Case Title: BONNIE M. QUINN REVOCABLE TRUST v. SRW. INC.

Citation: 

Docket Number: 03-180

State: wyoming

Court: Wyoming Supreme Court

Date: 2004-06-07T00:00:00Z

Document:
BONNIE M. QUINN REVOCABLE TRUST v. SRW. INC.2004 WY 6591 P.3d 146Case Number: 03-180Decided: 06/07/2004
April Term, A.D. 2004

 

BONNIE 
M. QUINN REVOCABLE TRUST,

dated 
March 7, 1995; and JOHN QUINN, JR.

REVOCABLE 
TRUST, dated March 7, 1995

 

Appellants(Plaintiffs),

 

v.

 

SRW, 
INC., a Michigan Corporation; and

BRENCO 
DRILLING, LLC, a Wyoming

Limited 
Liability Company,

 

Appellees(Defendants).

 

Appeal 
from the District Court of Sheridan County

The 
Honorable John C. Brackley, Judge

 

Representing 
Appellant:

Dennis 
M. Kirven of Kirven and Kirven, P.C., Buffalo, WY.  Argument by Mr. 
Kirven.

 

Representing 
Appellee:

Kevin 
D. Huber and P. Craig Silva of Williams, Porter, Day and Neville, P.C., Casper, 
WY.  Argument by Mr. 
Silva.

 

Before 
HILL, C.J., and GOLDEN, LEHMAN, KITE, and VOIGT, JJ.

 

 

LEHMAN, 
Justice.

 

[¶1]      The 
John Quinn, Jr. Revocable Trust, dated March 7, 1995, and Bonnie M. Quinn 
Revocable Trust, dated March 7, 1995, (Quinn Trusts) appeal the district court 
order dismissing their complaint pursuant to W.R.C.P 12(b)(6) for failure to 
state a claim upon which relief can be granted.  The Quinn Trusts argue that they are 
entitled to maintain a declaratory judgment action under the circumstances and 
that they have presented a justiciable controversy.  SRW, Inc. and Brenco Drilling, LLC (SRW 
and Brenco) maintain that the complaint was properly dismissed because the Quinn 
Trusts failed to exhaust their administrative remedies.  We affirm.  

 

 

ISSUES

 

[¶2]      The Quinn Trusts 
phrase the issues as:

 

A.  Are 
Appellants entitled to maintain a Declaratory Judgment action to determine 
whether the exploration and production of coalbed methane gas requires a 
conditional use permit under the zoning resolution of Sheridan County, Wyoming? 

 

B.  Is 
the regulation of coalbed methane gas activities prohibited under W.S. § 
18-5-201?  

 

SRW 
and Brenco present the following issues:

 

1.  Determining 
whether the exploration and production of coalbed methane gas requires a 
conditional use permit would bypass appropriate administrative ruling resulting 
in prejudging of issues when appellants have failed to seek appropriate 
administrative relief.

 

2.  The 
Quinn Trust failed to exhaust its administrative remedies, therefore, it cannot 
seek relief in district court making the issue of justiciability moot, 
notwithstanding that, the Quinn Trust's complaint fails to present a justiciable 
controversy.

 

3.  Under 
Wyoming law and the holding in River Springs Ltd. Liability Co. v. Board of 
County Commissioners the county commissioners cannot zone mining 
exploration.   

 

 

FACTS

 

[¶3]      The Quinn Trusts 
own real property in Sheridan County as tenants in common.  This property is used primarily for 
agricultural purposes.  Indeed, the 
Quinn property is zoned for agricultural use pursuant to the Sheridan County 
zoning resolution, which was adopted by the Board of County Commissioners for 
Sheridan County on May 14, 1985.  
The Quinn Trusts do not own the rights to the minerals underneath the 
Quinn property.  

 

[¶4]      In April of 2003, 
SRW and Brenco began the exploration and development of minerals underneath the 
Quinn property.  SRW and Brenco did 
not seek or obtain a conditional use permit from the board of county 
commissioners prior to the commencement of their activities.  However, their activities were pursuant 
to permits obtained from the Wyoming Oil and Gas Conservation Commission.  SRW and Brenco have constructed roads 
and drill pads on the Quinn property and are drilling from the surface down to 
the coal seam to obtain coalbed methane gas.  

 

[¶5]      Shortly after SRW 
and Brenco commenced their work, the Quinn Trusts sent a letter to SRW's 
attorney demanding that SRW comply with the Sheridan County zoning 
resolution.  Specifically, the Quinn 
Trusts asserted that section 17 of the zoning regulation provides that "mineral 
exploration temporary facilities" are not permitted in any of the zoning 
resolution's classifications; and, as a result, such activities are only allowed 
if a conditional use permit is applied for and granted.1  The Quinn Trusts therefore demanded that 
SRW apply for a conditional use permit before occupying or using the Quinn 
property for the purpose of mineral extraction.  SRW did not reply to this demand because 
it believed that its use of the land did not require a conditional use 
permit.  The Quinn Trusts 
additionally sent a letter to the county attorney asking that the zoning 
resolution be enforced.  No action 
was taken on that letter.     

 

[¶6]      On April 25, 
2003, the Quinn Trusts filed this action.  
The Quinn Trusts sought a declaration under the Uniform Declaratory 
Judgments Act that the zoning resolution required SRW and Brenco to apply for 
and obtain a conditional use permit for each drill site located on the Quinn 
property.  The Quinn Trusts also 
requested that the court issue an injunction prohibiting SRW and Brenco from 
continuing mineral extraction activity on the Quinn Trusts' property without a 
conditional use permit.  The Quinn 
Trusts additionally asked that the court determine that state or federal law 
concerning coalbed methane drilling does not preempt the board of county 
commissioners from regulating mineral exploration in this manner. 

 

[¶7]      SRW and Brenco 
did not file an answer but instead filed a motion to dismiss under W.R.C.P. 
12(b)(6).  SRW and Brenco alleged 
that the Quinn Trusts were not entitled to relief under the Uniform Declaratory 
Judgments Act because, among other things, the zoning regulation did not apply 
to their drilling activities and the Quinn Trusts failed to exhaust their 
administrative remedies.  They 
further alleged that under Wyo. Stat. Ann. § 18-5-201 (LexisNexis 2003) their 
drilling activities are not subject to regulation.  The court granted the motion on July 30, 
2003, dismissing the Quinn Trusts' complaint for failure to state a claim upon 
which relief can be granted.  The 
Quinn Trusts appeal.  

 

 

STANDARD OF 
REVIEW

 

[¶8]      Our well-known 
standard of review for motions to dismiss applies.  

 

            
When claims are dismissed under W.R.C.P. 12(b)(6), this court accepts the 
facts stated in the complaint as true and views them in the light most favorable 
to the plaintiff.  Such a dismissal 
will be sustained only when it is certain from the face of the complaint that 
the plaintiff cannot assert any facts that would entitle him to relief.  Story v. State, 2001 WY 3, ¶19, 
15 P.3d 1066, ¶19 (Wyo. 2001).  
Dismissal is a drastic remedy and is sparingly granted; nevertheless, we 
will sustain a W.R.C.P. 12(b)(6) dismissal when it is certain from the face of 
the complaint that the plaintiff cannot assert any set of facts that would 
entitle that plaintiff to relief.  
Robinson v. Pacificorp, 10 P.3d 1133, 1135-36 (Wyo. 2000).   

 

Manion v. 
Chase Manhattan Mortgage Corp., 2002 WY 
49, ¶6, 43 P.3d 576, ¶6 (Wyo. 2002) (quoting Van Riper v. Oedekoven, 2001 
WY 58, ¶24, 26 P.3d 325, ¶24 (Wyo. 2001)).  

 

 

DISCUSSION

 

[¶9]      We begin with the 
question of whether the Quinn Trusts can maintain their suit in light of their 
failure to seek administrative relief.  
The Quinn Trusts argue that the Uniform Declaratory Judgments Act was 
specifically designed for this type of action and that the act should be 
liberally construed to serve its purpose.2  In making this argument they claim that 
this action could resolve uncertainty created by the zoning resolution.  As such, they argue that they were not 
required to pursue administrative remedies in order to maintain their 
declaratory judgment action.  We 
disagree.  

 

[¶10]   The purpose of declaratory judgment 
actions is, as the Quinn Trusts assert, to settle disputes and terminate 
controversy concerning the legal rights and duties of the parties without 
requiring that one party commit a wrong.  
Hirschfield v. Board of County Comm'rs, 944 P.2d 1139, 1142 (Wyo. 
1997). Additionally, as the Quinn Trusts assert, Wyoming's declaratory judgments 
act is remedial and should be liberally construed and administered.  Id.; see Wyo. Stat. Ann. 
§ 1-37-114 (LexisNexis 2003).  
Nevertheless, there remains the prerequisite that the party seeking 
declaratory relief present the court with an actual controversy.  Hirschfield, at 1142.  In addition, 

 

there is a 
restriction on the availability of a declaratory judgment action with reference 
to its applicability to administrative matters.  Where the action would result in a 
prejudging of issues that should be decided in the first instance by an 
administrative body, it should not lie.  
This is because, if it be otherwise, all decisions by the several 
agencies could be bypassed, and the district court would be administering the 
activities of the executive branch of the government.  This restriction on the scope of 
declaratory judgments is akin to the requirement that administrative remedies 
must be exhausted before judicial relief is available.

 

Rocky 
Mountain Oil and Gas Ass'n v. State, 
645 P.2d 1163, 1168 (Wyo. 1982) (citations omitted).  

 

[¶11]   In this case it is apparent that 
the Quinn Trusts did not seek any type of administrative relief.  The only action the Quinn Trusts took 
prior to filing suit was to write two letters, one to SRW and one to the county 
attorney.   The Quinn Trusts 
took no action to seek relief with the body that has the duty of administering 
the zoning resolution, the board of county commissioners.  As a result, that body never had an 
opportunity to address the matter.  The Quinn Trusts seem to argue that they 
should be excused from this requirement because the zoning resolution does not 
specifically give them a mechanism to get in front of the zoning board, i.e. 
there is not a specific form for them to use to ask the zoning authority to 
enforce the zoning resolution.  

 

[¶12]   A somewhat similar argument was 
made and rejected in State ex rel. Baker v. Strange, 960 P.2d 1016 (Wyo. 
1998).  In that case, the Bakers 
were landowners across the alley from Bob Lewis.  Strange, the building inspector, issued 
Lewis a building permit to construct a building on his lot.  After the structure was framed, the 
Bakers concluded that the structure violated sections of the applicable zoning 
ordinance.  The Bakers then wrote a 
letter to Strange asking that he enforce the ordinance.  Strange did not respond to the request, 
and the Bakers filed for a writ of mandamus seeking that Strange be required to 
enforce the zoning ordinance.  The 
district court dismissed the action because the Bakers did not pursue 
administrative remedies.  
Baker, at 1017.  In 
affirming the district court's order of dismissal we noted, at 1019, "[t]he 
pertinent feature in this case is that, like the petitioner in State ex rel. 
Epp [v. Mayor, 894 P.2d 590 (Wyo. 1995)], the Bakers made no effort 
to pursue an available administrative remedy."  

 

[¶13]   The Quinn Trusts have similarly 
demonstrated no effort to seek administrative relief.  It is clear that the Quinn Trusts never 
tried to get in front of the zoning administrator and have entirely avoided the 
administrative process.  They did 
not even do as the Bakers did and write a letter to the zoning authority.  Instead, they sought to enforce the 
zoning resolution on their own through this declaratory judgment action.  At this point, it is unknown whether the 
Quinn Trusts would have been denied relief on the basis that they did not use 
one of the zoning administrator's forms because the Quinn Trusts made no effort 
to get in front of the zoning administrator.  

 

[¶14] 
Furthermore, while there may not have been a specific form for the Quinn Trusts 
to use, they still could have pursued administrative relief.  The Quinn Trusts could have requested 
that the zoning administrator enforce the resolution and, if he denied their 
request, proceeded administratively.  
Specifically, the zoning resolution provides that the zoning 
administrator has the duty to enforce the zoning resolution.3  Thus, as provided, the zoning 
administrator is a lower level adjudicator who reviews whatever is brought 
before him and makes a final decision.  
If the zoning administrator rules against a party, then that party 
becomes an aggrieved person and can appeal to the county planning and zoning 
commission.4  Decisions from this commission can be 
appealed to the board of county commissioners.  Following this procedure, if the Quinn 
Trusts do not agree with the lack of enforcement of the zoning resolution, their 
remedy is not against SRW and Brenco, but against the board of county 
commissioners, the administrative body responsible for administering this zoning 
resolution.  

 

[¶15]   In response to the argument that 
they are precluded by their failure to seek administrative relief, the Quinn 
Trusts argue that this case presents circumstances similar to Director of 
Office of State Lands & Invs. v. Merbanco, Inc., 2003 WY 73, 70 P.3d 241 
(Wyo. 2003) and thus, under the holding of that case, they were not required to 
exhaust administrative remedies.  In 
Merbanco we considered the 
question of standing and justiciability regarding a declaratory judgment action 
that had been filed seeking a declaration that the Wyoming constitution 
prohibited an exchange of state school lands without public auction.  Id., ¶¶7-24.  
In finding that the parties had standing to bring the action without 
exhausting administrative remedies we reasoned: 

 

            
The state's argument that we must let the board's process with regard to 
the Teton Village school section run its course is counter to the entire thrust 
of the declaratory judgments statute which was designed to enable parties to 
obtain judicial determinations prior to an injury rather than requiring them to 
wait until the damage is done. The board itself possesses no power to 
resolve questions of constitutionality. Riedel v. Anderson 
(Conflicting Lease Applications for Wyoming Agricultural Lease No. 
1-7021), 972 P.2d 586, 587 (Wyo. 1999).  We have rejected the argument that, in 
the context of administrative agency action, parties must exhaust their 
administrative remedies before challenging the authority of the agency to 
act.  Rocky Mountain Oil and Gas 
Association v. State, 645 P.2d 1163 (Wyo. 1982).  If the relief requested concerns the 
constitutionality or interpretation of a statute upon which the administrative 
action is, or is to be, based, the [declaratory judgment] action should be 
entertained.'  Id. at 
1168.

 

Merbanco, 
¶11.   

 

[¶16]   The Quinn Trusts latch onto our 
statement that, "we have rejected the argument that, in the context of 
administrative agency action, parties must exhaust their administrative remedies 
before challenging the authority of the agency to act. Rocky Mountain Oil and 
Gas Association v. State, 645 P.2d 1163 (Wyo. 1982)."  Merbanco, ¶11.  However, as can be seen when considering 
the full quote above, rather than just that sentence in isolation, relief from 
the exhaustion requirement is granted if the action "concerns the 
constitutionality or interpretation of a statute upon which the administrative 
action is, or is to be, based."  
Merbanco, ¶11.  It is 
clear that, placed in its context, this passage simply reiterates our 
long-recognized rule that "[a]n action for declaratory judgment cannot be a 
substitute for an appeal from administrative decisions but is available even 
though there is a statutory method of appeal if it concerns the 
validity and construction of agency regulations, or if it concerns 
the constitutionality or interpretation of a statute upon which the 
administrative action is, or is to be based."  Hirschfield, 944 P.2d  at 1142 
(emphasis added); see also Ten Broek v. County of Washakie, 2003 WY 164, 
¶8, 82 P.3d 269 ¶8 (Wyo. 2003); Snake River Brewing Co., Inc. v. Town of 
Jackson, 2002 WY 11, ¶6, 39 P.3d 397, ¶6 (Wyo. 2002) ("The Act is an 
appropriate vehicle, not for prejudging issues that should be decided by an 
administrative agency, but for interpreting the statute or ordinance upon which 
the administrative action is based.").  
In fact, a review of Rocky Mountain Oil and Gas Ass'n, shows that 
the full explanation of the rule referred to in Merbanco reads: 

 

            
Accordingly, where the relief desired is in the nature of a substitution 
of judicial decision for that of the agency on issues pertaining to the 
administration of the subject matter for which the agency was created, the 
action should not be entertained.  
If, however, such desired relief concerns the validity and construction 
of agency regulations, or if it concerns the constitutionality or interpretation 
of a statute upon which the administrative action is, or is to be, based, the 
action should be entertained. 
 

Rocky 
Mountain Oil and Gas Ass'n, 
at 1168.  

 

[¶17]   In Merbanco the parties were 
seeking a determination regarding the constitutionality of an agency action, and 
we thus found the action could be entertained.   Merbanco, ¶11.  It 
is also worth noting that the action in both Rocky Mountain Oil and Gas 
Ass'n and Merbanco was brought directly against the agency, providing 
the agency the opportunity to consider and defend its position.  Similar circumstances are not presented 
by this case.  The declaration that 
the Quinn Trusts primarily seek is "whether the exploration and production of 
coalbed methane gas requires a conditional use permit under the zoning 
resolution."   It 
is evident from the Quinn Trusts' arguments that this declaration requires 
neither the construction of the validity of the ordinance, a statutory 
interpretation, or a constitutional resolution.  Instead, 
the Quinn Trusts are simply asking the court to decide whether a conditional use 
permit is required in this situation.  
This 
is precisely the type of question that should first be entertained by the 
agency.  

 

[¶18]   In addition, the Quinn Trusts have 
tried to create some statutory construction issues claiming that the resolution 
presents uncertainty.  The 
uncertainty that the Quinn Trusts set forth relates to the definition of the 
word "landowner" and the definition of the word "facility."  The board of county commissioners and 
its lower level adjudicators have the expertise and are best situated to supply 
those definitions within the meaning of the zoning resolution.  As it sits now, we have no idea how the 
agency interprets these words.  
It 
is possible that the agency considers a road a "facility" and would require a 
conditional use permit in these circumstances, and it is just as possible that 
they do not consider a road a "facility" and would not require a conditional use 
permit.  As 
such, a court determination of whether a conditional use permit is required in 
these circumstances would bypass an appropriate administrative ruling resulting 
in the prejudging of issues that should be decided in the first instance by an 
administrative body.  See 
Rocky Mountain Oil and Gas Ass'n, at 1168.  If we are to review the matter at all, 
it should be after those issues are fully heard, briefed, presented, and decided 
at the administrative level.   

 

[¶19]   We, therefore, hold that the 
district court properly granted the motion to dismiss.   This holding is consistent with 
our long-standing reasoning behind requiring the exhaustion of administrative 
remedies.  

 

The 
reasons for applying the exhaustion doctrine have been well noted:  

 

A 
primary purpose is, of course, the avoidance of premature interruption of the 
administrative process. The agency, like a trial court, is created for the 
purpose of applying a statute in the first instance. Accordingly, it is normally 
desirable to let the agency develop the necessary factual background upon which 
decisions should be based. And since agency decisions are frequently of a 
discretionary nature or frequently require expertise, the agency should be given 
the first chance to exercise that discretion or to apply that expertise. And of 
course it is generally more efficient for the administrative process to go 
forward without interruption than it is to permit the parties to seek aid from 
the courts at various intermediate stages. The very same reasons lie behind 
judicial rules sharply limiting interlocutory appeals. 

 

Rissler 
& McMurry Co. v. State, 
917 P.2d 1157, 1160-61 (Wyo. 1996) (quoting Glover v. State, 860 P.2d 1169, 1172 (Wyo. 1993)).  

 

[¶20]   Lastly, the parties present 
argument considering whether the zoning resolution imposes a reasonable 
regulation on the mining activities and whether it violates Wyo. Stat. Ann. § 
18-5-201 (LexisNexis 2003) and our holding in River Springs Ltd. Liability 
Co. v. Board of County Comm'rs, 899 P.2d 1329 (Wyo. 1995).  We will not address this argument at 
this time.  Once again, this is 
clearly an argument that should be presented to and involve the board of county 
commissioners.  We have no idea how 
the board would enforce the resolution in this area.  It is possible that the commission would 
enforce the resolution in a manner that no such question will exist.  We simply do not know because the agency 
was never given the opportunity to decide the issue in the context of the Quinn 
Trusts' complaint.  Accordingly, we 
hold that this administrative process is required before we can entertain such 
argument.

 

 

CONCLUSION

 

[¶21]   For the above-stated reasons, we 
affirm the district court's order dismissing the complaint for failure to state 
a claim upon which relief can be granted.

 

FOOTNOTES

1Section 24(B) of the zoning resolution 
provides:

 

B.  Conditional Use Permit (CUP) Required.  Any use not shown as permitted in the 
Zoning District in which the use is being requested, as per Section 17.  ZONING USE CHART, shall require a CUP 
prior to initiation of the use.  

2Wyo. Stat. Ann § 1-37-103 (LexisNexis 2003) 
provides:

 

            
Any person interested under a deed, will, written contract or other 
writings constituting a contract, or whose rights, status or other legal 
relations are affected by the Wyoming constitution or by a statute, municipal 
ordinance, contract or franchise, may have any question of construction or 
validity arising under the instrument determined and obtain a declaration of 
rights, status or other legal relations. 

3The Sheridan county zoning resolution at § 25 provides in relevant 
part:

 

A.  Zoning Administrator.  
It shall be the duty of the Zoning Administrator, which shall be 
appointed by the Board of County Commissioners, to enforce the provisions of 
this resolution and to refuse to issue any zoning compliance certificate for any 
building or structure which would violate any of the provisions hereof.  The Zoning Administrator is hereby 
authorized to prosecute or bring any proceedings in a proper court in the name 
of the County of Sheridan against any person, firm or corporation violating any 
of the provisions of this resolution, and in case any building or structure is 
erected, constructed, reconstructed, altered or converted; or any building, 
structure or land is used in violation of this resolution, said Zoning 
Administrator is hereby authorized and directed to institute any appropriate 
action or proceeding to prevent such unlawful erection, construction, 
alteration, conversion or use; to restrain, correct or abate such violation and 
to prevent any illegal conduct or use on or about the premises.  

 

4Section 26 of the zoning resolution regarding appeals and variances 
provides in relevant part:

 

            
Procedure.  Appeals 
concerning interpretation on administration of this resolution may be taken to 
the County Planning Commission within 60 days by any person aggrieved by a 
decision of the Zoning Administrator.

 

            
Decisions of the Zoning Administrator and the County Planning Commission 
can be appealed to the Board of County Commissioners for confirmation, 
amendment, or reversal upon written request given within sixty (60) days by any 
person aggrieved by the decision.