BOARD OF COMMISSIONERS OF THE CITY OF DANVILLE, KENTUCKY APPELLANT
ADVOCATE COMMUNICATIONS, INC. D/B/A THE ADVOCATE-MESSENGER APPELLEE
REVIEW FROM COURT OF APPEALS CASE NOS. 2014-CA-001300 AND
2014-CA-1301 BOYLE CIRCUIT COURT NO. 12-CI-00482
COUNSEL FOR APPELLANT: Stephen Dexter Sheehan, Barnett, Dean,
Pennington, Little & Dexter, P.S.C.
COUNSEL FOR APPELLEE: Jon L. Fleischaker Jeremy Stuart Rogers
DINSMORE 8b SHOHL, LLP Michael P. Abate KAPLAN 8b PARTNERS
COUNSEL FOR AMICUS CURIAE THE MUNICIPAL ATTORNEYS ASSOCIATION
OF KENTUCKY, INC.: Morgan Todd Osterloh Sturgill, Turner,
Barker 8b Moloney, PLLC
COUNSEL FOR AMICUS CURIAE KENTUCKY LEAGUE OF CITIES: Laura
Milam Ross Kentucky League of Cities, Legal Services Counsel
IN PART AND VACATING IN PART
Kentucky's Open Meetings Act, city council meetings are
presumptively open to the public unless an exception permits
a meeting to be closed. The issue we address in this case is
whether the Board of Commissioners of the City of Danville
("Board") permissibly went into closed session to
discuss its intention to bid on real property offered for
sale pursuant to an absolute auction. Under the facts of this
case, we hold that no exception permitted the Board's
action and affirm that portion of the Court of Appeals'
opinion. But because the Board's action was not willful,
we vacate that portion of the Court of Appeals' opinion
remanding to the Boyle Circuit Court for an assessment of
fees and costs.
Factual and Procedural Background.
some time prior to 2012, the City of Danville needed space to
house its public works departments. To accommodate its needs,
it leased a portion of the Boyle Industrial Storage
Company's property, and attempted to purchase or enter a
long-term lease for the property in 2011. In 2012, the Board
budgeted $2, 000, 000 for the purchase of real estate for its
public works department. In July 2012, that property came up
for sale at an absolute public auction. The auction was
advertised and scheduled for August 10.
next regularly scheduled meeting, July 23, the Board went
into closed session to discuss the auction advertisement.
During the closed session, the Board authorized bidding at
the auction up to $1, 500, 000, the amount for which the
property appraised in 2007. In addition, the Board discussed
using a bidding agent to conceal the City's interest and
participation in the auction. The parties disagree on whether
the Board decided to use a bidding agent at the July 23
meeting, or whether that decision was made by the City
Manager following the meeting.
next week, Danville's mayor signed a confidential
Agreement and Bidding Instruction with a local realtor to act
as the City's agent/bidder. The auction terms included a
10% buyer's premium on the successful bid. As a result,
the Board's authorization limited the City's highest
bid to $1, 363, 636, which together with the buyer's
premium of $136, 364, totaled $1, 500, 000. In conjunction
with that Agreement, the mayor and the agent signed a
registration form with the auctioneer, and the agent signed
an acknowledgement of Auction Terms and Conditions. The
significant terms were that "[t]he successful bidder
shall be required to enter into a non-contingent auction
purchase agreement and deposit 10% of the contract price[,
]" with closing to be held within 30 days. The property
was offered AS IS, WHERE IS, and potential bidders were
advised to conduct inspection prior to the auction.
auction, the City, through its agent, was the successful
bidder at a total price, including buyer's premium, of
$1, 237, 500. After the fall of the hammer, the mayor, the
seller, and all participating realtors, signed the auction
purchase contract whereby the City agreed to buy the property
at a closing to be held within 30 days, subject only to a
standard contingency that the City receive merchantable title
via a general warranty deed, free and clear of all liens and
encumbrances, except easements, covenants and restrictions of
record. The mayor tendered the requisite 10% deposit check of
$123, 750. Significantly, the contract contained no
contingency of Board approval.
days after the auction, at its August 13 meeting, the Board
went into closed session to discuss the property's
purchase. At the adjournment of the closed session, the Board
openly and unanimously approved the purchase of the property.
At its August 27 meeting, ...