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Coppage Construction Company, Inc. v. Sanitation District No. 1

Court of Appeals of Kentucky

December 13, 2019

COPPAGE CONSTRUCTION COMPANY, INC. APPELLANT
v.
SANITATION DISTRICT NO. 1 AND DCI PROPERTIES-DKY, LLC APPELLEES

          APPEAL FROM KENTON CIRCUIT COURT HONORABLE GREGORY M. BARTLETT ACTION NO. 08-CI-02787

          BRIEFS FOR APPELLANT: D. Scott Gurney, Michael E. Nitardy, Jason P. Renzelmann, Samuel W. Wardle, Louisville, Kentucky

          BRIEF FOR APPELLEE SANITATION DISTRICT NO.1: Jeffrey C. Mando, Louis D. Kelly, Olivia F. Amlung

          BEFORE: COMBS, SPALDING, [1] AND K. THOMPSON, JUDGES.

          OPINION

          SPALDING, JUDGE:

         In 2005, DCI Properties-DKY, LLC ("DCI"), a privately-owned, one-member Ohio development firm, entered into an agreement with the City of Dayton to develop land along the Ohio River in Dayton, Kentucky. In the latter portion of 2006, DCI approached Sanitation District No. 1 ("SD1"), a public sanitation utility that provides services to Boone, Campbell, and Kenton Counties in Northern Kentucky, with a proposal regarding the relocation of a pipeline in SD1's stormwater network. SD1 viewed DCI's proposal as an opportunity to comply with the terms of a consent decree that SD1 had entered into with both state and federal environmental agencies, and proceeded to enter negotiations with DCI to upsize and improve the district's sewer system. Ultimately, SD1 and DCI entered into an agreement under which SD1 would pay approximately 70% of the total estimated cost of the project and purchase the end result of the work. Subsequently, DCI contracted with Coppage Construction Company, Inc. ("Coppage") for the labor, goods, services, etc., that would be required to construct the new line.

         The parties came to disagreements regarding the project, and Coppage, at some point in its and DCI's relationship, notified DCI that their contract had been breached, offering an opportunity to cure. DCI, however, chose to terminate the contract. On September 3, 2008, DCI filed suit against Coppage. Coppage filed a counterclaim, alleging, inter alia, breach of contract on the part of DCI, and, via third-party complaint filed in 2010, alleged a plethora of claims against SD1. These claims included a claim made under the doctrine of respondeat superior, breach of contract, a claim that SD1 and DCI were jointly and severally liable due to the joint nature of the enterprise, partnership by estoppel, a breach of Kentucky statutory law, negligent management, and a claim that it was a third-party beneficiary of the contract that existed between SD1 and DCI. SD1 filed a dispositive motion, which was granted by the trial court on the basis of sovereign immunity principles. The Kentucky Supreme Court reversed, holding that SD1 was not entitled to sovereign immunity and remanding to the trial court for further proceedings.

         On remand, the trial court once again awarded summary judgment to SD1, albeit this time as to the merits of the case. Coppage now appeals, arguing that its claims were dismissed in error. We address its arguments hereafter.

         Summary judgment is proper where "the pleadings, depositions, answers to interrogatories, stipulations, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." CR[2] 56.03. When considering a trial court's grant of summary judgment, "[t]he record must be viewed in a light most favorable to the party opposing the motion for summary judgment and all doubts are to be resolved in his favor." Steelvest, Inc. v. Scansteel Service Center, Inc., 807 S.W.2d 476, 480 (Ky. 1991) (citations omitted). However, "a party opposing a properly supported summary judgment motion cannot defeat it without presenting at least some affirmative evidence showing that there is a genuine issue of material fact for trial." Id. at 482 (citations omitted). An appellate court reviews a grant of summary judgment de novo, with "no deference to the conclusions of the trial court." Gentry v. Noe, 545 S.W.3d 323, 326 (Ky. App. 2018) (citation omitted).

         The first issue we address concerns the trial court's summary disposition of Coppage's claims based on SD1's alleged violation of KRS[3] 220.290. That statute provides, in pertinent part, as follows:

All contracts for work, material or supplies that may exceed one thousand dollars ($1, 000) shall be advertised for bids by publication pursuant to KRS Chapter 424 within the district where the work is to be done or the materials or supplies used. The contract shall be let to the lowest and best bidder who shall give bond with approved and ample surety for the faithful performance of the contract.

         In Coppage's view, because SD1 did not require DCI to post a bond, SD1 is liable, pursuant to statute, to Coppage for the money for which the bond would have stood. Coppage relies upon KRS 446.070, [4] Kentucky's codification of the common law doctrine of negligence per se, in making its claim that it is entitled to damages for SD1's supposed violation of KRS 220.290. The trial court held that Coppage's claim failed because it was not in the class of persons the statute was designed to protect.

         "KRS 446.070 'creates a private right of action under which a damaged party may sue for a violation of a statutory standard of care, provided that three prerequisites are met[.]'" Hickey v. General Electric Company, 539 S.W.3d 19, 23 (Ky. 2018) (quoting Vanhook v. Somerset Health Facilities, LP, 67 F.Supp.3d 810, 819 (E.D. Ky. 2014)). Those prerequisites are as follows: "first, the statute in question must be penal in nature or provide no inclusive civil remedy; second, the party [must be] within the class of persons the statute is intended to protect; and third, the plaintiff's injury must be of the type that the statute was designed to prevent." Id. at 23-24 (brackets in original) (emphasis and citations omitted) (quoting Vanhook, 67 F.Supp.3d at 819).

         Even assuming that this agreement violated KRS 220.290, which is a very debatable point, we find that the trial court was correct in its determination that the intent behind enactment of KRS 220.290 was to protect the public funds and to assure that public funds were being properly spent. In fact, if the statute applied, Coppage itself should have posted the bond, since it was the entity performing the work. Furthermore, its bid for the work should have been conducted in a bidding process for "the lowest and best" bid. This ...


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