Universal Mortg. & Fin. v. State

1

UNIVERSAL MORTGAGE &FINANCE, INC., Appellant, v. STATE OF WASHINGTON, DEPARTMENT OF FINANCIAL INSTITUTIONS, Respondents.

No. 59456-1-II

Court of Appeals of Washington, Division 2

October 29, 2024

UNPUBLISHED OPINION

VELJACIC, J.

Universal Mortgage &Finance, Inc. (Universal) appeals the superior court's dismissal of a petition for judicial review. Universal raises three issues on appeal. First, it argues the court erred in concluding that the timely service on the Attorney General's Office (AGO) did not satisfy RCW 34.05.542(6). Second, Universal claims the court erred in holding that strict, not substantial, compliance applies to the service requirements in the Administrative Procedure Act (APA). Third, Universal argues that the court erred in dismissing the case when the Department of Financial Institutions (Department) could not demonstrate prejudice by the alleged failure to serve the agency in a timely manner. Because the APA requires strict compliance with service requirements when seeking judicial appellate review of agency decisions in superior court, and Universal failed to serve the AGO or Department in accordance with RCW 34.05.542, we affirm the dismissal of the petition for judicial review.

FACTS

I. BACKGROUND

In January 2021, the Department issued a statement of charges against Universal. The Department alleged Universal conducted a mortgage loan business without being licensed and engaged in deceptive practices violating the Consumer Loan Act chapter 31.04 RCW. Universal sought review through the administrative process. At the outset, Assistant Attorney General (AAG) Jong Lee was the agency representative for the Department. Following an initial order on summary judgment by an administrative law judge (ALJ) with the Office of Administrative Hearings, AAG Stephen Manning was listed as the agency representative. Manning continued to represent the Department at several stages of the administrative process. The ALJ ultimately found Universal liable and assigned monetary fines. On November 9, 2022, the director of the Department affirmed the ALJ's decision in a final decision and order (Order) and mailed it that same day. Universal received the Order on November 14, 2022.

II. UNIVERSAL'S PETITION FOR JUDICIAL REVIEW

Universal filed a petition for judicial review with the Thurston County Superior Court on Thursday, December 8, 2022. On Friday, December 9, 2022, Universal e-mailed a copy of the petition to a general service e-mail address for the AGO at serviceATG@atg.wa.gov. Shortly thereafter, Universal received an automatic response from the AGO.^[1] Universal also e-mailed a process server a copy of the petition to deliver to the Department. The copy of the petition was delivered on Monday, December 12, 2022. Manning filed a notice of appearance on Tuesday, December 13, 2022.

III. THE DEPARTMENT'S MOTION TO DISMISS

The Department moved to dismiss the petition, arguing that service was untimely under RCW 34.05.542. The superior court granted the motion. Universal moved for reconsideration, which the court denied. Universal then moved for direct review before the Washington Supreme Court. The Supreme Court transferred the case to this court. We affirm the dismissal of the petition.

ANALYSIS

I. WHETHER UNIVERSAL SERVED THE PETITION FOR JUDICIAL REVIEW IN ACCORDANCE WITH RCW 34.05.542.

Universal contends that the superior court erred in dismissing its petition for judicial review. We disagree.

A. Standard of Review

Under CR 12(b)(1), a court may dismiss for a lack of subject matter jurisdiction. See Pitoitua v. Gaube, 28 Wn.App. 2d 141, 146, 534 P.3d 882 (2023). Whether a trial court has subject matter jurisdiction is a question of law we review de novo. Davis v. Dep't of Lab. &Indus., 159 Wn.App. 437, 441, 245 P.3d 253 (2011).

B. Legal Principles

Under the APA, a party may petition for judicial review after exhausting all administrative remedies. RCW 34.05.534. A superior court reviewing an administrative decision acts in a "'limited appellate capacity.'" Union Bay Pres. Coal. v. Cosmos Dev. &Admin. Corp., 127 Wn.2d 614, 618, 902 P.2d 1247 (1995) (quoting City of Seattle v. Pub. Emp. Rel. Comm'n, 116 Wn.2d 923, 926, 809 P.2d 1377 (1991)). Before invoking the superior court's appellate jurisdiction, "all statutory procedural requirements must be met." Id. Failure to do so requires a court to dismiss the case for lack of subject matter jurisdiction. See Stewart v. Dep't of Emp. Sec., 191 Wn.2d 42, 52-53, 419 P.3d 838 (2018).

1. Strict Compliance Applies to RCW 34.05.542

Universal argues that substantial compliance is the standard for evaluating adherence to RCW 34.05.542. We disagree.

The APA "establishes the exclusive means of judicial review of agency action." RCW 34.05.510. "A petition for judicial review of an order shall be filed with the court and served on the agency, the office of the attorney general, and all parties of record within thirty days after service of the final order." RCW 34.05.542(2); see also Skagit Surveyors & Eng'rs, LLC v. Friends of Skagit County, 135 Wn.2d 542, 555, 958 P.2d 962 (1998). Critically, "[s]ubstantial compliance with the service requirements of the APA is not sufficient to invoke the appellate, or subject matter, jurisdiction of the superior court." Skagit Surveyors, 135 Wn.2d at 556 (emphasis added); Stewart, 191 Wn.2d at 53-54.

Unlike other statutory frameworks regulating specific agencies, the APA has different requirements for petitions of judicial review. Compare Black v. Dep't of Lab. &Indus., 131 Wn.2d 547, 555, 933 P.2d 1025 (1997) (explaining substantial compliance supports the notion that courts construe "provisions of the Industrial Insurance Act . . . liberally . . . to achieve its purpose of providing compensation to all covered employees."), Skinner v. Civil Service Comm'n, 168 Wn.2d 845, 850, 855, 232 P.3d 558 (2010) (promoting substantial compliance with appeals arising out of RCW 41.12.090, a statute addressing the Police Civil Service Commission), with Stewart, 191 Wn.2d at 53-54 (promoting strict compliance for the service requirements of RCW 34.05.542).

Therefore, under the APA, a more exacting review is necessary to determine if all requirements have been satisfied. Stewart, 191 Wn.2d at 52-54.

Relying on Kenmore MHP, LLC v. City of Kenmore, 1 Wn.3d 513, 528 P.3d 815 (2023), Universal argues that substantial compliance is sufficient. Universal's reliance on Kenmore is misplaced. In Kenmore, Kenmore MHP (MHP) appealed a dismissal of their petition by the Growth Management Hearings Board (GMHB). 1 Wn.3d at 517-18. The Supreme Court reversed, holding that MHP substantially complied with the service requirements outlined in RCW 36.70A.290(2). Id. at 518, 531. Unlike the facts before us, Kenmore focused on the dismissal of a case where the appellant sought review by a GMHB; it did not focus on a petition for judicial review before a superior court acting in its statutory appellate capacity. Id. at 517; contra Skagit Surveyors, 135 Wn.2d at 552-53; Union Bay, 127 Wn.2d at 616-17.

Nonetheless, Universal claims Kenmore renders Skagit Surveyors and Union Bay inapplicable, but we disagree. As recently as 2018, the Supreme Court relied on strict compliance to affirm the dismissal of a petition for judicial review under RCW 34.05.542. See Stewart, 191 Wn.2d at 54-55. We observe that Skagit Surveyors, Union Bay, and Stewart all specifically reference petitions for judicial review under RCW 34.05.542, while Kenmore addresses an appellant seeking administrative review under chapter 36.07A RCW and the GMHB dismissing the matter under the Washington Administrative Code. Kenmore, 1 Wn.3d at 517; Skagit Surveyors, 135 Wn.2d at 552-53; Union Bay, 127. Wn.2d at 616-17; Stewart, 191 Wn.2d at 45. Kenmore does not mention RCW 34.05.542, Skagit Surveyors, or Union Bay. See Kenmore, 1 Wn.3d at 519-29. This is so because petitions for judicial review under RCW 34.05.542 are treated differently than petitions for administrative review. As our Supreme Court explained in Skagit Surveyors, a party seeking judicial review seeks to invoke the appellate subject matter jurisdiction of the superior court, a limited statutory jurisdiction. 135 Wn.2d at 555. Our Supreme Court has required strict compliance to invoke this jurisdiction while not requiring strict compliance for review before administrative agencies. Stewart, 191 Wn.2d at 57.

Accordingly, Kenmore does not apply to the petition for judicial review. The court did not err in concluding RCW 34.05.542 requires strict compliance.^[2]

2. Universal Did Not Properly Serve the AGO Next, Universal argues it properly served the AGO, satisfying RCW 34.05.542(6). We disagree.

The APA requires a party to file a petition "with the court" and serve it upon "the agency, the office of the attorney general, and all parties of record within thirty days after service of the final order." RCW 34.05.542(2). The term "party" is either an individual "to whom the agency action is specifically directed" or "[a] person named as a party to the agency proceeding or allowed to intervene or participate as a party in the agency proceeding." RCW 34.05.010(12). A party may serve a petition through the United States (U.S.) mail, in person, or electronic service. See RCW 34.05.010(19); RCW 34.05.542. If a party serves a petition through the U.S. mail, service "is complete upon deposit," evidenced by a postmark. See RCW 34.05.010(19). Also, agencies "may, by rule, authorize service by electronic transmission, or by commercial parcel delivery company." RCW 34.05.010(19).

"[S]ervice upon the attorney of record of any agency or party of record constitutes service upon the agency or party of record." RCW 34.05.542(6).^[3] The...