Commonwealth of Kentucky Ex Rel. Daniel Cameron, Attorney General v. Boone Development, LLC ( 2022 )

RENDERED: SEPTEMBER 30, 2022; 10:00 A.M.
TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2021-CA-0411-MR
COMMONWEALTH OF KENTUCKY, EX REL.
DANIEL CAMERON, ATTORNEY GENERAL APPELLANT
APPEAL FROM JESSAMINE CIRCUIT COURT
v. HONORABLE C. HUNTER DAUGHERTY, JUDGE
ACTION NO. 20-CI-00494
BOONE DEVELOPMENT, LLC;
ALEX LYTTLE, IN HIS OFFICIAL
CAPACITY AS A MEMBER OF THE
NICHOLASVILLE BOARD OF ADJUSTMENT;
CITY OF NICHOLASVILLE PLANNING
COMMISSION; HAROLD E. SMITH, IN HIS
OFFICIAL CAPACITY AS ACTING CHAIRMAN
AND MEMBER OF THE NICHOLASVILLE BOARD
OF ADJUSTMENT; JENNIFER CARPENTER, IN HER
OFFICIAL CAPACITY AS A MEMBER OF THE
NICHOLASVILLE BOARD OF ADJUSTMENT;
JIM PARSONS, IN HIS OFFICIAL CAPACITY AS
A MEMBER OF THE NICHOLASVILLE BOARD
OF ADJUSTMENT; JIMMY WELLS, IN HIS
OFFICIAL CAPACITY AS A MEMBER OF THE
NICHOLASVILLE BOARD OF ADJUSTMENT;
MICHAEL EAKINS, IN HIS OFFICIAL CAPACITY
AS INTERIM/ACTING PLANNING
DIRECTOR/ADMINISTRATIVE OFFICER FOR
THE CITY OF NICHOLASVILLE PLANNING
COMMISSION; NICHOLASVILLE BOARD
OF ADJUSTMENT; PAULA ELDER, IN HER
OFFICIAL CAPACITY AS A MEMBER OF THE
NICHOLASVILLE BOARD OF ADJUSTMENT;
TANYA BOLTON, IN HER OFFICIAL CAPACITY
AS A MEMBER OF THE NICHOLASVILLE
BOARD OF ADJUSTMENT; TIM CROSS, IN HIS
INDIVIDUAL CAPACITY AND IN HIS
OFFICIAL CAPACITY AS ENGINEER FOR THE
CITY OF NICHOLASVILLE PLANNING
COMMISSION; VIA VITAE DEVELOPMENT,
LLC, D/B/A JAMES MONROE HOMES; AND
WM. WAYNE HADEN, IN HIS OFFICIAL
CAPACITY AS A MEMBER OF THE
NICHOLASVILLE BOARD OF ADJUSTMENT APPELLEES
OPINION
REVERSING AND REMANDING
** ** ** ** **
BEFORE: CLAYTON, CHIEF JUDGE; COMBS AND DIXON, JUDGES.
CLAYTON, CHIEF JUDGE: The Commonwealth appeals from the Jessamine
Circuit Court’s order declaring Kentucky Revised Statute (“KRS”) 100.3471
unconstitutional. Upon review, we reverse and remand with instructions to the
circuit court to conduct a hearing as described in KRS 100.3471(3) to determine
the amount of an appeal bond and issue findings of fact regarding the appeal bond.
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FACTUAL AND PROCEDURAL BACKGROUND
The underlying dispute in this appeal is a land-use issue between a
property developer – Boone Development, LLC (“Boone”) – and the Nicholasville
Board of Adjustment (“the Board”). After the circuit court issued a final decision
in favor of the Board, Boone appealed to this Court, and the Board cross-appealed.
Those appeals are pending separately before this Court, the merits of which we
will discuss in a different Opinion. Rather, this appeal concerns the collateral
proceedings in the circuit court regarding the Board’s request for an appeal bond
under KRS 100.3471.
After Boone filed its notice of appeal on the merits of the underlying
land-use dispute, the Board filed a motion under KRS 100.3471 requesting that the
circuit court require Boone to pay an appeal bond. Boone opposed that motion,
arguing that KRS 100.3471 was unconstitutional. The Commonwealth intervened
to defend the statute’s constitutionality. Ultimately, the circuit court agreed with
Boone and declared the statute unconstitutional.
We will discuss further facts as they become relevant to this
Opinion.
ANALYSIS
In planning and zoning matters, KRS 100.347 provides for appeals to
the circuit court from the final actions of the board of adjustment, the planning
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commission, or the legislative body of any city, county, or consolidated local
government. However, the statute at issue here – KRS 100.3471 – seeks to limit
the subsequent appeals of such cases to the Court of Appeals.
To this end, the statute provides for the imposition of a bond on the
appellant upon motion by the appellee. KRS 100.3471(1). If a party appeals a
circuit court’s decision in a planning or zoning matter, the appellee has thirty days
to file a motion for such a bond. KRS 100.3471(2). The circuit court is thereafter
required to hold a hearing to set the amount of the bond, the maximum amount of
which is based on the circuit court’s determination of whether the appeal is
presumptively frivolous or not. KRS 100.3471(3).
If the court finds that the appeal is presumptively frivolous, after
considering such factors as whether “the appeal is of a ministerial or discretionary
decision[,]” and whether or not there exists “a reasoned interpretation supporting
the appellant’s position[,]” it “shall consider all costs, economic loss, and damages
that the appellee may suffer or incur during the pendency of, or that will be caused
by, the appeal, including attorney fees and court costs, up to a maximum bond
amount of two hundred fifty thousand dollars ($250,000).” KRS 100.3471(3)(b)
and (c).
If the court finds that the appeal is not presumptively frivolous, it
“shall consider the costs that the appellee may incur during the pendency of the
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appeal, including but not limited to attorney fees and court costs, plus interest
payable on land acquisition or development loans, up to a maximum bond amount
of one hundred thousand dollars ($100,000).” KRS 100.3471(3)(d).
Notably, the statute requires the circuit court to dismiss the appeal if
the appellant does not post the bond within fifteen days of the circuit court’s
determination of the bond amount. KRS 100.3471(3)(f).
Boone presents the following grounds for holding the statute to be
unconstitutional: (1) it violates the Kentucky Constitution’s separation of powers;
(2) it imposes an unconstitutional penalty on the right to appeal found in Section
115 of the Kentucky Constitution; (3) it violates the right to equal protection under
the United States Constitution and the Kentucky Constitution; and (4) it violates
the Noerr-Pennington1 doctrine.
Alternatively, the Commonwealth argues that KRS 100.3471 is
constitutional and a requirement that must be met before this Court has jurisdiction
to hear the underlying appeal and cross-appeal.
Regarding Boone’s separation of powers argument, Kentucky
Constitution Section 116 vests exclusive jurisdiction in the Supreme Court to
prescribe “rules of practice and procedure for the Court of Justice.” However,
1
Eastern Railroad Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127, 81 S. Ct.
523, 5 L. Ed. 2d 464 (1961); United Mine Workers of America v. Pennington, 381 U.S. 657, 85
S. Ct. 1585, 14 L. Ed. 2d 626 (1965).
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Section 111(2) of the Constitution states that the Court of Appeals “shall exercise
appellate jurisdiction as provided by law.” (Emphasis added.) As our Supreme
Court noted in Commonwealth v. Farmer, “[j]urisdiction is a threshold
consideration for any court at any level of the Kentucky court system.” 423
S.W.3d 690, 692 (Ky. 2014). As the Court further discussed, “[t]he ‘as provided
by law’ language . . . authorizes the legislature to prescribe the appellate
jurisdiction of the Court of Appeals.” Id. (citations omitted).
In enacting KRS 100.3471, the General Assembly utilized its
authority to prescribe this Court’s appellate jurisdiction. By stating that an “appeal
shall be dismissed” if the appellant fails to post the necessary bond within the
appropriate time, KRS 100.3471 removes such an appeal from the Court of
Appeals’ jurisdiction. Stated another way, KRS 100.3471 provides that the Court
of Appeals’ jurisdiction only encompasses appeals in which the appellant timely
posts the required bond. Because Section 111 of the Constitution allows the
legislature to define the Court of Appeals’ jurisdiction, the General Assembly did
not violate the separation of powers in enacting KRS 100.3471. Rather, the
General Assembly employed the power given to it by the Constitution.
Nor do we believe that the statute levies a penalty on all prospective
appellants that functions to take away their right to appeal under Section 115 of the
Constitution. Boone brought a facial challenge to the statute, which is “the most
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difficult challenge to mount successfully, since the challenger must establish that
no set of circumstances exists under which the [statute] would be valid.” Harris v.
Commonwealth, 338 S.W.3d 222, 229 (Ky. 2011) (internal quotation marks and
citation omitted); see also Commonwealth v. Bredhold, 599 S.W.3d 409, 415-16
(Ky. 2020). Here, Boone cannot make such a showing and has neither argued nor
shown that it is indigent or otherwise incapable of satisfying the bond requirement.
Additionally, the circuit court’s finding that some litigants might lose their right to
appeal is not enough to meet the standard by which one may establish a facial
challenge to a statute. While we note that KRS 100.3471 may be unconstitutional
as applied to an indigent appellant, that issue is not before this Court.
Moreover, the statute does not violate the equal protection clauses of
the United States or the Kentucky Constitution. “[T]he level of judicial scrutiny
applied to an equal protection challenge depends on the classification made in the
statute and the interest affected by it.” Zuckerman v. Bevin, 565 S.W.3d 580, 595
(Ky. 2018) (citation omitted). Statutes that affect economic policy are subject “to a
less searching form of judicial scrutiny, i.e.[,] the ‘rational basis’ test.” Id.(citation omitted). Indeed, “[a] statute complies with Kentucky equal protection
requirements if a ‘rational basis’ supports the classifications that it creates.” Id. at
596 (citations omitted).
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KRS 100.3471 survives such scrutiny, as “there is [a] reasonably
conceiv[ed] state of facts that could provide a rational basis for the classification.”
Zuckerman, 565 S.W.3d at 596 (internal quotation marks omitted). The General
Assembly stated the statute’s purpose in Section 2 of House Bill 72 as follows: “to
curb unnecessary appeals of land[-]use cases, which appeals burden the courts,
cause loss of jobs and loss of tax revenue, and many times render time-sensitive
projects such as multifamily affordable housing projects undevelopable[.]” Ky.
Laws ch. 181 (H.B. 11) (eff. Apr. 11, 2017). Thus, a rational basis existed for
KRS 100.3471.
Finally, KRS 100.3471 does not violate the Noerr-Pennington
doctrine. The Noerr-Pennington doctrine stands for the proposition that
“defendants are immune from antitrust liability for engaging in conduct (including
litigation) aimed at influencing decision[-]making by the government.” Octane
Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545, 556, 134 S. Ct. 1749,
1757, 188 L. Ed. 2d 816 (2014) (citations omitted). However, antitrust liability is
not the issue in this appeal. Nor is anyone asserting a cause of action against
Boone based on any conduct intended to influence government decision-making.
Appellant further argues that Appellees failed to appeal the circuit
court’s order that it would not require Boone to post a bond under KRS 100.3471
to perfect its appeal. However, as stated by our Supreme Court, “[s]ubject matter
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jurisdiction issues are different than other issues because they may be raised at any
time, even by the court itself. . . . They are all the more important when
established so clearly by statute.” Kentucky Employers Mut. Ins. v. Coleman, 236
S.W.3d 9, 15 (Ky. 2007) (emphasis added) (citing Commonwealth Health Corp. v.
Croslin, 920 S.W.2d 46, 48 (Ky. 1996) (discussing the Court’s “inherent power” to
raise sua sponte the issue of subject matter jurisdiction)).
If a court does not have subject matter jurisdiction, it has “not been
given any power to do anything at all in such a case[.]” Duncan v. O’Nan, 451
S.W.2d 626, 631 (Ky. 1970) (internal quotation marks and citation omitted).
Therefore, “[u]tilizing our inherent power to do so,” we may review for lack of
subject matter jurisdiction even if Appellees failed to appeal from the circuit
court’s order regarding the statute’s constitutionality. Croslin, 920 S.W.2d at 48
(citation omitted).
CONCLUSION
For the foregoing reasons, we reverse the Jessamine Circuit Court’s
order and remand with instructions to the circuit court to conduct a hearing under
KRS 100.3471(3) to determine the amount of the appeal bond and issue findings of
fact regarding the appeal bond.
ALL CONCUR.
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BRIEFS FOR APPELLANT: BRIEF FOR APPELLEES BOONE
DEVELOPMENT, LLC AND VIA
S. Chad Meredith VITAE DEVELOPMENT, LLC
Matthew F. Kuhn D/B/A JAMES MONROE HOMES:
Brett R. Nolan
Courtney E. Albini Carroll M. Redford, III
Assistant Attorneys General Elizabeth C. Woodford
Frankfort, Kentucky Lexington, Kentucky
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