Lincoln Trail Grain Growers Ass'n, Inc. v. Meade Cnty. Fiscal Court

632 S.W.3d 766

LINCOLN TRAIL GRAIN GROWERS ASSOCIATION, INC.; Nicholas Hardesty; Don Bewley; Edelen Farms, LLC; Ryan Hager ; Ben Sheeran; and David Padgett, Appellants

v.MEADE COUNTY FISCAL COURT ; City of Brandenburg; Meade County Riverport Authority ; Meade County-Brandenburg Industrial Development Authority; Bill Corum; Bryan Claycomb; Consolidated Grain & Barge Co. ; Greenland Acquisition Company, Inc.; and Nucor Corporation, Appellees

NO. 2020-CA-0892-MR

Court of Appeals of Kentucky.

AUGUST 6, 2021; 10:00 A.M.

BRIEFS FOR APPELLANTS: Michael C. Merrick, Charity S. Bird, Louisville, Kentucky.

ORAL ARGUMENT FOR APPELLANTS: Michael C. Merrick, Louisville, Kentucky.

BRIEF AND ORAL ARGUMENT FOR APPELLEES MEADE COUNTY FISCAL COURT; MEADE COUNTY RIVERPORT AUTHORITY; MEADE COUNTY-BRANDENBURG INDUSTRIAL DEVELOPMENT AUTHORITY: R. Keith Bond, Elizabethtown, Kentucky.

BRIEF AND ORAL ARGUMENT FOR APPELLEE CONSOLIDATED GRAIN & BARGE CO.: Anthony G. Raluy, Louisville, Kentucky.

BRIEF FOR APPELLEES NUCOR CORPORATION AND GREENLAND ACQUISITION COMPANY, INC.: Douglas C. Ballentine, Christopher E. Schaefer, Lindsey L. Howard, Louisville, Kentucky.

ORAL ARGUMENT FOR APPELLEE NUCOR CORPORATION: Douglas C. Ballentine, Louisville, Kentucky.

BEFORE: CLAYTON, CHIEF JUDGE; DIXON AND MAZE, JUDGES.

OPINION

MAZE, JUDGE:

Lincoln Trail Grain Growers Association, Inc. and individual members (collectively Lincoln Trail), along with Nicholas Hardesty and Don Bewley, appeal from an order of the Meade Circuit Court dismissing their claims alleging violations of the Open Meetings Act. The trial court dismissed their complaint, concluding that none of the appellants had established constitutional standing to bring the claims. We conclude that all of the appellants have alleged personal injuries fairly traceable to the defendants’ allegedly unlawful conduct and likely to be redressed by the requested relief. Therefore, the trial court erred by dismissing the complaint for lack of standing. Hence, we vacate the order dismissing and remand for additional proceedings on the merits of those claims.

For purposes of this appeal, the following facts are relevant: The Meade County Riverport Authority (the Riverport Authority) is a public board established under KRS ¹ 65.510, et seq. The Meade County-Brandenburg Industrial Development Authority (the Industrial Authority) is a public board established pursuant to KRS 154.50-301, et seq. The Meade County Fiscal Court (Fiscal Court) serves as the legislative body for Meade County and is established pursuant to Kentucky Constitution, Section 144 and KRS 67.040, et seq.

In 2003, the Riverport Authority leased 50 acres (the Riverport Property) along the Ohio River in Brandenburg, Kentucky. In 2010, the Industrial Authority purchased a 550-acre tract from Arch Chemical, Inc., which included the Riverport Property leased by the Riverport Authority. An amended ground lease established the Industrial Authority as the lessor of the Riverport Property, and the Riverport Authority as the lessee.

Shortly thereafter, the Riverport Authority entered into a lease with Consolidated Grain & Barge Co. (CGB). Under the agreement, CGB agreed to construct and operate a grain elevator on a 15-acre portion of the Riverport Property. The lease provided for a ten-year term from completion of the grain elevator. In late 2014, the grain elevator was completed and opened for business.

Beginning in early 2019, the Fiscal Court and the Industrial Authority engaged in negotiations with Nucor Corporation (Nucor) to build a steel mill on the Riverport Property. As part of these negotiations, Greenland Acquisition Company, Inc. (Greenland) entered into an option to purchase most of the former Arch Chemical property from the Industrial Authority. Nucor took the position that the operation of its steel mill would be incompatible with the continued operation of the grain elevator. By September 2019, Nucor, CGB, the Fiscal Court, and the Industrial Authority drafted a lease termination agreement. The agreement required Nucor to pay CGB the sum of $12,000,000 in exchange for termination of its lease agreement and cessation of operation of the grain elevator by March 31, 2020.

However, the termination agreement required the approval of the Riverport Authority, which was a party to the lease with CGB. The Fiscal Court held a special meeting on October 1, 2019. The agenda for the meeting included the general item, "Riverport," with no other detail about the action to be taken. During the meeting, the Fiscal Court voted to replace two members of the Riverport Authority, Nicholas Hardesty and Don Bewley, on the stated grounds that their terms had expired. The Fiscal Court appointed two new members, Bill Corum and Bryan Claycomb, to those positions on the Riverport Authority.²

Immediately following the Fiscal Court meeting, the Riverport Authority, including the two newly-appointed members, met and voted to approve the lease termination agreement. On December 13, 2019, the lease termination agreement was formally executed by all parties, namely: the Riverport Authority, the Industrial Authority, the Fiscal Court, CGB, and Greenland on behalf of Nucor.

On June 1, 2020, Lincoln Trail filed this action on behalf of grain farmers in Meade County who were affected by the closure of the grain elevator. Edelen Farms, LLC, Ryan Hager, Ben Sheeran, and David Padgett are members of Lincoln Trail. Lincoln Trail and its members alleged that the votes by the Fiscal Court and the Riverport Authority were conducted in violation of the Open Meetings Act, KRS 61.800 et. seq. , and that the vote of the Riverport Authority was conducted without a quorum of proper members. Finally, Lincoln Trail alleges that the Riverport Property is held in trust for the public and that the Meade County defendants lacked legal authority to sell the property. Consequently, Lincoln Trail sought declaratory relief holding the lease termination agreement void, and injunctive relief preventing CGB from ceasing operation of the grain elevator.

Hardesty and Bewley joined the action through an amended complaint, which challenged their removal from the Riverport Authority. In addition to the Open Meetings Act violations, Hardesty and Bewley allege that their prior terms had automatically renewed and that they were not subject to replacement by the Fiscal Court. In the alternative, Hardesty and Bewley allege the terms of the other members of the Riverport Authority had also expired but those members were not replaced. Hardesty and Bewley allege that the Fiscal Court arbitrarily removed them from the Riverport Authority based on their stated opposition to the lease termination agreement. Hardesty and Bewley sought declaratory relief setting aside their removal and replacement as members of the Riverport Authority.

In lieu of an answer, the Meade County defendants and Nucor filed a motion to dismiss pursuant to CR ³ 12.02. They argued that Lincoln Trail and its members lack constitutional standing to assert the claims. Following briefing and arguments of counsel, the trial court granted the motion. The court concluded that none of the plaintiffs, including Hardesty and Bewley, had asserted any concrete interest in the subject matter of the actions by the Fiscal Court or the Riverport Authority. Consequently, the trial court dismissed the complaints. This appeal followed. Additional facts will be set forth below as necessary.

CR 12.02 sets out defenses which may be asserted without filing a responsive pleading, including "(f) failure to state a claim upon which relief can be granted[.]" A motion to dismiss for failure to state a claim upon which relief may be granted "admits as true the material facts of the complaint." Upchurch v. Clinton County , 330 S.W.2d 428, 429-30 (Ky. 1959). A trial court should not grant such a motion "unless it appears the pleading party would not be entitled to relief under any set of facts which could be proved...." Pari-Mutuel Clerks’ Union of Kentucky, Local 541, SEIU, AFL-CIO v. Kentucky Jockey Club , 551 S.W.2d 801, 803 (Ky. 1977). Whether a court should dismiss an action pursuant to CR 12.02 is a question of law. James v. Wilson , 95 S.W.3d 875, 884 (Ky. App. 2002). Consequently, we conduct a de novo review of the trial court's order dismissing the action. Morgan v. Bird , 289 S.W.3d 222, 226 (Ky. App. 2009).

The sole question on appeal concerns the application of the doctrine of "constitutional standing," as adopted by the Kentucky Supreme Court in Commonwealth, Cabinet for Health and Family Services, Department for Medicaid Services v. Sexton by and through Appalachian Regional Healthcare, Inc. , 566 S.W.3d 185 (Ky. 2018). The facts in Sexton involved a Medicaid patient who was admitted to the hospital for observation, but her Medicaid provider denied her request for additional hospitalization and a cardiology consultation. Despite the denial, the hospital provided the services. Thereafter, the patient and the hospital sought a hearing with the Cabinet for Health and Human Services to challenge the denial. The Cabinet dismissed the proceeding, concluding that neither the patient nor the hospital had standing because neither would be entitled to recover even if the denial were improper. Id. at 188.

On further appeal, the Kentucky Supreme Court affirmed the dismissal based on the doctrine of constitutional standing. The Court adopted the analysis for the doctrine from the United States Supreme Court analysis in Lujan v. Defenders of Wildlife , 504 U.S. 555, 560-561, 112 S. Ct. 2130, 2136, 119 L. Ed. 2d 351 (1992). The doctrine establishes standing as a prerequisite to the existence of a justiciable cause of action. "In essence the question of standing is whether the litigant is entitled to have the court decide the merits of the dispute or of particular issues." Sexton , 566 S.W.3d at 193 (quoting Warth v. Seldin , 422 U.S. 490, 498, 95 S. Ct. 2197, 45 L. Ed. 2d 343 (1975) )....