Court Opinion

ID: 9376665
Source: CourtListenerOpinion
Date Created: 2023-03-03 15:05:53.900895+00
Date Added: 2024-06-11T17:17:08.196761
License: Public Domain

FILED
                                                                    IN THE OFFICE OF THE
                                                                 CLERK OF SUPREME COURT
                                                                        MARCH 3, 2023
                                                                  STATE OF NORTH DAKOTA

                  IN THE SUPREME COURT
                  STATE OF NORTH DAKOTA

                                  2023 ND 38

Olympic Financial Group, Inc.
d/b/a OFG, Inc., a sole shareholder
Minnesota Corporation; and Abdulaziz
Sugule, the sole shareholder of
Olympic Financial Group, Inc.,                     Plaintiffs and Appellants
      v.
North Dakota Department of Financial
Institutions, an administrative agency
of the State of North Dakota,                       Defendant and Appellee

                                  No. 20210361

Appeal from the District Court of Burleigh County, South Central Judicial
District, the Honorable Lindsey R. Nieuwsma, Judge.

DISMISSED.

Opinion of the Court by Jensen, Chief Justice.

David C. Thompson, Grand Forks, ND, for plaintiffs and appellants.

Courtney R. Titus, Assistant Attorney General, Bismarck, ND, for defendant
and appellee.
    Olympic Financial Group v. ND Dep’t of Financial Institutions
                          No. 20210361

Jensen, Chief Justice.

[¶1] Olympic Financial Group, Inc., (“Olympic Financial”) and Abdulaziz
Sugule appeal from a judgment dismissing their declaratory judgment action
without prejudice after the district court granted the Department of Financial
Institutions’ (“Department”) motion to dismiss. We conclude the court lacked
subject matter jurisdiction because Appellants failed to exhaust
administrative remedies. Because we further conclude the judgment
dismissing the declaratory relief action without prejudice is not appealable, we
dismiss the appeal.

                                       I

[¶2] Olympic Financial is a corporation engaged in money transmission. The
Department administers N.D.C.C. ch. 13-09, governing the licensure and
activities of money transmitters in North Dakota. The Department issued a
money transmitter license to Olympic Financial to operate.

[¶3] In July 2020, the Department began administrative proceedings against
Olympic Financial, issuing an order for revocation and an order to cease-and-
desist all money transmission activities in the state. Olympic Financial timely
appealed and requested an administrative hearing. While Sugule is not a party
to the administrative proceedings in his individual capacity, Sugule purports
to be Olympic Financial’s sole shareholder.

[¶4] During the course of the underlying administrative proceedings, the
parties served each other with discovery requests. Olympic Financial did not
respond to the Department’s discovery requests within the administrative
proceedings but alleges that it “notified the Department that substantial risk
existed for improper compelled self-incrimination on the part of Olympic
Financial sole shareholder Ab[d]ulaziz Sugule existed for in light of the
presence of N.D.C.C. § 13-09-22(2), an overly-broad and vague ‘catchall’
criminal statute[.]” Olympic Financial asserts it requested that the
Department agree to a grant of immunity for both Olympic Financial and

                                       1
Sugule before providing discovery responses. The Department declined to
enter into an agreement for a grant of immunity and moved to compel discovery
in the administrative proceedings before the administrative law judge (“ALJ”).

[¶5] Rather than responding to the Department’s motion to compel, Olympic
Financial and Sugule commenced this action in the district court for a
declaratory judgment against the Department. Olympic Financial and Sugule
subsequently filed an amended complaint seeking a judgment declaring that
N.D.C.C. § 13-09-22, which provides for criminal penalties under N.D.C.C. ch.
13-09 governing money transmitters, is unconstitutional; declaring that the
petitioners possess a constitutional right to be free from compelled self-
incrimination; and seeking a writ of mandamus compelling the Department to
recognize the petitioners’ constitutional rights to be free from self-
incrimination in pending administrative proceedings.

[¶6] The Department moved the district court to dismiss the action under
N.D.R.Civ.P. 12(b)(1) and 12(b)(6) asserting, respectively, that the district court
lacked subject matter jurisdiction over the amended complaint and that the
amended complaint failed to state a claim upon which relief can be granted
because Olympic Financial failed to exhaust administrative remedies and a
justiciable controversy did not exist. Olympic Financial and Sugule opposed
the Department’s motion. The administrative proceedings against Olympic
Financial remained pending at the time of the hearing on the motion.

[¶7] After a hearing, the district court granted the Department’s motion to
dismiss. In its order, the court held that it lacked subject matter jurisdiction
over both plaintiffs’ claims in the amended complaint based on the failure to
exhaust administrative remedies before seeking relief in the district court.
Judgment was entered dismissing the action without prejudice.

                                        II

[¶8] Chapter 32-23, N.D.C.C., authorizes courts to issue declaratory
judgments, which are reviewed on appeal under the same standards as other
cases. N.D.C.C. § 32-23-07; Zerr v. N.D. Workforce Safety & Ins., 2017 ND 175,
¶ 9, 898 N.W.2d 700; Nationwide Mut. Ins. Cos. v. Lagodinski, 2004 ND 147, ¶

                                        2
7, 683 N.W.2d 903. Under N.D.C.C. § 32-23-01, a “court of record within its
jurisdiction shall have power to declare rights, status, and other legal relations
whether or not further relief is or could be claimed.” Section 32-23-02,
N.D.C.C., provides that “[a]ny person . . . whose rights, status, or other legal
relations are affected by a statute . . . may have determined any question of
construction or validity arising under the . . . statute . . . and may obtain a
declaration of rights, status, or other legal relations thereunder.”

[¶9] A court may refuse to render a declaratory judgment if the judgment
would not terminate the uncertainty or controversy giving rise to the
proceeding. N.D.C.C. § 32-23-06. When declaratory relief is sought, all persons
having or claiming any interest that would be affected by the declaration must
be made parties, and a declaration may not prejudice the rights of persons not
named as parties to the proceeding. N.D.C.C. § 32-23-11. The declaratory relief
provisions under N.D.C.C. ch. 32-23 are remedial and are construed and
administered liberally to afford relief from uncertainty and insecurity about
rights, status, and other legal relations. N.D.C.C. § 32-23-12. “The declaratory
judgment statutes are not jurisdictional.” City of Harwood v. City of Reiles
Acres, 2015 ND 33, ¶ 12, 859 N.W.2d 13 (citing State v. J.P. Lamb Land Co.,
359 N.W.2d 368, 369 (N.D. 1984)).

[¶10] This Court has long held that “[t]he exhaustion of administrative
remedies is a prerequisite to seeking declaratory relief.” Cont’l Res., Inc. v. N.D.
Dep’t of Envtl. Quality, 2019 ND 280, ¶ 10, 935 N.W.2d 780; see also Zerr, 2017
ND 175, ¶ 12; Medcenter One, Inc. v. N.D. State Bd. of Pharmacy, 1997 ND 54,
¶ 12, 561 N.W.2d 634; Tooley v. Alm, 515 N.W.2d 137, 139 (N.D. 1994); Transp.
Div. of Fargo Chamber of Com. v. Sandstrom, 337 N.W.2d 160, 162-63 (N.D.
1983); Shark Bros., Inc. v. Cass Cnty., 256 N.W.2d 701, 705-06 (N.D. 1977).
This Court has recognized that dismissal for lack of subject matter jurisdiction
under N.D.R.Civ.P. 12(b)(1) is appropriate when a plaintiff fails to exhaust
administrative remedies. Vogel v. Marathon Oil Co., 2016 ND 104, ¶¶ 7-8, 879
N.W.2d 471; see also Armstrong v. Helms, 2022 ND 12, ¶ 7, 969 N.W.2d 180;
Thompson v. Peterson, 546 N.W.2d 856, 861 (N.D. 1996). A dismissal for lack of
subject matter jurisdiction is reviewed de novo on appeal when the
jurisdictional facts are not in dispute. Vogel, at ¶ 7.

                                         3
[¶11] Here, the district court held that it lacked subject matter jurisdiction
over the action seeking declaratory relief because Olympic Financial and
Sugule failed to exhaust administrative remedies in the proceedings before the
Department. Because the court dismissed the entire action without prejudice,
we examine whether the judgment is appealable.

                                       A

[¶12] “The right of appeal is governed solely by statute in this state[.]” Mann
v. N.D. Tax Comm’r, 2005 ND 36, ¶ 7, 692 N.W.2d 490; see also N.D.C.C. § 32-
23-07 (“All orders, judgments, and decrees under [N.D.C.C. ch. 32-23] may be
reviewed as other orders, judgments, and decrees.”). Section 28-27-02,
N.D.C.C., provides:

      The following orders when made by the court may be carried to the
      supreme court:
            1. An order affecting a substantial right made in any action,
            when such order in effect determines the action and prevents
            a judgment from which an appeal might be taken;
            2. A final order affecting a substantial right made in special
            proceedings or upon a summary application in an action
            after judgment;
            3. An order which grants, refuses, continues, or modifies a
            provisional remedy, or grants, refuses, modifies, or dissolves
            an injunction or refuses to modify or dissolve an injunction,
            whether such injunction was issued in an action or special
            proceeding or pursuant to the provisions of section 35-22-04,
            or which sets aside or dismisses a writ of attachment for
            irregularity;
            4. An order which grants or refuses a new trial or which
            sustains a demurrer;
            5. An order which involves the merits of an action or some
            part thereof;
            6. An order for judgment on application therefor on account
            of the frivolousness of a demurrer, answer, or reply; or
            7. An order made by the district court or judge thereof
            without notice is not appealable, but an order made by the
            district court after a hearing is had upon notice which
            vacates or refuses to set aside an order previously made

                                       4
            without notice may be appealed to the supreme court when
            by the provisions of this chapter an appeal might have been
            taken from such order so made without notice, had the same
            been made upon notice.

[¶13] “Ordinarily, a dismissal without prejudice is not appealable because
either side may commence another action.” State by & through Workforce
Safety & Ins. v. Boechler, PC, 2022 ND 98, ¶ 7, 974 N.W.2d 409 (quoting Rolette
Cnty. Soc. Serv. Bd. v. B.E., 2005 ND 101, ¶ 4, 697 N.W.2d 333). A dismissal
without prejudice may be final and appealable, however, “if the plaintiff cannot
cure the defect that led to dismissal” or “if the dismissal has the practical effect
of terminating the litigation in the plaintiff ’s chosen forum[.]” Rodenburg v.
Fargo-Moorhead Young Men’s Christian Ass’n, 2001 ND 139, ¶ 12, 632 N.W.2d
407; see also Boechler, at ¶ 7; Vogel, 2016 ND 104, ¶ 6; Haugenoe v. Bambrick,
2003 ND 92, ¶ 2, 663 N.W.2d 175 (quoting Jaskoviak v. Gruver, 2002 ND 1, ¶
8, 638 N.W.2d 1) (where a statute of limitations has run, a dismissal “effectively
forecloses litigation in the courts of this state”).

[¶14] The district court in this case dismissed the claims for declaratory relief
of both plaintiffs—Olympic Financial, the corporation subject to the
Department’s administrative proceedings, and Sugule, Olympic Financial’s
purported sole shareholder—without prejudice based on the failure to exhaust
administrative remedies.

[¶15] In failing to exhaust administrative remedies, the judgment dismissing
the declaratory judgment action without prejudice may be final and appealable
if Appellants cannot cure the defect that led to dismissal or if the dismissal has
the practical effect of terminating the litigation in their chosen forum.

[¶16] In Vogel, 2016 ND 104, ¶ 6, this Court held that a dismissal without
prejudice was appealable even though administrative remedies had not been
exhausted. The plaintiff, Vogel, individually and on behalf of those similarly
situated, sued defendant Marathon Oil Company seeking declaratory relief as
well as money damages for failure to pay royalties on flared gas. Id. at ¶ 3.
Vogel appealed from a district court judgment dismissing her complaint
without prejudice for failure to exhaust administrative remedies. Id. at ¶ 1.

                                         5
Vogel argued on appeal that her claims should not have been dismissed
because she had a private right of action for violations of N.D.C.C. § 38-08-06.4
and was not required to exhaust administrative remedies. Vogel, at ¶ 1.

[¶17] While we ultimately affirmed the district court in concluding Vogel was
required to exhaust her administrative remedies before pursuing any claims
in court, we initially concluded the dismissal “without prejudice” was
appealable because the judgment had the practical effect of terminating the
litigation in Vogel’s chosen forum:

            Vogel argues the judgment dismissing her complaint without
      prejudice is appealable. Marathon does not dispute that the
      judgment is appealable. A dismissal without prejudice generally is
      not appealable, but it may be final and appealable if it has the
      practical effect of terminating the litigation in the plaintiff ’s
      chosen forum. The judgment requires Vogel to pursue her
      administrative remedies and terminates her attempt to seek
      damages through the courts individually and as a class action. The
      judgment has the practical effect of terminating the litigation in
      Vogel’s chosen forum. We conclude the judgment in this case is
      appealable.

Vogel, 2016 ND 104, ¶ 6 (emphasis added) (citation omitted). Our decision in
Vogel, however, is distinguishable and does not support appealability for the
judgment dismissing this declaratory relief action without prejudice.

[¶18] In Vogel, the district court had concluded N.D.C.C. ch. 38-08 provided
the exclusive administrative remedies and N.D.C.C. § 38-08-06.4 did not
provide an express or implied private right of action. 2016 ND 104, ¶ 5. We
held the judgment therefore limited Vogel to administrative remedies and
terminated her attempt to seek damages, both individually and as a class
action, by way of a purported implied private cause of action through the
courts. Vogel, at ¶ 6. Under those circumstances, we held the judgment
dismissing the complaint without prejudice was appealable because it had the
practical effect of terminating the litigation in the plaintiff ’s chosen forum.

[¶19] In contrast, Appellants’ claims in this declaratory judgment action
specifically derive from or have arisen because the Department exercised its

                                       6
administrative executive power to regulate money transmitters. The
underlying administrative proceedings against Olympic Financial before an
ALJ are pending, which relate to the license revocation order, the cease-and-
desist order, and the ensuing discovery dispute. The Administrative Agencies
Procedure Act, N.D.C.C. ch. 28-32, provides for a statutory right to appeal and
judicial review in the courts. See, e.g., N.D.C.C. §§ 28-32-33, 28-32-42, 28-32-
46, 28-32-49.

[¶20] The district court’s judgment dismissing Appellants’ claims for
declaratory relief without prejudice does not terminate an independent
statutory claim or a cause of action attempting to seek damages through the
courts, like in Vogel. The court’s dismissal without prejudice also does not have
the practical effect of terminating litigation in Appellants’ chosen forum after
Olympic Financial appealed from and requested an administrative hearing on
the Department’s administrative orders. Rather, the dismissal without
prejudice merely defers the district court’s consideration of the claims raised
in this declaratory judgment action.

[¶21] Appellants argue the judgment dismissing its declaratory relief action
without prejudice is appealable because this case falls within exceptions to the
exhaustion requirement. In Zerr, 2017 ND 175, ¶¶ 12-13, this Court discussed
the purpose for requiring exhaustion before granting declaratory relief:

      The purpose of requiring exhaustion of remedies has its basis in
      the separation of powers doctrine. Requiring exhaustion accord[s]
      recognition to the ‘expertise’ of the [administrative agency’s] quasi-
      judicial tribunal, permitting it to adjudicate the merits of the
      plaintiff ’s claim in the first instance. Requiring exhaustion also
      promotes judicial efficiency.
            Therefore, [w]hen appellate processes are available and the
      remedies will provide adequate relief, those remedies must be
      exhausted before seeking judicial remedies, unless exhaustion
      would be futile. In addition to futility, we will not require
      exhaustion of administrative remedies when a legal question
      simply involves statutory interpretation and does not need the
      exercise of an agency’s expertise in making factual decisions. We
      have also said requiring exhaustion depends on considerations

                                        7
      including whether the issues need the expertise of an
      administrative body, the interpretation of a statute, or the
      resolution of a pure question of law.

(Citations and quotation marks omitted.)

[¶22] Appellants contend exhaustion of administrative remedies is not
required and they are entitled to declaratory relief because this declaratory
judgment action involves statutory interpretation on the constitutionality of
N.D.C.C. § 13-09-22, where expertise of the administrative agency is not
necessary; because important constitutional questions exist that are collateral
to the factual subject matter of the Department’s administrative proceedings;
and because the administrative agency is inadequate to adjudicate
constitutional questions and it would be futile. They alternatively assert this
Court should exercise its discretion to hear the appeal given the remedial
nature for declaratory judgments.

[¶23] The Department responds that the judgment is not appealable because
Appellants can cure the defect that led to the district court’s dismissal of the
case by exhausting remedies in the administrative proceedings and properly
perfecting an appeal from the administrative decision to the district court. The
Department argues the court’s dismissal did not have the practical effect of
terminating the litigation in Olympic Financial’s “chosen forum” because the
administrative proceedings would have simply continued.

[¶24] Appellants rely on Medcenter One, 1997 ND 54, ¶¶ 11-12, which
discusses the “bundle of considerations” in deciding whether to apply the
exhaustion doctrine and exceptions to the doctrine:

      The doctrine preserves agency authority by recognizing the
      agency’s initial decisionmaking responsibility. [5 Stein, Mitchell,
      Mezines, Administrative Law § 49.01 (1997).] The requirement for
      exhaustion is particularly weighty when the agency’s decision
      involves factual issues or administrative expertise. See Medical
      Arts Clinic, P.C. v. Franciscan Initiatives, Inc., 531 N.W.2d 289
      (N.D. 1995). The exhaustion prerequisite establishes an efficient
      method for dispute resolution by giving the agency a chance to
      correct its mistakes before being sued. Id. If the agency has an

                                       8
     opportunity to correct its own errors, a judicial controversy may be
     mooted or, at a minimum, piecemeal appeals may be avoided. See
     5 Stein, Mitchell, Mezines at § 49.01. And, where the dispute is not
     resolved at the administrative level, the exhaustion of remedies
     will generally develop a complete record for judicial review,
     especially in technical or complex factual situations. See Medical
     Arts. These factors recognize a vital role for exhaustion of
     administrative remedies in the relationship between the executive
     and the judicial branches of government.
           Notwithstanding       these     institutional     justifications
     [supporting exhaustion of remedies], the exhaustion doctrine has
     several well-recognized exceptions, including when a legal
     question simply involves statutory interpretation and does not
     need the exercise of an agency’s expertise in making factual
     decisions. See generally 2 Am.Jur.2d Administrative Law at § 511;
     5 Stein, Mitchell, Mezines at § 49.02. In Shark Brothers, Inc. v.
     Cass County, 256 N.W.2d 701 (N.D. 1977), we explained that
     application of the exhaustion doctrine depends upon a bundle of
     considerations, including whether the issues need the expertise of
     an administrative body, the interpretation of a statute, or the
     resolution of a pure question of law. See also Kessler v. Board of
     Educ. of City of Fessenden, 87 N.W.2d 743 (N.D. 1958) (no
     requirement for exhaustion of administrative remedies where
     construction of statute involved pure legal question customarily
     decided by courts). Shark Brothers acknowledges that exhaustion
     of administrative remedies is not a rigid prerequisite for a
     statutory interpretation that does not infringe on an agency’s
     factual decisionmaking process.

One of the above-noted authorities, however, further discussed criticism of
exceptions for constitutional questions or purely legal questions:

           Some courts have established their own categorical
     breakdowns of exceptions, or added additional categories. Many of
     these variations suggest another exception should be allowed
     when constitutional questions are at issue. This additional
     exception has been criticized, especially when eventual judicial
     review could deal with the constitutional issues after the agency
     has had the opportunity to amend its position and possibly avoid
     the need for a constitutional decision. Similarly, several courts
     allow an exception when the question presented is purely legal,

                                       9
      such as a question of statutory interpretation, where a factual
      record is unnecessary. Both of these “additional” exceptions may,
      however, be categorized as problems for which emergency
      remedies are “inadequate,” or for which the solutions are in excess
      of the agency’s statutory authority, obviating the need for added
      categories. Also, it is neither necessary nor advisable to avoid the
      doctrine each time a constitutional or legal issue is raised.

5 Jacob A. Stein & Glenn A. Mitchell, Administrative Law § 49.02 (2022)
(emphasis added) (footnotes omitted).

[¶25] In this case’s procedural posture, the dispositive question is the
appealability of the district court’s judgment dismissing without prejudice.
After the dismissal, Appellants have not been left in a position where a statute
of limitations has run, where it cannot cure a defect leading to the dismissal,
or where an independent claim or cause of action is barred in a subsequent
action based on its failure to exhaust administrative remedies. Appellants have
remedies in the underlying administrative proceedings. It is undisputed
administrative proceedings involving Olympic Financial have commenced, are
pending, and have been continued until disposition of this action. This action
for declaratory judgment has effectively forestalled or usurped the
administrative proceedings before discovery was completed, before an
administrative evidentiary hearing was held, and before an appeal of an ALJ’s
decision to the district court could be taken.

[¶26] We conclude the judgment dismissing without prejudice neither prevents
Appellants from curing the defect leading to the dismissal nor has the practical
effect of terminating litigation in their chosen forum. The judgment dismissing
the Appellants’ declaratory relief action without prejudice is therefore not
appealable.

                                       B

[¶27] Appellants nevertheless argue they should not be required to first
litigate state and federal constitutionally-based declaratory judgment claims
before the Department because if N.D.C.C. § 13-09-22(2) is unconstitutional,
any proceedings under it are in excess of a court’s jurisdiction, and the same

                                      10
principle applies to administrative agency proceedings. They assert the
declaratory judgment action seeks to declare the “strict liability” provision,
N.D.C.C. § 13-09-22(2), violates their rights to due process under the state and
federal constitutions. They again argue exhaustion is not required because the
subject matter of this declaratory judgment action involves statutory
interpretation, in which the expertise of the administrative agency is not
necessary to determine a “purely legal issue” collateral to the license year
revocation; because important collateral constitutional questions exist; and
because the Department is inadequate to adjudicate constitutional questions.

[¶28] However, in Johnson v. Elkin, 263 N.W.2d 123, 127 (N.D. 1978), this
Court explained that constitutional issues may be presented even when the
agency does not have the authority to decide:

             We adhere to the rule that evidence should be presented to
      the administrative agency, even though that evidence may relate
      to a constitutional issue which that agency has no power to decide.
      Very often the evidence on the constitutional issue will also be
      relevant to other issues before the agency. Even if additional
      evidence is taken on the constitutional issue, the time spent in
      taking it will be justified by the fact that the record will be in one
      unit and only one evidentiary hearing will be needed. However, the
      rule that evidence should be presented to the administrative
      agency does not preclude the raising of the constitutional issue at
      that level, either during the proceeding or by petition for
      rehearing. The administrative agency may, if it wishes, indicate its
      views as to constitutionality, but such views are not to be
      considered as binding.

[¶29] Appellants’ arguments on appeal are unavailing. In Brown v. State ex rel.
State Bd. of Higher Educ., 2006 ND 60, ¶ 8, 711 N.W.2d 194, this Court
reiterated that “past decisions holding the constitutionality of an act
administered by an agency may be raised for the first time on appeal to the
district court do not abolish the requirement for exhaustion of administrative
remedies before suing in court.” See also Thompson, 546 N.W.2d at 863 (same).

[¶30] Moreover, in Medical Arts Clinic, P.C. v. Franciscan Initiatives, Inc., 531
N.W.2d 289, 296-98 (N.D. 1995), a case addressing administrative discovery,

                                       11
this Court thoroughly discussed the law in effect at the time and a hearing
officer’s authority in administrative discovery. This Court explained that
“regardless of the correctness of a hearing officer’s answers to administrative
discovery questions, the Legislature has conferred statutory authority upon
the hearing officer to decide those questions[.]” Id. at 298. These principles
remain true under present law. See N.D.C.C. § 28-32-33.

[¶31] The district court did not err in concluding the Appellants’ constitutional
claims did not provide an exception to the doctrine to exhaust administrative
remedies in this case.

                                       C

[¶32] Sugule, as Olympic Financial’s purported sole shareholder, argues he
also possesses a right to be free from compelled self-incrimination under the
federal and state constitutions in the pending administrative proceedings.

[¶33] While Sugule attempts to bootstrap his individual objections to the
discovery sought to be compelled from Olympic Financial, this issue is clearly
intertwined with the underlying motion to compel in the administrative
proceedings and is subject to an ALJ’s fact-finding and decision-making. Our
decision in Medical Arts, 531 N.W.2d 289, is again instructive, in which this
Court concluded both a party and a nonparty from whom discovery is sought
in an administrative proceeding must exhaust their administrative remedies.

[¶34] In Medical Arts, 531 N.W.2d at 298, Medical Arts was a nonparty to the
administrative proceeding and asserted a trade-secret claim. Because of
Medical Arts’ nonparty status, this Court stated that “the procedure for judicial
review of Medical Arts’ claim, is not as clear [as a party’s procedure].” We
further explained, however, that “Medical Arts must first exhaust its
administrative remedies so the hearing officer has an opportunity to
specifically rule on its claim. Those administrative remedies include asking the
hearing officer to issue a protective order, or to quash or modify a subpoena.”
Id. (citation omitted).

                                       12
[¶35] Recognizing Medical Arts could exhaust its administrative remedies
and the hearing officer could deny Medical Arts’ trade-secret claim, this Court
also noted Medical Arts had no assurances Franciscan would not disclose the
information before judicial review was available. “Disclosure by Franciscan
under those circumstances would impose upon Medical Arts the impossible
task of seeking a remedy that would ‘unring a bell.’” Medical Arts, 531 N.W.2d
at 298. We addressed that possibility, holding “that if the impact of an order
compelling disclosure of claimed trade secrets cannot be ‘unmade’ and, after
exhaustion of administrative remedies, there is no other recourse for an entity
like Medical Arts, a writ of prohibition may be sought for judicial review of the
hearing officer’s trade-secret decision.” Id. at 299. Medical Arts therefore
stands for the proposition that, under the limited circumstances when judicial
review will not provide a meaningful remedy because of the impact of the
hearing officer’s discovery ruling, a nonparty may seek a writ of prohibition for
judicial review of the hearing officer’s decision. However, that remedy is only
potentially available when the nonparty first exhausts the nonparty’s
administrative remedies.

[¶36] Here, the record indicates Sugule did not exhaust administrative
remedies. Had he done so, it is possible the ALJ would have issued an order
addressing Sugule’s concerns. However, he made no attempt to permit the ALJ
to address the issue. Based on Medical Arts, the judgment dismissing the
declaratory judgment action without prejudice is not appealable as to Sugule
because he did not exhaust his administrative remedies.

[¶37] We conclude the discovery issues must be litigated through the pending
administrative proceedings before reaching a final disposition in the district
court. Olympic Financial and Sugule must exhaust the administrative
remedies in the underlying administrative proceedings before pursuing
judicial remedies in the district court. The judgment dismissing the action for
declaratory relief without prejudice is not appealable and dismissal of its
appeal is appropriate.

                                       13
                                III

[¶38] We conclude the remaining arguments are either without merit or
unnecessary to our decision. The appeal is dismissed.

[¶39] Jon J. Jensen, C.J.
      Daniel J. Crothers
      Lisa Fair McEvers
      Jerod E. Tufte
      Douglas A. Bahr

                                 14