Court Opinion

ID: 6322284
Source: CourtListenerOpinion
Date Created: 2022-03-11 15:05:31.783219+00
Date Added: 2024-06-11T09:20:43.988820
License: Public Domain

RENDERED: MARCH 4, 2022; 10:00 A.M.
                          TO BE PUBLISHED

                Commonwealth of Kentucky
                          Court of Appeals
                             NO. 2021-CA-0020-MR

UNIVERSITY OF KENTUCKY                                              APPELLANT

                APPEAL FROM FRANKLIN CIRCUIT COURT
v.              HONORABLE PHILLIP J. SHEPHERD, JUDGE
                        ACTION NO. 20-CI-00648

PETER REGARD, LEAH OUSLEY,
HALEIGH ALEXANDRA LONG,
MERIDETH MULLIN, ANNA QUINN
CURRAN, MACKENZIE PUTTEET,
AND KEEGAN MCLARNEY                                                  APPELLEES

                               OPINION
                AFFIRMING IN PART, REVERSING IN PART,
                          AND REMANDING

                                  ** ** ** ** **

BEFORE: CALDWELL, CETRULO, AND JONES, JUDGES.

JONES, JUDGE: The Appellant, the University of Kentucky (“the University”),

seeks review of the Franklin Circuit Court’s December 30, 2020 order granting in

part and denying in part the University’s motion to dismiss on the basis of
governmental immunity.1 Relevant to this appeal, the circuit court determined that

Appellees’ breach of contract claim seeking a refund of tuition and fees from the

University is not barred by governmental immunity: (1) because it falls within

KRS2 45A.245’s waiver provision; and (2) because Appellees are seeking a refund

of their own money and not damages from the state treasury. The University

contends that the circuit court erred with respect to both conclusions. Having

reviewed the record, and being otherwise sufficiently advised in the law, we agree

with the University that the circuit court erred to the extent it determined that the

University’s governmental immunity was not implicated based on the source of the

funds; however, we disagree that the circuit court erred when it determined that

Appellees’ breach of contract claim falls within KRS 45A.245’s waiver of

immunity. As such, we affirm in part, reverse in part, and remand for further

proceedings.

                                        I. BACKGROUND

                Appellees were enrolled at the University as full-time, on-campus

students for the University’s 2020 Spring Semester (“Spring Semester”) which

began in mid-January 2020 and ended in May 2020. (Record (“R.”) at 56.) Like

1
  The circuit court’s order described the University’s immunity as “sovereign,” while the parties
have used “governmental” and “sovereign” interchangeably. In keeping with the language used
most recently by the Kentucky Supreme Court, we refer to the University’s immunity as being
“governmental” as opposed to “sovereign.”
2
    Kentucky Revised Statutes.

                                               -2-
all full-time, on-campus students, in addition to tuition, Appellees were charged

mandatory fees by the University for the Spring Semester. (R. at 58.) The fees

were allocated for various purposes, including student health, the student center,

and the Johnson Center. (R. at 137.)

              Just as the Spring Semester was getting underway at the University,

health officials began to focus on a new respiratory disease spreading and causing

illness in certain parts of China, coronavirus disease 2019 (“COVID-19”), an

illness caused by the SARS-CoV-2 virus.3 After COVID-19 was detected in other

parts of the world, local and national governments across the globe began to take

actions to curb the spread of the virus. These actions varied in length and severity

depending on the locale. Some were voluntary while others were mandated. By

the late winter and into the early spring of 2020, national health officials were

advising the public to maintain social distancing and to stay home whenever

possible to avoid spreading COVID-19.4

              It is against this backdrop that the University decided to implement

certain emergency measures to protect its students, faculty, and staff from COVID-

3
   Centers for Disease Control and Prevention, Basics of COVID-19,
https://www.cdc.gov/coronavirus/2019-ncov/your-health/about-covid-19/basics-covid-19.html
(last updated May 24, 2021).
4
  The World Health Organization declared COVID-19 “a public health emergency of
international concern” on January 30, 2020, and a global pandemic on March 11, 2020.
https://www.who.int/emergencies/diseases/novel-coronavirus-2019/interactive-timeline (last
accessed Nov. 29, 2021).

                                             -3-
19. Effective March 23, 2020, the University ceased all in-person, on-campus

instruction for the remainder of the Spring Semester. After this date, all classes

were conducted remotely. Additionally, according to Appellees, “the campus was

effectively shut down for student use and access.” (R. at 58.) The University did

not issue any refunds to its students to compensate them for the change in class

format or their reduced access to campus-related services. (Id.)

               On or about August 7, 2020, the seven Appellees filed this putative

class action lawsuit against the University in Franklin Circuit Court seeking a

refund of the fees and tuition they paid the University for the Spring Semester.5

(R. at 3-10.) The University was served with Appellees’ complaint on or about

August 24, 2020. (R. at 16.) Approximately a week later, the University filed a

motion to dismiss the complaint in its entirety pursuant to CR 12.02(a) and (f). (R.

at 17.) As related to immunity, the University argued that summary dismissal was

required because Appellees had failed to identify a written contract between

themselves and the University that would permit suit under the terms of KRS

45A.245. (R. at 19-44.)

5
  Appellees are seeking to represent themselves and “all people who contracted with [the
University] in writing for certain services and paid for those services in the form of tuition and
mandatory fees, and who because of [the University’s] response and policies relating to the
[COVID-19] pandemic, lost the benefits of the services for which they had paid, and/or the
services for which their fees were paid, without having those fees and costs refunded to them.”
(R. at 53-54.) The circuit court has not yet determined whether class certification is appropriate.
Kentucky Rules of Civil Procedure (“CR”) 23.03.

                                                -4-
               On the same day the University’s motion to dismiss was scheduled to

be heard, Appellees filed a first amended complaint as a matter of right pursuant to

CR 15.01. (R. at 53-226.) In addition to adding a count for unjust enrichment,

Appellees attempted to shore up their breach of contract claim by attaching a series

of documents exchanged between themselves and the University.6 Appellees

alleged that the “documents, taken as a whole, constitute the written contract for

on-campus instruction and use of facilities and other benefits related to mandatory

fees” allowing them to maintain suit against the University pursuant to KRS

45A.245. (R. at 56.)

               After Appellees filed their first amended complaint, the circuit court

ordered the University’s prior motion to dismiss withdrawn, and the University

was given additional time to respond to the amended complaint. (R. at 248.) A

short time later, the University filed another motion to dismiss in which it

disclaimed Appellees’ allegation that the documents included as part of their

amended complaint constituted a written contract. (R. at 250-344.) Alternatively,

6
  The following exhibits were included as part of Appellees’ first amended complaint: (1) the
University’s April 6, 2020 Senate Council Minutes, (R. at 68-73); (2) a printout of the online
application portal, (R. at 74-84); (3) a printout of the electronic confirmation and certification of
application materials, (R. at 85-86); (4) a printout of the online, registration orientation, (R. at
87-95); (5) a printout of the online registration portal, (R. at 96-104); (6) a printout of the online
student statement of financial obligation, (R. at 105-07); (7) excerpts from the 2019-2020
University Bulletin, (R. at 108-141); (8) Administrative Regulations 8.7, (R. at 142-46); (9) the
University Senate Rules, (R. at 147-58); (10) a printout from academic ombud services defining
a course syllabus, requirements for University syllabi and the University’s syllabus template, (R.
at 159-88); and (11) selected syllabi for various Spring Semester courses, (R. at 189-226).

                                                 -5-
the University argued that even under the terms of the documents included as part

of the first amended complaint, Appellees had failed to state a claim upon which

relief can be granted because they could not show any actual breach of a promise

made to them by the University. (Id.)

               Following additional briefing and argument by counsel, the circuit

court entered an order partially granting and partially denying the University’s

motion to dismiss. (R. at 448-63.) With respect to immunity, the circuit court

determined that: (1) Appellees’ breach of contract claim falls within the scope of

KRS 45A.245’s waiver of governmental immunity insomuch as the Statement of

Financial Obligation, Exhibit 6 of the amended complaint, constitutes a written

contract between Appellees and the University and the supplemental materials

relied on by Appellees “merely reinforce the terms of that contract and the

expectations of the parties,” (R. at 455); (2) Appellees’ breach of contract claim is

not barred by governmental immunity because Appellees seek a return of money

they paid to the University rather than damages from the state treasury, (R. at 458);

and (3) Appellees’ unjust enrichment claim is barred by governmental immunity

because “unlike claims for breach of contract, there has been no limited statutory

waiver of claims for unjust enrichment against agencies of the Commonwealth,”

(R. at 461).

                                          -6-
               After determining that Appellees’ breach of contract claim was not

barred by immunity, the circuit court turned to the University’s argument that

Appellees had failed to demonstrate that the University’s decision to move classes

online caused it to breach any specific, written promises made to Appellees. The

circuit court determined that even though the classes were moved to an online

format, Appellees still received the benefit of their bargain with the University as

related to their tuition payments because they received instruction, grades, and

academic credit. (R. at 460.) However, the court determined that Appellees had

sufficiently pled a breach of contract claim as to the mandatory fees insomuch as

Appellees alleged they were denied a full semester of access to the services and

facilities for which they paid the fees. (Id.)

               The University immediately filed this appeal pursuant to Breathitt

County Board of Education v. Prater, 292 S.W.3d 883, 887 (Ky. 2009), seeking

review of those portions of the circuit court’s order adverse to its claim of

governmental immunity.7

7
  The University filed its notice of appeal on January 5, 2021. Not quite a week later, on
January 11, 2021, Appellees filed a motion to reconsider wherein they requested the circuit court
to reconsider that portion of its order which dismissed Appellees’ claim for a refund of all or a
portion of their tuition payments for the Spring Semester for failure to state a claim upon which
relief can be granted pursuant to CR 12.02(f). After briefing was complete, the circuit court
entered an order denying the motion without prejudice. The circuit court explained that it
believed denial with leave to refile was appropriate until such time as the appellate courts had
rendered a final determination on the University’s interlocutory appeal on the immunity issue.

                                               -7-
                               II. SCOPE OF REVIEW

              “[A]n order denying a substantial claim of absolute immunity is

immediately appealable even in the absence of a final judgment.” Prater, 292

S.W.3d at 887. Accordingly, we have jurisdiction to review the issue of immunity

despite the interlocutory nature of the circuit court’s order. Id.

             As part of the order under review, the circuit court also addressed

substantive aspects of Appellees’ claims, i.e., whether Appellees stated a viable

breach of contract claim upon which relief can be granted. Even though the circuit

court addressed the CR 12.02(f) issue in the same order as the immunity issue, the

scope of our appellate review must be confined to the circuit court’s determination

on the issue of governmental immunity “and nothing more.” Commonwealth

Cabinet for Health and Family Services, Department for Medicaid Services v.

Sexton by and through Appalachian Regional Healthcare, Inc., 566 S.W.3d 185,

190 (Ky. 2018) (quoting Baker v. Fields, 543 S.W.3d 575, 578 (Ky. 2018)). As

such, nothing herein should be construed as this Court expressing an opinion on

the propriety of the circuit court’s rulings under CR 12.02(f).

                             III. 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.

                                          -8-
Peerce, 132 S.W.3d 824, 833 (Ky. 2004)). Likewise, the issue of contract

formation is a question of law. Baumann Paper Co., Inc. v. Holland, 554 S.W.3d

845, 848 (Ky. 2018). Questions of law are reviewed de novo. Jacobi v. Holbert,

553 S.W.3d 246, 252 (Ky. 2018). This means “we owe no deference to the legal

conclusions of the court[] below.” Howard v. Big Sandy Area Development

District, Inc., 626 S.W.3d 466, 470 (Ky. 2020).

                                   IV. ANALYSIS

             “Sovereign immunity is a bedrock component of the American

governmental ideal, and is a holdover from the earliest days of the Commonwealth,

having been brought over from the English common law.” Caneyville Volunteer

Fire Dep’t v. Green’s Motorcycle Salvage, Inc., 286 S.W.3d 790, 799 (Ky. 2009).

Conceptionally, sovereign immunity is best viewed as an intrinsic attribute of the

state itself. Commonwealth v. Kelley, 314 Ky. 581, 583, 236 S.W.2d 695, 696

(1951) (“Immunity from suit has always been an attribute of state sovereignty.”);

Yanero v. Davis, 65 S.W.3d 510, 517 (Ky. 2001). The state’s inherent immunity is

broad; it protects the state not only from the imposition of money damages but also

from the burdens of defending a lawsuit. Meinhart v. Louisville Metro

Government, 627 S.W.3d 824, 830 (Ky. 2021); Lexington-Fayette Urban County

Government v. Smolcic, 142 S.W.3d 128, 135 (Ky. 2004) (“Immunity from suit

includes protection against the ‘cost[s] of trial’ and the ‘burdens of broad-reaching

                                         -9-
discovery’ that ‘are peculiarly disruptive of effective government.’” (quoting

Harlow v. Fitzgerald, 457 U.S. 800, 817-18, 102 S. Ct. 2727, 2738, 73 L. Ed. 2d

396, 409-10 (1982)).

             Because much of the state’s work is actually performed at the agency

level, the doctrine of sovereign immunity has evolved over time. Jacobi, 553

S.W.3d at 254. It is now well established that departments, boards, and agencies

that are integral parts of state government enjoy the same type of immunity as the

state itself. See Bryant v. Louisville Metro Housing Authority, 568 S.W.3d 839,

846 (Ky. 2019). However, the immunity of governmental and quasi-governmental

agencies is referred to as “governmental” as opposed to “sovereign” immunity. Id.

             The central difference between governmental and sovereign immunity

is that the state, as a separate, sovereign entity, enjoys automatic, unqualified

immunity. The state’s immunity flows from its very existence as a sovereign.

Governmental immunity, however, is not automatic. The immunity of “public and

quasi-public agencies outside the fundamental departments of state government”

depends on whether the agency was created by or at the behest of the state and

whether it is performing a function that is integral to state government. Board of

Trustees of Kentucky School Boards Insurance Tr. v. Pope, 528 S.W.3d 901, 904

(Ky. 2017) (citing Comair, Inc. v. Lexington-Fayette Urban County Airport Corp.,

295 S.W.3d 91 (Ky. 2009)).

                                         -10-
             Over the years, Kentucky appellate opinions have inconsistently

described the University’s immunity, sometimes calling it sovereign and other

times referring to it as governmental. The University is “an independent agency

and instrumentality of the Commonwealth[,]” which is attached to the executive

branch. University of Kentucky v. Moore, 599 S.W.3d 798, 809 (Ky. 2019)

(quoting KRS 164.225). As such, it is more properly described as enjoying

governmental as opposed to sovereign immunity. See id. However, the

discrepancy in terminology is a distinction without a difference because,

irrespective of the precise descriptive label, it is beyond dispute that the University

is entitled to immunity from suit except as authorized by the General Assembly.

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.”); Withers v. University of

Kentucky, 939 S.W.2d 340, 343 (Ky. 1997) (“[The] University of Kentucky is

entitled to sovereign immunity”); Department of Corrections v. Furr, 23 S.W.3d

615, 617 (Ky. 2000) (internal quotation marks and citations omitted) (“The

doctrine of sovereign immunity sweeps broadly. It shields inter alia counties,

boards of education, public universities, university hospitals and all departments,

                                         -11-
boards or agencies that are such integral parts of state government as to come

within regular patterns of administrative organization and structure.”).

             Our conclusion that the University is entitled to claim governmental

immunity, however, is just the beginning of our inquiry. This is because the

Constitution of Kentucky vests the General Assembly with the authority to waive

immunity for the Commonwealth and its agencies. Benningfield v. Fields, 584

S.W.3d 731, 736 (Ky. 2019). Specifically, Section 231 provides: “The General

Assembly may, by law, direct in what manner and in what courts suits may be

brought against the Commonwealth.” KY. CONST. § 231. We will only find a

Section 231 waiver where the General Assembly has made it unambiguously clear

by use of “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 (quoting Murray v. Wilson Distilling Co., 213 U.S.

151, 171, 29 S. Ct. 458, 464, 53 L. Ed. 742 (1909)). In the absence of a statute

authorizing suit, we presume that the General Assembly has not waived the state’s

immunity. Reyes v. Hardin County, 55 S.W.3d 337, 342 (Ky. 2001) (citations

omitted) (“There is no need for a statute that precludes a suit against an immune

entity, for such is inherent in the doctrine of sovereign immunity. A statute is

required only if the legislature intends to permit such a suit.”).

                                          -12-
             With these principles in mind, we now turn to specific immunity

questions presented by this appeal: (1) whether the circuit court erred as a matter

of law in concluding that immunity did not bar Appellees from suing the

University because they were merely seeking a return of their money and not

money damages from the state treasury; and (2) whether the circuit court erred as a

matter of law in concluding that Appellees’ breach of contract claims fall within

KRS 45A.245’s waiver provision for suits based on written contracts.

                                A. Source of Funds

             Appellees included an alternative count of unjust enrichment against

the University as part of their first amended complaint. This count’s language

makes clear that Appellees were trying to plead their way over the immunity

hurdle in the event they were determined not to have written contracts with the

University. Within the allegations of their unjust enrichment count, Appellees

alleged that the University should not be protected by governmental immunity

because Appellees were not seeking “money from the general fund of the

Commonwealth of Kentucky but rather the return of their tuition and fee payments

paid to the University.” (R. at 64.) Appellees posited that the University should be

deemed to be holding their tuition and fees in a constructive trust and ordered to

return it to them.

                                        -13-
             “[A] constructive trust arises when a person entitled to property is

under the equitable duty to convey it to another because he would be unjustly

enriched if he were permitted to retain it.” Patel v. Tuttle Properties, LLC, 392

S.W.3d 384, 387-88 (Ky. 2013) (quoting Terrill v. Estate of Terrill, 217 S.W.3d

858, 860 (Ky. App. 2006)). “[I]nvoking the trust is not enforcing a contract but is

providing equitable relief from a fraud or breach of confidence.” O’Bryan v.

Bickett, 419 S.W.2d 726, 728 (Ky. 1967).

             Confusingly, the circuit court concluded that Appellees’ claim for

unjust enrichment must be dismissed because “there has been no limited statutory

waiver of claims for unjust enrichment against agencies of the Commonwealth,”

(R. at 442), yet also determined that the remedy sought by Appellees for unjust

enrichment, a return of their money under a constructive trust theory, is not barred

by sovereign immunity. We are unsure how the circuit court intended these two

conclusions to be reconciled with one another. However, we need not concern

ourselves too much about this seeming inconsistency because while the circuit

court was correct on its first conclusion, it erred as a matter of law on the second.

             The circuit court concluded that the University’s immunity was not

infringed where Appellees “are seeking a return of their money rather than

payment from the State Treasury.” (R. at 440.) It pointed out that the money

originated with the students and was not allocated to the University by the General

                                         -14-
Assembly. Since the money was not generated “pursuant to the taxing power of

the state,” the circuit court concluded that the refund requested by Appellees

implicated neither the state treasury nor the doctrine of governmental immunity.8

(R. at 440-41.)

               The circuit court’s order asserted, “[i]n [Beshear v. Haydon Bridge

Company, Inc., 416 S.W.3d 280 (Ky. 2013)], the Supreme Court of Kentucky

noted that sovereign immunity in Kentucky is rooted in Sections 230 and 231 of

the Kentucky Constitution.” (R. at 439.) The relevant portion of Section 230

states that “[n]o money shall be drawn from the State Treasury, except in

pursuance of appropriations made by law[,]” while Section 231 states, “[t]he

General Assembly may, by law, direct in what manner and in what courts suits

may be brought against the Commonwealth.” Because Appellees sought relief in

the form of refunded tuition and fees from the University, rather than a direct

withdrawal of funds from the state treasury, the circuit court found governmental

immunity was not implicated.

               The circuit court’s source-of-funds reasoning relies on a misreading of

Haydon Bridge in order to conclude immunity will not lie under a negative

8
  The circuit court observed in a footnote that the University’s refusal to issue the refunds might
also be classified as “a constitutional taking of property without just compensation” for which
suit would be authorized. (R. at 441.) Because the circuit court only mentioned this alternative
theory in passing and the parties have made no mention of it, we will not address it. Suffice it to
say, Appellees’ pleadings give no indication that they are pursuing a constitutional takings claim
against the University.

                                               -15-
implication of Section 230; i.e., that suits against the Commonwealth which do not

touch the state treasury do not trigger sovereign or governmental immunity.

However, sovereign immunity is not exclusively constrained or defined by Section

230. Sovereign immunity is “an inherent attribute of the state.” Yanero, 65

S.W.3d at 523. It does not depend on Sections 230 and 231 of the Kentucky

Constitution, and Haydon Bridge itself explicitly rejects such a reading:

               Although some cases suggest that Sections 230 and 231
               are the source of sovereign immunity in Kentucky, e.g.,
               Bach v. Bach, Ky., 288 S.W.2d 52, 54 (1956), those
               sections are more accurately viewed as delegating to the
               General Assembly the authority to waive the
               Commonwealth’s inherent immunity by direct
               appropriation of money from the state treasury and/or by
               specifying where and in what manner the Commonwealth
               may be sued.

Haydon Bridge, 416 S.W.3d at 287;9 see also Reyes, 55 S.W.3d at 339.

               Additionally, in one of its later opinions considering the financing of

public university budgets, the Kentucky Supreme Court held universities, “unlike

other government entities, are given their own money to be held in their own

accounts,” while simultaneously pointing out that these same universities “retain[]

9
  Haydon Bridge’s discussion occurred in the context of the declaratory and injunctive relief
exceptions to sovereign immunity. 416 S.W.3d at 293-94. In other words, it had already been
established that the plaintiffs in Haydon Bridge had a right to file suit against the Commonwealth
to challenge the constitutionality of a statute. Id. at 289 (“[P]rospective injunctive powers are
available to Kentucky courts in cases such as this and those powers include both temporary relief
pending a declaration of unconstitutionality under the Kentucky Constitution as well as
permanent relief in a final judgment.”). Appellees have not sought either injunctive or
declaratory relief against the University.

                                              -16-
many of the government’s characteristics, such as immunity from suit.”

Commonwealth ex rel. Beshear v. Commonwealth Office of the Governor ex rel.

Bevin, 498 S.W.3d 355, 380-81 (Ky. 2016). The circuit court’s source-of-funds

immunity analysis does not comport with the Supreme Court’s reasoning.

             At the time Appellees paid their tuition and fees, the funds became the

University’s property. The University is “a state agency because it serves as a

central arm of the state performing the essential function of educating state citizens

at the college level and because it receives money from the state treasury in

support of this function.” Autry v. Western Kentucky University, 219 S.W.3d 713,

717 (Ky. 2007). The fact that the University also receives money from other

private sources, like Appellees, does not diminish its status as a state agency or its

immunity from suit. Comair, Inc., 295 S.W.3d at 102 (“The fact that the Board has

substantial revenue from fees charged while operating the airport also does not

make the activity proprietary.”).

             “Once it has been determined that an entity is entitled to sovereign [or

governmental] immunity, this Court has no right to merely refuse to apply it or

abrogate the legal doctrine.” Withers, 939 S.W.2d at 344. Applicable here, the

University’s immunity dictates that suit cannot be maintained against it except as

authorized by the General Assembly. There is no exception for suits in equity,

fraud, or bad faith or where the plaintiff is merely seeking a refund of money

                                         -17-
generated outside of the Commonwealth’s taxing power. If sovereign or

governmental immunity depended on whether the source of funds sought derived

from the state treasury, any government agency purchasing an insurance policy

would lose its immunity protection, and we know this is not correct. “[A] waiver

of sovereign immunity shall not be construed from the purchase of liability

insurance or the establishment of a fund for self-insurance.” Id. at 345.

               To be clear, the General Assembly has not authorized suits against the

state or its agencies for unjust enrichment. Lipson v. University of Louisville, 556

S.W.3d 18, 28 (Ky. App. 2018) (“Whatever the merits of Lipson’s unjust

enrichment claim against the University may be, Lipson cannot recover against the

University under this equitable remedy because there is no waiver of immunity for

anything other than a written contract.”). By the same token, the General

Assembly has not excepted claims against the Commonwealth and its agencies

based on the source of the funds at issue.10 Accordingly, we reverse the circuit

10
   In fact, the General Assembly has directed how money judgments for breach of contract
claims against state agencies are to be paid without regard to the source of the original funds.

               (1) Each agency which has had an award or judgment against it
               upon a claim filed pursuant to KRS 45A.240 to 45A.270 shall
               furnish a certified copy of the award of judgment to the Finance
               and Administration Cabinet. The first five hundred thousand
               dollars ($500,000) of any award or judgment against the
               Department of Highways, Transportation Cabinet, shall be paid out
               of the state road fund, upon warrants drawn by the secretary of the
               Finance and Administration Cabinet upon the State Treasurer. The
               first five hundred thousand dollars ($500,000) of any award or
               judgment against other departments or agencies of the state, which

                                               -18-
court’s order to the extent it determined that Appellees’ claims were not barred by

governmental immunity “based on the nature of the damages that they seek.” (R.

at 458.)

                                 B. Breach of Contract

             While the defense of sovereign or governmental immunity usually

arises from tort claims, “[t]he doctrine extends to both actions in tort and contract.”

University of Louisville v. Martin, 574 S.W.2d 676, 677 (Ky. App. 1978). In this

case, the circuit court concluded Appellees’ breach of contract claim against the

University “falls squarely within the waiver of sovereign immunity set forth in

KRS 45A.245.” (R. at 432.)

             KRS 45A.245, codified within Kentucky’s Model Procurement Code

(“KMPC”), provides:

             (1) 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

             are not maintained by appropriations out of the general fund, shall
             be paid out of the funds created or collected for the maintenance
             and operation of such department or agency, upon warrants drawn
             by the secretary of the Finance and Administration Cabinet upon
             the State Treasurer. The first five hundred thousand dollars
             ($500,000) of any award or judgment against all other departments
             and agencies of the state shall be paid out of the general fund, upon
             warrants drawn by the secretary of the Finance and Administration
             Cabinet upon the State Treasurer.

KRS 45A.270(1).

                                             -19-
            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.

            (2) If damages awarded on any contract claim under this
            section exceed the original amount of the contract, such
            excess shall be limited to an amount which is equal to the
            amount of the original contract.

(Emphasis added.) Although KRS 45A.245 is contained within the KMPC, its

“immunity is not limited to contracts entered into pursuant to the KMPC[.]”

University of Louisville v. Rothstein, 532 S.W.3d 644, 647 (Ky. 2017). “KRS

45A.245 is an unqualified waiver of immunity in all cases based on a written

contract with the Commonwealth[.]” Id.

            The University asserts that Appellees cannot rely on KRS 45A.245

because they do not have written contracts with it. Appellees allege that a number

of documents, which they included as exhibits to their first amended complaint,

“taken as a whole” comprise their written contract with the University. (R. at 56.)

The University concedes these documents were either given to Appellees or at

least referenced at some point during Appellees’ tenure with it. However, it

vigorously denies ever having entered into any written contracts with Appellees.

                                        -20-
According to the University, at best, a portion of these documents may have

created an implied contract,11 which is insufficient under KRS 45A.245.

               “The cases generally hold that a written instrument which sets forth

the undertaking of the persons executing it or discloses terms from which such an

undertaking can be imported, and which shows the consideration for the

undertaking, and which identifies the parties thereto, will be considered a contract

in writing.” Mills v. McGaffee, 254 S.W.2d 716, 717 (Ky. 1953). “[W]here an

instrument containing all the terms of a completed contract between two parties is

executed by one of the parties and accepted or adopted by the other, the instrument

constitutes a contract in writing.” Gray v. International Ass’n of Heat & Frost

Insulators and Asbestos Workers, Local No. 51, 447 F.2d 1118, 1121 (6th Cir.

1971) (citation omitted).

              However, all the terms do not have to be contained within a single

document. Dixon v. Daymar Colleges Group, LLC, 483 S.W.3d 332, 344 (Ky.

2015); Childers & Venters, Inc. v. Sowards, 460 S.W.2d 343, 345 (Ky. 1970).

“Terms and conditions incorporated by reference are enforceable.” Home Lumber

Co. v. Appalachian Regional Hosps., Inc., 722 S.W.2d 912, 914 (Ky. App. 1987).

11
   “To establish a contract implied in fact, the evidence must disclose an actual agreement or
meeting of the minds although not expressed and such is implied or presumed from the acts or
circumstances which according to the ordinary course of dealing and the common understanding
of men shows a mutual intent to contract.” Rider v. Combs, 256 S.W.2d 749, 749 (Ky. 1953).

                                             -21-
“For a contract validly to incorporate other terms, ‘it must be clear that the parties

to the agreement had knowledge of and assented to the incorporated terms.’ In

addition, there must be ‘clear language [ ] express[ing] the incorporation of other

terms and conditions[.]’” Dixon, 483 S.W.3d at 344 (quoting 11 WILLISTON ON

CONTRACTS § 30.25 (4th ed. 2014); Bartelt Aviation, Inc. v. Dry Lake Coal Co.,

Inc., 682 S.W.2d 796, 797 (Ky. App. 1985)).

              The Kentucky Supreme Court first considered whether university

informational documents and policies could create contractual obligations

sufficient to satisfy KRS 45A.245’s requirements in Furtula v. University of

Kentucky, supra. The plaintiff in Furtula claimed that the University’s employee

handbook constituted a written employment contract. No other employment

contract was alleged. Further, the handbook at issue contained a disclaimer at the

beginning that specifically stated that the handbook was not a contract and that all

employees at the University are considered “at will.” Furtula, 438 S.W.3d at 309.

Ultimately, the Court held that the University was entitled to immunity because the

plaintiff had “not established that the General Assembly expressly waived

sovereign immunity in claims based upon implied contracts arising from a state

university’s employee handbooks and personnel policies, and because the relevant

University of Kentucky personnel documents specifically disclaimed the creation

of a contract[.]” Id. at 310.

                                         -22-
              Most recently, the Kentucky Supreme Court considered KRS

45A.245’s written contract requirement in Britt v. University of Louisville, 628

S.W.3d 1 (Ky. 2021). In that case, the University of Louisville sent Dr. Britt a

letter in the fall of 2003 indicating that she was going to be recommended for

appointment to a full-time, tenure track position. Id. at 3. “The letter set out the

terms and conditions of the position, including the duration of the appointment and

first year’s salary.” Id. “The letter further stated other terms and conditions

applicable to the appointment, such as the policies governing personnel reviews

and termination, were set out in the University’s governance document, The

Redbook, and other relevant college-level policy statements.” Id. Dr. Britt was

asked to communicate her acceptance by signing and returning the letter, which

she did. Id. Similar letters were sent for several years thereafter. Id. However,

Dr. Britt’s 2009 application for tenure was denied, and her employment with the

University of Louisville terminated after the 2011 spring semester. Id. at 4. In

2012, “Dr. Britt filed suit against the University . . . alleg[ing] . . . that the

University breached its employment contract with her when it violated provisions

of its policy manuals and failed to provide her with adequate time to perform the

research necessary for her to obtain tenure.” Id. The University of Louisville

sought dismissal of the complaint on the basis that it was entitled to governmental

immunity. Id. It argued that the appointment letters did not meet KRS 45A.245’s

                                            -23-
requirement for a written contract, and alternatively, even if the letters did

constitute written contracts, “those contracts did not incorporate the University’s

personnel policies as contractual promises.” Id.

               Our Supreme Court held that while Dr. Britt did not work under a

written contract with the University every year, “the parties did execute a series of

valid, written contracts for at least five of those years” by virtue of the offer letters

sent to Dr. Britt. Id. at 6. The Court then considered whether the terms of The

Redbook, which contained the policies and procedures at issue, could be

considered part of the parties’ written contracts. Id. at 7-8. Ultimately, the Court

held “the provisions of The Redbook and its associated personnel policies relevant

to Dr. Britt’s position, including but not limited to the University [of Louisville’s]

policies regarding tenure, personnel review, and termination, to be validly

incorporated into each of the [] contracts.” Id. at 8. It reached this holding based

on language in the letters12 in which the University had indicated that The Redbook

12
   “The letters provide[d] that ‘[t]he terms and conditions of employment in the University of
Louisville herein specified include all rules and regulations promulgated on the authority of the
University of Louisville Board of Trustees and the governance document known as The
Redbook.’” Id. at 3. “Regarding tenure, each letter state[d] ‘[t]he appointment . . . is subject to
the tenure policy of the University of Louisville. Under the policy of The Redbook, tenure in this
position would be awarded July 1, 2011 should it be mutually agreeable to make renewals of this
appointment beyond this date.’” Id. at 3-4.

                                               -24-
“shall control, decide, or affect its relationship” with Dr. Britt.13 Id. (emphasis

added).

              With this framework in mind, we now turn to the documents relied on

by Appellees. We cannot agree with Appellees that each of the documents

included as part of their first amended complaint is part of a written contract with

the University with respect to the payment of fees and tuition for the Spring

Semester. Exhibits 2-3 of Appellees’ first amended complaint are a compilation of

the University’s online admissions application and related materials. The

admissions process necessarily predated the payment of fees and tuition for the

2020 Spring Semester. On the other end of the spectrum, Exhibits 10-11 of

Appellees’ first amended complaint relate to the creation and effect of class syllabi.

While the syllabi guidelines describe each syllabus as an “academic contract” with

the students, the actual syllabi were not distributed to Appellees until the start of

classes, well after Appellees paid the disputed sums to the University. Likewise,

we cannot agree that the Senate Council Meeting Minutes (Exhibit 1), the

Administrative Regulations (Exhibit 8), or University Senate Rules (Exhibit 9) is

part of any, specific written contract between Appellees and the University for the

13
   Nevertheless, at the end of the day, the Court affirmed our reversal of the Franklin Circuit
Court’s denial of the University’s motion for summary judgment because Dr. Britt had not filed
her suit within one year of the completion date of her last written contract as required by KRS
45A.260(2). Britt, 628 S.W.3d at 9.

                                             -25-
payment of tuition and fees for the 2020 Spring Semester. While these documents

may have been viewed by and/or accessible to Appellees we cannot agree that they

were presented to Appellees as documents that would “control, decide, or affect

[their] relationship” with the University at the time Appellees paid the tuition and

fees at issue. Britt, 628 S.W.3d at 8. Documents, like the online admissions

application and the course syllabi and guidelines, simply do not contain the

“promises of performance to be rendered by each party” necessary to support

formation of a legally binding contract, at least not with respect to the specific fees

and tuition payments at issue here.14 Energy Home, Div. of Southern Energy

Homes, Inc. v. Peay, 406 S.W.3d 828, 834 (Ky. 2013) (quoting Kovacs v.

Freeman, 957 S.W.2d 251, 254 (Ky. 1997)).

              However, the Financial Obligation Statement, attached as Exhibit 6 to

Appellees’ first amended complaint, (R. at 105-07), and the other registration-

related documents lead to a different conclusion. The Financial Obligation

Statement was presented to Appellees as part of the online registration process, and

the students were required to accept their financial responsibility to the University

14
   “The court finds no legal support for treating a course syllabus as a contract. The few courts
that have considered the issue have concluded that a syllabus does not constitute a [legally
binding] contract.” Gabriel v. Albany College of Pharmacy and Health Scis. - Vermont Campus,
No. 2:12-cv-14, 2012 WL 4718678, at *7 (D. Vt. Oct. 3, 2012) (collecting cases).

                                              -26-
before completing their registration for the Spring Semester. In relevant part, the

Financial Obligation Statement provides:

             Please read the following statement and then click the
             accept button at the bottom of this page to continue the
             registration process.

             ...

             Request and completion of registration constitutes a
             contractual financial obligation to pay tuition and fees
             for which I am liable. I am responsible for reading and
             understanding the current Drop/Refund policy of the
             University as it appears in the current Schedule of
             Classes. Permission to cancel enrollment does not
             constitute, nor shall it be construed as, a waiver by the
             University of my financial obligation. I understand that
             any financial assistance I receive will be applied against
             my billed charges to reduce my financial obligation.

             I am responsible for all outstanding debts and contracts
             with the University. The University reserves the right to
             assess financial penalties on any indebtedness. Any past-
             due accounts may be referred to an outside collection
             agency or the Department of Revenue, which could result
             in collection fees. If my account is referred to an outside
             collection agency, I understand and agree to reimburse
             the University for any collection agency fees, which may
             be based on a percentage at a maximum of 33% of the
             debt and all costs and expenses including reasonable
             attorney’s fees, the University incurs in such collection
             efforts. If my account is referred to the Department of
             Revenue, I understand and agree to reimburse the
             University for any Department of Revenue fees, which
             are based on a percentage of 25% of the debt, plus
             6% interest accrued daily, and all costs and expenses
             including reasonable attorney’s fees, the University
             incurs in any such collection efforts.

                                        -27-
(R. at 105-06 (some emphases added).)

             The Financial Obligation Statement is the converse of the handbook in

Furtula. While the University explicitly disavowed its intent to form a contractual

relationship in the handbook, the Financial Obligation Statement explicitly states

that the University and its students are contracting one another for the payment of

tuition and fees as part of the registration process. A student assents to the

formation of this contractual relationship by clicking the “accept button” and then

“request[ing] and complet[ing]” registration. (R. at 105.) Clearly, the

“manifestation of mutual assent to the exchange,” which was found lacking in

Furtula, is present here insomuch as the University required its students to

expressly consent to the formation of a “contractual financial obligation” with it.

See RESTATEMENT (SECOND) OF CONTRACTS § 17 (1981).

             Despite the fact that the University required Appellees to click the

accept button on the Financial Obligation Statement before they were allowed to

complete registration for the Spring Semester, it argues in this appeal that

Appellees “have never produced evidence to show they actually accepted the

University’s alleged offer.” (Appellant’s Brief at 12.) The University’s Financial

Obligation Statement is best described as a “clickwrap” arrangement, in which the

user is required to “explicitly assent by clicking ‘I agree’ (or something similar)

before using the website or purchasing a product.” Foster v. Walmart, Inc., 15

                                         -28-
F.4th 860, 863 (8th Cir. 2021). “Applying ordinary contract law principles, courts

routinely uphold ‘clickwrap’ . . . agreements . . . ‘for the principal reason that the

user has affirmatively assented to the terms of agreement by clicking “I agree.”’”

Hidalgo v. Amateur Athletic Union of United States, Inc., 468 F. Supp. 3d 646, 654

(S.D.N.Y. 2020) (quoting Meyer v. Uber Techs., Inc., 868 F.3d 66, 75 (2d Cir.

2017)).

               In their first amended complaint, Appellees alleged that the University

required them to electronically sign or acknowledge the Financial Obligation

Statement.15 (R. at 56.) This allegation, which we must accept as being true,

Brown-Forman Corporation v. Miller, 528 S.W.3d 886, 889 (Ky. 2017), coupled

with the nature of the Financial Obligation Statement convinces us that the parties

manifested their mutual assent to be bound through their electronic interchanges

with one another. And, under KRS 369.107(3), “[i]f a law requires a record to be

in writing, an electronic record satisfies the law.” Thus, we are satisfied that

Appellees’ electronic acceptance of the Financial Obligation Statement created a

written contract with the University sufficient to satisfy KRS 45A.245.

               While the University acknowledges that the Financial Obligation

Statement referred to the creation of financial obligations, it points out that the

15
   Appellees further alleged that they were unable to include their individual acceptances
because the University maintains each electronic copy and does not provide copies to the
students. (R. at 56.)

                                              -29-
document itself does not contain all the terms necessary, such as the amount owed,

to stand on its own. While this may be true, the document was not presented to the

students in isolation. A careful reading of the document, shows it was presented to

the students at the inception of the registration process. (R. at 105) (emphasis

added) (“Please read the following statement and then click the accept button at the

bottom of this page to continue the registration process.”). It is clear from this

statement that the University’s intent was for the registration and fee related

documents to “control, decide, or affect its [contractual financial] relationship”

with its students meaning those documents are part of the University’s written

contract with Appellees. Britt, 628 S.W.3d at 8.

               Registration involves the completion of an online process whereby the

student selects the type and number of classes she will take for the upcoming

semester. The University Bulletin reiterates that students become contractually

obligated to the University by completing registration.

               You become financially obligated to [the University]
               when you register for classes. The financial obligation
               can only be adjusted if you add/drop hours or withdraw
               from the University. It is your responsibility to comply
               with this policy and schedule for paying registration fees.

(R. at 128.)

               The final amount to be paid by the student for tuition and fees

depends on the specific degree program being pursued and the classes selected by

                                          -30-
the student. The exact amount of the mandatory fees and tuition is set out in the

University Bulletin. Important to this dispute, full-time graduate and

undergraduate students with at least one course on campus were charged $674.50

in mandatory fees per semester while full-time undergraduate and graduate

students with no courses on campus were charged $128.50 in mandatory fees per

semester.16 (R. at 137.) Specifically,

               Mandatory fees are listed separately above and will be
               assessed based on the student’s full-time or part-time
               status, course delivery mode(s), and whether or not the
               student is enrolled in at least one on-campus course. An
               on-campus course requires regular or periodic physical
               attendance on campus for instruction and/or assessment.
               The delivery modes for an on-campus course may
               include, but are not limited to, traditional classroom,
               hybrid (e.g., traditional classroom and Internet web-
               based), compressed video, or satellite courses. Unless
               stated elsewhere, students will be assessed a maximum
               $674.50 mandatory fees per semester.

(R. at 135.)

               When the Financial Obligation Statement is considered in conjunction

with the other registration documents, all the elements necessary for contract

formation are met. When boiled down to its simplest terms, through these written

documents, the students and the University agreed to enter into a contractual

relationship whereby the students agreed to pay the University fees and tuition in

16
   “Mandatory student fees mean fees that are assessed to all full-time students, with the
exception of those students who take all courses via the Internet or off-campus.” (R. at 143.)

                                              -31-
accordance with the University’s fee and tuition schedule as set out in the

University Bulletin. In return, the University agreed to provide the students with

access to the classes selected during registration and to make its facilities available

for the students’ use.17 The terms are both “definite and certain” and set forth the

“promises of performance to be rendered by each party.” Energy Home, Div. of

Southern Energy Homes, Inc., 406 S.W.3d at 834 (citation omitted). Accordingly,

we agree with the circuit court that Appellees and the University have a written

contract with each other for the payment of fees and tuition for the Spring

Semester, and that Appellees’ breach of contract claim as set forth in their first

amended complaint is “an action against the [University] on the contract” allowing

this suit to proceed despite the University’s governmental immunity. KRS

45A.245.18

                                       V. CONCLUSION

               For the foregoing reasons, we reverse the portion of the Franklin

Circuit Court’s order relating to a source-of-funds rationale for finding waiver of

17
  For example, the University Bulletin states: “For the regular fall and spring semesters,
payment of the mandatory health fee by full-time students entitles them to medical and
behavioral health care at University Health Services.” (R. at 128.)
18
   We reiterate that this Opinion is limited to a determination of the specific immunity questions
discussed herein. The fact that we have determined that the University’s immune status does not
shield it from Appellees’ breach of contract claims does not mean that we have determined that
the University actually breached its contracts with Appellees. At this juncture, such a
determination is beyond the scope of our appellate jurisdiction.

                                              -32-
sovereign or governmental immunity, we affirm the remaining portions of the

order which find the University’s immunity has been waived by execution of a

lawfully authorized written contract, and we remand for further proceedings not

inconsistent with this Opinion.

             CALDWELL, JUDGE, CONCURS.

         CETRULO, JUDGE, CONCURS IN PART, DISSENTS IN PART,
AND FILES SEPARATE OPINION.

             CETRULO, JUDGE, CONCURRING IN PART AND DISSENTING

IN PART: Respectfully, I concur in part and dissent in part with the majority

Opinion. I agree that the Franklin Circuit Court’s order relating to a source-of-

funds rationale for finding waiver does not comport with the Supreme Court’s

reasoning in Commonwealth ex rel. Beshear v. Commonwealth Office of the

Governor ex rel. Bevin, 498 S.W.3d 355, 380-81 (Ky. 2016). I further agree that

any claims for unjust enrichment are barred by governmental immunity. However,

the majority’s opinion that any breach of contract claim against UK falls within the

scope of waiver of immunity under KRS 45A.245 necessarily requires a finding

that there was a clear contract with which I cannot agree. Our recent Supreme

Court decisions have certainly made the majority’s conclusion understandable, but

I would find this an implied contract at best.

             “We will find waiver only where stated by the most express

language[,] or by such overwhelming implication[s] from the text as [will] leave no

                                         -33-
room for any other reasonable construction.” Withers v. University of Kentucky,

939 S.W.2d 340, 346 (Ky. 1997) (internal quotation marks omitted) (quoting

Murray v. Wilson Distilling Co., 213 U.S. 151, 171, 29 S. Ct. 458, 53 L. Ed. 742

(1909)). See also Bryant v. Louisville Metro Housing Authority, 568 S.W.3d 839

(Ky. 2019). The Supreme Court’s decision in Britt v. University of Louisville, 628

S.W.3d 1 (Ky. 2021), did extend the written contract requirement of KRS 45A.245

and found a waiver of immunity based upon a series of letters and personnel

policies. However, I cannot agree that this was the intention of the Legislature in

enacting KRS 45A.245, nor that the documents relied upon herein by the majority

created anything more than an implied contract. Kentucky has not waived

immunity as to implied contracts. Furtula v University of Kentucky, 438 S.W.3d

303 (Ky. 2014). Therefore, I would find that immunity exists.

                                        -34-
BRIEFS FOR APPELLANT:         BRIEF AND ORAL ARGUMENT
                              FOR APPELLEES:
Joshua M. Salsburey
Donald C. Morgan              Andre F. Regard
Lexington, Kentucky           Ivey L. Workman
                              Lexington, Kentucky
William E. Thro

Lexington, Kentucky

ORAL ARGUMENT FOR
APPELLANT:

Joshua M. Salsburey
Donald C. Morgan
Lexington, Kentucky

BRIEF FOR AMICI CURIAE,
EASTERN KENTUCKY
UNIVERSITY, MURRAY STATE
UNIVERSITY, NORTHERN
KENTUCKY UNIVERSITY,
UNIVERSITY OF LOUISVILLE,
AND WESTERN KENTUCKY
UNIVERSITY:

Donna King Perry
Jeremy S. Rogers
Alina Klimkina
Louisville, Kentucky

August Johannsen
Lexington, Kentucky

                            -35-