Arizona Supreme Court holds declaratory action not barred by failure to exhaust administrative remedies when there is not a pending administrative proceeding.

In 2019, the Arizona Board of Technical Registration received a customer complaint alleging that the individual and his firm were engaged in “engineering practices” but were not registered with the Board as required by A.R.S. §§ 32-141 and -145.  After conducting its own investigation, the Board concluded that the individual was engaging in engineering practices and was not properly registered.  The Board attempted to resolve the issue informally by sending the individual a proposed consent agreement.  The individual refused to sign the consent agreement, refused to meet with the Board to discuss the investigation, and refused to sign a second consent agreement.  At no point in this process did the Board initiate formal proceedings against the individual.

Rather than wait for those proceedings, the individual filed a lawsuit seeking declaratory and injunctive relief, raising a range of constitutional claims against the Board’s ability to exercise authority over him.  The Board moved to dismiss, arguing that the individual had failed to exhaust his administrative remedies, the individual lacked standing, and his claims were unripe.  The trial court agreed and dismissed the case.  On appeal, the court of appeals affirmed.

On review, the Arizona Supreme Court vacated the court of appeals’ opinion and largely reversed the trial court’s decision.  Both of the lower courts had based their decisions on the individual’s failure to exhaust administrative proceedings before the Board.  The Supreme Court, however, noted that that doctrine only applies when there actually is an administrative proceeding.  Here, the Board had never commenced formal proceedings, and the individual had no legal mechanism to force the issue before the Board.  As such, requiring the individual to exhaust administrative remedies would have left him in limbo, possibly for years, while the Board decided whether to initiate formal proceedings.  Indeed, there was no guarantee that the Board would ever initiate formal proceedings, and thus it was possible the individual would never have the questions in his case resolved if he were limited to the administrative forum.  The absence of an available administrative remedy meant that the individual could bring his declaratory action.

Vice-Chief Justice Timmer authored the opinion for a unanimous Court.

Posted by: Joshua J. Messer