Title: STATE ex rel. OKLAHOMA DEPT. OF MINES v. JACKSON
Citation: 1997 OK 149, 68OBJ4019, 950 P.2d 306
Docket Number: 
State: Oklahoma
Issuer: Oklahoma Supreme Court
Date: December 9, 1997

STATE ex rel. OKLAHOMA DEPT. OF MINES v. JACKSON Annotate this Case STATE ex rel. OKLAHOMA DEPT. OF MINES v. JACKSON 1997 OK 149 950 P.2d 306 68 OBJ 4019 Case Number: 90069, 90112 Decided: 12/09/1997 Supreme Court of Oklahoma THE STATE OF OKLAHOMA, ex rel. THE OKLAHOMA DEPARTMENT OF MINES, Petitioner, v. THE HONORABLE NILES JACKSON, Judge of the District Court of Oklahoma County, State of Oklahoma, 7 and THE STATE OF OKLAHOMA, ex rel. THE OKLAHOMA DEPARTMENT OF MINES, Petitioner, v. THE HONORABLE JOHN M. AMICK, Judge of the District Court of Oklahoma County, State of Oklahoma, 7 PROCEEDINGS UPON APPLICATIONS TO ASSUME ORIGINAL JURISDICTION OF TWO PETITIONS FOR PREROGATIVE WRITS ¶ 0 The Oklahoma Department of Mines (ODM) seeks to prohibit the respondent/judges, Niles Jackson and John M. Amick, both of the District Court, Oklahoma County, from proceeding further in two actions for declaratory relief, each brought by a different surety while its administrative appeal from an ODM order declaring the bonds forfeited remains pending, for exoneration of liability on reclamation bonds. ORIGINAL JURISDICTION IS ASSUMED; THE TWO CAUSES ARE CONSIDERED AND DISPOSED OF BY A SINGLE OPINION; WRITS OF PROHIBITION ARE DENIED, BUT THE DECLARATORY JUDGMENT PROCEEDINGS STAND ARRESTED UNTIL THE FORFEITURE-RELATED ISSUES HAVE BEEN FINALLY DECIDED IN THE ADMINISTRATIVE APPEALS. Mark Secrest, Chief Counsel For Petitioner Caroleen Carman, Asst. Counsel Oklahoma Department of Mines G. Patrick Garrett For the Real Parties Oklahoma City, Oklahoma in Interest OPALA, J. [950 P.2d 307] ¶ 1 The issue, dispositive of both original proceedings, is whether the district court may proceed to determine a surety's liability on a reclamation bond in a declaratory judgment action brought by that surety while its administrative appeal from an order of forfeiture remains pending. We hold that (a) although the district court has authority to adjudicate matters arising from a performance bond forfeited by order of a state agency, the forfeiture issue lies exclusively within the agency's cognizance, and (b) the district court should not proceed further in the actions for declaratory relief until the forfeiture-related issues have been finally determined. I. ANATOMY OF CONTROVERSY ¶ 2 The Oklahoma Department of Mines (ODM or Department) issued permits to K & R Coal Company for two mining operations [950 P.2d 308] in Haskell County. The company had fulfilled the statutory requirement of securing performance bonds before the surface coal mining and reclamation permits were issued. See 45 O.S.1991 § 745.6(A). ¶ 3 ODM determined in 1994 that the mining company had failed to reclaim the land. Pursuant to the Oklahoma Administrative Code, ODM issued notices of bond forfeiture. The company and the sureties were also informed of their right to a hearing. They availed themselves of this administrative remedy, in which they pressed for exoneration. The sureties brought motions to quash, alleging that the mining company to which permits were issued has ceased to exist and that a successor entity, Sunset Sales, Inc., had sought reorganization under the Bankruptcy Code. ODM was alleged to have failed to assert a claim in the bankruptcy proceeding against the mining company's successor. These and other alleged ODM acts and omissions were said to support the sureties' general position that the bonds should not be declared forfeited. ¶ 4 The motions to quash were presumably denied. ODM and each of the sureties in a combined proceeding before the same hearing examiner moved for decision by summary process, arguing the absence of disputed issues of fact. The hearing examiner granted ODM's motion, finding that its forfeiture determinations were proper. ODM's director then issued a single final agency order, adopting the hearing examiner's report and upholding the bond forfeitures. ¶ 5 Both of the affected sureties separately appealed to the district court. Their administrative appeals are pending. ¶ 6 ODM sought dismissal of the declaratory judgment actions for "lack of jurisdiction," but the respondent/judges denied the motions. The instant original proceedings brought by ODM seek prohibition. [950 P.2d 309] II. ALTHOUGH THE DISTRICT COURT HAS AUTHORITY TO ADJUDICATE THE SURETIES' LIABILITY ON THE BONDS, IT SHOULD NOT PROCEED UNTIL AFTER FINAL DETERMINATION OF THE FORFEITURE-RELATED ISSUES HAS BEEN EFFECTED IN THE PENDING ADMINISTRATIVE APPEALS ¶ 7 ODM argues primarily that the respondent/judges lack jurisdiction because the sureties failed to exhaust administrative remedies. It also contends that the relief sought by the sureties - resolution of the parties' contractual rights - cannot be granted because ODM is not a party to any of the contracts of suretyship. We need not address that argument. It deals with the merits of the declaratory judgment actions, and today's arrest of proceedings in those actions is not based on any absence of power to affect the sureties' civil liability on the bonds, if any. Our concern is to prevent the declaratory judgment actions from interfering with the pending administrative appeals, the latter of which deal exclusively with the threshold issue of forfeiture. ¶ 8 The sureties have responded to ODM's quest for prohibition by contending: (1) Inasmuch as the Attorney General is authorized by statute (45 O.S.1991 § 780(A)) ¶ 9 The terms of § 780(A) do authorize the Attorney General to bring an action on behalf of ODM, but only when the latter incurs damages and expenses or needs injunctive relief because of an operator's default or statutory violation. The surety may be made a party defendant. This statute, though, affords no legal basis for denying a surety equal access to the district court for resolution of any other litigable issues in the exercise of that court's unlimited original jurisdiction. [950 P.2d 310] ¶ 10 The administrative process of which the sureties availed themselves began with ODM's determinations of bond forfeiture. Those rulings did not involve the Attorney General, and ODM did not seek (and has not sought) to recover damages or to obtain an injunction. ODM's forfeiture declarations are contemplated by statute. See the provisions of 45 O.S.1991 § 786(D), which state that, in cases of permit revocation, "the Chief Mine Inspector shall declare as forfeited the performance bonds for the operation." The terms of § 745.6(B) provide that " * * * [t]he amount of the bond for coal mining shall be sufficient to assure the completion of the reclamation plan if the work had to be performed by the Department in the event of forfeiture . . . . " (Emphasis added.) ODM is clearly invested with authority to declare a performance bond forfeited. ¶ 11 In support of their due process argument the sureties urge that ODM "lacks the requisite disinterestedness to adjudicate liability under the Performance Bond for the additional reason that . . . [the Sureties'] asserted defenses to liability stem from actions taken (or inactions) by ODM itself which substantially and materially modified the terms of the obligation of the named principal, K&R, under the bond[s]." ODM responds by correctly pointing out that "the fact that an agency participates in the investigation, prosecution and adjudication of matters before it has been held not to violate the due process clause," citing Wilson v. Oklahoma Horse Racing Com'n, 1996 OK 3, 910 P.2d 1020 , 1023. ¶ 12 As for the exhaustion doctrine, it is inapplicable here. It governs only where the law requires that administrative process be pursued as a prerequisite for a later court action. Because the sureties' actions tender issues that are not cognizable by ODM, the exhaustion-of-remedies doctrine is not invocable as a bar to their quests for declaratory relief. See Lone Star Helicopters, Inc. v. State, 1990 OK 111, 800 P.2d 235 , 237-238. ¶ 13 ODM is vested with the statutory authority to declare the performance bonds forfeited but lacks power to affect the sureties' liability. Suit may be brought in the district court either to recover on the bonds ¶ 14 Because prohibition would deprive the respondent/judges of power to consider issues tendered by the sureties' actions, which are plainly within the district court's constitutional cognizance, we decline to issue the prerogative writs sought. Instead, we direct that, pending final resolution of the forfeiture-related issues, the respondent/judges shall not proceed further in the sureties' declaratory-relief suits. ORIGINAL COGNIZANCE IS TAKEN OF BOTH PROCEEDINGS BROUGHT BY [950 P.2d 311] ODM; WRITS OF PROHIBITION ARE DENIED, BUT THE DECLARATORY JUDGMENT PROCEEDINGS STAND ARRESTED UNTIL THE FORFEITURE-RELATED ISSUES HAVE BEEN FINALLY DECIDED IN THE ADMINISTRATIVE APPEALS. All Justices concur. FOOT