COMMONWEALTH OF KENTUCKY, TRANSPORTATION CABINET VS. BLACKBURN (THOMAS), ET AL.
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RENDERED: JULY 9, 2010; 10:00 A.M.
NOT TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2008-CA-001455-MR
COMMONWEALTH OF KENTUCKY,
TRANSPORTATION CABINET,
DEPARTMENT OF HIGHWAYS
v.
APPELLANT
APPEAL FROM PIKE CIRCUIT COURT
HONORABLE EDDY COLEMAN, JUDGE
ACTION NO. 03-CI-01200
THOMAS BLACKBURN; PATRICIA
BLACKBURN; AND LUCILLE BLACKBURN
APPELLEES
OPINION
AFFIRMING IN PART,
REVERSING IN PART,
AND REMANDING
** ** ** ** **
BEFORE: ACREE, CAPERTON, AND THOMPSON, JUDGES.
THOMPSON, JUDGE: The Department of Highways of the Commonwealth of
Kentucky Transportation Cabinet appeals from a judgment of the Pike Circuit
Court reversing its decision regarding replacement housing payments. For the
reasons stated herein, we affirm in part, reverse in part, and remand.
On February 15, 1996, Thomas and Patricia Blackburn, owners of
Parcel No. 119 on U.S. Highway 119 in Pikeville, were notified by the Cabinet of
its intention to take their property pursuant to the Kentucky Eminent Domain Act,
KRS 416.540, et seq. On March 7, 1996, Lucille Blackburn, owner of Parcel No.
117, was notified that her property would be taken by eminent domain as well.
The Cabinet’s letters stated that they were considered displaced
persons and, thus, might be eligible for replacement housing payments. According
to the letter, Thomas and Patricia were eligible for a payment of $11,500, and
Lucille’s letter provided that she would receive $15,000. These payments were
based on the difference between the acquisition cost of the acquired dwelling (i.e.,
the present value of the property to be taken) and the cost to purchase a comparable
replacement dwelling as provided in Section 19(5) of 600 KAR1 3:010.
During this same period, a civil action was ongoing regarding the
determination of the ownership rights to the two parcels. After the resolution of
this case, the Blackburns’ ownership interests were reduced to an undivided, twothirds interest in their respective parcels. The Cabinet then awarded the owners of
Parcel No. 119 $70,000, of which $46,900 went to Thomas and Patricia. The
owner of Parcel No. 117 received $75,000, of which $50,000 went to Lucille.
On January 25, 2000, the Cabinet notified the Blackburns that they
would receive nothing for replacement housing payments. The Cabinet’s letters
stated that the replacement housing payments were being eliminated because they
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Kentucky Administrative Regulations (KAR).
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had received higher acquisition awards. These acquisition awards were higher
than the costs of purchasing comparable dwellings for the Blackburns.
The Blackburns appealed these decisions regarding replacement
housing payments to the Cabinet. The Blackburns argued that their replacement
housing payments were miscalculated because their payments were not based on
comparable housing prices appraised near the time of their acquisition settlement.
However, the Cabinet disagreed with the Blackburns’ claims and issued two orders
finding that the Blackburns were not entitled to replacement housing payments.
On August 8, 2003, the Blackburns filed a petition for judicial review
of the Cabinet’s decision regarding their replacement housing payments. On
December 22, 2006, an agreed order was entered submitting the case to the trial
court for a decision. Subsequently, the trial court issued a judgment reversing the
decision of the Cabinet. The trial court found that the Cabinet’s use of dated
comparable dwelling valuations was erroneous.
Additionally, the trial court found that Thomas and Patricia were
entitled to $23,100 for replacement housing and incidental relocation expenses.
The trial court found that the Cabinet correctly determined Lucille’s award because
“she purchased lower-priced, comparable housing.” The trial court further found
that the Blackburns’ administrative appeal was filed within the sixty-day filing
period. This appeal followed.2
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Because the trial court found that Lucille was not entitled to any award and she has not
contended that the trial court erred, we will not address any matter related to her claim.
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The Cabinet contends that the trial court erred by not dismissing the
Blackburns’ petition because it was outside the sixty-day filing period. Citing
Section 31 of 600 KAR 3:010, the Cabinet contends that the Blackburns failed to
appeal its decision within sixty days of February 15, 1996, the date of their award
letter. The Cabinet contends that the trial court cannot deviate from the clear
language of the regulation and, thus, must be reversed. We disagree.
When a trial court sits without a jury, its findings of fact will not be
set aside unless they are clearly erroneous. Sebastian-Voor Properties, LLC v.
Lexington-Fayette Urban County Government, 265 S.W.3d 190, 195 (Ky. 2008).
When factual findings are supported by substantial evidence, they will not be
deemed clearly erroneous. Eagle Cliff Resort, LLC v. KHBBJB, LLC, 295 S.W.3d
850, 853 (Ky.App. 2009). However, we review the trial court’s application of law
de novo. Cummings v. Commonwealth, 226 S.W.3d 62, 65 (Ky. 2007).
Section 31 of 600 KAR 3:010, in pertinent, provides the following:
(1) A person may file a written appeal and request for
hearing with the Transportation Cabinet in any case in
which the person believes that the cabinet has failed to
properly determine:
(a) His eligibility; or
(b) The amount of the payment required under the
provisions of this administrative regulation.
(2) The Transportation Cabinet shall consider a written
appeal regardless of form.
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(3) The appeal shall be filed within sixty (60) days of the
date of his written notice from the Transportation Cabinet
of the cabinet's determination on the person's claim.
In this case, the trial court found that the Cabinet issued a notification
letter in 1996 informing the Blackburns that they were eligible for a replacement
housing payment of $11,500. However, on January 25, 2000, the Cabinet issued a
revised letter providing that the Blackburns would receive no replacement housing
award. In interpreting the appeal provision, the trial court wrote the following:
. . . if the right of appeal is meaningful under these
regulations, the right of appeal should be preserved
through the end of the Transportation Cabinet’s
transaction with [Thomas and Patricia].
Thus, because the parties’ final settlement determines their entitlement to and the
amount of the replacement housing payment, the trial court ruled that the sixty-day
period must begin when the Blackburns were notified of their new (final) award,
not when they were notified of their initial replacement housing payment eligibility
in 1996.
After reviewing the record, we conclude that the trial court did not err
by finding that the Blackburns filed their appeal within the sixty-day appeal period.
Subsection Three of Section 31 clearly states that the date of a property owner’s
written notice following the Cabinet’s “determination on the person's claim” starts
the clock on the running of the sixty-day period. Although the Cabinet disagrees
with our interpretation, we are bound to apply the literal meaning of a regulation's
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terms. Richardson v. Rees, 283 S.W.3d 257, 263 (Ky.App. 2009). The appeal
period shall begin to run only on the date of the written notice for the actual award.
Furthermore, the fundamental purpose of providing notice is to permit
a party with a meaningful opportunity to present any legal or factual claim they
may have. Conrad v. Lexington-Fayette Urban County Government, 659 S.W.2d
190, 197 (Ky. 1983). If we were to vindicate the Cabinet’s legal argument, we
would essentially be legalizing its ability to issue an initial award and then wait
sixty days before issuing a revised and lower award without any possible right of
appeal by an aggrieved property owner. This was not the intent of the legislature.
Accordingly, the Blackburns were permitted to appeal the January 25,
2000, final decision of the Cabinet denying them a replacement housing payment.
On March 13, 2000, the Blackburns issued a letter to the Cabinet appealing the
decision to deny them a replacement housing payment. Thus, the Blackburns
perfected their appeal within the confines of Section 31(3) of 600 KAR 3:010.
The Cabinet next contends that the trial court erred by incorrectly
determining the method by which replacement housing payments are calculated.
The Cabinet contends that the trial court erred by precluding it from using the 1996
comparable housing valuation to determine a replacement housing payment.
In determining the appropriate replacement housing payment, Section
19(5) of 600 KAR 3:010 provides the following:
If a single-family dwelling is owned by several persons,
and occupied by only part of the owners, the replacement
housing payment shall be the lesser of:
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(a) The difference between the owner-occupants' share of
the acquisition cost of the acquired dwelling and the
actual cost of the replacement dwelling; or
(b) The difference between the total acquisition cost of
the acquired dwelling and the amount determined by the
Transportation Cabinet as necessary to purchase a
comparable dwelling.
Further, Section 16(7) of 600 KAR 3:010 provides the following:
(a) If the lapse of time between obtaining a listing of an
available dwelling which is used to compute a
replacement housing payment and the offer of the
replacement housing payment amount to the displaced
person exceeds thirty (30) days, the Transportation
Cabinet shall determine that the property is still on the
market.
(b) If a check of the market reveals the comparable
dwelling relied upon is not available, a new comparable
dwelling shall be selected and a new replacement
housing payment computed.
Finally, Section 16(8) of 600 KAR 3:010 provides that an adjustment must be
made to the asking price of the selected comparable dwelling when the market
changes by more than five percent in the asking price and the sale price of
comparable housing in the area.
Based on these regulations, the legislature has created a scheme that
seeks to fairly compensate landowners for their property. The Cabinet has an
affirmative duty to ensure that the dwelling used to compute the replacement
housing payment is still on the market within thirty days of the offer of the housing
payment. Section 16(7)(a) of 600 KAR 3:010. If the dwelling is no longer on the
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market, a new replacement housing payment must be computed to ensure that a
fair settlement is made. Section 16(7)(b) of 600 KAR 3:010. If the sale prices of
comparable housing in the area fluctuate by more than five percent, the valuation
of the selected comparable dwelling must be changed to reflect market prices.
The trial court ruled that “the Transportation Cabinet use the Section
19(5)(a) calculation,” in determining the replacement housing payment for the
Blackburns, “for the sake of expediency.” Thus, the trial court took the difference
between the Blackburns’ share of the acquisition costs, $46,900, and the actual cost
of their replacement dwelling, $60,000. The trial court further awarded the
Blackburns’ incidental expenses of $10,000 associated with their relocation. This
resulted in a total award of $23,100.
Despite the trial court’s ruling, Section 19(5) of 600 KAR 3:010
clearly provides the Cabinet with the authority to determine the appropriate
replacement housing payment using either of two methods delineated in the
regulation. In reviewing administrative decisions, our courts have a deferential
standard of review and cannot substitute our view for the judgment of the agency.
Louisville/Jefferson County Metro Government v. TDC Group, LLC., 283 S.W.3d
657, 663 (Ky. 2009). Accordingly, because the legislature provided the Cabinet
with the choice of either of two methods of calculating the housing replacement
payment, the trial court could not choose which calculation method to apply. Id.
Having reversed the trial court’s decision regarding the calculation
method used to determine the Blackburns’ replacement housing payment, we
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further conclude that the Cabinet has not established that it followed Section 16(7)
and (8), despite the almost four-year gap between the 1996 comparable housing
listing price and the 2000 replacement housing payment offering. The trial court
correctly determined that a three-year old valuation cannot be offered by the
Cabinet without proof that the 1996 valuation reflects current market values.
For the foregoing reasons, the judgment of the Pike Circuit Court is
affirmed in part, reversed in part, and remanded for further proceedings consistent
with this opinion.
ALL CONCUR.
BRIEF FOR APPELLANT:
BRIEF FOR APPELLEES:
Andrew M. Stephens
Lexington, Kentucky
Lawrence R. Webster
Pikeville, Kentucky
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