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# of 2008-SC-000904-DG RENDERED: APRIL 22, 2010

TO BE PUBLISHED

MARY LASSISTER (IN HEROFFICIAL APPELLANT CAPACITY AS STATE BUDGET DIRECTOR)

ONREVIEW

FROM COURT OF APPEALS V . CASE NOS. 2007-CA-000908-MRAND 2007-CA-000973-MR

FRANKLINCIRCUIT COURT NO . 06-CI-01151 AMERICAN EXPRESS TRAVEL RELATED APPELLEES SERVICES COMPANY, INC ., ETAL. OPINION OF THE COURT BYJUSTICE VENTERS

REVERSINGAND R

EMANDING 

# DAT[E5' 1 3-4o.T-tz4" . rt~G .

The State Budget Director, Mary Lassiter, appeals froman opinion of the Court of Appeals dismissing her' appeal froma 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 fromfifteen years to seven years for the two-year budget period was unconstitutional . The Court ofAppeals 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 andJohn Hicks. Mary Lassiter presently holds the position. Accordinglywe usefeminine 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 theTreasurer was effectively namedas 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 ANDPROCEDURAL 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 companycharges nofees for issuing the checks, but rather earns a profit on the business by investing the interest-free funds received fromits traveler's check customers during the float period prior to redemption. Thus, the presumptionof a fifteen-year float period is crucial to its business model . In accordance with the UniformUnclaimed PropertyAct, Kentucky, like our forty-nine sister states, has codified the presumed abandonment period for traveler's checks as fifteenyears. See KRS 393.062(2) . Accordingly, after fifteenyears, 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 unclaimedfunds. Only upon a finding by a court that the funds are actually abandoned

does the state assume actual ownershipof the funds, though there is evidence in the record that theTreasurer 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 fromfifteenyears to sevenyears 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 ofTreasury and theTreasurer in his official capacity. Upon motion by theTreasurer, the Budget Director wasjoined 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 thecase, that is, that Part III, Section 39 was legally enacted in all respects. In due course, the parties moved for summaryjudgment. On January 31, 2007, thecircuit 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 2The 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 39was not a lawful suspension of the escheat statute but was, rather, in substance andeffect, 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 theTreasurer nor the Department ofTreasury 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 ofAppeals 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 Houseagain 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 challengingthe constitutionality ofthe enactment, including upon federal grounds. OnJanuary 26, 2008, the District Court entered an opinion and order holding the legislation unconstitutional upon federal substantive due process grounds. Thefederal litigation is presently pendingbefore the Sixth Circuit Court ofAppeals (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 ofAppeals erred by dismissing her appeal for failure to name theTreasurer 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 ofAppeal stated, in relevant part, as follows: AMERICAN EXPRESS TRAVEL RELATEDSERVICES, 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 whomthis 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 whomthis appeal is taken. There areflaws in the notice, andwe 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 noticeof appeal, and our emphasis remains on substance over style. Official Form22

provides a format for the text, but not the caption. CR 84directs 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 Form22. 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 theTreasurer 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 followa 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, 810S.W .2d 55 (Ky. 1991) ; R

.C .R. v. Commonwealth, 988S.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,810S.W

.2d at 56 (citing Lee v

. Stamper, 300S.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, 548S.W

.2d 181, 184 (Ky. App. 1977) ("There is no magic to the use of the term`appellee' . . . . In the absence of anyspecific designation using the term`appellee,' any party, other than an appellant, who is specifically named in the captionwill be deemed to be an appellee."). Therewas 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 ofTreasury, by functional equivalence, she likewise named theTreasurer 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 wayof 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 theentity." Id. (citing Brandon v. Holt, 469 U

.S. 464, 471-472 (1985)) . In summary, the holding in Grahamis 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, orjudicial 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. Anyjudicial result - either benefit or detriment - would be binding upon both with equal force.

4While the discussion in Graham was in the context of a42 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 Grahamprinciple, we conclude that by

naming the Department, the Budget Director, by functional equivalence, likewise named the agency's head, theTreasurer 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 whomthis 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 adverseparty against whom she was prosecuting the appeal, but rather was a party alliedwith 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 theTreasurer 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 theTreasurer, we believe it injudicious to rework the outcome of the litigation based upon this ambiguous sentence, and accordingly will refrain fromdeciding 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 doingcorrespondingly named its head, the Treasurer in his official capacity, as a party. Accordingly, the Court of Appeals erred by dismissing theappeal for failure to name theTreasurer as a party to the appeal . INDISPENSIBLE PARTY ISSUES The Budget Director contends that even if theTreasurer in his official capacity was not properly named as a party, nevertheless thecase was improperly dismissed because theTreasurer 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 ofAppeals 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 FORAPPELLANT:

M . Holliday Hopkins Jason Patrick Renzelmann Sheryl G . Snyder Griffin Terry Sumner Frost BrownTodd, LLC 400West Market Street 32nd Floor Louisville, Kentucky 40202-3363 COUNSEL FORAPPELLEES: Paul C . Harnice Stoll, Keenon 8v Ogden, PLLC 307 Washington Street Frankfort, Kentucky 40601 Walter L. Sales TimothyJoseph Eifler Bryon Riggs Lewis Kathryn V

. Eberle Stoll, Keenon &Ogden, PLLC 2000 PNCPlaza 500West Jefferson Street Louisville, Kentucky 40202