LONE OAK RACING v. OREGON RACING COM'N

• Decision Date: 04 August 1999
• Parties: LONE OAK RACING, INC., an Oregon corporation, and Oregon Horsemen's Benevolent & Protective Association, an Oregon nonprofit corporation, Respondents, v. STATE of Oregon, acting By and Through the Oregon Racing Commission, Appellant.
• Court: Oregon Court of Appeals

986 P.2d 596

162 Or. App. 111

LONE OAK RACING, INC., an Oregon corporation, and Oregon Horsemen's Benevolent & Protective Association, an Oregon nonprofit corporation, Respondents, v. STATE of Oregon, acting By and Through the Oregon Racing Commission, Appellant.

(97C-10028; CA A97122)

Court of Appeals of Oregon.

Argued and Submitted on January 29, 1999.

Decided August 4, 1999.

John T. Bagg, Assistant Attorney General, argued the cause for appellant. With him on the briefs were Hardy Myers, Attorney General, and Michael D. Reynolds, Solicitor General.

Timothy J. Sercombe, Portland, argued the cause for respondents. With him on the brief was Preston Gates & Ellis LLP.

Before EDMONDS, Presiding Judge, and DEITS, Chief Judge,¹ and ARMSTRONG, Judge.

EDMONDS, P.J.

Defendant Oregon Racing Commission appeals from a judgment that awarded plaintiffs summary judgment on their first claim for declaratory relief under ORS 28.010 and declared plaintiffs' rights under ORS 462.125(2).² ORCP 47. We remand for vacation of the judgment because we conclude that defendant had exclusive jurisdiction over the controversy that led to the declaratory judgment.

In January 1997, plaintiffs Lone Oak Racing, Inc. (Lone Oak) and the Oregon Horsemen's Benevolent & Protective Association (HBPA) filed a complaint in circuit court for a declaratory judgment. As we understand it, the filing of the complaint was prompted by a meeting with defendant that concerned plaintiffs' request that defendant repeal a rule regarding simulcasting privileges. Simulcasting privileges are important to the economic viability of a race meet.³ Plaintiffs contended that the rule would "preclude simulcasting by" Lone Oak and could make a race meet financially unsuccessful. As a result of the meeting, plaintiffs apparently came to believe that the commission intended to deny any application by Lone Oak for a license for the 1997 racing season based on an interpretation of ORS 462.125. In their complaint, plaintiffs alleged that Lone Oak "plan[ned] to apply for a license to conduct [its Salem] meet during the 1997 season." They sought to obtain a favorable declaration about the meaning of the statute from the circuit court, rather than proceeding through the administrative process with defendant. In its answer to the complaint, defendant admitted the following facts: Lone Oak is an Oregon corporation that has conducted a "horse race meet at the Oregon State Fairgrounds each year for the past several years." Defendant licensed Lone Oak to conduct those meets under the statutory authority for commercial horse race meets. Defendant allocated fewer than 80 days for the Lone Oak meet each year from 1992 to 1996. HBPA is an Oregon nonprofit corporation that is "devoted to furthering the welfare of persons in the horse racing industry, including horse owners, trainers and grooms." Defendant "has recognized HBPA as representative of the horse racing industry in the State of Oregon. HBPA is an interested party in the criteria used by [defendant] to approve horse race meet licensees." Additionally, defendant's answer admitted the following excerpt from plaintiffs' complaint:

"By letter of December 12, 1996 to [Lone Oak], Oregon Racing Commission Chair Stephen S. Walters stated that under ORS 462.125(2) a commercial meet licensee must `run a minimum of 80 days of nine live races each.' At the December 19, 1996 meeting of the Oregon Racing Commission, Chair Walters stated that this interpretation of ORS 462.125(2) was one shared by him, the executive director of the Commission and its legal counsel. Chair Walters also stated that the effect of this interpretation would be that an application by [Lone Oak] for a commercial meet license for the Salem facility for the period of time obtained in the past would be denied."

Plaintiffs sought to obtain a declaration from the circuit court that "ORS 462.125(2) does not require each commercial horse race meet to be conducted for a period of 80 or more race days[.]" Defendant's answer contained a counterclaim requesting that, in the event that the trial court did not dismiss plaintiffs' complaint, the trial court declare

"that an application for a commercial race meet license may be granted to race meets for horses in a manner not inconsistent with allocations made by the Commission for the calendar years 1992 and 1993 and only if not fewer than nine live races occur on 40 percent of all days on which the Commission authorizes pari-mutuel wagering for horse races, or on 80 days, whichever is greater, as required by ORS 462.125(2); and that such requirements must be met in each `metropolitan area' within the meaning of ORS 462.125(3)."

Defendant moved for summary judgment. Plaintiffs did not file a reply to defendant's counterclaim but received leave from the trial court to file an amended complaint. The first claim of plaintiffs' amended complaint requested declaratory and injunctive relief concerning ORS 462.125, and the amended complaint contained two additional claims. Plaintiffs also filed a motion for summary judgment. Defendant did not file an amended answer in response to plaintiffs' amended complaint.

The trial court entertained defendant's and plaintiffs' motions for summary judgment. In a letter to the parties' attorneys, the trial court ruled that there were "no genuine issues of material fact in dispute" and that plaintiffs had stated a justiciable controversy and were justified in not filing a license application with defendant before they filed their claim for relief in circuit court. Eventually, the trial court entered a modified judgment that provided, in part:

"1. Judgment is entered in favor of Plaintiffs on their first claim for relief. The court declares, as to commercial horse race meet licensees only, ORS 462.125(2) requires that all horse race meet licensees must not run fewer than nine live races on 40% of all days on which the Oregon Racing Commission authorizes pari-mutuel wagering for horse races, or on 80 days, whichever is greater. An application for a commercial horse race meet with fewer than 80 days of live racing may be allowed by the Oregon Racing Commission if the total number of live race days in the state in each fiscal year is at least 40% of the total number of days allocated to pari-mutual wagering (live plus simulcast days), if the applicant otherwise meets the requirements of law;

"2. Declaratory judgment is denied as to Defendant's counterclaim as inconsistent with the court's ruling on Plaintiffs' first claim for relief, and is therefore dismissed;

"3. Plaintiffs' second claim for relief is dismissed for lack of jurisdiction;

"4. Plaintiffs' third claim for relief is dismissed for lack of jurisdiction[.]"

On appeal, defendant assigns error to the trial court's failure to dismiss plaintiffs' action on the ground that plaintiffs' exclusive remedy was under the Oregon Administrative Procedures Act (APA), ORS 183.310 et seq. Defendant argues that

"where the legislature sets out an administrative licensing process and a remedy for denial of a license, the administrative process should be followed and should not be subject to collateral attack through declaratory judgment or some other proceeding in circuit court. If a party is permitted to pursue both the administrative remedy and seek a declaration on a critical matter in another forum, there is a very real possibility of conflicting findings and confusion over which order or resolution should be given force and effect."⁴

Plaintiffs counter:

"There was no agency order to review, so as to bring into play the judicial review parts of the Administrative Procedures Act. Declaratory relief should not be refused because a statutory construction issue could be adjudicated in potential administrative processes, when relief under the administrative processes would not be timely, the issue involves no agency expertise, and the agency position is certain and would not resolve the controversy. At a minimum, the declaratory relief here was proper under the Commission's counterclaim seeking a construction of ORS 462.125 from the court."

Initially, we discuss the claims for declaratory judgment as they pertain to plaintiff HBPA. In their brief, plaintiffs argue that a justiciable controversy exists between them and defendant for purposes of ORS chapter 28. Specifically, they contend:

"HBPA had no administrative remedy to exhaust. Despite the Commission's references to both plaintiffs as `Lone Oak,' the interests of HBPA are separate from those of Lone Oak. The parties agree that HBPA is the `representative of the horse racing industry in the State of Oregon,' that the interpretation of ORS 462.125 advanced by the Commission's representatives `will result in less purse money being awarded to Oregon horse breeders, trainers and owners' and that `the viability of the horse racing industry in Oregon will be diminished.' Given this economic harm to its members, and the imminent loss of the Salem and Grants Pass meets by the threatened actions of the Commission, HBPA was entitled to seek immediate declaratory relief from a court."

They also assert that "HBPA had a * * * genuine and existing interest in that its members would lose substantial revenue given the new interpretation of ORS 462.125(2)." They also say that defendant

"admitted that its interpretation of ORS 462.125 would diminish the viability of the horse racing industry in the state. The industry had a compelling economic interest of its own to advance and protect. There was no need for * * * Lone [Oak] to exhaust its licensing opportunities in order for HBPA to assert its declaratory judgment rights."

Finally, the affidavit of HBPA's Executive Secretary in support of plaintiffs' motion for summary judgment states, in part, that "[t]he purpose of this affidavit is to establish that the members of the HBPA will adversely be affected or aggrieved by the challenged actions and ...