Univ. of Ky. v. Davis

551 S.W.3d 443
CourtCourt of Appeals of Kentucky
DecidedSeptember 15, 2017
DocketNO. 2015-CA-001493-MR; NO. 2015-CA-001494-MR
StatusPublished
Cited by3 cases

This text of 551 S.W.3d 443 (Univ. of Ky. v. Davis) is published on Counsel Stack Legal Research, covering Court of Appeals of Kentucky primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Univ. of Ky. v. Davis, 551 S.W.3d 443 (Ky. Ct. App. 2017).

Opinion

THOMPSON, JUDGE:

In separate cases, the Franklin Circuit Court denied the University of Kentucky's (UK) motions to dismiss actions filed by Rebecca Lynn Davis and Roland Taylor after they were denied long-term disability benefits. UK contends that any claim by Davis or Taylor for declaratory and injunctive relief is precluded by governmental *445immunity. We agree with the circuit court that at this point in the litigation when no discovery has taken place, dismissal based on immunity is not appropriate and affirm.

Davis and Taylor were long-term employees of UK. Because of their length of employment with UK, each qualified to participate in UK's long-term disability (LTD) benefits program for its regular full-time employees. The LTD Program is a unilateral, self-funded, non-ERISA benefit that UK makes available to its employees at no cost. Although the benefits paid during the first six months of disability are paid under the salary continuation part of the program, long-term benefits paid under the LTD program are funded by an irrevocable LTD Trust established in 1981. PNC Bank, National Association serves as trustee.

The LTD program is governed by the employee staff handbook, human resources policies and procedures and documents adopted by the Board of Trustees. An employee's application for LTD benefits is reviewed by UK's employee relations department, which considers information submitted by the applicant and may include independent medical and vocational examinations relevant to whether the application is totally disabled under the terms of the LTD program. If an employee is denied, he or she may appeal that decision within sixty days to the appropriate UK vice president's office.

Davis and Taylor applied for and were denied LTD benefits and, after following the procedure for internal appeals as provided for in the LTD program, each commenced an action alleging breach of contract against UK based on the staff handbook and the associated personnel policy documents that define the disability compensation programs. They alleged that any immunity UK may have as a state agency was waived by Kentucky Revised Statutes (KRS) 45A.245, part of the Model Procurement Code, which waives immunity for claims brought pursuant to a written contract with the Commonwealth. They further alleged breach of fiduciary duty against PNC Bank. Davis's case was assigned to Division I and Taylor's case was assigned to Division II of the Franklin Circuit Court.

UK filed motions to dismiss on the basis that, as a state agency, it was entitled to immunity. It alleged there was no written contract between it and its employees under the LTD program as required by KRS 45A.245 to waive immunity.

At the time UK's motion was filed, Furtula v. University of Kentucky , 438 S.W.3d 303 (Ky. 2014) was pending in the Kentucky Supreme Court. Because the claims in Furtula were identical to the contract claims raised by Davis and Taylor against UK and governmental immunity was asserted in that case by UK, both divisions of the Franklin Circuit Court entered orders holding Davis's and Taylor's cases in abeyance pending the Supreme Court's final decision.

In Furtula , the Supreme Court held that summary judgment was properly granted to UK on the contract claims based on governmental immunity. It held that the documents relied on by the former UK employees did not constitute a written contract so that immunity was not waived by KRS 45A.245. Following Furtula, UK and PNC filed motions to dismiss Davis's and Taylor's cases. In Taylor's, the Division II court dismissed the action based on Furtula .

In Davis's case, her contract claim against UK was dismissed as precluded by governmental immunity. However, the court held that Davis's claim could proceed based on a request for declaratory and injunctive relief and granted Davis thirty *446days to file an amended complaint alleging claims for arbitrary and capricious action by UK in violation of Section 2 of the Kentucky Constitution. Although the circuit court concluded that PNC did not owe Davis a fiduciary duty to disburse benefits and dismissed that claim, it ruled PNC should remain a party for purposes of any relief that may be granted to Davis in the form of declaratory or injunctive relief.

UK filed a motion to alter, amend or vacate the order in Davis's case. UK argued that even if a declaratory judgment action is appropriate to determine whether it acted arbitrarily, benefits cannot be ordered to be paid from public funds because it is immune from such payment under governmental immunity. The circuit court denied the motion as premature. No amended complaint had been filed and no discovery conducted.

In the meantime, Taylor moved the Division II court to set aside its prior order of dismissal and grant leave to file an amended complaint. The Division II court granted the motion noting that its original order did not address whether Taylor could seek relief under Section 2 of the Kentucky Constitution. The Division II court adopted the opinion and order in the Davis case and permitted Taylor to file an amended complaint.

UK filed interlocutory appeals in both cases pursuant to Breathitt Cty. Bd. of Educ. v. Prater , 292 S.W.3d 883, 887 (Ky. 2009), which held that "an order denying a substantial claim of absolute immunity is immediately appealable even in the absence of a final judgment." By order, this Court consolidated the appeals. For simplicity, in our discussion, we refer to the Division I and Division II courts as the circuit court.

When ruling on a motion to dismiss under Kentucky Rules of Civil Procedure (CR) 12.02, "the pleadings should be liberally construed in a light most favorable to the plaintiff and all allegations taken in the complaint to be true." Gall v. Scroggy , 725 S.W.2d 867, 869 (Ky. App. 1987). The motion should not be granted unless it appears the moving party would not be entitled to relief under any set of facts which could be proved in support of his claim. Pari-Mutuel Clerks' Union of Ky., Local 541, SEIU, AFL-CIO v. Ky. Jockey Club , 551 S.W.2d 801, 803 (Ky. 1977). Because whether a trial court's ruling was correct is purely a question of law, our review is de novo. Fox v. Grayson , 317 S.W.3d 1

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Related

Rebecca Lynn Davis v. University of Kentucky
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Cite This Page — Counsel Stack

Bluebook (online)
551 S.W.3d 443, Counsel Stack Legal Research, https://law.counselstack.com/opinion/univ-of-ky-v-davis-kyctapp-2017.