Opinion ID: 2592992
Heading Depth: 1
Heading Rank: 3

Heading: Procedure in District Court

Text: We now turn to the question of whether the district judge employed the appropriate procedure in the Water District's challenge to the appraisers' award under K.S.A. 12-527. This question also requires analysis of K.S.A. 12-527. Thus our standard of review is unlimited. Higgins, 288 Kan. at 361, 204 P.3d 1156. The Water District asserts that it was entitled to a full opportunity to trial de novo in the district court, including any necessary discovery and a completely new factfinding before its choice of a district judge or jury without any limitations arising from the earlier proceeding before the appraisers. It advances five arguments on this issue: (1) The original language of K.S.A. 12-527 permitted full judicial review; (2) the phrase institute an action, as used in the current version of K.S.A. 12-527, indicates that a challenge to an appraisers' award is not an appeal but a new action eventually leading to trial; (3) City of DeSoto requires that a district court's review be de novo; (4) K.S.A. 12-527 is similar to K.S.A. 26-508 governing eminent domain, which requires de novo review of an award; and (5) K.S.A. 12-527 should not be compared to K.S.A. 77-607, which pertains to review of an agency adjudication, because agencies are required to make factual findings while appraisers are not. In response, the City contends that the legislature did not use the phrase de novo in K.S.A. 12-527, although it has done so in other statutes. The City also argues that a district court should treat an appraisers' award like an agency decision. The Water District's first argumentthat the original language of the statute somehow compels trial de novois without merit. First, we cannot imagine a situation in which we would be justified in ignoring updated and applicable language of a statute in favor of interpreting and applying conflicting language used in an earlier version of it. The constitutional doctrine of separation of powers and the prudential considerations of limited institutional competence command that we work with the content of a statute as it is, not as it was. Second, K.S.A. 12-527(a)(3) has provided since 1987: If either the district or the city is dissatisfied with the decision of the appraisers, then the district or the city may institute an action in the district court. (Emphasis added.) The statute's 1968 and 1986 versions provided a city the power to establish the amount of compensation it would pay to a water district for annexed territory. These versions then provided that, if the water district disagreed with the city's amount, the district's board of directors [may] bring an action in the district court to determine the reasonableness of the [amount of compensation] fixed and determined by any such city. (Emphasis added.) We see no distinction of meaning or function among the operative language may bring an action in 1968, may bring an action in 1986, and the current may institute an action. That being said, we also are not persuaded that the Vancrum letter's casual reference to the district court proceeding as an appeal rather than a de novo review or a new trial dictates a ruling in favor of the City on this issue. In short, the legislative history of this particular statute gives us nothing particularly enlightening on the nature and extent of the procedure to be employed by the district court. The Water District's second argument that the phrase institute an action necessarily implicates an expansive trial de novo rather than a limited appealprompts us to look beyond this particular statute to other places where our legislature has employed the phrase. We see it fairly frequently. See K.S.A. 21-4012 (the department of health and environment, or local department of health, may institute an action in any court of competent jurisdiction to enjoin repeated violations of this act); K.S.A. 21-4017 (same); K.S.A. 40-3619 ([t]he rehabilitator, upon an order for rehabilitation, within one year or such other longer time as applicable law may permit, may institute an action or proceeding on behalf of the insurer); K.S.A. 40-3627 ([t]he liquidator ... may institute an action or proceeding on behalf of the estate); K.S.A. 44-806a ([o]n complaint of the secretary of state that any labor organization has failed to make the filing required by said statutes, it shall be the duty of the county or district attorney, or the attorney general, to institute such action in the district court of Shawnee County, Kansas); K.S.A. 55-215 ([t]he holder of such lien shall within six months institute an action to foreclose and enforce the lien in the manner now provided by law, or shall within six months institute an action in attachment or replevin); K.S.A. 58-3064 (the commission may institute an action in the district court of the county in which the person resided ... for an injunction to enforce compliance with the act or rules and regulations); K.S.A. 60-4115 (the plaintiff's attorney may institute an action in the district court against any person); K.S.A. 65-1828 ([t]he board may institute such actions in the courts of competent jurisdiction as may appear necessary to enforce compliance with [sanitation standards]); K.S.A. 79-2801 (it shall be the duty of the county attorney or county counselor to institute an action in the district court, in the name of the board of county commissioners... by filing a petition with the clerk of the court). In addition, this court has used the phrase institute an action when referring to a typical litigation eventually promising a full trial in the first instance in district court. See Teepak, Inc. v. Learned, 237 Kan. 320, 329, 699 P.2d 35 (1985) (whether the action is barred by Teepak's failure to institute an action against Learned prior to the running of the statute of limitations relative to medical malpractice is rendered moot); Johnson v. Schrader, 150 Kan. 545, Syl. ¶ 1, 95 P.2d 273 (1939) ([w]here a party institutes an action in a district court of a particular county to partition lands within the county, and the defendants file their answers, and the court thereafter renders a judgment within its power, the judgment is void); Martin, Governor v. State ex rel. Hall, 39 Kan. 576, 18 P. 472 (1888) ([a]s a general proposition, a county attorney of one county cannot institute an action, in the nature of a public prosecution, in the name of the state, in another county [other] than his own). Although this essentially plain language or ordinary meaning argument cuts in favor of the Water District, it is not fully and finally dispositive on the nature of the process in district court. In each of the other statutes and in each of the three cases cited above for comparison, no prior full adversary proceeding in another forum is contemplated before the commencement of a district court action. K.S.A. 12-527, in contrast, sets up an award process before a panel of appraisers that at least practically precedes, and may eliminate the theoretical or practical need for, any district court involvement. Indeed, in this case, the proceedings before the appraisers amounted to a deluxe model. The appraisers heard direct and cross-examination of witnesses and legal argument. They were instructed by the district court on their task. A formal record was taken and transcribed. The Water District is correct that this unique procedural history, launched as it was by the City's initial refusal to follow the statutory appraisal procedure, does not control our analysis of the statute, which must govern generally in the future as well as resolve the dispute that arose between these parties in the past. Nevertheless, the existence of a more or less elaborate appraisal process makes interpretation of K.S.A. 12-527 more complex than it would be in a simple plain language or ordinary meaning case. The Water District's third argument that City of DeSoto establishes its right to a trial de novo in the district court over reads that case. The design and scope of district court procedure were not at issue in City of DeSoto. The Court of Appeals' reversal and remand to district court for an evidentiary hearing on the issue of reasonableness may have suggested that evidence beyond the universe of material on which the appraisers had based their decision would be admitted in the hearing, but it did not place that issue beyond principled dispute. Both the Water District's fourth argument and the City's response use statutory language governing eminent domain as a reference point. K.S.A.2008 Supp. 26-508 on eminent domain procedure provides: (a) If the plaintiff, or any defendant, is dissatisfied with the award of the appraisers, such party, within 30 days after the filing of the appraisers' report, may appeal from the award by filing a written notice of appeal with the clerk of the district court. The appeal shall be deemed perfected upon the filing of the notice of appeal. In the event any parties shall perfect an appeal, copies of such notice of appeal shall be mailed to all parties affected by such appeal, within three days after the date of the perfection thereof. An appeal by the plaintiff or any defendant shall bring the issue of damages to all interests in the tract before the court for trial de novo. The appeal shall be docketed as a new civil action, the docket fee of a new court action shall be collected and the appeal shall be tried as any other civil action. The only issue to be determined therein shall be the compensation required by K.S.A. 26-513, and amendments thereto. Unfortunately, review of the eminent domain statute for assistance in this case obscures rather than illuminates. The legislature enacted K.S.A. 26-508 in 1963, 5 years before it enacted K.S.A. 12-527. Although K.S.A. 26-508 has been amended several times since, it has consistently characterized the district court action initiated by the party unhappy with an appraiser's award as an appeal. At the same time, it has explicitly specified that the district court shall conduct a trial de novo. K.S.A. 12-527 simply uses neither term. The fact that the distinct language of K.S.A. 26-508 has been interpreted and applied one way or the other does not inevitably demand a similar or a different interpretation and application of K.S.A. 12-527. Likewise, the statutory language governing review of agency decisions found in K.S.A. 77-606, et seq., again compared by both the Water District and the City, is of limited utility. As the Water District points out, agency adjudications require findings of fact while appraisals under K.S.A. 12-527 do not. This distinction alone goes a long way toward explaining the legislature's explicitly narrow prescription for court review of agency adjudications, requiring them to be upheld if supported by substantial competent evidence in the record. See K.S.A. 77-621(c)(7). The legislature has not chosen to exercise similar control in K.S.A. 12-527. Aside from the parties' arguments on appropriate district court procedure, we note that the district judge in this case relied in part on a comparison of K.S.A. 12-527 to K.S.A. 66-1,176, which codifies annexation procedures for retail electric suppliers, which Vancrum had mentioned. As with the eminent domain and administrative procedure statutes, however, there are marked differences between the language used in K.S.A. 12-527 and K.S.A. 66-1,176. K.S.A. 66-1,176 provides for fair and reasonable compensation to be paid to a terminated retail electric supplier. The amount is to be mutually agreed upon and shall be the sum of certain factors. See K.S.A. 66-1,176(c). In the event that the parties are unable to agree upon an amount of compensation to be paid ... either party may apply to the district court having jurisdiction where any portion of the facilities are located, for determination of compensation. Such determination shall be made by the court sitting without a jury. (Emphasis added.) K.S.A. 66-1,176(d). Finally, our own research efforts have turned up no helpful law from our sister states. Iowa appears to be the only one of them with a statute somewhat similar to K.S.A. 12-527. See Iowa Code § 357A.21 (2000). But it provides for arbitration if a water district and city fail to agree on a fair price. Furthermore, like K.S.A. 12-527, Iowa Code § 357A.21 has rarely prompted litigation. The one case referencing it does not bear on the issue before us. See Clay Regional Water v. City of Spirit Lake, Iowa, 193 F.Supp.2d 1129 (N.D.Iowa 2002) (staying litigation to determine water district and city boundaries until pending case in district court complete). All of the above-referenced potential sources for guidance on the appropriate procedure to be employed by the district court under 12-527, standing alone and in combination, leave much to be desired. We conclude, however, that the legislature's use of the nonspecific institute an action language in K.S.A. 12-527 endows a party dissatisfied with an appraisers' award with the right to trial de novo in the district court on the issue of the reasonableness of the award. This trial de novo means the action instituted under the statute may include all of the conventional attributes of a civil lawsuit, e.g., discovery, exchange of expert reports, the possibility of a jury. The party challenging an appraiser's award bears the burden of demonstrating it to be unreasonable. In arriving at this decision, we rely on the admittedly imperfect analogs of other statutes using the institute an action language. We trust that, if we have misapprehended the legislature's intention in employing this phrase in this context, it will say so through prompt amendment of K.S.A. 12-527. Because the Water District was not permitted a trial de novo in the district court when it challenged the appraisers' award in this case, we must reverse and remand for the appropriate procedure to be employed. We recognize the district judge's laudable sensitivity to the Water District's rights through his design and supervision of a Cadillac appraisal process between the warring parties before him but rule that it cannot be viewed as a substitute, even in this single case, for what we view as required by the governing statute. The lack of clarity in that statute led directly to this result, despite the judge's substantial efforts to reach a balanced and just outcome.