Supreme court says procurement contractors waived right to judicial forum

Listen to this article

The South Carolina Supreme Court ended two consolidated procurement battles by holding that JMI Sports, JMSI College, LLC, and Intellectual Capitol cannot pursue a declaratory judgment attack on the constitutionality of section 11-35-4230 because they knowingly contracted to have any dispute decided by the Chief Procurement Officer (CPO). The companies had won state contracts with the Workers’ Compensation Commission and Clemson University, but after disagreements arose the agencies invoked the statute’s administrative dispute process and filed contract-controversy requests with the CPO. The contractors responded with circuit court suits alleging the statute violates separation-of-powers and judicial-power provisions in the state constitution.

The circuit court dismissed, finding the CPO held exclusive jurisdiction and the contractors had not exhausted administrative remedies. On appeal, the Supreme Court affirmed the result while narrowing the rationale. It agreed that the Uniform Declaratory Judgments Act generally permits courts to declare rights without exhaustion, and it acknowledged that an administrative officer cannot decide constitutional questions.

Nevertheless, the justices stressed that a declaratory judgment requires a justiciable controversy involving an existing legal right. Here, the only right the contractors asserted was “the right to have a court of the unified judicial system decide their contract claims,” a right they unequivocally waived in their contracts by accepting the CPO forum. Because the parties voluntarily surrendered that right, no live legal interest remained and the constitutional challenge became a purely academic exercise.

Finding the waiver dispositive, the Court “affirmed as modified” the dismissals, reinstating the circuit court’s judgment without relying on exhaustion or exclusive jurisdiction theories and emphasizing that contractual dispute resolution clauses will be enforced absent fraud or coercion.

The 9-page opinion is Richards v. Spicer, I.C. Lawyers’ Weekly No. 010-025-25.