Anderson v. Iowa Department of Transportation

IN THE COURT OF APPEALS OF IOWA

No. 17-1276
Filed March 6, 2019

CURT ANDERSON and CAROL ANDERSON,
Petitioners/Cross-Appellants,

JEFFREY ENGLAND, LARRY ENGLAND, and CHARLOTTE ENGLAND,
Petitioners-Appellants,
vs.

STATE OF IOWA, ex rel. IOWA DEPARTMENT OF TRANSPORTATION,
Respondent-Appellee.
________________________________________________________________

Appeal from the Iowa District Court for Wapello County, Joel D. Yates,

Judge.

Appellants and cross-appellants challenge the department of

transportation’s cancellation of an auction for the sale of a parcel of land.

AFFIRMED.

Nathan A. Olson and Christine E. Branstad of Branstad Law, PLLC, Des

Moines, and Steven P. Wandro of Wandro & Associates, P.C., for appellants.

Thomas J. Miller, Attorney General, and David S. Gorham, Noel C. Hindt

(until withdrawal), and Richard E. Mull (until withdrawal), Assistant Attorneys

General, for appellee.

Paul Zingg of Denefe, Gardner & Zingg, P.C., Ottumwa, for cross-

appellants.

Heard by Vogel, C.J., and Vaitheswaran and McDonald, JJ.
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McDONALD, Judge.

In this administrative appeal, appellants Kurt and Carol Anderson and

cross-appellants Jeffrey, Larry, and Charlotte England (collectively “the Englands”)

challenge the Iowa Department of Transportation’s (DOT’s) cancellation of an

auction for a parcel of land. The DOT affirmed the cancellation in a declaratory

order. The district court affirmed the declaratory order. We also affirm.

The DOT owns the parcel of land at issue in this appeal. In 2016, the DOT

decided to dispose of the parcel by auction. The DOT opened the auction to the

owners of the three abutting pieces of property: Jon and Cheryl Simparcel, Kurt

and Carol Anderson, and Jeffrey England. The DOT sent the owners of each

abutting parcel a letter and a bidding form. The letter stated that “Iowa DOT policy

allows a purchase preference for all abutting owner(s) of land to be sold.” The

letter stated it would give preference to bids that equaled or exceeded the fair

market value of the parcel, which the DOT determined was $45,000. The bid form

stated that to submit a valid bid the bidder must include a check with the returned

form. The form also pre-printed $45,000 as the default bid amount: “I herewith

submit an unconditional offer of $45,000 to the [DOT] for the purchase of the

following land[.]” Finally, the form stated “The [DOT] reserves the right to waive

any technicalities and to reject any or all bids or offers.”

The Andersons returned a completed form. The bid form offered $45,000

and was accompanied by a check for the same amount. Jeffrey England also

submitted a form. Jeffrey’s bid form left the pre-printed bid amount of $45,000.

However, Jeffrey’s bid was accompanied by a check signed by his parents, Larry

and Charlotte, in the amount of $51,016. After the Andersons learned another
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party was interested in the property, they increased their bid to $50,000. The

bidding period then closed.

Subsequently, the DOT called Jeffrey. The exact substance of that phone

call is not in the record. Jeffrey contends he was “informed he was the high bidder

for the parcel.” According to the agency, Jeffrey “was informed that the check from

Larry and Charlotte England for $51,016 was the highest offer, and that there were

discrepancies between the Offer to Buy Jeffrey England signed and the check

received from Larry and Charlotte England.” Jeffrey was also allegedly informed

“the DOT would need to send a new Offer to Buy form to Larry and Charlotte

England, to be signed so that the offer would match the check.”

On the same day, the DOT also called Charlotte. It is unclear exactly what

transpired during this phone call. According to the DOT, Charlotte was “informed

of the discrepancies between the Offer to Buy that Jeffrey England signed and the

check received from Larry and Charlotte England.” She was also told “that [the

DOT] would be mailing her paperwork, including a new Offer to Buy, to be signed

by Larry and Charlotte England, so that the offer would match the check.”

Finally, the DOT sent the Andersons a letter that explained that their bid

was unsuccessful. The DOT also returned the Andersons’ uncashed check.

Shortly after, the DOT attempted to mail Charlotte and Larry the original,

voided bid form that Jeffrey had submitted. The DOT also sent a blank bid form

and a note that said, “Cross off the amount of $45,000.00 and write in $51,016.00

above it and initial. Fill in name as Larry England and Charlotte England. Please

sign and date as 3-18-16.” However, because of a clerical error, the DOT

inadvertently sent the forms to the Andersons instead of Charlotte and Larry.
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After the Andersons were inadvertently mailed the letter intended for Larry

and Charlotte, the Anderson’s attorney contacted the DOT regarding the potential

sale of the property. The Andersons raised concerns that the land was being sold

to parties who were not abutting landowners. They requested “an opportunity for

an open auction of the property with the abutting land owners identified in your

disposal notice.” In response to the Anderson’s concerns, the DOT reviewed the

matter and concluded that the sale of the land should not go forward. The DOT

issued Charlotte and Larry a check refunding their payment. The DOT also sent

letters to all abutting landowners, informing them that the sale would be cancelled

and the DOT would reinitiate the bidding process at a later time.

In response, the Andersons and the Englands petitioned for a declaratory

order. The Englands claimed the DOT was contractually bound to sell the land to

Jeffrey or, in the alternative, the DOT was contractually bound to sell the land to

Larry and Charlotte. The Andersons claimed they were the sole abutting

landowners to place a valid bid and they were therefore entitled to the property.

In response, the DOT issued a declaratory order, determining that it had not

erred in cancelling the auction and that it had not entered into an enforceable

contract with Jeffery or Charlotte and Larry England. Both the Andersons and the

Englands appealed to the district court. The district court affirmed. The Englands

now appeal that decision, and the Andersons cross-appeal.

The parties present a number of arguments regarding whether there was

an enforceable contract between the DOT and the Andersons or the Englands.

We think these arguments miss a more fundamental question: Does the DOT even

have the authority to determine the existence of a contract. We think not.
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“Administrative agencies are tribunals of limited jurisdiction.” Bair v. Blue Ribbon,

Inc., 129 N.W.2d 85, 86 (Iowa 1964) (quoting 2 Am. Jur. 2d Administrative Law

§ 328). An agency “has no inherent power and has only such authority as is

conferred by statute or is necessarily inferred from the power expressly granted.”

Zomer v. W. River Farms, Inc., 666 N.W.2d 130, 132 (Iowa 2003) (quoting Schmidt

v. Iowa State Bd. of Dental Exam’rs, 423 N.W.2d 19, 21 (Iowa 1988)); see Bair,

129 N.W.2d at 86 (“[An agency’s] jurisdiction is dependent entirely upon the validity

and the terms of the statutes reposing power [to it] . . . .” (citation omitted)).

“Whether a particular administrative agency has primary jurisdiction . . . depends

on the statutory scheme.” Charles Gabus Ford, Inc. v. Iowa State Highway

Comm’n, 224 N.W.2d 639, 647 (Iowa 1974); accord Dehning v. Eads, 201 N.W.2d

454, 456 (Iowa 1972). The DOT only has authority to issue a declaratory order

when “[t]he subject matter of the petition [is] within the primary jurisdiction of the

department.” Iowa Amin. Code r. 761-12.2(1). No statute or regulation provides

the DOT with authority to adjudicate the existence of a contract. While the DOT,

as a legal entity, has the authority to enter into contractual relations, it does not

have the authority to adjudicate the issue of whether a contract was formed. The

authority to declare the existence of a contract and the rights and the duties of the

parties to any such contract is inherent in and exclusive to the judicial branch. See

Peterson v. Domestic Util. Servs. Co., 179 N.E.2d 444, 449 (Ill. Ct. App. 1962) (“An

administrative agency, such as the Commerce Commission, is not a judicial body

and it has no jurisdiction to adjudicate controverted individual property or contract

rights.” (citation omitted)); R.R. Comm’n of Tex. v. Rau, 45 S.W.2d 413, 416 (Tex.

Civ. App. 1931) (concluding an administrative agency has no authority to
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determine contract rights). To the extent the parties seek a declaration of contract

rights, their respective remedies lie in the district court and not within the very

agency allegedly a party to a contract.

With that understanding, the only question presented on appeal is whether

the DOT’s decision to cancel the land auction violated the Iowa Administrative

Procedure Act, Iowa Code chapter 17A (2016). Our “review of the DOT’s decision

is governed by Iowa Code chapter 17A.” Hager v. Iowa Dep’t of Transp., 687

N.W.2d 106, 108 (Iowa Ct. App. 2004); accord Pointer v. Iowa Dep’t of Transp.,

546 N.W.2d 623, 625 (Iowa 1996). “The district court acts in an appellate capacity”

when reviewing agency decisions. Ludtke v. Iowa Dep’t of Transp., 646 N.W.2d

62, 64 (Iowa 2002); accord New Midwest Rentals, LLC v. Iowa Dept. of Commerce,

910 N.W.2d 643, 648 (Iowa Ct. App. 2018). We apply the same standards “to

determine whether we reach the same result as the district court.” New Midwest

Rentals, LLC, 910 N.W.2d at 648. We affirm if we come to the same conclusion

as the district court, but we reverse if we come to a different conclusion. Westling

v. Hormel Foods, Corp., 810 N.W.2d 247, 251 (Iowa 2012); New Midwest Rentals,

LLC, 910 N.W.2d at 648.

On the relevant question of whether the parties have demonstrated the DOT

acted arbitrarily, capriciously, or otherwise committed error in cancelling the

auction, we agree with the district court that it did not do so. In the letter sent to

the potential bidders, the DOT stated it was soliciting offers from abutting owners

for the purchase of the land. The letter made clear that any offers were for

“consideration” by the DOT “prior to offering the property for public sale.” In the

preprinted forms mailed to the potential bidders, the DOT made explicitly clear that
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it reserved the right “to reject any or all bids or offers.” This reservation of rights

was not qualified or limited in any respect. There was thus nothing in the

solicitation that prevented the DOT from canceling the auction. Here, the DOT

determined there was too much confusion to move forward with this particular

auction and decided to start over. That wholly discretionary decision was certainly

within its purview. See, e.g., Dickinson Co., Inc. v. City of Des Moines, 347 N.W.2d

436, 440 (Iowa Ct. App. 1984) (noting governmental entity had discretion to reject

all bids and solicit new bids on a contract); J.L. Manta, Inc. v. Braun, 393 N.W.2d

490, 493 (Minn. 1986) (“Nevertheless, although the DOT has the option of

accepting the Rainbow bid as the lowest remaining responsible bid, it is not

precluded from rejecting all bids and readvertising the contract in the event it

should elect to do so.”).

We have considered each of the parties’ arguments, whether or not set forth

in full herein, and we conclude the parties’ have not established an entitlement to

relief pursuant to the Iowa Administrative Procedure Act.

AFFIRMED.

Vogel, C.J., concurs; Vaitheswaran, J., concurs specially.
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VAITHESWARAN, Judge. (concurring specially)

I specially concur. I disagree with the majority’s statement that the DOT

lacks authority to adjudicate the existence of a contract. I believe Iowa Code

section 306.23 (2016), governing the sale of tracts adjacent to property

condemned for highway purposes, confers the necessary authority. And, as the

Iowa Supreme Court stated in Zomer v. West River Farms, Inc., 666 N.W.2d 130,

133 (Iowa 2003), the agency has the power to decide any issue necessary to a

determination within its purview.

That said, I would conclude the agency did not err in interpreting and

analyzing section 306.23. Accordingly, I concur in the result.