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State v. Kentucky Insurance Guaranty Association5/30/1997
0.990(3), the actual statute for judicial review following a hearing on bond forfeiture is KRS 350.032 which provides for review in Franklin Circuit Court or the circuit court of the county where the mine is located. Following the "commencement of the proceedings" in court pursuant to KRS 350.032, the circuit court can affirm, modify, enforce or set aside the order.
Thus if the Cabinet's interpretation is adopted, the administrative actions could proceed because they are not literally barred by the statute of limitations but to obtain recovery the Cabinet would eventually have to file an action in court at the Conclusion of those administrative proceedings. Certainly KRS 413.220(3) would bar an action for collection on the bond as anticipated by 405 KAR 10:050. Even if the Cabinet commenced a proceeding in circuit court in accordance with
KRS 350.032 following Conclusion of the administrative process, KRS 413.220(3) and the foregoing Discussion regarding an administrative agency's application of the most analogous limitations period should still bar the suit. A court would not be bound to affirm an administrative ruling ordering bond forfeiture where the statute of limitations was raised before the hearing officer and the period provided in the analogous statute of limitations had in fact passed before the administrative proceeding was ever commenced. If the bond forfeiture process cannot be concluded in accordance with the statute and regulations, we perceive no logic whatsoever in allowing it to be commenced. In Conclusion, the seven-year limitations period in KRS 413.220(3) applies by analogy. Because any administrative action for bond forfeiture at this juncture would be more than seven years beyond the issuance of the notices of noncompliance, the Cabinet's claims against KIGA are time-barred.
II. A CAUSE OF ACTION AGAINST KIGA ACCRUES WHEN SUBSTANTIVE
RECLAMATION VIOLATIONS OCCUR WHICH WOULD HAVE RENDERED THE INSOLVENT SURETY LIABLE
The Cabinet next argues that KRS 413.220(3) begins to run only when a "cause of action accrues," an event which it claims has not yet occurred. Under the Cabinet's theory the cause of action which it has against KIGA on the various bonds does not accrue until administrative proceedings are concluded and the Secretary of the Cabinet enters an order forfeiting the respective bonds. In a different fashion, the Cabinet is rearguing the applicability of KRS 413.220(3) to administrative proceedings. As KIGA notes, the real issue is not when a judicial remedy is first available but "what is the event which grants the Cabinet a cause of action to seek bond forfeiture and have a claim against KIGA." Stated differently, a cause of action accrues when the Cabinet first has the right to institute an action of any kind, administrative or judicial, against KIGA. That point in time has been precisely identified in an earlier decision of this court.
In Kentucky Insurance Guaranty Association v. Natural Resources and Environmental Protection Cabinet, Ky. App., 885 S.W.2d 315 (1994) [hereafter KIGA II ], this court considered KIGA's contention that applicable statutes and regulations did not permit the forfeiture of a performance bond solely for failure to maintain an adequate bond where the failure arises from the insurer's insolvency. In rejecting this argument, the court focused on KIGA's obligations pursuant to KRS 304.36-080 and identified when KIGA first becomes liable and, conversely, the Cabinet first has a cause of action:
KRS 304.36-080(1)(b) makes KIGA liable only to the extent that the insolvent insurer would have been liable. The insolvent insurer would have been liable for the bond amounts, only i
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