Opinion ID: 1199622
Heading Depth: 1
Heading Rank: 3

Heading: aac failed to exhaust its administrative remedies.

Text: ¶ 10 What AAC was attempting to obtain from the trial court via its DJA suit was one of the following: 1) a judicial declaration the records/files of the Clerks' Offices contained all those documents required to be reflected in its proposed abstract plant as that term is defined at § 227.11(2) of the OAL or, 2) if documents were missing that were required to be reflected in an abstract plant under the OAL, it sought to have the trial court identify each such document so it could have the information necessary to make a decision as to whether it would either a) take the steps necessary to replace the missing document(s), or b) abandon its desire to become a licensed abstract company in Carter County, because for some reason it would be impossible to replace or restore the required missing documents. In order to grant the relief sought by AAC it was incumbent on the trial court to grapple with two basic issues, one legal and the other factual: 1) what records/documents filed in a district court clerk and county clerk office are required to be reflected in an abstract plant by virtue of the OAL definition of abstract plant contained in § 227.11(2)  a legal question concerning the meaning of § 227.11(2) and 2) whether any required records/documents were missing from the Clerks' Offices  a factual question. The same questions were put at issue in the administrative permit process initiated by AAC via CCAC's protest of that application, but the administrative process did not culminate in a final decision because AAC withdrew its permit application before any ruling could be made by the A & I. Both questions, in our view, are committed for initial resolution to the A & I. ¶ 11 Pursuant to the OAL, the A & I is the State officer with regulatory authority over the abstracting business in Oklahoma. See generally Denney v. Scott, 1992 OK 134, 848 P.2d 1142; Abstracts of Oklahoma, Inc. v. Payne County Title Co., 1992 OK 13, 825 P.2d 1334. The A & I is charged with the duty of administering the [OAL] and is the sole governmental entity, state, county or municipal, authorized to regulate and issue certificates of authority, permits, and abstract licenses in [Oklahoma]. 74 O.S.1991, § 227.12(A). Section 227.12(A) also provides that in carrying out its powers and responsibilities in administering the OAL, the A & I is subject to the Oklahoma Administrative Procedures Act (OAPA), 75 O.S.1991, § 250 et seq., as amended, which includes, of course, Article II of the OAPA, the provisions thereof governing individual proceedings/hearings in individual cases. Section 227.22(A) of the OAL further requires that the A & I may not refuse to issue a permit to build an abstract plant without affording a hearing. The A & I is also authorized to promulgate rules and regulations and to make orders necessary to implement the OAL's provisions. § 227.13(1). The A & I has promulgated extensive rules under this authority which are found in the Oklahoma Administrative Code (OAC), Title 80, including Rule 80:1-3-1(a) that allows a protest to a permit application and a hearing thereon. ¶ 12 Acquisition of a permit to build an abstract plant is the initial step in the administrative process that must be followed by a person or entity desiring to engage in the business of abstracting in a particular county. [13] A permit holder is allowed free access to any instruments affecting real property in any city, county or state office, which allows the ability to search for and copy those recorded instruments necessary for inclusion in an abstract plant. After an abstract plant is completed by a permit holder, the next step is to obtain a certificate of authority which is defined at § 227.11(3) as the authorization to engage in the business of abstracting in a county in this state, granted to a person, firm, corporation, or other entity, by the State Auditor and Inspector. ¶ 13 In the instant case, after AAC filed its permit application with the A & I, a protest to that application was filed by CCAC pursuant to A & I Rule 80:1-3-1(a), partly on the basis AAC would be unable to build an abstract plant in compliance with the OAL using the records of the Clerks' Offices because the records of those offices according to CCAC  were incomplete, as they did not contain all documents or matters which legally impart constructive notice of matters affecting title to real property, any interest therein or encumbrances thereon, which [were] filed or recorded in the offices of the county [] and [] court clerk[s].... § 227.11(2). [14] Rather than litigate any legal issue concerning the proper interpretation of § 227.11(2) or any factual question as to what required documents might be missing from the Clerks' Offices within the confines of the administrative process it had initiated, AAC sought to litigate any such questions related to the adequacy of the Clerks' records for OAL purposes in a DJA case and then withdrew its permit application. This was an improper course of action because it was required to exhaust available remedies before the A & I and, without any decision of the A & I on these matters, there was no actual justiciable controversy presented to the trial court in the DJA case. [15] ¶ 14 Plainly, an administrative officer clothed with the duty of regulatory authority over a class of business enterprises  such as the A & I has been granted over the abstract industry  is empowered in the first instance to interpret the provisions of the statutory scheme it is duty-bound to administer. This Court has expressly recognized that administrative agencies, like courts, are often called upon to interpret the statutes they are charged with administering and that the presence of a legal question alone is not a sufficient reason to by-pass administrative avenues of relief. Ledbetter v. Oklahoma Alcoholic Beverage Laws Enforcement Com'n, 1988 OK 117, 764 P.2d 172, 181. The OAPA itself requires state agencies to state their conclusions of law when deciding individual cases [§ 312] and a court reviewing an administrative agency decision is authorized to reverse, modify or remand an agency decision if legal errors of the agency prejudice the substantial rights of an appealing party [§ 322]. ¶ 15 Exhaustion of administrative remedies is generally a prerequisite for resort to the courts. Lone Star Helicopters, Inc. v. State, 1990 OK 111, 800 P.2d 235, 237. It is also understood that exhaustion of administrative remedies is a simple rule of orderly procedure and is designed to allow administrative bodies to perform their statutory functions free from premature and unnecessary interference by preliminary court litigation. Speaker v. Board of County Commissioners, 1957 OK 100, 312 P.2d 438, 441. Further, issues falling within an agency's original cognizance usually may be considered by a district court only when it is entertaining an administrative appeal. State ex rel. Oklahoma Department of Mines v. Jackson, 1997 OK 149, 950 P.2d 306, 310; Ricks Exploration Co. v. Oklahoma Water Resources Bd., 1984 OK 73, 695 P.2d 498, 502; See also Dawson v. Department of Transportation, 480 F.Supp. 351, 352 (W.D.Okla.1979) (declaratory judgment suit may not be used to preempt and prejudge issues that are committed to an administrative agency for initial decision). ¶ 16 The exhaustion doctrine, when it is applicable, does not require merely initiation of prescribed administrative remedies, but that such remedies be pursued to their final outcome before judicial intervention is sought. Martin v. Harrah Independent School District, 1975 OK 154, 543 P.2d 1370, 1374. The rationale behind the doctrine of exhaustion of administrative remedies is grounded on various policy considerations. Ledbetter v. Oklahoma Alcoholic Beverage Laws Enforcement Com'n, supra, 764 P.2d at 180. Exhaustion normally allows the administrative agency to exercise discretion or apply its expertise under the statutory scheme it is charged with administering, it is generally more efficient to allow the administrative process to progress forward without court intervention, the agency may discover and correct its own errors in the administrative process, and, in fact, a litigant may succeed in vindicating his rights in that process so that it may never be necessary for the courts to intervene. Id. Generally, it is only where administrative remedies are unavailable, ineffective or futile to pursue that such remedies may be bypassed. Robinson v. State, 1996 OK 145, 916 P.2d 1390, 1393; Lone Star Helicopters, Inc. v. State, supra, 800 P.2d at 237. ¶ 17 Here, although the A & I does not have statutory authority under the OAL to replace or restore missing records of a district court clerk or county clerk that may be deemed necessary to be contained or reflected in an abstract plant under the OAL, the A & I clearly has the authority to decide the questions sought to be litigated by AAC in its DJA action, questions that concerned the adequacy of the Clerks' records for OAL purposes. Thus, AAC is mistaken when it asserts the A & I is not empowered to answer the questions it sought to litigate in its DJA action. It is also mistaken, at least at this stage, in assuming the A & I was merely going to grant its permit without resolving the questions raised by it in the DJA case and by CCAC in the administrative process. Before AAC withdrew its permit application, the A & I's Office had set CCAC's protest of that permit application for administrative hearing, and we have been presented with no viable argument that the questions involved in AAC's DJA action would not have received some type of resolution in the administrative process had AAC not abandoned that process prematurely. ¶ 18 Our decision that AAC's DJA case should have been dismissed for failure to exhaust administrative remedies does not impinge on the district court's authority as a court of unlimited jurisdiction as AAC seems to assert. OKLA. CONST. art. 7, § 7(a), which grants to State District Courts unlimited original jurisdiction of all justiciable matters provides in pertinent part: The District Court shall have unlimited original jurisdiction of all justiciable matters, except as otherwise provided in this Article, and such powers of review of administrative action as may be provided by statute. Merely because in a different context (e.g. in a quiet title action where missing court or county clerk records are necessary to resolve some issue in the action) a district court would have authority to inquire into the status of lost or destroyed records and to use the mechanisms in Title 67 to replace or restore them, does not mean a district court may preempt or prejudge issues committed for initial resolution to an administrative agency, like the issues presented in AAC's DJA case. ¶ 19 It is the A & I that has been statutorily granted regulatory power over the abstract industry and the initial authority to decide the questions AAC and CCAC sought to resolve concerning the completeness or adequacy of the Clerks' records for purposes of the OAL. This recognition does not impinge on any authority of the district court and, of course, should AAC be aggrieved by any final order of the A & I's Office issued in an individual proceeding covered by the OAPA, AAC would be authorized to seek judicial review of such an order under § 318 of the OAPA. See Double LL Contractors, Inc. v. State, 1996 OK 30, 918 P.2d 34, 37 (parties aggrieved by an administrative agency's final order issued in the context of an individual proceeding are afforded a cause of action for judicial review by § 318 of the OAPA). Further, depending upon the ultimate resolution by the A & I's Office of issues posed in the administrative process, the provisions of Title 67 concerning replacement or restoration of records/documents would be available to AAC for invocation at an appropriate time. In sum, AAC's DJA case should have been dismissed by the trial court for failure to exhaust administrative remedies.