Posted by: Patricia Salkin | November 23, 2018

UT Appeals Court Denies Takings Claims for Failure to Exhaust Administrative Remedies

This post was authored by Matthew Loeser, Esq.

 

Osmond Senior Living, LLC submitted plans and obtained the appropriate building permit to construct a new, three-story assisted living facility in Lindon City. The State Fire Marshal Division alerted Osmond that the structure, which was already under construction, might not be approved for licensure as an assisted living facility because the third floor violated building codes. As a result, Osmond changed its plans, removed the partially completed third story, and built a two-story facility instead. Six months later, the State Fire Marshal told Osmond that three-story assisted living facilities were allowed. Osmond then brought an unconstitutional takings claim against the Department of Public Safety and the Department of Health and sought millions in compensation for renovation costs and lost revenue. The district court ruled that it lacked subject matter jurisdiction as Osmond did not exhaust its administrative remedies.

 

On appeal, Osmond contended that it was not required to exhaust its administrative remedies since the legislature did not specifically delegate adjudicative authority to the Utah Fire Prevention Board. Specifically, while Subsection 204 of the Utah Fire Prevention and Safety Act listed the Board’s duties, it did not delegate adjudicative authority to the Board. Instead, Subsection 204 stated that creating a local board of appeals in accordance with the state fire code “shall be administered locally by a city, county, or fire protection district.” Even though it was unclear why the legislature chose to delegate that authority to a local entity rather than to the Utah Fire Prevention Board itself, the statutory language made it clear that adjudicative authority for the “application and interpretation of a code,” had been delegated by the legislature to a local board of appeals.

 

Osmond next contended that, even if the legislature delegated adjudicative authority, Osmond was excused from exhausting those remedies because the State Fire Marshal acted outside the scope of his authority. Specifically, Osmond claimed that the statute authorized enforcement “against state-owned property, including school district owned property, asylums, mental hospitals, homes for the aged, residential health-care facilities” but that an “exception to-the-exception” for privately owned property used for schools in corporate cities and county fire protection districts existed. Based on the plain language of the statute, the court found was clear that “residential health-care facilities” were among the subset of private properties to which the statute expressly applied.

 

Lastly, the court found the procedure for an administrative adjudicative proceeding only applied to adjudicative acts, and not to discussing a potential violation with a builder. Here, the record reflected that the State Fire Marshal did not issue an administrative ruling or conduct an adjudicative proceeding in sending the letter or holding the meeting. As such, the State Fire Marshal could not exceed his authority by failing to follow the procedures for adjudicative actions because there was no adjudication. Accordingly, the court affirmed, holding that Osmond was not excused from exhausting administrative remedies.

 

Osmond Senior Living v Utah Department of Public Safety, 2018 WL 6131999 (UT App. 11/23/2018)


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