Court Opinion

ID: 9965753
Source: CourtListenerOpinion
Date Created: 2024-05-03 14:07:37.990644+00
Date Added: 2024-06-11T08:25:38.138917
License: Public Domain

RENDERED: APRIL 26, 2024; 10:00 A.M.
                  NOT TO BE PUBLISHED

           Commonwealth of Kentucky
                   Court of Appeals
                     NO. 2023-CA-0384-MR

WHITLEY COUNTY FISCAL COURT
AND WHITLEY COUNTY,
KENTUCKY                                            APPELLANTS

            APPEAL FROM WHITLEY CIRCUIT COURT
v.           HONORABLE DANIEL BALLOU, JUDGE
                   ACTION NO. 22-CI-00320

KING-CRETE DRILLING, INC. AND
JIMMY BATES                                          APPELLEES

AND

                     NO. 2023-CA-0386-MR

JIMMY BATES, INDIVIDUALLY
AND JIMMY BATES, IN HIS
OFFICIAL CAPACITY AS THE
DIRECTOR OF INFRASTRUCTURE
AND COUNTY PROJECT
DEVELOPMENT                                         APPELLANTS

            APPEAL FROM WHITLEY CIRCUIT COURT
v.           HONORABLE DANIEL BALLOU, JUDGE
                   ACTION NO. 22-CI-00320
KING-CRETE DRILLING, INC.;
WHITLEY COUNTY FISCAL
COURT; AND WHITLEY COUNTY,
KENTUCKY                                                              APPELLEES

                                OPINION
                        REVERSING AND REMANDING
                        APPEAL NO. 2023-CA-0384-MR
                                   AND
                        VACATING AND REMANDING
                        APPEAL NO. 2023-CA-0386-MR

                                  ** ** ** ** **

BEFORE: GOODWINE, KAREM, AND MCNEILL, JUDGES.

GOODWINE, JUDGE: Whitley County Fiscal Court and Whitley County,

Kentucky, (collectively Whitley County), and Jimmy Bates (Bates) individually,

and in his official capacity as Director of Infrastructure and County Property

Development, (collectively Appellants), appeal separately from the Whitley Circuit

Court’s interlocutory order denying their motions to dismiss Appellee, King-Crete

Drilling, Inc.’s (King-Crete) complaint under Kentucky Rules of Civil Procedure

(CR) 12.02 for failure to state a claim upon which relief can be granted based on

claims of sovereign and qualified official immunity respectively. We reverse and

remand Appeal No. 2023-CA-0384-MR and vacate and remand Appeal No. 2023-

CA-0386-MR.

                                         -2-
                                    BACKGROUND

              This appeal arises from a contract between Whitley County and King-

Crete to repair two sections of the roads that were damaged during the historic

flooding in August 2021. King-Crete sued Whitley County for breach of contract

for monies owed for completed repair work and sued Bates for intentional and

negligent misrepresentation alleging he authorized the additional work and assured

King-Crete would be paid.1 Bates was not a party to the contract. The Federal

Emergency Management Agency (FEMA) funded the repair projects.

              Whitley County solicited competitive bids for several FEMA-funded

road repairs based on FEMA-required specifications. Whitley County accepted

King-Crete’s bids for two of the projects. King-Crete was the lowest bidder. Once

the repair work was completed, King-Crete submitted invoices higher than its

original bid. Whitley County paid King-Crete the original bid amounts, and King-

Crete sued to recover more than the agreed-upon bid price, contending Bates

authorized the additional work and assured it would be paid.

              King-Crete initially filed suit against Bates individually and identified

him as the Director of Infrastructure and County Project Development for the

Whitley County Fiscal Court, alleging intentional and negligent misrepresentations

1
 There is no record of any such communications nor any written changes to the work
specifications.

                                             -3-
relating to the project. In paragraph 34 of its Verified Complaint, King-Crete

specifically stated it was suing Bates in his individual capacity. Record (R.) at 7.

King-Crete subsequently amended its complaint and added Whitley County,

alleging a breach of contract and unjust enrichment. R. at 24-27.

             In its complaint, King-Crete alleged (1) that Bates knew or acted

recklessly in making false representations and assurances as to repayment for the

actual repairs, R. at 19-20; (2) that Bates had a duty to exercise reasonable care to

avoid misrepresentations but breached this duty by assuring King-Crete that

Whitley County would pay above the initial bid, R. at 21-25; and (3) that Bates had

a “statutory and/or regulatory duty to maintain the safety of the county’s

infrastructure including its county roads” and failed to carry out the ministerial

functions required of his office. R. at 34.

             Whitley County and Bates filed motions to dismiss, contending that

sovereign immunity and qualified official immunity barred all claims. Following a

hearing, the circuit court entered an order on March 10, 2022, denying the

Appellants’ motions to dismiss based on immunity, and these interlocutory appeals

followed.

                                    ANALYSIS

             The denial of a motion to dismiss is typically interlocutory and not

subject to appeal, as appellate review is available solely for final judgments. CR

                                         -4-
54.01. Nevertheless, “when an appeal is based on a claim of sovereign immunity,

immediate de novo review is available upon request.” County Employees

Retirement Systems v. Frontier Housing, Inc., 536 S.W.3d 712, 713 (Ky. App.

2017) (citing Breathitt County Bd. of Educ. v. Prater, 292 S.W.3d 883, 886 (Ky.

2009)). Consequently, an appellate court has jurisdiction to consider the denial of

a motion to dismiss directly connected to a claim of sovereign immunity. Id. at

713-14.

             In Fox v. Grayson, our Supreme Court thoroughly addressed the

standard of review for motions to dismiss:

                     A motion to dismiss for failure to state a claim upon
             which relief may be granted admits as true the material
             facts of the complaint. So a court should not grant
             such a motion unless it appears the pleading party would
             not be entitled to relief under any set of facts which could
             be proved. . . . Accordingly, the pleadings should be
             liberally construed in the light most favorable to the
             plaintiff, all allegations being taken as true. This
             exacting standard of review eliminates any need by the
             trial court to make findings of fact; rather, the question
             is purely a matter of law. Stated another way, the court
             must ask if the facts alleged in the complaint can be
             proved, would the plaintiff be entitled to relief? Since a
             motion to dismiss for failure to state a claim upon which
             relief may be granted is a pure question of law, a
             reviewing court owes no deference to a trial court’s
             determination; instead an appellate court reviews the issue
             de novo.

317 S.W.3d 1, 7 (Ky. 2010) (internal quotation marks and footnotes omitted).

                                         -5-
“Because we are concerned only with whether the complaint states a cause of

action and not liability, our decision necessarily depends on the allegations made in

the complaint.” Taylor v. Maxson, 483 S.W.3d 852, 855 (Ky. App. 2016)

(citations omitted).

             The Appellants assert that the complaint does not state a claim upon

which relief can be granted because they are entitled to immunity. Immunity from

suit is a sovereign right of the state. Yanero v. Davis, 65 S.W.3d 510, 517 (Ky.

2001). No one can sue the State without its consent. Id. “The General Assembly

may, by law, direct in what manner and in what courts suits may be brought

against the Commonwealth.” KENTUCKY CONSTITUTION, Section 231. Absent

statutory authorization, the Commonwealth is immune from suit for breach of

contract. University of Louisville v. Rothstein, 532 S.W.3d 644, 649 (Ky. 2017).

Kentucky Revised Statutes (KRS) 45A.245(1) allows actions against the

Commonwealth on written contracts, “including but not limited to actions either

for breach of contracts or for enforcement of contracts or for both.”

             A county “is a political subdivision of the Commonwealth as well,

and as such is an arm of the state government. It, too, is clothed with the same

sovereign immunity.” Cullinan v. Jefferson County, 418 S.W.2d 407, 408 (Ky.

1967, overruled on other grounds by Yanero v. Davis, 65 S.W.3d 510, 527 (Ky.

2001). Likewise, counties are immune from suits for breach of contract. George

                                         -6-
M. Eady Co. v. Jefferson County, 551 S.W.2d 571, 572 (Ky. 1977). There is no

statutory waiver of immunity from suits on contracts for counties as there is for the

Commonwealth.2 Id.

              It is undisputed that Bates was not a party to the contract and cannot

be held individually liable for deficiencies in payment. General Electric v.

American Buyers Cooperative, Inc., 316 S.W.2d 354 (Ky. 1958). Only Whitley

County can be held liable for any deficiencies in payment, and it is protected by

sovereign immunity.

              As to King-Crete’s allegations of intentional or negligent

misrepresentation against Bates, Bates argues he is entitled to qualified official

immunity. Applying qualified official immunity to employment activities or

decisions can be problematic. Patton v. Bickford, 529 S.W.3d 717 (Ky. 2016). In

Patton, our Supreme Court noted:

              The application of qualified official immunity to
              particular activities has long been problematic and this
              case is no different. Qualified official immunity,
              generally speaking, is “immunity from tort liability
              afforded to public officers and employees for acts
              performed in the exercise of their discretionary
              functions.” Yanero v. Davis, 65 S.W.3d 510, 521 (Ky.
              2001). Qualified immunity applies only to the negligent
              performance of duties that are discretionary in nature. A
              government official is not afforded immunity from tort
              liability for the negligent performance of a ministerial

2
 A different panel of this Court so held in Trace Creek Construction, Inc. v. Harlan Cnty. Fiscal
Court, No. 2007-CA-000328-MR, 2008 WL 1991647 (Ky. App. 2008).

                                               -7-
             act. The act of “governing cannot be a tort, but failing to
             carry out the government’s commands properly when the
             acts [to be performed] are known and certain can be.”
             Marson v. Thomason, 438 S.W.3d 292, 296 (Ky. 2014).

             Categorizing actions as either the performance of a
             discretionary duty or the performance of a ministerial
             duty is vexing to litigants and courts alike. We recently
             affirmed that the distinction “rests not on the status or
             title of the officer or employee, but on the function being
             performed. Indeed, most immunity issues are resolved
             by examining the nature of the functions with which a
             particular official or class of officials has been lawfully
             entrusted.” Id. at 296-297 (internal quotes and citation
             omitted). A somewhat rudimentary expression of the
             distinction between discretionary and ministerial acts
             provides that “[p]romulgation of rules is a discretionary
             function; enforcement of those rules is a ministerial
             function.” Williams v. Kentucky Department of
             Education, 113 S.W.3d 145, 150 (Ky. 2003) (citations
             omitted). This is, of course, too simple for most
             circumstances, but it serves as a sound point from which
             to begin.

Id. at 723-24.

             King-Crete alleges that Bates is the Director of Infrastructure and

County Project Development, and as such had a statutory and regulatory duty to

maintain the safety of the county’s infrastructure, including county roads. It

further alleges this duty is ministerial but alternatively argues that if it was

discretionary, it was performed in bad faith.

             Bates denies making any statements claimed by King-Crete; that he

was not able to alter or dictate new terms as to a written contract executed by

                                           -8-
Whitley County and King-Crete’s reliance on any assurances offered would be

unreasonable under the circumstances. Any mistakes made in speculating what

Whitley County would pay fall within the qualified immunity and discretional

authority that Bates was allowed to carry out his duties. Nowhere in any of the

pleadings has King-Crete alleged that Bates acted outside Whitley County’s

authority. Instead, in its brief, King-Crete refers to the County and Bates as the

principal and agent. King-Crete states:

              The Amended Complaint alleges that Bates, as an agent
              of the County, contracted with King-Crete for the
              rebuilding and repair of roads damaged by flooding.
              As part of that contract, Bates bound the County to pay
              King-Crete’s unit-priced bids for the materials and
              labor incurred in restoring the roads to industry and
              county standards. As an agent of the County, Bates
              is liable to King-Crete co-extensively with the County[.]

Appellee Brief at 8 (responding to Bates).3

              Whitley County paid the full amount owed under the contract,

consistent with the initial bid that had to comply with FEMA specifications. King-

Crete has never disputed that Whitley County has satisfied those terms by paying

the full amount from both of King-Crete’s bids. King-Crete conceded the FEMA

bid specifications detailed specific amounts of material and labor for the repairs.

The bids show that King-Crete bid a lump-sum total based on the itemized FEMA

3
  We have reviewed the First Amended Complaint (R. at 24-27) and do not find a specific
reference to a principal/agency relationship.

                                             -9-
specifications. King-Crete asserts that it knew all along that the bid amount totals

it submitted were insufficient to perform the work. King-Crete did not have to

submit a bid it thought was insufficient to cover labor costs and materials. It

certainly could have increased its bid sufficient to cover whatever it believed to be

the necessary labor costs and materials. Under an unjust enrichment theory, King-

Crete’s claims for extra-contractual relief are similarly barred by sovereign

immunity. Lipson v. Univ. of Louisville, 556 S.W.3d 18, 28 (Ky. App. 2018).

             King-Crete alleges Bates as “Director of Road Infrastructure and

County Project Development for the Whitley County Fiscal Court is Charged with

the statutory and/or regulatory duty of maintaining and ensuring the safety of the

county’s infrastructure including its county roads.” R. at 34. “To establish a

negligence claim against a public official, the complaint must allege a violation of

a special duty owed to a specific identifiable person and not merely breach of a

general duty owed to the public at large.” Fryman v. Harrison, 896 S.W.2d 908,

910 (Ky. 1995). King-Crete failed to allege a special duty.

             The record is insufficiently developed regarding Bates’ duties. The

question of whether Bates’ duties generally and specifically, statutory and/or

regulatory, were ministerial or discretionary is fact-specific. Kea-Ham

Contracting, Inc. v. Floyd County Development Authority, 37 S.W.3d 703 (2000).

The trial court made no findings in this regard in its order denying Bates’ motion to

                                        -10-
dismiss based on qualified official immunity. Without a determination from the

trial court of whether Bates’ duties, as established from evidence obtained during

discovery, are ministerial or discretionary, and, if discretionary, whether performed

in bad faith, we are unable to assess whether the trial court’s denial of Bates’

motion to dismiss was appropriate.

             Thus, we remand for the parties to conduct discovery and establish

Bates’ duties as Director of Infrastructure and County Development. Once the

general and specific duties are fleshed out through discovery, Bates may request

the trial court to determine summarily whether said duties are ministerial or

discretionary, and if discretionary, whether performed in bad faith. If the trial

court determines Bates is still not entitled to qualified official immunity, Bates may

seek interlocutory relief.

             Any arguments not addressed are deemed irrelevant, redundant, or

unnecessary to dispose of the issues herein.

                                  CONCLUSION

             Based on the foregoing, we reverse the Order of the Whitley Circuit

Court in Appeal No. 2023-CA-0384-MR and remand for entry of an order

dismissing Whitley County; and we vacate the Order of the Whitley Circuit Court

in Appeal No. 2023-CA-0386-MR and remand for further proceedings regarding

Bates consistent with this Opinion.

                                         -11-
             ALL CONCUR.

BRIEFS FOR APPELLANTS        BRIEFS FOR APPELLEE:
WHITLEY COUNTY FISCAL
COURT AND WHITLEY            R. Aaron Hostettler
COUNTY:                      London, Kentucky

Griffin Terry Sumner
Michelle C. Fox
Louisville, Kentucky

BRIEF FOR APPELLANT
JIMMY BATES:

Jason E. Williams
John F. Kelley, Jr.
London, Kentucky

                           -12-