By Eleanor Tolbert – Reporter, Louisville Business First
Nov 22, 2022
The Kentucky Court of Appeals recently upheld the constitutionality of a law that aims to minimize lawsuits and appeals with the sole purpose of slowing major developments.
The law, KRS 100.3471, requires opponents of a development to post a bond when seeking to appeal Circuit Court decisions upholding those developments. It was passed in 2017.
According to the statute, an appellee, such as a developer, can file a motion in Circuit Court requesting an appeal bond be posted by an appellant. The circuit court in question would then conduct a hearing to gather findings of fact and set a bond amount.
Nick Pregliasco, an attorney with Louisville-based Bardenwerper Talbott & Roberts PLLC, explained if the appeal is deemed presumptively frivolous after that hearing, an appellant could be required to post a maximum bond up to $250,000. Appeals not deemed presumptively frivolous could still bring a maximum bond amount of $100,000.
The appeal can be dismissed if the bond is not posted within 15 days, according to court documents.
“Bonds have been required by the court for an appeal, so it was just a matter of time before one of those was then ultimately challenged,” Pregliasco said. “In this case, there were three different challenges, and they all were decided at the same time.”
When drafting the bill, the General Assembly stated the purpose of the statute was “to curb unnecessary appeals of land-use causes because appeals burden the courts, cause loss of jobs and loss of tax revenue, and many times render time sensitive projects such as multifamily affordable housing undevelopable.”
Local developer Scott Hagan, CEO of Hagan Properties, was an advocate of the statute since its inception. He said it took three years and many resources to get the initial bill passed.
The Court of Appeals upholding the law is a huge win for the Kentucky business community, Hagan said, because it enables developers to have a mechanism to limit lawsuits with the sole purpose of stalling development.
“This statute goes a long way toward balancing the interests of zoning opponents and developers/land sellers. It provides for zoning opponents to be heard at the applicable planning commission and then to appeal that decision to the applicable Circuit Court,” Hagan said. “But then, assuming they want to appeal the Circuit Court decision to the Kentucky Court of Appeals they must post a bond in varying amounts as determined by the Circuit Court judge. Shortening these appeals will prevent loss of income by developers, loss of tax revenue and loss of construction and permanent jobs.”
Three cases across the state took the statute to the Kentucky Court of Appeals, arguing it was unconstitutional. In all three cases, the appellants were contesting a decision from each respective circuit court.
The court documents show the cases were: Bluegrass Trust for Historic Preservation v. Lexington Fayette Urban County Government Planning Commission; Com. Of Kentucky ex re. Cameron v. Boone Development LLC; and Raz Inc v. Mercer County Fiscal Court.
Each case argued the law was unconstitutional because it infringes on the separation of powers, imposes a penalty on the right to appeal and violates the equal protection clauses of the U.S. and Kentucky constitutions, according to court documents.
The Court of Appeals denied those claims. In the analysis of the cases, written by Chief Judge Denise Clayton and judges Sara Combs and Donna Dixon, the documents said the law does not violate the separation of powers because “the Kentucky Constitution allows the legislature to define the Court of Appeals jurisdiction.”
The Court of Appeals also states the argument about an unconstitutional penalty is a facial challenge, meaning it is based on an argument that the requirement cannot be applied fairly or reasonably in any situation, according to Law Insider. The document said this is the hardest challenge to argue “since the challenger must establish that no set of circumstances exist under which the statute would be valid.”
In this case, the challengers failed to make that argument, the court documents said.
Lastly, the Court said the statute does not violate the equal protection clauses because those clauses require a statute have a reasonably conceived state of facts, and the purpose of the law was deemed to have a reasonably conceived state of facts.