Court Opinion

ID: 9951013
Source: CourtListenerOpinion
Date Created: 2024-03-15 15:18:14.832081+00
Date Added: 2024-06-11T14:35:54.541544
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                 NOT TO BE PUBLISHED

           Commonwealth of Kentucky
                 Court of Appeals
                    NO. 2022-CA-1276-MR

KENTUCKY COMMUNITY &
TECHNICAL COLLEGE SYSTEM
AND DAVID ADKINS, IN HIS
OFFICIAL CAPACITY AS
DIRECTOR OF TREASURY
MANAGEMENT                                        APPELLANTS

          APPEAL FROM FRANKLIN CIRCUIT COURT
v.        HONORABLE THOMAS D. WINGATE, JUDGE
                  ACTION NO. 18-CI-00975

SAYRE LAWRENCE; MARK
METCALF, KENTUCKY STATE
TREASURER; BENJAMIN LANE;
DEPARTMENT OF REVENUE;
KIMBERLY BENNETT; MOREHEAD
STATE UNIVERSITY; RONNIE
LESTER, INDIVIDUALLY; SUSAN
KRAUSS, IN HER OFFICIAL
CAPACITY AS UNIVERSITY
TREASURER; TERESA LINDGREN,
IN HER OFFICIAL CAPACITY AS
CHIEF FINANCIAL OFFICER; AND
UNIVERSITY OF KENTUCKY                             APPELLEES

AND
                    NO. 2022-CA-1321-MR

COMMONWEALTH OF KENTUCKY,
DEPARTMENT OF REVENUE                           APPELLANT

           APPEAL FROM FRANKLIN CIRCUIT COURT
v.         HONORABLE THOMAS D. WINGATE, JUDGE
                   ACTION NO. 18-CI-00975

KIMBERLY BENNETT; BENJAMIN
LANE; RONNIE LESTER,
INDIVIDUALLY; AND SAYRE
LAWRENCE                                         APPELLEES

AND

                    NO. 2022-CA-1353-MR

UNIVERSITY OF KENTUCKY;
MARY FISTER-TUCKER IN HER
OFFICIAL CAPACITY; MOREHEAD
STATE UNIVERSITY; AND PENNY
COX IN HER OFFICIAL CAPACITY                    APPELLANTS

           APPEAL FROM FRANKLIN CIRCUIT COURT
v.         HONORABLE THOMAS D. WINGATE, JUDGE
                   ACTION NO. 18-CI-00975

KIMBERLY BENNETT AND
BENJAMIN LANE                                    APPELLEES

                             -2-
                                       OPINION
                            AFFIRMING IN PART, REVERSING
                              IN PART, AND REMANDING

                                           ** ** ** ** **

BEFORE: ACREE, GOODWINE, AND JONES, JUDGES.

ACREE, JUDGE: Appellants, which include Kentucky Community and Technical

College System (KCTCS), the University of Kentucky (UK), Morehead State

University (MSU), each school’s respective head financial officer, the

Commonwealth of Kentucky, Department of Revenue (Department), and Kentucky

Treasurer Allison Ball, appeal from the Franklin Circuit Court’s October 19, 2022

order denying their motions to dismiss. As relevant to this interlocutory appeal,

the circuit court concluded sovereign immunity did not apply to any of Appellees’

claims. We affirm in part, reverse in part, and remand.

                                         BACKGROUND

                 Appellees, Kimberly Bennett, Benjamin Lane, Sayre Lawrence, and

Ronnie Turner,1 filed suit on September 27, 2018 to challenge the ability of

Appellants KCTCS, UK, and MSU to refer their outstanding student debts to the

Department for collection. In addition to KCTCS, UK, MSU, and the Department,

Appellees sued financial officers for each educational institution in their official

1
    Appellees seek class certification in the underlying suit, which they have not yet obtained.

                                                  -3-
capacities. Additionally, Appellees sued then-Kentucky Treasurer Allison Ball in

her official capacity.

                Each Appellee was a former student at either KCTCS, UK, or MSU,

and each had unpaid tuition debt owed to their respective institution. Under KRS2

45.238, debt that an agency certifies shall be referred to the Department for

collection; KRS 45.237 defines an “agency” as an organizational unit or

administrative body of the Commonwealth’s executive branch. KRS 45.238(1);

KRS 45.237(1)(a). Using this statutory mechanism, KCTCS, UK, and MSU

referred the debts to the Department for collection. This resulted in the levy of the

Appellees’ tax refunds, levy from their bank accounts, or both.

                In their complaint, Appellees pursue a variety of relief. First,

Appellees seek a declaratory judgment that KCTCS, UK, and MSU may not

legally refer debts to the Department, arguing these entities are not “agencies”

under KRS 45.237 and that their debts are not “liquidated debts” under KRS

45.241(1)(b). Second, Appellees challenge the constitutionality of KRS 45.237 to

45.241, arguing the statutes to be unconstitutional both facially and as applied.

Third, Appellees seek relief on the basis of mistake, alleging KCTCS, UK, MSU,

and the Department mistakenly represented that they had the ability to collect the

2
    Kentucky Revised Statutes.

                                            -4-
debts when they did not. Additionally, Appellees challenge the Department’s

assessed collection fee of 25% as excessive. In addition to various declaratory

judgments, Appellees request “a judgment for relief in the form of the equitable

remedy of restitution of their monies” and an order directing the Kentucky State

Treasurer and the financial officers of the universities to return Appellees’ funds.

Record (R.) at 24-26.

             The circuit court held this case in abeyance pending the outcome of

University of Kentucky v. Moore, 599 S.W.3d 798 (Ky. 2019). In Moore, a

declaratory judgment action involving the Department’s collection of outstanding

medical debt owed to UK Healthcare, UK moved to dismiss; UK asserted, among

other arguments, that “it is a state agency that shares the Commonwealth of

Kentucky’s sovereign immunity.” Id. at 801-02. The Kentucky Supreme Court

held that UK “is in the executive branch of government[,]” without declaring

whether UK is an executive branch entity empowered to refer debts to the

Department under KRS 45.238. Moore, 599 S.W.3d at 810. Additionally, the

Supreme Court held that sovereign immunity did not bar Moore’s declaratory

judgment action, while declining to decide whether monetary relief resulting from

a declaratory judgment is barred by sovereign immunity because that question was

unripe. Id. at 813.

                                         -5-
              After expiration of the circuit court’s abeyance period, Appellants

filed three motions to dismiss: one from KCTCS, another from UK, MSU, and

their financial officers, and a third from the Department. Across these motions,

Appellants argued, as relevant to the present appeal, that Appellees failed to state a

claim for which relief can be granted and that sovereign immunity bars Appellees’

requested monetary relief. Appellants asserted other arguments that remain

pending before the circuit court, including arguments related to exhaustion of

administrative remedies.

              On October 19, 2022, the circuit court entered an order denying the

Appellants’ motions to dismiss. Therein, the circuit court addressed threshold

issues.3 Relevant to the present appeal, the circuit court determined sovereign

immunity does not bar any of Appellees’ claims. It held that the General

Assembly had waived immunity for both the amounts taken out of Appellees’ tax

refunds and for money improperly paid into the state treasury. The circuit court

concluded KRS 131.565(6), 131.570(1), and 45.111 provide such waiver.

3
  In addition to the sovereign immunity issue before us, the circuit court determined, per Moore,
that KCTCS, UK, and MSU are entitled to refer debts to the Department for collection, but that
KRS 45.241 requires debts to first be liquidated – meaning a party must obtain a civil judgment
against a debtor from whom it seeks to collect prior to doing so.

                                              -6-
                Appellants appealed the circuit court’s order denying their motions to

dismiss. Following initial motion practice before this Court, we agreed to take this

interlocutory appeal and limit our review to the issue of sovereign immunity only.4

                                STANDARD OF REVIEW

                CR5 12.02 governs motions to dismiss. “Under CR 12.02 a court

should not dismiss for failure to state a claim unless the pleading party appears not

to be entitled to relief under any state of facts which could be proved in support of

his claim.” Weller v. McCauley, 383 S.W.2d 356, 357 (Ky. 1964) (citation

omitted). When considering a motion to dismiss under CR 12.02, “the pleadings

should be liberally construed in a light most favorable to the plaintiff and all

allegations taken in the complaint to be true.” Gall v. Scroggy, 725 S.W.2d 867,

869 (Ky. App. 1987) (citation omitted). Though the “[d]enial of a motion to

dismiss is generally interlocutory and unappealable because appellate review is

reserved for final judgments[,] . . . when an appeal is based on a claim of sovereign

4
  We note that Appellants variously argue they are entitled to either “sovereign immunity” or
“governmental immunity” between their briefs. These are different concepts. Governmental
immunity is derived from sovereign immunity. Yanero v. Davis, 65 S.W.3d 510, 519 (Ky. 2001)
(citing 57 AM. JUR. 2D, Municipal, County, School and State Tort Liability, § 10 (2001)).
“However, to the extent that the agency is performing a governmental function, as a state university
does, its governmental immunity is functionally the same as sovereign immunity.” Furtula v.
Univ. of Kentucky, 438 S.W.3d 303, 305 n.1 (Ky. 2014) (citing Yanero, 65 S.W.3d at 519).
Because these immunities are “functionally the same” in the context of this appeal, id., and the
terms are often used interchangeably, see Yanero, 65 S.W.3d at 519, we will refer to the form of
immunity at issue in this appeal as “sovereign immunity.”
5
    Kentucky Rules of Civil Procedure.

                                                -7-
immunity, immediate de novo review is available upon request.” Cnty. Emps. Ret.

Sys. v. Frontier Housing, Inc., 536 S.W.3d 712, 713 (Ky. App. 2017) (citing CR

54.01; Breathitt Cnty. Bd. of Educ. v. Prater, 292 S.W.3d 883, 886 (Ky. 2009)).

             Naturally, if a defendant is afforded immunity against a plaintiff’s

claims, then the plaintiff will not be entitled to relief and his claims should be

dismissed. “The question of whether a defendant is protected by sovereign

immunity . . . is a question of law.” State v. Great Lakes Minerals, LLC, 597

S.W.3d 169, 171 (Ky. 2019) (citing Rowan Cnty. v. Sloas, 201 S.W.3d 469, 475

(Ky. 2006)). We review questions of law de novo. Estate of Clark ex rel. Mitchell

v. Daviess Cnty., 105 S.W.3d 841, 844 (Ky. App. 2003).

                                     ANALYSIS

             We note at the outset that the issue of sovereign immunity in this

appeal is quite similar, but not identical, to the sovereign immunity issue presented

in a companion consolidated appeal: University of Kentucky, et al. v. Amelia Long,

et al., No. 2023-CA-0398-MR and Commonwealth of Kentucky, Department of

Revenue, et al. v. Amelia Long, et al., No. 2023-CA-0411-MR. In a manner

similar to the facts of this appeal, the Appellees in Long were subject to referral of

outstanding UK HealthCare medical debt to the Department for collection via the

KRS 45.237 et seq. mechanism. There, too, the circuit court identified a waiver of

sovereign immunity for the appellees’ claims. However, the circuit court in Long

                                          -8-
identified a different sovereign immunity waiver than those discussed herein.

Therefore, our analysis here will largely – but not entirely – overlap with the

analysis presented in Long.

             “Sovereign immunity is a bedrock component of the American

governmental ideal, and is a holdover from the earliest days of the Commonwealth,

having been brought over from the English common law.” Caneyville Volunteer

Fire Dep’t v. Green’s Motorcycle Salvage, Inc., 286 S.W.3d 790, 799 (Ky. 2009).

Only when the state has waived this immunity may suits be brought against the

state. Yanero v. Davis, 65 S.W.3d 510, 518 (Ky. 2001) (citing RESTATEMENT

(SECOND) OF THE LAW OF TORTS § 895B(1) (A.L.I. 1979); 72 AM. JUR. 2D, States,

Territories, and Dependencies, § 99 (1974)).

             Where sovereign immunity applies, it “affords the state absolute

immunity from suit[.]” Transit Auth. of River City v. Bibelhauser, 432 S.W.3d

171, 173 (Ky. App. 2013). Absolute immunity is not simply a shield from liability,

and, instead, frees the immune party “‘from the burden of defending oneself

altogether.’” Lexington-Fayette Urb. Cnty. Gov’t v. Smolcic, 142 S.W.3d 128, 135

(Ky. 2004) (quoting Fralin & Waldron, Inc. v. Henrico Cnty., Va., 474 F. Supp.

1315, 1320 (E.D. Va. 1979)). Accordingly, those who are afforded absolute

immunity are protected from the costs associated with trial and discovery. Id.

(citing Harlow v. Fitzgerald, 457 U.S. 800, 817-18, 102 S. Ct. 2727, 2738, 73 L.

                                         -9-
Ed. 2d 396 (1982)). As the Supreme Court of the United States pointedly

encapsulates this principle, “the essence of absolute immunity is its possessor’s

entitlement not to have to answer for his conduct in a civil damages action.”

Mitchell v. Forsyth, 472 U.S. 511, 525, 105 S. Ct. 2806, 2815, 86 L. Ed. 2d 411

(1985) (citations omitted).

             KCTCS, UK, MSU, and their officers sued in their official capacities

are afforded sovereign immunity, should immunity apply. “The state universities

of this Commonwealth, including the University of Kentucky, are state agencies

that enjoy the benefits and protection of governmental immunity except where it

has been explicitly waived by the legislature.” Furtula v. Univ. of Kentucky, 438

S.W.3d 303, 305 (Ky. 2014); see also Withers v. Univ. of Kentucky, 939 S.W.2d

340, 344 (Ky. 1997) (“[The] University of Kentucky is entitled to sovereign

immunity[.]”). And, where, as here, the state is the real party against which relief

is sought, immunity “extends to public officials sued in their representative

(official) capacities[.]” Yanero, 65 S.W.3d 510, 518 (citations omitted).

             Waiver of immunity is “a matter exclusively legislative.” Withers,

939 S.W.2d at 344; see also Univ. of Kentucky v. Guynn, 372 S.W.2d 414, 416

(Ky. 1963) (“As a matter of grace, such a remedy may be granted, withdrawn or

restricted at the will of the legislature.”). “It is an inherent attribute of a sovereign

state that precludes the maintaining of any suit against the state unless the state has

                                          -10-
given its consent or otherwise waived its immunity.” Yanero, 65 S.W.3d 510, 517

(citing RESTATEMENT (SECOND) OF THE LAW OF TORTS § 895B(1) (A.L.I. 1979); 72

AM. JUR. 2D, States, Territories, and Dependencies, § 99 (1974)). Waiver of

immunity must be “specific and explicit[.]” Commonwealth v. Whitworth, 74

S.W.3d 695 (Ky. 2002) (citing Withers, 939 S.W.2d 340). Statutes which

purportedly waive sovereign immunity are to be strictly construed in favor of the

state, and a waiver should only be found if “the intent of the legislature to effect

this object is clearly expressed.” Lexington-Fayette Urb. Cnty. Gov’t Bd. of Health

v. Bd. of Trustees of Univ. of Kentucky, 879 S.W.2d 485, 486 (Ky. 1994). Further,

purported waivers of immunity are to be construed narrowly. Commonwealth,

Just. & Pub. Safety Cabinet, Dep’t of Kentucky State Police v. Gaither, 539

S.W.3d 667, 676 (Ky. 2018). “We will find waiver only where stated by the most

express language or ‘by such overwhelming implications from the text as [will]

leave no room for any other reasonable construction.’” Withers, 939 S.W.2d at

346 (quoting Murray v. Wilson Distilling Co., 213 U.S. 151, 171, 29 S. Ct. 458,

464-65, 53 L. Ed. 742 (1909)) (modification original).

             As recognized in Moore, the Kentucky Supreme Court has identified

exceptions to sovereign immunity for declaratory relief and for injunctive relief.

Moore, 599 S.W.3d at 811 (citing Beshear v. Haydon Bridge Co., Inc., 416 S.W.3d

280, 293-94 (Ky. 2013)). However, as we explain below, close exploration of the

                                         -11-
nature of the specific relief a plaintiff seeks is required to determine whether

sovereign immunity prohibits it.

             Because application of sovereign immunity depends on the nature of

the requested relief, it is important to note the relief Appellees request in the instant

case. Across each count in their Complaint, Appellees seek (1) declaratory

judgments that their debts may not be legally referred to the Department, that the

Department may not legally undertake efforts to collect the debts, that Appellees

are entitled to such further relief in the form of an order and judgment directing the

return of their money, that KRS 45.237 to 45.241 are unconstitutional both facially

and as applied, and that the Department illegally imposed a collection fee; (2)

judgment in the form of equitable remedy of restitution of the collected funds; and

(3) an order and judgment directing Appellants to return Appellees’ money.

I. Sovereign Immunity Bars Appellees’ Requested Monetary Relief, Including
   Their Requests For Declarations They Are Entitled To Monetary Relief.

             The circuit court identified two waivers of sovereign immunity

applicable to the present case. First, it concluded that KRS 45.111 supplies a

waiver of sovereign immunity for claims for money improperly paid into the

treasury. The statute provides:

             Any funds received into the State Treasury which are later
             determined not to be due to the state may be refunded to
             the person who paid such funds into the Treasury. The
             Finance and Administration Cabinet may issue a warrant
             to disburse the funds upon a request from the budget unit

                                          -12-
               that originally received and deposited the funds. The
               request for refund must be approved by the head of the
               budget unit or his designated assistant. The Finance and
               Administration Cabinet may require any documentation
               deemed necessary.

KRS 45.111. If the circuit court is correct, this broad waiver would exempt the

entirety of the Appellees’ suit from the protections of sovereign immunity.

               The Kentucky Supreme Court discussed whether KRS 45.111 waives

sovereign immunity for certain claims in Beshear v. Haydon Bridge Company,

Inc., 416 S.W.3d 280 (Ky. 2013) (Haydon Bridge II).6 In Haydon Bridge II, the

plaintiffs challenged two budget bills suspending appropriations from the General

Fund to the Kentucky Workers’ Compensation Funding Commission’s Benefit

Reserve Fund (BRF) and transferring from the BRF to other state funds and

departments. 416 S.W.3d at 283-84. The Governor asserted sovereign immunity

precluded the trial court’s relief: (1) an injunction prohibiting transfer of funds out

of the BRF into the General Fund or to other state agencies; and (2) “retroactive

6
  Haydon Bridge II is the second appeal resulting from a lawsuit in which plaintiffs Haydon Bridge
Company, Inc., Greater Louisville Auto Dealers Association, Kentucky Automobile Dealers
Association, M & M Cartage Co., Inc., Springfield Laundry & Dry Cleaners, Inc. and Usher
Transport, Inc. sued the Governor and the State Budget Director. Haydon Bridge II, 416 S.W.3d
at 284. The plaintiffs sought a declaratory judgment that provisions in budget bills which (1)
suspended an annual appropriation from the General Fund to the Benefit Reserve Fund (BRF)
maintained within the Kentucky Workers’ Compensation Funding Commission (KWCFC) and (2)
transferred money out of the BRF to either the General Fund or the Department of Mines and
Minerals were unconstitutional. Id. at 285. The Kentucky Supreme Court determined the
suspension of appropriations was constitutional, but that the transfers out of the BRF were
unconstitutional. Id. Upon remand, the circuit court allowed the plaintiffs to file an amended
complaint, eventually resulting in the second appeal. Id. at 285-86.

                                              -13-
injunctive relief” requiring the return of “any and all monies that had been

transferred from the BRF to the General Fund in the decade from 2000-2010.” Id.

at 284.

             The Haydon Bridge II plaintiffs argued immunity against their claims

was waived in KRS 45.111. Id. at 289. The Supreme Court noted the statute

provided for refund of monies not “‘due to the state[.]’” Id. (quoting KRS 45.111).

Because the workers’ compensation insurance premiums at issue in Haydon Bridge

II were lawfully subject to assessment and, therefore, “literally ‘due to the state[,]’”

and because the plaintiffs sought restoration of the funds to the BRF rather than a

refund of their premiums, the Kentucky Supreme Court determined KRS 45.111

was inapplicable and did not constitute a waiver of sovereign immunity. Id. at

289-91.

             Despite finding the statute did not apply, the Kentucky Supreme Court

did state “the refund provisions of KRS 45.111 constitute a limited waiver of

sovereign immunity[.]” Id. at 291. However, the Supreme Court in Haydon

Bridge II did not explain or explore the parameters of that limited waiver. Further,

the allegations in Haydon Bridge II were distinct from the allegation in the instant

case – that the monies Appellees owed for tuition was not due the state.

             Appellees seek both prospective declaratory relief – a declaration that

the referral and collection of their debt is contrary to law – and what the Haydon

                                         -14-
Bridge II Court termed “retroactive injunctive relief” in the form of both equitable

restitution and an order from the circuit court requiring the return of their money

already collected. The “retroactive injunctive relief” in Haydon Bridge II took the

form of a trial court order directing the Governor to return money transferred from

the BRF to the General Fund. Haydon Bridge II, 416 S.W.3d at 284. As the

Supreme Court determined, “sovereign immunity bars the retroactive monetary

relief ordered by the trial court regardless of whether it is labeled a retroactive

injunction, equitable restitution, or some other type of remedy.” Id. at 295. This

was so because the plaintiffs’ requested retroactive injunctive relief “would require

the Commonwealth to withdraw monies from the General Fund, an action the

Commonwealth has not consented to through waiver of its sovereign immunity.”

Id. at 294.

              The circuit court in the instant appeal concluded that KRS 45.111

constitutes a waiver of sovereign immunity for claims seeking money improperly

paid into the treasury, basing this conclusion upon Haydon Bridge II’s allusion to

KRS 45.111’s limited waiver of sovereign immunity – the parameters of which the

Supreme Court did not define. R. at 740; Haydon Bridge II, 416 S.W.3d at 291.

Whatever the scope of the KRS 45.111 waiver might be, it cannot be interpreted to

permit Appellees’ claims for monetary relief – whether under the guise of

equitable restitution or that of injunctive relief – to bypass sovereign immunity,

                                          -15-
considering Haydon Bridge II’s determination that sovereign immunity shields the

Commonwealth from retroactive injunctive relief seeking withdrawal of money

already paid into the state treasury. See Haydon Bridge II, 416 S.W.3d at 292-94.

We cannot read the Haydon Bridge II opinion to reach two opposite conclusions.

             The circuit court also identified a narrower waiver – that sovereign

immunity is waived as to Appellees’ challenge to the offset of their tax refunds – in

KRS 131.565(6) and 131.570(1). Respectively, these statutes provide:

             Each state agency requesting the withholding of any
             individual income tax refund shall indemnify the
             department against any and all damages, court costs,
             attorneys fees, and any other expenses related to litigation
             which arises concerning the administration of KRS
             131.560 to 131.595 as it pertains to a refund withholding
             action requested by such agency.

KRS 131.565(6).

             (1) Upon determining that a pending individual income tax
             refund is subject to setoff as authorized under this section,
             the debtor shall be notified in writing by the department of
             the claim made against such refund by the named claimant
             agency, and of the department’s intention to set off the
             refund against the debt to the claimant agency. The notice
             shall provide that the debtor, within thirty (30) days from
             the date of the notice, may request a hearing before the
             claimant agency as provided by statute or local ordinance.
             No issues at such hearing may be considered that have
             been litigated previously, and the debtor, after being given
             due notice of rights of appeal, must exercise such rights in
             a timely manner. The decision of the claimant agency
             shall be subject to appeal as all other decisions rendered
             by the claimant agency. No funds shall be transferred to a

                                         -16-
             claimant agency until the debtor’s appeal rights have been
             exhausted.

KRS 131.570(1).

             The circuit court concluded that, because KRS 131.565(6) requires

state agencies to indemnify the Department for damages, court costs, attorneys

fees, and other litigation expenses in the event someone institutes legal action

challenging the withholding of their tax refund, KRS 131.565(6) waives sovereign

immunity for Appellees’ challenge to the offset of their tax refunds. The circuit

court also determined KRS 131.570(1) provides this waiver, but did not explain

why.

             Our analysis with respect to Appellees’ request for monetary relief

applies with equal force to the circuit court’s conclusion regarding KRS

131.565(6) and 131.570(1). Ordering the return of this money would be the sort of

“retroactive monetary relief” contemplated by Haydon II and which sovereign

immunity bars. Repayment of money taken from Appellees’ tax refunds and

applied toward their unpaid debt would constitute monetary relief paid out of

public funds, which sovereign immunity precludes. See Haydon II, 416 S.W.3d at

292-94; see also Univ. of Kentucky Davis, 551 S.W.3d 443, 448-49 (Ky. App.

2017).

             However, if, hypothetically, KRS 131.565(6) and 131.570(1) provide

a waiver of sovereign immunity, such waiver would be inapplicable to the

                                        -17-
Department’s offset of Appellees’ tax refunds. UK, MSU, and KCTCS referred

Appellees’ debts to the Department by the statutory mechanism of KRS 45.237 et

seq., rather than the mechanism under KRS 131.560 et seq.

              There is an obvious reason why one statutory mechanism was

appropriate and why the other was not. The act comprised of KRS 131.560 et seq.

is titled “Application of Refunds to Taxes Due.” See KRS 131.560 to 131.595

(emphasis added). Appellees’ debts at issue are not unpaid taxes. If the General

Assembly intended KRS 131.560 et seq. to include unpaid costs of post-secondary

education, the section would have been titled differently. KY. CONST. § 51 (a law’s

“subject . . . shall be expressed in the title”).

              More importantly, the language of KRS 131.565(6) and 131.570(1) is

insufficiently specific to constitute a waiver of sovereign immunity as it relates to

Appellees’ pursuit of monetary relief in the underlying dispute. KRS 131.565(6)

requires state agencies seeking to withhold tax refunds to indemnify the

Department “against any and all damages, court costs, attorneys fees, and any other

expenses related to litigation which arises concerning the administration of KRS

131.560 to 131.595 as it pertains to a refund withholding action requested by such

agency.” KRS 131.565(6) (emphasis added). Similarly, KRS 131.570 provides a

notice requirement and a dispute resolution process “[u]pon determining that a

                                            -18-
pending individual income tax refund is subject to setoff as authorized under this

section[.]” KRS 131.570(1) (emphasis added)

             In the instant case, Appellees’ debts were referred to the Department

in accordance with KRS 45.237 et seq., titled “Collection of Debts Owed the

Commonwealth.” Again, sovereign immunity prohibits actions against the

government unless the claimant can direct to court to statutory language expressly

waiving it or where necessary implication eliminates any other reasonable

interpretation except a waiver. Withers, 939 S.W.2d at 346 (citation omitted).

KRS 131.560 et seq. contain no cross reference to KRS 45.237 et seq., and KRS

131.560 et seq. specifically confines its scope to tax refund offsets arising under its

own title. Therefore, even presuming KRS 131.560 et seq. does provide some

species of sovereign immunity waiver, that waiver does not apply to the collection

of Appellees’ debts.

             As for Appellees’ requested declaration that they are entitled to an

order and judgment directing the return of the funds at issue, such declaratory

relief is, in effect, monetary relief, and therefore prohibited. If the Kentucky

Supreme Court determined in Haydon Bridge II that disguising a request for

monetary damages as one for either equitable restitution or retroactive injunctive

relief was insufficient to avoid application of sovereign immunity, 416 S.W.3d at

293-94, then a declaration that Appellees are entitled to an order and judgment

                                         -19-
returning their money is also barred. Simply, this declaratory relief, in truth, is

monetary relief in disguise which, as explained, sovereign immunity bars.

             Therefore, Appellees’ requested monetary relief is barred by

sovereign immunity and the circuit court erred in concluding otherwise.

II. Sovereign Immunity Does Not Bar Appellees’ Other Declaratory Relief.

             However, declaratory relief, which Appellees also request, interacts

with the Commonwealth’s sovereign immunity quite differently because of the

nature of such relief. “Sovereign immunity is founded on the notion that the

resources of the state, its income and property, cannot be compelled as recompense

for state action that harms a plaintiff through the ordinary suit-at-law process.”

Commonwealth v. Kentucky Ret. Sys., 396 S.W.3d 833, 836 (Ky. 2013). But, “a

declaratory judgment action is not a claim for damages, but rather it is a request

that the plaintiff’s rights under the law be declared.” Id. at 838. Declaratory

judgments do not bear upon state resources, and “[w]hen the state is a real party in

interest, the state is merely taking a position on what a plaintiff’s rights are in the

underlying controversy.” Id.

             The Kentucky Supreme Court has observed the qualitative difference

between petitions for declaratory judgments and claims for damages, as well as the

sound reasoning for exempting declaratory judgment actions from sovereign

immunity, and stated:

                                          -20-
               We do not have a government that is beyond scrutiny. If
               sovereign immunity can be used to prevent the state,
               through its agencies, from being required to act in
               accordance with the law, then lawlessness results. This
               review is qualitatively different from requiring the state to
               pay out the people’s resources as damages for state injury
               to a plaintiff. This is the very act of governing, which the
               people have a right to scrutinize. Thus to say that the state
               is entirely immune is an overbroad statement.

Id. at 839. “The state is not above its own constitution and laws.” Id. at 840.

               Of course, declaratory judgment is a remedy, but the nature of the

remedy places it beyond the ambit of sovereign immunity. The Kentucky

Declaratory Judgment Act, found in KRS Chapter 418, “is intended to be remedial

in nature, and its purpose is to make courts more serviceable to the people by way

of settling controversies and affording relief from uncertainty and insecurity with

respect to rights, duties, and relations.” Mammoth Med. v. Bunnell, 265 S.W.3d

205, 209 (Ky. 2008). Declaratory judgment actions may be brought alone, or, as in

the present appeal, “may be brought with the substantive claim seeking

recompense.” Id. (citing Fontaine v. Dep’t of Finance, 249 S.W.2d 799 (Ky.

1952)); KRS 418.040 (“In any action in a court of record of this Commonwealth

having general jurisdiction wherein it is made to appear that an actual controversy

exists, the plaintiff may ask for a declaration of rights, either alone or with other

relief[.]”).

                                           -21-
              This brings our attention to University of Kentucky v. Moore, in which

the Department garnished Moore’s paychecks, bank accounts, and tax refunds, and

imposed a collection fee and interest following UK HealthCare’s referral of her

medical debt to the Department for collection. Moore, 599 S.W.3d at 800-01. Just

as in the instant appeal, UK HealthCare certified the debt and referred it to the

Department by means of the mechanism provided in KRS 45.237 et seq. Id. at

801. Also, as in the instant case, Moore challenged UK HealthCare’s status as an

agency7 authorized to refer debts to the Department as contemplated by the statute.

Id.

              After amending her complaint, Moore only sought a declaratory

judgment from the circuit court. Id. at 801-02. Specifically, Moore requested the

following declaratory judgment:

              UK and UK HealthCare may not legally refer Moore’s
              debt to the Enterprise Collections Office for collection and
              consequently the Department of Revenue and/or the
              Enterprise Collections Office may not legally undertake
              efforts to collect debt owed to UK, including efforts such
              as garnishing Moore’s bank accounts, wages and tax
              refunds.

Id. at 801. Accordingly, Moore never directly requested relief in the form of the

return of her money from the treasury. See id.

7
 The Kentucky Supreme Court in Moore specifically left open the question of whether UK is an
executive branch agency for the purpose of KRS 45.237 et seq., remanding the issue to the circuit
court for its resolution.

                                              -22-
              The Kentucky Supreme Court in Moore reached two conclusions with

direct bearing on the underlying dispute, but only one of these issues bears upon

the current, interlocutory appeal. First, it concluded that UK “is in the executive

branch of government” as to KRS 45.237 et seq., but remanded to the circuit court

to determine whether UK is entitled to refer debts to the Department via KRS

45.238. Id. at 810.

              Relevant to the current appeal,8 the Kentucky Supreme Court

concluded sovereign immunity did not bar Moore’s declaratory judgment action.

Id. The Supreme Court observed that the Declaratory Judgment Act permitted a

declaratory judgment “when a person’s rights are affected by a statute or other

government regulation.” Id. (citing KRS 418.045). Following a declaration of

rights, “further relief based upon that declaration may be granted whenever

necessary or proper” and such further relief may be granted either in the same

action or in an independent action. Id. (citing KRS 418.055). Additionally, the

Supreme Court noted its decision in Commonwealth v. Kentucky Retirement

Systems, where sovereign immunity did not bar a suit by a group of county

8
 Irrelevant to the sovereign immunity question, the Supreme Court also concluded UK “is in the
executive branch of government” as to KRS 45.237 et seq., but remanded to the circuit court to
“determine whether UK is an executive branch entity entitled to refer debts to the Department of
Revenue for collection pursuant to KRS 45.238.” Moore, 599 S.W.3d at 810.

                                             -23-
employees seeking a declaration that a statute affecting their retirement benefits

was unconstitutional. Id. at 810-11 (citing Ret. Sys., 396 S.W.3d at 833).

             Both Moore and Retirement Systems make it clear that declaratory

judgment actions are not barred by sovereign immunity. This ensures the decisions

of the government are not above reproach. “The state is not above its own

constitution and laws.” Ret. Sys., 396 S.W.3d at 840. “To this extent” – meaning

to the extent a declaratory judgment action seeks to adjudicate statutory or

constitutional rights – “a waiver of sovereign immunity is not necessary in a

declaratory judgment action against the state.” Id. Therefore, those declarations

Appellees seek which, by their nature, are not actually monetary relief, the circuit

court did not err in determining these declarations are exempt from sovereign

immunity.

III. The Issue Whether Sovereign Immunity Bars Monetary Relief Flowing
     From A Declaratory Judgment is Unripe.

             It is true, both Moore and Retirement Systems are distinct from the

instant action because only declaratory relief was at issue. 599 S.W.3d at 801-02;

Ret. Sys., 396 S.W.3d at 836. In this case, Appellees seek injunctive relief

directing the return of their collected funds. However, as discussed above,

sovereign immunity bars the monetary relief which Appellees immediately request.

As this case demonstrates, sovereign immunity may bar one form of relief while

not barring another, even where both requests arise from the same operative facts.

                                        -24-
             The appellants in Moore implored the Supreme Court to distinguish

their case from Retirement Systems: they argued sovereign immunity still applied

in the context of their case because Moore would ultimately use the requested

declaratory judgment to obtain a refund from UK and the treasury. Accordingly,

they argued Moore’s declaratory judgment would run counter to the principle that

sovereign immunity protects the resources of the state from being used to

compensate a plaintiff via the suit-at-law process. Id. at 811 (citing Ret. Sys., 396

S.W.3d at 836). Ultimately, however, the Supreme Court declined to determine

whether any monetary relief flowing from a declaratory judgment action is barred

by sovereign immunity because that question was not yet ripe. Id. at 812-13.

             Appellants ask this Court to determine whether sovereign immunity

bars declaratory judgment actions where declaratory relief, should it be granted,

will ultimately be used to pursue monetary relief. In that respect, Appellants

believe this case picks up where Moore left off. As the Supreme Court notes in

Moore, “‘it is also true that in subsequent . . . actions to enforce declared rights, the

immunity issue could be relevant if the revenue or property of the state would be

affected.’” Id. at 813 (modification original) (quoting Ret. Sys., 396 S.W.3d at

838).

             However, in Moore, the circuit court had already entered its

declaratory judgment prior to appeal. Id. at 802. The Supreme Court determined

                                          -25-
UK’s and the Department’s argument that “sovereign immunity bars monetary

injunctive relief flowing from a declaratory judgment” to be unripe because “issues

that would necessarily be addressed preliminary to any monetary relief remain[ed]

undecided.” Id. at 813.

             There is more similarity between Moore and the current appeal than

Appellants would probably wish. The circuit court has not granted any of

Appellees’ requested declaratory judgments and has not otherwise decided

Appellees’ declaratory relief petition on its merits. This case is not in a posture

that would allow this Court to determine whether sovereign immunity applies to

monetary injunctive relief flowing from a declaratory judgment. Because this

issue is unripe, we will not address it.

                                   CONCLUSION

             Based on the foregoing, we affirm in part and reverse in part the

Franklin Circuit Court’s October 19, 2022 order and remand for proceedings

consistent with this Opinion.

             ALL CONCUR.

                                           -26-
BRIEFS FOR APPELLANTS           BRIEFS FOR APPELLEES
UNIVERSITY OF KENTUCKY          KIMBERLY BENNETT, BENJAMIN
AND MOREHEAD STATE              LANE, SAYRE LAWRENCE, AND
UNIVERSITY:                     RONNIE LESTER:

Bryan H. Beauman                E. Douglas Richards
Kevin G. Henry                  Lexington, Kentucky
Lexington, Kentucky
                                Bryan C. Hix
BRIEFS FOR APPELLANT KCTCS:     Frankfort, Kentucky

Melissa Norman Bork             ORAL ARGUMENTS FOR
Brent R. Baughman               APPELLEES:
Sarah T. Laren
Lexington, Kentucky             E. Douglas Richards
                                Lexington, Kentucky
BRIEFS FOR APPELLANT
COMMONWEALTH OF
KENTUCKY DEPARTMENT OF
REVENUE:

R. Campbell Connell
Frank L. Dempsey
Austin T. Green
Frankfort, Kentucky

ORAL ARGUMENT FOR
APPELLANTS UNIVERSITY OF
KENTUCKY AND MOREHEAD
STATE UNIVERSITY:

Bryan H. Beauman
Lexington, Kentucky

ORAL ARGUMENT FOR
APPELLANT KCTCS:

Melissa N. Bork
Lexington, Kentucky

                              -27-
ORAL ARGUMENT FOR
APPELLANT COMMONWEALTH
OF KENTUCKY DEPARTMENT OF
REVENUE:

R. Campbell Connell
Frankfort, Kentucky

                        -28-