Burkhead & Scott, Inc v. City of Hopkinsville, Kentucky

Filing 47

MEMORANDUM OPINION & ORDER granting 44 Motion for Summary Judgment. Signed by Judge Greg N. Stivers on 1/26/2016. cc: Counsel(KJA)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
PADUCAH DIVISION
CIVIL ACTION NO. 5:12-CV-00198-GNS-LLK
BURKHEAD & SCOTT, INC.

PLAINTIFF

v.
CITY OF HOPKINSVILLE, KENTUCKY
and HOPKINSVILLE SOLID WASTE AUTHORITY

DEFENDANTS

MEMORANDUM OPINION AND ORDER
This matter is before the Court on the Joint Motion for Summary Judgment filed by
Defendants City of Hopkinsville, Kentucky (“City”), and Hopkinsville Solid Waste Authority
(“HSWA”) (DN 44). The motion is ripe for decision. For the reasons stated below, the Court
GRANTS Defendants’ motion.
I.

BACKGROUND

Plaintiff Burkhead & Scott, Inc. (“BSI”) brings this action to challenge the
constitutionality of the City’s solid waste ordinance as well as to bring an action for tortious
interference with a business relationship.
The Hopkinsville Waste Enterprise Board (“Board”) was created as a component unit for
the City to conduct solid waste operations in the City. (Defs.’ Joint Mot. for Summ. J. 2, DN 44).
The Board was created by Hopkinsville City Ordinances to manage the City’s solid waste.
(Defs.’ Joint Mot. for Summ. J. 2). The Board is composed of five members who reside in the
City and are appointed by the mayor, subject to approval of the City’s governing body. (Defs.’
Joint Mot. for Summ. J. 3). The Board’s actions are regulated by Kentucky law and the City’s
governing body. (Defs.’ Joint Mot. for Summ. J. 3). The Board controls HSWA which provides
solid waste services to the public. (Defs.’ Joint Mot. for Summ. J. 4). Neither the Board, nor

HSWA are capable of retaining profits and must transfer all funds other than for its own
operation, to the City’s general fund. (Defs.’ Joint Mot. for Summ. J. 2).
The City passed the Flow Control Ordinance (“Ordinance”) in 1998 which granted
HSWA exclusive rights over the disposal of trash and building materials within the city limits.
(Defs.’ Joint Mot. for Summ. J. 6). BSI was in the business of disposing of construction and
industrial materials in the City. (Defs.’ Joint Mot. for Summ. J. 7). BSI contends it was injured
by the Ordinance, as the Ordinance required it to transport waste to HSWA’s waste transfer
facility rather than to cheaper facilities elsewhere. (Am. Compl. ¶ 22, DN 5).
BSI began operations in 1998 and was subsequently told by the City its operations were
illegal. (Burkhead Dep. 11:1-15, Dec. 4, 2013, DN 44-21). BSI continued to grow until 2011
when BSI received a letter from HSWA demanding that BSI halt operations. (Burkhead Dep.
14:13). BSI continued its business until 2012 when two of its customers switched their accounts
to HSWA. (Defs.’ Joint Mot. for Summ. J. 9-10).
BSI filed its Complaint on December 12, 2012, and its Amended Complaint on
December 26, 2013. (Compl. DN 1; Am. Compl.). Defendants filed their Joint Motion for
Summary Judgment on September 28, 2015. BSI responded to Defendants’ motion on November
30, 2015. (Pl.’s Mem. of Law in Supp. of Pl.’s Resp. to Defs.’ Joint Mot. for Summ. J, DN 45
[hereinafter Pl.’s Mot.]). Defendants filed their Reply on December 14, 2015. (Defs.’ Reply
Mem. in Further Supp. of Defs.’ Mots. for Summ. J., DN 46 [hereinafter Def.’ Reply]).
II.

JURISDICTION

The Court has jurisdiction over the parties pursuant to 28 U.S.C. § 1331 as this case
arises under the Constitution of the United States. This Court has supplemental jurisdiction over
all state law claims pursuant to 28 U.S.C. § 1367(a).

2

III.

STANDARD OF REVIEW

Under Federal Rule of Civil Procedure 56, “[t]he court shall grant summary judgment if
the movant shows that there is no genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). There is no genuine issue of
material fact when “looking to the record as a whole, a reasonable mind could come to only one
conclusion . . . .” Mickler v. Nimishillen & Tuscarawas Ry. Co., 13 F.3d 184, 186 (6th Cir. 1993)
(citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986)). “When moving for summary
judgment the movant has the initial burden of showing the absence of a genuine dispute as to a
material fact.” Automated Sols. Corp. v. Paragon Data Sys., Inc., 756 F.3d 504, 520 (6th Cir.
2014) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)). “The burden then shifts to the
nonmovant, who must put forth enough evidence to show that there exists ‘a genuine issue for
trial.’” Id. (citing Horton v. Potter, 369 F.3d 906, 909 (6th Cir. 2004)).
While the Court views the evidence in the light most favorable to the non-moving party,
the non-moving party must do more than merely show the existence of some “metaphysical
doubt as to the material facts.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,
586 (1986) (citations omitted). Rather, the non-moving party must present specific facts proving
that a genuine factual issue exists by “citing to particular parts of the materials in the record” or
by “showing that the materials cited do not establish the absence . . . of a genuine dispute . . . .”
Fed. R. Civ. P. 56(c)(1). “The mere existence of a scintilla of evidence in support of the [nonmoving party’s] position will be insufficient; there must be evidence on which the jury could
reasonably find for the [non-moving party].” Anderson, 477 U.S. at 252.

3

IV.

DISCUSSION

BSI makes two claims in this case. First, BSI contends that the City’s Ordinance is
unconstitutional because it discriminates against interstate commerce by benefiting a privately
operated business. (Am. Compl. ¶ 22). Second, BSI argues HSWA tortuously interfered with the
business relationship between BSI and its customers, ultimately leading to two of its clients
ending their relationship with BSI. (Am. Compl. ¶¶ 26-28). Since BSI fails to address its
constitutional claim in its response and this claim is invalid regardless1, the Court considers only
the latter argument.
A.

Defendants Did Not Tortuously Interfere with BSI’s Business Relationships.

Plaintiff claims tortious interference based upon its allegations that HSWA
representatives wrongly informed BSI’s customers that BSI was operating illegally under the
Ordinance. (Am. Compl. ¶ 26-28). Plaintiff asserts that Defendants improperly utilize the
elements of tortious interference with a contractual relationship with tortious interference with a
business relationship. (Pl.’s Resp. 8). Specifically, Plaintiff argues that the Court should analyze
its claim using the elements set forth in Snow Pallet, Inc. v. Monticello Banking Co., 367 S.W.3d
1 (Ky. App. 2012).
Plaintiff misreads Snow Pallet, however, as different elements apply only to the extent a
business relationship is prospective and the case does not distinguish between a “contractual”
relationship and a “business” relationship.”2 Regardless, BSI’s tortious interference claim must

Specifically, BSI’s claim is invalid under the Supreme Court’s decision of United Haulers
Ass’n, Inc. v. Oneida-Herkimer Solid Waste Management Authority, 550 U.S. 330, 338 (2007).
The Court is persuaded the United Haulers decision invalidates BSI’s claim and Plaintiff has not
raised a single argument which would contest this finding. Therefore, the Court declines to
address BSI’s Commerce Clause argument further.
2
“Tortious interference with a prospective business advantage does not require the existence of a
contract. Rather, Snow Pallet must prove: (1) the existence of a valid business relationship or
1

4

fail. As the Snow Pallet court noted, the tortious interference with a prospective business
relationship analysis “turns primarily on motive.” Id. at 6 (citing Nat’l Collegiate Athletic Ass’n
ex rel. Bellarmine College v. Hornung, 754 S.W.2d 855, 859 (Ky. 1988). This is similarly true
with tortious interference with a known contractual relationship. See Steelvest, Inc. v. Scansteel
Serv. Ctr., Inc., 807 S.W.2d 476, 487 (Ky. 1991) (“Under Kentucky law, tort liability exists for
the interference with a known contractual relationship, if the interference is malicious or without
justification, or is accomplished by some unlawful means such as fraud, deceit, or coercion.”
(citations omitted)). Further, “[t]o prevail under this theory of liability, the ‘party seeking
recovery must show malice or some significantly wrongful conduct.’” Snow Pallett, 367 S.W.3d
at 6 (quoting Hornung, 754 S.W.2d at 859).
In this case, BSI has not shown that Defendants acted with malice, without justification,
or some other wrongful conduct. The City’s actions were not wrongful; instead, it is clear that
the City’s notice to BSI’s customers was justified by BSI’s failure to obtain a permit in
contravention of the Ordinance. (Defs.’ Joint Mot. for Summ. J. Ex. 8l, at 9). HSWA’s
notification to BSI’s customers that BSI was violating the Ordinance advanced the City’s interest
in ensuring compliance with its laws and its legitimate economic interests, rather than any malice
towards BSI. (Sicari Dep. 16:1-25, 35:10-21). Such a motivation does not constitute malice. ATC
Distribution Grp., Inc v. Whatever It Takes Transmissions & Parts, Inc., 402 F.3d 700, 717 (6th
Cir. 2005) (“[S]imply attempting to advance one’s own legitimate economic interests at the
expense of another’s interests does not constitute malice.” (citing Hornung, 754 S.W.2d at 850)).

expectancy; (2) that Monticello was aware of this relationship or expectancy; (3) that Monticello
intentionally interfered; (4) that the motive behind the interference was improper; (5) causation;
and (6) special damages.” Snow Pallet, 367 S.W.3d at 6.
5

Plaintiff argues Defendants relied on an “inaccurate interpretation” of the Ordinance.
(Pl.’s Resp. 16). Indeed, the bulk of Plaintiff’s argument revolves around BSI’s disagreement
over its reading of the Ordinance in contradiction of Defendants’ interpretation. (Pl.’s Resp. 1316). Plaintiff does not create a genuine issue of material fact simply because a jury could agree
with BSI’s interpretation of the Ordinance. Defendants’ interpretation of the Ordinance is
plausible and creates no indicia of malice or wrongful conduct. Section 93.02(C)(5) of the
Ordinance states:
“[i]t shall be unlawful for any person or firm, except pursuant to temporary collection
service permits, to engage in or conduct any collection of trash or building material
within the city’s corporate limits. Any individual or firm providing the service without
proper consent shall be in violation of this chapter and subject to a civil penalty as
established herein. Collection at each premises shall constitute a separate offense.”
(Defs.’ Mot., Ex. 81, at 29) (emphasis added). The Ordinance further states that “[t]he City shall
maintain or have access to a facility for disposal of garbage, commercial refuse, building
material and trash generated within the City’s corporate limits. All garbage, commercial refuse,
building material and trash generated within the City shall be disposed of at the designated
facility. Operation of a facility by the City shall be under the control and direction of the
Department.” (Defs.’ Mot., Ex. 8a, at 7).
Plaintiff does not dispute that it never obtained a permit but instead claims it was not
bound by the Ordinance because BSI only engaged in the collection of “industrial waste” and
“commercial refuse.” (Pl.’s Resp. 8-9). BSI claims a genuine issue of material fact exists
regarding whether or not the Ordinance actually applied rather than establishing a genuine issue
whether Defendants knew the Ordinance did not apply and partook on a wrongful or malicious
venture to frustrate Plaintiff’s business relations. (Pl.’s Resp. 8-9).

6

As outlined in Plaintiff’s response, its business has “always been limited to the disposal
of industrial waste and construction demolition debris.” (Pl.’s Resp. 3). The Ordinance defines
the term “building material” as “[s]olid waste which results from the collection, remodeling,
repair and demolition of structures. (Defs.’ Mot., Ex. 81, at 22-24). There can be no question that
“demolition debris” would include solid waste from demolition of structures, which squarely
falls within the definition of “building material” under the Ordinance. The Ordinance provides
that “[i]t shall be unlawful for any person, except pursuant to temporary collection service
permits, to engage in or conduct any collection of trash or building material within the city’s
corporate limits.” (Defs.’ Mot., Ex. 81, at 24 (emphasis added)). Thus, because Plaintiff has
admitted that it collected construction demolition debris without a permit, its business operated
in violation of the Ordinance. Likewise, because the ordinance applies, BSI cannot show any
genuine issue of material fact that Defendants acted with malice or wrongful conduct to establish
a claim for tortious interference when it alerted BSI’s customers to the violation. Hornung, 754
S.W.2d at 859. Therefore, BSI’s claim of tortious interference fails as a matter of law.
V.

CONCLUSION

For the foregoing reasons, IT IS HEREBY ORDERED that Defendants’ Joint Motion
for Summary Judgment (DN 44) is GRANTED.

Greg N. Stivers, Judge
United States District Court
January 26, 2016

cc:

counsel of record

7