Executive Branch Ethics Commission v. Stephens

92 S.W.3d 69, 2002 Ky. LEXIS 200, 2002 WL 31323742
CourtKentucky Supreme Court
DecidedOctober 17, 2002
Docket2000-SC-0578-DG
StatusPublished
Cited by28 cases

This text of 92 S.W.3d 69 (Executive Branch Ethics Commission v. Stephens) 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
Executive Branch Ethics Commission v. Stephens, 92 S.W.3d 69, 2002 Ky. LEXIS 200, 2002 WL 31323742 (Ky. 2002).

Opinions

WINTERSHEIMER, Justice.

This appeal is from an opinion of the ' Court of Appeals affirming an order of the Franklin Circuit Court granting summary judgment for Stephens and finding that the Executive Branch Ethics Commission was without jurisdiction to investigate Stephens for possible violations of the Executive Branch Code of Ethics and that Stephens was immune from the ethics complaint.

The major question should be framed as whether the exclusive jurisdiction of the circuit court in matters involving the liquidation of a domestic insurer precludes the full investigation by the Executive Branch Ethics Commission of allegations of a violation of the Executive Branch Code of Ethics. We hold that it does not because the charges of misconduct relate only to personal behavior and are not directly connected to insurance liquidation.

Other issues presented include whether it was required that administrative remedies be exhausted; whether the deputy liquidator is an officer of the court completely under judicial control; whether Stephens was entitled to official immunity; and whether summary judgment was proper.

As Commissioner of the Department of Insurance, Stephens was appointed reha-bilitator of the estate of Kentucky Central Life Insurance Company and was later appointed as liquidator. He resigned as Commissioner of Insurance on December [71]*718,1995, and on December 11, 1995, he was appointed as deputy liquidator for Kentucky Central by his successor as Commissioner and liquidator. His appointment was by contract between himself and his successor and was approved the same day by Franklin Circuit Court Judge Graham in his role as presiding judge over the Kentucky Central liquidation action. Stephens served as deputy liquidator from December 11, 1995 until December 12, 1996. He was then appointed as a consultant to the liquidator and deputy liquidator on an “as needed” basis. The Ethics Commission, acting on its own motion, initiated a preliminary inquiry on February 6, 1996, as to whether Stephens had violated any provisions of KRS Chapter 11A.

In summary, the alleged violations were that Stephens had, in violation of KRS 11A.040(6), entered into a contract to serve as deputy liquidator for Kentucky Central; that he used his official position to obtain financial gain for himself by arranging this contract and appointment with Kentucky Central upon his leaving the Department of Insurance; and that in accepting the position of deputy liquidator, he violated the prohibitions of KRS 11A.040(8).

The matter proceeded at the administrative level where Stephens filed an unsuccessful motion to dismiss. During the pen-dency of the administrative proceeding, he also filed a motion in circuit court seeking declaratory and injunctive relief. Ultimately, the circuit court granted Stephens a summary judgment. The Court of Appeals affirmed and this Court accepted discretionary review.

The Ethics Commission argues that Stephens should have been required to exhaust the administrative remedies available to him before the circuit court considered any appeal or complaint he might have. It contends that statutes must be interpreted so as not to reach an absurd result. The Commission asserts that Stephens, as deputy director, worked for the liquidator and served at her pleasure, and the only role of the circuit court was to approve his compensation. It also claims that summary judgment was improperly granted and that the circuit court erred in deciding that Stephens has immunity pursuant to KRS 304.33-115.

Stephens responds that the circuit court had exclusive jurisdiction over all matters related to the liquidation of the estate. Accordingly, he contends that the Commission did not have jurisdiction to adjudicate the charges against him, and there is no requirement for him to exhaust administrative remedies. Stephens also maintains that the deputy liquidator is an officer of the court and thus the post-public service employment restrictions do not apply. Further, he claims that the estate of an insolvent insurance company is completely under judicial control and does not contract or do business with the state as a matter of law; that he, based on the record, is entitled to official immunity; that the rules of statutory construction support the decisions of the circuit court and the Court of Appeals; that enforcing the clear statutory mandate of exclusive jurisdiction is not an absurd result; that summary judgment was properly granted on both lack of jurisdiction and official immunity grounds; that the Ethics Commission never presented the arguments set forth in its brief to the Court of Appeals or to the circuit court and has not properly preserved those arguments for further review.

I. Exhaustion of Administrative Remedies

KRS 13B.140(1) states in part as follows: All final orders of an agency shall be subject to judicial review in accordance with the provisions of this chapter. A party shall institute an appeal by filing a [72]*72petition with the Circuit Court of venue, as provided in the agency’s enabling statutes within thirty (30) days after the final order of the agency is mailed or delivered by personal service.

Here, Stephens made a motion to dismiss before the hearing officer which was overruled. He then sought interlocutory relief from Franklin Circuit Court contending that to allow the Ethics Commission’s administrative proceeding to run its course would work irreparable harm both on him and the liquidation of Kentucky Central. However, at the time he filed his complaint in January of 1997, he was no longer the deputy liquidator for Kentucky Central. The Ethics Commission was not seeking to remove Stephens as deputy liquidator and thus attempting to overrule the appointment by the circuit court of Stephens to that position. Removal is a remedy not available to the Commission under the terms of its enabling statute.

At the time of the alleged offenses, KRS 11A. 100(3) stated that:

The commission, upon a finding pursuant to an administrative hearing that there has been clear and convincing proof of a violation of this chapter, may:
(a) Issue an order requiring the violator to cease and desist the violation; and
(b) Issue an order requiring the violator to file any report, statement, or other information as required by this chapter; and
(c) In writing, publicly reprimand the violator for potential violations of the law and provide a copy of the reprimand to the alleged violator’s appointing authority, if any; and
(d) In writing, recommend to the violator’s appointing authority that the violator be removed or suspended from office or employment, and include a recommendation for length of suspension, to be approved by the appointing authority, if any; and

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Cite This Page — Counsel Stack

Bluebook (online)
92 S.W.3d 69, 2002 Ky. LEXIS 200, 2002 WL 31323742, Counsel Stack Legal Research, https://law.counselstack.com/opinion/executive-branch-ethics-commission-v-stephens-ky-2002.