Court Opinion

ID: 5098351
Source: CourtListenerOpinion
Date Created: 2021-10-01 19:45:18.979805+00
Date Added: 2024-06-11T08:20:54.592422
License: Public Domain

KELLER, Justice,
concurring in part and dissenting in part.
I concur with the majority’s holding that KRS 350.990(9) did not supersede the common law doctrine of piercing the corporate veil but merely provided an additional basis for imposing individual liability for penalties assessed by the Cabinet. Accordingly, I would reverse the decision of the Court of Appeals to the extent it held otherwise.
I respectfully dissent, however, from the majority’s conclusion that the trial court correctly entered summary judgment for the Cabinet and that further remand is unnecessary. In my opinion, genuine issues of material fact inconsistent with summary judgment remain with regard to either theory of liability discussed in the majority opinion. While I agree with the majority that Neace could be liable under either the common law doctrine of piercing the corporate veil or under KRS 350.990(9), I disagree with the majority’s conclusion that all factual issues have already been resolved.
Without an evidentiary hearing, the circuit court summarily determined from the record that Neace was the alter ego of N.W. and, therefore, liable under the doctrine of piercing the corporate veil. Neace claimed that he had sold N.W. to Gulf and Gulf was in control of N.W. at the time the final orders were issued by the Cabinet. To impose individual liability on Neace under the doctrine of piercing the corporate veil for refusing to comply with the Cabinets’ orders, the Cabinet was required to show that Neace was still in control of N.W. at the time the final orders were entered. If Neace had indeed relinquished control of N.W. to Gulf prior to the entry of the Cabinet’s final orders, the doctrine of piercing the corporate veil based on Neace’s past control of N.W. would not be a basis for imposing individual liability on Neace since he would not have been in control of N.W. at the relevant time. I agree with the Court of Appeals that there was a genuine issue as to this material fact and that a summary judgment was not appropriate.1 In my opinion, therefore, we must remand for a resolution of this issue if the Cabinet seeks to impose liability based on the doctrine of piercing the corporate veil.
The majority correctly states that we may affirm a trial court under an alternate theory not relied upon by the trial court. “Consequently,” the majority holds, “based on the record and the law, it is clear that Neace should be held alternatively hable under KRS 350.990(9) in view of his complicity in the failure of the corporation to comply with the orders of the cabinet.” I disagree.
*21As pointed out by the majority, KRS 350.135(1) requires Cabinet approval for transfer of a permit and “[tjransfer ... of permit rights means a change in ownership or other effective control over the rights to conduct surface coal mining operations under a permit issued by the Cabinet.”2 Accordingly, any sale of the total shares or a sufficient number of shares to transfer the controlling interest in a corporate permit-tee must be approved by the Cabinet. Although not mentioned by the majority, the corporate transferor remains liable for any penalties prior the Cabinet’s approval: “All rights and liabilities under the permit shall pass to the transferee upon written approval of the transfer by the cabinet, except "that the transferor shall remain liable for any civil penalties resulting from violations occurring prior to the date of approval of the transfer.”3 While cited but not set forth in the majority opinion, KRS 350.990(9) under certain conditions does impose individual liability on directors, officers and agents of a corporate permittee:
When a corporate permittee violates any provision of this chapter or administrative regulation issue pursuant thereto or fails or refuses to comply with any final order issued by the secretary, any director, officer, or agent of the corporation who willfully and knowingly authorized, ordered, or carried out the violation, failure or refusal shall be subject to the same civil penalties, fines, and imprisonment as may be imposed upon a person pursuant to this section.4
Construing these statutory provisions together, it is clear that individual liability may be imposed only upon a director, officer or agent of a corporate permittee who, prior to the Cabinet’s approval of a transfer, willfully and knowingly authorizes, orders or carries out (1) a violation of any provision of KRS Chapter 350 or administrative regulation issued pursuant thereto or (2) a failure or refusal to comply with any final order issued by the Secretary.
The Cabinet imposed penalties for N.W.’s failure or refusal to comply with final orders and must, therefore, show that Neace was a director, officer or agent of N.W. at the time of the issuance of the orders and he willfully and knowingly failed or refused to comply with the orders. Neace claims that, by virtue of the sale to Gulf, he had completely relinquished control of and, as a result, any position with N.W. at the time of the final orders. His control of and relationship with N.W. at the time of the Cabinet’s orders were therefore material disputed facts. Accordingly, liability cannot be properly imposed upon Neace as a matter of law on the alternative theory suggested by the majority.
For the above reasons, I would remand this case to the circuit court for further proceedings.
COOPER, J., joins this dissent.

. Steelvest, Inc. v. Scansteel Service Center, Inc., Ky. 807 S.W.2d 476 (1991).

. 405 KAR 8:001, § 1(132) (emphasis added).

. KRS 350.135(1).

.KRS 350.990(9) (emphasis added).