Opinion
NO. 2018-CA-000655-MR
07-19-2019
JOHN K. CARTER, IN HIS OFFICIAL CAPACITY AS OLDHAM COUNTY ATTORNEY AND INDIVIDUALLY AS A RESIDENT AND TAXPAYER OF OLDHAM COUNTY, KENTUCKY APPELLANT v. OLDHAM COUNTY EXTENSION DISTRICT; OLDHAM COUNTY EXTENSION BOARD; JULIE K. BARR, IN HER OFFICIAL CAPACITY AS CLERK OF OLDHAM COUNTY; OLDHAM COUNTY, KENTUCKY; AND DAVID VOEGELLE, IN HIS OFFICIAL CAPACITY AS OLDHAM COUNTY JUDGE EXECUTIVE APPELLEES
BRIEFS AND ORAL ARGUMENT FOR APPELLANT: Lee E. Sitlinger Kelly M. Rowan Louisville, Kentucky BRIEF AND ORAL ARGUMENT FOR APPELLEES OLDHAM COUNTY EXTENSION DISTRICT AND OLDHAM COUNTY EXTENSION BOARD: Jon Salomon Kristin E. McCall Louisville, Kentucky
NOT TO BE PUBLISHED APPEAL FROM OLDHAM CIRCUIT COURT
HONORABLE KAREN A. CONRAD, JUDGE
ACTION NO. 17-CI-00495 OPINION
AFFIRMING IN PART, REVERSING IN PART, AND REMANDING
** ** ** ** **
BEFORE: CLAYTON, CHIEF JUDGE; KRAMER AND L. THOMPSON, JUDGES. THOMPSON, L., JUDGE: John Carter appeals from two orders of the Oldham Circuit Court which dismissed him from a declaratory action that challenged the validity of a tax. The court first dismissed Appellant from the action in his official capacity as County Attorney of Oldham County. Then, the court dismissed him from the action in his individual capacity as an Oldham County taxpayer. Appellant argues that he was properly before the court in both his official and individual capacities. We believe that the trial court properly dismissed Appellant from the action in his official capacity but erred in dismissing him in his individual capacity.
In July of 2017, Julie Barr, the Oldham County Clerk, received a tax rate sheet from the Oldham County Extension District Board (hereinafter referred to as the Board) which sought to levy a tax on real property, tangible personal property, watercraft, and motor vehicles. Prior to this date, the Board had never levied a tax. The Oldham County Extension District (hereinafter referred to as Extension District) had previously been funded through the general county taxes levied by the fiscal court.
Following the receipt of the tax rate sheet, Barr contacted Appellant and David Voegelle, the Oldham County Judge Executive. Barr asked for instructions on how to proceed as it was her duty to prepare the county tax bills. Appellant believed that the Extension District was not a taxing district and could not levy its own taxes. Voegelle informed Barr that he believed the tax was legal and should be included on the tax bills. On August 9, 2017, and in response to this conflicting information, Barr filed a petition for declaration of rights seeking guidance from the circuit court. Appellant, in his official capacity, and all Appellees were named in the action.
The correct spelling of the Oldham County Judge Executive's name is David Voegele. The spelling set forth in the notice of appeal is Voegelle. Per the rules of this Court, we will utilize the spelling contained in the notice of appeal.
On August 11, 2017, the Board and the Extension District filed their answer and sought a declaratory judgment in its favor. The Board and Extension District also sought a writ of mandamus compelling Barr to include the new tax on the tax bills. On August 29, 2017, Appellant, in his official capacity answered the petition. Appellant also moved to be allowed to proceed individually.
On September 15, 2017, the trial court entered an order which directed Barr to include the tax on the tax bills. The court found that her job was to only list the taxes presented to her on the tax bills. The court further found that she had no duty to contest the legality of the tax, and that this could only be done by an individual taxpayer once the tax has been levied. The court also dismissed Appellant, in his official capacity, from the action because it held that he was not representing the county as an entity. The court believed Appellant was representing dissenting individual taxpayers, which is not within the mandate of a county attorney. Finally, the court reserved Appellant's request to be joined to the action in his individual capacity until after the tax bills have been issued. The court stated:
Upon issuance of the tax bill by the Sheriff's Department, the Court shall entertain the issue of taxpayer challenges to the Extension District tax. The Court will then grant Mr. Carter's motion, as an individual taxpayer, to intervene, and shall schedule a hearing regarding the legality of the tax. The declaratory judgment action shall remain on the docket.
Once the tax bills were issued, Appellant filed a motion to intervene in his individual capacity as a resident and taxpayer of Oldham County. Appellant again sought to challenge the validity of the tax. The Extension District objected to the motion. The Extension District argued that Appellant had a conflict of interest in the case because his interests were adverse to those of his client, Oldham County.
Appellant has been represented by private counsel at all times during this action.
Neither the Oldham County Fiscal Court nor any of its members have participated in the underlying proceedings or this appeal.
On April 2, 2018, the trial court entered an order which denied Appellant's motion to intervene. The court held that Appellant's individual interests conflicted with those of Oldham County and the Oldham County Fiscal Court, and that it would be improper to allow Appellant to proceed due to this conflict of interest. This appeal followed.
Appellant's first argument on appeal is that the trial court erred in finding that Appellant had no standing in his official capacity to challenge the tax. The Extension District argues that this argument is untimely and cannot be appealed. In the alternative, the Extension District claims that the trial court was correct in its holding. We believe that the trial court did not err as to this issue.
As to the Extension District's argument that we should not review this issue, it claims that Appellant should have appealed the court's September 15, 2017 order dismissing him from the case in his official capacity. The Extension District claims this was a final and appealable order that should have been immediately appealed. We disagree. This argument was previously raised by the Extension District in a motion to dismiss the appeal as untimely. A previous panel of this court held that the appeal should proceed. We agree. The court's September order did not adjudicate all the rights of all the parties. Kentucky Rule of Civil Procedure (CR) 54.01. The court specifically stated in the order that it was reserving judgment on Appellant's motion to intervene as an individual. It also indicated that the action was to remain active on the court's docket. This shows that the order was not final and appealable; therefore, this issue is properly before us.
The trial court held that the county attorney only can act pursuant to direction from the county fiscal court or when defending against unjust claims. The court found that the fiscal court did not direct Appellant to act in this matter and opposing a tax is not an unjust claim. We agree with the court's assessment.
Kentucky Revised Statute (KRS) 69.210(1) states that the county attorney "shall institute, defend, and conduct all civil actions in which the county or consolidated local government is interested before any of the courts of the Commonwealth." This, however, can only be done "when so directed by the fiscal court or consolidated local government[.]" Id. Here, Appellant was not directed to challenge this tax by the fiscal court. In fact, the fiscal court directed Appellant to stand down.
Appellant relies primarily on KRS 69.210(3), which states that a county attorney "shall oppose all unjust or illegally presented claims." He argues that this tax is illegal, and he can challenge it even without the backing of the fiscal court. Appellant is correct in that a county attorney can sometimes act without the blessing of the fiscal court. In construing KRS 69.210, it has been held that a county attorney can act without authorization from the fiscal court if the fiscal court allows an unjust or illegal claim. Hoskins v. Leslie Cty. Fiscal Court, 242 S.W.2d 874, 875 (Ky. 1951); see also Estill Cty. v. Noland, 301 Ky. 204, 191 S.W.2d 223 (1945); Perry Cty. v. McIntosh, 280 Ky. 223, 133 S.W.2d 90 (1939); Johnson Cty. v. High Test Oil & Gas Co., 267 Ky. 760, 103 S.W.2d 272 (1937); Breckinridge Cty. v. Rhodes, 127 Ky. 444, 105 S.W. 903 (1907). The trial court considered this argument and found that challenging this tax was not the same as challenging an unjust or illegal claim. The trial court held that to be an unjust or illegal claim, the claim had to be against the funds or interests of the county. Here, at most, Appellant was only representing the interests of unknown objecting taxpayers and not the county itself.
We agree with the conclusion of the trial court. "The county attorney is the chosen legal representative of the people, charged with the responsibility to see that no illegal or wrongful appropriation of public funds of the county is made." Hoskins, 242 S.W.2d at 875. The cases cited above support the trial court's conclusion. All of the cases this Court could find regarding instances when a county attorney acted without authorization from the fiscal court concerned claims against funds of the county. Here, the tax at issue does not directly impact the county, the fiscal court, or county funds. The trial court did not err in dismissing Appellant, in his official capacity, from the cause of action.
Appellant's other argument on appeal is that the trial court erred in denying his motion to intervene in his individual capacity. It is undisputed that an individual taxpayer may challenge the legality of a tax. Bischoff v. City of Newport, 733 S.W.2d 762 (Ky. App. 1987). Here, the trial court did not allow Appellant to proceed in his individual capacity because it believed he had a conflict of interest. The court held that although the Oldham County Fiscal Court was remaining neutral in this case and had not made an appearance, it was tacitly approving the tax by not opposing it. This tacit approval, therefore, conflicted with Appellant's individual interest in challenging the tax. The court held that an attorney should not act contrary to the interests of his or her clients.
We disagree with the court's reasoning on this issue.
Before a lawyer is disqualified based on a relationship with a former client or existing clients, the complaining party should be required to show an actual conflict, not just a vague and possibly deceiving appearance of impropriety. And that conflict should be established with facts, not just vague assertions of discomfort with the representation.Marcum v. Scorsone, 457 S.W.3d 710, 718 (Ky. 2015). The trial court and Extension District cited to various cases and Kentucky Supreme Court Rules of Professional Conduct. One such rule, Kentucky Rule of the Supreme Court, Rule of Professional Conduct 3.130(1.7)(a), states that "a lawyer shall not represent a client if the representation involves a concurrent conflict of interest." It goes on to state:
A concurrent conflict of interest exists if:Id. This rule, along with the other rules and cases relied on by the Extension District and trial court, concerned an attorney representing a client who has interests in opposition to a former or current client. Here, Appellant is not representing a third-party against Oldham County. Appellant is asserting his own rights and is being represented by outside counsel.
(1) the representation of one client will be directly adverse to another client; or
(2) there is a significant risk that the representation of one or more clients will be materially limited by the lawyer's responsibilities to another client, a former client or a third person or by a personal interest of the lawyer.
We do not believe the Kentucky Supreme Court Rules of Professional Conduct prevent a county attorney from litigating personal claims against the county he or she works for. If that were the case, Appellant would be precluded from suing the fiscal court if he were injured on county property or by county personnel. This would be an unjust and unreasonable outcome.
We believe this holding is even more pertinent here because the Oldham County Fiscal Court has not made any appearance in this case, either at the trial level or on appeal. Even if Appellant's personal interests are in opposition to those of the county, the county is not without recourse. "[W]here the interest or duties of the county attorney are in conflict with the interests and responsibilities of the county, the fiscal court has power to engage independent counsel to represent it and to protect its interests." Commonwealth, for Use & Benefit of Clay Cty. v. Sizemore, 269 Ky. 722, 108 S.W.2d 733, 735 (1937).
Finally, the Extension District's argument as to why it can levy the contested tax is that it believes it is a "special purpose governmental entity." A special purpose governmental entity is a governmental entity created by statute which provides a limited number of services, is governed by a board, has authority separate from that of the state, city, or county in which it is located, and has the independent authority to generate public finds. KRS 65A.010(9). Pursuant to KRS 65A.100, special purpose governmental entities can levy ad valorem taxes without the need for approval from a county fiscal court. A county fiscal court cannot "adjust, amend, or veto the . . . tax". KRS 65A.100(2)(b). If the Extension District is a special purpose governmental entity, then the Oldham County Fiscal Court has no control over the tax at issue. If the Oldham County Fiscal Court has no control over whether the tax is implemented, and has indeed remained neutral on the issue, then there can be no conflict of interest arising from Appellant's attempt to stop the implementation of the Extension District's tax.
We make no decision as to whether or not the Extension District is such an entity. --------
For all of the above reasons, we believe the trial court erred in not allowing Appellant to intervene in his individual capacity.
Appellant and Appellees raise other issues in their briefs, however, they are not properly before this Court. The only issues on appeal are the ones concerning whether Appellant be allowed to proceed in his official capacity and whether Appellant had a conflict of interest that precluded him from asserting an individual claim.
Based on the foregoing, we affirm the judgment of the circuit court as to Appellant's ability to move forward with the cause of action in his official capacity, but reverse and remand as to Appellant's intervention in his individual capacity.
CLAYTON, CHIEF JUDGE, CONCURS.
KRAMER, JUDGE, CONCURS IN PART, DISSENTS IN PART, AND FILES SEPARATE OPINION.
KRAMER, JUDGE, CONCURRING IN PART AND DISSENTING IN PART: I concur with the majority opinion's affirming the circuit court's decision dismissing the Appellant from the action in his official capacity. However, I respectfully dissent as to the majority's decision to reverse the circuit court's decision denying Appellant's motion to intervene in his individual capacity. I agree with the analysis of the circuit court and would therefore affirm its decision to deny intervention. BRIEFS AND ORAL ARGUMENT
FOR APPELLANT: Lee E. Sitlinger
Kelly M. Rowan
Louisville, Kentucky BRIEF AND ORAL ARGUMENT
FOR APPELLEES OLDHAM
COUNTY EXTENSION DISTRICT
AND OLDHAM COUNTY
EXTENSION BOARD: Jon Salomon
Kristin E. McCall
Louisville, Kentucky