Kentucky American Seeks Dismissal Of Lawsuit Challenging Its Power To Condemn Posted: November 7, 2008
COMMONWEALTH OF KENTUCKY
FRANKLIN CIRCUIT COURT
CIVIL ACTION NO. 08-CI-1574
PENNY GREATHOUSE, ET AL.
KENTUCKY AMERICAN WATER COMPANY
PLAINTIFFS’ RESPONSE IN OPPOSITION TO DEFENDANT’S MOTION TO DISMISS
Plaintiffs, in support of their Response In Opposition To the Defendant’s Motion to Dismiss, state as follows:
This action arose under KRS 418.040 et. seq., the Declaratory Judgment Act. Plaintiffs, four landowners with property in Franklin County, have petitioned this court to determine whether Kentucky American Water Company (“KAWC”) has statutory authority to condemn their private lands of Plaintiffs in Franklin County, Kentucky in order to support the placement of a water transmission main through their properties. Plaintiffs in this case have each been informed that in the event that they do not grant such an easement, that KAWC may seek to condemn their properties. Plaintiffs seek a declaration of rights relative to KAWC in order to allow them to make informed decisions concerning negotiation without the cloud of threatened condemnation.
Predictably, KAWC seeks to dismiss this action and to force Plaintiffs to negotiate under the cloud of potential efforts to divest them of the easements by condemnation. KAWC’s Motion To Dismiss joins three issues. First, KAWC asserts that Plaintiffs cannot request a declaration of rights but instead must raise any challenge as to the authority of KAWC to condemn in the context of a condemnation action because, by engaging in an attempt to voluntarily negotiate an easement, KAWC has already begun the condemnation process. Second, KAWC claims that since the resolution of this action may affect similarly situated persons along the pipeline route, that all such persons must be joined as parties. Finally, KAWC claims that this Court should exercise its discretion to deny the request for a declaration of rights because the declaration of rights would not end the uncertainty or controversy and because the court’s opinion would be purely advisory, even as to Plaintiffs in any subsequent condemnation action.
Plaintiffs respond to each argument in turn, after reviewing briefly the standard by which a motion to dismiss is evaluated by this Court.
Standard of Review
In reviewing a motion to dismiss a declaratory judgment action, the question is not whether the complaint seeking the declaration of rights will ultimately prevail, but whether the complaint states a cause of action for declaratory relief. Bank One Kentucky NA v. Woodfield Financial Consortium LP, 957 S.W.2d 276, 278 (Ky. App. 1997). In ruling on a motion to dismiss, “it is improper for the court to consider whether the plaintiffs will ultimately prevail[.]” Id. at 278. The complaint must be construed in the light most favorable to the plaintiff and all allegations must be taken as true. Id. at 278. The only question “appropriately” before this Court is whether the Plaintiffs have “stated a cause of action for declaratory relief.” Id. at 279.
I. A Declaration of Rights Is Appropriate In This Instance.
The Kentucky General Assembly has declared the statutes that comprise the Declaratory Judgment Act, KRS 418.040 through 418.090, to be remedial; their 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, also gives courts broad discretion to grant relief and are to be liberally interpreted and administered.
KAWC asserts that a declaratory judgment action is inappropriate in this instance because KAWC “has already commenced” condemnation actions under the Eminent Domain Act, by writing to the landowner Plaintiffs, requesting that they grant a voluntary easement. KAWC argues that since KRS 416.550 requires that a party seeking to condemn property first attempt to acquire the property rights by agreement, that the Eminent Domain Act has been invoked, an action has commenced, and the sole venue for objecting to the statutory authority to condemn is in the context of the condemnation suit.
To suggest that from the point of initial contact with a private landowner seeking an easement forward, a condemnation action has commenced, is a stretch of epic proportion. KAWC can cite to no authority, in statute or in case law, suggesting that the initial attempt to acquire an easement by voluntary negotiation constitutes initiation or commencement of an action under the Eminent Domain Act.
In truth, it is abundantly clear from the statutes that an action for condemnation is ”commenced” by the filing of a verified petition, and that the requirement to attempt to negotiate a voluntary easement is a condition prerequisite to use of the Eminent Domain Act, but does not constitute the initiation of a condemnation action.
KRS 416.550 authorizes a condemnor to “condemn” property rights, privileges or easements needed for any use or purposes for which the condemnor is authorized by law, if the condemnor cannot, “by agreement with the owner thereof” acquire the rights by agreement. The structure of the statutory language itself makes clear that condemnation follows an unsuccessful attempt to negotiate a property rights, but is a condition precedent to initiation of an action rather than the initial step of that action. This much is clear from the sentence following that referenced above, in which the General Assembly has excused the obligation to negotiate in certain circumstances, indicating that “[I]t is not a prerequisite to an action to attempt to agree with an owner who is unknown or who, after reasonable effort, cannot be found within the state or an owner who is under a disability.” KRS 416.550. Plainly, the obligation to negotiate is a prerequisite to an action for condemnation, and is not initiation or commencement of an action.
It is clear that the ”initiation” of an action for condemnation pursuant to KRS 416.560 and 416.570, begins with the filing of a verified petition pursuant to KRS 416. 570, and not with the initial contact with a landowner seeking a negotiated property right. In short, KAWC attempts to create a conflict in this situation between the Eminent Domain Act and the Declaratory Judgment Act where one does not exist. KAWC has contacted each of the Plaintiffs seeking to obtain an easement by negotiation, as is evidenced in the attachments to the Petition for Declaratory Relief, but has not initiated a condemnation action under KRS 416.570(1).
Whether, as KAWC asserts, the Eminent Domain Act “sets forth that (sic) ‘procedures that must be followed when condemnation proceedings are commenced’”, Motion to Dismiss, p. 3, in such a manner that would preclude or preempt a Petition for Declaratory Relief filed after initiation of condemnation proceedings, is a question not before this Court, because KAWC has not initiated a condemnation proceeding. KRS 413.250 and Kentucky Rule of Civil Procedure 3.01 all reflect that an action is commenced upon the filing of a complaint and the issuance of a summons by the court. KRS 416.570(1) is in full accord in reflecting that a condemnation action commences on the filing of a verified petition.
The Kentucky Court of Appeals has made clear that the condemnation procedure begins with the filing of a verified petition, not with the initial communication with a landowner. “KRS 416.570 provides that a condemnation procedure is initiated by filing a verified petition of condemnation with the circuit court of the county in which the property is located and dictates what the petition must contain.” Kipling v. City of White Plains, 80 S.W.3d 776, 786 (Ky. App. 2001). Both the Kipling and the Bernard cases relied on by KAWC are in full accord that a condemnation action is commenced by the filing of a petition, and that the requirement to comply with the procedures of KRS 416. 540 et seq. attaches only after the action has been commenced.
The Kipling courts’ opinion provides no support for the novel suggestion by KAWC that proceedings under the Eminent Domain Act begin not with the filing a petition but with the first communication or attempt to negotiate with a landowner.
Finally, this is not a situation where there exists a conflict between the Eminent Domain Act and Civil Rules. KRS 416.650 states that “[a]ll provisions under [the Eminent Domain Act] shall be governed by the provisions of the Rules of Civil Procedure except where the provisions of [the Act] specifically or by necessary implication provide otherwise.” Thus, Civil Rule 3.01 would apply unless provisions of the Eminent Domain Act “specifically or by necessary implication” described another way to commence an action. No provision of the Eminent Domain Act suggests that an action under it should commence in any other way than by filing a petition for condemnation; rather KRS 416.560 and 570 clearly indicate that the filing of a verified petition initiates a condemnation action. Actions brought under the Eminent Domain Act commence upon the filing of a petition, as provided for in KRS 416.570, and consistent with both Civil Rule 3.01 and KRS 413.250. There is no indication, nor has KAWC provided any authority, suggesting that the Eminent Domain Act was intended to be interpreted in a manner that would preclude a landowner from seeking a declaration of rights in advance of the initiation of a condemnation action; rather the availability of a declaration of rights under KRS 418.080 is intended to be construed and applied liberally for just such a circumstance, where KAWC has indicated in a thinly-veiled fashion that it possesses the power to condemn the Plaintiffs’ lands if they do not “voluntarily” agree to the requested easement.
"In a declaratory judgment action it has been well recognized by this court that the question is not one of a present controversy…but rather whether there is a “justiciable controversy over present rights, duties or liabilities.”
Bank One Kentucky NA v. Woodfield Financial Consortium LP, 957 S.W.2d 276, 279 (Ky. App. 1997) (Emphasis original).
In this instance, it is clear that there is a justiciable controversy, and that Plaintiffs have stated a cause of action that is neither in conflict with nor governed by the Eminent Domain Act of Kentucky.
II. All Necessary Parties To This Action Are Before The Court
KAWC urges dismissal for a second reason - that Plaintiffs are seeking a broad declaration of rights that would affect non-parties and that KRS 418.075 mandates dismissal of the Petition.
A less selective reading of the Petition makes clear that the Petition seeks a declaration of rights as between the four landowners and KAWC. The very first sentence of the Petition for Declaration of Rights states:
This action arises under the provisions of the Kentucky Declaratory Judgment Act, KRS 418.040 et seq., seeking a declaration of rights between the Plaintiffs,Penny and Edward Greathouse, Fran Pinkston, and Elizabeth Felgendreher, and the Defendant, Kentucky American Water Company . . . concerning the power of KAWC…to acquire certain easements through eminent domain….
Petition for Declaration of Rights, p. 1. (emphasis added).
It is not disputed that the Declaratory Judgment Act requires that “all persons shall be made parties who have or claim any interest which would be affected by the declaration, and no declaration shall prejudice the rights of persons not parties to the proceedings.” KRS 418.075. KAWC has not identified any other persons holding interests in the properties of Edward and Penny Greathouse, Fran Pinkston, and Elizabeth Felgendreher, and to the best of Plaintiffs’ knowledge, there are no other persons holding such interests. Since the sought-after declaration of rights is limited to the four landowners and KAWC, there are no other "persons . . . who have or claim any interest which would be affected by the declaration[.]” KRS 418.075.
That the Petition for Declaration of Rights is limited to the question of whether KAWC has the power to condemn properties of the four landowners in Franklin County, is clear from a reading of the entirety of the Petition in context:
"This action arises under the provisions of the Kentucky Declaratory Judgment Act, KRS 418.040 et seq., seeking a declaration of rights between the Plaintiffs,Penny and Edward Greathouse, Fran Pinkston, and Elizabeth Felgendreher,and the Defendant, Kentucky American Water Company . . . concerning the power of KAWC…to acquire certain easements through eminent domain…."
It is clear from the above-quoted introduction to the Petition that it is a declaration of rights as between the four landowners and KAWC for certain properties owned by those Plaintiffs, that is at issue.
Additionally, numerical paragraph 18 explains why venue is appropriate in Franklin County, further underscoring the scope of the declaration sought:
"Venue is appropriate in this Court pursuant to K.R.S. 452.400, which provides that an action for an estate or interest in real property or for an injury to real property ‘must be brought in the county in which the subject of the action, or some part thereof, is situated.’
Since each plaintiff owns property in Franklin County and the power of KAWC to condemn an easement through those properties is the subject of this action, Franklin County is an appropriate venue to bring this action."
Petition, Num. para. 18 (emphasis added).
The requested relief, read in the context of the introduction to the Petition and the factual background and venue discussion, makes clear that Plaintiffs seek a declaration of rights as between themselves and their specific properties and KAWC, and thus are the proper and sufficient parties at bar.
Nor do the cases cited by KAWC suggest otherwise. The Maney decision cited by KAWC involved a challenge to the constitutionality of a statute, in which case notice of the Attorney General is required. Such is not the case here. The Ezzell v. Exall decision involved a petition for declaration of rights concerning a partitioning of land, and the appellate court determined that since the declaration of rights would potentially affect the interests of a fractional interest-holder or unknown heirs in a tract of land, those persons should have been parties to the action. Since Plaintiffs are unaware that any other party claims an interest to the specific properties for which the declaration is sought, and KAWC has provided none, that all proper and necessary parties pursuant to K.R.S. 418.075 have been joined.
It is difficult to understand, as a legal matter, how KAWC believes that the rights of other persons would be prejudiced by a declaration of rights in this case, since the statute specifically states that “no declaration shall prejudice the rights of persons not parties to the proceeding.” KRS 418.075. That there may be others who have properties in Franklin or other counties that are similarly situated to the properties of the Plaintiffs with respect to KAWC’s project, does not mean that Plaintiffs cannot secure a determination of their own rights without joining all other parties from whom KAWC seeks an easement. While such parties are free to intervene if they wish to be bound by the outcome, the declaration sought by Plaintiffs is with respect to specific properties owned by them and easements on those lands sought by KAWC, and does not prejudice the rights or defenses of nonparties.
III. This Petition Will Terminate The Uncertainty Concerning The Power of KAWC To Condemn Plaintiffs’ Lands And Should Be Heard Under K.R.S. 418.065
The final grounds on which KAWC seeks dismissal of this action is that, allegedly, Plaintiffs do not present a justiciable controversy but rather seek a “purely advisory opinion from this Court,” because a decision in this case will not “terminate the uncertainty or controversy which gave rise to the action[,]” and because the declaration is not “necessary or proper at the time under all the circumstances.”
The fact that KAWC has, in correspondence with the Plaintiffs, indicated that unless the four landowners provide an easement “voluntarily” that one will be acquired by condemnation, hardly makes the question of whether KAWC has the power of condemnation, advisory in nature. The ability vel non of KAWC to condemn these specific lands, currently and materially affects the landowners judgments concerning whether to negotiate or to refuse such easement, for obvious reasons. There is nothing hypothetical about this controversy, as the daily presence of bulldozers and other equipment near the properties of the Plaintiffs reflects.
A justiciable controversy is one in which “a present and fixed claim of right is asserted against one who has an interest in contesting it[.]” West v. Commonwealth, 887 S.W.2d 338, 341 (Ky. 1994) citing BLACK'S LAW DICTIONARY, 865 (6th ed. 1990). It is one that in the context of a declaratory judgment action, has been “well recognized” to be a question “not of a present controversy…but rather whether there is a ’justiciable controversy over presents rights, duties or liabilities.” Bank One Kentucky NA v. Woodfield Financial Consortium LP, 957 S.W.2d 276, 279 (Ky. App. 1997). Here, KAWC is presently asserting a right of eminent domain against the Plaintiffs, who have an immediate interest in determining the existence of that right, and their potential liabilities in the event that they simply refuse to grant an easement. Without knowing whether KAWC possesses the right to take their properties by operation of law, Plaintiffs are unable to properly evaluate KAWC’s proposals to purchase easements on their properties. It is a real and actual controversy since Plaintiffs question KAWC’s statutory right of condemnation, while KAWC claims such right. A declaration of rights is appropriate where an advance determination would eliminate or minimize the risk of wrong action or mistake by any of the parties. McConnell v. Commonwealth, 655 S.W.2d 43, 46 (Ky. App. 1983). The uncertainty Plaintiffs are seeking to resolve is the same uncertainty and insecurity that the Declaratory Judgment Act was created to decide, since the purpose of the Act is to allow parties uncertain of their rights to avoid the risk of error and have those rights declared before acting on their own view of such rights. Dravo v. Liberty Nat’l Bank & Trust Co., 267 S.W.2d 95, 97 (Ky. 1954).
"The criterion that should govern the courts is not that there is a present controversy but a justiciable controversy over present rights, duties or liabilities. This is so although the effect of the judgment is prospective. A declaration in such a case is not only expedient but is just, and is within the design and purview of the statute…one of the main purposes of the Act is to afford relief from uncertainty and insecurity."
Dravo, supra at 97.
If KAWC is asserting the power of condemnation it does not possess, then the request to purchase an easement on Plaintiffs properties is clouded by an implied threat of involuntary dispossession of the easement by condemnation. Plaintiffs may mistakenly grant an easement to KAWC because they believe they have no choice and to avoid further litigation costs. The Declaratory Judgment Act was designed to allow advance determination of such critical issues of law or fact in order to allow Plaintiffs to avoid peril.
The acceptance of the Petition by this Court and the determination of the one question before the court, which is whether KAWC possesses the statutory authority of eminent domain with respect to this project and these lands, will terminate the uncertainty and controversy as between these parties. KAWC mistakenly asserts that Plaintiffs will be able to ignore a final judgment of this Court on the merits of that question, stating that “Plaintiffs can contest the right to take in subsequent proceedings on the same ground as raised in the Petition” so that the declaratory relief is “not necessary.”
While the issue of necessity may remain as between the four landowners and KAWC, depending on the outcome of this case (since a decision that KAWC lacked statutory authority to condemn in this instance would preclude KAWC from initiating an action against the landowners), if Plaintiffs lose this case on the merits and it is determined that KAWC possesses the power of eminent domain as to these lands, Plaintiffs would clearly not be in a position to raise a defense of lack of statutory authority if and when a condemnation action were filed by KAWC. Instead, this action allows KAWC to defend in one venue, the alleged right to condemn as to four parties whose properties it has claimed to need in order to pursue its project.
The question of whether KAWC has been granted the power to condemn by the General Assembly is an essential and necessary question to allow these landowners to determine their legal status in relation to KAWC. KAWC has contacted each Plaintiff in this case and noted that it has the power to condemn their properties unless Plaintiffs grant an easement. However, KAWC has not provided Plaintiffs with any citation to its statutory authority to condemn, and Plaintiffs are uncertain whether KAWC has that authority. Plaintiffs do not want to grant KAWC an easement on their properties, but without knowing KAWC’s rights (if any) with respect to condemnation they are unable to decide whether or how to negotiate with KAWC. KAWC has in each of these cases attempted to acquire easements to their properties under cloud of condemnation, and the existence of that power is essential to prevent wrongful acquisition of property under duress, and to enable an informed decision as to whether to relinquish their property rights. It is a current justiciable controversy in need of resolution.
The Kentucky Declaratory Judgment Act gives a court broad discretion to declare rights and grant relief. Continental Ins. Co. v. Riggs, 126 S.W.2d 853, 855 (Ky. 1939). It is a remedial act with a purpose 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[.]“ KRS 418.080. This court is given specific authority under KRS 418.045 to declare rights affected by statute, as is the case here since whether KAWC has the authority under statute to condemn property is an issue of statutory construction and is the sole question at issue. While KRS 418.065 empowers the Court as a matter of discretion to decline to entertain a petition for declaratory relief where controversy may not be resolved by a decision or where a decision is not necessary or proper at the time, this is not such a situation.
The Declaratory Judgment Act was designed to allow advance determination of such critical issues of law or fact in order to allow Plaintiffs to “avoid peril.” In quoting at length from the treatise by Yale University Law Professor Borchard on declaratory judgments, entitled “Avoiding Peril,” the Dravo Court noted that:
"The learned author, upon cited authority, states that one of the major purposes of the Act is to afford relief from uncertainty and insecurity. He quotes, p. 931, as picturesquely describing this special function, a statement made in Congress some years ago with reference to the Federal Declaratory Judgment Act by the Honorable Ralph Gilbert, a Representative of Kentucky, as follows:
Under present law you take a step in the dark and then turn on the light to see if you stepped into a hole. Under the declaratory judgment law you turn on the light and then take the step."
Dravo v. Liberty National Bank & Trust Co., supra at 97.
While KAWC might wish for the Plaintiffs to remain in the dark as they step forward, this Court should reject the Motion to Dismiss and allow some light to be shed on KAWC’s authority to condemn these Plaintiffs’ lands before they have to take a step towards negotiation or possibly, condemnation of their properties.
For the reasons stated above and in the Plaintiffs’ Petition for Declaration of Rights, Plaintiffs respectfully request that KAWC’s Motion to Dismiss be denied.