Court Opinion

ID: 4704152
Source: CourtListenerOpinion
Date Created: 2021-07-16 14:07:04.229371+00
Date Added: 2024-06-11T08:05:09.740384
License: Public Domain

RENDERED: JULY 9, 2021; 10:00 A.M.
                         NOT TO BE PUBLISHED

                Commonwealth of Kentucky
                          Court of Appeals
                             NO. 2020-CA-0037-MR

DUSTIN C. BEARD                                                     APPELLANT

                APPEAL FROM FRANKLIN CIRCUIT COURT
v.              HONORABLE THOMAS D. WINGATE, JUDGE
                        ACTION NO. 19-CI-00498

CABINET FOR HEALTH AND
FAMILY SERVICES                                                       APPELLEE

                               OPINION
                 AFFIRMING IN PART, VACATING IN PART,
                          AND REMANDING

                                  ** ** ** ** **

BEFORE: CALDWELL, JONES, AND TAYLOR, JUDGES.

JONES, JUDGE: Dustin C. Beard appeals an order of the Franklin Circuit Court

which granted the Cabinet for Health and Family Services’ (the Cabinet’s) motion

to dismiss his suit seeking enforcement of a contract. We affirm in part, vacate in

part, and remand for further proceedings.
                                       I.     BACKGROUND

               The parties disagree regarding virtually all of the underlying facts in

this case. Beard is an attorney working out of a private firm in Lexington.

According to Beard, he was contacted by Tabitha Schnell, an employee working

for the Cabinet. The Cabinet was allegedly involved in a guardian and conservator

action in Scott County in which an individual, L.C.K., was being exploited by her

children. 1 In Beard’s account, Schnell approached him and asked if he would

petition the court for appointment as L.C.K.’s guardian and conservator. She

allegedly requested Beard’s services because the Cabinet is ill-equipped to serve as

a guardian to a person with significant assets, particularly stocks and bonds.

According to Beard, he was informed, presumably by Schnell, to keep a record of

his hours worked on the case, and the Cabinet would compensate him for his time

at the conclusion of his representation. There is nothing in the record which

memorializes the alleged agreement between Beard and Schnell or any other

member of the Cabinet; although, Beard alleged the existence of a valid contract in

his complaint.

1
  Although not specified in the record or the briefs, it appears the L.C.K. action was initiated
under the provisions for conservatorship of a disabled person, pursuant to Kentucky Revised
Statutes (KRS) 387.500, et seq. The underlying issues in the L.C.K. action are not part of the
record.

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             According to Beard, he worked on the L.C.K. case from September

12, 2017, to July 18, 2018. However, when he submitted a detailed invoice for his

services in the amount of $39,315.00 to the Cabinet, the Cabinet declined payment

on the invoice. After some negotiation with the Cabinet attorneys, Beard filed a

suit to enforce his contract in Scott Circuit Court. The matter was then transferred

to Franklin Circuit Court pursuant to the requirements of KRS 45A.245(1). Beard

attached emails to his pleadings documenting his communication with Cabinet

attorneys Johann Herklotz and Marion Hogan. Those emails show that Beard was

working on an unspecified case with Herklotz and Hogan, and they also document

a dispute relating to his fee. Beard also attached his detailed invoice, showing the

time he invested in the L.C.K. case. Finally, Beard attached an affidavit from

Cameron Culbertson, Assistant Scott County Attorney, in which Culbertson

attested as follows:

             It was my understanding that Dustin C. Beard was
             representing the Cabinet for Health and Family Services
             in [the L.C.K. case], and that he filed the Guardianship
             case at the request of the Cabinet for Health and Family
             Services. . . . Dustin C. Beard filed pleadings and
             represented the Cabinet for Health and Family Services
             in all respects of the case from September 12, 2017
             through July 18, 2018.

(Record (R.) at 119.)

             The Cabinet moved to dismiss Beard’s suit on grounds that Beard did

not show he had a lawfully authorized written contract with the Cabinet, and

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sovereign immunity barred suit in such cases. Following receipt of the parties’

briefs on the issue, the Franklin Circuit Court agreed with the Cabinet and entered

its order granting the motion to dismiss. This appeal followed.

                                         II.    ANALYSIS

                The trial court granted the Cabinet’s motion to dismiss under CR2

12.02. As an appellate court, we apply the following standard of review in such

cases:

                A motion to dismiss for failure to state a claim upon
                which relief may be granted admits as true the material
                facts of the complaint. So a court should not grant such a
                motion unless it appears the pleading party would not be
                entitled to relief under any set of facts which could be
                proved. . . . Stated another way, the court must ask if the
                facts alleged in the complaint can be proved, would the
                plaintiff be entitled to relief? Since a motion to dismiss
                for failure to state a claim upon which relief may be
                granted is a pure question of law, a reviewing court owes
                no deference to a trial court’s determination; instead, an
                appellate court reviews the issue de novo.

Skeens v. University of Louisville, 565 S.W.3d 159, 160 (Ky. App. 2018) (quoting

Fox v. Grayson, 317 S.W.3d 1, 7 (Ky. 2010) (internal quotation marks and

citations omitted)).

                Beard presents three arguments on appeal. First, he argues the circuit

court erroneously found the Cabinet did not hire him in the L.C.K. guardianship

2
    Kentucky Rules of Civil Procedure.

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proceedings. Second, Beard argues the circuit court erroneously found the Cabinet

did not waive sovereign immunity regarding his attorney-client agreement with the

Cabinet. Third, and finally, Beard argues the circuit court erroneously found his

claim was barred by sovereign immunity when the Cabinet’s employees informed

him a writing would be performed at the conclusion of his representation. For its

part, the Cabinet asserts Beard has not produced a written contract between itself

and Beard and cites Commonwealth v. Whitworth, 74 S.W.3d 695 (Ky. 2002), for

the proposition that “[l]egally enforceable contracts with the state are to be in

writing.” Id. at 700. The circuit court relied upon this same point in its order

dismissing Beard’s action against the Cabinet.

             We agree with the circuit court that, as a matter of sovereign

immunity, suits against the Commonwealth or its agencies to enforce a contract

require a written contract. Sovereign immunity is “an inherent attribute of the

state” which provides it with “[a]bsolute immunity from suit.” Comair, Inc. v.

Lexington-Fayette Urban County Airport Corp., 295 S.W.3d 91, 94 (Ky. 2009)

(citations omitted). “[P]ure sovereign immunity, for the state itself, has long been

the rule in Kentucky. . . . Sovereign immunity can only be waived by the General

Assembly.” Ruplinger v. Louisville/Jefferson County Metro Government, 607

S.W.3d 583, 585 (Ky. 2020) (citations and internal quotation marks omitted).

Governmental immunity, derived from sovereign immunity, likewise prevents suit

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against a government agency. Yanero v. Davis, 65 S.W.3d 510, 519 (Ky. 2001).

Like sovereign immunity, governmental immunity can only be waived by an

explicit act of the General Assembly. University of Louisville v. Rothstein, 532

S.W.3d 644, 647 (Ky. 2017). “It is undisputed that the Cabinet is a state agency

entitled to the protection of governmental immunity.” Cabinet for Health and

Family Services v. Todd County Standard, Inc., 488 S.W.3d 1, 9-10 (Ky. App.

2015) (citing Stratton v. Commonwealth, 182 S.W.3d 516 (Ky. 2006)).

             Beard’s suit against the Cabinet is predicated upon enforcement of a

contract. The governmental immunity afforded to the Cabinet in contract matters

has been waived by the General Assembly in KRS 45A.245(1), which reads in

pertinent part as follows: “Any person, firm or corporation, having a lawfully

authorized written contract with the Commonwealth . . . 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.” A plain

reading of the statute indicates that the legislative waiver of sovereign immunity in

contractual matters only applies to written contracts. This was the basis for our

Supreme Court’s declaration in Commonwealth v. Whitworth, that “a lawsuit

cannot be brought against the Commonwealth to enforce oral contracts.”

Whitworth, 74 S.W.3d at 700. The circuit court correctly determined anyone

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bringing suit against the Commonwealth for enforcement of a contract must have a

written contract, and we affirm that part of the circuit court’s order.

             However, the record presented to us, as well as to the circuit court, is

underdeveloped in this case. Beard strenuously argues several Cabinet employees

knew he was working on the L.C.K. matter for the Cabinet, and he asserts the

Cabinet now incorrectly denies he was working on its behalf. Based on the record

before us, it appears the circuit court did not have the advantage of being able to

consider the record in the underlying L.C.K. action in order to consider the scope

of Beard’s representation. Furthermore, Beard claims there are documents in the

Cabinet’s possession which, taken together, will show all the elements of a written

contract between himself and the Cabinet were present while he performed

services on the L.C.K. matter. Beard asserts the Cabinet blocked him from

conducting adequate discovery which would prove the existence of this written

contract.

             Wide-ranging discovery is not appropriate against a party claiming

immunity. “Immunity from suit includes protection against the ‘cost of trial’ and

the ‘burdens of broad-reaching discovery’ that ‘are peculiarly disruptive of

effective government.’” Lexington-Fayette Urban County Government v. Smolcic,

142 S.W.3d 128, 135 (Ky. 2004) (quoting Harlow v. Fitzgerald, 457 U.S. 800,

817-18, 102 S. Ct. 2727, 2738, 73 L. Ed. 2d 396, 409-10 (1982)). The Kentucky

                                          -7-
Supreme Court has held that “broad-reaching discovery” was not appropriate

“prior to an immunity determination” by the trial court. Presbyterian Church

(U.S.A.) v. Edwards, 566 S.W.3d 175, 179 (Ky. 2018). Notably, however, the

Supreme Court also held “limited discovery [which] the trial court may deem

necessary” on the question of immunity was appropriate. Id. at 181.

             Here, it appears the circuit court granted the Cabinet’s motion to

dismiss before Beard could conduct limited discovery relevant to the threshold

immunity issue. In doing so, the circuit court took the Cabinet’s representations at

face value and found no contract existed in this case. However, if Beard is correct,

and the Cabinet has documents in its possession which amount to a written contract

between Beard and the Cabinet in the underlying case, this could effectively waive

the Cabinet’s immunity under KRS 45A.245(1). Furthermore, the circuit court

should review the record in the underlying L.C.K. case in order to determine the

scope of Beard’s representation in that action.

                                  III.   CONCLUSION

             For the foregoing reasons, we affirm that portion of the Franklin

Circuit Court’s order which found a written contract was necessary to enforce a

suit against the Cabinet in a contract matter. We vacate the order of dismissal and

remand to the circuit court with instructions (1) to review the record in the

underlying L.C.K. action, in order to ascertain the scope of Beard’s representation;

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and (2) to allow limited discovery sufficient to discover whether a written contract

exists between Beard and the Cabinet before determining immunity should apply

in this case. After this additional discovery, the circuit court shall determine

whether a valid written agreement existed between the parties or whether the

Cabinet’s motion should be granted on the basis that no written agreement existed

between the parties.

             ALL CONCUR.

 BRIEF AND ORAL ARGUMENT                    BRIEF AND ORAL ARGUMENT
 FOR APPELLANT:                             FOR APPELLEE:

 D. Lyle McQuinn                            Carmen M. Ross
 Lexington, Kentucky                        Frankfort, Kentucky

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