,$UyrrMr .(~Vurf of

2008-SC-000904-DG

RENDERED : APRIL 22, 2010

TO BE PUBLISHED

MARY LASSISTER (IN HER OFFICIAL APPELLANT

CAPACITY AS STATE BUDGET DIRECTOR)

ON REVIEW FROM COURT OF APPEALS

V. CASE NOS. 2007-CA-000908-MR AND 2007-CA-000973-MR

FRANKLIN CIRCUIT COURT NO. 06-CI-01151

AMERICAN EXPRESS TRAVEL RELATED APPELLEES

SERVICES COMPANY, INC., ET AL.

OPINION OF THE COURT BY JUSTICE VENTERS

REVERSING AND REMANDING

DAT[E5'1 3-4 o . T-tz 4".rt~G.

The State Budget Director, Mary Lassiter, appeals from an opinion of the

Court of Appeals dismissing her' appeal from a Franklin Circuit Court

decision . The circuit court's decision held that a provision in the 2006-2008

Executive Branch budget bill shortening the escheat period for unredeemed

traveler's checks from fifteen years to seven years for the two-year budget

period was unconstitutional. The Court of Appeals dismissed the appeal upon

its conclusion that the Budget Director failed to name an indispensible party to

the appeal, that is, the State Treasurer.

' During the course of this litigation several persons have held the position of Budget

Director, including Bradford L. Cowgill and John Hicks. Mary Lassiter presently

holds the position. Accordingly we use feminine pronouns to refer to the Budget

Director throughout this opinion.
The Budget Director argues that her notice of appeal did effectively name

the Treasurer by naming the Department of Treasury in the caption, and that,

in any event, the Treasurer was not an indispensible party to the appeal.

Because we conclude that the Treasurer was effectively named as a party to the

appeal before the Court of Appeals via the naming of the Department of

Treasury, we reverse and remand for a consideration of the appeal on the

merits.

FACTUAL AND PROCEDURAL BACKGROUND

American Express Travel Related Services, Inc., is the largest issuer of

traveler's checks in Kentucky. Traveler's checks are redeemable at any time,

and there is no expiration date for redemption . The company charges no fees

for issuing the checks, but rather earns a profit on the business by investing

the interest-free funds received from its traveler's check customers during the

float period prior to redemption . Thus, the presumption of a fifteen-year float

period is crucial to its business model.

In accordance with the Uniform Unclaimed Property Act, Kentucky, like

our forty-nine sister states, has codified the presumed abandonment period for

traveler's checks as fifteen years . See KRS 393.062(2) . Accordingly, after

fifteen years, traveler's checks that have not been redeemed are presumed

abandoned and escheat to the state pursuant to KRS Chapter 393. The state

then begins to hold the property in trust for the traveler's check owner, and,

furthermore, begins to receive the benefit of the interest on the unclaimed
funds. Only upon a finding by a court that the funds are actually abandoned

does the state assume actual ownership of the funds, though there is evidence

in the record that the Treasurer never actually pursues ajudgment of this type .

During the 2006 Regular Session the House passed House Bill 380, a bill

relating to the 2006-2008 biennial budget. 2006 Ky. Acts ch . 252. Included in

the bill was Part III, Section 39 which shortened the presumed abandonment

period for traveler's checks from fifteen years to seven years for the two-year

budget period. The enactment did not purport to permanently amend the

fifteen-year period contained in KRS 393.062(2), but, rather, sought only to, by

suspension, implement the change for the biennial budget period .

After the budget bill was signed into law, American Express filed an

action in Franklin Circuit Court seeking injunctive relief prohibiting the

enforcement of Part III, Section 39. The complaint named as defendants the

Department of Treasury and the Treasurer in his official capacity. Upon

motion by the Treasurer, the Budget Director was joined in the litigation as a

necessary party. 2 Since being added as a party, the Budget Director has taken

the initiative in prosecuting the Commonwealth's position in the case, that is,

that Part III, Section 39 was legally enacted in all respects .

In due course, the parties moved for summary judgment. On January

31, 2007, the circuit court entered an order holding that Part III, Section 39

was unconstitutional as failing to comply with Section 51 of the Kentucky

Constitution which states, "No law enacted by the General Assembly shall

2 The circuit court denied the Treasurer's motion to add the Legislative Research

Commission as a party.
relate to more than one subject, and that shall be expressed in the title, and no

law shall be revised, amended, or the provisions thereof extended or conferred

by reference to its title only, but so much thereof as is revised, amended,

extended or conferred, shall be reenacted and published at length ." The circuit

court's holding was based upon its determination that Part 111, Section 39 was

not a lawful suspension of the escheat statute but was, rather, in substance

and effect, an amendment failing to meet the requirements of Section 51 of the

Kentucky Constitution. While not directed to any specific party, the order

permanently enjoined the enforcement of Part 111, Section 39 .

On May 3, 2007, the Budget Director filed her Notice of Appeal to the

Court of Appeals. As further discussed below, the notice contained multiple

imperfections. Neither the Treasurer nor the Department of Treasury filed a

separate notice of appeal. American Express filed a cross-appeal challenging

the circuit court's ruling granting the motion to add the Budget Director as a

party to the litigation. On October 3, 2008, the Court of Appeals rendered an

opinion and order dismissing the Budget Director's appeal for failure to name

an indispensable party, that is, the State Treasurer . We granted discretionary

review. 3

3 In the 2007-2008 legislative session the House again passed legislation reducing the

escheat period, but this time complied with the formal amendment procedures the

Franklin Circuit Court had found to be lacking . American Express filed a lawsuit in

United States District Court, Eastern District of Kentucky, Central Division (Civil

Action No . 3: 08-58-DCR), again challenging the constitutionality of the enactment,

including upon federal grounds. On January 26, 2008, the District Court entered

an opinion and order holding the legislation unconstitutional upon federal

substantive due process grounds. The federal litigation is presently pending before

the Sixth Circuit Court of Appeals (Case No . 09-5898) . Success by American

Express in the federal litigation would moot the present state litigation .
NOTICE OF APPEAL ISSUES

The Budget Director contends that the Court of Appeals erred by

dismissing her appeal for failure to name the Treasurer as a party to the

appeal. . She argues that her notice of appeal did effectively name the Treasurer

by having named the Department of Treasury in the caption.

The Notice of Appeal stated, in relevant part, as follows:

AMERICAN EXPRESS TRAVEL

RELATED SERVICES, INC. PLAINTIFF

v.

COMMONWEALTH OF KENTUCKY,

KENTUCKY DEPARTMENT OF TREASURY, et al. DEFENDANTS

NOTICE OF APPEAL

Pursuant to CR 73 .03, notice is given that Defendant, Bradford L.

Cowgill, in his official capacity as State Budget Director, hereby

appeals to the Kentucky Court of Appeals from the Judgment

entered by this Court on January 31, 2007, a copy of which is

attached as Exhibit A.

Appellant is Bradford L. Cowgill in his official capacity as State

Budget Director. The name of the Appellee against whom this

appeal is taken is American Express Travel Related Services

Company, Inc., the plaintiff in this proceeding.

The Commonwealth of Kentucky, Kentucky Department of

Treasury, Jonathan Miller, Treasurer was also a defendant in this

proceeding, but is not a party against whom this appeal is taken.

There are flaws in the notice, and we do not publish it here as a model

pleading. Our rules of civil procedure provide little guidance on what a notice

of appeal should look like . CR 73.03 specifies the content required of a notice
of appeal, and our emphasis remains on substance over style. Official Form 22

provides a format for the text, but not the caption . CR 84 directs that the

official forms "are sufficient under the rules and are intended to indicate the

simplicity and brevity of statement which the rules contemplate." The body of

Budget Director's notice closely parallels Form 22 . The term "et al." as used in

the caption is a practice specifically disapproved by CR 73 .03 . The concluding

paragraph in the body of the notice is ambiguous in that it could be construed

as intending to mean that the Treasurer is not to be a party at all to the appeal

(American Express's interpretation) or, alternatively, to mean that he is a party,

but is allied with, not against, the Budget Director (the Budget Director's

interpretation.)

Whatever the shortcomings, however, except for tardy appeals and the

naming of indispensible parties, we follow a rule of substantial compliance in

regards to notices of appeal . Johnson v. Smith, 885 S.W.2d 944, 948 (Ky.

1994) . KRS 73 .03(1) provides that "The notice of appeal shall specify by name

all appellants and all appellees . . . ." However, it is now well established that

naming a party in the caption of the notice is, standing alone, sufficient to

satisfy the rule, even though the party is not named in the body of the notice .

Morris v. Cabinetfor Families and Children, 68 S.W.3d 73, 74 (Ky. 2002);

Blackburn v. Blackburn, 810 S.W.2d 55 (Ky. 1991) ; R.C.R. v. Commonwealth,

988 S.W.2d 36 (Ky. App. 1998) . This rule recognizes that the principal

objective of a pleading is to give fair notice to the opposing party. Blackburn,
810 S.W.2d at 56 (citing Lee v. Stamper, 300 S.W .2d 251 (Ky. 1957)) . Thus,

although a party may not be named in the body of the notice, by listing the

party in the caption, fair notice is given to the opposing party, and thus the

objective of the notice is satisfied .

The Department of Treasury was named in the caption of the notice as a

party to the appeal. As the Department did not itself appeal, as a nonappealing party, it was properly listed in the Appellee's position in the caption .

It is not fatal that the Department was misidentified as a "Defendant" rather

than as an "Appellee ." See Schulz v. Chadwell, 548 S.W .2d 181, 184 (Ky. App.

1977) ("There is no magic to the use of the term `appellee' . . . . In the absence

of any specific designation using the term `appellee,' any party, other than an

appellant, who is specifically named in the caption will be deemed to be an

appellee.") . There was no other reasonable purpose for listing the Department

in the caption except to name it as a party to the appeal. As such, the listing

gave fair notice to American Express that the Budget Director was naming the

Department as a party to the appeal, and thus under the Blackburn principle,

the Department was properly named as an appellee to the appeal.

Citing Kentucky v. Graham, 473 U.S . 159 (1985), the Budget Director

argues that, having properly named the Department of Treasury, by functional

equivalence, she likewise named the Treasurer in his official capacity as a party

to the appeal . We agree .

In Graham, the Supreme Court stated "Official-capacity suits . . .
`generally represent only another way of pleading an action against an entity of

which an officer is an agent."' Id. at 165 (citing Monell v. New York City Dept. of

Social Services, 436 U.S. 658, 690, n. 55 (1978)) ; Commonwealth v. Harris,

59 S.W.3d 896 (Ky. 2001). "As long as the government entity receives notice

and an opportunity to respond, an official-capacity suit is, in all respects other

than name, to be treated as a suit against the entity." Id. (citing Brandon v.

Holt, 469 U.S . 464, 471-472 (1985)) . In summary, the holding in Graham is

that the naming of the agency head in his official capacity in a lawsuit is the

functional equivalent of naming the agency itself. 4

By the same process of reasoning, and in the absence of a specific

statutory, regulatory, or judicial rule to the contrary, we conclude that the

converse must likewise be recognized, and that the naming of an agency to a

lawsuit is equally the functional equivalent of naming the agency's head in his

official capacity. Here, we are cited to no authority which requires that the

Treasurer in his official capacity and the Department he heads are to be treated

as separate and distinct parties in litigation of this type . Moreover, no rational

purpose would be served by making such a hyper-technical distinction in this

case . Any judicial result - either benefit or detriment - would be binding upon

both with equal force .

4 While the discussion in Graham was in the context of a 42 U.S .C . § 1983 lawsuit,

there is no practical reason the principle would not apply with equal force in the

present litigation .
Thus, upon application of the Graham principle, we conclude that by

naming the Department, the Budget Director, by functional equivalence,

likewise named the agency's head, the Treasurer in his official capacity.

There remains to be addressed, however, the ambiguous concluding

sentence in the notice which states, "The Commonwealth of Kentucky,

Kentucky Department of Treasury, Jonathan Miller, Treasurer was also a

defendant in this proceeding, but is not a party against whom this appeal is

taken." The Budget Director contends that this was merely to clarify that while

a party to the appeal, the Treasurer was not an adverse party against whom

she was prosecuting the appeal, but rather was a party allied with the Budget

Director's position . American Express, on the other hand, argues that the

sentence is a clear expression of the Budget Director's intention to exclude the

Treasurer as a party to the appeal .

The Budget Director's explanation for including the sentence in the

notice is reasonable, and its parsing is as valid as the interpretation suggested

by American Express. Her inclusion of the sentence is entirely consistent with

having named the Treasurer as a party, but edifying the court of his status as

an allied party rather than an adverse party. In light of our conclusion, as set

forth above, that the Budget Director otherwise properly named the Treasurer,

we believe it injudicious to rework the outcome of the litigation based upon this

ambiguous sentence, and accordingly will refrain from deciding the case by

applying the interpretation urged by American Express.
In summary, the Budget Director, by naming the Department of Treasury

in the caption, properly named that agency as a party to the appeal and by so

doing correspondingly named its head, the Treasurer in his official capacity, as

a party. Accordingly, the Court of Appeals erred by dismissing the appeal for

failure to name the Treasurer as a party to the appeal.

INDISPENSIBLE PARTY ISSUES

The Budget Director contends that even if the Treasurer in his official

capacity was not properly named as a party, nevertheless the case was

improperly dismissed because the Treasurer was in any event not an

indispensible party to the appeal . Because we have determined that the

Treasurer in his official capacity was properly named, this issue is moot, and

we need not address it on the merits.

CONCLUSION

For the foregoing reasons the opinion of the Court of Appeals is reversed,

and the case is remanded to the Court of Appeals for a determination of the

appeal on the merits.

Minton, C.J., Abramson, Cunningham, Noble and Schroder, JJ.,

concur . Scott, J., concurs in result only.
COUNSEL FOR APPELLANT:

M. Holliday Hopkins

Jason Patrick Renzelmann

Sheryl G. Snyder

Griffin Terry Sumner

Frost Brown Todd, LLC

400 West Market Street

32nd Floor

Louisville, Kentucky 40202-3363

COUNSEL FOR APPELLEES:

Paul C. Harnice

Stoll, Keenon 8v Ogden, PLLC

307 Washington Street

Frankfort, Kentucky 40601

Walter L. Sales

Timothy Joseph Eifler

Bryon Riggs Lewis

Kathryn V. Eberle

Stoll, Keenon & Ogden, PLLC

2000 PNC Plaza

500 West Jefferson Street

Louisville, Kentucky 40202