COMAIR, INC.; AND COMAIR SERVICES, INC. V. LEXINGTON-FAYETTE URBAN COUNTY AIRPORT CORP., ET AL.
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COMAIR; INC . ; AND
COMAIR SERVICES, INC .
V.
APPELLANTS
ON APPEAL FROM FAYETTE CIRCUIT COURT
HONORABLE JAMES D. ISHMAEL, JR., JUDGE
NO. 06-CI-03749
LEXINGTON-FAYETTE URBAN COUNTY
AIRPORT CORPORATION; AND LEXINGTONFAYETTE URBAN COUNTY AIRPORT BOARD,
AND THE MEMBERS, OFFICERS AND
DIRECTORS OF THE BOARD AND/OR
CORPORATION IN THEIR OFFICIAL CAPACITIES
APPELAEES
OPINION OF THE COURT BY JUSTICE NOBLE
AFFIRMING
This case raises the question whether the Lexington-Fayette Urban
County Airport Board, the Lexington-Fayette Urban County Airport
Corporations, and the Board's members are entitled to sovereign,
governmental, or other immunity so as to preclude liability in litigation over a
tragic air crash . The Fayette Circuit Court found they are immune. Because
the Airport Board and Airport Corporation are government agencies,
specifically of the Lexington-Fayette Urban County Government, performing a
governmental function, they are entitled to immunity from suit for alleged
negligence, and the board members are entitled to immunity from suit in their
representative capacities . The circuit court therefore is affirmed.
I. Background
Comair Flight 5191 was scheduled to depart from Lexington Blue Grass
Airport at approximately 6 :00 a .m . on August 27, 2006. Due to ongoing
redesign and reconstruction of the runways and taxiways, the normal path to
the regular runway was reportedly blocked . In attempting to navigate the
construction, the plane took a wrong turn and ended up on a shorter
secondary runway from which it could not gain sufficient altitude for a safe
takeoff and crashed into an adjacent field immediately after takeoff. All fortyseven passengers and two crew members died . A third crew member was
critically injured but survived the crash.
The estates of the deceased passengers began filing wrongful death
actions against the companies that operated Flight 519 l, Comair, Inc . and
Comair Services, Inc. (collectively "Comair"), in the Fayette Circuit Court on
September 1, 2006 . Eventually forty-four such suits were filed. Other claims
were filed in federal district court, I and at least one was filed in Florida state
court.
In May 2007, Comair filed a third-party complaint naming the LexingtonFayette Urban County Airport Board, the Lexington-Fayette Urban County
Airport Corporation, and twenty John Does (the members of the Board) in their
1 The federal litigation, which has actually moved between the state and federal courts
several times, has been described in some detail by the federal district court in In re
Air Crash at Lexington, Kentucky, August 27, 2006 , No . 5 :06-cv-316-KSF, 2007 WL
4206687 (E.D. Ky. Nov . 26 2007) (unpublished) .
2
individual and representative capacities. Initial discovery was undertaken,
including the production of financial records and the deposition of John
Rhodes, the Blue Grass Airport Director of Administration and Finance. In
June, the Airport Board and the Airport Corporation moved to dismiss the
third-party complaint on the ground that they enjoyed immunity from liability .
On August 2, 2007, the circuit court held a hearing on the motion to
dismiss. At the hearing, the court orally discussed the Kentucky cases
covering immunity of government agencies, stating that the matter would
ordinarily be controlled by Kentucky Center for the Arts v. Berns , 801 S.W.2d
327 (Ky . 1991), but noting that the Court of Appeals had previously held that
the Airport Board and Airport Corporation were entitled to immunity in Inco,
Ltd . v. Lexington- Fayette Urban County Airport Board , 705 S.W.2d 933 (Ky.
App. 1985) . Finding that Inco, Ltd . was binding precedent, the circuit court
dismissed as to the Airport Board, the Airport Corporation, and the Board
members.2 In a subsequent written order, the circuit court "adopt[ed] by
reference its oral bench ruling stating its rationale" from the August 2nd
hearing.
Comair appealed the decision . Given the importance of the issues, this
Court transferred the case from the Court of Appeals' docket to its own .
II. Analysis
Comair has challenged the trial court's decision as to the immunity of
the Airport Board, the Airport Corporation, and the Board's members in their
2 The court's dismissal order did not distinguish between suit against the board
members in their individual and official capacities .
3
official capacities, but has not addressed the board members' immunity or
liability in their individual capacities. This Court will therefore not address
individual liability issues .
Despite the frequency of opinions on the subject from this Court, the law
of sovereign immunity, and the related doctrines of governmental immunity,
official immunity, and qualified official immunity, is still difficult to apply, no
doubt in part because of the large number of decisions on the subject.
Attitudes about the propriety of immunity for the state and its subdivisions,
government agencies and their employees, and government-created entities
have shifted back and forth over time and personnel changes on the Court.
The one clear thing is that pure sovereign immunity, for the state itself,
has long been the rule in Kentucky . Though "[t]he basis and policy of the
doctrine has been many times stated," Kentucky State Park Com'n v.
Wilder, 260 Ky. 190, 84 S.W.2d 38, 39 (1935)-as has much criticismperhaps the most succinct explanation accounting for the concept is that "it is
not a tort for government to govern . . . . .. Dalehite v. United States, 346 U .S .
15, 57 (1953) (Jackson, J ., dissenting) . In Kentucky the doctrine is sometimes
claimed to stem from Section 231 of the Kentucky Constitution, but it is really
a common law concept that recognizes a quality (immunity from suit) of the
sovereign state: "Absolute immunity from suit is a high attribute and
prerogative of sovereignty. . . . This immunity has come down to us as a part of
the fundamental common law and is only indirectly contained in the
Constitution . " Wilder, 84 S . W.2d at 39.3 Put more succinctly : "The immunity
as a matter of fact appears in the Constitution not at all, except as the grant of
a dispensing power of the legislature implies the existence of the immunity ."
Paul Oberst, The Board of Claims Act of 1950, 39 Ky. L. J . 35, 35 n.8 (195019 51) . More recently, the doctrine has been "recognized as an inherent
attribute of the state" in Yanero v. Davis, 65 S.W .3d 510, 523 (Ky. 2001) .
The reach of sovereign immunity becomes more complicated when
dealing with governmental and quasi-governmental entities and departments
below the level of the Commonwealth itself. However, at least one line is clear
for now: the distinction between counties and cities . Counties, which predate
the existence of the state and are considered direct political subdivisions of it,
enjoy the same immunity as the state itself. Lexington- Fayette Urban County
Government v. Smolcic, 142 S.W.3d 128, 132 (Ky . 2004) ; see also Schwindel v.
Meade County, 113 S .W .3d 159, 163 (Ky. 2003) ("A county government is
cloaked with sovereign immunity .") ; cf. Thomas P. Lewis, James S . Kotas, and
Charles N. Carnes, Consolidation-Complete or Functional-of City and
County Governments in Kentucky , 42 Ky . L. J. 295 (1952-1953) ("[T]he main
purpose of counties has been to function as administrative subdivisions of the
state .") . Cities, as municipal corporations, on the other hand, while enjoying
some immunity for much of this state's history, are now liable for negligent
acts outside the legislative and judicial realms . See Gas Service Co ., Inc . v.
3 The closest the Constitution comes to directly expressing sovereign immunity is in
Section 230, which bars the taking of money from the treasury except by
appropriations by the legislature .
City of London , 687 S .W.2d 144, 146 (Ky . 1.985) ; Haney v. City of Lexington ,
386 S .W.2d 738, 742 (Ky. 1965) .
Numerous other entities, however, fall outside this taxonomy of city
versus state and county, and it is not immediately clear: whether they are
agencies of the state, and therefore possibly entitled to immunity, or more akin
to municipal corporations, and are therefore liable in tort. These in-between
entities have given courts the most trouble in recent years .
The obvious starting point for addressing the immune status of the
entities in this case is the previous case law related to them . Airport boards
(frequently termed "air boards") have been discussed numerous times by this
Court, then sitting as the Court of Appeals, and the current intermediate Court
of Appeals. Usually, however, the immune status of such entities has not been
the primary concern in the case. Nevertheless, those cases demonstrate the
confusion surrounding the exact legal nature of airport boards .
When this Court sat as the Court of Appeals prior to the current Judicial
Article, several decisions addressed county airport boards and described them
as municipal corporations or similar entities . See, e .g. , Dixie Taxi. Service, Inc.
v. Louisville and Jefferson County Air Bd . , 465 S.W.2d 273, 274-76 (Ky. 1971)
(analogizing the air board to a private property owner) ; Bowling Green-Warren
County Airport Bd. v. Bridges Aircraft Sales 8s Service, Inc. , 460 S.W.2d 18,
19 (Ky. 1970) ("The [Airport] Board is a municipal corporation established
pursuant to the enablements of KRS 183 .133 .") ; Sawyer v. Jefferson County
Fiscal Court , 438 S.W .2d 531, 534 (Ky. 1969) (citing Louisville 8s Jefferson
County Air Board v. American Airlines, D.C . , 160 F.Supp . 771 (W.D.Ky. 1958),
6
as having held that an airport board is a municipal corporation : "[t]here is
nothing extraordinary in the concept that a [development board created. by the
fiscal court] is a municipality") ; Stephenson v . Louisville and Jefferson County
Bd . of Health , 389 S .W.2d 637, 638 (Ky . 1965) (stating in dicta that the
Louisville and Jefferson County Air Board was a "municipal corporation" based
on Louisville 8 Jefferson County Air Board v. American Airlines, D.C . , 160
F.Supp . 771 (W.D .Ky. 1958), and holding that the Board of Health, also a
municipal corporation, was not immune under Haney v. City of Lexington) ;
Louisville and Jefferson County Air Bd . v. Porter, 397 S .W .2d 146, 150 (Ky.
1965) (stating in dicta that an airport board is "a governmental agency which
has the power to sue and be sued liable for damage to property caused by its
non-negligent acts," in the context of a nuisance/ reverse-condemnation claim) .
If airport boards are to be viewed as municipal corporations as the cases
above say, then under Haney they are not entitled to immunity. However, none
of these old Court of Appeals cases expressly addressed immunity in tort for
airport boards, and many did not turn on immunity issues at all, and may
have used the term "municipal corporation" more as a way to identify an entity.
The only case to directly address the immune status of an airport board
is Inco, Ltd . v. Lexington-Fayette Urban County Airport Board, 705 S.W.2d 933
(Ky. App. 1985) .4 Our current Court of Appeals addressed the question of
4 This Court has one other time addressed the issue, although in an oblique way, in
Bernard v. Russell County Air Board , 718 S.W.2d 123 (Ky. 1986), which involved a
dispute over whether the air board could condemn property for the airport
independent of the Russell County government . The Court noted that because its
eminent domain power was not an independent power and had to be exercised
through the county government, "[t]he Russell County Air Board is not a wholly
7
"whether the airport board is a separate entity from the county, and if so, is it
denied the immunity enjoyed by the government?" Id. at 934. The court held
that the Airport Board was a county agency either at its inception, if it was
created by Fayette County, or upon the merger of the city of Lexington and
Fayette County to form the Lexington-Fayette Urban County Government,
which had the effect of "extend[ing] the immunity of the state and the county to
the air board ." Id. Though this Court did not grant discretionary review of
that decision, it is important to note that the Court of Appeals opinion was
ordered to be published .
However, that decision contained a separate opinion concurring in result
only, written by Judge Wilhoit which presages the question that is presented in
this case as to whether separate corporate entities can be governmental (state
agencies) and thus immune : "I cannot agree with the majority opinion insofar
as it holds that the Lexington -Fayette Urban County Airport Board is a unit of
the urban county government . Id. at 935. He cited to KRS 183 .132(2) (now
183 .132(3)), which stated that an air board is "a body politic and corporate
with the usual corporate attributes," which he viewed as showing that "the
independent board," _id. at 125, and that it "is subordinate to the Russell County
government," id. at 126 . The Court concluded,
A board comprised of six individuals should not have the power
independent of the Russell County government, to take property away
from private citizens . Respondent argues that airport boards are not
departments of county government, yet claims the Russell County Air
Board was appointed by the county judge-executive and is funded and
authorized by the county . The board's attachment to the Russell County
government indicates the board should be held responsible to the county
government.
board is plainly not a unit of the urban county government, but an
independent entity which performs designated governmental functions
including limited legislative functions." 705 S.W.2d at 935. He concluded "that
under our case law such an entity constitutes a quasi-municipal corporation ."
Id . (citing Fawbush v. Louisville & Jefferson County Metropolitan Sewer Dist . ,
240 S .W.2d 622 (Ky. 1951)) . He then framed the relevant inquiry as "whether a
quasi-municipal corporation possesses only the limited immunity from tort
claims of a true municipality or whether it shares the sovereign immunity of
the State ." Id. (citation omitted) . He concluded that "[i]t is far from clear to me
how our Supreme Court would answer that question today; however, in the
past it has recognized a distinction between `municipal corporations proper'
and 'quasi-municipal corporations .' It has treated the latter as state agencies
for the purpose of liability for negligence." Id. Thus, while he did so for
different reasons, he agreed that the Airport Board was entitled to immunity.
While Judge Wilhoit focused on "quasi-municipal corporations," a now
nearly defunct legal term in sovereign immunity issues,5 he did pose the
problem that continues to plague the courts : what makes one corporate entity
municipal and thus not immune, and another a state agency that is immune?
This is the question that this Court attempted to answer in 1991 in Kentucky
Center for the Arts v. Berns, 801 S.W.2d 327 (Ky. 1991) . It is also one of the
5 Judge Wilhoit relied on Fawbush v. Louisville 8s Jefferson County Metropolitan Sewer
District, 240 S .W.2d 622 (Ky. 1951), and Board of Education of Louisville v . Society
of Alumni of Louisville Male High School, 239 S.W.2d 931 (Ky. 1951), for his
discussion of "quasi-municipal corporations ." This Court's research shows that by
the 1970s, the term had all but disappeared from this Court's jurisprudence,
showing up mainly in dissenting opinions .
9
questions that must be answered to determine whether the LFUC Airport
Board and the Airport Corporation continue to be entitled to the sovereign
immunity they have enjoyed since Inco, Ltd .
The modern "basic" test for whether an entity is entitled to sovereign
immunity was laid out in Berns , where the Court addressed "when the
sovereign immunity defense applies to an entity created by an act of the
General Assembly . . . ." Id . at 328. The entity in question was the Kentucky
Center for the Arts in Louisville, which was created by statute . See KRS
153.400 - .460 . In analyzing the situation, however, the Court did not appear
to have a single coherent rule.
At first it noted that the Center for the Arts "was not created to discharge
any `governmental function' in the context in which ยง 231 of the Constitution
was written," id. at 330, and that it "performs substantially the same functions
as any private business engaged in the entertainment business," id . a t 331 .
Based on these observations, the Court then noted,
[C]ertainly not every business can be immunized simply because it
is established by act of the General Assembly . . . . We cannot
perceive how a patron attending the Louisville Orchestra, which
formerly performed at the Macauley Theatre and now performs at
the Kentucky Center for the Arts, has been deprived by reason of
the change in location of his right to maintain a common law
action when he is negligently injured. The corporation furnishing
the performance hall now is performing the same function that the
corporation operating the Macauley Theatre did in the past . If we
were to follow such reasoning, there would be no limitation on the
scope of sovereign immunity. Every time the state gets involved in
an enterprise formerly private the area of sovereign immunity
would expand accordingly.
Id . This discussion alone would have been sufficient to find that the Center for
the Arts lacked immunity.
10
Rather than standing on this conclusion, however, the Court went on to
address an earlier case, Gnau v . Louisville 8& Jefferson County Metropolitan
Sewer District , 346 S.W .2d 754 (Ky. 1961), in which the former Court of
Appeals had, addressed whether the Metropolitan Sewer District was an
"agency of the state" under the Board of Claims Act. From that case, it gleaned
a "two-pronged test, the first consisting of the `direction and control of the
central State government,' and the second consisting of being `supported by
monies which are disbursed by authority of the Commissioner of Finance out
of the State treasury.' Id . Under this test, the Court concluded, "our
constitutional fathers would not view this activity as qualifying for sovereign
immunity ." Id.
Despite laying out this "test" for sovereign immunity, the Court in Berns
still continued its discussion, turning this time to municipal corporations,
which are not entitled to sovereign immunity under HaneY and Gas Service
Co., Inc . The Court noted that the term "municipal corporation" (1) refers to
"local entities created by act of the General Assembly and not agencies
performing the services of central state government"; (2) "is not limited to a
city" ;
d (3) "means nothing more than a local government entity created by
the state to carry out `designated' functions." 801 S . W.2d at 331-32 . The Court
then noted :
The line between what is a state agency and what is a municipal
corporation is not divided by whether the entity created by state
statute is or is not a city, but whether, when viewed as a whole,
the entity is carrying out a function integral to state government .
. . . [S]overeign immunity should extend only to "departments,
boards or agencies that are such integral parts of state
government as to come within regular patterns of administrative
organization and structure ."
Id . at 332 (quoting Kentucky Region Eight v . Commonwealth, 507 S .W.2d 489,
491 (Ky. 1974)) (emphasis added) . Immediately following this language, the
Court concluded, "Kentucky Center for the Arts Corporation does not qualify
for sovereign immunity under this concept." Id .
Ultimately, it appears that Berns was an attempt to generally distinguish
between state agencies and municipal corporations . Despite the broad-ranging
discussion on the subject, it is the narrower, "two-pronged test" that is
frequently cited as the test for sovereign immunity . See, e.g. , Kea-Ham
Contracting, Inc. v. Floyd County Development Authority, 37 S .W.3d 703, 706
(Ky. 2000) ; Withers v. University of Kentucky , 939 S.W .2d 340, 342 (Ky. 1997);
Louisville 8v Jefferson County Board of Health v. Calvert Investments, Inc . , 805
S .W.2d 133, 137 (Ky. 1991) .
Recent decisions of this Court, however, have emphasized those parts of
Berns dealing with whether the entity in question carries out a government
function. For example, as one case noted, "The ultimate holding in Berns was
that the Center for the Arts, though created by the state, was not entitled to
immunity because it `was not created to discharge any "governmental
function,"' and was not `carrying out a function integral to state government ."'
Yanero, 65 S .W .3d at 520 (quoting Berns , 801 S.W.2d at 330, 332) ; see also
Caneyyille Volunteer Fire Dept. v. Green's Motorcycle Salvage, Inc. , 286 S .W.3d
790, 802 (Ky. 2009) ("The real thrust of . . . Berns . . . is whether the entity
carries out an integral governmental function.") ; Autry v . Western Kentucky
12
University, 219 S.W.3d 713, 717 (Ky. 2007) ("[U]nless created to perform a
governmental function, a state agency is not entitled to governmental
immunity. An analysis of what an agency actually does is required to
determine its immunity status ." (citing Berns)) . Though all of these decisions
mention the two prongs focused on in Berns, they clearly demonstrate a shift
in focus to the nature of the entity.
Even those cases purporting to apply the two-pronged test have
mentioned this aspect of Berns. See Kea-Ham Contracting Inc. , 37 S.W .3d at
706 (noting Berns's "key factor is . . . whether, when viewed as a whole, the
entity is carrying out a function integral to state government") ; Withers, 939
S .W.2d at 344 ; Calvert Investments, Inc. , 805 S .W .2d at 137. And it is worth
reiterating that Berns itself concluded that the "line" between being immune
and non-immune is "divided by . . . whether, when viewed as a whole, the
entity is carrying out a function integral to state government ."
801 S .W.2d at
332 (emphasis added) .
Though this Court's recent cases have implicitly begun to apply Berns so
as to deemphasize the two-pronged test and focus instead on those parts of the
decision about carrying out a governmental function, such an implied shift is of
limited use to the bench and bar and can at times be misleading. It is thus
time to lay the cards on the table, so to speak, and explain the status of the
various elements of Berns .
To begin with, the two-pronged "test" was useful in Berns, but it is best
left in that case. The two prongs (or factors) were an attempt to lay down a
simple formula to determine whether the entity in question was an arm of the
13
central state government (rather than a purely local, municipal corporation) .
Unfortunately, the test was overly simple, failing to allow for subtlety, and too
limiting. For example, because it focuses on whether the entity is a direct arm
of the state, it overlooks that an entity that is the arm of a county (which in
turn is a direct administrative subdivision of the state) might also qualify . In
fact, because of this state-level focus, the two-pronged test is too easy to
overconstrue, which arguably happened in the early cases applying it and
arguably led to inconsistent results . See, e .g. , Kea-Ham Contracting Inc . , 37
S.W.2d at 708-709 (Johnstone, J., dissenting) (arguing that the application of
the Berns prongs to a county entity was overly strict and inconsistent with the
earlier application in Withers) .
Nevertheless, the basic concept behind the two-prongs-whether the
entity in question is an agency (or alter ego) of a clearly immune entity (like the
state or a county) rather than one for purely local, proprietary functions-is
still useful . It is an attempt to determine first whether an entity falls within the
limitations on immunity found in Haney . Rather than attempting to reduce
that idea to a simple test, however, it should instead be treated as a guiding
principle, with the focus instead being on the origins of the entity. This inquiry
can be as simple as looking at the "parent" of the entity in question, i.e ., was it
created by the state or a county, or a city? This amounts to recognizing that
an entity's immunity status depends to some extent on the immunity status of
the parent entity. E.g. , Autry, 219 S .W.3d at 719 (noting that an entity
"derives its immunity status through" the parent entity) .
14
The more important aspect of Berns is the focus on whether the entity
exercises a governmental function, which that decision explains means a
"function integral to state government ." 801 S .W.2d at 332 . This determination
has been the focus of sovereign immunity analysis from early on . See Gross v .
Kentucky Board of Managers of World's Columbian Exposition, 105 Ky . 840, 49
S .W. 458, 459 (1899) (relying in part on the fact that the entity "was not
created to discharge any governmental function") .
This obviously will require a case by case analysis, but Berns itself
offered a way to begin to frame the discussion by noting that sovereign
immunity should "extend . . . to departments, boards or agencies that are such
integral parts of state government as to come within regular patterns of
administrative organization and structure ." 801 S .W.2d at 332 (internal
quotation marks omitted) . The focus, however, is on state level governmental
concerns that are common to all of the citizens of this state, even though those
concerns may be addressed by smaller geographic entities (e .g., by counties) .
Such concerns include, but are not limited to, police, public education,
corrections, tax collection, and public highways .
Actually, both of these inquiries--the sources of the entity in question
and the nature of the function it carries
out are tied together to the extent
that frequently only an arm of the state can exercise a truly integral
governmental function (whereas municipal corporations tend to exercise
proprietary functions addressing purely local concerns) . This is not a new
concept:
15
Municipal corporations proper are called into existence either at
the direct solicitation or by the free consent of the persons
composing them, for the promotion of their own local and private
advantage and convenience . On the other hand : Counties are at
most but local organizations, which, for the purposes of civil
administration, are invested with a few functions characteristic of a
corporate existence . They are local subdivisions of the state,
created by the sovereign power of the state, of its own sovereign
will, without the particular solicitation, consent, or concurrent
action of the people who inhabit them. The former (municipal)
organization is asked for, or at least assented to, by the people it
embraces ; the latter organization (counties) is superimposed by a
sovereign and paramount authority . A municipal corporation
proper is created mainly for the interest, advantage, and
convenience of the locality and its people ; a county organization is
created almost exclusively with a view to the policy of the state at
large, for purposes of political organization and civil
administration, in matters of finance, of education, of provisions
for the poor, of military organization, of the means of travel and
transport, and especially for the general administration of justice .
With scarcely an exception, all the powers and functions of the
county organization have a direct and exclusive reference to the
general policy of the state, and are, in fact, but a branch of the
general administration of that policy.
Marion Count v. Rives Ss McChord, 133 Ky. 477, 118 S.W. 309, 311 (1909)
(internal quotation marks omitted) . Of particular interest here is that
functions carried out by the county are usually state functions and that "the
policy of the state at large . . . in the means of travel and transport" is, or at
least can be, a county (and state) concern, rather than a municipal concern .
It is with this latter statement that the nature of the Airport Board and
Airport Corporation in this case become clear.
Airport boards may be created by "[a]ny urban-county government, city,
or county, or city and county acting jointly, or any combination .
" KRS
183 .132(1) . As noted by the Court of Appeals in Inco, Ltd. , it is not clear
whether the City of Lexington or Fayette County initially created the Airport
16
Board, but upon the merger of the city and the county to create the LexingtonFayette Urban County Government, "every function [the city] sponsored
became a county agency . . . ." 705 S.W.2d at 934 . The record in this case is
no clearer as to the origin of the Board, but the principle in Inco, Ltd. is sound .
At the merger of the city and the county, the newly formed Urban County
Government became the (possibly adoptive) "parent" entity of the Airport
Board .
This is further supported by the fact that the Urban County Government
retains significant control over the board . The members of the Airport Board
are appointed by the mayor . KRS 183 .132(4)(e) . The mayor, or his
representative, also sits on the Board . Id. The accounting books of the Board
"shall at all times be subject to examination by the legislative body . . . by
whom the board was created." KRS 183.132(15) . The Board is required to
submit an annual "detailed report of all acts and doings of the board to the
legislative body or bodies by whom the board was created ." Id . The most
control, however, stems from KRS 183 .133(6), which states :
The board or any other governmental unit may from time to time
make, adopt and enforce such rules, regulations and ordinances as
it may find necessary, desirable or appropriate for carrying into
effect the purposes of this chapter, including those relating to the
operation and control of the airport, airport facilities or air
navigation facilities owned or operated by such board or such other
governmental unit.
The term "governmental unit" includes "urban-county government," KRS
183 .012(2), meaning that under KRS 183 .133(6), the Urban County
Government can exercise regulatory control over the Board and the airport if it
sees fit to do so .
17
The Airport Board also carries out a function integral to state
government in that it exists solely to provide and maintain part of the
Commonwealth's air transportation infrastructure (i.e., the airport) . The
statutory purpose of airport boards is "to establish, maintain, operate, and
expand necessary, desirable or appropriate airport and air navigation facilities,"
and they "shall have the duty and such powers as may be necessary, or
desirable to promote and develop aviation, including air transportation,
airports and air navigation facilities ." KRS 183 .133(1) . As argued by the Board
and Corporation, this function is, in many ways, analogous to the provision of
county roads and state highways . Though the analogy is imperfect, since the
Airport Board does not own or maintain the airways themselves (an
impossibility, actually), it is sufficient because the board, by providing the
airport, provides the primary means for accessing those airways, which in turn
are essential for commercial and private transportation of people, cargo, and
mail. See also KRS 183 .200 ("Recognizing that the rapid development of a
statewide system of airports is of prime importance in the industrial
development of the state, the General Assembly reaffirms its previous
declarations that the acquisition, establishment, construction, enlargement,
improvement, maintenance, equipping and operation of airports is a public
purpose, and further declares assistance in the financing of local airport
projects to be within the proper province of state government.") ; KRS 183 .123
("The acquisition of any lands for the purpose of establishing airports or other
air navigation facilities ; . . . the acquisition, establishment, construction,
enlargement, improvement, maintenance, equipping, and operation of airports
18
and other air navigation facilities, whether by the state separately or jointly
with any governmental unit thereof or air board . . . are hereby declared to be
public and governmental functions exercised for a public purpose, and matters
.
of public necessity . . ." (emphasis added)) .
It is also important that the Board is "a legislative body for the purposes
of KRS 183 .630 to 183 .740 [the statutes relating to the issuance of bonds] ."
KRS 183 .132(3) . The power to legislate is one of the core functions of
government. Though this legislative capacity is only one small aspect of the
Board, it is nevertheless telling about the overall nature of the entity . It is also
worth noting that even the cases most restrictive of immunity admit that
legislative and quasi-legislative functions are entitled to immunity . E.g. ,
Haney, 386 S .W .2d at 742 .
Comair argues that the Airport Board is "engaged in a proprietary
venture, i.e., transportation ." This, however, imputes too much function and
activity to the Board, which does not actually provide transportation services,
for example, by operating an airplane to transport people . Instead, it provides
the runways, terminals, and other infrastructure that private airline companies
like Comair use (admittedly for a fee) to provide those transportation services.
Comair's reasoning is akin to saying that the Transportation Cabinet is
engaged in the business of transportation because it facilitates private and
commercial transportation (e.g., by trucking companies) by building roads and
highways (and even charges a fee for their use at times with toll booths) . But
the Cabinet (like the Board) is actually in the "business" of providing
19
transportation infrastructure, which is a quintessential state concern and
function, one that is very different from the business of transportation itself.
The fact that the Board has substantial revenue from fees charged while
operating the airport also does not make the activity proprietary. Partly this is
because fees, authorized by KRS 183 .33, are but one of many ways an airport
board can generate revenue . An airport board can also receive money from its
local government, including counties and urban-county governments, which
may impose taxes and appropriate money from their general funds to support
the creation, expansion, and operation of airports. See KRS 183 .134 . Most
importantly, however, an airport board can issue revenue bonds, KRS 183 .136,
which, as noted above, is a legislative function .
Also, the Board is far more limited than a private entity when setting the
fees it charges for some of its services (use of the landing area, etc .), since the
fees can only be "reasonable" and are subject to judicial review, much like an
administrative agency's decisions. KRS 183 .133(2) . The Board is not a forprofit entity . Its revenues are to be used solely to make improvements and to
maintain the airport itself through employees and contracts with construction
and service providers.
Comair also argues that the Airport Board over the years has held itself
out to be a wholly private entity independent of the Lexington-Fayette Urban
County Government. This argument cuts both ways, since in many
documents-including the annual financial report, the bond issue documents,
and the lease of the airport real estate from the Airport Corporation (which
holds title) to the Board and the Urban County Government-the Board refers
20
to itself as an agency of the Urban County Government. Ultimately, however,
such statements by the entity are not controlling. As noted in AutrY , "An
analysis of what an agency actually does is required to determine its immunity
status ." 219 S .W.3d at 717.
An examination of the "parent" and the function of the Airport Board
thus reveals that the Court of Appeals was correct in Inco, Ltd. in holding that
the Board was a county agency entitled to the protection of sovereign
immunity. The Urban County Government is the parent of the Board and
continues to exercise some control over the entity. But perhaps more
importantly, the Board's sole function is to provide vital transportation
infrastructure for the people of the Commonwealth, which is an integral
function of state government. The Airport Board is therefore entitled to
immunity.6
This analysis is not quite as neat as to the Airport Corporation, in part
because it is a true corporation that was created by filing Articles of
Incorporation with the Secretary of State. This is important because the
Airport Corporation, not the Airport Board, holds title to all the real estate that
makes up the Blue Grass Airport. Upon closer examination, however, it is
evident that the Corporation is little more than an alter-ego of the Board,
created primarily to take advantage of certain types of financing, much like the
Student Life Foundation in Autry v.Western Kentucky University.
6 The question of whether a wholly municipal airport board, which the statutes allow,
and which performs the same function, is entitled to immunity involves further
considerations, is not before the Court, and will not be decided herein.
21
According to its Articles of Incorporation filed with the Secretary of State
in 1976, the Corporation was established as a non-profit, non-stock
corporation. It was formed pursuant to resolutions of both the Airport Board
and the Lexington- Fayette Urban County Government . The primary purpose of
the corporation, according to the Articles of Incorporation, is "to act as a `public
agency' of the State of Kentucky as well as an agency for financing purposes for
the benefit of the Airport Board and the Urban County Government, it being
formed as authorized . . . for `governmental' purposes . . . ." Though the
creation of a separate entity from the Airport Board does not appear to be
anticipated by KRS Chapter 183, the choice of form is explained in the original
Articles of Incorporation as a way to take advantage of "a plan of financing of
the type approved by the Court of Appeals of Kentucky known as the `holding
company' plan."7 Upon dissolution of the corporation, all its assets revert back
to the Airport Board and the Urban County Government .
The Articles of Incorporation were amended in 1984 pursuant to
resolutions adopted by the Board of Directors of the Airport Corporation, the
Airport Board, and the Lexington-Fayette Urban County Council . The
amended articles include provisions similar (if not functionally identical) to
those in the original articles . The amended articles include a new provision
stating that the Airport Corporation
is created subject to the condition that the governing body of the
Airport Board and the governing body of the Urban County
Government shall exercise (a) organizational control over the
7 The "holding company plan" concept appears to have been approved, at least in part,
in Sawyer v. Jefferson County Fiscal Court, 438 S.W.2d 531 (Ky. 1969), and the
cases cited therein .
22
Corporation . . . ; or (b) supervisory control over the Corporation as
may be deemed proper by the Airport Board and the Urban County
Government in the administration of the activities of the
Corporation . . . .
The amended articles also provide that all revenue beyond that used to retire
the debt of the corporation shall inure only to the benefit of the Airport Board
and the Urban County Government.
Most telling, however, is that according to the deposition of John Rhodes,
the Corporation was created to issue bonds to finance airport improvements .
Creation of a new entity by an otherwise immune entity simply to take
advantage of a funding mechanism does not cut off the immunity defense for
the new entity. See Autry, 219 S .W.3d at 719 (noting that an entity "derives its
immunity status through" the parent entity) . Ultimately, the Corporation has
the same governmental function and parent as the Board. Thus, it enjoys the
same immunity as the Board .
Finally, Comair argues that the members of the Airport Board cannot
claim immunity when sued in their official capacity because the Board as an
entity is not entitled to immunity. This issue is moot because, as discussed
above, the Board and Corporation are cloaked in sovereign immunity .
Therefore, the members of the Board, when sued in their representative
capacity, are immune. Yanero, 65 S.W.3d at 522 .
Comair has not raised the issue of the board members' entitlement to
qualified official immunity, though they were also sued in their individual
capacities. Because the issue has not been appealed, this Court need not
address it.
23
III . Conclusion
The Lexington-Fayette Urban County Airport Board and the LexingtonFayette Airport Corporation are agencies of the Lexington -Fayette Urban
County Government . By providing essential transportation infrastructure to
the citizens of the Commonwealth, both the Board and Corporation are
exercising a function integral to state government . Therefore, both entities are
covered by sovereign immunity and cannot be held liable in tort . Additionally,
the members of the Board, in their official or representative capacities, are
immune .
For the foregoing reasons, the judgment of the Fayette Circuit Court is
affirmed.
All sitting. All concur.
COUNSEL FOR APPELLANTS :
Ronald L. Green
Boehl, Stopher 8v Graves, LLP
444 West Second Street
Lexington, Kentucky 40507
Raymond G. Smith
Edward H. Stopher
Jeffrey Wayne Adamson
Boehl, Stopher 8s Graves, LLP
2300 Aegon Center
400 West Market Street
Louisville, Kentucky 40202
COUNSEL FOR APPELLEES:
Kevin G . Henry
Sturgill, Turner, Barker 8. Moloney, PLLC
333 West Vine Street
Suite 1400
Lexington, Kentucky 40507
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