Court Opinion

ID: 4217256
Source: CourtListenerOpinion
Date Created: 2017-11-02 15:12:08.011945+00
Date Added: 2024-06-11T07:47:44.765285
License: Public Domain

RENDERED: NOVEMBER 2, 2017
                                                            TO BE PUBLISHED

                ~uprtmt 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

absolu~e   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 iri all cases based

on a written contract With the Commonwealth, including but not limited to

                                          3
employment contracts. We hold that this immunity is not limited to contracts·

entered into pursuant to the KMPC and thus, therefore,          d~cline   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 ~entue:ky, 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
           )

       1  "'[G]overnmental immunity' is the public policy, derived from the traditional
do_ctrine 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
governmenta}, as opposeq to a proprietary, function." Yanero, 65 S.W.3d at 519
(citillg 72 Am.Jur.2d, States, Territories and Dependendes, §104 (1974)).

                                            4
    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 thejudiciary_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
\
    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.           Wil~on   Distilling

    Co., 213 U.S. 151, 171 (1909)).

             ln interpreting a statute,· "[w]e have a duty to accord to words of a statute
                                     .                                   .            ,            1

    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   ~anguage   of a statute and, if the language is clear;

    our inquiry ends. See Revenue Cabin.et 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 sourc·e." Id. (quoting_Ronald Benton          Bro~      & 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

                                                5
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.,

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.

      Iri the Furtula case, this Court specificaliy de~lined. 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 fot a case ...

in which the resolution of that controversy would be material to our decision."

Furtula;· 438 S.W.3d at 306. Tqe bill has come due and we now must answer .

this questfort. 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,     th~     waiver applies to all

lawfully authorized written contracts. This necessarily indudes contracts

                                              6
whose authority lies outside the       [KMP~]."   Id. at 319. KRS 45A.245 was .

formerly codified as KRS 44·.270, pnor 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 s}?.all 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 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 origi9ally

referred to as .the "Contract Claims Act." Id. at 319-20. The Court ofAppeals

interpreted that provision: to apply to employment contracts, 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'

exist, [KRS 44.270] must have applied to non.:.[KMPC] contract~." Furtula, 438

S.W.3d at 320 (Noble, J., dissenting);

                                             7
       Justice Noble continued in tracing the sta,tute's hist~ry 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 language 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. Wea5el, .934 S.W.2d 257, 262 (Ky. 1996)). As

 such, Justice Noble stated that th~ 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 Department 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

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

                                         8
  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 Fi.delity & 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:
                l                                         .
        The Contract Claims Act makes it possible that a 'person, firm or
        corporation'. contracting with the Commonwealth 'may bnng an
        action' to require the Commonweruth to live up. to its contracturu
        obligations:    When the Legislature excepted 'the defense of
        governmental immunity' as a defense, it waived ·governmental
        immunity as it had the authority to do under section 231 of the
        Constitution.

 Id. at 114 .

       .The judiciary continued this trend in H.E. Cummins & Sons Constr. Co. v.

 Turnpike Auth; 562 S.W.2d 651 (Ky. App, 1977). "We conclude that the

 Turnpike Authority is an agency of the Commonwealth and that any contract

 action against the Turnpike Authofity 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

                                         9
S.W.2d 679, 681 (Ky. App.· 1977) (citing KRS 44.270(1)). In All-American

Movers, the Court of Appeals distinguished written contracts, for w:P,ich there

had been a clear waiver of immunity, 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 thi~jprocedure, the legislature was acting up9.et [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 ofthe legislature." Id. (citing
                                                '
Un~v'?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

                                           10
 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."' 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

       2We also note that, although our Court has declined to specifically hold that
this waiver exists before today, our Court has contemplated and agteed with that
holding in dicta of pr:i,or decisions:          ·
                 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 agaillst 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 premis~d on written
contracts." Campbell v. University of Louisville,· 862 ·F.Supp.2d 578, 58S (W.D. Ky.
2012) (citing KRS 45A.245(1) and Whitworth, 74 S.W.3d at 699-700).

                                             11 .
  us, therefore, to jmpose a constraint unintended or unexpressed by the

  General Assembly. Clearly, the legislature has waived governmental immunity

 on all claims brought by all persons on all ~awfully 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,   3~7   S.W.3d)561, 564 (Ky. 2012)

 (quoting Hughes v. Commonwealth, 87 S.W.3d 850, 855 (Ky. 2902) (quoting

 Commonwealth v. Trousdale, 181 S.W.2d 254, 256 (Ky. 1944))). "[T]he failure of·

 the legislature to change a known judicial interpretation ofa statute [is]

 extremely persuasive evidence of the true legislative intent. There is a strong

 i~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 induding

 written employment contracts within this waiver. The legislature has chosen

 not to_ act in contravention of the Court's prior rulings regarding the

                                          12
 predecessor statute and we deem this as indicative of the legislature's intent .

. T4is interpretation comports with the clear, unequivocal language of the

 statute; the General Assembly has specifically chosen to waive the defense of
                                                                                      /

. governmental immunio/ in all cases based upon written contracts with the

 Comrrionwealth.

                                IV. CONCLUSION.

       We decline at this time to decide whether public universities must abide

 by the remaining provisions of the KMPC in hiring professors. Instead, 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 straightforward 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:
                                        13