South Central Kentucky Properties, Inc. v. Commonwealth

510 S.W.3d 850, 2017 WL 382406, 2017 Ky. App. LEXIS 20
CourtCourt of Appeals of Kentucky
DecidedJanuary 27, 2017
DocketNO. 2015-CA-001486-MR
StatusPublished

This text of 510 S.W.3d 850 (South Central Kentucky Properties, Inc. v. Commonwealth) 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
South Central Kentucky Properties, Inc. v. Commonwealth, 510 S.W.3d 850, 2017 WL 382406, 2017 Ky. App. LEXIS 20 (Ky. Ct. App. 2017).

Opinion

OPINION

STUMBO, JUDGE:

South Central Kentucky Properties, Inc. (“South Central”) appeals from an Opinion and Order of the Franklin Circuit Court dismissing its action against the Commonwealth of Kentucky, Department of Energy and Environment Cabinet, and from an Opinion and Order granting Summary Judgment in favor of the Commonwealth of Kentucky, Department of Transportation.1 South Central argues that the circuit court erred in failing to conclude that 1) the Department of Transportation (“DOT”) violated provisions of the Kentucky Constitution by allowing a DOT contractor to dump waste material into a DOT easement, thus constituting a taking without compensation, and 2) the Energy and Environmental Cabinet (“EEC”) violated Kentucky’s administrative law by allowing the DOT to dump the waste material and in failing to conduct a hearing or offer any substantive response. For the reasons stated below, we find no error and AFFIRM the Orders on appeal.

Appellant, South Central, owns a parcel of real property situated in Cave City, Kentucky, upon which was a hotel constructed of cinder blocks. South Central began the process of demolishing the hotel. As part of that effort, South Central sought to dump cinder blocks and other debris into a sinkhole on the parcel. According to South Central, rain water would pool in the sinkhole creating a hazard, and adding the debris would mitigate the hazard while providing a cost-effective means of disposing of the debris.

[852]*852South Central contacted the EEC requesting permission to dump the debris in the sinkhole. The EEC responded with a letter denying the request. On April 28, 2014, South Central sent another letter to the EEC restating its request. The EEC did not respond.

The DOT has a drainage easement and right-of-way over the entire area encompassing the sink hole. In the summer of 2014, and with the DOT’s consent, a DOT road project contractor began dumping construction debris into the sinkhole.

On July 14, 2014, South Central filed the instant action against the DOT and EEC in Franklin Circuit Court. It argued that the EEC committed an improper regulatory taking by refusing South Central’s request to dispose of demolition waste in the sinkhole, while then allowing the DOT to alter the sinkhole with similar material. It further alleged that the DOT effectively limited the number of beneficial uses to which it could use the parcel, thus resulting in an improper taking.

On May 7, 2015, the EEC moved to dismiss the action, arguing that South Central failed to exhaust its administrative remedies as required by statute. The following month, the Franklin Circuit Court rendered an Order sustaining the Motion to Dismiss the EEC. As a basis for the Order, the Court found that South Central “did not exhaust its administrative remedies. Plaintiff failed to file for a permit to dispose of the inert concrete blocks under 401 KAR[2] 47:110. Thus, Plaintiff never started a process for administrative determination.”

On July 10, 2015, the DOT moved for Summary Judgment arguing that an inverse condemnation had not taken place because just compensation had been paid to South Central’s predecessors in interest in exchange for the easement. South Central responded by arguing that the DOT had exceeded the scope of its easement, resulting in an improper restriction of South Central’s beneficial uses of the parcel. On considering the matter, the court noted that neither party had introduced into the record any documents circumscribing the scope of the drainage easement. It found, however, that a February 12, 1976 Commissioner’s Deed provided that South Central’s predecessor in interest conveyed to the DOT real property and real property rights connected with “the Highway Project”.

Ultimately, the court found that by dumping debris into the sinkhole, the DOT acted within the scope of its easement because it had the effect of improving the drainage of water into the sinkhole. By way of an Opinion and Order rendered on September 4, 2015, the court sustained the DOT’s Motion for Summary Judgment and this appeal followed.

South Central now argues that the Franklin Circuit Court erred in dismissing the EEC and rendering Summary Judgment in favor of the DOT. It contends that the servient estate may use its property for any purpose that does not interfere with the DOT’s draining and that the DOT exceeded the scope of its drainage easement. South Central goes on to argue that the DOT committed an unconstitutional taking without compensation and that the dismissal of its claim against the EEC allows any agency to avoid liability through simple inaction and stonewalling. In sum, South Central argues that the Franklin Circuit Court erred in the disposition of its action. It seeks an Opinion reversing the Orders on appeal and remanding the matter to determine just [853]*853compensation or for a ruling ejecting the DOT from the parcel.

The first question for our consideration is whether the Franklin Circuit Court erred in sustaining the EEC’s Motion to Dismiss. It is well-established that the exhaustion of administrative remedies is a jurisdictional prerequisite before a trial eourt can adjudicate claims asserted against the agency. Popplewell’s Alligator Dock No. 1, Inc. v. Revenue Cabinet, 133 S.W.3d 456, 468-69 (Ky. 2004). The EEC regulates waste sites via permits issued pursuant to Kentucky Administrative Regulations Chapters 30-49. The Division of Waste Management’s Solid Waste Branch (“SWB”) undertakes the responsibility for reviewing and issuing solid waste disposal permits. The dispositive question before us is whether South Central initiated the administrative process and then exhausted those remedies before bringing its action in Franklin Circuit Court. We must answer this question in the negative.

The record reveals that South Central contacted the EEC’s field office regarding the demolition project, to which an EEC inspector responded that the disposal of demolition waste in an unpermitted sinkhole “could” result in violations. South Central did not file any application, formal request or plans with the EEC, and the EEC inspector’s response to South Central’s inquiry did not result in the issuance of a complaint or an order to abate any activity. Rather, the inspector’s response might properly be characterized as advisory. The Franklin Circuit Court determined that South Central never initiated an administrative process; therefore, no administrative remedies could have been exhausted. This conclusion is supported by the record and the law.

When a trial court is considering a CR3 12.02 Motion to Dismiss, the pleadings should be construed in a light most favorable to the plaintiff and the allegations presumed to be true. Gall v. Scroggy, 725 S.W.2d 867, 869 (Ky. App. 1987). The court should not grant the Motion unless it appears that the plaintiff would not be entitled to relief under any set of facts in support of the claim. Mims v. WesternSouthern Agency, Inc., 226 S.W.3d 833, 835 (Ky. App. 2007). Appellate courts consider the matter de novo as a question of law. D.F. Bailey, Inc. v. GRW Eng’rs, Inc.,

Related

Steelvest, Inc. v. Scansteel Service Center, Inc.
807 S.W.2d 476 (Kentucky Supreme Court, 1991)
Popplewell's Alligator Dock No. 1, Inc. v. Cabinet
133 S.W.3d 456 (Kentucky Supreme Court, 2004)
Mims v. Western-Southern Agency, Inc.
226 S.W.3d 833 (Court of Appeals of Kentucky, 2007)
Gall v. Scroggy
725 S.W.2d 867 (Court of Appeals of Kentucky, 1987)
Scifres v. Kraft
916 S.W.2d 779 (Court of Appeals of Kentucky, 1996)
D.F. Bailey, Inc. v. GRW Engineers, Inc.
350 S.W.3d 818 (Court of Appeals of Kentucky, 2011)
Cary v. Pulaski County Fiscal Court
420 S.W.3d 500 (Court of Appeals of Kentucky, 2013)

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Bluebook (online)
510 S.W.3d 850, 2017 WL 382406, 2017 Ky. App. LEXIS 20, Counsel Stack Legal Research, https://law.counselstack.com/opinion/south-central-kentucky-properties-inc-v-commonwealth-kyctapp-2017.