § 15.393(2)(a)(3), (b)(2). 5              The

language of the contract reinforced this mandate.                      The mandate of

sections 15.393(2)(a)(3) and (b)(2) squarely fall within the definition and

test as to whether an agency’s action or inaction qualifies as other

agency action.         The duty to verify and issue the credits bears a

discernible relationship to the statutory mandate of the IDED as

evidenced by the express statutory authorization.                      Additionally, the
legislature has not devised a separate remedial statutory scheme to

process a claim for film tax credits.

       Accordingly, the district court did not have the authority to hear

this case because Ghost Player failed to exhaust its administrative


       5At  the time, the Code provided, “After verifying the eligibility for a tax credit
under this paragraph ‘a’, the department of economic development shall issue a film,
television, and video project promotion program tax credit certificate to be attached to
the person’s tax return.” Iowa Code § 15.393(2)(a)(3). “After verifying the eligibility for a
tax credit under this paragraph ‘b’, the department of economic development shall issue
a film, television, and video project promotion program tax credit certificate to be
attached to the person’s tax return.” Iowa Code § 15.393(2)(b)(2).gf
                                     10

remedies. Thus, we affirm the district court’s decision dismissing Ghost

Player’s petition.

      V. Whether Ghost Player Was Deprived Due Process Because
the IDED Failed to Have Administrative Rules in Place.

      In the papers filed by Ghost Player in the district court, it failed to

cite either the Iowa or the United States Constitution in support of its

due process argument. In reaching its decision, the district court only

stated,

            Next, Plaintiffs argue they will be denied due process
      because there are no administrative rules in place to process
      claims which IDED has wrongly decided. They claim they
      did not receive a full and fair hearing on the merits of the
      case.

It too, did not cite either the State or Federal Constitution.

      On appeal, Ghost Player’s claim concerns its procedural due

process rights contained in the Due Process Clauses of the Fourteenth

Amendment to the United States Constitution and article I, section 9 of

the Iowa Constitution. In its brief, Ghost Player cites cases applying the

Federal Constitution or cases applying the Iowa Constitution in the same

manner as the Federal Constitution. When a party makes both a state

and federal constitutional argument and only argues the federal

constitutional standard, we have discretion to consider a different

standard under our state constitution and may apply the federal

standard more stringently. State v. Dewitt, 811 N.W.2d 460, 467 (Iowa

2012). In this case, we decline to exercise our discretion to consider a

different standard, and we will not apply the federal standard more

stringently under our state constitution.

      The United States Supreme Court has stated that we decide what

process is due under the Constitution by balancing three competing
                                     11

interests. Mathews v. Eldridge, 424 U.S. 319, 335, 96 S. Ct. 893, 903,

47 L. Ed. 2d 18, 33 (1976). These interests are:

      First, the private interest that will be affected by the official
      action; second, the risk of an erroneous deprivation of such
      interest through the procedures used, and the probable
      value, if any, of additional or substitute procedural
      safeguards; and finally, the Government’s interest, including
      the function involved and the fiscal and administrative
      burdens that the additional or substitute procedural
      requirements would entail.

Id. Just because another procedure may seem fairer or wiser, does not

mean the procedure provided violates due process. Bowers v. Polk Cnty.
Bd. of Supervisors, 638 N.W.2d 682, 691 (Iowa 2002).

      Although not citing Mathews, we have previously balanced these

competing interests in another case involving other agency action.

Sindlinger, 503 N.W.2d at 389–90.         There we looked at the legislative

mandate to see if a contested case procedure was required. Id. Having

determined a contested case proceeding was not required, we looked at
the process provided to see how it affected the private interest and if the

procedure offended the right of due process. Id. at 390. We concluded

the informal hearing process did not offend due process. Id.

      Applying these principles to this case, we first note the legislature

did not mandate a contested hearing process to review and award tax

credits. Additionally, the Code and the contract set forth the process for

obtaining the tax credits.    All that was required of the IDED was to

review the claim and make a determination as to the amount of the

credit. As the record demonstrates, if the claimant was unhappy with a

determination by the IDED, the claimant could present further

documentation to the IDED.
                                     12

      The IDED reviewed all the subsequent documentation presented

and changed the award of tax credits when it deemed it was required to

do so based on Ghost Player’s submissions. This informal procedure did

not offend the due process guaranteed under the State and Federal

Constitutions because it correctly balanced the interests set forth in

Mathews. 424 U.S. at 335, 96 S. Ct. at 903, 47 L. Ed. 2d at 33; see also

Sindlinger, 503 N.W.2d at 389–90.

      Additionally, Ghost Player argues by not having a hearing before

the IDED, the judicial review process will offend due process. First, we

cannot decide if the appeal process will offend due process because we

are not fortunetellers who can predict what will occur in a judicial review

process. We can say with certainty that when a party requests judicial

review of other agency actions the district court “may hear and consider

such evidence as it deems appropriate.” Iowa Code § 17A.19(7). This

means at the judicial review proceeding, the court should have the

agency file and any testimony that will shed light on what actually

occurred at the agency level.      The purpose of this section is for the

district court to determine what actually occurred at the agency level to

facilitate a meaningful review of the agency’s action.     Sindlinger, 503

N.W.2d at 390. In any event, we need not say more about the process

provided at the judicial review proceedings until such time as it has

taken place.

      VI. Disposition.

      We agree with the decision of the district court dismissing Ghost

Player’s petition on the grounds the IDED actions regarding the review

and awarding the requested tax credits was other agency action and

required Ghost Player to exhaust its administrative remedies prior to

filing a case in district court.    Consequently, the district court was
                                  13

without authority to hear the case.    We further conclude the district

court was correct in finding the process used by the IDED in processing

the claim did not offend the right of due process under the State or

Federal Constitutions. Therefore, we affirm the decision of the district

court.

         AFFIRMED.
