Suzette Sewell-Scheuermann v. Michael Scalise

── Suzette Sewell-Scheuermann v. Michael Scalise ── Court: Court of Appeals of Kentucky Date: May 08, 2026 Author: Owen McNeill Category: General RENDERED: MAY 8, 2026; 10:00 A.M. NOT TO BE PUBLISHED Commonwealth of Kentucky Court of Appeals NO. 2025-CA-0388-MR SUZETTE SEWELL-SCHEUERMANN APPELLANT APPEAL FROM JEFFERSON CIRCUIT COURT v. HONORABLE BRIAN C. EDWARDS, JUDGE ACTION NO. 13-CI-006719 MICHAEL SCALISE; AL HUBER; ANNE BRAUN; GARY VOGEL; JOANNE BADER; JONATHAN LEACHMAN; JUDY SCHWENKER; MARK STEVENS; STEVE MILLER; AND VINCE OSBOURN APPELLEES OPINION AFFIRMING IN PART, REVERSING IN PART, AND REMANDING ** ** ** ** ** BEFORE: THOMPSON, CHIEF JUDGE; L. JONES AND MCNEILL, JUDGES. MCNEILL, JUDGE: Suzette Sewell-Scheuermann (“Sewell”) appeals from the Jefferson Circuit Court’s determination that City of Audubon Park (“City”) officials were not personally liable for misappropriating surplus sanitation revenue in violation of KRS1 92.330 and KRS 92.340, and Section 180 of the Kentucky Constitution.2 For the reasons below, we affirm in part, reverse in part, and remand for further proceedings. BACKGROUND From fiscal year 2007-2008 to fiscal year 2013-2014, the City’s mayor and city council approved annual ordinances setting a monthly assessment for the specific purpose of paying for trash collection and recycling (“sanitation funds”). However, the revenue produced by the assessment was substantially more than the cost of the City’s contract for these services. The surplus was placed in the City’s general fund and spent on other City expenses. Sewell filed this action as a “taxpayer for the use and benefit of the City” against Mayor Michael Scalise and City Council members Al Huber, Anne Braun, Gary Vogel, Joanne Bader, Jonathan Leachman, Judy Schwenker, Mark Stevens, Steve Miller, and Vince Osbourn (collectively “Defendants”). The complaint alleged that Defendants had violated KRS 92.330 and KRS 92.340 by spending the surplus sanitation funds on “budget items unrelated to sanitation 1 Kentucky Revised Statutes. 2 While Sewell’s complaint cites Section 180 of the Kentucky Constitution, as our Supreme Court noted in a previous appeal, “her claim is more narrowly focused on [the] two statutes[.]” Scalise v. Sewell-Scheuermann, 566 S.W.3d 539, 546 (Ky. 2018). Therefore, while we acknowledge the constitutional basis for her claim, we will focus our analysis on her arguments concerning KRS 92.330 and KRS 92.340. -2- services.” The circuit court dismissed the complaint, finding that the City had suffered no damage. Our Court reversed, holding Defendants had violated the plain language of KRS 92.330 and were therefore jointly and severally liable to the City for the sanitation funds spent on non-sanitation expenses. On discretionary review, the Supreme Court affirmed in part and reversed in part, holding that while Sewell had stated a valid cause of action, Defendants’ liability was not absolute if they could prove that the excess sanitation funds were spent on “valid City obligations.” Scalise v. Sewell-Scheuermann, 566 S.W.3d 539, 541 (Ky. 2018). Citing City of Newport v. McLane, 256 Ky. 803, 77 S.W.2d 27, 29 (1934), City of Newport v. Rawlings, 289 Ky. 203, 158 S.W.2d 12, 14 (1941), and Daily v. Smith’s Adm’x, 297 Ky. 689, 180 S.W.2d 861 (1944), the Court acknowledged that a judicially-created “offset defense” had developed from this line of cases where city officials who spent money raised for one purpose on a different purpose could be “relieved of liability to the extent that they could establish the propriety of the other municipal expenditures.” Scalise, 56