Beshear v. Haydon Bridge Co.

416 S.W.3d 280, 2013 WL 6145132, 2013 Ky. LEXIS 582
CourtKentucky Supreme Court
DecidedNovember 21, 2013
DocketNo. 2011-SC-000563-TG
StatusPublished
Cited by13 cases

This text of 416 S.W.3d 280 (Beshear v. Haydon Bridge Co.) is published on Counsel Stack Legal Research, covering Kentucky Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Beshear v. Haydon Bridge Co., 416 S.W.3d 280, 2013 WL 6145132, 2013 Ky. LEXIS 582 (Ky. 2013).

Opinions

Opinion of the Court by

Justice ABRAMSON.

Three years ago in Beshear v. Haydon Bridge Co., Inc., 304 S.W.3d 682 (Ky.2010) (Haydon Bridge I), this Court held that provisions of the 2000-2002 and 2002-2004 Budget Bills which suspended annual General Fund appropriations to the Benefit Reserve Fund (BRF) maintained within the Kentucky Workers’ Compensation Funding Commission (KWCFC) were constitutional but that other provisions of those bills ordering monies transferred from the BRF to the General Fund and the Department of Mines and Minerals were unconstitutional under Section 51 of [284]*284the Kentucky Constitution. This Court reasoned that the monies the legislature had previously appropriated to the BRF and the ongoing private contributions from assessments on workers’ compensation insurance premiums were incapable of differentiation, and thus the General Assembly was without authority to transfer any BRF monies to the General Fund absent a statutory amendment and compliance with the publication requirement of Section 51 as set forth in Commonwealth ex rel. Armstrong v. Collins, 709 S.W.2d 437 (Ky. 1986). On remand, the trial court granted permanent prospective relief prohibiting the future transfer of funds from the BRF to the General Fund or any other state agency, and also ordered “retroactive in-junctive relief’ in the form of a judgment requiring Defendants Governor Steven L. Beshear and State Budget Director Mary E. Lassiter to return any and all monies that had been transferred from the BRF to the General Fund in the decade from 2000-2010. The trial court’s order addressed not only transfers from the part of the BRF known as the Special Fund but also the Coal Workers’ Pneumoconiosis Fund, a separate fund maintained by KWCFC pursuant to Kentucky Revised Statutes (KRS) 342.1241 and .1242 and the focus of new claims brought by Plaintiffs in their Third Amended Complaint. Finally, the trial court held that the Plaintiffs had created a common fund through this litigation and, consequently, their attorneys were entitled pursuant to KRS 412.070 to a 25% contingency fee ($8,778,-725.00) to be paid by the Commonwealth of Kentucky.

This Court accepted transfer of the ensuing appeal pursuant to Kentucky Rule of Civil Procedure (CR) 74.02. Defendants/Appellants Beshear and Lassiter (collectively “the Governor”) maintain that sovereign immunity and the separation of powers provisions of the Kentucky Constitution preclude the “retroactive injunctive relief’ ordered by the trial court, relief that in essence is an award of damages against the Commonwealth. They also maintain that because no common fund can be created in this case there is no basis for the attorneys’ fee award against the Commonwealth. Finally, they contend that the Pneumoconiosis Fund claims should not have been addressed by the trial court since none of the Plaintiffs has standing, never having been subject to the assessments which support that Fund and having no interest in it. Agreeing with the Governor on all of these issues, we reverse the Judgment of the Franklin Circuit Court.

RELEVANT FACTS

I. The Original Suit and Haydoti Bridge I.

In December 2003 and February 2004, respectively, Plaintiffs Haydon Bridge Company, Inc., Greater Louisville Auto Dealers Association, Kentucky Automobile Dealers Association, M & M Cartage Co., Inc., Springfield Laundry & Dry Cleaners, Inc. and Usher Transport, Inc. (Plaintiffs) filed first a Petition for Declaration of Rights and Injunctive Relief and later a First Amended Petition against then-Governor Paul Patton and Acting State Budget Director Mary Lassiter. Plaintiffs challenged the Governor’s budget reduction plan and corresponding parts of the 2000-2002 and 2002-2004 Budget Bills that affected the Special Fund portion of the BRF. The Special Fund, originally created in 1946, is addressed in KRS 342.122 and is funded through two sources, appropriations by the General Assembly and assessments against workers’ compensation premiums paid by Kentucky employers such as the Plaintiffs. The original and First Amended Petitions (and an eventual Second Amended Petition naming then-Gover[285]*285nor Ernie Fletcher) sought a declaration that provisions in the aforementioned budget bills, which (1) temporarily suspended an annual $19 million appropriation from the General Fund to the KWCFC and (2) ordered transfers out of the Special Fund to either the General Fund or the Department of Mines and Minerals, were unconstitutional. The trial court invalidated all of the challenged budget provisions under Section 51 of the Kentucky Constitution.

As noted above, this Court found suspension of the appropriations to be constitutional under Sections 15 and 5Í of the Kentucky Constitution1 but agreed with Plaintiffs that transfer of funds out of the Special Fund2 was unconstitutional. This Court reasoned that KRS 342.1227 prohibited funds in the possession of KWCFC from being transferred or loaned to the Commonwealth for any purpose other than those authorized by KRS Chapter 342. While the General Assembly in KRS 48.310(2) and 48.315 provided that a budget bill could be used to transfer KWCFC funds back to the General Fund, those transfers were necessarily limited by this Court’s holding in Armstrong v. Collins, 709 S.W.2d at 437. Armstrong held that the legislature had no authority, via a budget bill, to transfer back to the General Fund any agency funds in which legislative appropriations and private contributions were commingled and not subject to differentiation. In Haydon Bridge I, we concluded that monies in the Special Fund could not be differentiated and thus the attempted statutory suspension of KRS 342.1227 was improper under Section 15 of the Kentucky Constitution; in fact, a statutory amendment was necessary, necessitating compliance with the publication requirement of Section 51. Because there was no compliance with Section 51, the challenged transfers from the agency funds to the General Fund and the Department of Mines and Minerals were unconstitutional.

II. The Trial Court’s Orders on Remand and This Appeal.

On remand, Plaintiffs were allowed to file a Third Amended Complaint challenging provisions in the 2004-2006, 2006-2008 and 2008-2010 Budget Bills that were similar to those held unconstitutional in Hay-don Bridge I and adding new claims regarding provisions in budget bills dating back to 2000 which pertain to the Pneumo-coniosis Fund. The Pneumoconiosis Fund was created in 1996 for the benefit of coal industry workers whose last exposure occurred on or after December 12, 1996 and is funded solely by “employers engaged in the severance or processing of coal.” KRS 342.1242.

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Bluebook (online)
416 S.W.3d 280, 2013 WL 6145132, 2013 Ky. LEXIS 582, Counsel Stack Legal Research, https://law.counselstack.com/opinion/beshear-v-haydon-bridge-co-ky-2013.