Commonwealth of Kentucky, Department of Alcoholic Beverage Control v. Hon David A. Tapp Judge, Pulaski Circuit Court ( 2014 )

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NOT TO BE PUBLISHED OPINION
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RENDERED: OCTOBER 23, 2014
NOT TO BE PUBLISHED
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2014-SC-000154-MR
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1:1'1 AT
COMMONWEALTH OF KENTUCKY,
DEPARTMENT OF ALCOHOLIC BEVERAGE CONTROL;
FREDERICK HIGDON, COMMISSIONER; AND
TONY DEHNER, DISTILLED SPIRITS ADMINISTRATOR APPELLANTS
ON APPEAL FROM COURT OF APPEALS
CASE NO. 2013-CA-001927-OA
V. PULASKI CIRCUIT COURT CASE NO. 13-CI-00872
HONORABLE DAVID A. TAPP,
JUDGE, PULASKI CIRCUIT COURT APPELLEE
AND
CITY OF SOMERSET, KENTUCKY; AND
NICK BRADLEY, SOMERSET ALCOHOLIC
BEVERAGE CONTROL ADMINISTRATOR REAL PARTIES IN INTEREST
MEMORANDUM OPINION OF THE COURT
DENYING PETITION FOR WRIT OF PROHIBITION
The Department of Alcoholic Beverage Control seeks a writ of prohibition
to block the trial court from proceeding with the underlying declaratory-
judgment action. The underlying action involves a controversy over the proper
roles cities and the Department play in the process of distributing licenses to
sell alcohol. The City of Somerset argues the Department usurped its
statutorily defined role. In defense, the Department counters that Somerset's
action violates Kentucky's constitutional separation of powers or, alternatively,
is moot.
The Department fails to prove the necessary elements for a writ of
prohibition so we decline to interpose such an extraordinary remedy.
I. FACTUAL AND PROCEDURAL BACKGROUND.
Somerset, through a local-option election under Kentucky Revised
Statutes (KRS) 242.125, approved the sale of alcoholic beverages. Following
the election, Somerset enacted ordinances regulating the activity. The
Department, under KRS 241:060, determined that Somerset was entitled to five
retail-package liquor licenses and issued a notice to the public of their
availability.
Fourteen businesses applied for the five licenses. In his discretion, Tony
Dehner, the Department's Distilled Spirits Administrator, awarded the five
licenses. Somerset then sued the Department seeking to increase the city's
license allotment. Eventually, however, that lawsuit was dismissed through an
agreement by both parties to resolve Somerset's concerns through the
administrative process. The Department increased Somerset's allotment by
amending its regulations. But Somerset's win was short-lived because the
General Assembly's Administrative Regulation Review Subcommittee declined
to approve the amended regulations providing a license increase.' The
ARR Subcommittee found the proposed regulations were deficient under
1 KRS 13A.290 requires review and approval by the Administrative Regulation
Review Subcommittee.
2
KRS 13A.335. In light of this determination, the Department amended its
regulations to: (1) automatically set a city's quota following a vote to authorize
the sale of alcoholic beverages; (2) provide a three-year moratorium for any
additional quota license increases; and (3) provide a detailed procedure to
govern requests for additional quota licenses.
Again, Somerset sued the Department, this time seeking declaratory and
injunctive relief. In Somerset's estimation, the Department arbitrarily enforced
regulations concerning license allotments and, by approving applications for
state licenses before the city administrator approved applications, violated
KRS 243.370. The Department responded by moving to dismiss Somerset's
suit premised largely on separation of powers and the absence of proper
standing by the city. The trial court denied the Department's motion, and this
writ action followed in the Court of Appeals.
The Court of Appeals denied the Department's writ request because the
Department failed to show the trial court was without subject-matter
jurisdiction. According to the Court of Appeals, Somerset's declaratory-
judgment action was appropriately within the trial court's province regardless
of whether the injunctive relief sought by Somerset could actually be granted
without violating Kentucky's strong doctrine of separation of powers. Further,
the Court of Appeals noted that the Department's standing argument was
insufficient for a writ to issue because there was an available remedy through
appeal.
3
II. ANALYSIS.
When ruling on a writ petition, we must first determine if the writ is
appropriate. Only if the writ is appropriate do we look to the merits of the
petition to determine the soundness of the trial court's decision. The decision
whether to issue a writ always lies within this Court's discretion. 2 Truly a
remarkable remedy, a writ action commands conservative use of that discretion
"to prevent short-circuiting normal appeal procedure[.]" 3 Accordingly, a writ
should issue only:
[U]pon a showing that (1) the lower court is proceeding or is about
to proceed outside of its jurisdiction and there is no remedy
through an application to an intermediate court; or (2) that the
lower court is acting or is about to act erroneously, although
within its jurisdiction, and there exists no adequate remedy by
appeal or otherwise and great injustice and irreparable injury will
result if petition is not granted. 4
Essentially, writs are divided into two classes. Here, the Department presents
an argument under both classes. The Department first argues the trial court is
without jurisdiction to proceed. And, in the alternative, even if the trial court
has jurisdiction, the Department argues it would be improper to proceed
because Somerset lacks standing. Because jurisdiction and standing are
questions of law, our review is de novo. 5
2 Hoskins v. Maricle, 150 S.W.3d 1, 5 (Ky. 2004) (citation omitted).
3 Bender v. Eaton, 343 S.W.2d 799, 800 (Ky. 1961).
4 Hoskins, 150 S.W.3d at 10.
5 See Tax Ease Lien Investments 1, LLC v. Commonwealth Bank & Trust,
384 S.W.3d 141, 143 (Ky. 2012) (noting that standing is a question of law subject to
de novo review); Grange Mut. Ins. Co. v. Trude, 151 S.W.3d 803, 810 (Ky. 2004)
(highlighting de novo review is typically appropriate under the first class of writs
because jurisdiction is a question of law).
4
As we recently made clear in Davis v. Wingate, 6 the first class of writ does
not require the showing of an irreparable injury or lack of adequate remedy by
appeal. Rather, "[t]hose prerequisites apply only in the second class of writ
actions—actions in which the trial court is allegedly erroneous but within its
jurisdiction . "7
In the context of writ actions, jurisdiction refers to subject-matter
jurisdiction, meaning the authority not simply to hear "this case[,] but this kind
of case." 8 A court only acts outside its jurisdiction, therefore, "where [it] has
not been given, by constitutional provision or statute, the power to do anything
at all." 9 KRS 418.040, governing declaratory judgment actions, "allows a claim
for a declaration of rights to be brought in any court of record in the
Commonwealth[;] . . . circuit courts are such courts of record." 0 Without a
doubt, the trial court has jurisdiction over this kind of case.
The Department argues the trial court, because of Kentucky's strong
doctrine of separation of powers, does not have the authority to grant the relief
sought by Somerset, which is the authority to compel the Department to
increase the city's license allotment. As accurate as this argument may be, it is
immaterial to the trial court's subject-matter jurisdiction over Somerset's
6 Davis v. Wingate, No. 2014-SC-000323-MR, 2014 WL 4160032 (Ky. Aug. 14,
2014).
7 Id. at *2.
8 Daugherty v. Telek, 366 S.W.3d 463, 466 (Ky. 2012) (internal quotation
marks omitted).
9 Id. at 467.
10 Davis, 2014 WL 4160032 at *3 (citing KRS 23A.010(3)).
5
claim. KRS 418.040 makes clear that a "plaintiff may ask for a declaration of
rights, either alone or with other relief; and the court may make a binding
declaration of rights, whether or not consequential relief is or could be asked."
The trial court's purported inability to grant the injunctive relief Somerset
requests is not fatal to the viability of the overall claim under KRS 418.040.
Again, as we pointed out in Davis,
Frankly speaking, so long as the applicable law is followed, a
litigant's choice to pursue a potentially hollow victory is not for us
to consider here. We are not responsible for trying the case for the
parties or ensuring the best litigation strategy. Instead, we are
simply responsible for enforcing the law. 12
The Department's writ petition must fail because the trial court does have
subject-matter jurisdiction and is, therefore, not about to proceed outside its
jurisdiction.
The Department's second argument proceeds under the second class of
writ; that is, the trial court is acting erroneously within its jurisdiction.
According to the Department, the trial court was erroneous in finding Somerset
had standing to challenge the allotment of licenses. When operating under this
class of writ, both irreparable injury and lack of an adequate remedy by appeal
must be proven by the writ-seeking party. 13 Of course, we have considered writ
actions despite "the absence of a showing of specific great and irreparable
injury to the petitioner, provided a substantial miscarriage of justice will result
11 Emphasis added.
12 Davis, 2014 WL 4160032 at *4.
13 Hoskins, 150 S.W.3d at 9-10.
6
if the lower court is proceeding erroneously, and correction of the error is
necessary and appropriate in the interest of orderly judicial administration."
The Department has failed to prove it lacks an adequate remedy by
appeal. In point of fact, our case law demonstrates standing is a proper issue
for appellate review on direct appea1. 15 While the cost or inconvenience of
litigation may be objectionable to the Department, that objection, in and of
itself, is not sufficient to justify a writ. 16 And, as correctly pointed out by the
Court of Appeals, the exception mentioned above does not apply to the
Department because "the exception allows a petitioner to avoid only the
requirement of great and irreparable injury, not the requirement of lack of an
adequate remedy by appeal." 17
We admit that we may, in our discretion, "address the merits of the issue
within the context of the petition for the writ[1" 18 And the Department urges
us to do so here because of the constitutional separation-of-power concerns
presented. But it is equally true that we "may decline to [address the merits]
14 Bender, 343 S.W.2d at 801.
15 See Bailey v. Preserve Rural Roads of Madison County, Inc., 394 S.W.3d 350,
355 (Ky. 2011).
16 See, e.g., Fritsch v. Caudill, 146 S.W.3d 926, 930 (Ky. 2004) ("Inconvenience,
expense, annoyance, and other undesirable aspects of litigation may be present, but
great and irreparable injury is not.").
17 Corn. of Kentucky, Dep't of Alcoholic Beverage Control, et al. v. Tapp, et al.,
No. 2013-CA-001927-OA at 6 (Ky.App. February 18, 2014) (order denying petition for
writ of prohibition) (quoting Indep. Order of Foresters v. Chauvin, 175 S.W.3d 610, 617
(Ky. 2005)).
18 St. Clair v. Roark, 10 S.W.3d 482, 485 (Ky. 1999).
7
on grounds that there is an adequate remedy by appeal." 19 So we decline the
Department's invitation to wade into the deep, perhaps murky, water of this
litigation at this juncture. The Department has offered little to persuade us
that it will suffer any injury that cannot be fully remedied on appeal.
III. CONCLUSION.
For the foregoing reasons, we deny the Department's petition for a writ of
prohibition.
All sitting. All concur.
COUNSEL FOR APPELLANTS:
Peter Frank Ervin
Noelle Jill Bailey
Public Protection Cabinet
APPELLEE HONORABLE DAVID A. TAPP,
JUDGE, PULASKI CIRCUIT COURT:
David Austin Tapp
Judge, Pulaski Circuit Court
COUNSEL FOR APPELLEES CITY OF SOMERSET, KENTUCKY, AND NICK
BRADLEY, SOMERSET ALCOHOLIC BEVERAGE CONTROL ADMINISTRATOR:
Charles David Cole
Carrie E. D. Wiese
Derrick Thomas Wright
Sturgill, Turner, Barker 86 Moloney, PLLC
19
Id.
8