Hagan v. Farris
807 S.W.2d 488
Ky.
1991
Check Treatment

*1 Scanlan was still ing most of which time Suppliers and

employed Steelvest. Steel

Kaelin, presumably attorney, as an would activities in formulat-

know that Scanlan’s during this

ing plan his form Scansteel his

period employment Steelvest fiduciary

possibly a breach of constituted Nevertheless, he continued to as-

duties. in the formulation of

sist Scanlan circumstances, with

scheme. Under fiduciary showing of a breach of

some Scanlan, on the we hold part

duties used attorney-client privilege cannot be requested discovery infor- prevent

mation.

Accordingly, reverse the decision of we and remand this case

the Court Court for further

to the Jefferson Circuit opinion.

proceedings with this consistent

All concur. Jr., Robinson,

Sidney HAGAN, Cecil Kentucky Home

Inc., Appellants, FARRIS, Grugin, and

Edward A. Donald constituting (together Hogan

Martin Board

the Alcoholic Kentucky) and Bloomfield

Inc., Appellees.

No. 90-SC-361-DG.

Supreme Kentucky. Court of

April 1991. *2 Childers, Phillip Shepherd, by J. Board to paying Joe Francis renew his license twice Jr., Childers, Frankfort, Shepherd during & for renewal fees annual license the two- movants, appellants. period dormancy. year Houghlin of never liquor by made active use of the license the Staib, Counsel, C. Catherine Gen. Alco- operation liquor of a business. Control, Frankfort, holic for re- Farris, spondents, appellees A. Edward Houghlin liquor sold the license to Grugin Hogan. and Donald Martin July Liquors Bloomfield on 1987. A Haddad, Jr., Shaikun, Liquors’ application protest Frank E. Leon J. of Bloomfield Hillerich, Louisville, respon- liquor Ronald P. for transfer this license was made dent, appellee appellants Bloomfield Inc. the to the ABC Board. A hear- ing was held the ABC Board to consider

SPAIN, Justice. appellants’ protest. Appellants argued the hearing that, the pursuant at to 804 KAR dispute This case arises out of a over the 4:110, liquor lapsed the license had granting and package liquor of a retail license become void because the license had been appellee, Kentucky the Alcoholic Bever- (hereinafter years. They for age argued dormant two also Board “ABC Board”), granting that the of appellee, the Bloomfield Li- this license violated (hereinafter quors, liquor mandatory quota Inc. Li- the of “Bloomfield licenses al- quors”). Appellants Hagan Robinson, and the for lotted ABC Board Nelson Coun- employee, shareholder and respectively, ty.1 protest of The ABC Board overruled appellant Kentucky Inc., granted Liquors Home and Bloomfield its license. protested Liquors’ application Appellants appeal an then filed Board, granted to the ABC the li- ABC Board’s decision with the Franklin after hearing. appellants cense a ap- The appellants Circuit Court. appeal, On pealed the ABC Board’s decision to the argue Houghlin’s liquor continued to that Court, Franklin Circuit and in turn to the could license not be transferred because it Appeals, Court both which affirmed. regulation. was null and void under the granted discretionary We review from the appellees argued The separate Appeals. the Court of “buy-out” provision 4:110(4)(a) KAR May 1985, Ray In Houghlin acquired the applicable question. was to the license in real estate a retail package provision Board, This upon allows the ABC liquor Inc., FMJ, license from which had buy-out, notice of a to extend a license operated liquor a city store in the of Bloom- thirty days beyond expiration the date of field, Kentucky, across the street from gives license. The seller’s also Houghlin Houghlin Funeral Home. then Spirits the Distilled Administrator discre- liquor store, closed had the building extending filing tion the time for a re- razed, and had a parking lot constructed in length newal for a “reasonable place. upheld time.” The court Id. trial

Houghlin applied to ruling granting the ABC Board to ABC Board’s the transfer liquor However, placed liquor doing have license dormant license. pending buyer. so, interpre- status his location of a it noted ABC Board’s that the granted request placed Board ABC tation of 804 KAR 4:110 was “tortured at regulation’s in dormancy period pur- the license for a and defeated the best” days. ninety Houghlin subsequently pose. re- The trial court also noted that hold- quested granted period for ing was seven additional a license in a extensions, ninety-day dormancy period years imagi- could two no stretch expired July interpreted “buy-out” of which a last on 1987. nation be as situa- 4:110(4)(a). Houghlin was also under KAR As noted allowed ABC tion County, regulations, regulation setting up quotas 1. Board Nelson under ABC when the adopted. was quota Currently, granting of twelve this license will has licenses. four- result operation County operation licenses are in in Nelson teen Nelson in fifteen licenses in Coun- "grandfathered ty- since two licenses were in” Occupational Safety and Health Review above, affirmed the trial court nevertheless (6th Commission, Cir.1988). 861 F.2d 936 because of the ABC Board’s decision prohibits an administrative continuing practice of the ABC Board KRS 13A.130 strong modifying detri- body extensions and the from administrative grant such *3 Houghlin by policy in re- or by regulation reliance thereon internal another mental being per- in ceiving these extensions and action. form of pay his annual license renewal mitted to agree Houghlin placed had We that fees. Board’s inter strong reliance on the ABC unanimously Appeals af- The Court of regulation. Houghlin pretation of its own approving firmed the trial court prac followed the established ABC Board Bloomfield liquor license to transfer of requests filing extension tice Inc., solely there was because in dormant status. keep his license Hough- by strong detrimental reliance both Houghlin also allowed the ABC was Liquors on the ABC lin and Bloomfield payment his license Board to renew decades-old, interpreta- consistent Board’s cases, In of two annual license fees. most dormancy regulation. The tion of the regu agency’s interpretation of its own an Appeals the same time con- at Court deference. lations is entitled to substantial interpretation of Board’s demned the ABC Inc., Constructors, supra. A con Fluor pro- applied its decision regulations, but regulation officers struction of a law or ruling that its would spectively and held interrup agency continued without to Bloomfield granted the license not affect is entitled to long period for a of time tion liquor licenses that Liquors any or Depart weight. Barnes v. controlling status as of currently were under dormant Revenue, Ky., 575 S.W.2d 169 ment of alleged “buy- opinion for the date of its (1978). practice to con usually It is liquor licenses (Thirty-five package outs.” that when agency’s form to an construction licenses.) twenty-nine liquor drink regulation’s agency responsible for was Shearer, Ap Ky., 239 agree with Court v. adoption. We Passafiume that, sup (1951). do not peals. The facts in this ease be We believe S.W.2d 456 interpretation that the en port the Board’s and the ABC Houghlin’s reliance cause of Houghlin li dormancy period of the misinterpretation tire of its Board’s continued “buy-out” by the cense should be covered unfair and un be regulation, own it would immediate intention exception. Houghlin’s Board’s decision just the ABC to overrule Inc., FMJ, from clear buying the license license to Houghlin had no and rule that building liquor store ly to demolish Liquors. was to Bloomfield transfer parking for his fu provide additional Appeals agree We Court any There was no evidence neral home. applied be case should the decision this “buy-out” negotiations thereafter pending equitable provide an as to prospectively so transfer immediately before the until liquor li had licensees who result to the To years later. two the date of as of in dormant status censes gross is to permit practice to continue is within opinion. It Appeals’ the Court of dormancy provisions of the ly abuse the give a power of a Court the inherent regulations. appli retrospective or prospective decision Commonwealth, Ky., v. cation. Lasher agency must be bound An per further (1967). It is 416 418 S.W.2d promulgates. Shearer v. regulations it prospec apply (1950). to have a decision missible Ky. 226 S.W.2d 955 Dailey, 312 hard injustice or tively in order avoid Further, adopted by an regulations Coun ship. Lexington-Fayette v. and effect law. Jacobs agency have the force Government, Ky., 560 S.W.2d (1959). ty Darch, Urban 323 S.W.2d Linkous v. property (1978). true where This is interpretation of a agency’s An have acted parties involved and however, interpretation are valid, only if the is existed, and a it law as in reliance on the language of the the actual complies with unconscionable. be Constructors, contrary result would Inc. v. regulation. Fluor Bishop specifically prohibited Bishop, Ky., S.W.2d 587 Such behavior is (1961). K.R.S. 13A.130. of the Court is principles general

affirmed. regarding proper is not equity reliance this situation. In for reliance to order be LAMBERT, LEIBSON considered, such reliance must be reason- REYNOLDS, JJ., concur. prudent It was not reasonable for able. rely practice the licensee to on WINTERSHEIMER, J., dissents clearly Board when it conflicted with the STEPHENS, opinion, in separate promulgated provisions of the administra- C.J., joins. *4 regulations. tive Bloomfield must be COMBS, J., sitting. not charged legal knowledge regu- with of the Justice, position the is not in WINTERSHEIMER, lations of Board. It a dissenting. purchased it to assert reliance when a li- respectfully majority the I dissent from which the clear cense is invalid under lan- opinion because it tolerates inexcusable regulation. guage of the Action practice the Alcoholic prohibited policy on a internal does based contrary Board which is to law and is not elevate the above a mere not busi- necessary under all the circumstances. knowledge ness decision with full of the Although disagree it is to difficult with can potential Equity risk. afford no relief skillfully opinion majority the written imprudent judgment. from an business application equitable principles of in its a Realty Corp., Ky. v. 283 Mazer Hazard prospective pos- manner in to avoid a order 283, (1940). Equity 140 S.W.2d 1033 fol- injustice hardship, I sible believe that we lows the law and the of whenever continue cannot to tolerate the clear dis- parties governed by clearly the are the regard applicable regulations of the law, equity of the of will fol- rules courts statutes the ABC Board. such low rules. v. Kaufman Kaufman’s abundantly is existing It clear that the Adm’r, (1942). Ky. S.W.2d 860 regulations regarding licenses were not fol- in If Bloomfieldbecame involved this trans- Any agency lowed. be bound must its consulting published without the fer first regulations. Dailey, own Shearer regulations clearly it was administrative (1950). Ky. 226 S.W.2d 955 vigilant not and not entitled to the kind of provided herein. equitable relief Appeals of in excluding The Court erred from the of its deci- possible expectations parties of the because principles equity sion under a ignore the to its Board would continue grant cannot a party court relief to whose published regulation are not entitled own practice reliance on a of the Board is at protection the law. The reliance to plain language regu- variance with the of a policy promulgated than on internal rather and was lation not reasonable. The author- a clearly promotes loss of confi- limited, ity the court is and the Court of agencies and in the dence administrative scope exceeded the its review engenders It government general. power attempted gen- when it act under regulations. disregard legal Those for all principles equity. See K.R.S. 243.- eral promulgated rely on who the written 570(2). regulations placed at a and laws are seri- presented disadvantage system. here such a The sole issue is whether ous under power guarantee of a consistent or the ABC Board acted in excess its There is no agen- if issuing the in violation of treatment for all citizens license uniform go beyond dormancy regulation. permitted The Board has un- cies the law are policies. questionably attempted expand promulgated alter and their own written and clearly disregard- regulation through a Board has its own administrative Here ABC policy regulations is at its and the courts have private internal which variance ed own remedy to the situation plain language regulation. found there is no legal authority repeal to amend or improper activities than to let all the other power regulations. It has the to in- permitted. own past to be the Board quota licenses allotted to each may gain crease the movants fact that the The mere county. Clearly authority it is within the suffi- is not a by enforcement of law agency to avoid harsh conse- disregard of the ignore cient reason potential arising have the quences nation of could not be a regulation. This of the Board was reversed. sought if the decision only be if enforcement could laws It is unaffected a violation. those already enough mystery There is about many understand how impossible to regulations and Kentucky administrative wrongs right. amake encourage need to it further. there is no the courts in this matter The decision of STEPHENS, J., cir- necessary joins under the in this dissent. absolutely not

is practice of the Board cumstances. dormancy regulations has

ignoring the conferring a valuable economic

effect of dormant licenses

right on the owners of the *5 to such a bene- legally are not entitled

who hardship would any injustice If

fit.

result, Board has appear that the it would