Opinion
NO. 2014-CA-001300-MR NO. 2014-CA-001301-MR
04-29-2016
BOARD OF COMMISSIONERS OF THE CITY OF DANVILLE, KENTUCKY APPELLANT/CROSS-APPELLEE v. ADVOCATE COMMUNICATIONS, INC., D/B/A THE ADVOCATE-MESSENGER APPELLEE/CROSS-APPELLANT
BRIEF FOR APPELLANT: Stephen A. Dexter Danville, Kentucky BRIEF FOR APPELLEE: Jon L. Fleischaker Louisville, Kentucky
NOT TO BE PUBLISHED APPEAL AND CROSS-APPEAL FROM BOYLE CIRCUIT COURT
HONORABLE DARREN W. PECKLER, JUDGE
ACTION NO. 12-CI-00482 OPINION
AFFIRMING AS TO THE APPEAL AND VACATING AND REMANDING AS TO THE CROSS-APPEAL
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BEFORE: COMBS, DIXON, AND D. LAMBERT, JUDGES. COMBS, JUDGE: The Board of Commissioners of the City of Danville and Advocate Communications, Inc., d/b/a the Advocate-Messenger, appeal the order of the Boyle Circuit Court. The Board appeals the court's finding that it violated the Open Meetings Act, and the Advocate-Messenger cross-appeals the court's denial of monetary relief. After our review, we affirm as to the appeal and vacate and remand as to the cross-appeal.
The City of Danville began leasing a portion of the Boyle Industrial Storage Company (BISCO) warehouse for its Public Works Department in 2004. The lease expired on September 30, 2011, at which time the City and BISCO entered into a month-to-month arrangement. The Board of Commissioners approved a search for a new facility and set a budget limit of two million dollars.
On July 17, 2012, the owners of the BISCO building announced that they would be holding a public auction for the property on August 10, 2012. The building had been appraised in 2007 for $1.5 million. The Board held its regular public meeting the following week on July 23. During the meeting, the Board went into a closed session in order to discuss purchasing the BISCO building. The Board made the decision to bid on the property at the auction and set a maximum bid of $1.5 million. The commissioners agreed to authorize the city manager, Ronald Scott, to engage a bidding agent. Stephanie Mojica was the reporter who covered the meeting for the Advocate-Messenger.
City manager Ronald Scott then engaged Nina Kirkland to be the city's bidding agent and memorialized the arrangement in a written agreement. On August 2, 2012, Kirkland executed a bidder's contract with the realtor on behalf of the city. It was a "non-contingent contract of sale to purchase the property" in the event that the city placed the winning bid.
The city - through Kirkland - was the highest bidder at the auction with a final bid of $1,237,500, automatically activating the terms of the bidder's contract. Scott signed a contract to purchase on behalf of the city and tendered a check for the down payment. Three days later, on August 13, 2012, in its regular open meeting, the Board again went into a closed session to discuss the transaction. When it returned to the open meeting, the Board approved the purchase contract and a down payment of $123,750.00, which had already been executed.
Public discussion of the purchase took place at the Board's next regular open meeting on August 27, 2012. Several citizens were present and asked numerous questions about the purchase. Before the meeting began, Scott provided a copy of a memorandum to the reporter for the Advocate-Messenger and to a representative of the local radio station. That memorandum laid out what he would be discussing. In response to numerous questions from citizens who were present, Scott then proceeded to discuss the purchase at length -- including the reasons why the Board had entered into closed sessions.
On August 30, 2012, the Advocate-Messenger submitted a complaint to Mayor Bernie Hunstad alleging that the closed session on July 23 violated the Open Meetings Act and seeking to have the action declared null and void. When the city did not respond to the complaint, the Advocate-Messenger appealed to the Kentucky Attorney General on September 10, 2012.
Kentucky Revised Statutes (KRS) Chapter 61.800 et seq.
The Attorney General issued his opinion (12-OMD-179) on September 28, 2012. It agreed that the Board had violated the Open Meetings Act on July 23 when it went into a closed session and decided to submit a bid for the BISCO warehouse. It also declared that the Board further violated the Act by failing to respond to the original complaint submitted to Mayor Hunstad.
The Board appealed to the Boyle Circuit Court. The Advocate-Messenger litigated the appeal and sought attorneys' fees, costs, and the imposition of statutory penalties. The trial court affirmed the opinion of the Attorney General in all respects but abated the Advocate-Messenger's motion for penalties and damages. The Board appealed to this Court. On April 11, 2014, we dismissed the appeal due to the lack of finality and remanded to the trial court for it to rule on the Advocate-Messenger's motion for monetary relief.
When it filed its lawsuit, the Advocate-Messenger also sought to have the purchase of the warehouse declared null and void. However, on May 3, 2013, it filed a motion seeking only an award of costs, attorneys' fees, and statutory penalties. We have not been able to determine why it abandoned its original claim seeking to nullify the purchase. --------
On remand, the Board sought reconsideration of the finding of violations of the Open Meetings Act. The Advocate-Messenger opposed the motion and renewed its own motion for costs and penalties. On June 18, 2014, the trial court once again found that the Board had violated the Open Meetings Act by its actions in closed sessions. However, it denied the Advocate-Messenger's motion for fees, costs, and statutory penalties. Both parties now appeal.
Determination of whether the Open Meetings Act has been violated is a matter of statutory interpretation. Floyd County Bd. of Educ. v. Ratliff, 955 S.W.2d 921, 925 (Ky. 1997). Therefore, our review is de novo. Commonwealth v. Love, 334 S.W.3d 92, 93 (Ky. 2011).
The Open Meetings Act protects the public's right to be informed of governmental activities by maximizing notice of public meetings and actions. Floyd County Bd. of Educ. v. Ratliff, 955 S.W.2d at 923. Agencies are bound to strict compliance with its mandates. Id. Indeed, the legislative statement of policy contained at the preamble to KRS Chapter 61.800 provides as follows:
The General Assembly finds and declares that the basic policy of KRS 61.805 to 61.850 is that the formation of public policy is public business and shall not be conducted in secret and the exceptions provided for by KRS 61.810 or otherwise provided for by law shall be strictly construed.KRS 61.810(1) provides that "[a]ll meetings of a quorum of the members of any public agency at which any public business is discussed or at which any action is taken by the agency, shall be public meetings, open to the public at all times . . .." Within the Open Meetings Act, "any action" is defined as "a collective decision, a commitment or promise to make a positive or negative decision, or an actual vote by a majority of the members of the governmental body . . . ." KRS 61.805(3). There are specific exceptions in which closed meetings are permissible, but it is imperative that "[n]o final action may be taken at a closed session . . . ." KRS 61.815(c).
The Board argues that its closed session was permissible pursuant to KRS 61.810(1)(b), the exception for "[d]eliberations on the future acquisition or sale of real property by a public agency, but only when publicity would be likely to affect the value of a specific piece of property to be acquired for public use or sold by a public agency."
First, the Board contends that KRS 61.810(1)(b) and KRS 61.815(c) are conflicting and should be subject to the rules of statutory construction. We disagree. The exception of KRS 61.810(1)(b) allows deliberations on acquisition of property. Deliberation is "the act of carefully considering issues and options before making a decision or taking some action . . . ." Blacks Law Dictionary, 438-39 (7th Ed. 1999). Thus, it allows closed session discussions which lead to the final action. However, KRS 61.815(c) prohibits performance of the actual final action which results from the deliberations - in this case, voting on the approval of bidding on the property. The final action must be carried out in a public meeting. The statutes' language is plain. There is no conflict, and we need not resort to rules of statutory construction.
There is no dispute that the Board did not vote or approve of bidding on the property in an open meeting prior to the auction. Before the auction purchase was ratified on August 13, the city had already entered into a purchase contract and tendered a check for $123,750.00. In its defense, the Board claims that if it had publicly discussed its intention to enter the bidding, the strategy of other bidders would have been altered, affecting the likely value or cost. However, the Board relates in its brief that it determined it limited its bid to the appraised value of $1.5 million. It does not explain how bidding an amount up to but no more that the appraised value would affect the value of the property with respect to other bidders.
Additionally, the decision to participate in the action was an agreement to enter the binding "non-contingent" bidding contract, which was a prerequisite of participation in the auction. By its very nature, the decision exceeded the boundaries of permissible "deliberations." Nonetheless, the action was both approved and executed without any public discussion as contemplated and mandated by the Act.
Also in the closed session, the Board agreed to hire a bidding agent in order to insure anonymity in its participation in the auction. In its brief, the Board claims that it did not actually agree on hiring a bidding agent. However, the record is replete with statements that all members of the Board agreed that a bidding agent should be employed. As a result of the closed session, and without any public discussion, the city did hire a bidding agent who represented the city and ultimately submitted the winning binding bid at the auction.
In Carter v. Smith, 366 S.W.3d 414, 422 (Ky. 2012), our Supreme Court has unequivocally held that the hiring of a contractor must be discussed in public: "[by] excluding the public from the discussion of Carter's consulting contract, the Board expanded the intended scope of the personnel exception and improperly concealed matters otherwise appropriate for public view." In Carter, the Court also held that actions improperly taken in closed session could not be remedied or salvaged by ratification in a subsequent open session. Id. at 23. "If a public agency wants to effectuate actions that were originally taken in an improper closed session, it must, to the extent possible, begin anew." Id.
The situation before us is highly analogous. The city impermissibly hired a contractor without public discussion and then ratified the relationship after she had performed her contractual obligation. The opinion of the Attorney General ably summarized the issue:
The public was entitled to know each Commission member's position on the purchase of the BISCO Building at the time the agreement was reached to extend a bid and not after the purchase was consummated. Although its intent in failing to conduct a public vote on the purchase may have been prompted by a desire to acquire the building at the least cost and in the most fiscally responsible way, the City Commission did not enjoy the privilege of cloaking its final action in secrecy, and its decision to do so constituted a violation of KRS 61.815(1)(c).Therefore, we are compelled to affirm the finding of the Boyle Circuit Court that the Board violated the Act in its July 23, 2012, closed session.
In its cross-appeal, the Advocate-Messenger contends that the trial court erred in denying its motion for attorneys' fees, costs, and statutory penalties pursuant to KRS 61.848(6). This statute provides that if a court determines that a public agency has violated the Open Meetings Act, it may award costs and reasonable attorneys' fees if the violation was willful. Penalties may be imposed consisting of up to one hundred dollars per violation. In an open records challenge, our Supreme Court defined willful behavior as that "without plausible justification and with conscious disregard of the requester's rights." City of Fort Thomas v. Cincinnati Enquirer, 406 S.W.3d 842, 854 (Ky. 2013).
The Advocate-Messenger claims that the Board's failure to respond to its original complaint is sufficient to justify an award of fees and penalties. KRS 61.846(1) provides that after a public agency has received a complaint, it shall respond to the complainant within three days. The response must include "a statement of the specific statute or statutes supporting the public agency's denial and a brief explanation of how the statute or statutes apply."
The Board acknowledges that the Advocate-Messenger sent a complaint on August 30, 2012. It does not dispute that it failed to comply with the three-day response provision of KRS 61.846(1). In fact, it did not respond at all until the Advocate-Messenger invoked the assistance of the Attorney General. In its defense, the Board contends that it substantially complied because it had provided the Advocate-Messenger with minutes from the July 23 closed meeting prior to the complaint. The Supreme Court of Kentucky has stated in dicta that failure to respond to a complaint constitutes willful conduct, per se. Yeoman v. Commonwealth, Health Policy Bd., 983 S.W.2d 459, 474 fn 12 (Ky. 1998).
The General Assembly created the Open Meetings Act because "the formation of public policy is public business and shall not be conducted in secret...." KRS 61.800. "The failure to comply with the strict letter of the law. . . violates the public good." Webster County Bd. of Educ. v. Franklin, 392 S.W.3d 431, 435 (Ky. App. 2013). The exceptions which allow closed meetings must be narrowly construed in order to prevent "improper or unauthorized closed, executive or secret meetings." Floyd County Bd. of Educ. v. Ratliff, 955 S.W.2d at 923. Nonetheless, the Board asserts that its closed meeting was justified by the exception of KRS 61.810(1)(b).
The Board was acutely aware that discussing its bid in a public meeting would automatically create a disadvantage for it as a bidder in an auction. Nonetheless, the requirements of the Open Meetings Act are clear on their face. The Board went into a closed meeting to discuss a matter of public business. Its closed meeting did not satisfy any of the exceptions to the open meetings mandate. The Board deliberately elected to ignore the requirements of the Open Meetings Act when it proceeded to discuss public business in private. It later declined to respond to the open meetings request by the Advocate-Messenger. Its conduct with respect to the clear requirements of the statute was unquestionably willful as construed by City of Fort Thomas, supra. Therefore, the trial court erred when it denied the Advocate-Messenger's motion for fees and penalties.
To summarize, we affirm as to the appeal, but we vacate as to the cross-appeal and remand to the Boyle Circuit Court for entry of an order awarding the fees and penalties sought by the Advocate-Messenger.
ALL CONCUR. BRIEF FOR APPELLANT: Stephen A. Dexter
Danville, Kentucky BRIEF FOR APPELLEE: Jon L. Fleischaker
Louisville, Kentucky