Osmond Senior Living v. Dept. of Public Safety

2018 UT App 218

THE UTAH COURT OF APPEALS

OSMOND SENIOR LIVING LLC,
Appellant,
v.
UTAH DEPARTMENT OF PUBLIC SAFETY AND
UTAH DEPARTMENT OF HEALTH,
Appellees.

Opinion
No. 20170153-CA
Filed November 23, 2018

Fourth District Court, Provo Department
The Honorable M. James Brady
No. 150401586

Richard J. Armstrong and Judson D. Burton,
Attorneys for Appellant
Sean D. Reyes and Joshua Davidson,
Attorneys for Appellees

JUDGE DAVID N. MORTENSEN authored this Opinion, in which
JUDGES KATE A. TOOMEY and DIANA HAGEN concurred.

MORTENSEN, Judge:

¶1 Osmond Senior Living, LLC (Osmond) submitted plans
and obtained the appropriate building permit to construct a
new, three-story assisted living facility in Lindon City (the City).
The State Fire Marshal Division alerted Osmond that the
structure, the construction of which was well underway, might
not be approved for licensure as an assisted living facility
because the third floor violated building codes for such facilities.
Osmond changed its plans, removed the partially completed
third story, and built a two-story facility instead. About six
months later, the State Fire Marshal told Osmond that
three-story assisted living facilities were now allowed. Osmond
Osmond Senior Living v. Department of Public Safety

brought an unconstitutional takings claim against the
Department of Public Safety and the Department of Health,
seeking millions in compensation for renovation costs and lost
revenue. The district court ruled that it lacked subject matter
jurisdiction because Osmond did not exhaust its administrative
remedies. In the alternative, the court ruled that Osmond failed
to state a claim for which relief could be granted because it never
held a vested interest in the three-story facility. Osmond appeals.
We affirm.

BACKGROUND

¶2 Osmond planned to build a three-story assisted living
facility in the City, with the first two floors built for Institutional
Group 2 (I-2) occupancy and the third floor built for Institutional
Group 1 (I-1) occupancy. 1 Osmond received the required
building permit from the City prior to construction. The permit,
issued in late January 2014 (1) required the applicant to comply
with all city, county, and state building laws and ordinances and
(2) prohibited occupancy “until after final inspection and zoning
and occupancy compliance certificate is issued.”

¶3 With permit in hand, Osmond began construction as
planned, building for I-2 occupancy on the first two levels and
I-1 occupancy on the third level. Part of Osmond’s attempt to

1. Under the International Building Code, I-1 occupancy
buildings are used “for more than 16 persons who reside on a 24
hour basis in a supervised environment and receive custodial
care.” 2012 International Building Code § 308.3. I-2 occupancy
buildings are used to provide medical care on a
twenty-four-hour basis for more than five persons who are
“incapable of self-preservation.” Id. § 308.4. The relevant section of
the code is available at https://codes.iccsafe.org/content/IBC2012
/chapter-3-use-and-occupancy-classification [https://perma.cc
/5EKV-EL97].

20170153-CA 2 2018 UT App 218
Osmond Senior Living v. Department of Public Safety

construct a compliant facility involved the inclusion of a
two-hour firewall between the I-1 and I-2 levels. But in April
2014—several months after construction began and after
Osmond had erected the structural components for all three
floors—Osmond’s architect received a letter (the Letter) from the
Utah Department of Health signed by the Architect and Special
Deputy of the Utah State Fire Marshal. 2 The Letter stated that it
was the third “plan review letter” issued by the department
concerning the project. The Letter indicated that the department
had received drawings for the project in February 2014 and that
it had sent an earlier letter in March 2014 regarding “outstanding
items” that needed to be addressed. Although the Letter
referenced these earlier communications, the appellate record
contains no other documentary evidence of prior communication
between Osmond and any state agency.

¶4 In bold type, the Letter warned: “Plans for the project
have not been approved by our office. Any items that are
currently being constructed that are found not to be in
compliance with the required rules will need to be corrected
before we can approve plans and ultimately recommend
approval for licensure.” The Letter opined that the project
did not comply with the International Building Code [IBC] or
Utah law for an assisted living facility. Specifically, the Letter
stated:

As we see it, the biggest issue on this project is the
permissibility of a 3 story, wood framed building
that contains an I-2 occupancy and a type-2
assisted living population. . . . [A]fter reading
through the commentary to the IBC and consulting
with different code officials and Life Safety

2. The following were copied on the Letter: (1) Jared Osmond,
owner of Osmond Senior Living; (2) Phil Brown, Chief Building
Official for the City; (3) Mark Burton, Deputy State Fire Marshal;
and (4) Richard Gee, Utah State Fire Marshal’s plan reviewer.

20170153-CA 3 2018 UT App 218
Osmond Senior Living v. Department of Public Safety

surveyors . . . it is our opinion that a 3 story, wood
framed building containing an I-2 occupancy is not
allowed per the IBC.

The Letter then made the following request:

We ask that you and the owner consider removing
the top floor of the new building to meet not only
what we interpret to be required in the IBC, but
more so to comply to what we have been told is the
intent of the [State of Utah] amendment allowing a
maximum of 2 stories, wood framed construction
for I-2 occupancies.

The Letter expressed that the Utah Department of Health was
concerned about the consistent application of regulations:

Owners from competing [assisted living] facilities
have frequently stated to us that we have allowed
leniency to their competition on rules relating to
assisted living facilities while requiring them to be
in strict compliance. It is our intent to apply the
rules for assisted living facilities evenly throughout
the State of Utah. I am concerned that if this project
is built as currently designed, it may set a bad
[precedent] for current and future assisted living
facilities in the State of Utah.

Lastly, the Letter said, “We will leave the permissibility of the 3
story buildings containing I-2 occupancies up to the local
Building Official having jurisdiction to enforce as they ultimately
have jurisdiction on this matter.” The Letter concluded by asking
Osmond’s architect to “respond to these comments in writing
and with appropriate drawings so that approval may be
considered.”

20170153-CA 4 2018 UT App 218
Osmond Senior Living v. Department of Public Safety

¶5 In May 2014, Osmond representatives met with State Fire
Marshal Division officials and other state officials to discuss the
Letter and the future of the project (the Meeting). 3 According to
Osmond, the Deputy State Fire Marshal and other state officials
warned that the three-story facility “would never be licensed to
operate as an assisted living facility.” Although Osmond asserts
throughout its brief that state officials ordered the construction
to be “stopped,” the record is not so absolute. Rather, it indicates
that Osmond was told that its facility would be not be licensed
as an assisted care facility if it had three floors instead of two,
but it was never told to “stop” construction. The State contends
that the State Fire Marshal merely “advised” Osmond that a
three-story facility would “not comply with the [IBC] and would
not be licensed.”

¶6 In response to the Letter and the Meeting, Osmond
redesigned the project as a two-story facility. Osmond incurred
significant expenses in redesigning, reengineering, and
rebuilding the project. Osmond also alleges it lost the annual
rental value—approximately $1,008,000—of the entire third
floor.

¶7 In October 2014, the Deputy State Fire Marshal visited the
facility and, according to Osmond, stated: “[W]e’ve changed our
policy and now allow three stories to be built for
assisted-living.” 4

3. The parties agree that the Meeting took place, but the record
contains no transcript or minutes of what transpired at the
Meeting.

4. It is unclear from the record whether there was a change in
interpretation of the State Fire Code or whether it was a decision
not to enforce it in this instance. As the Utah Department of
Health indicated in the Letter to Osmond’s architect, some
(continued…)

20170153-CA 5 2018 UT App 218
Osmond Senior Living v. Department of Public Safety

¶8 Osmond never attempted to appeal or otherwise seek
review of the State Fire Marshal Division’s directives expressed
in the Letter or the Meeting. Instead, after capitulating to the
State Fire Marshal Division’s warnings and completing the
project, Osmond filed suit for an unconstitutional taking against
the Utah Department of Health and the Utah Department of
Public Safety (collectively, the State). The district court granted
the State’s motion to dismiss for lack of subject matter
jurisdiction, agreeing with the State that Osmond failed to
exhaust its administrative remedies. The court also granted
summary judgment in favor of the State on the alternative
ground of failure to state a claim, concluding that Osmond did
not have a vested property interest in the property allegedly
taken. Osmond appeals.

ISSUE AND STANDARD OF REVIEW

¶9 Osmond raises a number of arguments relating to the
district court’s grant of the State’s motion to dismiss. 5 Whether
the district court erred by granting the State’s motion to dismiss
under rule 12(b)(1) for lack of subject matter jurisdiction is a
question of law reviewed for correctness. 6 See Republic Outdoor

(…continued)
assisted living facility owners had expressed concern that the
regulations were being inconsistently implemented.

5. Because we conclude that the district court lacked subject
matter jurisdiction under Utah Rule of Civil Procedure 12(b)(1)
owing to Osmond’s failure to exhaust administrative remedies,
we do not address the takings claim, which Osmond asserts the
district court erroneously dismissed under rule 12(b)(6).

6. The State argues that because Osmond did not raise the issue
of the Utah Fire Prevention Board’s adjudicative authority at the
district court, Osmond’s arguments on subject matter
(continued…)

20170153-CA 6 2018 UT App 218
Osmond Senior Living v. Department of Public Safety

Advert., LC v. Utah Dep't of Transp., 2011 UT App 198, ¶ 12, 258
P.3d 619.

ANALYSIS

¶10 Because Osmond did not exhaust the available
administrative remedies, the district court ruled that it lacked
subject matter jurisdiction to review the claim. See Utah R. Civ.
P. 12(b)(1); Western Water, LLC v. Olds, 2008 UT 18, ¶ 18, 184 P.3d
578 (“Authority for judicial review arises only after the parties
have exhausted their administrative remedies unless an
exception applies.”). Osmond argues that it was not required to
exhaust its administrative remedies because the legislature did
not specifically delegate adjudicative authority to the Utah Fire
Prevention Board (the Board). Osmond further argues 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. We conclude
that the legislature has delegated adjudicative authority to fire
protection districts and that the State Fire Marshal acted within
the scope of his authority.

I. The Legislature Delegated Adjudicative Authority to Fire
Protection Districts.

¶11 District courts have “original jurisdiction in all matters
except as limited . . . by statute.” Utah Const. art. VIII, § 5. Thus,

(…continued)
jurisdiction were waived. “One exception to the preservation
requirement is subject matter jurisdiction. Because subject matter
jurisdiction goes to the heart of a court’s authority to hear a case,
it is not subject to waiver and may be raised at any time, even if
first raised on appeal.” In re adoption of Baby E.Z., 2011 UT 38,
¶ 25, 266 P.3d 702 (cleaned up). We therefore consider Osmond’s
arguments.

20170153-CA 7 2018 UT App 218
Osmond Senior Living v. Department of Public Safety

“Utah courts have subject matter jurisdiction over a legal claim
unless adjudicative authority for that claim is specifically
delegated to an administrative agency.” Zions Mgmt. Services v.
Record, 2013 UT 36, ¶ 24, 305 P.3d 1062 (cleaned up). To
determine whether the legislature has delegated adjudicative
authority to an agency, courts “look to the plain language of the
applicable statute.” Ramsay v. Kane County Human Res. Special
Service Dist., 2014 UT 5, ¶ 9, 322 P.3d 1163.

¶12 The task before us then is to determine whether the
district court retained adjudicative authority or whether the
legislature specifically delegated that authority elsewhere. The
relevant code sections 7 indicate that adjudicative authority is
“administered locally by a city, county, or fire protection
district.” See Utah Code Ann. § 53-7-204(4) (LexisNexis Supp.
2018). 8

¶13 The Utah Fire Prevention and Safety Act, id. §§ 53-7-101
to -506, outlines the specific duties of the Utah Fire Prevention
Board and the administrative duties of local fire protection
districts. Subsection 204 lists the Board’s duties but does not
delegate adjudicative authority to the Board. Rather, subsection
204 states 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.” Id. § 53-7-204(4)(b). The State
Construction and Fire Codes Act (the State Fire Code),
referenced in the Utah Fire Prevention and Safety Act, provides:

7. Because the statutory provisions in effect at the time do not
differ in any material way from those now in effect, we cite the
current version of the Utah Code for convenience.

8. As our supreme court has pointed out, fire protection districts
are not agencies of the State, but they nonetheless retain agency
status. See Lyon v. Burton, 2000 UT 19, ¶ 80, 5 P.3d 616 (“[F]ire
protection districts are categorized with other nonstate agency
entities like counties, towns, and metropolitan water districts.”).

20170153-CA 8 2018 UT App 218
Osmond Senior Living v. Department of Public Safety

“A compliance agency shall establish a method of appeal by
which a person disputing the application and interpretation of a
code may appeal and receive a timely review of the disputed
issues in accordance with the codes.” Id. § 15A-1-207(3)(a)
(LexisNexis 2013).

¶14 The statutory language makes clear that adjudicative
authority for the “application and interpretation of a code,” see
id., has been delegated by the legislature to “a local board of
appeals” through the Utah Fire Prevention and Safety Act, see id.
§ 53-7-204(4)(b). It is not entirely clear why the legislature chose
to delegate that authority to a local entity rather than to the Utah
Fire Prevention Board itself; but the limited question before us is
whether adjudicative authority has been delegated. We conclude
that it has.

II. The State Fire Marshal Did Not Act Outside the Scope of
His Authority.

¶15 Having determined that the legislature delegated
adjudicative authority for the application and interpretation of
the State Fire Code, we now address Osmond’s alternative
argument that it was excused from exhausting its administrative
remedies because the State Fire Marshal acted outside the scope
of his statutory authority. Osmond specifically argues that the
State Fire Marshal (1) acted outside his scope of authority under
Utah Code section 53-7-104(3)(b) and (2) did not act in
compliance with the procedures outlined in Utah Code section
63G-4-201. We disagree on both points.

A. The State Fire Marshal Acted Within the Scope of
Authority to Enforce the Fire Code Under Utah Code
Section 53-7-104.

¶16 Utah Code section 53-7-104 outlines the enforcement of
the State Fire Code and the scope of enforcement authority. The
section states,

20170153-CA 9 2018 UT App 218
Osmond Senior Living v. Department of Public Safety

The state fire marshal may enforce the state fire
code and rules in: . . . state-owned property, school
district owned property, and privately owned
property used for schools located within corporate
cities and county fire protection districts, asylums,
mental hospitals, hospitals, sanitariums, homes for
the aged, residential health-care facilities,
children’s homes or institutions, or similar
institutional type occupancy of any capacity.

Utah Code Ann. § 53-7-104(3)(b) (LexisNexis Supp. 2018).

¶17 Osmond argues that the statute allows the State Fire
Marshal to enforce the State Fire Code against only one type of
privately owned property: private property located within
corporate cities used for schools. We disagree.

¶18 The Utah Supreme Court has stated that “the plain
language of a statute is to be read as a whole, and its provisions
interpreted in harmony with other provisions in the same statute
and with other statutes under the same and related chapters.”
Kouris v. Utah Highway Patrol, 2003 UT 19, ¶ 12, 70 P.3d 72
(cleaned up). Osmond would have us read the statute to mean
that “privately owned property used for schools located within
corporate cities and county fire protection districts,” Utah Code
Ann. § 53-7-104(3)(b), is an independent class of privately owned
property inserted into the middle of a list of state-owned
property categories to which enforcement authority applies. In
other words, Osmond argues that the statute authorizes
enforcement “against state-owned property, including school
district owned property, asylums, mental hospitals, homes for
the aged, residential health-care facilities, etc.,” but that an
“exception-to-the-exception”—privately owned property used
for schools in corporate cities and county fire protection
districts—is grafted in the middle of that list. While Osmond’s
construction of the statute is grammatically creative, it does not
withstand closer examination.

20170153-CA 10 2018 UT App 218
Osmond Senior Living v. Department of Public Safety

¶19 The statute contemplates three property classifications
separated by commas: (1) “state-owned property,” (2) “school
district owned property,” and (3) “privately owned property.”
Id. The first two classifications are unqualified; the State Fire
Code may be enforced in all state-owned and school
district owned property. The third classification, privately
owned property, is qualified by specific subsets and
defined by the type of use. Thus, the State Fire Code does not
apply to all privately owned property; it applies only to those
private properties specifically identified in the statute. And
among the subset of private properties to which it expressly
applies are “residential health-care facilities.” Id. Based on
the plain language of the statute, we have no difficulty
concluding that the State Fire Marshal may enforce the State
Fire Code against private property used as an assisted living
facility.

¶20 We further note that section 53-7-204, a section in the
same act, similarly identifies assisted living facilities under the
umbrella of the section’s authority. That section states that the
Utah Fire Prevention Board shall administer the State Fire Code
by establishing standards in any

(A) publicly owned building, including all public
and private schools, colleges, and university
buildings; [or] (B) building or structure used or
intended for use as an asylum, a mental hospital, a
hospital, a sanitarium, a home for the elderly, an
assisted living facility, a children’s home or day care
center, or any building or structure used for a
similar purpose.

Utah Code Ann. § 53-7-204(1)(b)(i)(A)-(B) (emphases added).
This section’s organization reinforces our reading of section
104—that the State Fire Code is applicable and enforceable
against any building, public or private, used as an assisted living
facility.

20170153-CA 11 2018 UT App 218
Osmond Senior Living v. Department of Public Safety

B. The State Fire Marshal Did Not Exceed His Authority by
Failing to Comply with Procedures for an Adjudicative
Proceeding.

¶21 Utah Code section 63G-4-201 outlines the procedure for
an administrative adjudicative proceeding. This subsection
requires that officers conducting adjudicative proceedings,
among other things, serve a “notice of agency action,” Utah
Code Ann. § 63G-4-201(1)(a) (LexisNexis 2016), hold a hearing
“after timely notice to all parties,” id. § 63G-4-203(1)(d), and
provide the parties “a signed order in writing,” id. § 63G-4-
203(1)(i).

¶22 Osmond argues that the State Fire Marshal acted outside
his authority by failing to comply with these procedures. But
these requirements apply only to adjudicative acts. They would
not apply, for example, to the State Fire Marshal picking up the
telephone and discussing a potential violation with a builder.
Similarly, the Letter sent by the State Fire Marshal does not rise
to the level of an agency action because its language does not
constitute an “application and interpretation 9 of a code,” id.
§ 15A-1-207(3)(a), but only expresses the State Fire Marshal’s
opinion that a three-story building would not be in compliance
with the State Fire Code. The Letter does not indicate that any
action was going to be taken. The State Fire Marshal never
issued a citation, notice of violation, or a stop work order. In fact,
the Letter explicitly states that the decision regarding the
permissibility of a three-story building containing I-2
occupancies would be left up to local building authorities. Thus,

9. The Letter uses the word “interpret” but does so in a qualified
and informal sense: “We ask that you and the owner consider
removing the top floor of the new building to meet not only
what we interpret to be required in the IBC, but more so to
comply to what we have been told is the intent of the [State of
Utah] amendment allowing a maximum of 2 stories, wood
framed construction for I-2 occupancies.”

20170153-CA 12 2018 UT App 218
Osmond Senior Living v. Department of Public Safety

the State Fire Marshal did not issue an administrative ruling or
conduct an adjudicative proceeding in sending the Letter or
holding the Meeting. Rather, by these actions, the State Fire
Marshal merely advised Osmond of potential licensing
problems. Put succinctly, the State Fire Marshal could not exceed
his authority by failing to follow the procedures for adjudicative
actions because there was no adjudication.

¶23 Even in the absence of agency action, the Utah
Administrative Code provides a means to petition for a
declaratory order in situations where the applicability of a rule
or code provision is in question. See id. § 63G-4-503(1) (“Any
person may file a request for agency action, requesting that the
agency issue a declaratory order determining the applicability of
a statute, rule, or order within the primary jurisdiction of the
agency to specified circumstances.”). Rather than pursue a
declaratory order, Osmond opted to yield to the State Fire
Marshal’s warning and voluntarily redesign the building while it
was under construction. 10

¶24 We conclude that the State Fire Marshal did not act
outside the scope of his authority by warning Osmond of a
perceived violation.

CONCLUSION

¶25 The district court lacked subject matter jurisdiction
because the legislature has delegated adjudicative authority for
interpretations of the State Fire Code to local fire protection
districts. We hold that Osmond was not excused from
exhausting administrative remedies because the Letter and the

10. The Letter stated that it was the third plan review letter that
the State Fire Marshal had issued on the project, suggesting that
Osmond had at least two other occasions to seek clarification by
asking the agency to issue a declaratory order.

20170153-CA 13 2018 UT App 218
Osmond Senior Living v. Department of Public Safety

Meeting were actions taken within the scope of authority
granted in the relevant statutes. Accordingly, the district court
correctly granted the motion to dismiss.

¶26 Affirmed.

20170153-CA 14 2018 UT App 218