Mcmillan v. Dept. of Agriculture

Decision Date14 March 2005
Docket NumberNo. 3963.,3963.
Citation364 S.C. 60,611 S.E.2d 323
CourtSouth Carolina Supreme Court
PartiesJohnny McMILLAN, Jimmie Griner and Hughsie Trowell, Respondents, v. SOUTH CAROLINA DEPARTMENT OF AGRICULTURE, Appellant.

Andrew F. Lindemann and William H. Davidson, II, both of Columbia, for Appellant.

John E. Parker and Ronnie L. Crosby, both of Hampton, for Respondents.

BEATTY, J.:

The South Carolina Department of Agriculture (SCDA) appeals the decision of the special referee finding Johnny McMillan and Jimmie Griner (collectively Respondents) were entitled to recover damages, pre-judgment interest, and attorney's fees from the Warehouse Receipts Guaranty Fund.1 We affirm in part, and reverse in part.

FACTS

McMillan and Griner are farmers in Hampton County. Each contracted with Hampton County Warehouse (the warehouse) to store cotton. The warehouse was a licensed facility by the SCDA pursuant to sections 39-22-10 through — 200 of the South Carolina Code (Supp.2004). McMillan stored 1,180 bales of cotton and Griner stored 358 bales of cotton.

In addition to contracting with the warehouse for storage, Respondents both contracted with Sea Island Cotton Trading Company (the broker) to sell the cotton.2 Approximately three months after entering the contract with the broker, Respondents each received an advance of 80 percent of the market price for cotton at that time with the understanding that when the market price increased the cotton would be sold as authorized by Respondents. Although warehouse receipts for the cotton indicated ownership was transferred to the broker, it is unclear from the record when this took place.

The warehouse and the broker each declared bankruptcy in 1998. Respondents were unable to sell their cotton and failed to collect the remaining 20 percent owed for the cotton. Pursuant to the Warehouse Receipts Guaranty Fund and section 39-22-15 of the South Carolina Code (Supp.2004), Respondents filed claims with SCDA to recover the 20 percent loss they claim resulted from the warehouse's bankruptcy. The former director of SCDA denied the claims. In the denials, he noted the receipts indicating a sale to the broker and suggested Respondents seek other legal action. The denial makes no mention of any further administrative remedy, including no mention of an appeal of his decision.

Respondents then filed claims in bankruptcy court, seeking to collect the losses. However, the bankruptcy court, upon a finding that ownership was never transferred to the broker and remained with Respondents, rejected the claims.

Respondents then filed the underlying action, seeking to collect a "loss" from the Warehouse Receipts Guaranty Fund. SCDA filed a motion for summary judgment, arguing Respondents failed to exhaust their administrative remedies prior to bringing suit in circuit court. Circuit Court Judge Diane Goodstein denied the motion.

The Honorable Luke Brown, acting as special referee, heard the claim. At the hearing, McMillan and Griner each testified regarding their transactions with the warehouse and the broker. Both maintained they never sold the cotton to the broker, but merely received an advance. Each asserted ownership should not have been transferred to the broker.

Additionally, Louie Conder, former director of the warehouse system, testified extensively regarding the receipts issued to the broker and whether the receipts were proper under the statute or the regulations. He also testified Respondents had not been paid the full amount for their cotton.

The referee found Respondents had not transferred ownership of the cotton to the broker and the receipts were not valid. The referee concluded Respondents demonstrated a "loss" under section 39-22-15 and were entitled to recover the 20 percent still owed for the cotton. He also found Respondents were entitled to recover pre-judgment interest and attorney's fees.

SCDA filed a motion to alter or amend pursuant to Rule 52(b), SCRCP. The referee denied SCDA's requested relief. He found the action was not an appeal from an administrative decision, and Respondents were not required to exhaust administrative remedies. Finally, the referee set the award of attorney's fees to Respondents. This appeal followed.

DISCUSSION
I. Exhaustion of Administrative Remedies

SCDA contends the referee erred in finding Respondents were not required to exhaust their administrative remedies prior to filing suit in circuit court for damages. Additionally, SCDA maintains because section 22 of Article I of the South Carolina Constitution provides due process and requires an opportunity for an individual to be heard, Respondents still had administrative remedies that could be pursued. We disagree and find nothing requiring Respondents to exhaust administrative rights prior to bringing this action in circuit court.

First, this issue is not preserved for review on appeal. A party must raise the issue of the exhaustion of administrative remedies and receive a ruling by the trial court in order to preserve it for review on appeal. Food Mart v. South Carolina Dep't of Health & Envtl. Control, 322 S.C. 232, 233, 471 S.E.2d 688, 688 (1996). "A denial of a motion for summary judgment does not establish the law of the case, and the issues raised in the motion may be raised later in the proceedings." Brown v. Pearson, 326 S.C. 409, 416, 483 S.E.2d 477, 481 (Ct.App. 1997).

While SCDA raised the issue in a summary judgment motion prior to trial, the issue was never raised to the referee until SCDA made its motion to alter or amend under Rule 52(b), SCRCP. Accordingly, the issue is not preserved because it cannot be raised for the first time in a motion to alter or amend. See Patterson v. Reid, 318 S.C. 183, 185, 456 S.E.2d 436, 437 (Ct.App.1995) ("A party cannot for the first time raise an issue by way of a Rule 59(e) motion which could have been raised at trial.").

The Administrative Procedures Act (APA) provides for judicial review of a contested case after agency action upon the partys exhaustion of administrative remedies. S.C.Code Ann. 1-23-380 (2005). Pursuant to section 1-23-310(3) of the South Carolina Code: "`Contested case' means a proceeding including, but not restricted to, ratemaking, price fixing, and licensing, in which the legal rights, duties, or privileges of a party are required by law to be determined by an agency after an opportunity for hearing." S.C.Code Ann. § 1-23-310(3) (2005).

This court explicated:

"The doctrine of exhaustion of administrative remedies only comes into play when a litigant attempts to invoke the original jurisdiction of a circuit court to adjudicate a claim based on a statutory violation for which the legislature has provided an administrative remedy." Med. Mut. Liab. Ins. Soc. of Md. v. B. Dixon Evander & Assocs., 92 Md.App. 551, 609 A.2d 353 (1992). A litigant need not exhaust administrative remedies where "there are no administrative remedies for the wrongs it assertedly suffered." Id. at 360.

Thomas Sand Co. v. Colonial Pipeline Co., 349 S.C. 402, 413, 563 S.E.2d 109, 115 (Ct. App.2002).

In the instant case, a statutory procedure does not exist to provide an administrative remedy. There is no "contested case" for which the provisions of the APA would apply. As additional proof of the lack of remedies, the denial by the director of SCDA does not point to any further administrative avenues available to Respondents. The director of SCDA suggests bankruptcy or other legal proceedings may be available to Respondents. The denial does not mention the availability of an appeal or subsequent hearing of any type. Accordingly, as there are no administrative remedies set forth and available to Respondents, they should not be barred from bringing this action in circuit court.

Section 22 of Article I of the South Carolina Constitution states:

No person shall be finally bound by a judicial or quasi-judicial decision of an administrative agency affecting private rights except on due notice and an opportunity to be heard; nor shall he be subject to the same person for both prosecution and adjudication; nor shall he be deprived of liberty or property unless by a mode of procedure prescribed by the General Assembly, and he shall have in all such instances the right to judicial review.

S.C. Const. art. I, § 22.

In discussing Section 22 of Article I, the South Carolina Supreme Court explained:

In recognition of the increasing number of governmental powers delegated to administrative agencies, South Carolina Constitution article I, § 22 was added to the 1895 Constitution in 1970 "as a safeguard for the protection of liberty and property of citizens." Final Report of the Commitee to Make a Study of the South Carolina Constitution of 1895, p. 21 (1969).

...

We have interpreted this provision as specifically guaranteeing persons the right to notice and an opportunity to be heard by an administrative agency, even when a contested case under the APA is not involved. Stono River EPA v. Department of Health and Environmental Control, 305 S.C. 90, 406 S.E.2d 340 (1991).

Ross v. Med. Univ. of South Carolina, 328 S.C. 51, 68, 492 S.E.2d 62, 71 (1997).

Respondents filed a claim with SCDA, which was ultimately denied. Respondents have not claimed a violation of their due process rights under section 22 of Article I. Nor have they asserted they were deprived of notice or an opportunity to be heard. They have brought suit seeking to collect money damages owed pursuant to a statutorily created reimbursement fund. It does not appear section 22 of Article I was intended to be used by the agency to force a claimant to proceed under the Administrative Procedures Act when the agency does not have a procedure in place. Accordingly, we find the referee properly determined Respondents were not required to exhaust any additional administrative remedies prior to brining...

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