University of Louisville v. Rothstein, Mark ( 2017 )

RENDERED: NOVEMBER 2, 2017
TO BE PUBLISHED
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UNIVERSITY OF LOUISVILLE APPELLANT
ON REVIEW FROM COURT OF APPEALS
CASE NO. 2014-CA-000997-MR
v. FRANKLIN CIRCUIT COURT NO. 13-CI-00202
MARK ROTHSTEIN APPELLEE
OPINION OF THE COURT BY JUSTICE KELLER
AFFIRMING
Appellant, University of Louisville (U of L), appeals the decision of the
Court of Appeals affirming the order of the Franklin Circuit Court, denying U of
L's immunity against suit in this case. We granted discretionary review and,
for the reasons stated herein, affirm the Court of Appeals and remand to the
Franklin Circuit Court for further proceedings.
I. BACKGROUND.
U of L recruited Appellee, Mark Roth~tein (Rothstein), as a professor of
medicine in 2000. He was granted tenure as the Herbert F. Boehl Chair of Law
and Medicine and appointed as a Distinguished University Scholar (DUS)
under a five-year renewable contract. This DUS contract is at i~sue irt the
undedying case. As we do. not reac~ the substantive merits of this case based
on its procedural stance, we need not unnecessarily recite the terms and
minutia of the process. However, importantly here, disputes arose between U
of L and Rothstein regarding the adherence of the parties to this DUS contract.
Ultimately, Rothstein's. DUS contract
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was terminated
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and he filed suit against
U of L for breach of this· written contract.
Both parties moved the Franklin Circuit Court for summary judgment; U
of L partially based its motion on its ~tatus as a state agency and. its resulting
immunity from suit. Although U of L agreed that Kentucky Revised Statute.
(KRS) 45A.245 waives immunity for breach of contract actions agajnst the
Commonwealth, U of L. argued that this immunity does not
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extend to ·
employment contracts. U of L stated that the KRS in question was part of the
Kentucky Model Procurement Code.(KMPC), which had no bearing on the
hiring of faculty by a university and, thus, the waiver did not extend to the
employment contract in question.
Fran~in Circuit Court denied U of L's argument that sovereign immunity
barred Rothstein's claims for breach .of the written contract. "it found KRS
Chapter 45A applicable to written employment contracts and that the
legislature had thus waived immunity for suits like Rothstein's.
U of L appealed solely on the l.ssue of whether it should have been .
shielded by the. doctrine of sovereign immunity for Rothstein's claims of breach
of contract. The Court of Appeals found there was a written employment
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contract and that KRS 45A.245 clearly constituted an unequivocal waiver of
immunity for such contract claims.
Once ag~n, U of L appealed this decislon and moved this Court for
discretionary review. We granted review and for the reasons stated. herein~
affiri:n the Court of Appeals and hold that the legislature has waived immunity
for all claims arising out of lawfully authorized written contracts with the
Commonwealth and its agencies.
II. STANDARD OF REVIEW.
The issue of whether a defendant is entitled to the defense of sovereign or
governmental immunity is a question of law. See Ro1J!an County v. Sloas, 201
. .
S ..W.3d 469, 475 (Ky. 2006) (citing Jefferson County Fi.seal Court v. Peerce, 132
S.W.3d 824, 825 (Ky. 2004)). Questions of law are reviewed de novo.
Cumberland Valley Contractors, Inc. v. Bell County Coal Corp., 238 S.W.3d 644,
647 (Ky. 2007). We also note that "an order denying a substantial claim of
absolute immunity is immediately appealable even in the absence of a final
judgment." Breathitt County Bd. of Educ. v. Prater, 292 S.W.3d 883, 887 (Ky.
2009).
III. ANALYSIS.
Today, this Court is faced with a decision it has declined to answer
before: whether KRS 45A.245~ codified within the KMPC, waives immunity for
all contracts with the state, including written employment contracts. We now
hold that KRS 45A.245 is an unqualified waiver of immunity irt all cases based
on a written contract With the Commonwealth, including but not limited to
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employment contracts. We hold·that this immunity is not limited to contracts·
entered· into pursuant to the KMPC and .thus, therefore, decline to dictate
whether the hiring of university professors must comply with the remaining
provisions of the KMPC.
A. KRS 45A.245.
. ..
KRS 45A.245(1) states:
Any person, firm or corporation, having a lawfully authorized
written contract with the Commonwealth at the time of or after
. June 21, 1974, may bring an action against the Commonwealth on
the contract, including but not limited to actions either for breach
of contracts or for enforcement of contracts or for both. Any such
action shall be brought in the. Franklin Circuit Court and shall be
tried by the court sitting without a jury. All defenses in law or
equity, except the defense of governmental immunity, shall be
preserved to the Commonwealth.
KRS 45A.245(2) goes on to limit the amount of damages recoverable:under this
section.
· As a preliminary matter, the University. of Louisville is a state agency ·
entitled to governmental immunity,1 an extension of the Commonwealth's
sovereign immunity. See Furtula v. University of J(entucky, 438 S.W.3d 303,
305 (Ky. 2014) ("The state universities of this Commonwealth, including the
University of Kentucky, are state agencies that_ enjoy the benefits and
protection of governmental immunity except where it has been explicitly waived
)
I "'[G]overnmental immunity' is the public policy, derived from the traditional
doctrine of sovereign immunity, that limits imposition of tort liability on a governmen..t
agency." Yanero v. Davis, 65 S.W.3d 510, 519 (Ky. 2001) (citing 57 Am.Jur.2d,
Municipal, County, School and State Tort Liability, § 10 (2001)) . "[A] state agency is
entitled to immunity from tort liability to the extent that it is performing a
governmental, as opposeq to a proprietary, function." Yanero, 65 S.W.3d at 519
(citillg 72 Am.Jur.2d, States, Territories and Dependencies, §104 (1974)). .
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by the legislature."). Thus; t1:Je next determination is whether the l_egislature
has explicitly evidenced an intent to waive this immunity. Withers v. University
of Kentucky, 939 S.W.2d 340, 344 (Ky. 1997). While the judiciary has the sole
ability to determine whether an entity is entitled to sovereign immunity, id. at
342, only the !egislature can limit or waive that immunity once it has been
determined. Id. at 344 (citing Kentucky Center for the Arts v. Berns, 801.
\ S.W.2d 327, 329 (Ky. 1991)). We have stated that "[w]e will find waiver only
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where stated 'by the ;most express language or by such overwhelming
implication_s from the text as [will] leave no room for any other reasonable
construction."'. Withers, 939 S.W.2d at 346 (qu·oting Murray v. Wil~on Distilling
Co., 213 U.S. 151, 171 (1909)).
tn interpreting a statute,· "[w]e have a duty to accord to words of a statute)
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their literal meaning unless to do so would lead to an absurd or wholly
unreasonable conclusion." Cosby v. Commonwealth, 147 S.W.3d 56, 59 (Ky.
2004) (quoting Bailey v. Reeves, 662 S.W.2d 832, 834 (Ky. 1984)). As such, we
must look first to the plain Janguage of a statute and, if the language is clear;
our inquiry ends. See Revenue Cabinet v. O'Daniel, 153 S.W.3d 815; 819 (Ky ..
2005): We hold fast to the rule of constructio.n that "[t]he plain meaning of the
statutory language is presumed to be what the legislature intended, and if the
meaning is plain, then the court cannot base its interpretation on any .other
method or source." Id. (quoting_Ronald Benton Bro~ & Sharon Jacobs
B:rown, Statutory Inter}:>retation: The Search for Legislative Intent§ 4.2, at 38 ·
(NITA 2002)). In other words,."we assume that the '[Legislature] meant exactly
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what it said, and said exactly what it meant."' O'Daniel, 153 S.W.3d at 819
(quoting Stone v. Pryo~, .45 s:w. 1136, 1142 (Ky. 1898) (Waddle, S. J., ·
dis senting)).
Thus, we begin our inquiry with the plain language of KRS 45A.245(1).
This statute clearly intends a waiver of the 9-efense of governmental immunity.
There is no other "reasonable construction" of the statute. The legislature
clearly stated that "the defense of governmental immunity" was not preserved
for the Commonwealth on these contract claims. The parties here do not
question that a waiver was intended by the legislature. lnste~d, they-argue as
to the extent of this waiver.
B. Furtula v. University of Kentucky.
In the Furtula case, t_his Court specificaliy deqlined to answer the
I .
question of whether KRS 45A.245 applied to a written employment contract,
instead "leaving the examination or"that issue for another day, and for a case ...
. in which the resolution of that controversy would be material to our decision."
Furtula; 438 S.W.3d at 306. The bill has come due and we now.must answer .
this question. Fortuitously, however, our iearned colleague,. Justice Noble,
wrote a dissent to our opinion in which she addressed this. specific question.
See id. at 310-20 (Noble, J., dissenting). We now find her reasoning as to the
extent of this waiver persuasiv~.
Justice Noble stated that "[t]he waiver [in KRS 45A.245(1)] is not limited
to contracts entered into under the,[KMPC]; rather, th~ waiver applies to all
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lawfully authorized written contracts. This necessarily indudes contracts
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whose authority lies outside the [KMPC]." Id. at 319. KRS 45A.245 was .
formerly codified as KRS 44.270, prior to the adoption of the KMPC. Id. The
language of KRS 44.270(1) was almost identical to the presently codified
language of KRS 45A.245(1):
Any person,· firm or corporatiori, having entered into a lawfully
authorized written contract with the Commonwealth after June 16,
1966, may bring an action against the Commonwealth on a claim
for enforcement of contract or on a claim for breach of contract in
the Franklin. Circuit Court, provided, however, ·that all available
remedies under any regulation of the contracting agency or under
any clauses in the contract shall ·first be exhausted. Any such
action shall be tried by the Court sitting without a jury. All
defenses· in law or equity, except the defense of governmental
immunity, shall be preserv:ed to the _Commonwealth.
(emphasis added). Aside from the date of the contract and the requirement of
exhausting administrative remedies, the· text is lar$ely the same. Most
importantly, the waiver language in KRS 45A.245(1) remains identical to the
original codified statute in KRS 44.270(1).
Justice Noble also noted that KRS 44.270 was included in the same
. ~hapter that created the Board of Claims and KRS 44.270 was originally
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. referred to as .the "Contract Claims Act." .Id. at 319-20. The Court ofAppeals
interpreted that provision: to apply to employment contraets, specifically in that
case t? a contract with U of L. Id. at 320 (citing University of Louisville v.
Martin, 574 S.W.2d 676, 679 (Ky. App. 1978). "[S]ince the [KMPC] did not'
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exist, [KRS 44.270] must have applied to non-[KMPC] contract~." Furtula, 438
S.W.3d at 320 (Noble, J., dissenting).
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Justice Noble continued in tracing the statute's history to note that,
although the statute has been reenacted multiple times since 1978, the
General Assembly· has chosen not to make any change to the lariguage of this
waiver, even despite judicial recognition of a waiver of immunity in Martin. Id.
This strongly implies that the legislature has.agreed with the interpretation of
the statute. Id. (quoting Rye v. Wea8el, .934 S.W.2d 257, 262 (Ky. 1996)). As
I . .
such, Justice Noble stated that the waiver of governmental immunity described
in KRS 45A.245(1) should apply to all contracts, including the contract at issue
in Furtula. Furtula, 438 S.W.3d at 320 (Noble, J., dissenting).
C. Interpretation of KRS 44.270.
In 1963, this Court's predecessor was presented with the issue of
whether "the Departinent of Highways, an agency of the state, [could) defeat an
action for damages for breach of a contract by the plea of sovereign
immunity[.]" Foley Constr. Co. v. Ward, 375 S.W.2d 392; 392 (Ky. 1963). The
Court held that "[i]n view of the constitutional provision, the sound. public
policy in support of it, and the long adherence by this Court to the principle of
sovereign immunity," the agency could assert sovereign immunity in defense of
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an action for breach of contract. Id. at 396. "Only by authority of an
enactment of the Legislature may such suit be brought, and then the manner
of bringing a suit and the court in which it may be brought must be directed."
Id.
The legislature did respond. In 1966, House Bill 442 was introduced as
"an act relating to actions against the Commonwealth of Kentucky arising out
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of its contracts." The proposed Act included the same language now present in
KRS 45A.245(1): "All defenses in law or equity, except the defense of.
governmental immunity, shall be preserved to the Commonwealth." The law
was approved on March 23, 1966 and codified as KRS 44.270'. Our courts
then began the business of interpreting the provision.
. "
In Fidelity & Casualty Co. v. Commonwealth ex rel. Christen, this Court
specifically held "that the doctrine of sovereign immunity has no application
here, but that the right of Fidelity to maintain the action is authorized by KRS
44.270, 'Contract Claims Act, m and we reversed with directions to enter
judgment for Fidelity. 445 S.W.2d 113, 113 (Ky. 1969). The Court stated:
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The Contract Claims Act makes it possible that a 'person, firm or
corporation'. contracting with the Commonwealth 'may bnng an
action' to reqµire the Commonwealth to live up to its contractufil
obligations:· When the Legislature excepted 'the defense of
governmental immunity' as a de(ense, it waived ·governmental
immunity as it had the authority to do under section 231 of the
Constitution.
Id. at 114.
The judicia.rY continued this trend in H.E. Cummins & Sons Constr. Co. v..
Turnpike Auth, 562 S.W.2d 651 (Ky. App, 1977). "We conclude thatthe
Turnpike Authority is an agency of the Commonwealth and that any contract
. actio~ against the Turnpike Authotity must be brought pursuant to the
provisions of the Contract Claims Act." Id. at 653 .. Similarly, the Court of
Appeals stated that "one cannot sue the Commonwealth on a claim unless
sovereign immunity has been waived, as it has been on lawfully authorized
· written contracts." All-American Movers, Inc. v. Kentucky ex rel. Hancock, 552
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S.W.2d 679, 681 (Ky. App.· 1977) (citing KRS 44.270(1)).' In All-American
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·Movers, the Court of Appeals distinguished written contracts, for w:P,ich there
had been a clear waiver of immu,nity, and an oral contract at issue there. Id.
In University of Louisville v. Martin, '·a teacher sued for back wages and
retirement contributions. 574 S.W.2d at 677. The Court acknowledged the
. university's immunity status and that·the immunity "extends to.both actions in
tort and contract." Id. at 677. The Court specifically stated that proper course
for the claim at issue was through KRS 44.260 et seq. Id. at 679. "In
. prescribing thisiprocedure, the legislature was acting un9,er [Kentucky
Constitution Section] 231, which authorizes the General Assembly to direct the
manner[,] and in what courts[,] suits may be brought against the
Commonwealth." Id. Such a waiver is "a matter of grace[;]. such a remedy may
be granted, withdrawn or restricted at the will of the legislature." Id. (citing
'
Univtf!rsity of Kentucky v. Guynn, 372 S.W.2d 414 (Ky. 1963)).
In 1978, what became known as the KMPC was introduced and codified
as KRS Chapter 45A. It became effective in January of 1979. At that time, ,
KRS 44.270 was "[r]epealed and reenacted ~s KRS 45A.245, effective January
1, 1979." KRS 44.270.
D. KRS ·45A.245 waives immunity as to all claims arising from written
. contracts with the Commonwealth.
Based on the. plain language of the· statute and our prior interpretation of
.KRS 44.270, we now hold that KRS 45A.245(1) waives the defense of
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governmental immunity in all claims, based upon lawfully authorized written.
~
contracts. 2
The Plain Language of KRS 45A.245 waives immunity for contract claims.
The language of this statute is clear. We deem no necessity to begin
parsing out the types of contracts the legislature envisioned when creating this
particular statute. Instead, we look to the plain language of the statute:·"Any
person, firm or corporation, having a lawfully authorized written contract with
the Commonwealth . .". may bring· an action against the Commonwealth on the
contract ... All defenses in law or equity, except the defense of governmental
immunity, shall be preserved to the Commonwealth." KRS 45A.245(1). Once
again, we reiterate that "we assume that the '[Legislature] meant exactly what it
·said, and said exactly what it meant.m O'Daniel, -153 S.W'.3d at 819 (quoting
Pryor, 45 S.W. at 1142 (Waddle, S. J., dissenting))." The legislature chose to
utilize this language, without restriction or limitation. There is no reason for
2 We also note that, 8Ithough our Court has declined to specifically hold that
this waiver exists before today, our Court has contemplated and agreed with that
holding in dicta of prior decision~:
Suit cannot be instituted against the Commonwealth on a
claim · unless sovereign immunity has been specifically
waived; as it has been on a lawfully authorized contract ...
KRS 45A.245(1) provides that any person having a lawfully
authorized written contract with the Commonwealth may
·bring an action against the Commonwealth on the contract
Commonwealth v. Whitworth, 74 S.W.3d 695, 700 (Ky. 2002) (internal citations
omitted) .. This case was also relied upon by the Western District of Kentucky: "Here,
while the state has· waived its immunity for claims pertaining to. written contracts, it
has done so only for actions brought in Franklin County, Kentucky, Circuit Court ...
the state's waiver of sovereign immunity ... applies only to claims premised on written
contracts." Campbell v. University of Louisville, ·862 -F.Supp.2d 578, 58q (W.D. Ky.
2012) (citing KRS 45A.245(1) and Whitworth, 74 S.W.3d at 699-700). .
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us, therefore, to jmpose a co:nstraint unintended or unexpressed by the
General Assembly. Clearly, the legislature has waived governmental immunity
on all claims brought by all persons on all lawfully authorized written contracts
with the Commonwealth.
The Reenactment Doctrine requires our holding here today.
We discern no reason to treat KRS 45A.245 any differently than its
legislative predecessor, KRS 44.270. In fact, under the reenactment:doctrine,
we should interpret this provision in the same manner. "[W]hen a statute has
been construed by a court of.last resort and ·the statute is substantially
reenacted, the Legislature may be regarded· as adopting· such construction."
Benningfield ex rel. Benningfield v. Zinsmeister, 367-S.W.3d 561, 564 (Ky. 2012)
. - j
(quoting Hughes v. Commonwealth, 87 S.W.3d 850, 855 (Ky. 2Q02) (quoting·
Commonwealth v. Trousdale, 181S.W.2d254, 256.(Ky. 1944))). "[T]he failure of
the legislature to change a known judicial interpretation of a statute [is]
extremely persuasive evidence of the true legislative intent. There is a strong
i:m,plication that the legislature agrees with' a prior court interpretation when it
does not amend the statute interpreted." Benningfield, 367 S.W.3d at 564
(quoting Rye, 934 S.W.2d at 262).
As we have outlined, this Court has interpreted KRS 44.270 as a waiver
.. of the defense of governmental immunity to all claims based. upon lawfully
authorized written contracts with the Commonwealth, specifically including
written employment contracts within this waiver. The legislature has chosen
not to_ act in contravention of the Court's prior rulings regarding the
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predecessor statute and we deem this as indicative of the legislature's intent.
This interpretation comports with the clear, unequivocal language of the
statute; the General Assembly has specifically chosen to waive the defense of
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. governmental immunio/ in all cases based upon written contracts with the
Commonwealth.
IV. CONCLUSION.
We decline at this time to decide whether public universities must abide
by the remaining provisions of the KMPC in hiring professors·. Insteac:I, we
simply hold that this waiver of immunity applies to all claims based· upon ·
"lawfully authorized written contract[s]" with the Commonwealth. We believe
this is a simple, reasonable, and straightforw~d interpretation of the statute at
issue. To hold otherwise would be to contravene the clear intent of the ·General.
Assembly. For the foregoing reasons, we affirm the Court of Appeals and
remand to the Franklin Circuit Court for further proceedings.
Minton, C.J.; Cunningham, Keller, VanMeter, Venters and Wright, JJ.,
concur. Hughes, J. not sitting.
COUNSEL FOR APPELLANT:
Craig Christman Dilger
Steven Clark
Emily Mattingly (
Stoll Keenon Ogden PLLC
COUNSEL FOR APPELLEE:
Robert W. Bishop
John Saoirse Friend .
Tyler Zachary Korus
Bishop Korus Friend, P.S.C.
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