KENTUCKY RETIREMENT SYSTEMS VS. FOSTER (BARBARA)
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RENDERED: JULY 23, 2010; 10:00 A.M.
TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2009-CA-001369-MR
KENTUCKY RETIREMENT SYSTEMS
v.
APPELLANT
APPEAL FROM FRANKLIN CIRCUIT COURT
HONORABLE ROGER L. CRITTENDEN, JUDGE
ACTION NO. 05-CI-00964
BARBARA FOSTER
APPELLEE
OPINION
AFFIRMING IN PART AND VACATING IN PART
** ** ** ** **
BEFORE: MOORE AND THOMPSON, JUDGES; WHITE,1 SENIOR JUDGE.
MOORE, JUDGE: Kentucky Employees Retirement Systems (“KERS”) appeals
the Franklin Circuit Court’s decisions to: 1) deny KERS relief from a court order
granting Barbara Foster's request to purchase twenty-three months of service credit
for the time she was employed as a professor at the University of Kentucky; 2)
1
Senior Judge Edwin M. White sitting as Special Judge by assignment of the Chief Justice
pursuant to Section 110(5)(b) of the Kentucky Constitution and Kentucky Revised Statutes
(KRS) 21.580.
hold KERS in contempt for refusing to allow Foster to purchase those twenty-three
months of service credit; 3) impose the expense of Foster’s attorney’s fees upon
KERS as a sanction for contempt; 4) direct KERS to restore a month of sick leave
service credit KERS removed following an audit of her account; and 5) enjoin
KERS from further auditing or adjusting Foster’s account below a total of 325
months of service credit. For the reasons stated herein, we affirm the first three of
these rulings and vacate the latter two.
I. STATEMENT OF FACTS
In 2002, Foster made three written requests to purchase service credit
from KERS with the intention of maximizing her future state-government
retirement benefits. In May of 2002, Foster asked to purchase service credit for
her work at the Internal Revenue Service from April 10, 1978, through August 7,
1982. In July of 2002, Foster asked to purchase service credit for her work at the
United States District Court from November 1, 1991, through August 28, 1992. In
August of 2002, Foster requested to purchase service credit for two periods of
employment at the University of Kentucky: 1) student employment from July 1,
1977, through February 28, 1978; and 2) employment as a full-time visiting
assistant professor from July 1, 1982, through June 1, 1984.
KERS calculated the number of months of service credit available for
purchase in each instance, with the exception of Foster’s employment as a
professor at UK. KERS offered Foster fifty-two months of service credit for her
IRS employment, ten months for her district court employment, and eight for her
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UK student employment. On October 28, 2002, Foster purchased all seventy
months. With respect to Foster’s employment as a professor at UK, however,
KERS determined that Foster was not eligible to purchase any service credit and its
general counsel sent Foster a letter to this effect on February 21, 2003.
Subsequently, Foster initiated administrative proceedings, specifically
requesting that KERS grant her the right to purchase twenty-three months of
service credit for that employment. On June 21, 2004, a KERS hearing officer
denied Foster’s request to purchase that service credit. Foster appealed to the
Board of Trustees and, on June 18, 2005, Foster was notified that the Board had
affirmed the hearing officer’s decision.
On July 15, 2005, Foster appealed to the Franklin Circuit Court. On
September 19, 2006, the circuit court reversed KERS and specifically held that
Foster was entitled to purchase twenty-three months of service credit representing
her tenure as a professor at UK. KERS then appealed to this Court and its sole
contention of error was that a proper construction of the relevant statutes mandated
that instructional positions, such as the one at which Foster was employed, did not
qualify for any service credit. However, we upheld the circuit court’s decision.
See Kentucky Employees Retirement Systems v. Foster, 272 S.W.3d 198 (Ky. App.
2007).2 The Supreme Court of Kentucky denied discretionary review of our
decision on January 14, 2009.
2
Throughout the remainder of this opinion, we refer to this matter as “Foster I.”
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On February 13, 2009, Foster requested to purchase the twenty-three
months of service credit that were at issue in Foster I. On March 19, 2009, KERS
again refused Foster’s request, this time citing the results of an audit it had
performed on her retirement account after the Supreme Court denied discretionary
review in Foster I. In relevant part, KERS stated that 1) Foster’s UK employment
from July 1, 1982, through June 1, 1984, encompassed twenty-four months rather
than twenty-three months; 2) Foster was not eligible to purchase two of her twentyfour months of UK service credit, i.e., July and August of 1982, because they
overlapped with her employment with the IRS; 3) Foster’s employment with the
IRS, from April 1978 through August 1982, encompassed fifty-three months rather
than fifty-two months; 4) Foster was entitled to purchase this newly discovered
fifty-third month of service credit for her work at the IRS; 5) Foster had only five
months of sick leave service credit rather than six months at the time she retired,
making her liable to KERS for $1,101.05 in overpayments; and 6) this was a final
administrative decision regarding the sick leave and must be appealed within thirty
days.
Prior to KERS’ audit, KERS had informed Foster that she had a total
of 301 months of service credit and, therefore, the purchase of an additional 23
months would, in that case, have left her with a total of 324 months. However, the
result of KERS’ audit left Foster with a total of 323 months of service credit.
Specifically, KERS had allowed Foster to purchase an additional month of service
credit for her employment with the IRS but had subtracted one month of sick leave
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service credit and had subtracted another month after discovering that one of the
twenty-three months described in the September 19, 2006 order overlapped with a
month of Foster’s employment with the IRS which Foster had already purchased in
2002.
Consequently, because KERS members in nonhazardous positions,
such as Foster, do not become eligible for full retirement benefits until they have
reached age 65 or have accumulated 324 months of service credit, Foster was now
one month short of full retirement benefits. See KRS sections 61.510(18), 61.595,
and 61.595(2)(b). On March 30, 2009, Foster requested KERS to comply with the
circuit court’s judgment regarding the purchase of UK service credit and also
demanded KERS restore the amount of her sick leave service credit to six months.
KERS instead informed Foster that it would treat her March 30, 2009 letter as a
request for an administrative hearing, and, on April 3, 2009, moved the Franklin
Circuit Court for relief from its September 19, 2006 order, pursuant to Kentucky
Rules of Civil Procedure (CR) 60.02.
Foster purchased the twenty-two months of UK service credit and one
month of IRS service credit that KERS offered. However, Foster opposed KERS’
CR 60.02 motion on the basis of res judicata. She also filed her own motion with
the circuit court to hold KERS in contempt of the September 19, 2006 order for
refusing to allow her to purchase the full twenty-three months of service credit
described in the circuit court’s September 19, 2006 order, and for removing one
month of sick leave service credit from her retirement account.
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On July 1, 2009, the circuit court held KERS in contempt; it also
ordered the further relief specified earlier in this opinion. In a separate order of
July 22, 2009, the circuit court also denied KERS’ motion for relief from
judgment. The circuit court’s July 1 and July 22, 2009 orders are the subject of
this appeal.3
II. ANALYSIS
A. THE JULY 22, 2009 ORDER DENYING CR 60.02 RELIEF
To analyze KERS’ CR 60.02 arguments, it is first necessary to
address whether res judicata bars KERS from reducing the number of service
credit months Foster is entitled to purchase, from twenty-three to twenty-two, to
account for the overlap between her IRS employment and UK employment which
KERS discovered during its 2009 audit of her account. We conclude that KERS is
barred from doing so, but res judicata does not act as the bar in this case. Rather,
it is the doctrine of the law of the case.
This Court recently described the nature of the law of the case
doctrine in Brooks v. Lexington-Fayette Urban County Housing Authority, 244
S.W.3d 747 (Ky. App. 2007):
Our Supreme Court said that “where a contention was not
made, if it could or should have been made on appeal, the
doctrine of res judicata prevented re-litigation [sic] of the
same contention in a subsequent appeal.” Lebow v.
Cameron, 394 S.W.2d 773, 778 (Ky. 1965) (Citation
omitted). This is essentially an expression of the law of
the case doctrine.
3
The administrative proceedings regarding Foster’s sick leave service credit have been stayed
pending the outcome of this appeal.
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Id. at 750. Brooks further stated:
The law of the case doctrine is “an iron rule, universally
recognized, that an opinion or decision of an appellate
court in the same cause is the law of the case for a
subsequent trial or appeal however erroneous the opinion
or decision may have been.” Union Light, Heat &
Power Co. v. Blackwell’s Adm’r, 291 S.W.2d 539, 542
(Ky. 1956). The doctrine is predicated upon the principle
of finality.
The law of the case rule is a salutary rule,
grounded on convenience, experience and
reason. It has been often said that it would
be intolerable if matters once litigated and
determined finally could be relitigated
between the same parties, for otherwise
litigation would be interminable and a
judgment supposed to finally settle the
rights of the parties would be only a starting
point for new litigation.
Id. The law of the case doctrine is similar to but distinct
from the doctrine of res judicata. “There is a difference
between such adherence (the law of the case doctrine)
and res adjudicata. One directs discretion; the other
supersedes it and compels judgment. In other words, in
one it is a question of power, in the other of submission.”
Southern Ry. Co. v. Clift, 260 U.S. 316, 43 S.Ct. 126, 67
L.Ed. 283, 284 (1922).
Sowders v. Coleman, 223 Ky. 633, 4 S.W.2d 731 (1928),
enunciates that the doctrine considers as settled “all
errors lurking in the record on the first appeal which
might have been, but were not expressly, relied upon as
error.”
Id. at 751.
The issue in Brooks related to judgment interest accruing upon an
award of damages against a governmental agency, i.e., a housing authority.
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Applying the law of the case doctrine, this Court held that the housing authority
was liable for that judgment interest in spite of established precedent precluding
the assessment of judgment interest against the housing authority in that instance.
This Court reasoned:
In view of Sowers, and regardless whether the question
was litigated in the first instance, it is evident that the law
of the case doctrine is applicable to the present case and
the explicit decision to award interest, whether correct or
erroneous, was finally made on that matter in the first
appeal. When the Supreme Court remanded the case to
the circuit court silent about the post-judgment interest
award contained in the 1997 interlocutory judgment, the
Court established as the law of the case that the Housing
Authority is liable for such interest. Therefore, the
Housing Authority’s motion to set aside the interest in
the court below was nothing more than an attempt to
relitigate an issue previously decided. . . . The Housing
Authority should have taken procedural steps to ensure
deletion of the interest at issue, which otherwise it was
obliged to pay, at the time the appellate decisions were
rendered. “Upon failure to take such procedural steps, a
party will thereafter be bound by the entire opinion.”
[Citing Williamson v. Commonwealth, 767 S.W.2d 323,
326 (Ky. 1989).]
Brooks, 244 S.W.3d at 751.
The case at bar is analogous to Brooks. Here, the underlying issues in
Foster I were not limited to whether Foster was entitled to purchase service credit
months for working as an instructor at UK; an additional and central issue in that
action was the number of months of service credit she was entitled to purchase by
virtue of that employment. At the administrative level, she specifically requested
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to purchase twenty-three months of service credit. After her request was denied,
she appealed to the Franklin Circuit Court, where her specific prayer for relief was:
5. That this Court reverse the Final Order of the KERS
and direct that Ms. Foster be allowed to purchase 23
months of service credit from her employment at the
University of Kentucky from 1982-84 under KRS
61.552(8), and that KERS be enjoined to grant this right
to Ms. Foster retroactive to August 23, 2002, the date of
her original request to purchase this service credit.
In this regard, the circuit court did not grant Foster any relief beyond what she
requested when it found in her favor and held, explicitly: “[Foster] is declared
eligible to purchase twenty-three (23) months of service credit from [KERS] for
her work as an instructor at UK.”
Between the administrative and trial levels, however, the only
contention that KERS made for refusing to sell Foster twenty-three months of
service credit was that it interpreted KRS 61.520 and KRS 61.552(8) to mean that
instructional employees at UK did not qualify to purchase service credit. Thus,
when the circuit court held in favor of Foster, the only issue that KERS appealed
was whether Foster was entitled to purchase any service credit at all; it did not
appeal the circuit court’s additional determination that Foster was specifically
entitled to purchase twenty-three months of service credit. See Foster I, 272
S.W.3d at 199. As in Brooks, however, the law of the case precludes KERS from
contesting this issue now, even if the facts in support of the circuit court’s holding
were erroneous in that respect, because KERS did not raise it as an issue on appeal
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of Foster I before either the circuit court or this Court and the issue of the twentythree months was ruled upon in Foster I.
KERS has not invoked CR 60.01 in order to contend that the circuit
court’s holding in Foster I—that Foster is specifically entitled to purchase twentythree months of service credit for her work at UK—is the result of a clerical error.
Nor, for that matter, does KERS contend that the circuit court’s holding in that
previous matter is void. Rather, KERS contends that it is entitled to relief from the
circuit court’s September 19, 2006 order, pursuant to CR 60.02, under three
separate grounds enumerated by this rule: “mistake, inadvertence, surprise or
excusable neglect” (CR 60.02(a)); satisfaction of the judgment (CR 60.02(e)); and
“any other reason of an extraordinary nature justifying relief.” (CR 60.02(f)). We
disagree.
In general, CR 60.02 is not intended merely as an additional
opportunity to relitigate the same issues which could reasonably have been
presented by direct appeal. McQueen v. Commonwealth, 948 S.W.2d 415, 416
(Ky. 1997). Rather, the rule was intended to codify the common-law writ of
coram nobis. “The purpose of such a writ was to bring before the court that
pronounced judgment errors in matters of fact which (1) had not been put into
issue or passed on, (and) (2) were unknown and could not have been known to the
party by the exercise of reasonable diligence and in time to have been otherwise
presented to the court.” Davis v. Home Indem. Co., 659 S.W.2d 185, 188 (Ky.
1983) (citing Gross v. Commonwealth, 648 S.W.2d 853 (Ky. 1983)). To this
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effect, CR 60.02 enumerates certain grounds, including (a), (e), and (f) as cited
above, upon which, “[o]n motion, a court may, upon such terms as are just, relieve
a party or his legal representative from its final judgment, order, or proceeding.”
We believe the circuit court correctly denied KERS relief under CR
60.02(a)4 because the circuit court was precluded from reviewing any argument
KERS offered under that provision. The rule itself states that “[t]he motion shall
be made . . . on grounds (a), (b), and (c) not more than one year after the judgment,
order, or proceeding was entered or taken[,]” and KERS did not move for relief
from the circuit court’s September 19, 2006 order until 2009.
KERS argues that a judgment, for purposes of CR 60.02, is not
considered “final” until after all appeals are exhausted and the Supreme Court
denies certiorari. It reasons that because the Supreme Court of Kentucky did not
deny certiorari in Foster I until 2009, its CR 60.02(a) argument was timely.
However, as the former Court of Appeals stated in Meredith v.
Commonwealth, 312 S.W.2d 460, 462 (1958):
4
KERS’ argument under CR 60.02(a) is that “While attempting to comply with Franklin Circuit
Court’s Order dated September 19, 2006, KERS discovered new evidence through mistake,
inadvertence, surprise or excusable neglect that would prevent it from being able to fully comply
with the Franklin Circuit Court’s Order dated September 19, 2006 while still fulfilling its
statutory mandate.”
“[N]ewly discovered evidence which by due diligence could not have been discovered in
time to move for a new trial under Rule 59.02” is also described as a ground under CR 60.02 for
relief from judgment, specifically under part (b) of the rule. KERS did not include this ground as
a basis for relief in its original CR 60.02 motion before the trial court and appears to have
combined this new argument with its previous argument under CR 60.02(a). In making this
argument for the first time before this Court, it is arguably improper for this Court to review it.
However, this argument would not have been properly raised even if it were before the trial court
because any argument under either CR 60.02(a) or (b) must be raised “not more than one year
after the judgment[.]” CR 60.02. Final judgment in this matter was entered in 2006 and KERS
did not raise this argument until 2009.
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The remedy provided by CR 60.02(1, 2, and 3[5]), must
be sought within the year even though an appeal is being
prosecuted. The remedy is available even though the
appeal is duly perfected and pending decision in this
Court. It would continue to be available if this Court, by
rare chance, should have its mandate of affirmance in
hands of the trial court before the expiration of the year.
Wolfe v. Combs’ Adm’r, Ky., 273 S.W.2d 33. In other
words the remedy is in no way affected by the appeal and
the appeal is in no way affected by the remedy.
We turn next to KERS’ remaining arguments under CR 60.02. Under
CR 60.02(e), KERS argues that four years prior to the circuit court’s judgment in
Foster I, it partially satisfied that judgment and that the number of service credit
months the circuit court ordered it to sell Foster should be reduced from twentythree to twenty-two because it had already sold Foster service credit for the period
during which Foster’s UK and IRS employment overlapped. Similarly, under CR
60.02(f), KERS argues that because it has already sold service credit to Foster for
those two months, a court order forcing it to resell service credit representing those
two months conflicts with the plain language of KRS 61.545(1): “It [the Board of
Trustees of the Kentucky Retirement Systems] shall not allow credit for more than
one (1) year of service for all service rendered in any period of twelve (12)
consecutive months[.]”
5
At the time of the Meredith decision, the provisions of CR 60.02 allowing relief on grounds of
“mistake, inadvertence, surprise or excusable neglect” and “newly discovered evidence” were
labeled “60.02(1)” and “60.02(2),” respectively. Subsequent to amendment in 1978, “60.02(1)”
was replaced with “60.02(a),” and “60.02(2)” was replaced with “60.02(b).”
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However, KERS cannot find relief under the purview of CR 60.02
under either of these theories. As stated in Board of Trustees of Policemen's and
Firemen's Retirement Fund of City of Lexington v. Nuckolls,
507 S.W.2d 183, 186 (Ky. 1974):
In those instances where grounds . . . for relief under a
60.02 motion are such that they were known or could
have been ascertained by the exercise of due diligence
prior to the entry of the questioned judgment, then relief
cannot be granted from the judgment under a 60.02
proceeding. Relief afforded by a 60.02 proceeding is
extraordinary in nature and should be related to those
instances where the matters do not appear on the face of
the record, were not available by appeal or otherwise,
and were discovered after rendition of the judgment
without fault of the party seeking relief.
(Emphasis added.)
Here, the information leading to KERS’ discovery of the overlap in
Foster’s employment through its 2009 audit, upon which KERS bases both of these
theories, was in KERS’ possession in 2002. This was two years prior to the
Board’s final administrative decision on June 21, 2004, and four years prior to the
circuit court’s September 19, 2006 order. Consequently, KERS cannot contend
that it is without fault for discovering this overlap after rendition of the circuit
court’s judgment.
Additionally, both of these theories would merely demonstrate that the
circuit court’s September 19, 2006 holding was erroneous, i.e., that Foster was not
entitled to purchase twenty-three months of service credit. As noted above, KERS
already had an opportunity to demonstrate that this specific holding was erroneous
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during its appeal of Foster I, and it failed to do so. As such, this fact likewise
precludes KERS from invoking any provision of CR 60.02 for relief from the
circuit court’s September 19, 2006 judgment.
In light of the above, we affirm the circuit court’s decision to deny
KERS CR 60.02 relief. To be clear, however, our holding in this opinion that
Foster is eligible to purchase twenty-three months of service credit for her
employment with UK, irrespective of any overlaps it had with her employment
with the IRS, does not constitute authority for the proposition that any person
might qualify to purchase service credit in excess of the limit that KRS 61.545(1)
prescribes. Rather, the result of this case, to paraphrase Brooks, 244 S.W.3d at
753, is the consequence of a valid judgment coupled with operation of a valid legal
doctrine—the law of the case doctrine—that binds KERS to sell the total twentythree months of service credit at issue.
B. THE JULY 1, 2009 ORDER ENFORCING THE SEPTEMBER 19, 2006
JUDGMENT
When the circuit court entered its July 1, 2009 order to enforce its
September 19, 2006 judgment, the effect of that order was five-fold: 1) it directed
KERS to sell Foster twenty-three months of service credit for her work as an
instructor at UK; 2) it directed KERS to restore one month of sick leave service
credit to Foster’s retirement account, which KERS removed from her account after
the rendition of Foster I; 3) it directed KERS to recalculate and adjust Foster’s
retirement benefits to include the full retirement benefits that her 325 months of
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service credit6 entitled her to receive and enjoined KERS from altering Foster’s
retirement account balance to anything less than 325 months; 4) it found KERS to
be in contempt of the circuit court’s September 19, 2006 order; and 5) it ordered
KERS to pay an amount of $18,885, representing the attorney’s fees Foster
incurred challenging KERS’ CR 60.02 motion.
As stated above, we find no error with respect to the first directive of
the circuit court’s order. We now address the latter four directives, in turn, below.
1. SICK LEAVE CREDIT
KERS’ decision to remove one month of sick leave service credit
from Foster’s account, reducing her total months of sick leave credit from six to
five, may be a moot point. As noted, Foster is entitled to purchase fully twentythree months of service credit for her employment at UK and, as KERS
acknowledges, KERS also discovered and allowed Foster to purchase an additional
month of service credit corresponding to her employment with the IRS,
representing April 1978. Foster is in the same position in which she would have
been had KERS taken no action against her at all or found no additional service
credit months for Foster to purchase, following our decision in Foster I: the total
months of service credit to which Foster is entitled remains 324.
6
The trial court calculated that Foster had 325 months of service credit, rather than 324, after
considering that 1) Foster had 301 months of service credit to begin with; 2) KERS was not
entitled to subtract one month of sick leave service credit from this figure; 3) KERS was required
to offer Foster 23 months of UK service credit; and 4) KERS had discovered, and allowed Foster
to purchase, an additional month of service credit for her IRS employment.
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Nevertheless, the circuit court erred when it held that KERS must
restore Foster’s month of sick leave service credit. As a general rule, “a judgment
cannot properly adjudicate a matter not within the pleadings.” Buskirk v. Joseph,
313 Ky. 773, 233 S.W.2d 524, 527 (1950); see also Nagle v. Wakefield’s Adm’r,
263 S.W.2d 127, 129-30 (Ky. 1953). And here, the only matter before the circuit
court was whether Foster’s employment at UK entitled her to purchase twentythree months of service credit from KERS, and the only relief Foster requested in
her pleadings was the right to purchase those months. Consequently, it was
improper for the circuit court to make any ruling on the subject of sick leave
service credit.
Foster puts forth three arguments as to why KERS should be barred
from contesting, in a separate proceeding, the number of months of sick leave
service credit she is entitled to receive. The first argument is based upon res
judicata; the second is based upon the doctrine of futility; and the third is based
upon equitable estoppel. Collectively, they are insufficient for this Court to ignore
the long-standing principle of the exhaustion of remedies doctrine.
With regard to her first argument, the doctrine of res judicata provides
that an existing final judgment rendered upon the merits is conclusive of a cause of
action and of facts or issues litigated. Yeoman v. Com., Health Policy Bd., 983
S.W.2d 459, 464 (Ky.1998). However, the res judicata rule does not mean that the
prior judgment is conclusive of matters which were not germane to, implied in, or
essentially connected with the actual issues in the case, although they may affect
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the ultimate rights of the parties and might have been presented in the former
action. Hays v. Sturgill, 302 Ky. 31, 193 S.W.2d 648, 650 (1946).
Here, Foster did not ask the circuit court to determine the total number
of service credit months she was entitled to purchase from KERS, or enforce any
warranty relating to sick leave service credit. Rather, the only issue before the
circuit court was the number of months Foster was qualified to purchase by virtue
of her employment with UK. Foster’s sick leave service credit was not germane
to, implied in, or essentially connected with the circuit court’s resolution of that
matter. As such, res judicata does not apply.
With regard to her second argument, Foster argues that the doctrine of
futility applies to the issue of her sick leave service credit because 1) further
administrative review on that issue would result in a decision on the same issue by
the same body; 2) KERS will not provide her with a fair and impartial hearing; and
3) KERS had no probable cause to re-audit her KERS account and, therefore, was
prohibited from doing so by virtue of KRS 61.685, and thus lacked any basis for
contesting her sick leave service credit.
As to her first point, our discussion on the subject of res judicata,
stated above, is equally applicable; we have already determined that the issue of
Foster’s sick leave is separate from the issue of Foster’s service credit. As to her
second point, Foster’s assertion that an administrative body is incapable of
providing a fair and impartial hearing is not grounds for futility. As to her third
point, there is nothing in KRS 61.685 that states any kind of probable cause
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requirement for re-auditing KERS accounts, or otherwise prohibits KERS from reauditing Foster’s account; KRS 61.685 simply grants KERS authority to audit
KERS accounts. Certainly, the law of the case now precludes KERS from altering
or re-auditing Foster’s entitlement to twenty-three months of service credit for her
employment at UK; however, it does not preclude KERS from altering or reauditing Foster’s amount of sick leave service credit.
Finally, with regard to her third argument, the question of whether the
Board is equitably estopped from reducing any of Foster’s retirement benefits, or
her entitlement to any service credit months outside of the twenty-three service
credit months related to her employment with UK, is not simply unrelated to this
matter; it is a question of fact to be decided first at the administrative level, rather
than at a trial court. See Board of Trustees, Kentucky Retirement Systems v. Grant,
257 S.W.3d 591 (Ky. App. 2008).
In Grant, the circuit court determined that KERS was equitably
estopped from reducing a claimant’s benefits following his retirement. On appeal
to this Court, Kentucky Retirement Systems contended that equitable estoppel
could not be invoked to prevent an agency from fulfilling its statutory duties and
that the circuit court misapplied the doctrine. This Court initially observed that
Kentucky Retirement Systems erroneously refused to consider equitable estoppel.
We also held that the circuit court erred as it “undertook an examination of the
facts of the case and found on its own that . . . [Kentucky Retirement Systems] was
estopped from reducing . . . [the] retirement benefit below the amount of its
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estimate . . . before . . . retirement.” Id. at 593. Finally, this Court concluded that
equitable estoppel presented a “question of fact” that must be initially determined
by the Board. Id. at 594. Consequently, this Court vacated the judgment of the
circuit court and remanded to the Board of Trustees for such findings of fact.
In the case at bar, we similarly conclude that if Foster wishes to
invoke the doctrine of equitable estoppel against KERS to prevent it from reducing
Foster’s entitlement to sick leave service credit, or any other benefits, the proper
forum for doing so is at the administrative level. And, because Foster’s sick leave
was never at issue in this case, Foster must do so in a separate administrative
proceeding.
2. THE 325 MONTHS OF TOTAL SERVICE CREDIT
Likewise, when the circuit court directed KERS to recalculate and
adjust Foster’s retirement benefits to reflect 325 months of service credit with full
benefits, and enjoined KERS from altering or re-auditing Foster’s retirement
account balance to anything less than 325 months, it also adjudicated issues not
raised in the pleadings of Foster I: at no time did Foster ever ask the circuit court
to determine the total number of service credit months she was entitled to purchase
from KERS, or whether she was eligible to retire with full benefits. Consequently,
our discussion relating to the issue of Foster’s sick leave service credit is equally
applicable to these portions of the circuit court’s order. And, for the same reasons,
we find that they were equally erroneous.
3. CONTEMPT
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KERS contends the circuit court abused its discretion when it held
KERS in contempt for failing to obey its September 19, 2006 order. It argues that
it was attempting to timely comply with that order when it discovered the overlap
in question and, thus, its failure to comply was not the result of willful disregard or
disrespect, but rather impossibility. Upon review, however, we find no abuse.
We begin with a statement of the law regarding contempt:
A trial court has inherent power to punish individuals for
contempt, and nearly unfettered discretion in issuing
contempt citations. We will reverse a finding of
contempt only if the trial court abused its discretion in
imposing the sentence. Abuse of discretion is defined as
conduct by a court that is arbitrary, unreasonable, unfair,
or unsupported by sound legal principles.
Contempt is the willful disobedience of - or open
disrespect for - the rules or orders of a court. Contempt
may be either civil or criminal, depending upon the
reason for the contempt citation. Civil contempt, the
focus of this appeal, is the failure to do something under
order of court, generally for the benefit of a party litigant.
Thus, courts have inherent power to impose a sanction
for a civil contempt to enforce compliance with their
lawful orders.
Crowder v. Rearden, 296 S.W.3d 445, 450 (Ky. App. 2009) (internal citations and
quotations omitted).
As in Crowder, the circuit court’s exercise of its civil contempt power
is at issue in this case. The purpose of a court’s exercising its civil contempt
powers is to force compliance with its orders or to compensate for losses or
damages caused by noncompliance,7 and the circuit court sought to compel KERS
7
Smith v. Loyall, 702 S.W.2d 838, 839 (Ky. App. 1986).
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to comply with its September 19, 2006 order and to compensate Foster for
litigating this matter. Furthermore, it cannot be contested that KERS willfully
failed to comply with the circuit court’s September 19, 2006 order when it refused
to recognize Foster’s right to purchase the full twenty-three months of service
credit associated with her employment at UK, even after it had exhausted all
appeals from that order.
KERS correctly states that the inability of the party to obey an order
of contempt is ordinarily sufficient to purge it of the contempt charged. “Whether
civil or criminal, a party cannot be punished for contempt for her failure to perform
an act which is impossible.” Crowder, 296 S.W.3d at 450 (citing Blakeman v.
Schnider, 864 S.W.2d 903, 906 (Ky. 1993). However, Kentucky only recognizes
impossibility as a defense to contempt where the party claiming it can prove that
he is not at fault for his inability to comply. See Campbell County v. Com.,
Kentucky Corrections Cabinet, 762 S.W.2d 6, 10 (Ky. 1988); see also Tucker v.
Commonwealth, 299 Ky. 820, 187 S.W.2d 291, 294-5 (1945). This, KERS cannot
do. As discussed at length above, it was entirely the responsibility of KERS to
bring the issue of Foster’s overlapping employment forward during these
proceedings; KERS is at fault for having failed to do so, and now the law of the
case mandates that KERS recognize Foster’s right to twenty-three months of
service credit for her employment at UK. For these reasons, KERS cannot claim
impossibility, and the circuit court had the discretion to hold KERS in contempt.
We find no error.
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4. ATTORNEY’S FEES
We review a court’s award of attorney’s fees under an abuse of
discretion standard. Giacalone v. Giacalone, 876 S.W.2d 616, 621 (Ky. 1994).
KERS does not contest the specific amount of the attorney’s fees the circuit court
awarded ($18,885); nor does it contest how this amount was calculated. Rather,
KERS argues that the circuit court abused its discretion by ordering KERS to pay
any amount of attorney’s fees because the expenditure of government resources is
solely within the control of the Kentucky legislature and, absent statutory or
contractual authority, the courts are without authority to ever impose costs or
attorney fees against the Commonwealth. We disagree.
On the same basis that KERS now advocates, in Cabinet For Health
and Family Services v. G.W.F., 229 S.W.3d 596 (Ky. App. 2007), we reversed an
order that required the Cabinet, another administrative agency, to pay for opiate
hair follicle drug screen testing for parents of a child adjudged to be neglected. In
doing so, we recited constitutional and statutory provisions that are equally
relevant and pertinent to our analysis regarding the attorney’s fees at issue here:
Kentucky Constitution § 27 states:
The powers of the government of the Commonwealth of
Kentucky shall be divided into three distinct departments,
and each of them be confined to a separate body of
magistracy, to wit: Those which are legislative, to one;
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those which are executive, to another; and those which
are judicial, to another.
Kentucky Constitution § 28 states:
No person, or collection of persons, being of one of those
departments, shall exercise any power properly belonging
to either of the others, except in the instances hereinafter
expressly directed or permitted.
Kentucky Constitution § 230 states:
No money shall be drawn from the State Treasury, except
in pursuance of appropriations made by law[.]
KRS 41.110 provides in part that:
No public money shall be withdrawn from the Treasury
for any purpose other than that for which its withdrawal
is proposed, nor unless it has been appropriated by the
General Assembly or is a part of a revolving fund, and
has been allotted as provided in KRS 48.010 to 48.800,
and then only on the warrant of the Finance and
Administration Cabinet.
KRS 41.130(2) provides that:
No warrant shall be issued unless the money to pay it has
been appropriated by law. The Finance and
Administration Cabinet may require any claimant to state
on the face of his claim the law under which it is payable.
KRS 453.010 provides that:
No judgment for costs shall be rendered against the
Commonwealth in any action prosecuted by or against
the Commonwealth in its own right, unless specifically
provided by statute; provided, however, that in any civil
action filed in any court of competent jurisdiction by or
against the Commonwealth of Kentucky, the costs may
be paid by the Commonwealth when such costs are
approved and allowed by the judge of the court in which
the case was filed. Costs shall not exceed the fees
allowed for similar services in other civil actions.
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And finally, Kentucky Rules of Civil Procedure (CR)
54.04(1) provides that:
Costs shall be allowed as of course to the prevailing party
unless the court otherwise directs; but costs against the
Commonwealth, its officers and agencies shall be
imposed only to the extent permitted by law.
Id. at 597-8.
The purpose of Section 230 of the Kentucky Constitution, the statutes,
and CR 54.04 is “to prevent the expenditure of the State’s money without the
consent of the Legislature.” Ferguson v. Oates, 314 S.W.2d 518, 521 (Ky. 1958)
(citation and internal quotations omitted). It is a purpose consistent with the
governmental separation of powers and reinforces the proper role of the judiciary.
“The judiciary’s reason for existence is to adjudicate.” Bradshaw v. Ball, 487
S.W.2d 294, 299 (Ky. 1972).
However, G.W.F. also recognizes that this Court has affirmed trial
court orders which directed an administrative agency to pay costs, irrespective of
the above rules and statutes, where the order mandating the payment of those costs
fell within the court’s “inherent powers to do that which is reasonably necessary
for the administration of justice.” G.W.F., 229 S.W.3d at 598 (citing G.G.L. v.
Cabinet For Human Resources, 686 S.W.2d 826, 829 (Ky. App. 1985). We
explained in G.W.F. that
[t]he control over this inherent judicial power . . . is
exclusively within the constitutional realm of the courts.
As such, it is not within the purview of the legislature to
grant or deny the power nor is it within the purview of
-24-
the legislature to shape or fashion circumstances under
which this inherently judicial power may or may not be
granted or denied.
Id. (citation omitted.)
The general rule is that in the absence of statutory or contractual
authority, a trial court abuses its discretion if it makes an award of attorney’s fees. 8
And, if the case at bar raised the issue of attorney’s fees outside the context of the
court’s inherent authority to administer justice, KERS would be correct in stating
that the circuit court abused its discretion by ordering it to pay Foster’s attorney’s
fees.
But, this case does involve the court’s inherent authority to administer
justice because the court’s power of contempt is the very embodiment of that
authority. See Murphy v. Commonwealth, 50 S.W.3d 173, 186 (Ky. 2001) (“If the
courts are to have the power to control participants in the judicial process and
effectively administer justice, the power of contempt must be more than a hollow
threat.”) And, the scope of a court’s contempt power is broad, even extending to
public officials, as well as all branches of government and its agencies. Louisville
Metro Dept. of Corrections v. King, 258 S.W.3d 419, 421 (Ky. App. 2007); see
also Commonwealth, Department of Natural Resources and Environmental
Protection v. Williams, 536 S.W.2d 474, 476 (Ky. 1976). Additionally, contempt
is an equitable remedy. Glanton v. Renner, 285 Ky. 808, 149 S.W.2d 748, 750
(1941). And, “[i]n equity the award of costs and [attorney] fees is largely within
8
See also Kentucky State Bank v. AG Services, Inc., 663 S.W.2d 754, 755 (Ky. App. 1984).
-25-
the discretion of the court, depending on the facts and circumstances of each
particular case.” Dorman v. Baumlisberger, 271 Ky. 806, 113 S.W.2d 432, 433
(1938); see also Batson v. Clark, 980 S.W.2d 566, 577 (Ky. App. 1998); Kentucky
State Bank v. AG Services, Inc., 663 S.W.2d 754, 755 (Ky. App. 1984); see also
Lake Village Water Ass'n, Inc. v. Sorrell, 815 S.W.2d 418, 421 (Ky. App. 1991)
(recognizing the court’s inherent power to shift fees “regardless of the existence of
statutory authority or remedial rules”).
It was not error for the circuit court to order KERS to pay Foster’s
attorney’s fees. In the context of contempt proceedings the circuit court had both
the discretion and the inherent legal authority to impose attorneys’ fees against
KERS, irrespective of KERS’ status as a government agency.
III. CONCLUSION
For the reasons herein stated, we affirm the circuit court’s decisions to
deny KERS relief under CR 60.02, hold KERS in contempt, and impose upon
KERS Foster’s attorney’s fees. However, we vacate the trial court’s decisions
directing KERS to restore one month of sick leave service credit to Foster’s
account and enjoining KERS from further adjusting or auditing Foster’s account
outside the context of Foster’s twenty-three months of UK employment; if Foster
wishes to litigate those matters, she must do so in a separate administrative
proceeding, not here.
ALL CONCUR.
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BRIEF FOR APPELLANT:
BRIEF FOR APPELLEE:
Schuyler Olt
Katherine Rupinen
Frankfort, Kentucky
Debra H. Dawahare
Leila G. O’Carra
Lexington, Kentucky
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