264 Kan. 776
(958 P2d 637)
No. 79,164
TIMOTHY KENNEDY, Appellant, v. BOARD OF COUNTY COMMISSIONERS OF SHAWNEE COUNTY, KANSAS; VICTOR MILLER, individually and in his official capacity as a Commissioner of Shawnee County, Kansas; and DONALD COOPER, individually and in his official capacity as a Commissioner of Shawnee County, Kansas, Appellees.
SYLLABUS BY THE COURT
1. The statutory standard of review under the Act for Judicial Review and Civil Enforcement of Agency Actions, K.S.A. 77-601 et seq., is discussed and applied.
2. Under K.S.A. 19-431, governing the removal of a county appraiser from office, an order of termination is effective as a suspension with full benefits pending a hearing on the order before the Director of Property Valuation.
3. The question of what process is due in a given factual situation under the Due Process Clause of the United States Constitution is a legal one.
4. The record is examined, and it is held that the district court did not err in finding that (1) there was substantial evidence to support the findings of fact made by the presiding officer acting on behalf of the Director of Property Valuation; (2) just cause existed to remove the plaintiff from the office of county appraiser; (3) appointment to or removal from the office of county appraiser is controlled by statute; (4) plaintiff had no liberty or property interest in the term of office beginning on July 1, 1993; (5) the requirements of due process were met in the removal of the plaintiff from the office of county appraiser; (6) plaintiff's letter to the chairman of the Board of Tax Appeals was not constitutionally protected speech nor was it the motivating reason for his removal from the office of county appraiser; and (7) summary judgment was proper as there were no disputed facts material to the conclusive issues in this case.
Appeal from Shawnee district court; FRANKLIN R. THEIS, judge. Opinion filed April 24, 1998. Affirmed.
William G. Haynes, of Frieden, Haynes & Forbes, of Topeka, argued the cause and was on the briefs for appellant.
Laura M. Graham, assistant county counselor, argued the cause, and Sandra L. Jacquot, county counselor, was with her on the brief for appellee Board of Shawnee County Commissioners.
Anne Lamborn Baker and Thomas E. Wright, of Wright, Henson, Somers, Sebelius, Clark & Baker, L.L.P., of Topeka, were on the brief for appellee Victor Miller.
Ann L. Hoover, of Bennett & Dillon, L.L.P., of Topeka, was on the brief for appellee Donald Cooper.
The opinion of the court was delivered by
ALLEGRUCCI, J.: Timothy Kennedy appeals his removal from the office of Shawnee County Appraiser. The Director of the Property Valuation Division of the Kansas Department of Revenue (Director) upheld the removal as being for just cause. Kennedy appealed that decision to the district court and filed a separate lawsuit against individuals Donald Cooper and Victor Miller, who were county commissioners, as well as against the Board of County Commissioners of Shawnee County, Kansas, (Board) in which he raised constitutional issues--some cast as violations of 42 U.S.C. § 1983 (1994)--and contract issues, and alleged retaliatory discharge. In the district court, the two suits were consolidated. The district court affirmed the administrative decision and granted defendants' motions for summary judgment on all other issues. Kennedy appeals from both rulings. Kennedy's motion to transfer the appeal from the Court of Appeals to this court was granted.
The facts material to this appeal are not controverted. It is undisputed that Kennedy was appointed as Shawnee County Appraiser in August 1992. On January 4, 1993, the Board passed Resolution 93-1, stating that it desired to contract and reappoint Kennedy as county appraiser, pursuant to K.S.A. 19-430, for a 4-year term from July 1, 1993, through June 30, 1997. Newly elected County Commissioners Miller and Cooper were sworn in on January 11, 1993. Immediately, the Board passed Resolution 93-5, which repealed Resolution 93-1. In March 1993, the Board stated its resolve to search for a county appraiser for the 4-year term beginning July 1, 1993. The minutes of the Board for April 6, 1993, show that the majority approved a motion for "appointment of Tim Kennedy as Shawnee County Appraiser for four years." On May 27, 1993, the Board passed Resolution 93-72, terminating Kennedy as county appraiser. The "Order of Termination" attached to Resolution 93-72 stated, in part:
"The reasons for your termination include but are not limited to the following: You have failed or neglected to properly perform the duties of the office. The general statutory duties are set forth in K.S.A. 79-1412a. Additional duties are set forth in the position description for Shawnee County Appraiser. This termination is for such failure or neglect and for other cause."
Also on May 27, 1993, the Board passed Resolution 93-71, rescinding the April vote to appoint Kennedy for 4 years. Additional facts will be stated as necessary to the discussion of particular issues.
We first consider the district court's affirmance of the Director's decision that Kennedy's termination was for just cause. Kennedy's removal from office was effected by the Board's passage of Resolution No. 93-72 on May 27, 1993. The order of termination was attached to the resolution. K.S.A. 79-1412a(a) provides:
"County appraisers and district appraisers shall perform the following duties:
First. Install and maintain such records and data relating to all property in the county, taxable and exempt, as may be required by the director of property valuation.
Second. Annually, as of January 1, supervise the listing and appraisal of all real estate and personal property in the county subject to taxation except state-appraised property.
Third. Attend meetings of the county board of equalization for the purpose of aiding such board in the proper discharge of its duties, making all records available to the county board of equalization.
Fourth. Prepare the appraisal roll and certify such rolls to the county clerk.
Fifth. Supervise the township trustees, assistants, appraisers and other employees appointed by the appraiser in the performance of their duties.
Sixth. The county appraiser or district appraiser in setting values for various types of personal property, shall conform to the values for such property as shown in the personal property appraisal guides devised or prescribed by the director of property valuation.
Seventh. Carry on continuously throughout the year the process of appraising real property.
Eighth. If the county appraiser or district appraiser deems it advisable, such appraiser may appoint one or more advisory committees of not less than five persons representative of the various economic interests and geographic areas of the county to assist the appraiser in establishing unit land values, unit values for structures, productivity, classifications for agricultural lands, adjustments for location factors, and generally to advise on assessment procedures and methods.
Ninth. Perform such other duties as may be required by law."
The Shawnee County Appraiser job description stated, in part:
"'REQUIRED KNOWLEDGE, ABILITIES AND SKILLS:
'Comprehensive knowledge of real estate appraisal principles and practices: comprehensive knowledge of Kansas property tax law, regulations, and principles and practices.
'Ability to establish and maintain effective working relationships with taxpayers, state officials, other employees, and the general public; ability to establish and maintain required records and reports.'"
The findings of fact made by the administrative hearing officer with respect to Kennedy's failure to perform his administrative duties satisfactorily can be summarized as follows:
1. Kennedy failed to provide lease information requested by the Board of Tax Appeals (BOTA) that he had agreed, under oath, to provide.
2. Temporary employees were assigned by Kennedy to work on 1993 values without Board authorization for their performing that task.
3. Under Kennedy's watch, temporary employees rolled values over to 1993 based on 1992 hearing values that were rejected by BOTA pending hearing or receipt of further documentation.
4. Kennedy failed to take the steps necessary to obtain an order from BOTA authorizing 1992 values, which had been set pursuant to a payment under protest hearing, to be frozen or rolled over to 1993. The order was required by the Director, and Kennedy had been advised by the county counselor that it was a necessity.
5. Although Kennedy had not requested or received an extension of the May 20 statutory deadline, K.S.A. 1993 Supp. 79-1448, he directed a memorandum to be prepared and circulated on May 21, informing his staff that the deadline for completing informal decisions on taxpayer appeals was June 8, 1993.
6. Kennedy told county commissioners in February 1993 that the value of new construction would be included in valuation notices to be mailed in March. Kennedy sent a memorandum to Commissioner Miller identifying several parcels for which the value of new construction had not been added before valuation notices were mailed. Records showed, however, that as of April 1993, there were 1,094 parcels on which 1992 building permits for new construction had been issued to which no value had been added. The task of picking up new construction continued into May 1993.
7. Kennedy requested and obtained an extension of the statutory deadline of March 1, K.S.A. 1993 Supp. 79-1460, for mailing valuation notices. When the notices were mailed on March 15, approximately 3,500 were erroneous and illegal.
8. Contrary to established practice, Kennedy instructed staff to use unvalidated sales in the valuation process.
9. Kennedy failed to forward files requested by the county clerk. Repeated attempts by the county clerk and her staff to resolve the problem were unsuccessful. Even when County Commissioner Cooper intervened, weeks passed without results.
10. "On April 8, 1993, BOTA Chairman Jack Shriver notified Kennedy the BOTA was concerned about Shawnee County protest justifications changing values recently established by the BOTA or District Court. Shriver also expressed the BOTA's concern that Shawnee County protest justifications lacked sufficient supporting documentation. Due to these problems, Shriver informed Kennedy the BOTA would set all Shawnee County protest justifications for hearing. . . .
. . . .
"On April 20, 1993, Kennedy sent Chairman Shriver what Kennedy admitted was a 'scathing' response to Shriver's April 8 letter."
On May 10, BOTA sent a list of over 600 rejected justifications to the county clerk and the Board. Only 23 were not attributable to Kennedy.
On May 14, Kennedy announced appointments to an Appraisal Advisory Committee. Because all appointees resided west of Topeka Boulevard, state and county lawmakers expressed concern that the advisory committee was not representative and not in compliance with K.S.A. 79-1412a Eighth.
11. The price for potential additional office space for the county appraiser furnished by Kennedy to Commissioner Cooper did not match the price given by a real estate broker to Commissioner Miller, from which Miller concluded that Kennedy misrepresented the cost.
12. There was at the very least an appearance of a conflict of interest in Kennedy's connection with Foxcross Associates before he became county appraiser and his agreeing to reduce valuations by significant amounts on Foxcross Associates property after he became county appraiser. In this regard, the administrative hearing officer found:
a. A March 1993 letter written to Commissioners Kingman and Cooper by attorney David Holstead "could reasonably be read as evidence Kennedy had been engaged by the Carpenter [law] firm to work on the Foxcross property" prior to his appointment as county appraiser.
b. Prior to being appointed county appraiser in August 1992, Kennedy testified at a May 1992 BOTA hearing on Foxcross Associates. He was introduced by Foxcross Associates' attorney Holstead as his witness who would "'provide evidence concerning the Taxpayer's position on the value.'"
c. Kennedy did not include in a March 1993 list of former clients he prepared for Commissioner Miller either Foxcross Associates or the Carpenter law firm.
d. "On September 10, 1992, Kennedy, as Shawnee County Appraiser, signed stipulations reducing values on Foxcross Associates parcels from $507,100 to $300,386 and from $1,103,300 to $710,000." The stipulations were rejected by BOTA on the following grounds:
"'[T]he testimony of Tim Kennedy is not credible because he had been retained by the taxpayer to render an opinion of value for the subject property, just prior to becoming the Shawnee County Appraiser. Mr. Kennedy then rendered an opinion of value on the same property in support of the stipulated value as Shawnee County Appraiser. Mr. Kennedy also submitted a workup into evidence at the January 4, 1993 hearing that he had prepared as a tax consultant retained by the taxpayer in support of the stipulation he agreed to as Shawnee County Appraiser.'"
The district court determined that the "findings of fact in the August 9, 1994 Memorandum Opinion, Findings of Fact, Conclusions of Law and Order of Michael Barbara as Presiding Officer Acting on behalf of the Director of Property Valuation are supported by substantial evidence and are hereby affirmed." To what the administrative hearing officer had said, the district judge added his observations that Kennedy failed to grasp that his duties as a county officer included functioning as a part of the county system rather than in an adversarial position. The judge noted that some of Kennedy's actions jeopardized the health and integrity of the county's tax base as well as taxpayers' opportunities to challenge valuations. In the judge's view, the appearance of a conflict of interest in favor of a developer, Kennedy's failure to be forthright about it, and his appointment of an advisory committee composed entirely of "persons with a 'westside' interest" combined to contribute to the fraying of "the only real important bond the county commission could enjoy with a county appraiser[,] which was one of trust in his office." The district court elaborated on this erosion of trust:
"Thus, though individually each of Mr. Kennedy's failures to perform according to statute or to cooperate with other public officials might seem not so egregious, nevertheless, given the complete and whole system upon which the valuation and taxation system operated and the importance of a forthright and competent appraiser to the system's proper functioning, his failures were critical to the maintenance of proper oversight and to instilling the necessary trust to enable the county commission, the Board of Tax Appeals, and other officials to effectively rely on his judgment as an essential county officer.
"Contrary to what his counsel asserts, the primary and fundamental qualification for any office holder is integrity and the maintenance of at least a minimal basis for trust and respect for the judgments made by that official. The record establishes clearly that Mr. Kennedy had substantially lost this fundamental and necessary base of trust in his judgment with those with whom and for whom he worked in the property tax appraisal system and accordingly, therefore, lost his ability to function as Shawnee County appraiser in the eyes of a majority of the Shawnee County Commission. The record supports this loss of trust for all the individual reasons stated which ultimately coalesced in the final judgment rendered by the commission majority.
"It was not necessary for the county to prove that Mr. Kennedy had in fact unjustifiably reduced valuations or acted out of partiality but rather only to prove his individual failures to comply with his duties which individual failures obviously led the majority of the commission to lose faith in his ability to fully and reasonably perform the duties of Shawnee County appraiser. The record as a whole supports not only the specific incidences of failure of duty but also the cumulative conclusion rendered by the Commission that Mr. Kennedy had accordingly 'failed and neglected to properly perform the duties of his office, by reasons of incompetence or other cause.'"
The principles governing judicial review are established by statute. In Southwest Kan. Royalty Owners Ass'n v. Kansas Corporation Comm'n, 244 Kan. 157, 164-65, 769 P.2d 1 (1989), this court stated:
"Under the Act for Judicial Review of Agency Actions, the party seeking change of an order has the burden of showing the district court that an agency's order is invalid for one of the following reasons:
. . . .
"'7. the agency action is based on a determination of fact, made or implied by the agency, that is not supported by evidence that is substantial when viewed in light of the record as a whole, which includes the agency record for judicial review, supplemented by any additional evidence received by the court under this act; or
"'8. the agency action is otherwise unreasonable, arbitrary or capricious.' K.S.A. 77-621(c).
"In determining whether the agency action is invalid for one of the foregoing reasons, the reviewing court must take into account the rule of harmless error. K.S.A. 77-621(d)."
"Arbitrary or capricious conduct may be shown where an administrative order is not supported by substantial evidence. [Citations omitted.] 'Substantial evidence' is evidence which possesses both relevance and substance, and which furnishes a substantial basis of fact from which the issues can be reasonably resolved. [Citation omitted.]" Kansas Racing Management, Inc. v. Kansas Racing Comm'n, 244 Kan. 343, 365, 770 P.2d 423 (1989).
Neither the district court nor an appellate court may substitute its judgment for that of the administrative agency. Pork Motel, Corp. v. Kansas Dept. of Health & Environment, 234 Kan. 374, 382, 673 P.2d 1126 (1983). This court's responsibility is to determine if the district court reviewed the administrative decision in accordance with its statutory responsibility. Shawnee Mission Med. Center v. Kansas Dept. of Health & Environment, 235 Kan. 983, 989, 685 P.2d 880 (1984). So long as the record contains competent evidence in support of the decision, it must be upheld by this court. Kansas Transport Co., Inc. v. State Corporation Commission, 202 Kan. 103, 105, 446 P.2d 766 (1968).
Kennedy contends that the administrative hearing officer's findings of fact "are not supported by substantial evidence in light of the record as a whole and did not justify the vote to terminate Kennedy." What Kennedy means by "the record as a whole" seems to be his version of the incident or conduct as well as the Board's version. In some instances, he seems to be asking this court to reweigh the evidence, which is not within the scope of review. In other instances, however, he endeavors to show that findings are not supported by substantial evidence.
As to the finding that Kennedy failed to provide lease information requested by BOTA, he contends that he "told the BOTA member he did not know whether any such leases existed but[,] if there were any, he would furnish them." There were no leases, he further contends, which explains why he furnished none. Kennedy's contention is not supported by the record. At the hearing before the administrative hearing officer, Kennedy testified, "Myra Gross asked me for leases, asked me if I had leases that I had used to compile the income analysis or to support the rents in the area, and I told her, yes, and to the extent we had them, I would send them to her." (Emphasis added.)
Kennedy implies that his use of temporary employees was necessary to his carrying out his duties of office. The hearing officer's findings in this regard were that Kennedy sought and obtained authorization from the Board to employ temporary workers "to complete 1991 and 1992 payment under protest [PUP] informal hearings," and that he used the temporary workers for other tasks. With respect to the rollovers, Kennedy's position seems to be that there is an unresolved legal issue as to whether the values could be rolled over "while BOTA was deciding whether to set them for hearing." He states that Commissioner Miller, who was qualified as an expert witness on the State's appraisal system, testified that he believed that PUP decisions were not final until approved by BOTA and that K.S.A. 1993 Supp. 79-1460 precluded their being rolled over. What Kennedy has presented to this court does not show a lack of substantial evidence supporting the hearing officer's findings on this point.
As to the May 21 staff memorandum, Kennedy quotes this portion of the memorandum in his brief:
"The deadline has been set for 93 informal decisions to be completed Tuesday, June 8th by 5:00 p.m. Pending decisions that are left to be made from the hearing officers will be distributed according to neighborhood assignments for residential and land use code for commercial. We will try to get these out by 5:00 p.m. Monday, May 24th . . . ."
Kennedy's contention seems to be that the Board proved neither that recipients of the memorandum believed that they were being instructed to make informal decisions after May 20 nor that any informal decisions were made between May 20 and May 27, when Kennedy was removed from office. Proof of either, however, is unnecessary to the finding.
In response to Kennedy's failure to include the value of new construction in valuation notices to be mailed in March, he cites testimony of the Director to the effect that it would be possible to add the value of new construction up to June 15, when the county appraiser was required to certify the valuations. On this basis, Kennedy seems to be contending that the failure to include the value of new construction in the valuation notices mailed in March was inconsequential. With regard to his failing to do what he had told the Board would be done, he implies that the failure was not a reason given by the Board for removing him from office. He concedes, however, that Miller testified that he voted to terminate Kennedy due to his deceit.
Kennedy raises two points with respect to the approximately 3,500 erroneous notices. First, he asserts that the Director predicted in June 1992 that approximately 3,500 incorrect valuation notices would be mailed in March 1993. It could be inferred from such a prediction, made well before Kennedy was appointed, that he was not responsible for the erroneous notices. Kennedy, however, failed to supply a record reference for the prediction. Second, he cites testimony of David Galloway, who became the acting county appraiser after Kennedy was removed from office, seemingly for the purpose of showing that the erroneous notices resulted from shortcomings in the computer system. Kennedy also directs the court's attention to Kansans for Fair Taxation, Inc. v. Miller, 20 Kan. App. 2d 470, 472, 889 P.2d 154, rev. denied 257 Kan. 1092 (1995), in which Judge (now Justice) Larson described problems created by the computer system after the valuation notices were sent out in March 1993.
It is beyond question that the computer system caused its share of problems in the present case. Whether Kennedy is free of responsibility for the erroneous March 1993 notices is not clear from what has been presented to this court. Galloway testified with regard to the 3,500 erroneous notices, "[I]n comparison to the past, that wasn't really a great number." Establishing that the number of erroneous notices under Kennedy's supervision was not unusual goes a long way toward diminishing the significance of the hearing officer's finding on this point.
Responding to the finding that Kennedy instructed staff to use unvalidated sales in the valuation process, he asserts that Phillip Rice, who supervised data collectors for the appraiser's office, "testified that when Kennedy took office in August 1992, he instructed staff not to pick up new construction but the record is devoid of evidence Rice testified Kennedy instructed staff not to validate sales used in neighborhood analysis." Kennedy's assertion is inaccurate. The following questions were asked of Rice, and he gave the following answers:
"Q. When Mr. Kennedy started work out there in August of 1992, what was the nature of your job?
"A. I was supervisor of the data collectors.
"Q. What did you do in that position?
"A. I did the training, I did the quality control on their work when they were going out doing the sales verification, new construction or the relist of the properties.
"Q. What do you mean by sales verification?
"A. To go out and talk to the owners about whether the purchase price we had on our records was correct, and to measure the structures to see that they were all as they were the last time we were out there.
"Q. What do you mean by your reference to new construction?
"A. As building permits are taken out, they are put on where we can look to see what kind of new buildings are being put up in the county, and we would go out and measure and list those.
"Q. What do you mean by the reference to 25 percent relist?
"A. We are required to measure, to look at 25 percent of the properties every four years, and that's the 25 percent relist.
. . . .
"Q. Now when Mr. Kennedy took over as Shawnee County Appraiser, did your job change at all?
"A. Yes.
"Q. How did it change?
"A. I was no long [sic] responsible to see that any of this work got done, in working with the data collectors.
"Q. What were your instructions?
"A. We were not going to pick up the new construction, and we weren't going to work with sales at the time.
"Q. Were you working the 25 percent relist?
"A. Yes, we weren't going to do that either." (Emphasis added.)
Kennedy's position on the appointments to the Appraisal Advisory Committee is that the appointments announced on May 14 were initial appointments, to be followed at some later date by additional ones that would "reach out to the entire community." In addition to his own testimony that his intent was to make the committee more representative by later adding members, Kennedy cites his May 14 memorandum for support. It is a memorandum to the appointees from Kennedy with copies to the county commissioners, which states in full:
"I want to thank you all for your commitments to Shawnee County in agreeing to serve on the Appraiser's Advisory Committee, and look forward to your input and participation.
"You will be notified within the next week of the date, time and agenda of the first meeting.
"Thanks again for your commitment."
What Kennedy has presented to this court does not show a lack of substantial evidence supporting the hearing officer's findings.
Kennedy explains that the price discrepancy on office space arose because the price he gave was for a "triple net lease." Examination of the memorandum reveals no explanation of the price. It is a four-page memorandum listing 15 potential office spaces and recommending a building on Wanamaker Road as "clearly the most desirable. In addition to having the lowest rent, it can be occupied immediately, is fully handicapped accessible, has adequate parking, is wired for the computer, has a phone system, and is accessible from all parts of the county."
Kennedy does not define a "triple net lease." Black's Law Dictionary 1040 (6th ed. 1990) defines a "net lease" as one requiring the tenant to pay insurance, taxes, and maintenance. If the prices Kennedy gave for the other 14 potential spaces were not on the same basis, the memorandum and its conclusion could be misleading with regard to which property was "most desirable" as well as somewhat generally misleading by not specifying what the price per square foot did not include. Kennedy has not presented anything that would undermine the hearing officer's findings.
Finally, with respect to the conflict of interest finding, Kennedy states that he was never a paid consultant for either the Carpenter law firm or Foxcross Associates. This denial does not dispel the appearance of a conflict of interest.
Kennedy has the burden of showing that the agency's decision was invalid based on determinations of fact not supported by substantial evidence or that it was otherwise unreasonable, arbitrary, or capricious. He has failed to do so.
Kennedy also challenges the district court's interpretation of K.S.A. 19-431 and its conclusions that Kennedy had no enforceable agreement, express or implied, for employment as Shawnee County Appraiser for the 4-year term beginning July 1, 1993. K.S.A. 1997 Supp. 19-430(a) provides: "On July 1, 1993, and on July 1 of each fourth year thereafter, the board of county commissioners of each county shall by resolution appoint a county appraiser for such county who shall serve for a term of four years and until a successor is appointed." The statute in effect at the time Kennedy was employed as Shawnee County Appraiser was K.S.A. 1992 Supp. 19-430, which provided: "On January 15, 1977, and on July 1 of each fourth year thereafter the board of county commissioners . . . shall . . . appoint a county appraiser . . . who shall serve for a term of four years." It further provided that a vacancy was to be filled by appointment of the board of county commissioners "for the unexpired term and until a successor is appointed." The record shows that Kennedy was appointed to the position of Shawnee County Appraiser on August 11, 1992, to fill a vacancy for an unexpired term, or until June 30, 1993.
Kennedy contends that the Board had committed to appoint him as county appraiser for the 4-year term from July 1, 1993, to June 30, 1997. Kennedy has not challenged the district court's findings of fact that relate to this contention. The district court found the following:
"3. On January 4, 1993, the Board passed Resolution No. 93-1 announcing the Board's desire to contract with and appoint Tim Kennedy as County Appraiser for a term commencing July 1, 1993, and terminating June 30, 1997. . . .
"4. Victor Miller and Donald Cooper were sworn in as Shawnee County Commissioners on January 11, 1993. . . .
. . . .
"6. On January 12, 1993, the Board passed Resolution No. 93-5 which repealed Resolution No. 93-1. . . .
"7. On April 6, 1993, a majority of th