State ex rel. Oklahoma Department v. Jackson

1997 OK 149, 950 P.2d 306, 124 N.M. 324, 68 O.B.A.J. 4019, 1997 Okla. LEXIS 139
CourtSupreme Court of Oklahoma
DecidedDecember 9, 1997
DocketNos. 90069, 90112
StatusPublished
Cited by4 cases

This text of 1997 OK 149 (State ex rel. Oklahoma Department v. Jackson) is published on Counsel Stack Legal Research, covering Supreme Court of Oklahoma primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
State ex rel. Oklahoma Department v. Jackson, 1997 OK 149, 950 P.2d 306, 124 N.M. 324, 68 O.B.A.J. 4019, 1997 Okla. LEXIS 139 (Okla. 1997).

Opinion

OP ALA, Justice.

¶ 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 [308]*308in 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).1 One of the bonds posted in the amount of $290,000.00 was by U.S. Capital Insurance Company. The second mining operation required the company to revise its permit and secure additional bonds totaling $606,000.00. The surety for this operation is Clarendon National Insurance Company. Van-American Insurance Company is its alleged agent. The term “sureties” refers to one or more of the three entities.

¶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.2 Within their appeals the sureties also sought declaratory and injunctive relief. On ODM’s motions the latter claims for relief were dismissed. Each surety subsequently brought its own declaratory judgment action in the district court for judicial determination of the “respective rights and duties of the parties,” declarations that the bonds are “void,” and, ultimately, exoneration of liability. The pleadings include requests for injunctive relief that would prevent ODM from initiating steps to collect on the bonds.3

¶ 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.

[309]*309II.

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))4 to sue an operator and its surety for damages and expenses incurred by ODM, sureties should be accorded equal access to sue ODM in the district court; (2) ODM lacks jurisdiction either to determine the liability of a surety under a performance bond or to declare a bond’s forfeiture; (3) “procedural due process requires that ... [a surety’s] defenses to liability be adjudicated by the district court — not by ODM, the obligee under the contracts] of suretyship;” and (4) the two declaratory judgment actions “involve separate and distinct claims, ... ex contractu in nature,” while the pending administrative appeals do not address themselves to “an adjudication of the contract dispute which has arisen between these parties.”

¶ 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 in-junctive 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.5

[310]*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 “⅜ * * [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 ...

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Related

Arbuckle Abstract Co. v. Scott
1998 OK 125 (Supreme Court of Oklahoma, 1999)
STATE EX REL. OKL. DEPT. OF MINES v. Jackson
1997 OK 149 (Supreme Court of Oklahoma, 1997)

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Bluebook (online)
1997 OK 149, 950 P.2d 306, 124 N.M. 324, 68 O.B.A.J. 4019, 1997 Okla. LEXIS 139, Counsel Stack Legal Research, https://law.counselstack.com/opinion/state-ex-rel-oklahoma-department-v-jackson-okla-1997.