Sierra Life Ins. Co. v. Granata

• Decision Date: 22 November 1978
• Docket Number: No. 13007,13007
• Citation: 99 Idaho 624,586 P.2d 1068
• Parties: SIERRA LIFE INSURANCE COMPANY, an Idaho Corporation, Petitioner, v. The Honorable George GRANATA, Jr., District Judge, District Court of the Fifth Judicial District, State of Idaho, In and For the County of Twin Falls, Respondent.
• Court: Idaho Supreme Court

Page 1068

586 P.2d 1068

99 Idaho 624

SIERRA LIFE INSURANCE COMPANY, an Idaho Corporation, Petitioner, v. The Honorable George GRANATA, Jr., District Judge, District Court of the Fifth Judicial District, State of Idaho, In and For the County of Twin Falls, Respondent.

No. 13007.

Supreme Court of Idaho.

Nov. 22, 1978.

Joseph M. Imhoff, Jr., of Imhoff, Lynch & Davis, Wilbur T. Nelson, of Nelson & Westberg, Boise, for petitioner.

R. Michael Southcombe, Sp. Asst. Atty. Gen., Dept. of Ins., and Max Eiden, Jr., Boise, for respondent.

DURTSCHI, Justice Pro Tem.

In this original proceeding this Court issued an alternative writ of mandate directing the respondent district judge to assume jurisdiction over the subject matter in the case of Sierra Life Insurance Company v. Monroe C. Gollaher, as the Director of Insurance of the State of Idaho, or in the alternative to show cause why he should not do so.

This action involves only a question of law and has been submitted on the basis of the pleadings, briefs, and oral argument.

The pleadings indicate that in February, 1978, Sierra was informed that it would be subjected to a statutory examination by the Idaho Director of Insurance commencing on March 6, 1978. Because of earlier controversies between the Idaho insurance department and Sierra extending over several years, Sierra obtained a conference between the Director and his staff, and the president of Sierra and lawyers representing Sierra. As a result of that conference and subsequent information, Sierra alleges that it had determined that in the course of the proposed examination the Director and his examiners, in determining the admissibility and valuation of certain assets of Sierra, would disregard and fail to properly apply controlling statutes of the state of Idaho would also refuse to abide by an earlier administrative decision and order which is legally binding under the principles of res judicata and collateral estoppel; and would refuse to abide by a final order of the District Court of the First Judicial District of the State of New Mexico which is legally binding under the full faith and credit clause of the United States Constitution. Sierra alleges that these claimed actions will result in irreparable damage to Sierra.

Sierra then filed a verified motion with the Director on March 2, 1978, asking the Director to either (1) enter an agreed order regarding the proper conduct of the proposed examination and directing the examiners to comply with the statutes as interpreted by Sierra and give full effect to the prior administrative order and decision and the final order of the New Mexico Court, or (2) stay the proposed examination and afford Sierra a hearing on its alleged grievances.

On March 3, 1978, the Director informed Sierra that he would neither enter the proposed order nor stay the examination. On March 6, 1978, the Director attempted to commence the proposed examination at Sierra's office in Twin Falls County. Sierra then commenced the district court action by filing its original complaint on March 6, 1978. In its complaint Sierra detailed the contentions heretofore summarized and prayed for a declaratory judgment "declaring the rights and legal position of the parties and the law governing the issues." Sierra also sought a temporary restraining order and a preliminary injunction restraining the Director from conducting the examination pending the trial and determination of the declaratory judgment action.

On March 6, 1978, the district court entered a temporary restraining order enjoining the Director and his examiners from commencing any examination of the affairs and conditions of Sierra until further order of the court. On March 16, 1978, the Director filed a motion to dismiss, asserting the following grounds:

(1) The complaint fails to state a claim for relief against this defendant;

(2) Plaintiff's Complaint fails to state a claim for relief cognizable under the Idaho Rules of Civil Procedure for injunction;

(3) Plaintiff herein is not entitled to extraordinary relief through injunction as there exists a clear and adequate remedy at law;

(4) This court lacks jurisdiction over the subject matter and the defendant.

The district judge heard oral argument on the motion and issued his opinion on May 12, 1978, in which he concluded that the district court had jurisdiction to issue the temporary restraining order but did not have jurisdiction over the subject matter as to the declaratory judgment action. The district judge ultimately entered an order of dismissal reciting as grounds that "the District Court of Twin Falls County does not have jurisdiction over the subject matter to hear or consider the declaratory judgment action of the Plaintiff on its merits . . . ."

This court issued its Alternative Writ of Mandate for the single purpose of considering whether or not the district court had jurisdiction over the subject matter.

As a preliminary matter we note that the extraordinary remedies of mandamus and prohibition are properly used to test questions of jurisdiction. Coeur d'Alene Turf Club, Inc., v. Cogswell, 93 Idaho 324, 461 P.2d 107 (1969); State v. Winstead, 66 Idaho 504, 162 P.2d 894 (1945); Hill v. Morgan, 9 Idaho 718, 76 P. 323 (1904); Peisker v. Chavez, 46 N.M. 159, 123 P.2d 726 (1942).

Furthermore, because of the serious ramifications and consequences which could follow from a court acting without jurisdiction over the subject matter, we recognize that it is important to keep that concept clearly defined. For example, the defense of lack of jurisdiction over the subject matter is never waived (I.R.C.P. 12(h)); purported judgments entered by a court without jurisdiction over the subject matter are void and as such are subject to collateral attack, and are not entitled to recognition in other states under the full faith and credit clause of the United States Constitution (Restatement of Judgments, § 7 (1942)). In addition, judges who act without jurisdiction over the subject matter may be liable for damages in civil actions. Stump v. Sparkman, 435 U.S. 349, 98 S.Ct. 1099, 55 L.Ed.2d 331 (1978); Bradley v. Fisher, 13 Wall. 335, 20 L.Ed. 646 (1871). For these reasons, it may work considerable mischief to confuse lack of jurisdiction over the subject matter with questions of venue, other aspects of jurisdiction, or defenses which may bar relief or render it improper or inappropriate for a court to proceed with a case even though it has jurisdiction over the subject matter.

Relying on cases from other jurisdictions for support, respondent urges that Sierra failed to exhaust its administrative remedy and that this deprived the district court of jurisdiction over the subject matter.

It is difficult to find truly analogous cases dealing with the defense of failure to exhaust administrative remedies because of (1) the extremely varied nature of the administrative proceedings and remedies involved; (2) the variations in the nature of the judicial relief or remedy sought which brings the judicial and the administrative proceedings into conflict; and (3) the variations in the manner in which the exhaustion doctrine defense is raised procedurally.

Professor Davis suggests the difficulty of looking to the cases for guidance in applying the exhaustion doctrine in these remarks:

The statement the courts so often repeat in their opinions that judicial relief must be denied until administrative remedies have been exhausted is seriously at variance with the holdings . . . .

The law embodied in the holdings clearly is that sometimes exhaustion is required and sometimes not. No court requires exhaustion when exhaustion will involve irreparable injury and when the agency is palpably without jurisdiction; probably every court requires exhaustion when the question presented is one within the agency's specialization and when the administrative remedy is as likely as the judicial remedy to provide the wanted relief. In between these extremes is a vast array of problems on which judicial action is variable and difficult or impossible to predict.

3 K. Davis, Administrative Law Treatise, 56-57 § 20.01 (1958). See McKart v. United States, 395 U.S. 185, 89 S.Ct. 1657, 23 L.Ed.2d 194 (1969). Professor Davis suggests a further area of confusion in the distinction between the doctrines of exhaustion of administrative remedies and primary jurisdiction.

The doctrine of primary jurisdiction, or exclusive primary jurisdiction, or primary decision, or preliminary resort, or prior resort, is not a doctrine that governs judicial review of administrative action. In this important respect, it is altogether different from the doctrines of exhaustion and of ripeness, which govern the timing of judicial review of administrative action. The doctrine of primary jurisdiction determines whether the court or the agency should make the initial decision.

The precise function of the doctrine of primary jurisdiction is to guide a court in determining whether the court should refrain from exercising its jurisdiction until after an administrative agency has determined some question or some aspect of some question arising in the proceeding before the court.

The doctrine of primary jurisdiction does not necessarily allocate power between courts and agencies, for it governs only the question whether court or agency will Initially decide a particular issue, not the question whether court or agency will Finally decide the issue . . . . Especially felicitous is the language of a district court that the question is merely one of 'priority of jurisdiction.'

3 K. Davis, Supra at 1-3 § 19.01. See Grever v. Idaho Telephone Co., 94 Idaho 900, 499 P.2d 1256 (1972).

Because of the variables involved many cases where the defense of the failure to exhaust administrative remedies is involved do not even require any consideration of jurisdictional concepts.

One situation however, in which a determination as to the relationship of...