Univ. of Louisville v. Rothstein

• Decision Date: 02 November 2017
• Docket Number: 2016-SC-000220-DG
• Citation: 532 S.W.3d 644
• Parties: UNIVERSITY OF LOUISVILLE, Appellant v. Mark ROTHSTEIN, Appellee
• Court: United States State Supreme Court — District of Kentucky

532 S.W.3d 644

UNIVERSITY OF LOUISVILLE, Appellant

v.Mark ROTHSTEIN, Appellee

2016-SC-000220-DG

Supreme Court of Kentucky.

NOVEMBER 2, 2017

COUNSEL FOR APPELLANT: Craig Christman Dilger, Louisville, Steven Clark, Emily Mattingly, Stoll Keenon Ogden PLLC.

COUNSEL FOR APPELLEE: Robert W. Bishop, John Saoirse Friend, Tyler Zachary Korus, Louisville, Bishop Korus Friend, P.S.C.

OPINION OF THE COURT BY JUSTICE KELLER

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 Rothstein (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 issue in the underlying case. As we do not reach 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 was terminated 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 status 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 against the Commonwealth, U of L argued that this immunity does not 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.

Franklin 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 issue 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 contract and that KRS 45A.245 clearly constituted an unequivocal waiver of immunity for such contract claims.

Once again, U of L appealed this decision and moved this Court for discretionary review. We granted review and for the reasons stated herein, affirm 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 Rowan County v. Sloas, 201 S.W.3d 469, 475 (Ky. 2006) (citing Jefferson County Fiscal 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 in all cases based on a written contract with the Commonwealth, including but not limited to 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 Kentucky, 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 by the legislature."). Thus, the next determination is whether the legislature 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 legislature 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 where stated ‘by the most express language or by such overwhelming implications from the text as [will] leave no room for any other reasonable construction.’ " Withers, 939 S.W.2d at 346 (quoting Murray v. Wilson Distilling Co., 213 U.S. 151, 171, 29 S.Ct. 458, 53 L.Ed. 742 (1909) ).

In interpreting a statute, "[w]e have a duty to accord to words of a statute 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 language 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 construction 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 Brown 8B Sharon Jacobs Brown, Statutory Interpretation: The Search for Legislative Intent § 4.2, at 38 (NITA 2002)). In other words, "we assume that the ‘[Legislature] meant exactly what it said, and said exactly what it meant.’ " O'Daniel, 153 S.W.3d at 819 (quoting Stone v. Pryor, 103 Ky. 645, 45 S.W. 1136, 1142 (1898) (Waddle, S. J., dissenting)).

Thus, we begin our inquiry with the plain language of KRS 45A.245(1), This statute clearly intends a waiver of the defense 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. Instead, they argue as to the extent of this waiver.

B. Furtula v. University of Kentucky.

In the Furtula case, this Court specifically declined to answer the question of whether KRS 45A.245 applied to a written employment contract, instead "leaving the examination of 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 learned 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 persuasive.

Justice Noble stated that "[t]he waiver [in KRS 45A.245(1) ] is not limited to contracts entered into under the [KMPC]; rather, the waiver applies to all lawfully authorized written contracts. This necessarily includes contracts 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 corporation, 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 preserved to the Commonwealth.

(emphasis added). Aside from the date of the contract and the requirement of exhausting administrative remedies, the text is largely 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 chapter that created the...