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Alaska Dept of Revenue v. Merriouns (5/5/95), 894 P 2d 623
NOTICE: This is subject to formal 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, (907) 264-0607.
THE SUPREME COURT OF THE STATE OF ALASKA
STATE OF ALASKA, )
DEPARTMENT OF REVENUE, ) Supreme Court No. S-6129
)
Appellant, )
) Superior Court No.
v. ) 3AN-93-1518 CI
)
MARY MERRIOUNS, ALBERT ) O P I N I O N
SANFORD and ROBERT MERRIOUNS, )
)
Appellees. ) [No. 4193 - May 5, 1995]
______________________________)
Appeal from the Superior Court of the State of Alaska,
Third Judicial District, Anchorage,
Karl S. Johnstone, Judge.
Appearances: Marilyn May, Assistant Attorney General,
Anchorage, and Bruce M. Botelho, Attorney General, Juneau, for
Appellant. Mary Merriouns, pro se, Chugiak, Albert Sanford, pro
se, Chugiak, and Robert Merriouns, pro se, Chugiak.
Before: Moore, Chief Justice, Rabinowitz, Matthews,
Compton and Eastaugh, Justices.
COMPTON, Justice.
This is an appeal from the superior court's reversal of
an order entered by the Department of Revenue (DOR) denying
Permanent Fund Dividends (PFDs) to three individuals.
I. FACTUAL AND PROCEDURAL BACKGROUND
Mary Merriouns, Robert Merriouns, and Albert Sanford
(Merriounses) each filed an application for a PFD for 1992. They
claim that Mary placed their applications in a mailbox at the
Eagle River post office on June 29. The applications were
received by DOR on July 8, in an envelope postmarked July 2. The
deadline for filing an application was June 30.1 Accordingly,
DOR denied the applications. The Merriounses requested an
informal conference. The informal conference decision affirmed
the denials.
The Merriounses then filed a Request for Formal
Hearing. The PFD Division (Division) moved for summary
adjudication of the cases. The Merriounses were informed of the
Division's motion, and informed that they needed to file a
written opposition by December 30.
On December 22, the Merriounses filed a letter
"object[ing] to [DOR's] denial"of their 1992 PFDs. The DOR
hearing examiner did not consider this letter a response to the
Division's motion for summary adjudication. The hearing examiner
entered a written order in which she briefly discussed the facts
as presented by the Division, and made reference to some of the
Merriounses' assertions regarding the untimely receipt of the
applications. She then granted the Division's motion for summary
adjudication. Thus DOR did not schedule the Merriounses' case
for formal hearing.
The Merriounses then filed an appeal in the superior
court. Appellate Rule 601(a). For the first time in the course
of the proceedings, they submitted affidavits of two persons who
swore that they were with Mary on June 29 when she mailed the PFD
applications. The Merriounses claim that the affidavits were not
proffered earlier because Mary "simply did not think about the
details concerning the mailing." DOR moved to strike the
affidavits, since they were not part of the administrative
record. Superior Court Judge Brian C. Shortell ordered the
affidavits stricken from the record.
The appeal was heard by Superior Court Judge Karl S.
Johnstone. In a Memorandum and Decision on Appeal, he concluded
that DOR should have treated the Merriounses' letter of objection
to the denial of their PFDs as a written opposition to the motion
for summary adjudication, and that a formal hearing should have
been granted. Judge Johnstone opined that "[b]ecause appellant's
opposition to the Motion for Summary Adjudication was not
acknowledged and because appellants were not given the
opportunity to present sworn notarized affidavits as proof of
timely filing, this Court, pursuant to Rule 609 of the Alaska
Rules of Appellate Procedure, exercises its discretion to grant a
trial de novo on the record." He concluded that the Merriounses
had satisfied their burden of proof of timely filing by providing
sworn affidavits, and reversed DOR's decision. [Id.] This
appeal followed. We affirm in part, reverse in part, and remand.
II. DISCUSSION
A. Standard of Review
This court independently reviews the merits of an
administrative determination. "No deference is given to the
superior court's decision when that court acts as an intermediate
court of appeal." Handley v. State, Dep't of Revenue, 838 P.2d
1231, 1233 (Alaska 1992). However, when a superior court grants
a trial de novo, this court's review is not of the administrative
decision, but of the superior court's decision. City of Nome v.
Catholic Bishop of N. Alaska, 707 P.2d 870, 875 (Alaska 1985);
see Kott v. City of Fairbanks, 661 P.2d 177, 180 n.1 (Alaska
1983). Therefore, the traditional "clearly erroneous" standard
of review applies to the court's factual findings. Nome, 707
P.2d at 876. Legal determinations, whether arising from the
superior court or an agency decision not involving agency
expertise, are reviewed under a "substitution of judgment"
standard. Langdon v. Champion, 745 P.2d 1371, 1372 n.2 (Alaska
1987); Tesoro Alaska Petroleum Co. v. Kenai Pipe Line Co., 746
P.2d 896, 903 (Alaska 1987).
B. The Superior Court Did Not Err in Concluding That The
Merriounses' Letter Should Have Been Treated as a Written
Opposition to the Division's Motion for Summary Adjudication.2
The timing of the Merriounses' letter, and a fair
reading of its contents, compel the conclusion that it was in
response to the invitation contained in DOR's Notice of
Assignment to file an opposition which disputed the Division's
motion. Further, its timing and contents indicate that the
Merriounses intended the letter to be their written opposition to
the motion.
The letter alleged that the untimely filing probably
was attributable to a "human error"on the part of the postal
service. Attached to the letter were two letters. One was
written by a postal customer adverting to a problem he had
experienced with the Chugiak/Eagle River postal service. The
other was a letter from the Field Division office of the United
States Postal Service. It stated that while mail dropped at the
Eagle River Post Office is picked up two times a day (and
presumably would be postmarked that day), mail dropped after
hours should be postmarked the next day. The letter concluded
that "[a]lthough there is no evidence of what actually happened
we do admit that there is always room for human error." In the
letter the Merriounses also offered to take a lie detector test,
"as testimony to the fact [that the PFD applications] were sent
on time."
The superior court did not err in determining that the
Merriounses' letter was, and should have been treated as, an
opposition to the Division's motion for summary adjudication.
C. The Superior Court Did Not Err in Concluding That the
Merriounses Might Be Entitled to Relief Under 15 AAC 23.135(c).
The Alaska Administrative Code provided:
if the department does not have a timely filed
application on file, in order to be eligible to receive a
dividend, the applicant must submit, before July 1 of the year
following the dividend year, a request to reapply and one of the
following forms of evidence that an application was timely filed
with the department:
(1) a mailing receipt;
(2) a delivery receipt; or
(3) a notarized affidavit in which the applicant . . .
states, under penalty of unsworn falsification, that the
application was timely filed and
(A) an individual states, under penalty of
unsworn falsification, that the individual witnessed the filing .
. . .
15 AAC 23.135(c) (repealed 1993) (emphasis added).
DOR argues this section is not applicable. It contends
that this section was intended to apply to situations in which no
application was ever received by DOR. It asserts that only when
DOR lacks evidence that an application was filed does evidence
submitted under 15 AAC 23.135(c) become relevant. Because DOR
already had the Merriounses' postmarked applications, no
substitute was needed.
Alternatively, DOR argues that if 15 AAC 23.135(c) is
applicable, the Merriounses failed to submit to the agency during
the course of the administrative proceedings the affidavits of
the eyewitnesses,3 or to submit requests to reapply required by
the regulation. Therefore, 15 AAC 23.135(c) is inapplicable.
Finally, DOR argues that if the regulation is
applicable, the proper procedure would be to remand the case to
DOR for a re-determination under 15 AAC 23.135(c) as to whether
the affidavits are more persuasive than the postmark.
"'[W]here an agency interprets its own regulation . . .
a deferential standard of review properly recognizes that the
agency is best able to discern its intent in promulgating the
regulation at issue.'" Handley v. State, Dep't of Revenue, 838
P.2d 1231, 1233 (Alaska 1992) (quoting Rose v. Commercial
Fisheries Entry Comm'n, 647 P.2d 154, 161 (Alaska 1982))
(alteration in original). "'Although an administrative agency's
interpretation of its own rules is entitled to great weight, the
ultimate resolution of a regulation's meaning is a question for
the courts.'" Borkowski v. Snowden, 665 P.2d 22, 27 (Alaska
1983) (quoting United States v. RCA Alaska Communications, Inc.,
597 P.2d 489, 498 (Alaska 1978) (footnotes omitted)). Therefore,
while we will defer to DOR's interpretation, we will not affirm
that interpretation if it is meritless.
We find no merit in DOR's interpretation of 15 AAC
23.135(c). The regulation provides the procedure to follow if
DOR "does not have a timely filed application on file." Former
15 AAC 23.135(c). Another section provides in part that "[a]n
application postmarked [after March 31 but before July 1 of the
dividend year] is considered timely filed." Former 15 AAC
23.145(a) (emphasis added). The regulation does not lend itself
to an interpretation that what it "considers"as proof of timely
filing excludes other means of proof. It follows, therefore,
that an application not postmarked during this time period is not
"considered" timely filed, but may be found timely filed upon
certain proof being accepted. Because DOR "does not have a
timely filed application on file,"the regulation is specifically
applicable to the present case.
We do find merit in DOR's argument that the proper
course for the superior court to have taken would have been to
remand the case to the agency for factual determination.4
The superior court correctly determined that DOR misled
the Merriounses regarding what proof they had to provide in
response to the Division's motion for summary adjudication. They
were not informed that affidavits were evidence of proof of
timely filing, and arguably for that reason did not file
affidavits with their letter. Had they attached the affidavits
to their letter, their request for a formal hearing might not
have been denied. Regardless, their letter constituted a written
opposition to the motion, and a formal hearing should have been
held to develop and resolve factual issues. It is the agency
that is charged with primary responsibility for developing and
resolving factual issues. Thus the superior court, after having
correctly interpreted the regulation, should have remanded the
Merriounses' claims to DOR for determination on the merits.5
III. CONCLUSION
We AFFIRM the superior court's conclusion that the
Merriounses' letter should have been considered a written
opposition to the Division's motion for summary adjudication, its
implicit conclusion that the Merriounses were entitled to have
been informed that they could submit affidavits in opposition to
the motion, its conclusion that they were entitled to a formal
hearing, and its conclusion that 15 AAC 23.135(c) applies to a
PFD application mailed before July 1.
We REVERSE the grant of a trial de novo and judgment
entered thereon, and direct the superior court to REMAND the case
to DOR for proceedings consistent with this opinion.
_______________________________
1 The Alaska Administrative Code (AAC) formerly provided:
An individual may apply for a permanent fund dividend after March 31 but
before July 1 of the dividend year on a form provided by the department.
An application postmarked during that period is considered timely filed.
15 AAC 23.145(a) (repealed 1993).
This regulation, as well as the other regulations and statutes cited herein
are those in effect for the 1992 PFD year.
2 It is appropriate that a court substitute its judgment for that of an
agency to determine the sufficiency of a document as a legally sufficient
response. This determination requires legal analysis which a court is at
least as capable of performing as is an agency. See Noden v. Commercial
Fisheries Entry Comm'n, 680 P.2d 493, 497 n.7 (Alaska 1984).
3 Implicit in this argument is an assertion that DOR is under no obligation
to inform PFD applicants what proof they must provide in response to a
motion for summary adjudication.
DOR is correct in asserting that there is no affirmative requirement that
DOR inform applicants of all relevant statutory or regulatory provisions.
Specifically, DOR does not have an affirmative duty to assist the
Merriounses in establishing their eligibility to a PFD. However, in the
Notice of Assignment DOR sent to the Merriounses, DOR stated that the
Merriounses "must provide proof of timely filing such as a mailing receipt
or a delivery receipt"to overcome DOR's claim that they filed their
application late. (Emphasis added).
DOR informed the Merriounses of two of the three available forms of
evidence sufficient to establish a timely filing. The third alternative
(sworn affidavits) was not mentioned. Failure to mention that there was in
fact another alternative was misleading. If the third alternative had been
mentioned, it is reasonable to believe that the Merriounses would have
given more thought earlier to the details of their alleged mailing, and
would have attempted to present the later proffered affidavits during the
administrative proceedings. This was the superior court's implicit
conclusion. Because the Notice of Assignment was misleading in this
regard, the superior court did not err in implying in its findings that DOR
should have alerted the Merriounses to the alternative of submitting
affidavits as evidence of timely filing.
The affidavits are vital to the Merriounses' case. Presentation of
affidavits from eyewitnesses to the mailing is one method by which a PFD
applicant can establish that a PFD application has been timely filed, when
DOR does not have a timely filed application on file.
4 Absent a showing of agency bias, the role of the primary factfinder belongs
to the agency. LeResche v. Lustig, 663 P.2d 542, 545 (Alaska 1983) (noting
the role of the agency in developing a factual record); Earth Resources Co.
of Alaska v. State, Dept. of Revenue, 665 P.2d 960, 962 n.1 (Alaska 1983)
("agency personnel and procedures are presumed to be honest and impartial
until . . . a showing of actual bias or prejudgment"is made). Professor
Davis notes that two of the reasons articulated by the Supreme Court for
the exhaustion doctrine are that (1) agencies are created by the
legislature to apply a statutory scheme to particular factual situations,
and (2) judicial review may be hindered because the agency may not have had
an adequate opportunity to assemble and analyze relevant facts. Kenneth C.
Davis & Richard J. Pierce, Jr., Administrative Law Treatise 15.2, at 309
(3d ed. 1994). Since the agency misinterpreted 15 AAC 23.135(c), the
agency has had no opportunity to assess the affidavits and the credibility
of the witnesses. When the factual record is incomplete or improperly
developed, the proper course is a remand to the factfinder, in this case
the agency. See Capener v. Tanadgusix Corp., 884 P.2d 1060, 1064 (Alaska
1994) (remanding to the trial court for determination of factual issues).
5 DOR contends that the superior court erred when it granted a "trial de novo
on the record"instead of deferring to the agency's decision. In view of
our disposition, we need not determine whether or the extent to which the
superior court has jurisdiction to order a trial de novo in a disputed PFD
claim.
On remand, DOR "may consider the date indicated on the postmark on the
envelope as evidence of the date of mailing, but such evidence does not
create an irrebuttable presumption." Silides v. Thomas, 599 P.2d 80, 82
n.3 (Alaska 1977). The Merriounses have the burden "of proving that the
nonexistence of the presumed fact is more probable than its existence."
Martens v. Metzgar, 524 P.2d 666, 677 (Alaska 1974).