Coleman v. Campbell Cnty. Library Bd. of Trs., NO. 2016-CA-001642-MR

• Court: Court of Appeals of Kentucky
• Writing for the Court: CLAYTON, JUDGE
• Citation: 547 S.W.3d 526
• Parties: Charlie COLEMAN, John P. Roth Jr. and Erik Hermes, Appellants v. CAMPBELL COUNTY LIBRARY BOARD OF TRUSTEES, Appellee
• Decision Date: 05 January 2018
• Docket Number: NO. 2016-CA-001642-MR

547 S.W.3d 526

Charlie COLEMAN, John P. Roth Jr. and Erik Hermes, Appellants
v.
CAMPBELL COUNTY LIBRARY BOARD OF TRUSTEES, Appellee

NO. 2016-CA-001642-MR

Court of Appeals of Kentucky.

JANUARY 5, 2018; 10:00 A.M.
Discretionary Review Denied by Supreme Court June 6, 2018

BRIEFS FOR APPELLANT: Timothy J. Eifler, Stephen A. Sherman, Louisville, Kentucky, Erica L. Horn, Madonna E. Schueler, Lexington, Kentucky, Brandon N. Voelker, Fort Mitchell, Kentucky.

BRIEF FOR APPELLEE: Jeffrey C. Mando, Louis D. Kelly, Covington, Kentucky.

BEFORE: COMBS, CLAYTON, AND D. LAMBERT, JUDGES.

OPINION

CLAYTON, JUDGE:

Charlie Coleman, John P. Roth Jr. and Erik Hermes (hereinafter "the taxpayers") bring this appeal from the Campbell Circuit Court’s grant of summary judgment to the Campbell County Library Board of Trustees (hereinafter "the Board"). The primary issue is whether the holding of an opinion (hereinafter "the Opinion") of the Court of Appeals, which harmonized statutes relating to public library ad valorem tax rates, is to be applied retroactively or prospectively only.

In Campbell Cty. Library Bd. of Trustees v. Coleman , 475 S.W.3d 40, 41 (Ky. App. 2015), disc. review denied (Dec. 10, 2015), a panel of this Court addressed whether public libraries in Kentucky, created by petition pursuant to Kentucky Revised Statutes (KRS) 173.710 et seq. , should assess the library’s ad valorem tax rate in accordance with KRS 132.023 or KRS 173.790. The underlying class action, brought by a group of taxpayers in the Campbell Circuit Court,¹ sought recovery of what they maintained were unlawfully excessive ad valorem taxes levied by the Campbell County Library Board. According to the taxpayers, the Board had erroneously calculated its ad valorem rate each year according to the provisions of KRS 132.023, which allows a taxing district to increase revenue from ad valorem taxes up to four percent without triggering a reconsideration by the district or voter recall referendum, when in fact it should have applied KRS 173.790, which only allows an increase in the tax rate via a petition signed by fifty-one percent of duly qualified voters in the district. The circuit court entered summary judgment for the taxpayers, ruling that the Board is required to comply with KRS 173.790, as the more specific statute, in setting its annual tax rate. The Board appealed. The Court of Appeals panel reversed the circuit court, concluding that

547 S.W.3d 530

KRS 132.023 and KRS 173.790 are both applicable to ad valorem taxing rates of a library taxing district formed by petition under KRS 173.720 and can be harmoniously interpreted to complement each other. KRS 132.023 generally controls the ad valorem tax rate assessed by a library taxing district formed by petition; however, KRS 173.790 is triggered if the library seeks to increase revenue from ad valorem taxes above 4 percent of the revenue generated from the compensating tax rate as set forth in KRS 132.023(1) and (3). Our construction of KRS 132.023 and KRS 173.790 gives effect to both statutes and honors what we believe the General Assembly intended.

Campbell Cty. Library Bd. , 475 S.W.3d at 47-48.

The case was remanded for proceedings consistent with the Opinion. The Kentucky Supreme Court denied the taxpayer’s motion for discretionary review.

The Board moved for summary judgment on the remaining counts of the taxpayers' complaint. The taxpayers filed a cross-motion for summary judgment. The circuit court entered an agreed order limiting briefing solely to the issue of whether the Opinion should be applied retroactively or prospectively only. Following a hearing, the circuit court entered an order in which it applied the three-factor test for retroactivity set forth in Chevron Oil Co. v. Huson , 404 U.S. 97, 106, 92 S.Ct. 349, 355, 30 L.Ed. 2d 296 (1971)disapproved of by Harper v. Virginia Dep't of Taxation , 509 U.S. 86, 113 S.Ct. 2510, 125 L.Ed. 2d 74 (1993), to hold that the Opinion harmonizing KRS 173.790 and KRS 132.023 was intended to be applied prospectively only. The taxpayers filed a motion to amend, alter or vacate the order. The motion was denied and this appeal by the taxpayers followed.

The taxpayers raise four arguments: (1) that the circuit court order is contrary to the Opinion and violates the law-of-the-case doctrine; (2) federal due process and Kentucky law require the taxpayers to be provided with meaningful retroactive relief; (3) the order renders KRS 173.790 ineffective for periods prior to the Opinion, thereby violating Kentucky’s separation of powers doctrine and; (4) even if prospective-only application was possible in this case, the circuit court erred in finding it justified here.

I. Whether the circuit court’s order is contrary to the Opinion and violates the law-of-the-case doctrine; and whether the Board waived the issue of prospective-only application

The taxpayers' first argument questions the trial court’s authority to determine that the Opinion is to be applied prospectively only. Because the Opinion does not expressly state that its holding is to be given prospective-only application, they contend the holding must apply both retroactively and prospectively, and, in the absence of any petition for rehearing or modification by the Board, this retroactive application has become the law of the case. "The law-of-the-case doctrine describes a principle which requires obedience to appellate court decisions in all subsequent stages of litigation. Thus, on remand, a trial court must strictly follow the mandate given by an appellate court in that case." Buckley v. Wilson , 177 S.W.3d 778, 781 (Ky. 2005) (footnotes omitted). "Upon receipt of an appellate court opinion, a party must determine whether he objects to any part of it and if he does, petition for rehearing or modification or move for discretionary review. Upon failure to take such procedural steps, a party will thereafter be bound by the entire opinion."

547 S.W.3d 531

Williamson v. Commonwealth , 767 S.W.2d 323, 326 (Ky. 1989).

The pertinent portion of the Opinion states that "the Campbell and Kenton Circuit Courts erred as a matter of law by concluding that KRS 132.023 was inapplicable to library districts formed by petition and erred by rendering the respective summary judgments so concluding. We hold that KRS 132.023 and KRS 173.790 are both applicable to library districts formed by petition and can be harmonized in their application as set out in this Opinion." Campbell Cty. Library Bd. , 475 S.W.3d at 48. The Opinion reverses the summary judgments and remands "for proceedings consistent with this Opinion[.]" Id.

The Board argues that statements elsewhere in the Opinion do expressly and unmistakably direct a prospective-only application of the Court’s holding, specifically the following passage discussing the principles of Wayne Public Library Board of Trustees v. Wayne County Fiscal Court , 572 S.W.2d 858 (Ky. 1978) :

In Wayne, the Supreme Court addressed a second attack on the constitutionality of the provisions of KRS Chapter 173 as pertains to the petition method of forming public library districts in Kentucky. As noted, that legislation was enacted in 1964. In upholding the statutes, the Supreme Court in Wayne noted that "[w]hen over two-thirds of the library districts in Kentucky are the children of these statutes, there can be no doubt that many important and valuable rights, obligations and services have vested." Id. at 859. That same logical common sense approach is also applicable to these cases now on appeal, notwithstanding that this Court has harmonized the statutes at issue.

Campbell Cty. Library Bd. , 475 S.W.3d at 48.

Although this passage may articulate policy grounds to support a prospective-only application, it does not provide an unambiguous directive to that effect.

The taxpayers argue that when an appellate opinion is silent, the silence speaks for retroactive application only and any contrary intention must be manifest. Kentucky jurisprudence "generally embrace[s] the idea that although legislation may only apply prospectively, judicial decisions generally apply retroactively." Branham v. Stewart , 307 S.W.3d 94, 102 (Ky. 2010) (citing United States v. Security Industrial Bank, 459 U.S. 70, 79, 103 S.Ct. 407, 74 L.Ed.2d 235 (1982) ). The taxpayers also rely on an opinion of the United States Supreme Court, Harper , supra , which states that "[w]hen this Court applies a rule of federal law to the parties before it, that rule is the controlling interpretation of...