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Varilek v. City of Houston (06/25/2004) sp-5822
Varilek v. City of Houston (06/25/2004) sp-5822
Notice: This opinion is subject to correction before
publication in the Pacific Reporter. Readers are
requested to bring errors to the attention of the Clerk
of the Appellate Courts, 303 K Street, Anchorage,
Alaska 99501, phone (907) 264-0608, fax (907) 264-0878,
e-mail corrections@appellate.courts.state.ak.us.
THE SUPREME COURT OF THE STATE OF ALASKA
LARRY R. VARILEK, )
) Supreme Court No. S-10814
Appellant, )
) Superior Court No.
v. ) 3PA-01-1252 CI
)
CITY OF HOUSTON and ) O P I N I O N
MATANUSKA-SUSITNA )
BOROUGH, ) [No. 5822
- June 25, 2004]
)
Appellees. )
________________________________)
Appeal from the Superior Court of the State
of Alaska, Third Judicial District, Palmer,
Eric Smith, Judge.
Appearances: Larry R. Varilek, pro se,
Houston. Richard A. Weinig, Pletcher &
Weinig, Anchorage, for Appellee City of
Houston. Elizabeth D. Friedman, Assistant
Borough Attorney, and Teresa Williams,
Borough Attorney, Palmer, for Appellee
Matanuska-Susitna Borough.
Before: Bryner, Chief Justice, Matthews,
Eastaugh, Fabe, and Carpeneti, Justices.
CARPENETI, Justice.
I. INTRODUCTION
Larry Varilek sued Matanuska-Susitna Borough and the
City of Houston claiming that their enforcement of certain land
use ordinances violated his constitutional rights. The superior
court dismissed the claim because Varilek failed to exhaust his
administrative remedies prior to bringing suit. Varilek asserts
that he was unable to exhaust administrative remedies because he
was unable to pay the boroughs mandatory $200 administrative
filing fee. Because Varileks access to the legal system in this
case is contingent on payment of the boroughs administrative
fees, an absolute requirement that such fees be paid, without a
process for waiver upon a showing of indigency, would violate
Varileks right to procedural due process if Varilek is in fact
indigent. Because it is unclear whether Varilek is indigent, we
vacate the superior courts dismissal and remand for a
determination of that issue.
II. FACTS AND PROCEEDINGS
Larry Varilek operated a metal recycling business in an
area denominated as a holding district within the municipal
boundaries of the Matanuska-Susitna Borough and the City of
Houston. Under Matanuska-Susitna Borough Code 17.41.530(B),
development within the holding district will be permitted through
a conditional use approval process. Varilek did not receive a
conditional use permit for his business. Borough officials
issued Varilek a notice of violation of zoning and land use codes
regulating junk and trash and governing the disposal of scrap or
junked cars. The borough then issued an Enforcement Order
requiring Varilek to remedy the violations specified in the
notice.
Varilek sued, claiming that the boroughs regulations
and their enforcement were unconstitutional on a variety of
grounds. The defendants moved to dismiss, claiming that Varilek
failed to exhaust his administrative remedies before he brought
suit. Varilek responded that exhaustion was not required because
he was challenging the laws as facially unconstitutional. The
superior court rejected this argument and dismissed Varileks
claims without prejudice, strongly implying that he should
attempt to exhaust his administrative remedies before refiling
his case. On appeal, this court upheld that decision in all
respects.1
Varilek then apparently attempted to appeal the
boroughs Enforcement Order to its Board of Adjustment and
Appeals. However, such appeals require a $200 filing fee, to
defray the administrative cost of the appeal including, but not
limited to, preparation of the transcript. Claiming indigence,
Varilek requested a fee waiver, but his request was denied. The
borough admits that it has no provision for waiving the required
administrative fee. Varilek then filed a new lawsuit on
essentially the same grounds as Varilek I. This time, however,
he claimed that his attempt to file an administrative grievance,
plus the boroughs refusal to waive its filing fees, meant that he
had either effectively exhausted his administrative remedies or
was excused from doing so. At the same time, Varilek also
appealed the boroughs fee-related dismissal of his administrative
grievance, claiming that the dismissal denied his right to
procedural due process and equal protection. The superior court
consolidated Varileks new civil suit with his appeal of the
administrative fee decision.
The borough and city moved to dismiss Varileks lawsuit
for failure to exhaust administrative remedies and on collateral
estoppel grounds. The superior court found that the parties and
issues were identical to those in Varileks first case. It
therefore held Varilek to be collaterally estopped from
relitigating his complaint. Alternatively, the court found that
Varilek had again failed to exhaust his administrative remedies.
The court thus dismissed the civil suit portion of the
consolidated case. Varilek appeals this dismissal.
In its subsequent review of the boroughs administrative
fee, the superior court found that Varileks underlying property
interest in obtaining review of [the boroughs enforcement order]
is outweighed by the Boroughs interest in defraying the
administrative cost of the appeal. The court also found that the
borough did not violate Mr. Varileks equal protection rights
because the filing fee requirement . . . does not facially
discriminate one class of individuals from another. The superior
court thus affirmed the boroughs refusal to waive its
administrative filing fee. Varilek also appeals this decision.
We consider both of Varileks claims here the dismissal
of his civil suit on collateral estoppel grounds and the
determination that he failed to exhaust his administrative
remedies.
III. STANDARD OF REVIEW
We review decisions granting or denying motions to
dismiss de novo.2 We also apply a de novo standard of review to
questions of law, including constitutional law3 and adopt the
rule of law that is most persuasive in light of precedent,
reason, and policy.4 Whether res judicata or collateral estoppel
applies is a question of law,5 as is the determination whether a
claim requires the exhaustion of administrative remedies.6 On
the other hand, whether available administrative remedies
actually were exhausted is a question of fact that we review for
abuse of discretion.7 We will reverse a ruling for abuse of
discretion only when left with a definite and firm conviction,
after reviewing the whole record, that the trial court erred in
its ruling.8
IV. DISCUSSION
A. Because the City of Houston Had No Role in this
Controversy, It Is Dismissed from this Case with
Prejudice.
In all proceedings before the superior court and this
court, the city has concurred with the boroughs legal arguments.
However, the city also claims that it has no role in this
controversy, and notes that Varilek does not allege action by the
city or seek determination that any ordinance established by the
City of Houston [is] unconstitutional. Accordingly, the city
argues that it should be dismissed from this case. The borough
has not opposed the citys argument.
In support of its dismissal, the city has asked this
court to take judicial notice of two facts pursuant to Alaska
Rule of Evidence 201. Evidence Rule 201(b) allows us to take
judicial notice of facts not subject to reasonable dispute.
Facts are not subject to reasonable dispute if (1) generally
known within this state, or (2) capable of accurate and ready
determination by resort to sources whose accuracy cannot
reasonably be challenged. The city explains that Houston and
Matanuska-Susitna are separate political entities, one a city and
one a borough, and that the city is within the geographic limits
of the borough. These facts are of general knowledge, and thus
may be judicially noticed.
The city also asks us to take judicial notice of the
fact that all of the laws challenged by Varilek in this case are
borough, not city, ordinances. This can be easily ascertained by
reviewing Varileks pleadings: All of the statutes Varilek cites
are in fact borough ordinances, despite the fact that many of
them refer to or regulate the city.9 Moreover, under Evidence
Rule 202 this court may take judicial notice (with or without the
request of a party) of [d]uly enacted ordinances of
municipalities or other governmental subdivisions. This includes
Alaskas geographic and political boundaries.10 Accordingly, we
take judicial notice of the above facts.
We can properly dismiss all claims against a party
pursuant to Alaska Rule of Civil Procedure 21, which allows a
court to drop misjoined parties on motion of any party or of its
own initiative at any stage of the action. Since the city does
not have any interest or role in this case, we dismiss all claims
against the city.11
B. Varileks Legal Claims Are Not Precluded by Collateral
Estoppel.
The doctrine of collateral estoppel or issue preclusion
renders an issue of fact or law conclusive, and thus prevents its
relitigation between the same parties.12 For collateral estoppel
to apply, four requirements must be met: (1) the party against
whom preclusion is sought must have been a party in a previous
action (2) in which the identical issue was decided (3) by a
final judgment on the merits (4) that depended on resolution of
the issue.13
Although we have not ruled on the issue, other courts
generally do not consider dismissals without prejudice (such as
the dismissal of Varileks first lawsuit) to be preclusive final
judgments on the merits.14 Furthermore, in his previous lawsuit15
Varilek argued that he was not required to exhaust administrative
remedies, while in the present case Varilek has argued that the
boroughs filing fees prevented him from exhausting administrative
remedies. Thus, Varileks second case cannot be dismissed on the
same grounds as his first. For this reason as well, collateral
estoppel should not preclude Varileks claims.
C. Non-Waivable Administrative Filing Fees Violate
Procedural Due Process if They Deny Indigent Litigants
Access to the Courts.
Varilek claims that the boroughs refusal to waive his
filing fees violated his constitutional right to procedural due
process. The superior court rejected this claim, and upheld the
boroughs decision as constitutional. The superior court relied
upon our decision in Midgett v. Cook Inlet Pre-Trial Facility,16
which is based on the United States Supreme Courts decision in
Mathews v. Eldridge.17 Under Midgett, the determination of what
constitutes due process (and thus whether it was denied) involves
balancing: (1) the private interest affected by the official
action; (2) 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 (3) the
governments interest, including the fiscal and administrative
burdens that additional or substitute procedural requirements
would entail.18
Addressing the first Midgett factor, the superior
court rejected Varileks due process claim in part because it
found his interest in the case was not compelling because it is a
property interest. The court based this conclusion in part on
Boddie v. Connecticut.19 Boddie discussed an indigents right to
the judicial process unhampered by excessive fees. The Supreme
Court only applied this right to cases where the judicial system
holds a monopoly on the avenues of adjustment of a fundamental
human relationship, such as divorce.20 Because the superior court
interpreted our decision in In re K.A.H.21 as adopt[ing] the
rationale of Boddie, and because Varileks interest in this case
is only economic, the superior court concluded that Varilek has
no constitutional right of fee-less access to the legal system.
We cannot agree.
Alaska is not precluded from offering greater rights
and legal protections to its citizens than those offered by the
federal government.22 Accordingly, we have not limited the right
to access Alaskan courts without fees to indigents claiming
fundamental family interests. Rather, we have widened the right
of access to the judicial system beyond the Boddie line of cases.
In Bush v. Reid, a parolees suit for personal injuries
from an automobile accident was dismissed based on a statute
suspending the civil rights of a convict.23 We noted that a
personal injury lawsuit constituted only a property interest and,
unlike divorces, automobile accidents can often be resolved
privately, without resort to the state.24 Nonetheless, we
recognized that parties are not always successful in mediating
their conflicts and that it is sometimes necessary to resort to
the legal process.25 Although only Bushs property interests were
at stake, we held that the very quality of his future existence
may be dependant upon the outcome of the case, and the denial of
access to the court would constitute a grievous loss of his
property interests.26 Varileks property interests in this case
include his business and livelihood, the loss of which certainly
might affect the quality of his future existence.
Similarly, in Patrick v. Lynden Transport, Inc.,27 we
explicitly held that access to the courts to litigate a property
interest is an important right.28 The superior courts application
of the first Midgett factor thus substantially underestimates the
value of the private interest affected by the boroughs rule.
Furthermore, in this case it is the state, and not a private
individual or entity, that allegedly threatens Varileks
livelihood. This case thus does not involve, as was at issue in
K.A.H., the private structuring of individual relationships and
repair of their breach,29 for which the judicial system should be
the last resort.
In K.A.H., we upheld a trial courts decision to deny
reimbursement to an attorney for personal funds he advanced an
indigent client prior to a favorable settlement.30 The funds were
meant to cover the clients living expenses, not litigation costs
or fees, and as such were prohibited by Alaska Rule of
Professional Conduct 1.8(e). The attorney argued that barring
him from advancing living expenses to indigent litigants amounted
to an unconstitutional interference with the indigents right to
access the court,31 by impos[ing] a financial hardship on
plaintiffs that forces them to settle disputes rather than endure
the potentially prolonged litigation process.32 Rejecting this
contention, we noted that Boddies holding was limited to cases
involving state controls or intrusions on family relationships,
which were not at issue in K.A.H.33 However, we clearly indicated
that in Alaska the right of access to the courts is greater than
that guaranteed by Boddie. As we explained,
[W]hereas Bush, Boddie, and Patrick involved
direct impediments to court access, this case
does not. The statute in Bush flatly
prohibited parolees from filing suit. The
statutes in Boddie and Patrick imposed court
fees that denied indigent plaintiffs access
to the courts. Such fees have been
characterized as insurmountable barrier[s] to
filing suit. By contrast, nothing in Rule
1.8(e) expressly prohibits potential
plaintiffs from filing suit or requires
plaintiffs to pay for court access.[34]
Accordingly, we disagree with the superior courts conclusion that
K.A.H. models Alaskas right of court access on the same narrow
standard used by the federal courts. An indigent whose business
or property interests are threatened by an administrative action
originally filed by a government agency need not be litigating a
fundamental family matter in order to have a right of access to
the courthouse. Since prohibitive filing fees should not be
allowed to hamper an indigent litigants access to the justice
system in such situations,35 it follows that such fees should also
not be allowed to hamper his access to an administrative process
if such access is a prerequisite to judicial relief.36
The Midgett test also requires analysis of the states
interests in its existing laws, the costs of changing them, and
the viability of alternatives to the laws at issue. A reviewing
court must address the probable value, if any, of additional or
substitute procedural safeguards . . . and . . . the fiscal and
administrative burdens that additional or substitute procedural
requirements would entail.37 The superior court explicitly
concluded that the boroughs interest in charging a $200
administrative fee to all claimants was of utmost importance.
While the borough has an interest in collecting fees to defray
the cost of the administrative appeals process, a $200 fee is not
critical to the boroughs ability to conduct these appeals,
particularly when other options might accommodate Varileks and
the boroughs competing interests, such as reduced or graduated
fees for indigent claimants or an installment payment plan.38 The
superior court did not address potential alternatives to the
citys mandatory fee policy, nor did it weigh the benefit of such
fees against the social costs inherent in a policy that
effectively prohibits indigents from protecting their rights and
interests against state actions. We cannot agree with the
superior courts conclusion that in situations such as this, a
$200 fee imposed on an indigent person is so nominal that it
minimally impedes [the] appellants opportunity to seek appellate
review, and [that] the probable value of additional procedural
safeguards is minimal. Accordingly, we hold that the boroughs
refusal to offer any alternative to a $200 filing fee for
administrative actions amounts to an unconstitutional denial of
due process to indigent claimants. The only question then is
whether Varilek is in fact indigent.
The superior court made no findings of fact regarding
Varileks ability to pay the boroughs filing fee. While a court
might rightfully be skeptical that a person who is both a
business owner and a property owner is unable to pay a fee of
$200, there is nonetheless some support in the record for
Varileks indigence. That support includes the fact that the
superior court itself waived its filing fees for Varilek based
upon his low income. But because the record is incomplete in
this regard, we remand for factual findings related to whether
Varilek can afford to pay the filing fees or whether this
requirement prevents him from pursuing his claim through the
courts.
D. Varileks Other Constitutional Claims Need Not Be
Addressed.
In Varilek I, the superior court refused to address
Varileks constitutional claims, as did we. We explained that
these claims contained implicit allegations of non-constitutional
administrative error. Addressing such claims require[s] a
factual context [that] would have been supplied by an
administrative appeal. And an administrative reversal of such
error might moot Varileks entire case.39 Since Varilek has yet to
pursue his administrative appeal it remains premature to address
his other constitutional claims. It should be noted that since
these claims were not properly before the court in this appeal,
the borough was not obligated to brief these issues and it did
not waive any defenses by declining to do so preemptively.
V. CONCLUSION
Because the city played no role in enacting or
enforcing the legislation challenged in this case, it is
dismissed from this case with prejudice.
Because access to the boroughs administrative appeals
process requires a flat fee from all appellants regardless of
their wealth, and because this process is a prerequisite to
accessing the legal system, the boroughs policy violates the
procedural due process rights of indigent litigants. Because it
is unclear in the present case whether Varilek is actually
indigent, we REMAND to the superior court for a factual
determination of this question and further proceedings in
accordance with this opinion.
_______________________________
1 Varilek v. City of Houston and Matanuska-Susitna
Borough (Varilek I), 2002 WL 539034 (Alaska, April 10, 2002).
2 McElroy v. Kennedy, 74 P.3d 903, 906 (Alaska 2003); In
re Life Ins. Co. of Alaska, 76 P.3d 366, 368 (Alaska 2003).
3 R & Y, Inc. v. Municipality of Anchorage, 34 P.3d 289,
293 (Alaska 2001).
4 Guin v. Ha, 591 P.2d 1281, 1284 n.6 (Alaska 1979).
5 McElroy, 74 P.3d at 906.
6 Bruns v. Municipality of Anchorage, Anchorage Water &
Wastewater Util., 32 P.3d 362, 366 (Alaska 2001).
7 Id.
8 Betz v. Chena Hot Springs Group, 742 P.2d 1346, 1348
(Alaska 1987).
9 See http://ordlink.com/codes/matanusk/index.htm.
10 See McGee v. State, 614 P.2d 800, 808 (Alaska 1980)
(taking judicial notice of fact that Mile 206 of Richardson
Highway is within boundaries of Fourth Judicial District).
11 The city moved for dismissal only from the action
related to the boroughs administrative decision, and the superior
court granted its motion. While there is no indication in the
record that the city moved for dismissal in response to Varileks
civil suit, we find that dismissal is appropriate given that the
cases are consolidated and the city has no interest or stake in
either action.
12 McElroy, 74 P.3d at 907.
13 Jackinsky v. Jackinsky, 894 P.2d 650, 654 (Alaska
1995).
14 See, e.g., Cooter & Gell v. Hartmarx Corp., 496 U.S.
384, 396-97 (1990) (holding that under Federal Rules of Civil
Procedure, dismissal without prejudice does not operate as an
adjudication upon the merits, and that even when dismissed claim
was so unfounded as to merit Rule 11 sanctions, litigant was not
precluded from refiling it); Pilots Point Marina, Inc. v.
Cazzani Power Boat Mfg., Inc., 745 A.2d 782, 784 (R.I. 2000)
(dismissal of claim without prejudice where claimant lacks
capacity to sue is not final judgment on merits); Eastern Idaho
Agric. Credit Assn v. Neibaur, 987 P.2d 314, 320 (Idaho 1999) (A
dismissal without prejudice usually does not result in issue
preclusion.).
15 Varilek v. City of Houston and Matanuska-Susitna
Borough, 2002 WL 539034, *1 (Alaska, April 10, 2002).
16 53 P.3d 1105 (Alaska 2002).
17 424 U.S. 319 (1976).
18 Midgett, 53 P.3d at 1111 (adopting test articulated in
Mathews).
19 401 U.S. 371 (1971).
20 Id. at 382-83.
21 967 P.2d 91 (Alaska 1998).
22 Bush v. Reid, 516 P.2d 1215, 1219-20 (Alaska 1973).
23 Id.
24 Id. at 1217-18.
25 Id. at 1218.
26 Id. at 1218-19.
27 765 P.2d 1375 (Alaska 1988).
28 Id. at 1379. Although this decision was grounded in an
equal protection analysis, its reasoning is equally applicable to
a due process inquiry.
29 Bush v. Reid, 516 P.2d at 1218 (quoting Boddie v.
Connecticut, 401 U.S. at 375).
30 K.A.H., 967 P.2d at 97-98.
31 Id. at 92.
32 Id. at 94.
33 Id. at 94-95.
34 Id. (internal citations omitted).
35 Bush v. Reid, 516 P.2d 1215, 1217-18 (Alaska 1973)
(citing Boddie v. Connecticut, 401 U.S. 371 (1971)).
36 See, e.g., Bustamante v. Alaska Workers Comp. Bd., 59
P.3d 270, 273 (Alaska 2002) (dismissal of indigent appellants
appeal of administrative decision for failure to pay transcript
costs was abuse of discretion).
37 Midgett v. Cook Inlet Pre-Trial Facility, 53 P.3d 1105,
1111 (Alaska 2002).
38 Varilek complains only of a [t]otal denial of access to
review based upon the inability to pay a lump sum . . . and he
proposes a payment schedule where the fee is paid over a period
of time, i.e., $25.00 per month.
39 Varilek I, 2002 WL 539034, at *1 (Alaska, April 10,
2002).
