Opinion
NO. 2013-CA-001351-MR NO. 2013-CA-001375-MR
01-09-2015
KENTUCKY UNEMPLOYMENT INSURANCE COMMISSION APPELLANT v. KENTUCKY DIVISION OF UNEMPLOYMENT INSURANCE; JOHN D. LEWIS; AND JOBE PUBLISHING, INC. APPELLEES AND JOBE PUBLISHING, INC. APPELLANT v. KENTUCKY DIVISION OF UNEMPLOYMENT INSURANCE; JOHN D. LEWIS; AND KENTUCKY UNEMPLOYMENT INSURANCE COMMISSION APPELLEES
BRIEF FOR APPELLANT, KENTUCKY UNEMPLOYMENT INSURANCE COMMISSION: Patrick B. Shirley Frankfort, Kentucky BRIEF FOR APPELLANT; JOBE PUBLISHING, INC.: Christopher T. Davenport Brandon T. Murley Bowling Green, Kentucky BRIEF FOR APPELLEE, KENTUCKY DIVISION OF UNEMPLOYMENT INSURANCE: James C. Maxson Frankfort, Kentucky
NOT TO BE PUBLISHED APPEAL FROM FRANKLIN CIRCUIT COURT
HONORABLE PHILLIP SHEPHERD, JUDGE
ACTION NO. 12-CI-00373
OPINION
VACATING
BEFORE: CAPERTON, JONES, AND KRAMER, JUDGES. KRAMER, JUDGE: The brief filed by the Kentucky Unemployment Insurance Commission correctly summarizes the relevant factual and procedural history in this matter as follows:
On February 22, 2011, the Appellee Kentucky Division of Unemployment Insurance (hereinafter the "Division") issued an administrative determination which held that the Appellee, John D. Lewis (hereinafter the "claimant"), was an employee for purposes of Unemployment Insurance, and that the service performed by the claimant was in covered employment. Therefore, the claimant's employer, Appellee Jobe Publishing (hereinafter the "employer"), was held liable for payment of unemployment tax based on wages paid to the claimant in the covered employment.
In March 10, 2011, the employer appealed the administrative determination to the Division. On July 20, 2011, a referee conducted an evidentiary hearing on the matter. The hearing was continued and concluded on August 9, 2011. On February 29, 2012, the Appellant Kentucky Unemployment Insurance Commission (hereinafter the "Commission"), issued an Order Reversing, which held that the claimant was not an employee of the employer for purposes of Unemployment Insurance, and the service was not performed in covered employment. On March 20, 2012, the claimant filed a complaint with the Franklin Circuit Court seeking judicial review of the Commission's Order Reversing. In doing so, the claimant named both the employer and the Division as
"Appellee/Respondent." The claimant did not name the Commission as an Appellee/Respondent.
On April 4, 2012, the Division filed a Motion to Dismiss the claimant's complaint on the grounds that the Franklin Circuit Court lacked subject matter jurisdiction due to the claimant's failure to comply with [Kentucky Revised Statute] KRS 341.450(1) in failing to name the Commission as a defendant in the claimant's complaint. On July 9, 2012, the Franklin Circuit Court issued an Order that denied the Division's Motion to Dismiss. In the Order, the Franklin Circuit Court specifically allowed the claimant an opportunity to amend his Complaint to add the Commission as a Defendant.
On August 9, 2012, the claimant filed a Motion to Amend his complaint in order to name the Commission as a Defendant in the action. On August 14, 2012, over the objections of all named parties, and the Commission, the Franklin Circuit Court granted the claimant's Motion to Amend.
On July 16, 2013, after the parties had briefed the merits of the claimant's appeal, the Franklin Circuit Court issued an Opinion and Order that reversed the Commission's Order Reversing. On August 6, 2013, the Commission filed a Notice of Appeal.
Judge Caperton concurred in this opinion prior to Judge Debra Lambert being sworn in on January 5, 2015, as Judge of Division 1, Third Appellate District. Release of this opinion was delayed by administrative handling.
As the above would indicate, the primary argument advanced by both appellants in these two consolidated appeals is that the circuit court should have dismissed Lewis's action on the basis that it lacked subject matter jurisdiction.
We agree. Moreover, the Kentucky Division of Unemployment Insurance also agrees.
As a general matter, KRS 341.450(1) permits judicial review of a decision of the Commission. In relevant part, it provides that
within twenty (20) days after the date of the decision of the commission, any party aggrieved thereby may, after exhausting his remedies before the commission, secure judicial review thereof by filing a complaint against the commission in the Circuit Court of the county in which the claimant was last employed by a subject employer whose reserve account or reimbursing employer account is affected by such claims. . . .
Here, Lewis failed to file any complaint against the Commission within the twenty-day period specified in KRS 341.450(1). The circuit court nevertheless allowed his action to proceed after determining Lewis had substantially complied with KRS 341.450(1) because 1) Lewis had named the Division of Unemployment Insurance in his complaint and, in the circuit court's opinion, Lewis had thereby "effectively named" the Commission as a party per the statute; 2) the record indicated that the Commission had been served with summons, and the Commission ostensibly had notice of Lewis's action; and 3) Lewis stated in his complaint that the purpose of his action in circuit court was to appeal "the finding of the Kentucky Unemployment Insurance Commission." Furthermore, the circuit court held that the Kentucky Rule of Civil Procedure (CR) 15.01 would, in any event, allow Lewis to cure his failure and amend his complaint to add the Commission as a party after the expiration of the twenty-day period specified in KRS 341.450(1).
However, the Division and the Commission are distinct from one another; naming one as a party does not "effectively name" both. See Kentucky Unemployment Ins. Comm'n v. Providian Agency Group, Inc., 981 S.W.2d 138 (Ky. App. 1998) (dismissing an unemployment insurance appeal for failure to comply with KRS 341.450(1) when the appellant named the Commission as an appellee, but failed to name the Division). Indeed, only the Commission is obligated to file an answer in an unemployment insurance proceeding in circuit court. KRS 341.450(2); see also Western Kentucky Coca-Cola Bottling Co., Inc. v. Runyon, 410 S.W.3d 113, 116 (Ky. 2013).
More to the point, the doctrine of substantial compliance does not apply where, as here, the appellate process is statutorily created and implemented. See Kentucky Unemployment Comm'n v. Carter, 689 S.W.2d 360, 361 (Ky. 1985). When an aggrieved party is permitted by statute to appeal an administrative agency decision, "the requirements of the statute are mandatory, and a circuit court does not obtain jurisdiction to hear the appeal unless the statutory requirements have been met." Cabinet for Human Res. v. Holbrook, 672 S.W.2d 672, 675 (Ky. App. 1984) (citations omitted). Kentucky courts have long held that statutes providing for judicial review of administrative agency decisions are to be strictly observed. See Carter, 689 S.W.2d 360; Board of Adjustment of the City of Richmond v. Flood, 581 S.W.2d 1 (Ky. 1979); Fisher v. Kentucky Unemployment Ins. Comm'n, 880 S.W.2d 891, 892 (Ky. App. 1994); Monyhan v. Kentucky Unemployment Ins. Comm'n, 709 S.W.2d 837 (Ky. App. 1986); Frisby v. Board of Educ. of Boyle County, 707 S.W.2d 359 (Ky. App. 1986); Holbrook, 672 S.W.2d 672; Pickhart v. United States Post Office, 664 S.W.2d 939 (Ky. App. 1983); Roberts v. Watts, 258 S.W.2d 513 (Ky. 1953).
Furthermore, "[t]he civil rules which would normally permit amendment do not apply to appeals of administrative decisions until after the appeal has been perfected and jurisdiction has attached." Holbrook, 672 S.W.2d at 675 (citing Politt v. Kentucky Unemployment Ins. Comm'n, 635 S.W.2d 485 (Ky. App. 1982)). Thus, the amendment provision of CR 15.01 was not a viable avenue of relief for Lewis. See also CR 1(2) (""the procedural requirements of the statute shall prevail over any inconsistent procedures set forth in the Rules [of Civil Procedure]").
In short, the circuit court lacked subject matter jurisdiction to adjudicate the merits of Lewis's action. Accordingly, its order reversing the Commission is hereby VACATED.
ALL CONCUR. BRIEF FOR APPELLANT,
KENTUCKY UNEMPLOYMENT
INSURANCE COMMISSION:
Patrick B. Shirley
Frankfort, Kentucky
BRIEF FOR APPELLANT; JOBE
PUBLISHING, INC.:
Christopher T. Davenport
Brandon T. Murley
Bowling Green, Kentucky
BRIEF FOR APPELLEE,
KENTUCKY DIVISION OF
UNEMPLOYMENT INSURANCE:
James C. Maxson
Frankfort, Kentucky