KEA-HAM CONTRACTING, INC. v. FLOYD COUNTY DEVELOPMENT AUTHORITY and BURL WELLS SPURLOCK
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RENDERED: October 23, 1998; 10:00 a.m.
NOT TO BE PUBLISHED
C ommonwealth O f K entucky
C ourt O f A ppeals
NO.
1997-CA-002144-MR
KEA-HAM CONTRACTING, INC.
v.
APPELLANT
APPEAL FROM FLOYD CIRCUIT COURT
HONORABLE JOHN DAVID CAUDILL, JUDGE
ACTION NO. 97-CI-000172
FLOYD COUNTY DEVELOPMENT
AUTHORITY and
BURL WELLS SPURLOCK
AND:
APPELLEES
Cross-Appeal No. 1997-CA-002478-MR
FLOYD COUNTY
DEVELOPMENT AUTHORITY
v.
CROSS-APPELLANT
CROSS-APPEAL FROM FLOYD CIRCUIT COURT
HONORABLE JOHN DAVID CAUDILL, JUDGE
ACTION NO. 97-CI-000172
KEA-HAM CONTRACTING, INC.
CROSS-APPELLEE
OPINION
AFFIRMING ON APPEAL, REVERSING ON CROSS-APPEAL
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BEFORE:
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GUDGEL, CHIEF JUDGE; GARDNER and MILLER, Judges.
MILLER, JUDGE.
Kea-Ham Contracting, Inc. (Kea-Ham), brings this
appeal from an August 21, 1997 summary judgment of the Floyd
Circuit Court.
The Floyd County Development Authority
(Authority) brings a cross-appeal from the same judgment.
We
affirm on appeal and reverse on cross-appeal.
The facts are these: It appears that the Authority
entered into a construction contract with Kea-Ham for the development of certain land.
Co-appellee Burl Wells Spurlock
(Spurlock) was chairman of the Authority.
Soon after beginning
work on the project, Kea-Ham terminated its efforts and brought
an action in the Floyd Circuit Court alleging breach of contract
and fraud against the Authority and Spurlock, individually.
Ultimately, the circuit court entered summary judgment.
Civ. Proc. 56.
Ky. R.
It determined that Spurlock was entitled to the
protection of “official immunity” and thus was immune from
liability.
The court also concluded that the Authority was
entitled to the defense of “sovereign immunity” but had waived
same to the extent of available insurance coverage.
The appeal
and cross-appeal followed.
Summary judgment is proper when there exists no material issue of fact and the movant is entitled to judgment as a
matter of law.
Steelvest, Inc. v. Scansteel Service Center,
Inc., Ky., 807 S.W.2d 476 (1991).
On appeal, Kea-Ham contends that the circuit court
erred as a matter of law by concluding that the Authority was
cloaked with sovereign immunity.
reveals
We disagree.
The record
that the Authority was created by Floyd County pursuant
to Ky. Rev. Stat. (KRS) 154.50-316 and that the members of the
Authority are appointed by the county judge executive.
-2-
We
believe the Authority to be an agency of Floyd County and, as
such, endowed with sovereign immunity.
See Inco, Ltd. v.
Lexington-Fayette Urban County Airport Board, Ky. App., 705
S.W.2d 933 (1985).
We thus cannot say that the circuit court
erred by concluding that the Authority was enveloped by sovereign
immunity.
Next, Kea-Ham asserts that even if the Authority is
entitled to sovereign immunity, such does not preclude an action
based upon contract.
We disagree.
We are of the opinion that
the doctrine of sovereign immunity shields the Authority from
liability arising from contractual claims.
See Foley Construc-
tion Company v. Ward, Ky., 375 S.W.2d 392 (1963), and Powell v.
Board of Education of Harrodsburg, Ky. App., 829 S.W.2d 940
(1991).
As such, we perceive no error.
Last, Kea-Ham maintains that Spurlock, as chairman of
the Authority, was not entitled to the protection of official
immunity.
The claim against Spurlock arose from representations
he made in a letter to Kea-Ham's insurance agent assuring that
funding for the project was in place at a local bank.
Kea-Ham
alleges intentional and negligent misrepresentation.
We agree
with the circuit court that official immunity shields Spurlock
from liability in the instant action.
We believe his decision to
respond to Kea-Ham's insurance agent's request and his composition of the letter providing such information were clearly
discretionary acts.
Public officials are entitled to immunity
from liability when exercising a discretionary act so long as
such act is not illegal or outside the scope of their authority.
-3-
See Franklin County, Kentucky v. Malone, Ky., 957 S.W.2d 195
(1997).
It is clear that Spurlock was acting within the scope of
his authority when writing the letter, and there is no allegation
by Kea-Ham that Spurlock's actions were “illegal.”
Hence, we are
of the opinion that the claims against Spurlock were properly
dismissed based upon the doctrine of official immunity.
We now turn to the cross-appeal.
The Authority con-
tends that the circuit court erred as a matter of law by concluding that its purchase of liability insurance constituted an
implied waiver of sovereign immunity.
We are of the opinion that
the purchase of liability insurance can no longer be viewed as a
partial waiver of sovereign immunity to the extent of applicable
insurance coverage.
See id., and Withers v. University of
Kentucky, Ky., 939 S.W.2d 340 (1997).
In light thereof, we think
the court erred by concluding that the Authority had partially
waived sovereign immunity.
We do not believe Kea-Ham is entitled
to recover from the Authority the extent of its liability insurance coverage.
For the foregoing reasons, the judgment of the circuit
court is affirmed on appeal and reversed on cross-appeal.
GUDGEL, CHIEF JUDGE, CONCURS.
GARDNER, JUDGE, CONCURS IN RESULT.
BRIEFS FOR APPELLANT/
CROSS-APPELLEE KEA-HAM:
Erich E. Blackburn
Pikeville, KY
Pierre Michael de Bourbon
-4-
BRIEF FOR APPELLEES:
Bradford L. Cowgill
Richard E. Fitzpatrick
William Craig Robertson III
Lexington, KY
-andMichael J. Schmitt
Paintsville, KY
BRIEF FOR APPELLEE/
CROSS-APPELLANT AUTHORITY:
Michael J. Schmitt
Paintsville, KY
-5-
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