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Lochsa Falls, L.L.C., An Idaho Limited Liability Company v. State of Idaho

April 7, 2009


Appeal from the District Court of the Fourth Judicial District of the State of Idaho, Ada County. Honorable Michael R. McLaughlin, District Judge.

The opinion of the court was delivered by: Horton, Justice

2009 Opinion No. 51

Stephen Kenyon, Clerk

The judgment dismissing the complaint is vacated and the case is remanded for further proceedings.

This is an appeal by Lochsa Falls, L.L.C. (Lochsa Falls), a developer, from an order of the district court dismissing its complaint against the Idaho Transportation Department (ITD) and the Board of ITD for failure to exhaust administrative remedies. Because we find that no administrative remedies were available in the instant case, we vacate the judgment dismissing Lochsa Falls‟ complaint and remand for further proceedings consistent with this opinion. We decline to award attorney fees on appeal.


Lochsa Falls is the developer of a 254 acre subdivision located along US Highway 20/26 (Chinden Boulevard) between Linder and Ten Mile roads, in Meridian, Idaho. The development includes approximately 740 residential lots. The development, according to Lochsa Falls‟ traffic consultant, Washington Infrastructure Services, is estimated to generate 12,480 vehicle trips per day, with 1,396 trips during the peak hour.

In January of 2003, Lochsa Falls presented a preliminary plat of the entire subdivision to the City of Meridian (the City) for approval. The City approved the preliminary plat. In order to accommodate the significant increase in traffic at the time of build out, the plat called for an internal collector street to intersect with Chinden Boulevard.*fn1

Because Chinden Boulevard is designated as a controlled-access highway, ITD required that Lochsa Falls obtain an encroachment permit. As part of the application process, Lochsa Falls was required to submit a Transportation Impact Study (TIS). Lochsa Falls‟ traffic consultant recommended that a traffic signal be installed at one of the two approaches to Chinden Boulevard. During the encroachment permit application process, the location of the recommended traffic signal was modified by ITD‟s Chief Engineer. With the exception of the change in the location of the traffic signal, Lochsa Falls‟ application was approved as submitted and ITD‟s Chief Engineer issued a temporary encroachment permit on November 19, 2006. That permit states: "This permit SHALL BE VOID if all work is not completed and the Department has not made final inspection and approval within one year of the issuance date," and "Permit will be considered Temporary until final inspection and approval by a Department Representative." (emphasis in original).

Lochsa Falls‟ TIS estimated construction costs for the signal and approach at approximately $180,000. Accordingly, the encroachment permit included inter alia the conditions that "Developer shall design and construct a signal prior" and that "[a] Performance Bond or a Certificate of Deposit in the amount of $180,000.000, shall be provided by the developer for the signal, prior to any work being done on the highway right of way."*fn2

After a subdivision receives preliminary plat approval from the City, the developer has the option of constructing the subdivision in phases. Lochsa Falls elected to construct the subdivision in twelve phases. Lochsa Falls obtained construction plan approval and final plat approval for all twelve phases from the City. After all phases of the subdivision were under construction or complete, including completion of all roadways, and all lots in the subdivision

had been sold except for the 116 lots contained in Phase 12, the City informed Lochsa Falls that building permits would not be issued until Lochsa Falls complied with ITD‟s requirement that the signal be paid for by Lochsa Falls.

Under these circumstances, Lochsa Falls believed that it had no option but to agree to pay the cost of the installation of the signal. Thus, in March 2005, Lochsa Falls submitted to ITD‟s District Office a letter of credit to cover construction costs. The letter of credit was accompanied by a cover letter from Brian F. McColl, Lochsa Falls‟ attorney, which stated, in part, that filing the "letter of credit does not constitute a waiver of . . . Lochsa‟s rights to question the District‟s authority to require Lochsa Falls to pay for the traffic signal in question."*fn3 This was the first indication from Lochsa Falls to ITD that it objected to paying for the cost of the construction of the signal.

After the new road intersecting Chinden Boulevard was built and the traffic signal was installed but not operational, Lochsa Falls initiated this litigation on August 30, 2006, seeking to have ITD reimburse it for expenses it incurred in constructing the traffic signal. ITD has never accepted nor approved of any portion of the permitted work, including the traffic signal. On the other hand, ITD never formally denied the permit nor disapproved of the construction.

Lochsa Falls presented three causes of action before the district court arguing that the requirement it construct the traffic signal was: (1) a disguised and unconstitutional tax, (2) a taking without just compensation, and (3) a violation of substantive due process and equal protection of the law. In response, ITD filed a motion for summary judgment requesting that the district court dismiss Lochsa Falls‟ complaint without prejudice for, inter alia, failure to exhaust administrative remedies.

The district court dismissed Lochsa Falls‟ complaint without prejudice for failure to exhaust administrative remedies. The district court further found that that the fee was reasonably imposed pursuant to valid police power, was rationally related to public safety, and was not an unconstitutional tax. The district court did not address Lochsa Falls‟ second and third causes of action in its decision. Lochsa Falls appeals from the district court‟s dismissal of its complaint.


This appeal is from: (1) an order of summary judgment, (2) arising under the Idaho Administrative Procedures Act (APA), (3) which raises constitutional questions. This Court was recently faced with a similar situation in American Falls Reservoir Dist. No. 2. v. Idaho Dep't of Water Resources, 143 Idaho 862, 154 P.3d 433 (2007) wherein we explained the appropriate standard of review:

In an appeal from an order granting summary judgment, the standard of review is the same as the standard used by the district court in ruling on a motion for summary judgment. Upon review, the Court must liberally construe facts in the existing record in favor of the nonmoving party, and draw all reasonable inferences from the record in favor of the nonmoving party. Summary judgment is appropriate if the pleadings, depositions, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. If there are conflicting inferences contained in the record or reasonable minds might reach different conclusions, summary judgment must be denied.

The constitutionality of a statute or administrative regulation is a question of law over which this Court exercises free review. There is a presumption in favor of the constitutionality of the challenged statute or regulation, and the burden of establishing that the statute or regulation is unconstitutional rests upon the challengers. An appellate court is obligated to seek an interpretation of a statute that upholds it constitutionality. The judicial power to declare legislative action unconstitutional should be exercised only in clear cases.

Where an administrative remedy is provided by statute, relief must be sought from the administrative body and this remedy exhausted before the courts will act.

Id. at 869, 154 P.3d at 440 (internal citations and quotation marks omitted).


On appeal we are asked to consider: (1) whether the district court correctly dismissed Lochsa Falls‟ complaint finding that it was required to exhaust its administrative remedies prior to filing suit; (2) whether the district court correctly found that ITD and its Board had authority to require Lochsa Falls to construct the traffic ...

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