Request By:
Ms. Alison Lobb Milby
Walker and Milby
P. O. Box 486
Richmond, Kentucky 40475
Opinion
Opinion By: Robert F. Stephens, Attorney General; By: Thomas R. Emerson, Assistant Attorney General
This is in response to your letter stating that you represent the Richmond Utilities Board which you maintain is an independent body established by city ordinance to manage the city's gas, water and sewerage works. Board members are appointed by the mayor.
An opinion is sought from this office with regard to the tort liability of the city, the board and the individual board members in connection with the operation of the gas, water and sewerage works.
The first matter to be resolved in connection with your inquiry is the status of the "Richmond Utilities Board." You have not furnished us with much information to work with and in absence of a copy of the ordinance creating the board and any statutory references pertaining to the board we will have to consider several possibilities.
Perhaps the board exists pursuant to KRS 94.070 which authorizes a board of public works in cities of the third class. Such a board, under KRS 94.110, has exclusive power and control over the construction, equipment, management and operation of any works the city may own for supplying the city or its inhabitants with water, light, heat or power. The members of such a board would be municipal officers and despite the board's power over the city utilities such a board would not be an independent corporate body but rather an agency of the municipal government. See OAG 77-353, copy enclosed.
KRS 96.170 authorizes the city legislative body of any third class city to provide, by ordinance, for the furnishing of the city with water, light, power, heat and telephone service, by contract or by works of its own. There are no specific statutory provisions authorizing the creation of a utility commission to operate such utilities in a city of the third class such as Richmond. However, in Keathley v. Town of Martin, Ky., 246 S.W.2d 152 (1951), the Court concluded that a city has legal authority to set up an administrative board in connection with the operation of the municipal utilities.
The members of such a board or commission would probably be considered municipal officers. If the utility was established pursuant to ordinance, which created a board or commission to manage and operate the system and defined the duties of the commission, fixed the terms of the members and required an oath to be taken, members of the commission would be public officers and officers of the city. See OAG 74-707, copy enclosed. Such a commission would be an agency of the municipal government and not an independent political subdivision.
An example of an independent city utility commission is one existing pursuant to KRS 96.530. That statute provides that such a utility commission shall have absolute control of the utility plant in every respect, including its operation and fiscal management. The commission is also declared to be a public body politic and corporate, with the power to fix the number, qualifications, pay and terms of employment of all employes needed to operate the plant. In Bruner v. City of Owensboro, Ky., 522 S.W.2d 440 (1975), the Court said that the city utility commission's employes were its own employes as distinguished from city employes. Thus, the utility commission created pursuant to KRS 96.530 is independent of the city as long so it is in existence.
If your particular utilities board is in fact an agency of the municipal government and the members of the board are considered municipal officers or employes, then the city could incur liability for the negligent acts of the board members. Beginning with Haney v. City of Lexington, Ky., 386 S.W.2d 738 (1964), the Court abandoned the ancient doctrine of municipality sovereign immunity from tort and held the city liable in the negligent operation of a swimming pool. The principle set forth in Haney, supra, concerning municipal tort liability was further discussed, defined and clarified in City of Louisville v. Louisville Seed Company, Ky., 433 S.W.2d 638 (1968) and City of Russellville v. Greer, Ky., 440 S.W.2d 269 (1969). Since the most recent decision of the Kentucky Supreme Court on the subject of municipal tort liability, Grogan v. Commonwealth, the "Beverly Hills" case, decision rendered January 16, 1979, is presently pending before that Court on the appellants' petition for rehearing, we direct your attention to Frankfort Variety, Inc. v. City of Frankfort, Ky., 552 S.W.2d 653 (1977).
In Frankfort Variety, supra, the Court said that the nonliability of the city does not rest on the doctrine of governmental immunity as a city is answerable for a breach of duty. However, when a city undertakes measures for the protection of its citizens, it is not held to the same standards of performance that would be required of a professional organization hired to do the job. If it were, it might hesitate to undertake those measures. To impose liability on the city, it must be shown that the city dealt with appellants on an individual basis or that the losses sustained by the appellants were isolated from a loss occasioned by the general public. At page 656 of the opinion the Court said:
"The trial court properly determined that the city was engaged in a municipal function. However, it erroneously applied the municipal immunity doctrine. Being engaged in a municipal function which affects all members of the general public, the city owed no duty to appellants; consequently there was no negligence on which liability could be predicated."
Two recent decisions of the Kentucky Court of Appeals dealing with municipal liability are Richmond v. Louisville and Jefferson County Metropolitan Sewer District, Ky. App., 572 S.W.2d 601 (1978) and Ellis v. Jordan, Ky. App., 571 S.W.2d 635 (1978).
If your utilities board is in fact an independent public corporate body politic, the city in all probability would not be liable for the board's negligent acts. Although we do not know of any Kentucky cases directly in point, we have serious doubts as to a utility board, which is a body politic and corporate, invoking the doctrine of sovereign immunity to escape liability for negligence under all circumstances. See Stephenson v. Louisville & Jefferson County Board of Health, Ky., 389 S.W.2d 637 (1965). In Richmond v. Louisville and Jefferson County Metropolitan Sewer District, Ky. App., 572 S.W.2d 601 (1978), the Court, in dealing with the metropolitcan sewer district (an independent public corporation) concluded that governmental immunity still exists where the activity involves the ultimate function of government, unless the municipality was dealing with the injured party on an individual basis. Furthermore, since the creator of an independent utility board (the city) can be liable for its negligent acts it is logical to conclude that the independent corporate board can also be held liable for such acts.
Regardless of the legal status of the utility board involved in your particular situation, members of the board could be personally liable if negligence on their part is proved. Generally, board members would not be liable for the negligence of board employes if they employed persons of suitable skills. See Spillman v. Beauchamp, Ky., 362 S.W.2d 33 (1962) and Moores v. Fayette County, Ky., 418 S.W.2d 412 (1967).
In view of the lack of specific information concerning the organization and legal status of the "Richmond Utilities Board," we can only set forth the rules, holdings and principles covering those situations and circumstances which might be analogous to the organization and operation of your utility board. Hopefully the material set forth above will enable you to answer the questions you have posed after you determine the legal status of the "Richmond Utilities Board."