Taylor et al v. University of the Cumberlands
Filing
69
MEMORANDUM OPINION & ORDER: the Taylors' Motion for Partial Summary Judgment [R. 38 ] is DENIED. Motions terminated: 38 MOTION for Summary Judgment by Dinah Taylor, James Taylor filed by Dinah Taylor, James Taylor. Signed by Judge Gregory F. Van Tatenhove on 3/29/2018.(RBB)cc: COR
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
SOUTHERN DIVISION
LONDON
DR. JAMES TAYLOR and MRS. DINAH
TAYLOR,
Plaintiffs,
V.
UNIVERSITY OF THE
CUMBERLANDS,
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Civil No: 6:16-cv-109-GFVT
MEMORANDUM OPINION
&
ORDER
Defendant.
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Dr. James Taylor was employed as President of the University of the Cumberlands for 35
years beginning in August of 1980. Following his retirement from that position, and after
serving as Chancellor of the University for a short time, Dr. Taylor insisted on enforcement of a
contract – which the parties now refer to as the “Disputed Agreement” – purportedly made
between the University and Dr. and Mrs. Taylor. The University refused to fulfill the terms of
the Disputed Agreement, which, among many other benefits, provided Dr. James Taylor and
Mrs. Dinah Taylor with compensation for life following Dr. Taylor’s retirement from the
position of President. Subsequently, Dr. Taylor brought suit against the University alleging
breach of contract, promissory estoppel, slander, intentional infliction of emotional distress, and
seeking punitive damages and reformation. Nearly three months later, the Taylors amended their
complaint to include allegations of unjust enrichment and violations of the Employee Retirement
Income Security Act of 1974 (“ERISA”). In February 2017, the Court, addressing the
University’s 12(b)(6) Motion, dismissed the Taylors’ unjust enrichment and ERISA claims.
Presently before the Court is the Taylors’ Motion for Partial Summary Judgment [R. 38], which,
for the reasons set forth below, will be DENIED.
I
Given the present context, the factual summary that follows is taken from the record, with
all facts and inferences drawn in the light most favorable to the University as the nonmoving
party. See Logan v. Denny’s, Inc., 259 F.3d 558, 566 (6th Cir. 2001) (citation omitted). Dr.
James Taylor was employed as President of the University of the Cumberlands for 35 years
beginning in August of 1980. [R. 16 at 2.] He served as President of the University during times
of significant expansion and development, including the transition from Cumberland College to
the University of the Cumberlands.
The Taylors allege that, through a series of University Board of Trustees meetings
beginning in October 2005, and continuing to October 2015, the University entered into and
reaffirmed commitment to an agreement to provide Dr. James Taylor and Mrs. Dinah Taylor
with compensation for life following Dr. Taylor’s retirement from the position of President. [See
id. at 2-3.] According to the Taylors, the Disputed Agreement memorialized on April 19, 2012
[see R. 16-1] was first discussed generally at the University’s Board of Trustees Meeting held
October 21, 2005. [R. 16 at 2.] The Taylors contend that, during a closed executive session on
April 19, 2012, the board unanimously adopted a resolution made by Trustee Bill Hacker and
seconded by Trustee Dave Huff that would, among many other things, “continue Dr. Taylor and
Ms. Dinah Taylor’s salary and benefits following his retirement from the position of President,
and to appoint him as Chancellor of the University immediately thereafter.” [Id.]
The purported resolution explicitly states, “In the event Dr. Taylor predeceases his wife,
such compensation and benefits shall go to Dinah Taylor,” and that the University Bylaws and
2
President’s contract shall be amended “to include the establishment of the position of Chancellor
and the salary and benefits for Dr. and Mrs. Taylor.” [Id.] The Disputed Agreement details the
consideration for its terms by declaring “that the compensation and other benefits included in this
agreement are not conditional upon Dr. Taylor remaining as The President of the University of
the Cumberlands or accepting the position as Chancellor,” and that the parties “agree that the
compensation and benefits contained in this agreement is/are for the past decades of duties
and/or work performed by Dr. and Mrs. Taylor all for the benefit of The University of the
Cumberlands.” [R. 16-1 at 3-4.]
According to the Taylors, the parties preliminarily agreed on some form of retirement
package for Dr. and Mrs. Taylor in October 2005. [R. 16 at 2.] In doing so, the Board approved
the creation of the position of Chancellor. [Id.] Dr. Taylor was to assume the position of
Chancellor upon his retirement as President. [Id.] Jim Oaks, Chairman of the Board of Trustees,
hired the law firm of Guenther, Jordan & Price, P.C. to prepare the necessary amendments to the
Bylaws in order to create the Chancellor position. [R. 16 at 3.] The retirement package itself,
however, was not further addressed by the Board until seven years later at its meeting held April
19, 2012. Although the Taylors contend the terms of the agreement were agreed upon in October
2005, it was not until the spring of 2012 that Dr. Taylor unilaterally approached attorney Steven
J. Moore to draft the Disputed Agreement. [See R. 38-1 at 2.] The Disputed Agreement was
signed by Dr. Taylor,1 Jim Oaks as the then-Chairman of the Board of Trustees, and a notary
public.2 [See R. 16-1.] However, while Jim Oaks acknowledges his signature on the Disputed
Agreement [See R. 46 at 15], he claims he never agreed to compensate Dr. and Mrs. Taylor for
1
Dr. Taylor signed not only his name, but also the name of his wife, Dinah Taylor. [R. 38-1 at 3.]
The University contends that the Disputed Agreement is a product of fraud. [R. 23 at 9; R. 46 at 20.] For support,
the University notes that the Disputed Agreement was signed by a notary public “subscrib[ing], sw[earing], and
acknowledge[ing]” Mrs. Dinah Taylor’s signature. [R. 16-1; R. 46 at 15; R. 46-1 at 28-30.]
2
3
the rest of their lives without Dr. Taylor serving as Chancellor and continuing to fundraise for
the University after his retirement as President. [See R. 46-2 at 30-35.]
The Disputed Agreement calls for the University to provide to Dr. and Mrs. Taylor, after
Dr. Taylor’s retirement from the Presidency, a number of retirement benefits including health
insurance benefits, Dr. Taylor’s full salary, and a residence or apartment in Williamsburg,
Kentucky. [R. 16 at 3.] These benefits were to be provided for the lives of Dr. and Mrs. Taylor.
The complaint states that on October 15, 2014, the Board “unanimously reconfirmed the
University’s commitment to provide a benefit package for Dr. and Mrs. Taylor to include salary
in effect on January 1, 2015, all previously approved insurance for Dr. and Mrs. Taylor, plus all
other perks they were receiving at that time.” [Id.] On October 15, 2015, Dr. Taylor stepped
down as President and entered the role of Chancellor, while Mrs. Taylor “continued to serve as
ambassador for the University.” [Id.] The University contests the Taylors’ description of Board
actions at the Executive Session and challenges the validity and accuracy of the minutes that the
Taylors reference in the complaint.
After Dr. Taylor’s retirement, the University attempted to reduce the amount of benefits
owed to Dr. and Mrs. Taylor by offering Dr. Taylor a one-year renewable contract that provided
for a salary significantly less than had been provided for in the Disputed Agreement. [Id. at 3-4.]
The University warned Dr. Taylor that failure to accept this one-year renewable contract would
result in the loss of all prior benefits including his “University owned apartment in
Williamsburg, KY, the University owned vehicle he drives, and the cellular telephone he uses,
all of which were benefits to him under the [Disputed Agreement].” [Id. at 4.] Despite the threat
of losing all benefits, Dr. Taylor refused these offers and insisted on enforcement of the Disputed
Agreement as purportedly negotiated by the parties. [Id.] Subsequently, the University informed
4
Dr. and Mrs. Taylor that “their Agreement . . . will not be honored and their retirement benefits
have been terminated.” [Id.]
Dr. and Mrs. Taylor now move for summary judgment on their breach of contract claim
based on Mr. Oaks’s apparent authority to execute the Disputed Agreement. [R. 38.] The
Taylors claim that (1) the University held Jim Oaks out as having the authority to execute
contracts binding the University because Mr. Oaks was the then-Chairman of the Board of
Trustees; (2) Dr. and Mrs. Taylor were reasonable in their belief that Mr. Oaks had the authority
to sign contracts on behalf of the University, and, therefore, when he signed the Disputed
Agreement he bound the University to the terms contained therein; and (3) the Taylors’ beliefs
regarding Mr. Oaks authority are traceable to the University’s representations, especially those
representations contained in the board meeting minutes. [See R. 38-1 at 5-7.]
The University contests summary judgment on several points. First, the University
argues that Dr. and Mrs. Taylor are not entitled to summary judgment because they have not
satisfied the burden of showing an absence of a genuine dispute of material fact. [R. 46 at 1920.] Second, the University asserts Jim Oaks lacked actual or apparent authority to execute the
Disputed Agreement so as to bind the University. [Id. at 20.] Next, the University states the
board meeting minutes cited by the Taylors in support of their motion for summary judgment do
not support the motion. [Id. at 29.] The University then argues that the Disputed Agreement is
void as a matter of law. [Id. at 31.] Lastly, the University contends that Dr. and Mrs. Taylor’s
motion for summary judgment is premature given four months of discovery remained at the time
the motion was filed. [Id. at 38.] For all of these reasons, the University urges the Court to deny
the Taylors’ motion for summary judgment.
5
II
A
Summary judgment is appropriate “if the movant shows that there is no genuine dispute
as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P.
56. “A genuine dispute exists on a material fact, and thus summary judgment is improper, if the
evidence shows ‘that a reasonable jury could return a verdict for the nonmoving party.’” Olinger
v. Corporation of the President of the Church, 521 F. Supp. 2d 577, 582 (E.D. Ky. 2007)
(quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986)). Stated another way, “[t]he
mere existence of a scintilla of evidence in support of the [nonmoving party’s] position will be
insufficient; there must be evidence on which the jury could reasonably find for the [nonmovant].” Anderson, 477 U.S. at 252. The movant has the initial burden of demonstrating the
basis for its motion and identifying those parts of the record that establish the absence of a
genuine issue of material fact. Chao v. Hall Holding Co., Inc., 285 F.3d 415, 424 (6th Cir.
2002). The movant may satisfy its burden by showing “that there is an absence of evidence to
support the non-moving party’s case.” Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986).
When applying the summary judgment standard, the Court must review the facts and draw all
reasonable inferences in favor of the nonmoving party. Logan v. Denny’s, Inc., 259 F.3d 558,
566 (6th Cir. 2001) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986)).
At the outset, the Taylors assert that summary judgment is appropriate simply because
Jim Oaks “unquestionably had apparent authority to execute the agreement, and Dr. and Mrs.
Taylor were entitled to rely upon that apparent authority because they had no knowledge to the
contrary.” [R. 38-1 at 2.] The Taylors also contend that the University is prohibited from
introducing parol evidence to contradict what the Taylors claim to be official minutes of certain
6
Board of Trustee meetings. [Id. at 9.] Because the University held Mr. Oaks out as someone
who could contractually bind the University and because the Taylors were reasonable in their
reliance on Mr. Oaks’s apparent authority, the argument goes, the University is prohibited from
introducing any evidence contradicting the board meetings’ minutes and the Taylors are entitled
to judgment as a matter of law.
Under agency principles, actual authority and apparent authority are quite different from
one another. Actual authority exists when a principal manifests in the agent the authority, and
the agent consents to such authority, to act on the principal’s account. Kindred Nursing Centers
Ltd. P’ship v. Brown, 411 S.W.3d 242, 249 (Ky. Ct. App. 2011) (internal citation omitted).
However, apparent authority exists when the principal holds the agent out as possessing authority
to bind the principal. Mill St. Church of Christ v. Hogan, 785 S.W.2d 263, 267 (Ky. Ct. App.
1990) (internal citations omitted). “It is a matter of appearances on which third parties come to
rely.” Id. The party claiming apparent authority has the burden of proving such authority, here
the Taylors. See id. (internal citations omitted). At issue here is whether the Taylors can prove
Jim Oaks had apparent authority to bind the University to the terms of the Disputed Agreement.
The Kentucky Supreme Court has adopted the following: “Apparent authority . . . is
created by a person’s manifestation that another has authority to act with legal consequences for
the person who makes the manifestation, when a third party reasonably believes the actor to be
authorized and the belief is traceable to the manifestation.” Dean v. Commonwealth Bank &
Trust Co., 434 S.W.3d 489, 500 (Ky. 2014) (quoting Restatement (Third) of Agency § 3.03
(2006)); see also Ping v. Beverly Enters., Inc., 376 S.W.3d 581, 594 (Ky. 2012) (“An agent is
said to have apparent authority to enter transactions on his or her principal’s behalf with a third
party when the principal has manifested to the third party that the agent is so authorized, and the
7
third party reasonably relies on that manifestation.”). The elements of apparent authority “are
chiefly factual matters,” see Orchard Group, Inc. v. Konica Med. Corp., 135 F.3d 421, 426 n.1
(6th Cir. 1998), and the reasonableness of a third party’s belief “is usually a question for the trier
of fact.” Dean, 376 S.W.3d at 594. For purposes of this case, then, the three inquiries are (1)
whether the University manifested that Jim Oaks had authority, (2) whether the Taylors
reasonably believed that Jim Oaks had authority based on the manifestations, and (3) whether Dr.
and Mrs. Taylor’s beliefs were directly traceable to the University’s manifestations. If the
Taylors can satisfy their initial burden of answering these three questions in the affirmative, the
University will then be required to go beyond the pleadings and put forth specific facts
demonstrating the existence of a genuine issue for trial. See Fed. R. Civ. P. 56; Hall Holding,
285 F.3d at 424 (citing Celotex, 477 U.S. at 324).
1
There remains a question fact as to whether the University manifested in Jim Oaks, the
then-Chairman of the Board of Trustees, the authority to bind the University to the terms of the
Disputed Agreement. The Taylors claim his position alone was enough of a manifestation to
bind the University. [R. 38-1 at 5.] The University, however, maintains it never manifested
authority – actual or apparent – in Jim Oaks to unilaterally enter the University into executory
contracts, especially the Disputed Agreement. [R. 46 at 20, 23.] The Taylors respond by stating
Oaks did not act unilaterally, rather the Disputed Agreement was approved by the Board during
an Executive Session of the Board’s April 19, 2012, meeting, and Oaks was acting in accord
with the Board’s approval. [See R. 52 at 4.] The University vehemently contends that the
Disputed Agreement was never properly and fully submitted for Board ratification. [R. 46 at
23.] In support of the argument, the University cites the depositions of several Trustees who
8
claim the Board never took up for consideration a contract having such terms as those contained
in the Disputed Agreement. [R. 46 at 26 n.11; R. 46-11 at 5-8; R. 46-13 at 3-7; R. 46-14 at 3-7.]
Of course, the Taylors, on several occasions, point to purported official minutes to show that the
Disputed Agreement was read to and approved by the Board in April of 2012. [R. 38-1 at 3, 811.] But the University disputes the authenticity of the minutes. [R. 46 at 13-15.] Whether the
Board actually ratified the Disputed Agreement, which likely would have manifested apparent
authority in Oaks under the Bylaws to execute the Disputed Contract, is a question of material
fact that should be left to the jury.
The University also argues that Oaks, by executing the Disputed Agreement, would have
been in violation of Article III, § 2, of the University’s Bylaws. [R. 46 at 23; see also R. 46-18 at
3.] However, whether Oaks violated the University’s Bylaws is a separate and distinct question
from whether the University manifested authority in him. To this point, the Court should look to
see whether the University, through inaction, had previously ratified contracts unilaterally
executed by Oaks; if so, then it is more likely that the University manifested in Oaks the
authority to bind it.
Dr. Taylor, in his affidavit, states he knew of other occasions Jim Oaks executed
contracts binding the University. [See R. 38-6.] In fact, the Taylors contend that the
University’s “current President acts today pursuant to a contract signed by [Oaks], as the sole
signatory on behalf of the University.” [R. 38-1 at 2.] However, Dr. and Mrs. Taylor neither
develop this argument further nor point to where in the record that assertion can be substantiated.
There is no evidence before the Court, other than the Taylors’ self-serving statements, to suggest
the University ratified other contracts unilaterally executed by Oaks. Drawing all reasonable
inferences in favor of the University, the Court finds that the Taylors have not satisfied their
9
burden of showing there is an absence of evidence regarding the issue of whether the University
manifested authority in Jim Oaks.
2
Agency principles also require third parties to reasonably believe an agent has authority
to bind her principal. Dean, 434 S.W.3d at 500; Ping, 376 S.W.3d at 594. The third parties in
this case – Dr. and Mrs. Taylor – are quite different than most third parties who may be strangers
to the principal. Dr. Taylor, at the time of his retirement, had been affiliated with the University
of the Cumberlands for over 50 years. [R. 46-3 at 4.] For many of those years, he served as
President while Mrs. Taylor served as an ambassador for the University. [R. 16 at 2.] What
amounts to a “reasonable belief” in terms of Dr. and Mrs. Taylor as third parties to a contract
with the University will look very different than, say, a new landscaper entering into her first
grounds keeping contract with the University. The facts of this case indicate that whether Dr.
and Mrs. Taylor could not have reasonably believed that Jim Oaks had authority to bind the
University to the terms of the Disputed Contract remains a question best suited for the jury.
In analyzing apparent authority, the Sixth Circuit has stated that it is unreasonable for
third parties to “rely upon an agent’s ostensible authority if the third party knows that the agent is
not authorized to act in a particular manner.” Anderson v. Int’l Union, United Plant Guard
Workers of America, 370 F.3d 542, 551 (6th Cir. 2004). In Anderson, the Sixth Circuit reversed
a lower court’s determination that high-ranking union officials reasonably relied upon the
apparent authority manifested in the union’s President and the union’s International Executive
Board. Id. at 545. The high-ranking union officials were the Vice President and two Regional
Directors of the union. Id. at 546. Those officials claimed the President and International
Executive Board had authority to bind the union to certain pension benefits. Id. at 549-50. In
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fact, the union officials not only had the President’s assurance that the pension benefit plan in
question had been cleared by attorneys and accountants but also the union attorney’s assurance
that the plan was legal. Id. at 549. Still, the Sixth Circuit held the Vice President and Regional
Directors “had actual knowledge of the limitations of pension benefits imposed by [the union’s]
constitution and should have known the appropriate procedures for amending [the union’s]
constitution.” Id. at 551-52. Thus, the union’s President and International Executive Board did
not have apparent authority to bind the union to the disputed pension benefits. Id. at 552.
Similarly, Dr. Taylor was no stranger to the University’s practices and procedures due to
his longtime tenure as President of the University of the Cumberlands. In fact, the Bylaws were
amended in 2009, during Dr. Taylor’s presidency. [See R. 46-18.] Dr. Taylor knew well the
importance of procedure and the need to have Bylaws amended in order to implement certain
hierarchical changes. [See R. 46-1 at 6; R. 46-3 at 3.] Additionally, Dr. Taylor testified at his
deposition that he approached Steve Moore to draft the terms of the Disputed Contract, even
though Moore had no previous experience drafting such contracts for the University. [R. 46-1 at
37-41.] Indeed, at least according to the record, there was never any back-and-forth between the
parties and Moore concerning the terms to be included in the Disputed Agreement. [See R. 5210.] Dr. Taylor also never asked attorneys Jim Guenther or James Jordan to review the contract
drafted by Moore even though Guenther and Jordan consistently served the University and its
Board during 2012. [Id. at 35-36.]
The Bylaws, as amended in 2009, contained a provision that limited the Chairman’s
ability to execute contracts. [R. 46-18 at 3.] Article III, § 2, of those Bylaws specifically states,
“The Chair shall . . . execute, with the Secretary assisting, contracts and instruments authorized
or issued by authority of the Board requiring the Chairman’s signature.” [Id.] Lonnie Walden
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was the Board’s Secretary in 2012 when the Disputed Agreement was purportedly executed.
[See R. 46-12 at 18.] Although Walden’s signature appears in the meeting’s minutes directly
below a section detailing the occurrence of an Executive Session during the Board meeting held
April 19, 2012 – the Executive Session in which the Taylors claim the Disputed Agreement was
approved – that section contains absolutely no details concerning the terms of the Disputed
Agreement. [Id.] In fact, Walden testified that the terms contained in the Disputed Agreement
were never read to the Board, and Walden never voted to approve such terms. [R. 46-11 at 5-8.]
Dr. Taylor had actual knowledge of the restrictions placed on the Chairman’s authority to
execute certain contracts; after all, he was the President of the University when they Bylaws
were enacted placing such limitations on the Chairman’s authority. [See R. 46-18.] Like the
Vice President and Regional Directors in Anderson, Dr. Taylor should have known the
appropriate procedures of executing contracts such as the Disputed Agreement. See Anderson,
370 F.3d at 552. Although Dr. and Mrs. Taylor may have believed Oaks had the authority to
bind the University to the terms of the Disputed Agreement, Dr. Taylor’s actual and imputed
knowledge likely renders such belief unreasonable in light of the facts articulated above.3
Because this element of apparent authority is “chiefly factual, and because “reasonable in this
context is usually a question for the trier of fact,” the determination as to the reasonableness of
Dr. and Mrs. Taylor’s belief concerning Oaks’s authority is best left to the jury.4 See Orchard
The Court recognizes its Memorandum Opinion & Order addressing the University’s 12(b)(6) Motion states the
Taylors never received notice of any kind that would suggest the Disputed Agreement could not be relied upon.
[See R. 21 at 24.] This statement seems to contradict the analysis here. However, the University’s 12(b)(6) Motion
required the Court to construe the Complaint’s facts, and all reasonable inferences therefrom, in favor of the
Plaintiff. See DirectTV, Inc. v. Treesh, 487 F.3d 471, 476 (6th Cir. 2007). Here, analyzing the Taylors’ Motion for
Summary Judgment requires the Court to review the facts and draw all reasonable inferences in favor of the
University. See Logan v. Denny’s, Inc., 259 F.3d 558, 566 (6th Cir. 2001).
4
The Taylors cite Suhail v. Univ. of the Cumberlands, 107 F. Supp. 3d 748 (E.D. Ky. 2015), to support their claim
of apparent authority. However, the Suhail plaintiff who sought a breach of employment contract claim was
positioned very differently that Dr. Taylor is here. Dr. Suhail had not previously been employed with the
University, but had enrolled as a graduate student there and had accepted a faculty position to commence at a later
3
12
Group, Inc., 135 F.3d at 426 n.1; Dean, 376 S.W.3d at 594.
3
Finally, agency principles require a third party’s belief to be directly traceable to the
principal’s manifestations. See Dean, 434 S.W.3d at 500; Ping, 376 S.W.3d at 594. The Taylors
contend that other Trustees notified Dr. Taylor that the Board approved the Disputed Agreement
in the April 19, 2012, Executive Session, and that the minutes from that meeting
“unambiguously state that the [Disputed] Agreement was read to and approved by the Board.”
[R. 38-1 at 2.] The Taylors, therefore, claim that any belief they had regarding Oaks’s authority
directly stems from the University’s manifestations. [See id. at 7.] The University argues any
belief the Taylors had cannot be traced to the University’s representations. [R. 46 at 27.]
Based on the analysis of apparent authority to this point, the Court need not weigh in on
whether the Taylor’s beliefs are directly traceable to the University’s manifestations. As the
Court previously stated, “There are significant factual disputes surrounding the drafting, signing,
and execution of the [D]isputed [A]greement as well as competing interpretations of University
Board minutes and closed Executive Session minutes.” [R. 21 at 14.] Those factual disputes
remain, rendering whether apparent authority existed a question for the jury. Again, drawing all
reasonable inferences in favor of the University, the Court finds that the Taylors have failed to
establish an absence of evidence to support the University’s position.
B
In the apparent authority analysis above, the Court cites to several depositions. Dr. and
Mrs. Taylor argue that it is inappropriate to allow parol evidence in an attempt to contradict the
date. Suhail, 107 F. Supp. 3d at 751. Therefore, Dr. Suhail was not as intimately involved with the University’s
administrative processes as Dr. Taylor. Dr. Suhail, being an outsider to faculty and university governance, is much
like the hypothetical landscaper mentioned above. Thus, what amounts to a “reasonable belief” in terms of Dr. and
Mrs. Taylor as third parties to a contract with the University looks very different than that of Dr. Suhail.
13
official minutes of the University’s Board meetings. [R. 38-1 at 8-11.] In support of its
argument, the Taylors cite several cases from Kentucky’s high court. [Id.] However, the cases
the Taylors cite also cut against their argument. The Taylors first cite Bennett v. Madison Sales
Co., 95 S.W.2d 604 (Ky, 1936), for the proposition that “The minutes of private corporations are
the best evidence of actions of the board of directors referred to therein, and the general rule is
that parol evidence cannot be received to prove what was done if the minutes are accessible.”
Bennett, 95 S.W.2d at 608. However, the Bennett Court also stated that “it is recognized in all
jurisdictions that where corporate minutes appear on their face to be incomplete or are
ambiguous, parol evidence is admissible to supply the omission or to aid in ascertaining their
true meaning.” Id.
The Taylors also cite Harlan-Kellioka Coal Co. v. Kelly, 262 S.W. 259 (Ky. 1924),
which held that parol evidence was inadmissible to alter or vary terms related to the salaries of
employees where the minutes of the meeting affix certain salaries to certain positions and state
from where those moneys should be paid. See Kelly, 262 S.W. at 260. Kelly, though, is
distinguishable from the case at bar. In Kelly, the salary amounts are fixed and stated in the
minutes of the meeting. Id. Additionally, the dispute in Kelly related only to those salary
amounts memorialized in the minutes. Id. at 259. Here, though, the Disputed Agreement
contains benefits over and above what Dr. Taylor’s salary would be upon retirement or during
his tenure as Chancellor. [See R. 16-1.] Many of the disputed terms never appear
unambiguously in the minutes of the University’s Board meetings. In fact, the April 19, 2012,
minutes contain absolutely no information related to the terms of the Disputed Agreement. [See
R. 46-12.] The only minutes that contain information from which one could argue provided
guidance for drafting the Disputed Agreement were “Closed Minutes of University of the
14
Cumberlands Board of Trustees, Executive Session, October 21, 2005.” [See R. 46-9.]
However, these minutes were sealed, and, according to the record, one reviewing the unsealed
official minutes might never have known that the Close Minutes even existed. [See R. 46-1 at 613.] Further, these Closed Minutes are ambiguous on their face. One looking to interpret the
terms of the retirement agreement from the Closed Minutes would necessarily need to consider
parol evidence to determine, for example, what is meant by “the annual compensation and
applicable benefits.” [See R. 46-9 at 1.] Those terms are not made clear within the four corners
of the documents. [See R. 46-9.]
Kelly-Koett Mfg. Co. v. Goldenberg, 270 S.W. 15 (Ky. 1924), also cited by the Taylors,
recognizes that “Corporate books are not, as a general rule, conclusive. . . . The minutes of
corporation meetings and other like corporate records are only prima facie evidence of the
proceedings, and parol testimony is admissible for the purpose of proving what actually
occurred.” Goldenberg, 270 S.W. at 17-18. Dr. and Mrs. Taylor also cite Martin v. Holian, 126
S.W.2d 465 (Ky. 1939), for its proposition that, generally speaking, “the records of the
corporation cannot be varied by parol evidence except in cases of fraud and then they must be
directly attacked for that purpose and not collaterally.” Martin, 126 S.W.2d at 467. The
University’s Response in Opposition is riddled with claims of fraud. [See, e.g., R. 46 at 2, 20,
28-29.] Because the Taylors do not cite authority expressly precluding the Court from
considering parol evidence to address this Motion, and because of the ambiguous nature of most
of the Board minutes concerning Dr. and Mrs. Taylor’s disputed benefits, the Court finds it
appropriate to look to parol evidence here.
15
III
Summary judgment is improper when there exists a genuine dispute as to a material fact.
See Fed. R. Civ. P. 56. Unfortunately, for the Taylors, this case presents many disputes as to
material facts. Regarding their breach of contract claim, Dr. and Mrs. Taylor argue that
summary judgment is appropriate under agency principles, specifically the principle of apparent
authority. Kentucky has held that the party asserting agency and apparent authority carries the
burden of proving it exists. Hogan, 785 S.W.2d at 267. The three elements of apparent authority
present fact intensive questions best suited for the trier of fact. See Orchard Group, Inc., 135
F.3d at 426 n.1; Dean, 434 S.W.3d at 500. There remain many fact intensive questions
surrounding the Disputed Agreement and what authority, if any, the University manifested in Jim
Oaks to execute the agreement. For the reasons stated above, and construing all reasonable
inferences in favor of the University, the Court finds that the Taylors have failed to meet their
burden of demonstrating an absence of any genuine issue of material fact regarding their breach
of contract claim against the University.
Accordingly, and the Court being otherwise sufficiently advised, it is hereby ORDERED
that the Taylors’ Motion for Partial Summary Judgment [R. 38] is DENIED.
This the 29th day of March, 2018.
16
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