Baughman v. Commonwealth

572 S.W.3d 473
CourtMissouri Court of Appeals
DecidedApril 18, 2019
Docket2018-SC-000104-DG
StatusPublished

This text of 572 S.W.3d 473 (Baughman v. Commonwealth) is published on Counsel Stack Legal Research, covering Missouri Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Baughman v. Commonwealth, 572 S.W.3d 473 (Mo. Ct. App. 2019).

Opinion

OPINION OF THE COURT BY JUSTICE HUGHES

The Energy and Environment Cabinet (Cabinet) is tasked with regulating Kentucky's environment to protect public health, including preventing degradation of the waters of the Commonwealth. Beginning in 2004, the Cabinet notified Jeffrey Bowling (Bowling), the owner of five wastewater treatment plants in Johnson County, Kentucky, that his plants were improperly operated and maintained. These plants were discharging untreated sewage into Kentucky waters, posing health hazards to people in the area. After Bowling failed to resolve the plant conditions, the Cabinet filed a complaint against him seeking a temporary injunction and requesting that the trial court appoint a receiver. At the conclusion of the litigation - almost nine years later - the court-appointed receiver was owed $ 27,005. Recognizing the difficulty the receiver would have collecting from Bowling, the trial court assessed this amount against the Cabinet. On appeal, the Court of Appeals reversed the trial court, holding that only Bowling could be liable for the monies owed to the receiver. John B. Baughman, the receiver, sought discretionary review on behalf of himself and his predecessor receiver. The sole issue for review is whether the trial court abused its discretion in assessing the receiver's outstanding balance1 against the Cabinet. Finding no abuse of discretion, we affirm the Court of Appeals' opinion reversing the Franklin Circuit Court's order requiring the Cabinet to pay the receiver's outstanding balance *475and remand to the circuit court for entry of a new order consistent with this Opinion.

Before turning to the facts and analysis of this particular case, we note the absence in the record before us of any regular accounting by the receiver during the course of the receivership. Periodic accountings, whether quarterly, semi-annually, or even annually, provide the trial court with a clearer picture of the status of the receivership at any point in time and, when disputes do arise, allow for more effective trial court and appellate review. Although periodic accounting by a receiver is not mandatory, it is very strongly encouraged.

FACTS AND PROCEDURAL HISTORY

The Energy and Environment Cabinet is the administrative agency duly charged with the statutory duty to enforce all rules, regulations and orders promulgated for environmental protection, including those related to wastewater treatment and the prevention of water degradation. Bowling was the operator of several wastewater treatment plants (treatment plants) servicing residential subdivisions in Johnson County, Kentucky.2 The plants owned by Bowling were improperly operated and maintained and continued to discharge untreated sewage into the waters of the Commonwealth, posing serious health risks to area residents.

Beginning in 2004, the Cabinet repeatedly issued notices of violations of wastewater regulations resulting from Bowling's inadequate operation and maintenance of the treatment plants.3 Bowling took no action to resolve the conditions cited by the Cabinet as noncompliant. On July 26, 2005, the Cabinet filed a complaint seeking to enjoin Bowling, as the operator, from ongoing environmental degradation by continuing to discharge untreated sewage into Kentucky waters. The complaint also requested that Bowling be required to retain a Kentucky-licensed wastewater operator to operate the plants at issue, or, in the alternative, that a receiver be appointed to take possession of the plants in question, receive the assets (including monthly payments from the subdivision residents), and perform any other necessary duties. The trial court issued a temporary injunction against Bowling that same day.

*476On August 11, 2005, a Cabinet representative inspected the treatment plants and found ongoing violations of the Kentucky regulations, meaning Bowling had not complied with the temporary injunction. The trial court issued a show cause order, which Bowling ignored. He was eventually arrested on November 29, 2005, and a $ 10,000 cash bond was posted on his behalf that same day. Despite his arrest, Bowling continued to disregard the court's temporary injunction. An inspector with the Division of Water branch of the Cabinet noted that as of May 12, 2006, some of the treatment plants were septic and nearly all the plants were in very poor condition. After Bowling's failure to comply with a second show cause order, he was arrested for the second time on December 19, 2006. A $ 33,000 cash bond was posted on his behalf the next day.

On the Cabinet's motion, the trial court appointed then-deputy master commissioner Squire Williams III as temporary receiver (the receiver) on December 21, 2006, to collect rates for the treatment plants and directed the Cabinet to petition the Public Service Commission (Commission) to pursue appointment of a permanent receiver to take over the treatment plants. On December 28, 2006, counsel for Bowling made an appearance of record. That same day, the Cabinet initiated abandonment proceedings with the Commission pursuant to Kentucky Revised Statute (KRS) 278.021.4 In May 2007, the Commission conducted a hearing to determine if the treatment plants were abandoned, but neither Bowling nor his counsel appeared.

On February 22, 2007, the trial court ordered, by agreement of the parties, that the $ 10,000 bond previously posted for Bowling be turned over to the receiver, to be used in furtherance of the operation, repair, and maintenance of the treatment plants. On March 7, 2007, the trial court entered an Agreed Order on behalf of the Cabinet, the receiver, and Prestonsburg City's Utilities Commission (PCUC) that appointed PCUC as operator of the five treatment plants. The order stated that the receiver would pay PCUC $ 60 per month, per customer (the 90 subdivision residents serviced by the treatment plants), for its services. If the fees collected from the customers were insufficient for the receiver to pay PCUC, the court ordered the receiver to use proceeds from Bowling's forfeited bond, or other funds made available to the receiver by the Cabinet.

Over the next several months, the receiver made distribution motions to the trial court for payment to PCUC for its services, totaling approximately $ 5,400 per month, and for payment of the fees and expenses incurred by the receiver. Over the course of this litigation, these distributions to the receiver ranged from approximately $ 300 to $ 20,000.5 The trial court ordered Bowling to submit a proposal *477to the court, Cabinet, and receiver outlining a payment plan and any other contributions Bowling could make to aid in the cleanup efforts for the treatment plants. On October 12, 2007, Bowling proposed that he could pay $ 1,000 per month "until the reasonable amount of the repair and maintenance bills [were] paid." Bowling questioned some of the costs being assessed, but nonetheless agreed to pay the receiver for overseeing the operation of the treatment plants.

The receiver responded, stating that approximately 71% of the residents regularly pay their sewer bill, resulting in an average monthly income for rate collection of approximately $ 3,600.

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Bluebook (online)
572 S.W.3d 473, Counsel Stack Legal Research, https://law.counselstack.com/opinion/baughman-v-commonwealth-moctapp-2019.