Matson v. Kansas Department of Corrections ( 2015 )

IN THE SUPREME COURT OF THE STATE OF KANSAS
No. 108,992
MIKE C. MATSON,
Appellant,
v.
KANSAS DEPARTMENT OF CORRECTIONS, et al.,
Appellees.
SYLLABUS BY THE COURT
1.
The inmate trust fund established by the Kansas Department of Corrections
pursuant to K.S.A. 76-173 is a trust and is subject to the Kansas Uniform Trust Code,
K.S.A. 58a-101 et seq.
2.
The Kansas Uniform Trust Code establishes the exclusive venue for actions filed
pursuant to the Kansas Uniform Trust Code.
Review of the judgment of the Court of Appeals in an unpublished opinion filed November 15,
2013. Appeal from Norton District Court; PRESTON PRATT, judge. Opinion filed April 3, 2015. Judgment
of the Court of Appeals affirming the district court is reversed. Judgment of the district court is reversed
and remanded with directions.
Mike C. Matson, appellant pro se, was on the briefs for appellant.
Robert E. Wasinger, of Kansas Department of Corrections, was on the brief for appellees.
The opinion of the court was delivered by
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STEGALL, J.: Mike Matson is an inmate in the custody of the Kansas Department
of Corrections. Like all inmates, Matson's property rights are limited. He does, however,
take advantage of the statutorily created inmate trust fund to place money in the custody
of the Department of Corrections for his use and benefit while serving his sentence.
After becoming dissatisfied with the management of the inmate trust fund, Matson
filed this pro se suit in Leavenworth District Court pursuant to the Kansas Uniform Trust
Code (KUTC), codified at K.S.A. 58a-101 et seq. He would eventually name as
defendants the State of Kansas, the Department of Corrections, and various state officials,
including the Warden of the Norton Correctional Facility where Matson was incarcerated
at the time. He alleged the defendants were in breach of trust as a result of various fees
charged against the balance held in his inmate trust fund. Matson claimed the Department
of Corrections' Internal Management Policies and Procedures authorizing the challenged
fees violated both state law and the Fifth Amendment to the United States Constitution.
The defendants quickly moved to transfer venue to Norton District Court in order
to better serve the convenience of the parties. The Leavenworth District Court granted the
motion without a hearing and prior to any responsive pleading from Matson. Once the
case reached Norton District Court, Matson filed a motion to transfer venue back to
Leavenworth District Court. Matson claimed the inmate trust fund is administered at the
Lansing Correctional Facility in Leavenworth County—a fact the defendants have never
disputed. Matson argued his claims under the KUTC could only be brought in
Leavenworth District Court because K.S.A. 58a-204 sets venue for such claims "in the
county of this state in which the trust's principal place of administration" is located.
The Norton District Court—citing K.S.A. 60-609(a), which permits a change of
venue for the convenience of the parties to "any county where [the action] might have
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been brought"—denied Matson's motion on the grounds his suit could have been brought
in Norton District Court pursuant to K.S.A. 60-602(2) given the Warden of the Norton
Correctional Facility was named as a defendant. The district court then granted summary
judgment to the defendants on all of Matson's claims.
On appeal to the Kansas Court of Appeals, Matson reprised his venue arguments
and claimed the district court erred in granting summary judgment to the defendants. A
panel of the Court of Appeals again rejected Matson's arguments and affirmed the
judgment of the lower court. With respect to venue, the panel held the "Leavenworth
District Court correctly found that Matson could have filed his suit in Norton County
under K.S.A. 60-602(2) since one of the named defendants was the warden of the Norton
Correctional Facility." Matson v. Kansas Dept. of Corr., No. 108,992, 2013 WL
6062910, at *2 (Kan. App. 2013) (unpublished opinion).
The panel held K.S.A. 58a-204, setting venue for actions under the KUTC in the
county where the trust is principally administered, would not have prevented Matson
from filing his suit in Norton District Court. 2013 WL 6062910, at *2. In so doing, the
panel relied on a comment to section 204 of the Uniform Trust Act which states that
"'general rules governing venue continue to apply'" in "'most proceedings where
jurisdiction . . . is based on a factor other than the trust's principal place of
administration.'" 2013 WL 6062910, at *2.
Matson timely petitioned this court for review, and we exercise jurisdiction
pursuant to K.S.A. 60-2101(b). Because we reverse on the question of venue as discussed
below, we need not reach, and express no opinion concerning, the merits of Matson's
various claims.
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DISCUSSION
We apply a deferential standard of review to lower court decisions to change or
not to change venue. We will not disturb such rulings absent a showing of an abuse of
discretion. State v. Higgenbotham, 271 Kan. 582, 591, 23 P.3d 874 (2001). Discretion is
abused, however, when its exercise is premised on an error of law. State v. Nelson, 296
Kan. 692, 694, 294 P.3d 323 (2013). Matson contends the Leavenworth District Court's
decision to transfer venue to Norton County, and the Norton District Court's refusal to
transfer it back, were both premised on an erroneous conclusion of law: i.e., his suit
could have been brought in Norton District Court in the first place. We agree with
Matson.
Whether K.S.A. 58a-204 applies to Matson's claims and whether that provision
required him to file those claims in Leavenworth District Court—and nowhere else—
present questions of statutory interpretation over which we exercise plenary review. See
State v. Brown, 298 Kan. 1040, 1057, 318 P.3d 1005 (2014). The fundamental rule of
statutory interpretation is the intent of the legislature is dispositive if it is possible to
ascertain that intent. State v. Looney, 299 Kan. 903, 906, 327 P.3d 425 (2014). The
language of a statute is our primary consideration in ascertaining the intent of the
legislature. 299 Kan. at 906. Where such language is plain and unambiguous, it is
typically determinative of legislative intent. State v. O'Connor, 299 Kan. 819, 822, 326
P.3d 1064 (2014).
The defendants first contend K.S.A. 58a-204 does not apply to Matson's claims
because the inmate trust fund is not actually a trust and is therefore not subject to the
KUTC. But we have no difficulty finding the plain language of the applicable statutes
establishes the inmate trust fund is, in fact, a trust subject to the KUTC. In accordance
with Kansas law, the Department of Corrections has designated "an officer or employee"
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to "have custody and charge of all moneys" held by any correctional institution "for the
use and benefit of each individual who is . . . [an] inmate of the institution." K.S.A. 76-
173. "Such moneys shall constitute . . . [an] inmate trust fund." K.S.A. 76-173.
Generally speaking, a trust subject to the KUTC is created when five conditions
are met: (1) a settlor with capacity (2) manifests an intent to create a trust and (3) gives a
trustee duties to perform for the benefit of (4) a definite beneficiary where (5) the same
person is not the sole trustee and the sole beneficiary. See K.S.A. 58a-402(a). The
statutory scheme establishing the inmate trust fund satisfies these criteria. Moreover, the
terms of the KUTC make it explicitly applicable to "trusts created pursuant to a statute."
K.S.A. 58a-102.
Having determined the inmate trust fund is a trust subject to the KUTC, we must
next decide whether the KUTC establishes exclusive venue in the county where the
inmate trust fund is administered—i.e., in Leavenworth County. The venue provision of
the KUTC applicable to Matson's claims is as follows: "venue for a judicial proceeding
involving a trust is in the county of this state in which the trust's principal place of
administration has been, is or will be located." K.S.A. 58a-204. The general statute relied
upon by the lower courts to establish Matson's claims could have been brought in Norton
County states actions "against a public officer for an act done or threatened to be done by
such officer by virtue or under the color of his or her office, or for neglect of his or her
official duties" are required to be "brought in the county in which the cause, or some part
thereof arose." K.S.A. 60-602(2).
It is a general rule of statutory interpretation that, when both a general statute and
a specific statute govern the same topic, the specific statute controls. See, e.g., State v.
Williams, 299 Kan. 911, 930, 329 P.3d 400 (2014). K.S.A. 60-602(2) is a generic venue
statute of general applicability. K.S.A. 58a-204 is a specific statute, limited in scope to
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only those actions governed by the KUTC. The rule that a general statute should yield to
a specific statute is "'merely a rule of interpretation which is used to determine which
statute the legislature intended to be applied in a particular case.'" Williams, 299 Kan. at
930 (quoting State v. Helms, 242 Kan. 511, 514, 748 P.2d 425 [1988]). In this instance, it
is clear the legislature, in adopting the KUTC, established a specific venue exception to
the more general rules. As such, K.S.A. 58a-204 controls the venue question in this case
and establishes the exclusive venue for Matson's claims in Leavenworth District Court.
See Vontress v. State, 299 Kan. 607, 613, 325 P.3d 1114 (2014) (quoting State v. Turner,
293 Kan. 1085, 1088, 272 P.3d 19 [2012]) ("'"'Where there is a conflict between a statute
dealing generally with a subject, and another dealing specifically with a certain phase of
it, the specific legislation controls in a proper case. [Citations omitted.]'"'").
Finally, we cannot approve the Court of Appeals' efforts to find legislative intent
in the commentary appended to the uniform law but not adopted into law by our
legislature. Such material is outside the plain language the legislature used to express its
intent. See State v. Roudybush, 235 Kan. 834, 846, 686 P.2d 100 (1984) ("[T]he
comments following the text of a statute are not a part of the legislative enactment, but
are extrinsic evidence to be used as an aid in construction only if the language of the
statute is ambiguous."). Arguably, the legislature's choice to not expressly include the
substance of the comment in the KUTC—as many other states have done—indicates a
contrary intent. See, e.g., Ala. Code § 19-3B-204 (2007) (venue for actions involving a
trust proper "in any county where venue is proper for civil actions generally"); see also
Fla. Stat. § 736.0204 (2014) (venue proper in any county where the venue is proper under
rules of civil procedure); Mich. Comp. Laws § 700.7204 (2013) (venue for trust may be
"[a]s otherwise specified by court rule"); Mont. Code Ann. § 72-38-205 (2013) (Except
as otherwise stated in the statute, "the proper county for commencement of a proceeding
pursuant to this chapter is determined by the rules applicable to civil actions generally.");
Neb. Rev. Stat. § 30-3815 (2008) (venue statute allows court to transfer proceeding to
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another court "in the interest of justice"). The KUTC contains no similar provision
indicating a legislative intent to incorporate the substance of the comment into Kansas
law.
Having found that venue was exclusively in Leavenworth County, the question of
remedy arises. In certain rare cases, an erroneous change of venue may be harmless error.
See Alliance Life Ins. Co. v. Ulysses Volunteer Fireman's Relief Assn., 215 Kan. 937,
942, 529 P.2d 171 (1974) (improper venue was harmless when the case was decided as a
matter of law on stipulated facts). However, the party benefiting from the error has the
burden to come forward with a showing of harmlessness. Kansas City Mall Assocs. v.
Unified Gov't of Wyandotte County/KCK, 294 Kan. 1, 8, 272 P.3d 600 (2012). Here, the
defendants have not done so. Therefore, because the change of venue from Leavenworth
District Court to Norton District Court was error in this case, we reverse and remand this
matter to the Leavenworth District Court.
The opinion of the Court of Appeals is reversed. The judgment of the district court
is reversed, and the case is remanded to Leavenworth District Court for further
proceedings.
***
BILES, J., concurring: I agree it was error to transfer venue to Norton County. This
case properly belongs in Leavenworth District Court as our court has now held. I write
separately to emphasize that our decision necessarily vacates the other aspects of the
Court of Appeals decision, including the panel's conclusion that the inmate lacked
standing and upholding the Internal Management Policy and Procedure (IMPP). In my
view, what needs to happen next is a deeper review into the practices brought to light by
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this inmate's lawsuit and the parties' claims and defenses on the merits. I wish to note a
few concerns.
Matson questions whether the Department of Corrections could legally implement
the IMPP without notice-and-comment rulemaking. This appears to be a colorable issue
that will benefit from further probing. Certainly, on a system-wide basis, the amounts
involved appear substantial if the affidavit Matson supplied to the district court is
accurate: that his mother's monthly deposit of $56.40 is reduced to $45 before it reaches
his spending account. Matson v. Kansas Dept. of Corr., No. 108,992, 2013 WL 6062910,
at *1 (Kan. App. 2013) (unpublished opinion).
What we know from the record is that under IMPP 04-103: (1) effective January
1, 2011, deposits into inmate trust accounts were required to be submitted electronically
through private contractors who, in turn, charged a per-deposit fee; and (2) each inmate's
pro rata share of interest earned by the fund each interest period was reduced by the
inmate's share of applicable banking fees. But when KDOC implemented the IMPP, its
own regulation provided that "[a]ll funds sent for deposit to an inmate's trust account
shall be in the form of a money order, a cashier's check, or a certified check. The funds
shall be sent to the centralized banking location . . . ." (Emphasis added.) K.A.R. 44-12-
601(b)(5).
Therefore, the IMPP appears to contradict on its face a properly issued
administrative regulation, which had the force and effect of law. See K.S.A. 2014 Supp.
77-415(c)(4). If so, the Department of Corrections operated for more than 3 years with a
practice that siphoned off someone's money by ignoring its own regulation and depriving
both the inmates and the general public of a free-of-cost method for sending and
receiving money intended for an inmate's benefit. How can the IMPP trump a lawfully
adopted administrative regulation and simply eviscerate it?
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The Court of Appeals avoided this question by holding that Matson lacked
standing to challenge the IMPP's deposit requirements—despite its possible illegality.
This appears to be premised on the agency's argument that the IMPP applied only to
those who sought to deposit their money into the trust for the inmate's benefit. But if that
were the case, how does that reconcile with the district court's recitation of
uncontroverted facts and an exhibit attached to the agency's motion to dismiss
characterizing the third-party vendors' fees as deductions from amounts deposited, rather
than surcharges assessed against the depositor?
Another explanation offered is that the existing rule did not expressly prohibit the
agency from establishing an IMPP regarding banking and deposit procedures. Matson,
2013 WL 6062910, at *7. But this observation fails to address how the procedures in
IMPP could conflict with and effectively trump those set out in the regulation.
And as to the bank service fees deducted from earned interest, the Court of
Appeals concluded the general rule requiring notice-and-comment rulemaking did not
apply because of an internal management exception to the general notice-and-comment
rulemaking requirements set out in law. See Matson, 2013 WL 6062910, at *6. Under
that exception, a "statement of agency policy may be treated as binding within the agency
if such statement of policy is directed to . . . [t]he internal management of or organization
of the agency." K.S.A. 2014 Supp. 77-415(b)(2)(B). But this statute also provides that
"[n]o such statement . . . may be relied upon to bind the general public." K.S.A. 2014
Supp. 77-415(b)(2)(B).
In other words, the district court will need to look closely whether each challenged
aspect of the IMPP, which on its face authorizes the deduction of account maintenance
expenses from the prisoners' earned interest and compels the general public to use of the
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agency's fee-based, third-party deposit services, is truly a matter of "internal
management." See Californians for Pesticide Reform v. Department of Pesticide
Regulation, 184 Cal. App. 4th 887, 907, 109 Cal. Rptr. 3d 428 (2010) (describing
exception to notice-and-comment rulemaking for regulations relating "only to the internal
management of the state agency" as a narrow exception "inapplicable where a rule is to
have general application and is to affect persons subject to regulation by the agency").
To be sure, careful consideration will no doubt be given on remand to these and
other issues necessarily arising from this inmate's challenge to the Department of
Corrections' IMPP.
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