Ward v. Commonwealth

566 S.W.2d 426, 1978 Ky. App. LEXIS 521
CourtCourt of Appeals of Kentucky
DecidedApril 7, 1978
StatusPublished
Cited by4 cases

This text of 566 S.W.2d 426 (Ward 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
Ward v. Commonwealth, 566 S.W.2d 426, 1978 Ky. App. LEXIS 521 (Ky. Ct. App. 1978).

Opinion

MARTIN, Chief Judge.

This is an appeal from a partial summary judgment granted in Franklin Circuit Court directing the appellants to comply with an investigative demand issued by the Attorney General under authority of the Consumer Protection Act. Appellants challenge the issuance of the demand on the ground that there is no allegation of a violation. They further argue that the Attorney General has not met the statutory requirements for issuance as upheld in Commonwealth v. Pineur, Ky., 533 S.W.2d 527 (1976).

Initially, this case presents a procedural problem because a panel of this court dismissed an earlier appeal of this case, number CA-689-MR, on the same issue. That dismissal was of an interlocutory order which did not state it was a final order as required by Civil Rule 54.02. See Huff v. Wood Mosaic Co., Ky., 454 S.W.2d 705 (1970). After the dismissal, no further hearings were held, nor were further pleadings filed. The only action taken by the trial court was the entry of an order reaffirming the partial summary judgment. This order does state that it is a final order as required by the Rules. This procedure is not good practice, because the secor 1 order does no more than reinstate a dismissed appeal. The proper procedure would be to redraft the order in its entirety, state that interlocutory relief is sought, and include the statement of finality required by Civil Rule 54.02. This error alone is not sufficient to warrant another dismissal; so we now turn to the merits of the case.

The facts of the case are not in dispute and were detailed in affidavits filed with the trial court. Appellants, John Ward and Art Weber, operated a proprietorship known as Powerguard-Louisville, which began business on April 1,1976. Powerguard-Louisville sells and installs electrical devices designed to aid in the economical use of electrical energy. The potential purchasers are both commercial and residential.

These proceedings began on August 19, 1976, with the issuance of an investigative demand by the Consumer Protection Division of the Office of the Attorney General under KRS 367.240(1) (1972). The demand directed Mr. Ward to produce for the Attorney General’s use and inspection all documents and information relating to the corporate structure of his companies which produced or sold a product designed to reduce or regulate the usage of electric power.

The appellants did not comply with the investigative demand but sought relief by filing a complaint in the Franklin Circuit Court under the provisions of KRS 367.-240(2) (1972) and 367.260 (1972). Their first challenge to the investigative demand was its failure to allege any violation of the Consumer Protection Act. The Attorney General answered the complaint and moved for a partial summary judgment on a counterclaim seeking to enforce the investigative demand. Affidavits and other documents were filed by both parties. The trial court, while conceding some merit to appellants’ claim and reserving his ruling on all other issues, concluded enforcement of the investigative demand must be granted by partial summary judgment because of the holding in Commonwealth v. Pineur, supra.

The pertinent statute, KRS 367.240(1) (1972), provides that the Attorney General may issue an investigative demand under the Consumer Protection Act in the following situations:

[428]*428When the attorney general has reason to believe that a person has engaged in, is engaging in, or is about to engage in any act or practice declared to be unlawful by KRS 367.110 to 367.300, or when he believes it to be in the public interest that an investigation should be made to ascertain whether a person in fact has engaged in, is engaging in or is about to engage in, any act or practice declared to be unlawful by KRS 367.110 to 367.300 . (emphasis added)

Nowhere in the statute is there a standard for determining what facts satisfy the conditions precedent to the issuance of an investigative demand.

Appellants argued that the investigative demand must be founded upon a substantial finding or allegation of wrongdoing to be valid. However, this argument has been partially resolved in Commonwealth v. Pineur, supra, the court stating 533 S.W.2d at 528:

Our determination is limited to whether there is either a statutory or constitutional requirement that a demand authorized by KRS 367.240 recite on its face the reason or grounds for its issuance, and the answer is no.

The Attorney General adopts this statement to support the position that it is his sole responsibility to determine whether or not to issue an investigative demand. We disagree. In Pineur, the court held that while the investigative demand did not have to set forth the reason for its issuance, the courts would look behind the demand. Judicial review of administrative rulings is a basic part of our legal system and is designed to protect against mistaken or arbitrarily issued investigative orders. The constitutionality of the whole Consumer Protection Act was before the court in Pin-eur. By holding the act constitutional, the court did not vest the Attorney General with the unbridled authority he seeks in the present case. The holding of Pineur was well stated in the next to the last paragraph of the opinion, at 530:

In this case the record as a matter of law supports the Attorney General’s authority under KRS 367.240 to enforce production of some of the information specified in its demand. Whether it would be unreasonable to require production of all of it is an issue of fact not finally determined by the judgment, and we do not pass on that question.

In Pineur, the record to which the court referred contained thirty-eight customer complaint letters, affidavits of numerous dissatisfied customers, and the affidavit of one former salesman. On these facts the Attorney General determined that an investigative demand should be issued, and the court agreed. In the present case, to support his motion for partial summary judgment, the Attorney General merely filed one attorney’s affidavit explaining the basis for the issuance of the demand. The affidavit was based on a letter from a representative of the Kentucky Association of Electrical Cooperatives. It contained the transcript of a Florida television program and other documents which allegedly tested appellants’ product and found it deficient. Without further investigation into the truth or falsity of these statements, the Attorney General has accepted them at face value.

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566 S.W.2d 426, 1978 Ky. App. LEXIS 521, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ward-v-commonwealth-kyctapp-1978.