Ethical Considerations

J.Bissell Roberts

A. ADMINISTRATIVE LAND USE MATTERS[1]

In Kentucky administrative land use matters generally involve applications to rezone, variances, waivers and conditional use permits. This outline will focus on the rezoning process.

Zoning involves a public hearing by the local Planning Commission, followed by consideration and possibly a second public hearing in the zone change application by the appropriate legislative body, i.e., the Urban County Government, the City legislative body, or Fiscal Court. Individuals involved in this process include developers, attorneys, engineers, planners, Planning Commission staff, appointed members of the Planning Commission and elected officials. The focus of these materials is the ethical consideration in the administrative law process. A lawyer’s compliance with the Code of Professional Responsibility will be discussed in the next section.

Although this discussion will focus on the rezoning process, the same general principles apply to cases filed with a local Board of Zoning Adjustments involving variances, conditional use permits, and appeals from an order of a zoning enforcement officer.

Typically the rezoning case involves a number of steps. They may include: pre-filing application, pre-application conference (which may be subject to “confidentiality” requirements), filing of a zone change application, neighborhood meetings, reviews by Planning Commission committees, a public hearing process before a Planning Commission, a public hearing process before a legislative body, a decision by a legislative body based on the Planning Commission’s recommendations, and a court appeal.

A starting point for considering ethical requirements that apply in a typical rezoning case is KRS 100.157(1). That statute provides in part:

“Any member of a planning commission may be removed by the appropriate appointing authority for inefficiency, neglect of duty, malfeasance, or conflict of interest. Any appointing authority who exercises the power to remove a member of the planning commission shall submit a written statement to the commission setting forth the reasons for removal, and the statement shall be read at the next meeting of the planning commission, which shall be open to the general public. A member so removed shall have the right of appeal in the Circuit Court.”

Land use attorneys should understand that the imposition of ethical responsibilities on Planning Commission members imposes obligations on counsel. Legal counsel should avoid all situations which would cause a member of the Planning Commission to violate their statutory responsibilities set on in KRS 100.157. There is no reported Kentucky case involving the removal of a member of a Planning Commission for neglect of duty, malfeasance or conflict of interest. That a statute however could be violated by improper conduct by persons, firms, corporations and attorneys involved in a rezoning case in their delays with member of the Planning Commission.

Rezoning cases often have a significant impact on the value of property. Because the financial stake in zoning cases may be very high, the potential for corruption may be present. In one large Midwestern city, 18 elected aldermen were convicted of corrupt criminal practices over a 20 year period. Seven of those convictions involved bribery in connection with zoning cases.

The general public, the Kentucky General Assembly and our Courts are committed to insuring that zoning cases involve fair hearings and ethical decisions made without bias or improper influence. KRS 147A.027 requires members of the Planning Commission and the Planning Commission staff to periodically attend educational courses, which may include courses on ethics.

In 1999, the Kentucky Court of Appeals decided an important case of public policy involving the planning commission. In LaGrange City Council v. Hall Brothers Co. of Oldham County, Inc., Ky. App., 3 S.W.3d 765 (1999) a property owner filed an application to rezone property located in LaGrange. One member of the Planning Commission, a Mr. Hoffman, was also a member of the LaGrange City Council. Mr. Hoffman participated during the Planning Commission’s public hearing by asking questions, but he abstained from voting. The Planning Commission voted 10 to 0 with Mr. Hoffman’s abstention to recommend the zone change. Two months later, the City Council conducted a hearing with eight members in attendance. At the conclusion of the City Council hearing, Mr. Hoffman seconded a motion to overturn the Planning Commission’s recommendation. This resulted in a 4 to 4 tie vote of the City Council. The LaGrange Mayor cast a vote to break the tie, voting to override the Planning Commission recommendation to rezone. The Kentucky Court of Appeals affirmed the decision of the trial court which approved the rezoning, after finding that Mr. Hoffman was disqualified from voting as a member of the City Council. The Court of Appeals held that Mr. Hoffman’s action was contrary to “public policy” and his actions violated the property owners‘ rights to due process and the right to a decision by an unbiased body. Although the Court of Appeals found that Kentucky statutes did not prohibit the appointment of a member of the City Council to the Planning Commission, the court found a “incompatibility between offices” which was a “common-law or functional incompatibility”. The court concluded that Mr. Hoffman’s holding of the two offices was detrimental to the public interest because the two offices were “inherently inconsistent or repugnant.” At p. 770, the Court of Appeals noted that Mr. Hoffman had a duty to discharge his duties uninfluenced by the duties and obligations of another office and that rules of “fundamental fairness” prohibited the same person from exercising decision-making authority in one capacity and then to reviewing the same decision in another capacity and that both due process and “public policy” prohibited Mr. Hoffman from serving simultaneously in both positions.

The LaGrange City Council case illustrates that courts expect zoning cases to proceed without undue influence by any party before administrative and legislative bodies, which should be unbiased. Land use attorneys should not improperly attempt to influence a recommendation by the Planning Commission or a decision by a legislative body. Decision makers have a responsibility not to participate in decisions in which they have an indirect or direct financial interest and should recuse themselves from voting in any situation where they have a conflict of interest or a bias.

Land use attorneys should familiarize themselves with ethical codes applying to other professionals involved in the zoning process, local codes of ethics and state statutes applicable to the rezoning process. Familiarity with these rules will assist land use attorneys in avoiding situations which could compromise their clients’ case, result in disqualification of counsel from participation in the zoning case, cause another professional to violate professional codes or cause a member of the Planning Commission staff, Planning Commission or legislative body to violate ethical standards applicable to their roles in the planning and zoning process.

Land use attorneys should also familiarize themselves with applicable ordinances on ethics and conflicts of interest which could apply and which impose standards of conduct on the Planning Commission staff, the Planning Commission, members of legislative bodies, and others involved in local zoning cases.

Kentucky’s Attorney General has issued a number of opinions relating to the planning and zoning process and applicable ethical standards, unrelated to the Kentucky Bar Association rules. In OAG 96-17, the Attorney General was asked if members of the Louisville-Jefferson Planning Commission were subject to their appointing authorities’ Code of Ethics. The opinion noted that KRS 65.003(1) requires that each city, county and urban county government to adopt by ordinance a Code of Ethics; however, the opinion concluded that because the members of the Louisville-Jefferson County Planning Commission were members of a “hybrid” organization, i.e., neither a city, county or state agency, that the members of a joint planning commission “are not subject to the required ethics codes implemented by governments which appointed them to those joint city-county boards and commissions.”

KRS 100.171, provides in part:

… Any member of a planning commission who has any direct or indirect financial interest in the outcome of any question before the body shall disclose the nature of the interest and shall disqualify himself from voting on the question, and he shall not be counted for the purpose of a quorum.”

The Kentucky Attorney General was asked to express an opinion regarding whether the Chairman of the Joint Planning Commission in Boone County was conflicted from voting on zoning cases, because he owned an engineering firm that occasionally represented applicants before the Commission. In those situations, the Chairman had always recused himself and left the room during Commission deliberations. The Attorney General opined that in OAG 97-21the Chairman would not be disqualified from participation in other cases based on an indirect interest or a speculative interest. However, the Chairman should be disqualified if the decision affected his personal financial status or that of a close family member.

An Owensboro newspaper sought a copy of a report issued to the Owensboro Metropolitan Planning Commission by the Owensboro-Daviess County Ethics Board. The Planning Commission refused to provide the opinion to the newspaper claiming it was a confidential advisory opinion involving a personal matter and not subject to disclosure by Kentucky’s Open Records Act. An attorney for the newspaper appealed the Planning Commission’s denial to the Kentucky Attorney General, claiming that one of the Planning Commissioners should not have voted on a bank’s request for rezoning, because of his business relationship with the bank. The Attorney General in OAG 99-217, concluded that the confidential ethics report should be disclosed to the newspaper, because the public interest in disclosure outweighed the privacy interest of the commission member. Apparently the commissioner had business loans from an affiliate of the bank. Although the Ethics Board had concluded that the commissioner did not have a direct or indirect conflict of interest it found, that a member of the public could question his impartiality or assume that his decision was influenced because of the loans. The Attorney General further concluded that disclosure would not result in a “unwarranted invasion of personal privacy.” Finally, the opinion noted that any party aggrieved by the decision of the Attorney General could appeal the decision to the Circuit Court after notice to the Attorney General. See also, City-County Planning Commission of Warren County v. Jackson, Ky. App., 610 S.W.2d 930 (1980).

In addition to attorneys, many individuals involved in the planning and zoning process are licensed professionals and members of associations that impose their own ethical standards. Those separate ethical standards impact the conduct of those professionals in their dealing with attorneys and others in the planning and zoning process. The American Institute of Certified Planners adopted a Professional Practice Manual describing standards and guidelines for certified planners and has adopted a statement of “Ethical Principles in Planning.” This Code of Ethics and Professional Conduct addresses issues concerning conflicts of interest, outside employment or moonlighting, honesty in the use of information to ensure effective enforcement of the Code of Ethics and Professional Conduct and rules pertaining to confidentiality. Similarly, ethical standards pertaining to professional engineers and other professionals may come into play in zoning cases.

A. COMPLYING WITH CODE OF PROFESSIONAL RESPONSIBILITY[2]

Land use attorneys should consider the implications of Kentucky’s Rules of Professional Conduct (hereinafter “Rules”) in all land use cases. SCR 3.130, et seq. This outline will discuss Rules which frequently impact attorneys involved in the land use process. Many of the same Rules and principles are equally applicable through eminent domain cases, but they will not be reviewed in any detail here. Rules that frequently come into play in zoning cases include Rule 1.6 (CONFIDENTIALITY OF INFORMATION); Rule 1.7 (CONFLICT OF INTEREST – GENERAL RULE); Rule 1.9 (CONFLICT OF INTEREST: FORMER CLIENT); Rule 1.11 (SUCCESSIVE GOVERNMENT AND PRIVATE EMPLOYMENT); Rule 3.3 (CANDOR TOWARD THE TRIBUNAL); Rule 4.1 (TRUTHFULNESS IN STATEMENTS TO OTHERS); Rule 3.9 (ADVOCATE IN NON-ADJUDICATIVE PROCEEDINGS); Rule 4.2 (COMMUNICATION WITH PERSON REPRESENTED BY COUNSEL); and Rule 4.2 (COMMUNICATION WITH PERSON REPRESENTED BY COUNSEL). (Appendix D)

For the land use lawyer, ethical considerations are important at every phase of an engagement. At the outset of an engagement it is important to define the scope of the representation, to sign an engagement letter with your client, and to identify and resolve any conflict of interest issues. In Jefferson County all zone change applications must be signed by both the property owner and the applicant. Because many zoning cases involve applications filed by developers with a purchase option contingent upon rezoning, it is essential for the land use attorney to be on record with both the applicant and the property owner, as to the identity of the attorney’s client and to make clear to the other parties the right to engage separate counsel as may be necessary.

AVOIDING ETHICAL TRAPS

Rule 1.7(a) provides that an attorney may not represent a client in a manner which would be directly adverse to another client unless the lawyer believes the representation will not adversely affect the relationship with the other client, and each client consents after consultation. It is important to obtain written waivers of any conflict of interest when this Rule comes into play. If a land use attorney is representing both the property owner and the applicant in a zone change case the attorney must be sure that there are no conflicts of interest between those parties or obtain waivers after complying with the requirements of Rule 1.7(a)

Rule 1.7(b) prohibits a lawyer from representing a client if the representation may be materially limited by the lawyer’s responsibilities to another client or to a third person, unless the lawyer reasonably believes the representation will not be adversely affected and all clients waive the conflict after the conflicts are fully explained and the risks understood. This conflict can come into play when an attorney represents multiple parties with differing financial interests in connection with the zone change application. It may also come into play with respect to an attorney who represents both the Planning Commission and legislative body. For example, assume that a Planning Commission recommends approval of a zone change application but the legislative body recommends denial. If the applicant files an appeal from the adverse decision of the legislative authority, may the same attorney represent the legislative body and Planning Commission at trial, even if the Planning Commission and legislative body after full disclosure agree to waive any conflict? Although there is no Kentucky case in point, cases in other jurisdictions have disapproved this practice.

Rule 1.9 prohibits an attorney from representing a client if the attorney has previously represented another person in the same or substantially related matter in which the interest of the current client conflicts with the interest of the former client. This Rule can come into play when an attorney representing a developer in one or more zoning matters moves his or her practice to another firm and agrees to represent a client whose interests are adverse to the former developer client. The interests of the former client must be considered paramount where there is a conflict. While the client may, in certain instances, waive the conflict the former client may have not legitimate reason to do so. In addition, Rule 1.9 prohibits a lawyer from using or revealing information provided by a former client in a way which is beneficial to a new client. Similarly, Rule 1.9 (a) may prohibit an attorney for the Planning Commission or government authority from entering private practice and providing legal services to developers in zoning cases in which the attorney had formerly advised the Planning Commission or the local government. By way of analogy, the Kentucky Court of Appeals in Commonwealth v. Maricle, Ky. App., 10 S.W.3d 117 (1999), disqualified a former assistant commonwealth attorney and all members of her firm from representing a criminal defendant in a case where she had formerly been the lead prosecutor. The court found that the conflict of interest and the appearance of impropriety outweighed the criminal defendant’s right to representation by the law firm.

As mentioned above, if a government land use attorney moves into private practice, he or she may not represent a private client in a matter in which the attorney was “personally and substantially” involved as a government attorney or employee, unless the agency consents after consultation. Rule 1.11 (a). Another lawyer in the law firm with which the former government attorney is associated, may continue such a representation, if the disqualified attorney is “screened” from any participation, receives no part of any fee therefrom, and written notice is given by the private law firm to the public body to enable it to confirm compliance with Rule 1.11(b).

An attorney who is a member of a Planning Commission or legislative body voting on a zoning case may be confronted with a dilemma because of a “conflict role.” In a case decided by the Washington Supreme Court, a member of a city council was an attorney who was retained by a developer to perform legal services less than 48 hours after his favorable vote on a zone change application. Although there was no evidence of an actual conflict of interest, the Washington Supreme Court validated the rezoning ordinance finding that the rezoning ordinance was “permeated with an appearance of unfairness.” Fleming v. City of Tacoma, Wash., 502 P.2d 327 (1972).

Rule 4.2 prohibits an attorney representing a client from communicating about that client’s zoning case with a party the lawyer knows is represented by other counsel, unless the other counsel provides consent or the communication is authorized by law. Attorneys representing applicants and opponents in zoning cases must refrain from direct communications with other parties represented by counsel unless their attorney specifically consents to each such communication.

A lawyer representing a client before a “legislative or administrative tribunal in a non-adjudicated proceeding shall disclose that the appearance is in a representative capacity.” Rule 3.9. Thus, if a lawyer is representing a party before a Planning Commission or a legislative authority, the lawyer should clearly disclose the representation.

In acting as an advocate before the Planning Commission or a legislative body in a zoning case, a lawyer may not knowingly make a false statement of material fact or law, or fail to disclose a material fact when the disclosure is necessary to avoid a “fraud” being perpetrated on the tribunal, or offer evidence that the lawyer knows is false. Rule 3.3. A lawyer may refuse to offer evidence that the lawyer reasonably believes to be false. Rule 3.3(c)

These Rules apply equally to all attorneys involved in the zoning process, including attorneys for applicants, opponents, the Planning Commission, the Board of Zoning Adjustments, and the legislative bodies. Certainly, a lawyer practicing land use law should advocate his or her client’s case zealously and loyally. In representing a client it is important to candidly evaluate the merits of your client’s position. Although the stakes in a zoning case may be high for your client, the Kentucky Rules of Professional Conduct provide excellent and mandatory guidelines for an ethical representation. A failure to adhere to the highest standards of ethics may not only cause an attorney problems with the Kentucky Bar Association, they will quickly damage an attorney’s reputation as perceived by the Planning Commission, the Board of Zoning Adjustments, elected officials and counsel for those entities. Adherence to the highest ethical standards and avoidance of ethics problems is essential for a successful land use law practice.