Brian D. Morrison
Schumacher, Francis & Nelson
Charleston, West Virginia
Attorney for the Petitioners
Mark A. Ferguson
Sprouse & Ferguson, PLLC
Charleston, West Virginia
and
Cecil C. Varney
Varney Law Office
Williamson, West Virginia
Attorneys for the Respondent,
S.E.T. Personnel Services Unlimited, Inc.
The Opinion of the Court was delivered PER CURIAM.
1. “Prohibition lies only to restrain inferior courts from proceedings in causes
over which they have no jurisdiction, or, in which, having jurisdiction, they are exceeding
their legitimate powers and may not be used as a substitute for writ of error, appeal or
certiorari.” Syl. Pt. 1, Crawford v. Taylor, 138 W.Va. 207, 75 S.E.2d 370 (1953).
2. “'“'The general rule is that where an administrative remedy is provided by
statute or by rules and regulations having the force and effect of law, relief must be sought
from the administrative body, and such remedy must be exhausted before the courts will act.'
Syl. pt. 1, Daurelle v. Traders Federal Savings & Loan Association, 143 W.Va. 674, 104
S.E.2d 320 (1958).” Syl. Pt. 1, Cowie v. Roberts, 173 W.Va. 64, 312 S.E.2d 35 (1984).'
Syllabus point 10, State ex rel. Miller v. Reed, 203 W.Va. 673, 510 S.E.2d 507 (1998).”
Syl. Pt. 7, Expedited Transportation Systems, Inc. v. Vieweg, 207 W.Va. 90, 529 S.E.2d 110
(2000).
3. “Proceedings in equity for injunctions cannot be maintained where there
is an administrative remedy provided by statute which is adequate and will furnish proper
remedy.” Syl. Pt. 4, Bank of Wheeling v. Morris Plan Bank & Trust Company, 155 W.Va.
245, 183 S.E.2d 692 (1971).
Per Curiam:
In this original proceeding in prohibition, the petitioners/defendants below,
Robert Smith, Commissioner of the West Virginia Bureau of Employment Programs, and
the Workers' Compensation Division of the Bureau
(See footnote 1)
(hereinafter generally referred to as
“Relators”), were awarded a rule against the Honorable Michael Thornsbury, Judge of the
Circuit Court of Mingo County, and plaintiff below, S.E.T. Personnel Services Unlimited,
Inc. (hereinafter SET), to show cause why they should not be prohibited from enforcing a
temporary restraining order issued by the lower court through its order of March 26, 2003.
The injunctive relief granted by the lower court included barring Relators from withdrawing
certification of workers' compensation coverage of SET for delinquent payment of workers'
compensation premiums and essentially lowering SET's workers' compensation premium
rate for its current employees during the resolution of an underlying monetary damage claim.
We have concluded, after full consideration of the filed documents and relevant law, that
Relators are entitled to the relief sought.
SET claims that it instituted the underlying suit for money damages and
injunctive relief in the Mingo County Circuit Court on January 24, 2003, because it had
received no response or relief from the Division. The complaint alleges that by not adhering
to the representations made at the June 18, 2002, meeting, and by increasing the workers'
compensation premium rates of SET for its underground mining venture, Relators
committed acts of negligence, fraudulent misrepresentation, unfair dealings and practices,
violations of due process and the tort of outrage and thus bear the responsibility for money
damages SET has suffered from its inability to solicit new business as well as from lost
business and future profits. The complaint also included a request for injunctive relief in
order “to enjoin the Defendants from taking any action adverse to the Plaintiff,
administrative or otherwise, that would affect its ability to conduct business in the State of
West Virginia” until the issues raised in the complaint were resolved. In essence, SET
requested that Relators be enjoined from withholding or revoking its workers' compensation
certification due to the company not paying workers' compensation premiums at the
reclassification rate.
Relators filed a motion to dismiss the complaint on January 31, 2003, based
on venue and notice issues. After a hearing regarding the dismissal motion and SET's
motion for injunctive relief, the circuit court issued an order on February 5, 2003, allowing
the action to continue with the proviso that “[f]rom the date of the entry of this order until
the dissolution of this case, SET shall pay the ordered compensation rate of $28.86 (sic) that
George L. Flick, III, Director of Underwriting, alleges is the correct rate for SET's
underground mining employees.”
SET subsequently filed a motion to clarify the February 5 order. The
requested amendment sought to have the $28.96 per hundred underground mining operation
rate applied prospectively to any new underground mining workers while the original rate
of $6.35 per hundred be maintained for all current employees, including underground
miners. At the same time, Relators asked the lower court to reconsider denial of the motion
to dismiss. A hearing was held on the motions on February 18, 2003, and an Amended
Order was issued on March 26, 2003, which provided in relevant part:
4. “The rule of exhausting administrative remedies before actions in courts
are instituted is applicable, even though the administrative agency cannot award damages[,]
if the matter is within the jurisdiction of the agency.” Syl. Pt. 3, Bank of Wheeling v. Morris
Plan Bank & Trust Company, 155 W.Va. 245, 183 S.E.2d 692 (1971).
We initially relate some preliminary information to further understanding of
the basis of SET's suit filed in the lower court. SET apparently operated for many years as
a diversified employment agency and paid workers' compensation premiums at the rate of
$6.35 per hundred dollars for its employees who worked in various job categories, including
mining.
(See footnote 2)
In the early part of 2002, new owners acquired SET. SET contends that the new
owners met with Commissioner Smith
(See footnote 3)
prior to expanding its employment services to
include underground coal mining and received assurances that it would continue to be
classified as a diversified employment agency as long as it did not employ surface miners.
Relators assert that the Division of Workers' Compensation (hereinafter “Division”) first
received notice in late September or early October 2002 of SET's intention to begin a new
business venture which involved retaining employees for use by area coal mines as
underground coal miners. The Division maintains that SET's reclassification was based
upon this information in order to account for the greater injury risk associated with deep
underground coal mining. The reclassification resulted in SET's workers' compensation
premium rates increasing to $28.96 per hundred dollars. SET timely requested
reconsideration of the increase in premium, and the Division timely issued its final order on
January 30, 2003.
(See footnote 4)
Although SET continued to remit premium payments after receipt of the
reclassification notice, payments were made at the lower rate of $6.35 per hundred.
9. The Court again finds there
is a bona fide dispute as to
whether Commissioner Smith reached a valid, legal
agreement with the Plaintiff that allowed the Plaintiff to
operate at a Diversified Personnel Service 9550 rate []for
all employees except surface mining employees.
Because there is a genuine dispute as to the rate to be
paid by the Plaintiff and because Plaintiff will suffer
irreparable harm and has no adequate remedy at law, the
Court shall issue a Temporary Restraining Order to
prevent the West Virginia Employment Programs from
withdrawing certification of Workers' Compensation
coverage from SET, and SET shall be allowed to
continue to operate and pay the Diversified Personnel
Service 9550 rate that was allegedly guaranteed by
[]Commissioner Smith.
10. Until further Order of
the Court SET shall pay this “disputed” Diversified Personnel Service
9550 rate. The compensation rate for any underground miner hired after entry
of this Order will be $28.86 [sic] per hundred, the rate that George L. Flick,
III, Director of Underwriting, alleges is the correct rate for SET's underground
mining
employees.
On May 6, 2003, Relators invoked the original jurisdiction of this Court by
filing a petition for a writ of prohibition so as to dissolve the temporary restraining order and
bar enforcement of the premium rate as established in the lower court's amended order.
After due consideration, this Court issued a Rule to Show Cause on July 2, 2003.
This writ was filed with the Court pursuant to our original grant of jurisdiction
over proceedings involving “habeas corpus, mandamus, prohibition and certiorari.” W.Va.
Const. art. VIII, § 3; W.Va.Code § 51-1-3 (1923) (Repl.Vol.2000).
This Court has recognized that the proper remedy for an employer who wishes
to challenge a workers' compensation ruling concerning default issues under the Workers'
Compensation Act is through the appellate process set forth in West Virginia Code § 23-2-
17. State ex rel. Frazier v. Hrko, 203 W.Va. 652, 661, 510 S.E.2d 486, 495 (1998).
Additionally, details regarding the procedures for administrative hearings governing
employer issues such as classification, rates, delinquency and default are addressed by
agency rules and regulations. W.Va. 85 C.S.R § 7. A regulatory provision of particular
relevance to the issue at hand states that “[e]ach employer who desires to dispute an article
two decision or action
(See footnote 8)
is required to file a complete and timely request for reconsideration
as a condition precedent to filing a petition for an article two hearing under the provisions
of W.Va. Code § 23-2-17.” W.Va. 85 C.S.R. § 7.3.3 (2002). Thereafter, “[t]he final
decision [of the Commissioner as to reconsideration] may be contested under the process
provided in W.Va. Code § 23-2-17.” W.Va. 85 C.S.R. § 7.3.8. It is abundantly clear from
the representations of the parties and the lower court's order that SET followed these
administrative procedures to contest the reclassification and concomitant rate increase.
However, it is equally clear that the administrative processes were not exhausted when the
suit was filed nor when the restraining order was issued.
As we explained in syllabus point one of Crawford v. Taylor, 138 W.Va. 207,
75 S.E.2d 370 (1953), a writ of “[p]rohibition lies only to restrain inferior courts from
proceedings in causes over which they have no jurisdiction, or, in which, having jurisdiction,
they are exceeding their legitimate powers and may not be used as a substitute for writ of
error, appeal or certiorari.” Consequently, “[a] writ of prohibition will not issue to prevent
a simple abuse of discretion by a trial court.” Syl. Pt. 2, in part, State ex rel. Peacher v.
Sencindiver, 160 W.Va. 314, 233 S.E.2d 425 (1977).
Although Relators offer several reasons
(See footnote 5)
why this Court should issue the
requested writ, we need go no further than the jurisdictional problem raised in order to reach
our decision to grant the relief sought. The jurisdictional claim Relators make is that the
lower court did not have the authority to issue the restraining order because SET had not
exhausted the exclusive administrative remedies provided by West Virginia Code § 23-2-17
(1993) (Repl. Vol. 2002), before proceeding with its monetary damage suit in the circuit
court.
(See footnote 6)
It should be noted as we begin our discussion that the reason underlying SET's
request for injunctive relief through the courts was to stop the Division from withdrawing
its workers' compensation certification. SET was delinquent in payment of its workers'
compensation premiums because it continued to pay the lower diversified employment
agency rate while contesting the reclassification decision. If the delinquency was not
corrected within a prescribed time, SET would be declared in default of its obligations. In
such situations the Division has a statutory obligation to revoke an employer's workers'
compensation certification. See W.Va. Code § 23-2-5 (1999) (Repl. Vol. 2002).
(See footnote 7)
As
we have frequently noted, “'“'[t]he general rule is that where
an administrative remedy is provided by statute or by rules and regulations
having the force and effect of law, relief must be sought from the administrative
body, and such remedy must be exhausted before the courts will act.' Syl.
pt. 1, Daurelle v. Traders Federal Savings & Loan Association, 143
W.Va. 674, 104
S.E.2d 320 (1958).” Syl.
Pt. 1, Cowie v. Roberts, 173 W.Va. 64, 312 S.E.2d 35 (1984).' Syllabus
point 10, State ex rel. Miller v. Reed, 203 W.Va. 673, 510 S.E.2d
507 (1998).' Syl. Pt. 7, Expedited Transportation Systems, Inc. v. Vieweg,
207 W.Va. 90, 529
S.E.2d 110 (2000). While some exceptions to the rule of
exhaustion exist, none appear to be applicable nor has such been asserted in the instant case.
See, e.g., Syl. Pt. 1, State ex rel. Bd. of Educ. of Kanawha County v. Casey, 176 W.Va. 733,
349 S.E.2d 436 (1986) (resort to available procedures would be an exercise in futility);
State
ex rel. Arnold v. Egnor, 166 W.Va. 411, 421, 275 S.E.2d 15, 22 (1981) (lack of agency
jurisdiction or the constitutionality of the underlying agency statute); Syl. Pt. 2, Daurelle v.
Traders Federal Sav. & Loan Assn., 143 W.Va. 674,
104 S.E.2d 320 (1958) (no
administrative remedy provided).
The operation of the doctrine of exhaustion of administrative remedies was
further explained in Bank of Wheeling v. Morris Plan Bank & Trust Company, 155 W.Va.
245, 183 S.E.2d 692 (1971), wherein we stated:
SET argues that exhaustion of administrative remedies was not necessary in
this case because SET was not attempting to appeal the administrative rulings related to its
reclassification rates. We find no merit in this proposition. It is obvious that any decision
resulting from the administrative process will affect the extent, if any, of SET's damages in
the civil claims it filed with the court below. Once again we find a ruling in Bank of
Wheeling quite pertinent: “The rule of exhausting administrative remedies before actions
in courts are instituted is applicable, even though the administrative agency cannot award
damages[,] if the matter is within the jurisdiction of the agency.” 155 W.Va. at 246, 183
S.E.2d at 693 (emphasis added). In proper situations, damages can be sought in the courts
after the administrative proceedings have reached their conclusion.
The doctrine simply provides that when the legislature provides
for an administrative agency to regulate some particular field of
endeavor, the courts are without jurisdiction to grant relief to
any litigant complaining of any act done or omitted to have
been done if such act or omitted act is within the rules and
regulations of the administrative agency involved until such
time as the complaining party has exhausted such remedies
before the administrative body.
Id. at 249, 183 S.E.2d at 694-95 (citations omitted). Even more pertinent to the action taken
by the lower court in the case before us is our holding in syllabus point four of Bank of
Wheeling which states: “Proceedings in equity for injunctions cannot be maintained where
there is an administrative remedy provided by statute which is adequate and will furnish
proper remedy.” 155 W.Va. at 246, 183 S.E.2d at 693.
As previously related, SET challenged the reclassification and attendant
premium rate increase through the administrative process as established in West Virginia
Code § 23-2-17 before it filed suit in the lower court, and the administrative remedy was not
exhausted at the time of filing. As a matter of fact, following the denial of its
reconsideration motion by the Commissioner but before the lower court issued its March 26,
2003 amended order, SET continued to invoke the administrative process by filing its
petition for review with the Office of Judges on March 3, 2003. Since concurrent
jurisdiction regarding challenges to decisions involving these matters is not statutorily
prescribed, when the lower court acted it did so without jurisdiction of the subject matter,
which renders the order void. Syl. Pt. 5, State ex rel. Hammond v. Worrell, 144 W.Va. 83,
106 S.E.2d 521 (1959) (“A decree entered in a pending suit in which the court lacks
jurisdiction of the subject-matter is to that extent void . . . .”). Unlike personal jurisdiction,
subject-matter jurisdiction may not be waived or conferred by consent and must exist as a
matter of law for the court to act. For this reason, lack of jurisdiction of the subject matter
may be raised for the first time in this Court and even upon this Court's own motion. Syl.
Pt. 6, State ex rel. Hammond v. Worrell, 144 W.Va. 83, 106 S.E.2d 521 (1959), citing Syl.
Pt. 3, Charleston Apartments Corp. v. Appalachian Electric Power Co., 118 W.Va. 694, 192
S.E. 294. Furthermore, this Court will reverse a trial court which exceeds its lawful
jurisdiction. Syl. Pt. 3, Hinkle v. Bauer Lumber & Home Bldg. Center, Inc., 158 W.Va. 492,
211 S.E.2d 705 (1975). This Court in Morris v. Calhoun, 119 W.Va. 603, 195 S.E. 341
(1938), recognized the appropriateness of prohibition as a remedy to situations where the
lower court lacked jurisdiction by stating:
[W]hen a court is attempting to proceed in a cause without
jurisdiction, prohibition will issue as a matter of right,
regardless of the existence of other remedies, and regardless of
whether or not the objections to the jurisdiction of the trial court
have been presented to that court prior to the application for
relief here.
Id. at 608, 195 S.E. at 345 (citations omitted).
Inasmuch as the lower court lacked jurisdiction, the March 26, 2003, order is
void, and its provisions, including the temporary restraining order, are unenforceable.
(See footnote 9)
For
these reasons, the writ of prohibition is granted.
Footnote: 2
Footnote: 3
Footnote: 4
Footnote: 5
Footnote: 6
Notwithstanding any provision in this chapter to the
contrary and notwithstanding any provision in section five
[§ 29A-5-5], article five, chapter twenty-nine-a of this code to
the contrary, in any situation where an employer objects to a
decision or action of the commissioner made under the
provisions of this article, then such employer shall be entitled to
file a petition demanding a hearing upon such decision or action
which petition must be filed within thirty days of the employer's
receipt of notice of the disputed commissioner's decision or
action or, in the absence of such receipt, within sixty days of the
date of the commissioner's making such disputed decision or
taking such disputed action, such time limitations being hereby
declared to be a condition of the right to litigate such decision
or action and hence jurisdictional.
The employer's petition shall clearly identify the decision
or action disputed and the bases upon which the employer
disputes the decision or action. Upon receipt of such a petition,
the commissioner shall schedule a hearing which shall be
conducted in accordance with the provisions of article five
[§ 29A-5-1 et seq.], chapter twenty-nine-a of this code. An
appeal from a final decision of the commissioner shall be taken
in accord with the provisions of articles five and six [§§ 29A-5-
1 et seq. and §§ 29A-6-1 et seq.] of said chapter: Provided,
That all such appeals shall be taken to the circuit court of
Kanawha county.
Footnote: 7