Larry Elkins v. Western Shores Property Owners Association, Inc. ( 2021 )

RENDERED: JANUARY 8, 2021; 10:00 A.M.
TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2020-CA-0228-MR
LARRY ELKINS; CALLOWAY
COUNTY FISCAL COURT; DON
CHERRY; EDDIE CLYDE HALE;
JOHNNY GINGLES; KENNETH
IMES; STEVE LAX; AND TIM TODD APPELLANTS
APPEAL FROM CALLOWAY CIRCUIT COURT
v. HONORABLE TIMOTHY KALTENBACH, SPECIAL JUDGE
ACTION NO. 18-CI-00337
WESTERN SHORES PROPERTY
OWNERS ASSOCIATION, INC. APPELLEE
OPINION
AFFIRMING
** ** ** ** **
BEFORE: COMBS, DIXON, AND TAYLOR, JUDGES.
DIXON, JUDGE: Larry Elkins, Calloway County Fiscal Court, Don Cherry,
Eddie Clyde Hale, Johnny Gingles, Kenneth Imes, Steve Lax, and Tim Todd
(“County Defendants”) appeal from the order denying their motion to dismiss the
claims against them in their individual capacities, and the order denying their
motion to reconsider same, entered by the Calloway Circuit Court on August 16,
2019, and January 21, 2020, respectively. After careful review of the briefs,
record, and the law, we affirm.
FACTS AND PROCEDURAL BACKGROUND
This appeal stems from the failure to complete roadways in the
Western Shores Subdivision. Its roadways are governed by the Subdivision
Regulations of Calloway County, Kentucky, (“Regulations”) effective March 1,
2003.1 Prior to approving the final plat, Calloway County Judge Executive Elkins
required Kentucky Land Partners, LLC (“KLP”)—developer of Western Shores
Subdivision—to post a surety bond, ensuring completion of the subdivision’s
roadways.
KLP Bond
Original Bond: 2006-2007. On April 21, 2006, KLP, as principal,
Westchester Fire Insurance Company, as surety, and the Calloway County Judge
Executive, as obligee, entered a bond of $3,031,382.75 for “Road construction,
paving, surveying and engineering at Western Shores Subdivision.” (Emphasis
1
County Defendants have alerted our Court via separate motions that Calloway County Fiscal
Court Ordinance No. 2020-0916-B, which amends and clarifies these regulations, was enacted
September 16, 2020. However, new material not considered by the trial court is not admissible
on appeal and should not be considered by our Court. Consequently, County Defendants’
motions requesting the record be supplemented with this ordinance and that they be allowed to
file a supplemental brief regarding same are denied by separate orders of this Court entered
contemporaneously with this Opinion. Appellee’s motion to file a responsive supplemental brief
is, likewise, denied.
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in original.) The bond provided, “Any action under this Bond by the Obligee must
be instituted before the expiration of one (1) year from the date on which the bond
was executed.”
First extension: 2007-2008. Construction of the subdivision’s
roadways was not fully accomplished within the year contemplated under the
original bond. Consequently, on April 21, 2007, the same parties executed a
change rider to the bond which reduced the bond limit to $1,012,000 to reflect the
roadwork that was done during the period covered by the original bond. A
continuation certificate was executed the same date, extending the bond for one
year.
Second extension: 2008-2009. Construction of the subdivision’s
roadways was not finished within the year the bond was extended. A subsequent
change rider was executed, effective April 21, 2008, which reduced the bond limit
to $983,043 to reflect the roadwork done during the period covered by the previous
extension of the bond. Presumably, a corresponding continuation certificate was
executed, extending the bond for another year.
Third extension: 2009-2010. The construction of the subdivision’s
roadways was still not completed within the second year the bond was extended.
In fact, it is unlikely that any roadwork was completed during the year’s extension
as the next extension of the bond was for the same amount. A continuation
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certificate was executed, effective April 21, 2009, extending the bond for another
year.
Bond “returned.” On April 13, 2010, Elkins wrote a letter to KLP
requesting the bond be increased to $1,500,000 due to “the increase in asphalt and
related costs.” The letter stated the current bond amount was “insufficient to
guarantee completion of the project.” However, it appears no change rider was
executed to increase the bond pursuant to this request and no continuation
certificate was executed to extend the bond. Therefore, the bond expired on April
21, 2010. Elkins noted on the April 21, 2007, change rider that “Bonds returned to
John [Oliphant]” of KLP. Elkins’ handwritten notation was dated June 24, 2010.
Litigation and Procedural History
On February 23, 2018, KLP entered a special warranty deed,
conveying the unfinished streets within Western Shores Subdivision to the Western
Shores Property Owners Association, Inc. (“WSPOA”). On September 14, 2018,
WSPOA filed the complaint herein against County Defendants, KLP, and KLP’s
directors. WSPOA claims that “[b]ecause KLP exited the Development without
completing all improvements required to be done and because the County failed to
properly bond the roads as mandated by County Regulations, the roads are
incomplete and the County Defendants refuse to accept the roads under their
jurisdiction for regular maintenance.” WSPOA asserted claims of negligence and
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requested a writ of mandamus and declaratory judgment against County
Defendants; it also lodged claims of breach of fiduciary duties and requested
punitive damages against KLP and KLP’s directors.
On October 23, 2018, County Defendants moved the trial court to
dismiss WSPOA’s claims against them, asserting they are entitled to absolute
legislative immunity, sovereign immunity, and qualified official immunity.
County Defendants further contended WSPOA’s complaint was barred by the
Claims Against Local Governments Act, WSPOA lacked standing to sue upon the
bond, and a writ of mandamus was an inappropriate remedy. On February 7, 2019,
County Defendants filed a supplemental memorandum of law in support of their
motion to dismiss, asserting WSPOA’s claims were barred by the statute of
limitations.
On August 16, 2019, after the matter was fully briefed and a hearing
conducted, the trial court entered a memorandum and order concerning County
Defendants’ motion to dismiss. The trial court dismissed the negligence claims
against County Defendants in their official capacities as barred by sovereign
immunity. However, the trial court did not dismiss the negligence claims against
County Defendants in their individual capacities, finding they were not entitled to
qualified official immunity. The trial court further found the claims for declaratory
judgment and mandamus against County Defendants were not barred by sovereign
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immunity. On August 22, 2019, County Defendants moved the trial court to
reconsider its order, but on January 21, 2020, following a full briefing of the
matter, the trial court denied the motion to reconsider. This appeal followed.
STANDARD OF REVIEW
A trial court should only grant a motion to dismiss if “it appears the
pleading party would not be entitled to relief under any set of facts which could be
proved in support of his claim.” Benningfield v. Petit Envtl., Inc., 183 S.W.3d 567,
570 (Ky. App. 2005) (citation omitted). In considering the motion to dismiss, the
truth of the allegations in the amended complaint is assumed, and the pleadings are
to be liberally construed in a light most favorable to the plaintiff. Id. This
determination requires no factual findings and is purely a question of law. Id.QUALIFIED OFFICIAL IMMUNITY
County Defendants filed an interlocutory appeal, arguing the
negligence claims against them in their individual capacities are barred by
qualified official immunity. This appeal is properly before us because an order
denying a substantial claim of qualified official immunity is immediately
appealable. Harrod v. Caney, 547 S.W.3d 536, 540 (Ky. App. 2018); Breathitt
Cty. Bd. of Educ. v. Prater, 292 S.W.3d 883, 887 (Ky. 2009); Mattingly v.
Mitchell, 425 S.W.3d 85, 89 (Ky. App. 2013).
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On appeal, County Defendants argue the trial court erred by
determining they are not entitled to qualified immunity for the negligence claims
against them in their individual capacities. This is the sole issue before us as “the
scope of appellate review of an interlocutory appeal of the trial court’s
determination of the application of qualified official immunity is limited to the
specific issue of whether the immunity was properly denied and nothing more.”
Baker v. Fields, 543 S.W.3d 575, 578 (Ky. 2018).
The standard for immunity is well-settled:
“Official immunity” is immunity from tort liability
afforded to public officers and employees for acts
performed in the exercise of their discretionary functions.
It rests not on the status or title of the officer or
employee, but on the function performed. Salyer v.
Patrick, 874 F.2d 374 (6th Cir. 1989). . . . [W]hen an
officer or employee of a governmental agency is sued in
his/her representative capacity, the officer’s or
employee’s actions are afforded the same immunity, if
any, to which the agency, itself, would be entitled. . . .
But when sued in their individual capacities, public
officers and employees enjoy only qualified official
immunity, which affords protection from damages
liability for good faith judgment calls made in a legally
uncertain environment. 63C Am. Jur. 2d, Public Officers
and Employees, § 309 (1997). Qualified official
immunity applies to the negligent performance by a
public officer or employee of (1) discretionary acts or
functions, i.e., those involving the exercise of discretion
and judgment, or personal deliberation, decision, and
judgment, id. § 322; (2) in good faith; and (3) within the
scope of the employee’s authority. Id. § 309;
Restatement (Second) [of the Law of Torts § 895D cmt.
g. (A.L.I. 1979)]. An act is not necessarily
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“discretionary” just because the officer performing it has
some discretion with respect to the means or method to
be employed. Franklin [Cty.] v. Malone, [957 S.W.2d
195, 201 (Ky. 1997) (quoting Upchurch v. Clinton Cty.,
330 S.W.2d 428, 430 (Ky. 1959))]. Qualified official
immunity is an affirmative defense that must be
specifically pled. Gomez v. Toledo, 446 U.S. 635, 100
S.Ct. 1920, 64 L.Ed.2d 572 (1980).
Conversely, an officer or employee is afforded no
immunity from tort liability for the negligent
performance of a ministerial act, i.e., one that requires
only obedience to the orders of others, or when the
officer’s duty is absolute, certain, and imperative,
involving merely execution of a specific act arising from
fixed and designated facts. Franklin [Cty.] v. Malone,
supra, at 201. “That a necessity may exist for the
ascertainment of those facts does not operate to convert
the act into one discretionary in nature.” Upchurch v.
Clinton [Cty.], supra, at 430. See also Restatement
(Second) Torts, supra, § 895D cmt. h; 63C Am. Jur. 2d,
Public Officers and Employees, §§ 324, 325 (1997).
Yanero v. Davis, 65 S.W.3d 510, 521-22 (Ky. 2001).
Here, we must determine what qualified immunity County Defendants
enjoy, if any, as an affirmative defense to the claims against them. We here note
that qualified immunity is not a blanket shield for all tort claims. Yanero, the
seminal authority on governmental immunity in Kentucky, held that qualified
official immunity protects discretionary acts negligently performed by public
officials so long as they are acting within their authority and in good faith. Id. at
522. “Qualified immunity gives government officials breathing room to make
reasonable but mistaken judgments, and protects all but the plainly incompetent or
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those who knowingly violate the law.” Stanton v. Sims, 571 U.S. 3, 6, 134 S.Ct. 3,
5, 187 L.Ed.2d 341 (2013) (per curiam) (citations and internal quotation marks
omitted). “[W]hen sued in their individual capacities, public officers and
employees enjoy only qualified official immunity, which affords protection from
damages liability for good faith judgment calls made in a legally uncertain
environment.” Yanero, 65 S.W.3d at 522 (citation omitted).
The trial court found County Defendants were not entitled to qualified
official immunity because their actions were ministerial rather than discretionary.
“Promulgation of rules is a discretionary function; enforcement of those rules is a
ministerial function.” Williams v. Kentucky Dep’t of Educ., 113 S.W.3d 145, 150
(Ky. 2003). Furthermore, “[s]ubdivision plats are approved . . . as a ministerial
function to insure compliance with the subdivision regulations.” Nash v. Campbell
Cty. Fiscal Court, 345 S.W.3d 811, 815 (Ky. 2011) (citing Kelly v. Cook, 899
S.W.2d 517, 519 (Ky. App. 1995); KRS2 100.277; KRS 100.281(1); Snyder v.
Owensboro, 528 S.W.2d 663 (Ky. 1975)).
County Defendants argue the language of the Regulations reveals the
discretionary nature of their actions, citing Section 6.2 titled “FAILURE TO
INSTALL IMPROVEMENTS,” which states:
If it is determined by the Fiscal Court that improvements
have not been installed as planned or that the
2
Kentucky Revised Statutes.
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improvements are not properly guaranteed, then the
Fiscal Court may take action to secure installation of the
improvements, including, but not limited to, civil actions
for injunctive relief, damages, and/or foreclosure against
the developer and such providers of the guarantees. The
parties executing the guarantee shall be firmly bound for
the payment of all necessary costs therefrom, including
the attorney fees and costs of the Fiscal Court.
If such action is taken, no new building permit or
certificate of occupancy or public approval by any public
agency shall be issued or granted until all improvements
are installed properly as determined by the Fiscal Court.
(Emphasis added.) County Defendants hone in on the word “may” to argue their
actions—or more accurately, inactions—were discretionary rather than ministerial.
It is well-settled that Kentucky courts have long construed “may” to be a
permissive word as opposed to a mandatory one. Our legislature has also given
guidance in this regard: when considering the construction of statutes, KRS
446.010(26) and (39) provide that “may” is permissive, and “shall” is mandatory.
See Alexander v. S & M Motors, Inc., 28 S.W.3d 303, 305 (Ky. 2000). However,
County Defendants ask our Court to look only at this singular provision rather than
at the Regulations as a whole, including other relevant sections.3
3
It is well-established in our Commonwealth that:
Statutory construction requires certain principles be followed
in order to give any statute its full and proper effect as intended by
the legislature. When construing a statute, the function of the
reviewing court is to effectuate the intent of the legislature. Vance
v. Kentucky Unemployment Ins. Comm’n, 814 S.W.2d 284, 286
(Ky. App. 1991). “[E]ach section of a legislative act should be
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In fact, the previous section—also numbered Section 6.2, but titled
“GUARANTEES”—provides, in relevant part:
The subdivider may execute and file guarantees with the
Fiscal Court . . . in lieu of actual installation or
completion of the required improvements, except
sidewalks, when requesting approval of the final plat.
....
B. Except as herein provided, the guarantee shall be in
the form of a good and sufficient surety bond . . . .
C. With regard to street, road or right of way
construction, the guarantee shall contain the further
condition that, should the subdivider fail to complete all
work and improvements required to be done by him
within twenty-four (24) calendar months of the date of
approval of the final plat, or within a mutually agreed
upon extension, but never to exceed twelve (12)
consecutive calendar months, that [sic] the Fiscal Court
shall cause all the work to be done and improvements
constructed. . . . All guarantees shall include a provision
that in the event of any default on the part of the
subdivider or the performance of any work or
construction of any improvements for which such
read in the light of the act as a whole; with a view to making it
harmonize, if possible, with the entire act, and with each section
and provision thereof, as well as with the expressed legislative
intent and policy.” Kentucky Tax Comm’n v. Sandman, 300 Ky.
423, 426, 189 S.W.2d 407, 409 (1945), overruled on other grounds
by Com. ex rel. Allphin v. Borders, 267 S.W.2d 940 (Ky. 1954).
No part of a statute should be interpreted as “meaningless or
ineffectual.” Lexington-Fayette Urban [Cty.] Gov’t v. Johnson,
280 S.W.3d 31, 34 (Ky. 2009). Finally, “statutes will not be given
[such a] reading where to do so would lead to an absurd or
unreasonable conclusion.” Hall v. Hospitality Res., Inc., 276
S.W.3d 775, 785 (Ky. 2008) (quotations and citation omitted).
Downey v. Kentucky Unemployment Ins. Comm’n, 479 S.W.3d 85, 89 (Ky. App. 2015).
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guarantees have been deposited, the Fiscal Court may
cause the required work to be done and the Fiscal Court
shall be permitted to withdraw that amount required for
payment of all costs therefore.
....
G. No release shall be made of guarantees until the
Fiscal Court has received written certification from the
developer’s engineer and from the appropriate County
official that all improvements have been constructed in
accordance with the previously approved plans.
(Emphasis added.) As previously mentioned, “shall” is mandatory. If an action is
mandatory, its performance is ministerial, not discretionary. Here, KLP filed
guarantees in the form of the bond, its change riders, and continuation certificates
in lieu of completion of the subdivision’s roadways. This triggered County
Defendants’ duty to insure the guarantees complied with the Regulations.
Nonetheless, and contrary to the provisions of Section 6.2(C) and (G), County
Defendants failed to insure the required language was included in the bond, they
returned the bond without proper certification, and they failed to cause the work to
be done or improvements to be constructed. These actions concerned enforcement
of established regulations and were integral to the approval of the final plat;
therefore, the actions were unquestionably ministerial in nature. Williams, 113
S.W.3d at 150; Nash, 345 S.W.3d at 815; Kelly, 899 S.W.2d at 519.
Additionally, the Regulations, in Section 1.1(A)(3), state proposed
roads “shall be properly built prior to acceptance or with adequate security to
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insure that said roads will be built without the expenditure of public funds.”
(Emphasis added.) Section 6.1 also provides:
[n]o final subdivision plat shall be approved by the Fiscal
Court . . . until the required improvements are
constructed in a satisfactory manner and certified as such
by the developer’s engineer and approved by the
appropriate County and City, if applicable, officials
having jurisdiction. In lieu of such prior construction, the
Fiscal Court may accept guarantees as provided in this
regulation.
(Emphasis added.) These provisions and their use of the word “shall” further
support the trial court’s finding that County Defendants’ performance of their
duties concerning approval of the plat and bond were ministerial rather than
discretionary. Further, Section 6.1 only allows acceptance of guarantees compliant
with the Regulations, and as previously noted, the guarantees herein did not
contain the language required by Section 6.2. Therefore, County Defendants are
not afforded qualified official immunity, and the trial court did not err in its
determination to that effect.
CONCLUSION
Therefore, and for the foregoing reasons, the orders entered by the
Calloway Circuit Court are AFFIRMED.
ALL CONCUR.
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BRIEFS FOR APPELLANTS: BRIEF FOR APPELLEE:
Stacey A. Blankenship Brian A. Veeneman
Kristen N. Worak Daniel P. Reed
Paducah, Kentucky Louisville, Kentucky
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