Memorial Hosp. Ass'n, Inc. v. Knutson

• Decision Date: 18 July 1986
• Docket Number: No. 58833,58833
• Citation: 722 P.2d 1093,239 Kan. 663
• Parties: MEMORIAL HOSPITAL ASSOCIATION, INC., Appellee, v. Colt KNUTSON, Riley County Attorney, Defendant, and State of Kansas, ex rel., Robert T. Stephan, Attorney General, Appellant.
• Court: Kansas Supreme Court

Page 1093

722 P.2d 1093

239 Kan. 663

MEMORIAL HOSPITAL ASSOCIATION, INC., Appellee, v. Colt KNUTSON, Riley County Attorney, Defendant, and State of Kansas, ex rel., Robert T. Stephan, Attorney

General, Appellant.

No. 58833.

Supreme Court of Kansas.

July 18, 1986.

Syllabus by the Court

1. A motion to intervene must be properly served on a party pursuant to K.S.A. 60-205, "accompanied by a pleading setting forth the claim or defense for which intervention is sought." K.S.A. 60-224(c)(1). Wilson & Walker v. State, 230 Kan. 49, 630 P.2d 1102 (1981).

2. Wherever the public interest is involved or the state is a party, the attorney general is primarily the proper counsel to appear. State, ex rel., v. City of Kansas City, 186 Kan. 190, 194, 350 P.2d 37 (1960). Because of the concurrent duty to enforce the statute and the statewide interest, once the county attorney determined not to appeal the district court's decision, the attorney general had a right to appeal.

3. Where it can be shown that a public body has intentionally, and for the purpose of avoiding the light of public scrutiny, appointed a board of non-elected citizens to determine for the elected board what course should be pursued, or where the actions of the private citizens are in any way binding upon the elected officials, the meetings of such groups should be open to public scrutiny. Public bodies cannot be allowed to do indirectly what the legislature has forbidden.

4. The 1984 legislature intended, where the county commission provides for the management and control of a county hospital by a board under K.S.A.1985 Supp. 19-4605, that such board be subject to the Kansas Open Meetings Act. Where the board under K.S.A.1985 Supp. 19-4611 leases the hospital property to another, the lessee is not subject to the open meetings requirement of the KOMA if the lessee: (1) has no governmental decision-making authority to expend public funds, and (2) is an independent entity which by contract agrees to provide hospital services under a lease of hospital property from a board of trustees.

Julene L. Miller, Deputy Atty. Gen., argued, and Robert T. Stephan, Atty. Gen., and Jeffrey S. Southard, Deputy Atty. Gen., were with her on briefs, for appellant.

Sam Brownback, Manhattan, argued, and was on brief, for appellee.

Wayne T. Stratton and Thomas L. Bell, of Goodell, Stratton, Edmonds & Palmer, Topeka, were on amicus curiae brief, for Kansas Hosp. Ass'n.

Bradley J. Smoot, of Petefish, Curran & Immel, Lawrence, was on amicus curiae brief, for The Manhattan Mercury.

LOCKETT, Justice:

Memorial Hospital Association, Inc., (Association) filed a declaratory judgment action to determine whether the Association was subject to the Kansas Open Meetings Act (KOMA). The district court found that the Association was not subject to the Open Meetings Act. The attorney general appeals.

The following facts were stipulated to by the parties.

Memorial Hospital Association, Inc., of Manhattan, Kansas, a not-for-profit Kansas corporation, operates Memorial Hospital. The hospital and the surrounding real property is owned by Riley County and is leased to the Association by the Board of Trustees (Trustees) of Memorial Hospital.

The Trustees, appointed by the Riley County Commission, are charged with overseeing maintenance and capital improvements of the hospital. The Trustees receive and allocate money for this purpose from a county mill levy.

From 1951 until March 1982, the Hospital was operated by the Lutheran Hospital Association under a lease with Riley County. In March of 1982, the Memorial Hospital Association was formed and succeeded in interest to the corporate structure, assets, and liabilities of the Lutheran Hospital Association. From March of 1982 until November of 1984, both the directors for the Association and the trustees for the county were the same eleven individuals, all of whom were appointed by the Riley County Commission. The directors and the Trustees held open meetings in compliance with the Kansas Open Meetings Act.

These boards were restructured in November of 1984. The process for selecting directors of the Association was changed. The new by-laws for the Association provided that new directors would be appointed by existing directors. At the November 1984 meeting, all members of the Association board resigned as directors. At the same meeting, five members of the Board of Trustees resigned and subsequently sent letters of resignation to the County Commission. A nominating committee submitted names for all eleven positions on the Board of Directors for the Association, resulting in none of the current Association directors having been appointed by a governmental entity. Four current members of the Association's directors were originally appointed to this position by the county commission. These four individuals were re-selected and elected to the Association's Board of Directors by the internal procedures of the Association.

Currently no individual serves as both a director of the Association and as a Trustee of the hospital. The hospital Board of Trustees and the Association Board of Directors are completely separate legal entities with separate procedures. The Trustees administer the county mill levy money, and the Association operates the hospital.

The Association does not have taxing powers, eminent domain powers, or legislative powers. The Association is not subordinate to any governmental entity. The Trustees receive the mill levy money and determine how the tax funds will be used to maintain the physical plant and where the funds will be spent for capital improvements. The Association receives the money and spends the funds as directed by the Trustees.

In December 1984, the Trustees and the Association entered into a fifteen-year lease, at $1.00 per year, for the hospital building and grounds. Under the lease, the Association must provide to the Board of Trustees a quarterly report, plus a certified audit and an annual financial report.

During fiscal year 1984, the Association grossed $4,713,000 and received $228,000 in county mill levy money, an amount equal to 4.8 per cent of its total gross revenues. In fiscal year 1985, the county mill levy money equaled 5.08 per cent of the gross revenues of the Association.

The district court found that the KOMA does not apply to the Association. The attorney general appeals.

When the Association originally filed for a declaratory judgment, the Riley County Attorney was named defendant. At the discovery conference the attorney general orally requested that the district court permit him to intervene. The request was denied, but the attorney general was given permission to submit a brief amicus curiae, which was filed.

The attorney general first contends that as a matter of law the district court's denial of the motion to intervene was incorrect. He contends that K.S.A. 60-224(a)(2) permits intervention upon timely application where the applicant claims disposition of the action may substantially impair or impede his ability to protect an interest and that, because K.S.A. 75-4320 authorizes both the attorney general and the county attorney to enforce the KOMA, intervention by the attorney general was required to insure proper judicial construction of the act.

Whether a motion to intervene is allowed is normally a matter of judicial discretion. Intervention depends upon the concurrence of three factors: (1) timely application; (2) a substantial interest in the subject matter; and (3) lack of adequate representation of the intervenor's interests. American States Ins. Co. v. Hartford Accident & Indemnity Co., 218 Kan. 563, 573, 545 P.2d 399 (1976).

K.S.A. 60-224(c)(1) requires the party moving to intervene in an action to serve a motion upon the parties. The motion must state the grounds for intervention and be accompanied by a pleading setting out the claim or defense for which intervention is sought.

A motion to intervene must be properly served on a party pursuant to K.S.A. 60-205, "accompanied by a pleading setting forth the claim or defense for which intervention is sought." K.S.A. 60-224(c)(1). Wilson & Walker v. State, 230 Kan. 49, 630 P.2d 1102 (1981). Whether the attorney general and the county attorney had similar interests in enforcing the KOMA and, therefore, the attorney general should have been allowed to intervene as a matter of right is not a question for determination under the facts of this case. At the discovery conference, the deputy attorney general made only an oral motion to intervene. The motion was not served on the parties as required by K.S.A. 60-205. The attorney general did not follow the statutory procedure for intervention. The court did not abuse its discretion in denying the motion to intervene.

After the district court had ruled that the Association was not subject to the KOMA, the Riley County Attorney resigned his office. A new county attorney was appointed. The new county attorney determined not to appeal the district court's decision. The attorney general then filed a notice of appeal. The Association contends (1) that the attorney general has exceeded his powers by appealing and (2) that the attorney general waived any right he might have to bring the appeal when he failed to intervene in the district court.

The attorney general argues that he had a statutory duty to appeal this case once the county attorney had declined to do so. He contends that permitting the attorney general to appeal promotes judicial economy, while denying the attorney general the right to appeal would prevent review of the issue because of the principles of res judicata. He also maintains that barring the attorney general from acting would usurp his statutory powers granted by the legislature.

The Association claims that the county attorney's determination not to appeal the decision of the district court was made in the best interest of the county. If the attorney...