Kuhnhein v. Kenton County Public Library Board of Trustees
Filing
14
RESPONSE in Opposition re MOTION for Order by Garth Kuhnhein filed by Kenton County Public Library Board of Trustees. (Attachments: # 1 Exhibit 1-Resolution dated 7/5/67, # 2 Exhibit 2-Letter 5/8/95 to Banks from Carter)(Hawkins, Michael) Modified text to describe exhibits on 2/24/2012 (TED).
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
NORTHERN DIVISION at COVINGTON
CASE NO. 2:12-CV-00035
GARTH KUHNHEIN, ON BEHALF
OF HIMSELF AND OTHERS
SIMILARLY SITUATED
PLAINTIFF
V.
KENTON COUNTY PUBLIC LIBRARY
BOARD OF TRUSTEES
DEFENDANT
DEFENDANT KENTON COUNTY PUBLIC LIBRARY
BOARD OF TRUSTEES’ RESPONSE IN OPPOSITION
TO PLAINTIFF’S MOTION TO ESCROW ALL TAX PAYMENTS
The Defendant, Kenton County Library Board of Trustees, by and through counsel, for its
Response in Opposition to Plaintiff’s Motion to Escrow all Tax Payments, states as follows:
I.
INTRODUCTION
On January 19, 2012, Plaintiff filed a Class Action Complaint against the Kenton County
Library Board of Trustees (“the Library”) in Kenton Circuit Court. In his Complaint, Plaintiff
challenges the ad valorem tax rates imposed by the library since 2007 and seeks refunds on
behalf of all property owners in Kenton County. Plaintiff also asserts claims for conversion,
unjust enrichment, and unlawful taking under the 5th and 14th Amendments to the United States
Constitution. When Plaintiff filed his Complaint, he also filed a Motion seeking an Order
requiring the Library to escrow all payments received in excess of $0.60 per thousand dollars of
assessed property value. On February 2, 2012 the Library timely removed the Kenton Circuit
Court action to this Court in light of the federal constitutional claims asserted in the Complaint.
II.
ARGUMENT
Plaintiff’s Motion is styled a “Motion for an Order to Requiring (sic) the Kenton County
Library Board of Trustees to Escrow All tax Payments Received in Excess of $0.60 per
Thousand of Assessed Valuation.” However, when a party is seeking an order to mandatorily
direct the doing of an act, such relief can only be brought through a motion for preliminary
injunction under Fed. R. Civ. P. 65. Because Plaintiff has not filed for a temporary injunction,
his Motion is improperly pled. And, assuming, arguendo, that Plaintiff’s Motion can be
converted into a Motion for Preliminary Injunction; he still cannot prevail because he has not
met the burden to warrant such extraordinary relief.
A preliminary injunction is an extraordinary remedy, which should be granted only if the
moving party carries its burden of proving that the circumstances clearly demand it. Overstreet v.
Lexington-Fayette Urban County Gov't, 305 F.3d 566, 573 (6th Cir. 2002). The decision on
whether to issue the injunction requires balancing four factors: (1) the likelihood that the moving
party will succeed on the merits; (2) whether the moving party will suffer irreparable harm if the
injunction does not issue; (3) the probability that granting the injunction will cause substantial
harm to others; and (4) whether the injunction advances the public interest. Jones v. Caruso, 569
F.3d 258, 270 (6th Cir. 2009). A balancing of these four factors favors a denial of Plaintiff’s
motion.
A.
Plaintiff is not likely to succeed on the merits.
With respect to a showing of a strong likelihood of success on the merits, “the proof
required for the plaintiff to obtain a preliminary injunction is much more stringent than the proof
required to survive a summary judgment motion.” Leary v. Daeschner, 228 F.3d 729, 739 (6th
Cir. 2000). Plaintiff has not made such a showing with his Motion.
The Kenton County Library was created in 1966 via petition pursuant to KRS 173.710 .800.1 Included in those provisions is 173.790 which states, in part, that an ad valorem tax levied
by a library organized by petition:
...shall not be increased or decreased unless a duly certified petition requesting an
increase or decrease in the tax rate of a specifically stated amount is signed by
fifty-one percent (51%) of the number of duly qualified voters voting at the last
general election in each county in the district.
At the time of its creation, the Library’s ad valorem tax rate was set at $0.60 per thousand dollars
of assessed property valuation.2 Plaintiff alleges that the Library has improperly increased its ad
valorem tax rate because the increases were not accompanied by a petition of fifty-one percent
(51%) of qualified voters as required under KRS 173.790. However, KRS 173.790 no longer
applies to the Library because the statute was repealed by implication when the General
Assembly enacted KRS Chapter 132.
The Kentucky General Assembly enacted House Bill 44 in the 1979 Special Session.
Hallahan v. Sawyer, 390 S.W.2d 664 (Ky. 1965). The provisions of House Bill 44 were codified
in KRS Chapter 132 and state that all taxing districts shall levy ad valorem property tax rates
based upon the compensating tax rate as set forth in KRS 132.010(6). The compensating tax rate,
as calculated by the terms of KRS 132.010(6), is designed to produce approximately the same
amount of revenue collected in the previous year. Due to the fluctuating assessment of real
property, the compensating tax rate will often fluctuate from year to year thus causing ad
valorem tax rates to increase or decrease depending upon property assessments.
In Kentucky, libraries are considered taxing districts. See KRS 65.060; Boggs v. Reep,
404 S.W.2d 24 (Ky. 1966). Consequently, upon the enactment of House Bill 44 in 1979, all
libraries in the Commonwealth of Kentucky (including seventy-seven library districts created via
1
2
See attached Exhibit 1.
Id.
petition) began setting their ad valorem tax rates pursuant to the provision of KRS Chapter 132.
Since the passage of House Bill 44, the Kentucky Department of Libraries and Archives
(“KDLA”) has interpreted KRS Chapter 132 as the controlling authority with respect to setting
ad valorem tax rates for libraries. In addition, KDLA calculates the compensating tax rate for
library districts as a service.3
Under Kentucky law, a statute may be repealed by implication when the provisions of
earlier and later statutes are repugnant to each other and irreconcilable, or when the subsequent
statute covers the whole subject matter of the former and is manifestly intended as a substitute
for it. Hallahan v. Sawyer, 390 S.W.2d 664 (Ky. 1965). KRS Chapter 132 repeals all other
inconsistent statutes by implication because it covers the whole subject matter with respect to the
levying of ad valorem tax rates for taxing districts. For example, KRS 132.023 states, in part:
No taxing district, other than the state, counties, school districts, cities,
consolidated local governments, and urban-county governments, shall levy a tax
rate which exceeds the compensating tax rate defined in KRS 132.010, until the
taxing district has complied with the provisions of subsection (2) of this section.
(Emphasis added)
In addition, KRS 132.010(6) defines the “compensating tax rate” as:
...that rate which, rounded to the next higher one-tenth of one cent ($0.001) per
one hundred dollars ($100) of assessed value and applied to the current year's
assessment of the property subject to taxation by a taxing district, excluding new
property and personal property, produces an amount of revenue approximately
equal to that produced in the preceding year from real property. (Emphasis added)
Finally, KRS Chapter 132 also provides detailed and comprehensive procedures for ad valorem
taxation for taxing districts including deadlines for setting rates (132.0225), recall petitions
(132.017), and reductions of tax rates on personal property (132.018).
3
Id.
In Fiscal Court Commissioners of Jefferson County v. Jefferson County Judge/Executive,
614 S.W.2d 954 (Ky. App. 1981), the Kentucky Court of Appeals held that the revisions to KRS
67.710, which said the Judge/Executive could not make appointments without Fiscal Court
approval, repealed by implication any statutes that vested sole appointment power with the
Judge/Executive. In their ruling, the Court noted that KRS 67.710 was a broad statute and that
more specific statutes with respect to certain boards existed giving the Judge/Executive sole
appointing authority. Id. at 958-959. However, the Court determined that because the revised
KRS 67.710 covered the whole subject area with respect to appointments by the
Judge/Executive, the inconsistent statutes were repealed by implication even though they were
more specific. Id.
Regardless of Plaintiff’s contention otherwise, there is significant case law and
persuasive authority to support the fact that Chapter 132 is the proper legal authority governing
taxation for libraries. For example, in LFUCG v. Hayse, 684 S.W.2d 301 (Ky. App. 1984), the
Court of Appeals held that the provisions of Chapter 132 apply to public libraries despite
contrary language in KRS 173.360. And, in Daviess County Public Library Taxing District v.
Boswell, 185 S.W.3d 651 (Ky. App. 2005), the Court of Appeals held that the Davies County
Library District was subject to the provisions of KRS 132.023.
Furthermore, it bears repeated emphasis that KDLA has interpreted KRS Chapter 132 as
governing taxation for all library districts in Kentucky since the passage of House Bill 44 in
1979. This interpretation and application to libraries state-wide has gone unchallenged until now.
Under Kentucky law, courts must accord great deference to an administrative agency’s
interpretation of a statute within its specific province. Com. Ex rel. Beshear v. Kentucky Utilities
Co., 648 S.W.2d 535, 537 (Ky. App. 1982). Indeed, KDLA is not the only administrative agency
to share this opinion. In 1995, the Casey County Library posed the question of whether KRS
173.790 or Chapter 132 controlled to the Kentucky Attorney General. The Attorney General
responded with a letter stating:
We do not believe that the General Assembly intended library districts to be
exempt from the provisions of House Bill 44. The relevant provision in KRS
173.790 has existed since the statue’s creation in 1964. House Bill 44 was enacted
in 1979. In its original form, KRS 132.023 included the phrase “notwithstanding
any statutory provisions to the contrary.” These observations compel us to
conclude that the legislature was aware of the library tax provision when it
enacted House Bill 44 and it did not intend that the older library tax provision
override the newly enacted House Bill 44. Indeed, this has been the construction
acquiesced in during the sixteen years since House Bill 44 was enacted.4
The comprehensive language of Chapter 132, coupled with case law and administrative
agency interpretations shows that it was designed to cover the entire subject area with respect to
ad valorem taxation by taxing districts. As such, Chapter 132 repealed KRS 173.790 by
implication, thereby making it highly unlikely that Plaintiff will ultimately succeed on the merits
of this action.
B.
Plaintiff has not shown irreparable harm.
Irreparable harm is the single most important prerequisite to consider when ruling on a
motion for a preliminary injunction. See Los Angeles v. Lyons, 461 U.S. 95, 111, (1983); see also
Lexington-Fayette Urban County Gov't v. Bellsouth Telcoms., Inc., 14 F. App'x. 636, 639 (6th
Cir. 2001). Plaintiff contends that despite only seeking monetary damages, he will suffer
irreparable harm in that “tax money unlawfully collected will be paid out with the possibility it is
unable to be returned.” (Motion, p. 1). However, in Sampson v. Murray, 415 U.S. 61, 90 (1974),
the Supreme Court explicitly held that claims for monetary damages do not constitute irreparable
harm for the purposes of injunctive relief, stating:
4
May 8, 1995 Letter from Asst. Attorney General Ross T. Carter to Jan J. Banks attached hereto as Exhibit 2.
The key word in this consideration is irreparable. Mere injuries, however
substantial, in terms of money, time and energy necessarily expended in the
absence of a stay, are not enough. The possibility that adequate compensatory or
other corrective relief will be available at a later date, in the ordinary course of
litigation, weighs heavily against a claim of irreparable harm.
The Sixth Circuit offers further guidance on measuring irreparable harm when a sum of money is
involved. In Basicomputer Corp. v. Scott, the Court of Appeals held that “a plaintiff's harm is not
irreparable if it is fully compensable by money damages.” 973 F.2d 507, 511 (6th Cir. 1992)
(citing Roland Mach. Co. v. Dresser Indus., Inc., 749 F.2d 380, 386 (7th Cir. 1984)).
The only claimed harm Plaintiff is seeking to avert a potential monetary loss for alleged
overpayment of taxes. Since recovery of that amount, and nothing more, would return Plaintiff to
the status quo, a preliminary injunction is unwarranted. Metro. Life Ins. Co. v. Vanlue, 2011 U.S.
Dist. LEXIS 56699 (W.D. Ky. May 23, 2011). Furthermore, the amount of monetary damages
claimed by Plaintiff can be precisely determined. Only when “an injury is not fully compensable
by money damages [or] if the nature of the plaintiff's loss would make damages difficult to
calculate” should a court classify the harm as irreparable.” Basicomputer, 973 F.2d at 511. In
short, because Plaintiff will not suffer irreparable harm, his Motion should be denied.
C.
A preliminary injunction in favor of Plaintiff would harm others and is not
in the public interest.
A preliminary injunction is an extraordinary remedy never awarded as of right. Munaf v.
Geren, 553 U.S. 674 (2008). In each case, “courts must balance the competing claims of injury
and must consider the effect on each party of the granting or withholding of the requested relief.”
Amoco Prod. Co. v. Vill. of Gambell, 480 U.S. 531 (U.S. 1987). "In exercising their sound
discretion, courts of equity should pay particular regard for the public consequences in
employing the extraordinary remedy of injunction.” Weinberger v. Romero-Barcelo, 456 U.S.
305, 312 (1982); see also Railroad Comm'n of Tex. v. Pullman Co., 312 U.S. 496, 500 (1941);
Winter v. NRDC, 555 U.S. 7, 24 (2008).
Plaintiff does not address, much less acknowledge, the adverse impact the requested
relief would have on others and the public at large. Plaintiff simply asks the Court to escrow all
taxes collected in excess of $0.60 per thousand dollars of assessed property valuation since the
Library’s creation. (Motion, p. 1). While not providing a total figure, Plaintiff claims that the
alleged excess funds for 2011 alone exceeds $5 million. (Complaint, ¶ 1). And, it is certainly
within the realm of possibility that the total amount Plaintiff seeks to escrow could exceed $10
million. Under these circumstances, forcing the library to escrow an amount that constitutes most
of its yearly budget would in essence shut down most, if not all, library operations. Salaries of
staff could not be paid; regular and ordinary purchases of resources would have to be
discontinued; public services and programs would have to be eliminated; and, the facilities
themselves might have to be shut down if they cannot be maintained in a safe, clean, and
operable manner. The public consequences alone call for the denial of Plaintiff’s Motion.
Of course, the general function of a preliminary injunction is to maintain the status quo
pending determination of an action on its merits. Blaylock v. Cheker Oil Co., 547 F.2d 962, 965
(6th Cir. 1976). Injunctive relief in this case would do the exact opposite. Plaintiff knows full
well that forcing the Library to escrow the tax revenues at issue would deal a crippling, and
possibly devastating blow to the Library’s ability to serve the public. Rather than maintaining the
status quo, Plaintiff’s motion would severely alter the status quo, causing an immediate and
irreparable negative consequence to the thousands of Library patrons who rely upon the Library
on a daily basis. The interests of the public must be weighed against any perceived harm that
Plaintiff might endure if the motion to escrow is denied. Here, Plaintiff posits no real, individual
harm that he may suffer if the motion to escrow is denied, and indeed, no such harm exists.
In sum, the equities, and in particular, the harm to the public if the Motion is granted,
weigh heavily against Plaintiff’s motion. If Plaintiff is successful in his lawsuit he has adequate
remedy and redress, and the pre-trial issuance of extraordinary relief, especially relief which has
far-reaching, substantial negative consequences to the public on what is at best, a dubious claim,
is both unnecessary and unwarranted.
D.
Assuming, arguendo, that the Court grants his Motion, Plaintiff must provide
security to cover damages associated with the injunction.
Assuming, arguendo, that the Court is inclined to grant his Motion, Plaintiff is required
to satisfy Fed. R. Civ. P. 65(c), which states that, “[t]he court may issue a preliminary injunction
or a temporary restraining order only if the movant gives security in an amount that the court
considers proper to pay the costs and damages sustained by any party found to have been
wrongfully enjoined or restrained.” Because he is seeking to freeze millions of dollars and
cripple the operations of the Library, Plaintiff should be required to post a bond which will
adequately compensate the Library for the damages suffered from this action.
II.
CONCLUSION
Based upon the foregoing, Defendant Kenton County Library Board of Trustees,
respectfully request that Plaintiff’s Motion be denied.
Respectfully submitted,
/s/ Michael W. Hawkins
Michael W. Hawkins, Esq. (Ky Bar 82949)
Cori R. Stirling, Esq. admitted pro hac vice
DINSMORE & SHOHL LLP
255 East Fifth Street, Suite 1900
Cincinnati, OH 45202
Phone: (513) 977-8200
Fax: (513) 977-8141
Email: michael.hawkins@dinsmore.com
cori.stirling@dinsmore.com
Mary Ann Stewart, Esq.
ADAMS, STEPNER,
WOLTERMANN & DUSING, PLLC
40 W. Pike Street
P.O. Box 861
Covington, KY 41012
Phone: (859) 394-6200
Fax: (859) 392 7364
Email: mstewart@aswdlaw.com
Attorneys for Defendant Kenton County
Public Library Board of Trustees
CERTIFICATE OF SERVICE
I hereby certify that on February 23, 2012, I electronically filed the foregoing with the
Clerk of Court using the CM/ECF system which will send notification of such filing to the
following: Brandon N. Voelker, THE VOELKER FIRM, 4135 Alexandria Pike, Suite 109,
Cold Spring, KY 41076, Attorney for Plaintiff.
/s/ Michael W. Hawkins_____________
2090642v1
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?