BLUE GRASS AUTOMOTIVE, INC. VS. KENTUCKY UNEMPLOYMENT INSURANCE COMMISSION , ET AL.
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RENDERED: OCTOBER 3, 2008; 10:00 A.M.
NOT TO BE PUBLISHED
ORDERED NOT PUBLISHED BY SUPREME COURT:
APRIL 15, 2009
(FILE NO. 2008-SC-0824-D)
Commonwealth of Kentucky
Court of Appeals
NO. 2007-CA-001526-MR
&
NO. 2007-CA-002055-MR
BLUEGRASS AUTOMOTIVE, INC.
v.
APPELLANT
APPEALS FROM FRANKLIN CIRCUIT COURT
HONORABLE PHILLIP J. SHEPHERD, JUDGE
ACTION NO. 07-CI-00053
KENTUCKY UNEMPLOYMENT INSURANCE
COMMISSION; COMMONWEALTH OF KENTUCKY;
EDUCATION CABINET; DEPARTMENT FOR
WORKFORCE INVESTMENT; OFFICE OF
EMPLOYMENT AND TRAINING;
DIVISION OF UNEMPLOYMENT INSURANCE;
AND JAMES INMAN, IN HIS OFFICIAL CAPACITY
AS DIRECTOR OF THE DIVISION OF
UNEMPLOYMENT INSURANCE
APPELLEES
OPINION
AFFIRMING
** ** ** ** **
BEFORE: COMBS, CHIEF JUDGE; DIXON AND LAMBERT, JUDGES.
DIXON, JUDGE: Bluegrass Automotive, Inc. (“Bluegrass”) appeals from two
orders of the Franklin Circuit Court dismissing its complaint and dismissing its
amended complaint against Appellees. We affirm.
In 2002, Bluegrass acquired the assets of Tom Payette Jaguar, Inc. In
August 2006, Bluegrass contacted the Kentucky Unemployment Insurance
Commission (“the Commission”) to inquire about a transfer of the unemployment
insurance reserve account of Tom Payette Jaguar. Thereafter, on November 30,
2006, the Division of Unemployment Insurance (“the Division”) mailed a tax
assessment notice to Bluegrass totaling $36,326.92 for the Tom Payette Jaguar
reserve account. The notice stated:
Appeal Information
If you disagree with this determination, you may file a
written appeal to the Unemployment Insurance
Commission pursuant to KRS 341.430(2). The appeals
may be faxed, delivered to the Unemployment Insurance
Commission or any office of the Division of
Unemployment Insurance or mailed, if postmarked on or
by 12/20/2006.
On January 8, 2007, Bluegrass appealed the assessment to the
Commission. The following day, Bluegrass filed a complaint against the
Commission in Franklin Circuit Court appealing the assessment and contending
the Commission acted outside of its statutory power. On January 12, 2007, the
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Commission filed a motion to dismiss the complaint, arguing the court did not
have jurisdiction because Bluegrass failed to exhaust its administrative remedies
pursuant to Kentucky Revised Statutes (KRS) 341.430 and KRS 341.450. The
Commission contended that no final administrative order existed for the court to
review, as the appeal of the assessment had been filed with the Commission on
January 8. In response, Bluegrass argued it was not required to exhaust its
administrative remedies pursuant to certain exceptions to the exhaustion doctrine.
On May 10, 2007, the court rendered an opinion and order granting
the motion to dismiss. The court noted that it did not have subject matter
jurisdiction because there was no final order of the Commission to review. The
court also noted that the Division was the agency that issued the assessment, not
the Commission; yet, the Division was not a party to the action.
On May 23, 2007, Bluegrass filed a motion to alter or amend the order
of dismissal and requested leave to file an amended complaint. On June 12, 2007,
while the motion was pending, Bluegrass filed an amended complaint, eliminating
the Commission as a party. The amended complaint instead named the Division,
the Commonwealth of Kentucky, the Education Cabinet, the Department for
Workforce Investment, the Office of Employment and Training, and James Inman
as Defendants. In the amended complaint, Bluegrass appealed the assessment,
raised a due process issue and sought injunctive relief on the theory that the
Division acted beyond the scope of its authority in issuing the assessment.
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Thereafter, the Commission filed a motion to strike the amended
complaint. In an order rendered June 26, 2007, the court denied the still-pending
motion to alter or amend, granted the motion to strike and dismissed the amended
complaint.1
On July 10, 2007, Bluegrass filed a second motion to alter or amend,
contending that the court erroneously dismissed its amended complaint. The trial
court denied that motion on September 11, 2007.2 This consolidated appeal
followed.3
Bluegrass raises several arguments on appeal. Because we conclude
the Franklin Circuit Court properly dismissed the complaint on jurisdictional
grounds, we will not address Bluegrass’s substantive claims.
In Board of Adjustments of City of Richmond v. Flood, 581 S.W.2d 1
(Ky. 1978), our Supreme Court stated:
There 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.
Id. at 2.
1
2007-CA-001526-MR
2
2007-CA-002055-MR
3
On November 14, 2007, this Court granted Bluegrass’s motion to consolidate the appeals.
-5-
The statutes applicable in the case at bar, KRS 341.430(2), KRS
341.450 and KRS 341.460, clearly set forth the procedure for appealing an
assessment. KRS 341.430(2) requires an employer to appeal to the Commission
within twenty days after the assessment was mailed to the employer. Pursuant to
KRS 341.450 and KRS 341.460, after the Commission renders a decision and all
administrative remedies have been exhausted, an aggrieved employer may seek
judicial review by filing a complaint against the Commission in Franklin Circuit
Court within twenty days of the decision.
In the case at bar, it is evident that Bluegrass failed to follow the
statutory mandate. Bluegrass filed its circuit court complaint against the
Commission before the Commission had rendered a decision. Further, even if
Bluegrass believed it was not required to exhaust its administrative remedies, the
Division, rather than the Commission, would have been the proper party to name in
the complaint because it rendered the assessment. Consequently, since Bluegrass
disregarded the statutory requirements for appealing an agency decision, it failed to
invoke the jurisdiction of the Franklin Circuit Court. Flood, 581 S.W.2d at 2. We
conclude the court properly dismissed the complaint.
Despite our conclusion that the trial court did not have jurisdiction to
entertain the cause of action, we must address Bluegrass’s claim that the court
erroneously dismissed the amended complaint. Bluegrass opines that its amended
complaint was proper pursuant to CR 15.01, which allows a party to amend a
pleading one time “as a matter of course . . . before a responsive pleading is
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served.” Bluegrass contends that its amended complaint asserted viable claims
against the Division and other Defendants.
Bluegrass erroneously relies on CR 15.01. “The civil rules which
would normally permit amendment do not apply to appeals of administrative
decisions until after the appeal has been perfected and jurisdiction has attached.”
Cabinet for Human Resources v. Holbrook, 672 S.W.2d 672, 675 (Ky. App. 1984)
(citing Pollitt v. Ky. Unemployment Ins. Commission, et al., 635 S.W.2d 485, 487
(Ky. App. 1982)). Here, Bluegrass failed to perfect its appeal pursuant to KRS
341.450 and did not invoke the jurisdiction of the Franklin Circuit Court.
Consequently, “the civil rules never became effective,” Id., and Bluegrass’s
amended complaint was properly dismissed.
For the reasons set forth herein, the judgment of the Franklin Circuit
Court is affirmed.
ALL CONCUR.
BRIEF FOR APPELLANT:
BRIEF FOR APPELLEES:
David B. Mour
K. Tracy Rigor
Louisville, Kentucky
Tamela A. Biggs
Education Cabinet
Office of General Counsel
Frankfort, Kentucky
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