Lisack v. Natural Resources & Environmental Protection Cabinet

840 S.W.2d 835, 1992 Ky. App. LEXIS 223, 1992 WL 317479
CourtCourt of Appeals of Kentucky
DecidedNovember 6, 1992
DocketNo. 91-CA-002364-MR
StatusPublished
Cited by1 cases

This text of 840 S.W.2d 835 (Lisack v. Natural Resources & Environmental Protection Cabinet) is published on Counsel Stack Legal Research, covering Court of Appeals of Kentucky primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Lisack v. Natural Resources & Environmental Protection Cabinet, 840 S.W.2d 835, 1992 Ky. App. LEXIS 223, 1992 WL 317479 (Ky. Ct. App. 1992).

Opinions

HUDDLESTON, Judge.

Dennis J. Lisack appeals from an order of the Franklin Circuit Court dismissing his tort action against Kentucky’s Natural Resources and Environmental Protection Cabinet on the ground that it is immune from suit. Because we agree that the Cabinet enjoys sovereign immunity, we affirm.

Lisack is founder of Exmet of Kentucky, Inc., a manufacturing concern devoted to producing zinc sulfate micronutrient fertilizer and animal feed. Exmet is now in Chapter 7 bankruptcy.

As conceived by Lisack, Exmet’s sole business was to receive non-hazardous, non-regulated smelter by-products as a raw material source for fertilizer and feed production. Exmet’s business plan did not contemplate the establishment of a hazardous waste treatment center.

In March 1986, Lisack on behalf of Ex-met contracted to secure a smelter product from Chemetco, a Delaware corporation operating in Illinois. Both verbally and in written correspondence, Chemetco confirmed that the material to be shipped to Exmet was a by-product of its smelter process, not hazardous waste.1

Prior to entering the March 1986 contract with Chemetco, Lisack had spoken with representatives of Kentucky’s Natural Resources and Environmental Protection Cabinet in an effort to secure a ruling as to whether the nature of the materials Exmet planned to receive and to process would require that a hazardous waste permit be obtained. The Environmental Protection Cabinet informed Lisack that it did not render advisory opinions regarding hypo[836]*836thetical situations, notwithstanding the fact that KRS 224.10-100(14) lists as one of the Cabinet’s duties that it “Advise, consult, and cooperate with ... affected persons, groups, and industries.”

In July 1986, after having entered the contract with Chemetco and undertaken substantial preparation of Exmet’s Louisville processing facility, Lisack addressed a comprehensive letter/report to the Environmental Protection Cabinet. This document described in detail the raw material Exmet was receiving from Chemetco, the Exmet manufacturing process, and the final product. Pursuant to the Cabinet’s “advise and consult” mandate, Lisack requested that the Cabinet confirm Chemet-co’s written assurances that the materials being shipped to Exmet did not constitute hazardous waste.

Lisack recognized that if Chemetco’s characterization of these materials was erroneous, Exmet would be operating a non-licensed waste treatment center in violation of Kentucky law. He expressed his ready willingness to obtain the appropriate permits, if needed.

Also in 1986, following Exmet’s execution of the Chemetco contract and the initiation of zinc oxide deliveries to Exmet’s Louisville facility, Frit Industries of Alabama complained to the Environmental Protection Cabinet that Exmet was illegally receiving hazardous waste material from Chemetco.

Although having before it Lisack’s formal ruling request and the Frit Industries complaint, the Environmental Protection Cabinet refused to make comment regarding the propriety of the Exmet operation, reiterating its “no advisory opinion” position. The Cabinet maintained this posture despite repeated follow-up calls and visits by Dr. Hugh Spencer, Exmet’s environmental advisor.

With no assistance from the Cabinet forthcoming, Lisack relied on the judgment of his advisors to conclude that his facility would not be handling hazardous waste materials. Exmet began full operations in late 1986. The facility terminated its operations in late 1988, evidently due to financial difficulties. In early 1989, the Environmental Protection Cabinet sued Exmet and Chemetco in Franklin Circuit Court. The suit resulted in a 1990 judgment against the two companies as “jointly and severally liable for the removal and disposal of all hazardous waste at the Exmet building....” Both companies were found to have violated Kentucky’s statutes and regulations prohibiting the un-permitted treatment, storage, and disposal of hazardous waste.

Lisack filed the present action against the Protection Cabinet in 1991, alleging that the Cabinet was grossly negligent in not fulfilling its regulatory mandate re Ex-met. Lisack submitted that the Cabinet’s negligence:

... caused Dennis J. Lisack harm and damage by allowing the company which he organized and to which he brought the investment capital in the form of trusted friends and associates as stockholders to operate as a non-permitted hazardous waste treatment and storage center.

Lisack further maintained that the Cabinet's negligence:

... caused serious and irreparable harm to Dennis J. Lisack’s principal business and occupation which is the formation of new business ventures and the associated confidence of financiers and investors. For the company, Exmet, to simply not have succeeded is one matter and is expected in the business. For the company not to have succeeded and then to be accused of illegal activities by the very regulatory agency whose advice was actively sought at the onset is a disgrace to the Commonwealth and has caused great personal and financial harm and loss to Dennis J. Lisack.
Furthermore, as if gross negligence is not enough, the Cabinet then chose to accuse Exmet and Dennis J. Lisack as the organizer and promoter of Exmet of [837]*837‘sham’ recycling to the ultimate and final detriment of Dennis J. Lisack’s financial well being and future business prospects.

The Cabinet moved to dismiss Lisack’s action for failure to state a claim on which relief could be granted, on sovereign immunity grounds, and for lack of subject matter jurisdiction. The trial court found that Kentucky’s General Assembly had not granted access to the courts for a negligence action against a sovereign organ of government. Lisack’s complaint was therefore dismissed, with prejudice, on the basis of sovereign immunity. This appeal followed.

We see nothing in the Environmental Protection Cabinet’s organization and funding to indicate that it is anything but a state agency “under the direction and control of the central State government and ... supported by monies which are disbursed by authority of the Commissioner of Finance out of the State treasury.” Gnau v. Louisville & Jefferson County Metropolitan Sewer Dist., Ky., 346 S.W.2d 754, 755 (1961). Under the authority of Gnau as construed by Kentucky Center for the Arts Corp. v. Berns, Ky., 801 S.W.2d 327, 331 (1991), we believe the Environmental Protection Cabinet to be a state agency enjoying sovereign immunity.

We further note that the question of the Environmental Protection Cabinet’s sovereign status has been largely settled by the Kentucky Supreme Court’s treatment of the issue in Calvert Investments, Inc. v. Louisville & Jefferson County Metropolitan Sewer Dist., Ky., 805 S.W.2d 133 (1991).

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840 S.W.2d 835, 1992 Ky. App. LEXIS 223, 1992 WL 317479, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lisack-v-natural-resources-environmental-protection-cabinet-kyctapp-1992.