Drake v. Indiana Dept. of Natural Resources

• Decision Date: 01 September 1983
• Docket Number: No. 1-183A2,1-183A2
• Citation: 453 N.E.2d 293
• Parties: Mervin E. DRAKE, Plaintiff-Appellant, v. INDIANA DEPARTMENT OF NATURAL RESOURCES, et al, W.L. Dillier, Francis M. Pierce, Defendant-Appellees.
• Court: Indiana Appellate Court

Page 293

453 N.E.2d 293

Mervin E. DRAKE, Plaintiff-Appellant, v. INDIANA DEPARTMENT OF NATURAL RESOURCES, et al, W.L Dillier, Francis M. Pierce, Defendant-Appellees.

No. 1-183A2.

Court of Appeals of Indiana First District.

Sept. 1, 1983.

Ronald L. Drake, Washington, D.C., Ronald S. Lieber, Indianapolis, for appellant.

Robert G. Lowry, Mark Leo Reed, Lowry & Reed, Sullivan, for W.L. Dillier and Francis M. Pierce.

Linley E. Pearson, Atty. Gen., Daniel P. Miller, Deputy Atty. Gen ., Indianapolis, for Indiana Dept. of Natural Resources Com'n, et al .

NEAL, Judge.

STATEMENT OF THE CASE

Petitioner-appellant landowner, Mervin D. Drake (Drake), appeals from the dismissal of his action for judicial review in favor of respondent-appellee, the Indiana Natural Resources Commission (Agency), and intervening respondent-appellee drillers, W.L. Dillier and Francis M. Pierce (Drillers). The Hendricks Circuit Court granted Drillers' motion to dismiss.

We affirm.

STATEMENT OF THE FACTS

Drillers are the owners and operators of an oil and gas lease on the subject 20 acre tract of land located in Sullivan County, Indiana. Drake, along with his wife, is the owner of the real estate which encompasses the leasehold. One oil well was drilled on the twenty acre unit and has remained in production since 1951. On September 8, 1980, Drillers filed with Agency's Division of Oil & Gas an application for a permit to drill a second oil well, Douglas-Drake # 3, on the tract, thus creating two ten acre units. On September 15, Drillers filed a "Petition for Exception of Paragraph 31-B of the Rules and Regulations affecting Oil and Gas Operations in the State of Indiana." 310 IAC 7-1-31(B) provides for twenty acre drilling units in limestone reservoirs, allowing one oil well per drilling unit. On October 3, the Sullivan Daily Times published notice that the Oil and Gas Division of the Department of Natural Resources had received from Drillers a request for an exception and that a public hearing on same would be held on October 15. Following this hearing, Agency issued a permit authorizing Drillers' action on Douglas-Drake # 3, on October 24. Drilling commenced on November 30, 1980.

On February 22, 1982, Drake filed a petition for judicial review with the Marion Circuit Court, naming Agency as the defendant. On June 3, Drake moved to add necessary party defendants and to amend his petition for review. The trial court granted the motion and Drake filed an amended petition for judicial review, adding Drillers as party defendants, on July 2. On August 9, Drillers filed a motion to dismiss pursuant to Ind. Rules of Procedure, T.R. 12(B)(1), 12(B)(3), and 12(B)(6). Drake filed a response to Drillers' motion on August 23, and Drillers replied on August 30. On October 18, 1982, the Hendricks Circuit Court, having received venue on a motion to change from Marion Circuit Court, granted Drillers' motion to dismiss. Drake appeals from this dismissal.

ISSUES

Restated, the issues presented by Drake for review are:

I. Whether a cause of action arising out of an order by an administrative agency, based on a denial of due process, may be pursued in equity, or at common law, without regard to the requirements of the AAA pertaining to judicial review;

II. Whether a cause of action, based on an agency's lack of statutory authority to take the action complained of, may be pursued without regard to the requirements of the AAA;

III. Whether a cause of action, based on an applicant's lack of standing to request the administrative action complained of, may be pursued without regard to the requirements of the AAA IV. Whether a cause of action, based on trespass and unlawful removal of oil, in compliance with an order by an administrative agency, may be pursued with regard to the requirements of the AAA;

V. Whether the trial court erred in dismissing Drake's action for judicial review.

Issues I, II and III will be discussed together.

DISCUSSION AND DECISION

Issues I, II, and III.

Drake argues that each of these issues, denial of due process, the Agency's lack of statutory authority to act, and Drillers' lack of standing to request the administrative action complained of, presents a cause of action which may be determined without regard to the AAA. However, until a party has exhausted the available administrative channels, a court has no jurisdiction to bestow equitable or common law relief. Public Service Commission of Indiana v. City of Indianapolis, (1956) 235 Ind. 70, 131 N.E.2d 308; South Bend Federation of Teachers v. National Education Association, (1979) 180 Ind.App. 299, 389 N.E.2d 23. This rule of "exhaustion of administrative remedies" will be departed from only where the statutory provisions are inadequate to protect and preserve the substantive rights of the parties, as where a statute is charged to be void on its face or where irreparable injury would result. Bowen v. Sonnenburg, (1980) Ind.App., 411 N.E.2d 390.

The standard of review which a court must follow in reviewing an order by an administrative agency is stated in Ind.Code 4-22-1-18 as follows:

"On such judicial review such court shall not try or determine said cause de novo but the facts shall be considered and determined exclusively upon the record filed with said court pursuant to this act.

On such judicial review if the agency has complied with the procedural requirements of this act, and its finding, decision or determination is supported by substantial, reliable and probative evidence, such agency's finding, decision or determination shall not be set aside or disturbed.

If such court finds such finding, decision or determination of such agency is:

(1) Arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law; or

(2) Contrary to constitutional right, power, privilege or immunity; or

(3) In excess of statutory jurisdiction, authority or limitations, or short of statutory right; or

(4) Without observance of procedure required by law; or

(5) Unsupported by substantial evidence, the court may order the decision or determination of the agency set aside. The court may remand the case to the agency for further proceedings and may compel agency action unlawfully withheld or unreasonably delayed.

Said court in affirming or setting aside the decision or determination of the agency shall enter its written findings of facts, which may be informal but which shall encompass the relevant facts shown by the record, and enter of record its written decision and order or judgment." (Footnotes omitted)

The AAA restricts access to the courts even though the agency takes action affecting "rights, duties, obligations, privileges or other legal relations"; including constitutional rights and duties . Ind.Code 4-22-1-3; Thompson v. Medical Licensing Board, (1979) 180 Ind.App. 333, 389 N.E.2d 43.

In the present case, the means of judicial review provided by the AAA are adequate to determine issues I, II, and III presented by Drake on appeal. Specifically, a determination by an administrative agency that it has authority to act may be reviewed by the trial court in accordance with the AAA. State ex rel. Paynter v. Marion County Superior Court, (1976) 264 Ind. 345, 344 N.E.2d 846. Review of an administrative determination to grant a permit is governed by the AAA. State ex rel. Calumet National Bank of Hammond v. McCord, (1963) 243 Ind. 626, 189 N.E.2d 583. Likewise, review of an alleged denial of due process in making an administrative determination is governed by the AAA. See Department of Financial Institutions v. Colonial Bank & Trust Company, (1978) 176 Ind.App. 368, 375 N.E.2d 285. Thus, Drake must pursue any administrative remedies available through judicial review under Ind.Code 4-22-1-1 et seq., in lieu of bringing an action for common law or equitable relief.

Issue IV.

Drake seeks to recover at common law or in equity for the alleged trespass and wrongful removal of oil by Drillers. However, this court notes that such complaint was not raised in Drake's motion to correct errors and is therefore waived on appeal. Enderle v. Sharman, (1981) Ind.App., 422 N.E.2d 686; State v . Holder, (1973) 260 Ind. 336, 295 N.E.2d 799.

Issue V.

Drake alleges that Agency failed to provide him with notice of its proceedings regarding Drillers' application for a permit and exception to drill Douglas-Drake # 3, as required by Ind.Code 4-22-1-25. Drake further alleges error through Agency's failure to notify him of its final determination under Ind.Code 4-22-1-14 and 4-22-1-6. Drake argues that the Agency's failure to provide notice constitutes a denial of due process and exempts him from the procedural requirements of Ind.Code 4-22-1-4 pertaining to judicial review. We do not agree.

We admit an administrative agency may not disregard its own rules in derogation of statutory or constitutional rights. Indiana Alcoholic Beverage Commission v. McShane, (1976) 170 Ind.App. 586, 354 N.E.2d 259. However, we need not reach the question of whether the Agency violated its procedural rules in the present case. Such issue could properly have been decided by the trial court upon judicial review, had Drake complied with the jurisdictional requirements found in Ind.Code 4-22-1-14, which states:

"Any party or person aggrieved by an order or determination made by any such agency shall be entitled to a judicial review thereof in accordance with the provisions of this act. Such review may be had by filing with the circuit or superior court of the county in which such person resides, or in any county in which such order or determination is to be carried out or enforced, a verified petition setting out such order, decision or determination so made by said agency, and alleging specifically wherein said order, decision or determination is:

(1) Arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law; or

(2) Contrary to constitutional right, power, privilege or...