Opinion
NO. 2014-CA-001221-MR
04-22-2016
CITY OF MANCHESTER, KENTUCKY APPELLANT v. EA PARTNERS, PLC APPELLEE
BRIEFS FOR APPELLANT: James T. Gilbert Richmond, Kentucky R. Scott Madden Manchester, Kentucky BRIEF FOR APPELLEE: Cassidy R. Rosenthal Buckner Hinkle, Jr. Gregory P. Parsons Lexington, Kentucky
NOT TO BE PUBLISHED APPEAL FROM CLAY CIRCUIT COURT
HONORABLE OSCAR G. HOUSE, JUDGE
ACTION NO. 11-CI-00098 OPINION
AFFIRMING IN PART, REVERSING IN PART, AND REMANDING BEFORE: ACREE, CHIEF JUDGE; DIXON AND KRAMER, JUDGES. DIXON, JUDGE: The City of Manchester ("City") appeals from an order of the Clay Circuit Court granting partial summary judgment in favor of EA Partners, PLC ("EAP"). After careful review, we affirm in part, reverse in part, and remand for further proceedings.
In October 2009, the City began the process of soliciting proposals from engineering firms to develop an industrial site for a recycling facility known as "Waste Not Technologies." EAP was selected as the engineering firm for the project, and a contract for services was signed by the mayor at that time, Carmen Lewis, in December 2009. In June 2010, the City executed a second contract with EAP for services on a separate project, known as the "Pennington Hill Water Tank." The City also executed a contract with EAP to perform work on a third project for the "Muddy Gap Sewer." EAP submitted invoices periodically for its work on the projects. Although the City paid EAP for a portion of the work performed on the Pennington Hill and Muddy Gap projects, the City failed to remit payment on the invoices relating to the Waste Not Technologies project.
EAP ultimately sued the City for breach of contract, alleging the City failed to pay for the engineering services rendered by EAP on the Waste Not Technologies project, Pennington Hill project, and Muddy Gap project.
Four separate lawsuits were filed. A subcontractor sued EAP and the City for breach of contract arising from the Waste Not Technologies project. EAP also filed suit against Carmen Webb Lewis.
The cases were consolidated by the circuit court, and the parties engaged in a lengthy discovery process. In June 2014, the circuit court granted partial summary judgment in favor of EAP on its breach of contract claims against the City. This appeal followed.
On appeal, the City challenges summary judgment as to the Waste Not Technologies contract and the Pennington Hill Water Tank contract. The City does not allege any error regarding the court's ruling on the Muddy Gap Sewer contract.
It is well-settled that "the proper function of summary judgment is to terminate litigation when, as a matter of law, it appears that it would be impossible for the [non-moving party] to produce evidence at the trial warranting a judgment in his favor." Steelvest, Inc. v. Scansteel Service Center, Inc., 807 S.W.2d 476, 480 (Ky. 1991). "[A] party opposing a properly supported summary judgment motion cannot defeat it without presenting at least some affirmative evidence showing that there is a genuine issue of material fact for trial." Id. at 482. "Because summary judgment involves only legal questions and the existence of any disputed material issues of fact, an appellate court need not defer to the trial court's decision and will review the issue de novo." Lewis v. B & R Corp., 56 S.W.3d 432, 436 (Ky. App. 2001).
I. Waste Not Technologies Project
The trial court's order granting summary judgment, which was tendered by counsel for EAP, included specific findings: the city council was "well aware of" and "ratified" the EAP contract; the City's budget reflected "sufficient" appropriations to pay EAP; and EAP performed valuable engineering services for the City. The court awarded EAP $461,053.95 in unpaid principal on the contract plus interest and attorney's fees.
The City asserts that it presented affirmative evidence indicating material questions of fact exist as to whether the contract with EAP was void and unenforceable. The City relies on KRS 91A.030(13), which provides as follows:
No city agency, or member, director, officer, or employee of a city agency, may bind the city in any way to any extent beyond the amount of money at that time appropriated for the purpose of the agency. All contracts, agreements, and obligations, express or implied, beyond existing appropriations are void; nor shall any city officer issue any bond, certificate, or warrant for the payment of money by the city in any way to any extent beyond the unexpended balance of any appropriation made for the purpose.
According to the City, the city council did not appropriate funds for the Waste Not Technologies project; consequently, the contract with EAP was void because it was "beyond existing appropriations" pursuant to KRS 91A.030(13). Deposition testimony of Carmen Lewis, George Saylor, Penny Robinson, and Pam Mathis indicated that no funds were appropriated for the EAP contract because the City did not receive state and federal funding to pay for the Waste Not Technologies project. According to Mathis, EAP knew from the outset that the City was in the process of attempting to secure outside funding from state agencies. Further, Tom Hatfield, a partner in EAP, acknowledged in his deposition testimony that EAP did not verify with the City that funding had been approved for the project.
Lewis was the mayor until the end of 2010. Saylor was a member of city council at the time, and he became mayor in 2011. Robinson was a member of city council, and Mathis was a city clerk. --------
In contrast, EAP asserts the City's budget was broadly categorized and funds existed that could have been used to pay EAP's contract. EAP also points out that the City's 2010 audit included EAP's outstanding invoices as a liability in accounts payable totaling $516,000.
A city must strictly comply with the statutory requirements regarding the formation of a contract. City of Greenup v. Pub. Serv. Comm'n, 182 S.W.3d 535, 540 (Ky. App. 2005). The reasoning for such strict compliance was explained in City of Princeton v. Princeton Elec. Light & Power Co., 179 S.W. 1074, 1079 (Ky. 1915):
The laws provide how municipalities may bind themselves, and the contracts to be obligatory must be made in the manner the laws prescribe. A different rule prevails in regard to municipalities to that which governs private persons and private corporations. The persons who contract with municipal corporations must, at their peril, know the rights and powers of the officers of such municipalities to make contracts and the manner in which they must make them. Any other rule would destroy all the restrictions which are thrown around the people of municipalities for their protection by the statute laws and the Constitution, and would render abortive all such provisions. The rule in certain instances may be harsh, but no other is practical.
We are mindful summary judgment "is not a substitute for trial, nor is it the functional equivalent of a motion for directed verdict." Paintsville Hosp. Co. v. Rose, 683 S.W.2d 255, 256 (Ky. 1985). The circuit court's record in this case is voluminous. From our review of the evidence, including the deposition testimony referenced above, we agree with the City that disputed issues of material fact exist as to whether the EAP contract was void because the City did not appropriate funds for the Waste Not Technologies project. KRS 91A.030(13). Accordingly, we reverse the portion of the order granting summary judgment in favor of EAP as to the Waste Not Technologies project and remand for further proceedings.
II. Pennington Hill Water Tank Project
The City next contends material issues of fact exist as to whether EAP completed the work for which it billed the City on the Pennington Hill project.
At the outset, we note the City failed to include a statement of preservation for this argument. CR 76.12(4)(c)(v) requires ". . . at the beginning of the argument a statement with reference to the record showing whether the issue was properly preserved for review and, if so, in what manner." Further, EAP asserts the City did not raise this argument below; consequently, the trial court was not given an opportunity to consider this allegation. "The function of the Court of Appeals is to review possible errors made by the trial court, but if the trial court had no opportunity to rule on the question, there is no alleged error for this court to review." Kaplon v. Chase, 690 S.W.2d 761, 763 (Ky. App. 1985). We decline to address the City's unpreserved claim, as it "cannot feed one can of worms to the trial judge and another to the appellate court." Triplett v. Triplett, 414 S.W.3d 11, 15-16 (Ky. App. 2013). The portion of the order granting summary judgment in favor of EAP as to the Pennington Hill Water Tank project is affirmed.
For the reasons stated herein, the judgment of the Clay Circuit Court is affirmed in part, reversed in part, and remanded for further proceedings consistent with this opinion.
ALL CONCUR. BRIEFS FOR APPELLANT: James T. Gilbert
Richmond, Kentucky R. Scott Madden
Manchester, Kentucky BRIEF FOR APPELLEE: Cassidy R. Rosenthal
Buckner Hinkle, Jr.
Gregory P. Parsons
Lexington, Kentucky