CRESTBROOK PROPERTIES, LLC v. NORTHERN KENTUCKY WATER SERVICE DISTRICT
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RENDERED: MAY 16, 2003; 10:00 a.m.
NOT TO BE PUBLISHED
Commonwealth Of Kentucky
Court of Appeals
NO. 2001-CA-001852-MR
CRESTBROOK PROPERTIES, LLC
APPELLANT
APPEAL FROM KENTON CIRCUIT COURT
HONORABLE PATRICIA M. SUMME, JUDGE
ACTION NO. 00-CI-02149
v.
NORTHERN KENTUCKY WATER
SERVICE DISTRICT
APPELLEE
OPINION
VACATING AND REMANDING
** ** ** ** **
BEFORE:
BARBER, DYCHE, AND TACKETT, JUDGES.
BARBER, JUDGE:
The Appellant, Crestbrook Properties, LLC
(“Crestbrook”), seeks review of an order of the Kenton Circuit
Court granting summary judgment in favor of the Appellee,
Northern Kentucky Water Service District (“Water District”), and
dismissing Crestbrook’s counterclaim.
For the reasons set forth
below, we vacate the order of the circuit court, and remand.
On October 17, 2000, the Water District, a public
water system organized pursuant to KRS Chapter 74, filed a
complaint against Crestbrook, a water service customer, in the
Kenton Circuit Court, seeking to enjoin it from violating its
cross-connection control policy and directing Crestbrook to
install a cross-connection control device in compliance
therewith.
A copy of the policy, attached to the complaint,
reflects that cross-connections are prohibited by 401 KAR 8:020
§2(2) which provides:
All cross-connections are prohibited. The use of
automatic devices, such as reduced pressure zone
back flow preventers and vacuum breakers, may be
approved by the cabinet in lieu of proper air gap
separation. A combination of air gap separation
and automatic devices shall be required if
determined by the cabinet to be necessary due to
the degree of hazard to public health. Every
public water system shall determine if or where
cross-connections exist and shall immediately
eliminate them.
The policy further reflects that cross connections are
defined at 401 KAR 8:010, § 1(28)1 as:
[A] physical connection or arrangement between
two (2) otherwise separate systems, one (1) of
which contains potable water and the other being
either water of unknown or questionable safety,
or steam, gas, or chemicals, whereby there may be
flow from one (1) system to the other, the
direction of flow depending on the pressure
differential between the two (2) systems.
1
Now 401 KAR 8:010 §1(32).
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On November 6, 2000, Crestbrook filed an answer and
counterclaim.
Crestbrook explained that it is a Kentucky
limited liability company which owns the multi-family dwelling
described in the complaint.
In its counterclaim, Crestbrook
alleged that the Water District’s cross-connection control
policy, and the enforcement action based upon its policy,
constitute arbitrary administrative action.
Crestbrook
maintained that because similarly-situated (namely, singlefamily) residential customers were not required to install the
devices, the policy violated the equal protection and due
process clauses of the 14th amendment of the United States
Constitution and §§ 2 and 3 of the Kentucky Constitution.
Crestbrook also asserted a statutory cause of action under KRS
446.070 for a violation of KRS 278.170.
KRS 278.170(1) provides:
No utility shall, as to any rates or service, give
any unreasonable preference or advantage to any
person or subject any person to any unreasonable
prejudice or disadvantage, or establish or
maintain any unreasonable difference between
localities or between classes of service for doing
a like and contemporaneous service under the same
or substantially same conditions.
Crestbrook sought to enjoin the Water District from
enforcing the policy and sought a declaration that the policy
and actions of the Water District were in violation of the
United States and Kentucky Constitutions.
-3-
On April 25, 2001, the Water District filed a motion
for summary judgment.
On June 20, 2001, Crestbrook filed a
memorandum in opposition to the motion for summary judgment,
contending, inter alia, that the circuit court should delay
ruling on the motion.
Crestbrook explained that on July 29,
2001, it had “sent a Formal Complaint to be filed with the
Kentucky Public Service Commission.”
Crestbrook asserted that
the “PSC has ‘exclusive jurisdiction over the regulation of
rates and services of utilities,’ such as the Water District.”
Crestbrook maintained that the PSC had jurisdiction “to conduct
fact-finding as to whether the Water District’s policy is
unreasonable or discriminatory. . . .However, [the circuit court
and] not the PSC retains exclusive jurisdiction over
Crestbrook’s injunctive and declaratory relief claims that the
Water District is violating the U.S. and Kentucky
Constitutions.”
Crestbrook requested that the circuit court
delay ruling on the motion for summary judgment until the PSC
had completed its fact finding, under the doctrine of primary
jurisdiction.
On July 20, 2001, the Water District filed a reply,
contending that the doctrine of primary jurisdiction was
inapplicable, because Crestbrook’s claims were solely
constitutional and delay was not required.
-4-
On July 25, 2001, the circuit court entered an order
granting summary judgment in favor of the Water District:
Plaintiff is entitled to judgment as a matter of
law. Defendant is hereby ordered to install a
cross connection prevention control device in
compliance with Plaintiff’s Cross Connection
Control Policy. Plaintiff’s Motion for Summary
Judgment is sustained, at the Defendant’s costs.
It is further Ordered that the defendant’s
Counterclaim is hereby dismissed.
On August 24, 2001, Crestbrook filed a notice of
appeal to this Court.2
On appeal, Crestbrook asserts that the
circuit court erred in granting summary judgment, because: (a)
the policy’s classification of similarly-situated customers
bears no rational relationship to preventing cross-connection
contamination of the public water system, (b) real issues of
material fact existed on Crestbrook’s counterclaims; and (c)
Crestbrook should have first had an opportunity to complete
discovery.
Crestbrook also asserts that it had contested the
validity of the Water District’s policy, contrary to the circuit
court’s finding.
2
By order of this Court entered January 30, 2002, the appeal was
held in abeyance pending an attempt to settle the case. By
order of April 4, 2002, the appeal was returned to the active
docket, settlement negotiations having been unsuccessful.
-5-
Although not brought to our attention by the parties,
on March 24, 2003, the Kentucky PSC issued the following order
concerning Crestbrook’s pending formal complaint3:
On June 22, 2001 Crestbrook Properties, LLC
(“Crestbrook”) filed a formal complaint against
Northern Kentucky Water District (“Northern
Kentucky”) alleging that Northern Kentucky’s
cross-connection policy violates KRS 278.170 by
establishing an unreasonable difference or
classification among residential customers.
Prior to the filing of Crestbrook’s complaint
with the commission, Northern Kentucky had filed
a complaint against Crestbrook in Kenton Circuit
Court, n1 [Case No. 00-CI-02149.] seeking a court
order requiring Crestbrook to follow Northern
Kentucky’s cross-connection policy. On July 25,
2001, the Kenton County Circuit Court, finding in
favor of Northern Kentucky, granted Summary
Judgment and ordered Crestbrook to install a
back-flow prevention device. This case is
currently before the Kentucky Court of Appeals.
The Commission has original jurisdiction over
Crestbrook’s complaint. KRS 278.040, KRS
278.260. Specifically, the Commission has
jurisdiction to determine whether Northern
Kentucky’s cross-connection policy, or the
application thereof, is unreasonably
discriminatory pursuant to KRS 278.170. The end
result of an order deciding the issue would be
whether Crestbrook must install a backflowprevention device. However, the Kenton Circuit
Court already has ordered Crestbrook to install a
backflow-prevention device. In light of this
order, we reluctantly conclude that it would be
inappropriate to enter a final ruling in this
case prior to the determination by the Kentucky
Court of Appeals, which currently has the case
3
In the Matter of CRESTBROOK PROPERTIES, LLC, COMPLAINANT v.
NORTHERN KENTUCKY WATER DISTRICT, DEFENDANT, CASE NO. 200100202, Kentucky Public Service Commission, 2003 Ky. PUC LEXIS
205, March 24, 2003.
-6-
before it. Crestbrook Properties, LLC v.
Northern Kentucky Water District, 2001-CA-001852.
IT IS THEREFORE ORDERED that this case be held in
abeyance pending the ruling of the Kentucky Court
of Appeals.
(Emphasis original).
The circuit court never addressed the PSC’s jurisdiction or
the formal complaint pending before it, but simply ordered
Crestbrook to install a cross-connection control device in
compliance with the Water District’s policy and dismissed
Crestbrook’s counterclaim.
The circuit court’s ruling
presupposes the validity of the policy under KRS 278.170;
however, that is a matter within the exclusive jurisdiction of
the PSC.4
KRS 278.040 is entitled, “Public service commission -Jurisdiction – Regulations” and provides at subsection (2):
The jurisdiction of the commission shall extend
to all utilities in this state. The commission
shall have exclusive jurisdiction over the
regulation of rates and service of utilities, but
with that exception nothing in this chapter is
intended to limit or restrict the police
jurisdiction, contract rights or powers of cities
or political subdivisions.
(Emphasis added)
KRS 278.010
(13) defines service:
“Service" includes any practice or requirement in
any way relating to the service of any utility,
including the voltage of electricity, the heat
4
See Carr v. Cincinnati Bell, Ky. App., 651 S.W.2d 126 (1983).
-7-
units and pressure of gas, the purity, pressure,
and quantity of water, and in general the
quality, quantity, and pressure of any commodity
or product used or to be used for or in
connection with the business of any utility;
(Emphasis added)
Thus, the relief sought in the case sub judice is
divided between the jurisdiction of the PSC and the circuit
court,5 because the PSC cannot determine the constitutionality of
the Water District’s policy.
The doctrine of primary
jurisdiction does not apply, because the circuit court does not
have subject matter jurisdiction of the matter pending before
the PSC.
“The doctrine of ‘primary jurisdiction’ clearly
recognizes that the court has subject-matter jurisdiction but as
a matter of judicial policy should not exercise it in instances
where proper judicial administration requires that action be
deferred by the court until the agency has acted . . . .”6
Nevertheless, the proceedings before the circuit court
and the PSC are closely intertwined.
It is manifestly unjust to
order Crestbrook to comply with the Water District’s policy,
before the PSC, with its specialized knowledge, determines
whether that policy, or the application thereof, is unreasonably
discriminatory under KRS 278.170.
We believe that the circuit
court’s failure to delay ruling on the summary judgment motion,
5
6
Id.
Preston v. Meigs, Ky. 464 S.W.2d 271, 274-75 (1971).
-8-
pending resolution of Crestbrook’s formal complaint before the
PSC, constitutes substantial error.
CR 61.02.
Accordingly, we vacate the order of the Kenton Circuit
Court granting the Water District’s motion for summary judgment,
entered July 25, 2001, and remand this case to the circuit court
with direction that it be held in abeyance, pending a final
ruling of the Kentucky PSC.
ALL CONCUR.
BRIEFS FOR APPELLANT:
BRIEF FOR APPELLEE:
James P. Walsh
Fort Wright, Kentucky
H. Lawson Walker, II
Rachael A. Hamilton
Cincinnati, Ohio
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