Opinion
NO. 2018-CA-001079-MR NO. 2018-CA-001864-MR
12-13-2019
KY LIEN HOLDINGS, LLC APPELLANT v. FAYETTE COUNTY CLERK, FAYETTE COUNTY PVA, AND FAYETTE COUNTY a/k/a LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENT APPELLEES AND KY LIEN HOLDINGS, LLC APPELLANT v. KENTUCKY DEPARTMENT OF REVENUE APPELLEE
BRIEFS FOR APPELLANT: Justin H. Ramey Murray, Kentucky BRIEF FOR APPELLEES FAYETTE COUNTY CLERK AND FAYETTE COUNTY PVA: Larry S. Roberts Fayette County Attorney Steven P. Stadler Richard E. Vimont Assistant County Attorneys Lexington, Kentucky BRIEF FOR APPELLEE KENTUCKY DEPARTMENT OF REVENUE: Frank L. Dempsey Frankfort, Kentucky BRIEF FOR APPELLEE LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENT: Evan P. Thompson Lexington, Kentucky
NOT TO BE PUBLISHED APPEAL FROM FAYETTE CIRCUIT COURT
HONORABLE PAMELA R. GOODWINE, JUDGE
ACTION NO. 18-CI-00762 APPEAL FROM FAYETTE CIRCUIT COURT
HONORABLE THOMAS L. CLARK, JUDGE
ACTION NO. 18-CI-00762 OPINION
AFFIRMING IN PART AND VACATING IN PART
** ** ** ** **
BEFORE: DIXON, KRAMER, AND K. THOMPSON, JUDGES. DIXON, JUDGE: KY Lien Holdings, LLC, ("KLH") appeals the order dismissing its case against the Fayette County Clerk, Fayette County PVA, and Fayette County a/k/a Lexington-Fayette Urban County Government ("the Fayette defendants"); the order denying its motion to alter, amend, or vacate the aforementioned order; the order dismissing its case against the Kentucky Department of Revenue ("DOR"); and the order vacating default judgment against the DOR, said orders entered by the Fayette Circuit Court on May 10, 2018; July 10, 2018; and December 10, 2018, respectively. Following a careful review, we affirm the orders dismissing KLH's case against the Fayette defendants and denying KLH's motion to alter, amend, or vacate the order dismissing the Fayette defendants, and we vacate the order vacating default judgment against the DOR as void ab initio.
On July 21, 2017, KLH purchased a Certificate of Delinquency ("COD") from the Fayette County Clerk for property located at 1021 W. New Circle Road. On October 2, 2017, the Kentucky Transportation Cabinet ("Cabinet") wrote a letter informing KLH that the Cabinet had acquired said property by way of condemnation prior to KLH's purchase of the COD. The letter went on to assert:
[the Cabinet] took possession and equitable title to the property through the condemnation process prior to January 1, 2016. This is done pursuant to K.R.S. 416.610 which provides for possession after an Interlocutory Order is entered. I have included the Master Commissioner's Deed for this parcel for your review. As you already know, pursuant to Section 170 of the Kentucky Constitution, property held by the Commonwealth is exempt from taxation.(Footnote added).
I am requesting that you remove us from your tax notice roster and make no further attempt to collect property tax from this property.
Kentucky Revised Statutes.
On January 26, 2018, KLH wrote a letter to the Fayette County Clerk requesting a refund of the amount expended for purchase of the lien. On January 30, 2018, the Fayette County Clerk emailed KLH denying the request for a refund. That email stated:
The amount was $8,258.85. --------
We have researched the background of this particular tax bill. Here are our results:
July, 2015: a lis pendens was filed against this property related to its eventual condemnation.
January 1, 2016: the owner as of this date now owes property taxes for 2016.
July, 2016: court orders property condemned.
November, 2016: a deed is filed by the Master Commissioner completing the condemnation.
This tax bill is still enforceable against the previous owner, although detached from the property itself. This situation was litigated in the past few years and the court found that a refund is not required.
See [Fayette County Clerk v. Kings Right, LLC, 536 S.W.3d 201 (Ky. App. 2017)].
Rather than appeal the denial of its refund to the Kentucky Claims Commission ("Commission"), KLH filed the instant lawsuit in the Fayette Circuit Court. KLH claims jurisdiction and venue are appropriate with the Fayette Circuit Court pursuant to KRS 452.405 and KRS 134.551. KRS 452.405 provides:
[e]xcept as otherwise provided by statute, actions shall be brought in the county where the cause of action, or some part thereof, arose:
(1) For the recovery of a fine, penalty, or forfeiture, imposed by a statute; but if the offense for which the claim is made be committed on a watercourse or road which is the boundary of two (2) counties, the action may be brought in either of them;
(2) Against a public officer for an act done by him in virtue or under color of his office, or for a neglect of official duty;
(3) Upon the official bond of a public officer.(Emphasis added).
KRS 134.551(1) provides:
[i]f a certificate of delinquency or personal property certificate of delinquency held by an individual is declared void by a court of competent jurisdiction because of the irregularity of taxing officers, the amount for which the certificate was issued shall be refunded by the state, county, and taxing districts on a pro rata basis. If a school district or county is unable to make the refund currently when requested, it shall be given preference from the next year's revenue. The application for refund must be made within one (1) year after the judgment. The property covered by the void certificate shall be assessed immediately as omitted property and the tax bill shall be payable as soon as prepared.(Emphasis added).
However, and by contrast, KRS 134.551(2) applies to situations, such as the one in the case at hand, in which a COD is held by a third-party purchaser who paid the COD to the county clerk. In such cases:
[i]f the county clerk denies the application for refund, or the property valuation administrator fails to certify that property was not subject to taxes as a matter of law, the third-party purchaser may appeal the decision of the county clerk or the property valuation administrator to the Kentucky Claims Commission pursuant to KRS 49.220.KRS 134.551(2)(d). KRS 49.220(1) provides that the "commission, pursuant to KRS 49.020, is vested with exclusive jurisdiction to hear and determine appeals from final rulings, orders, and determinations of any agency of state or county government affecting revenue and taxation." (Emphasis added).
It is well established:
[t]here is no appeal to the courts from an action of an administrative agency as a matter of right. When grace to appeal is granted by statute, a strict compliance with its terms is required. Where the conditions for the exercise of power by a court are not met, the judicial power is not lawfully invoked. That is to say, that the court lacks jurisdiction or has no right to decide the controversy. Kentucky Utilities Co. v. Farmers Rural Electric Cooperative Corporation, Ky., 361 S.W.2d 300 (1962); Roberts v. Watts, Ky., 258 S.W.2d 513 (1953).Board of Adjustments of City of Richmond v. Flood, 581 S.W.2d 1, 2 (Ky. 1978). KLH's failure to exhaust its administrative remedies by appealing the Fayette County Clerk's determination to the Commission prevented the trial court from exercising jurisdiction. Therefore, the trial court's orders dismissing the action were appropriate as it lacked jurisdiction and its other order was void ab initio for the same reason.
Therefore, and for the foregoing reasons, the orders entered by the Fayette Circuit Court dismissing—and confirming dismissal of—this action are AFFIRMED, and the remaining order is VACATED.
THOMPSON, K., JUDGE, CONCURS.
KRAMER, JUDGE, CONCURS IN RESULT ONLY. BRIEFS FOR APPELLANT: Justin H. Ramey
Murray, Kentucky BRIEF FOR APPELLEES FAYETTE
COUNTY CLERK AND FAYETTE
COUNTY PVA: Larry S. Roberts
Fayette County Attorney Steven P. Stadler
Richard E. Vimont
Assistant County Attorneys
Lexington, Kentucky BRIEF FOR APPELLEE
KENTUCKY DEPARTMENT OF
REVENUE: Frank L. Dempsey
Frankfort, Kentucky BRIEF FOR APPELLEE
LEXINGTON-FAYETTE URBAN
COUNTY GOVERNMENT: Evan P. Thompson
Lexington, Kentucky