Furtula v. University of Kentucky, 438 S.W.3d 303

Background

Vera Furtula and Anthony Miller were long‑term employees of the University of Kentucky and participated in a self‑funded long‑term disability (LTD) program administered via a Staff Handbook, HR policies (HRP&P §§90.0, 95.0), Board‑adopted plan documents, and a trust.
Each plan described eligibility and benefits and used mandatory language (e.g., “shall”), but also contained prominent disclaimers stating the handbook/plan is not a contract and reserving the University’s right to amend or terminate plans.
The University denied both employees’ LTD claims on the ground they were not “totally disabled.”
Furtula and Miller sued for breach of a written contract based on the handbook/policy documents; the University asserted governmental/sovereign immunity.
The Court of Appeals held the documents did not create an implied contract and therefore sovereign immunity barred suit; the Supreme Court granted review to decide whether the materials constituted a “written contract” within KRS 45A.245’s waiver of governmental immunity.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the handbook/policies/plan docs created an enforceable contract for LTD benefits	Furtula/Miller: the materials (handbook, HR policies, plan documents) created contractual rights (unilateral/implied contract) that employees accepted by continued service/performance	University: documents include explicit, clear disclaimers and reservation‑of‑rights language showing no intent to be contractually bound; thus no contract exists	Held: No enforceable contract — explicit disclaimers and amendment/termination reservations preclude inferring mutual assent, so no implied/unilateral contract arose
Whether an implied or unilateral contract from personnel materials can be treated as a “written contract” under KRS 45A.245 (sovereign‑immunity waiver)	Plaintiffs (and dissent): personnel materials are writings (and can be unilateral contracts) and thus fall within KRS 45A.245 waiver	University: even if some contractual theory existed, an implied contract is not a “written contract” for purposes of the waiver; plus disclaimers negate contract formation	Held: Court did not reach KRS 45A.245 scope in depth because it found no written contract; affirmed dismissal on sovereign‑immunity grounds
Whether Parts Depot controls and requires finding an implied contractual obligation from personnel policies	Plaintiffs: rely on Parts Depot (employee handbook can create binding obligations when accepted by continued work)	University: Parts Depot is distinguishable because that case lacked explicit contract disclaimers present here	Held: Parts Depot distinguished — absence of disclaimers in Parts Depot was critical; explicit disclaimers here prevent implying a contract
Whether venue/venue‑transfer under KRS 45A.245 affects proper forum	Plaintiffs: invoked KRS 45A.245’s venue provision (Franklin Circuit Court) if waiver applies	University: challenged venue and immunity; lower courts transferred or addressed venue inconsistently	Held: Court declined to decide KRS 45A.245’s scope or venue provision because no written contract was found; venue issue left unresolved

Key Cases Cited

Parts Depot, Inc. v. Beiswenger, 170 S.W.3d 354 (Ky. 2005) (personnel policies can give rise to contractual obligations when accepted by continued work)
Breathitt Cnty. Bd. of Educ. v. Prater, 292 S.W.3d 883 (Ky. 2009) (allowing interlocutory appeal when sovereign immunity is denied)
City of Houston v. Williams, 353 S.W.3d 128 (Tex. 2011) (ordinances construed as written unilateral contract for purposes of waiver of municipal immunity)
Kellum v. Browning’s Adm’r, 21 S.W.2d 459 (Ky. 1929) (contract may be inferred from conduct; mutual assent required)
Johnson’s Adm’r v. Johnson, 244 S.W.2d 969 (Ky. 1951) (elements required to infer contract in fact)