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Lipson v. University of Louisville

Court of Appeals of Kentucky

July 27, 2018



          BRIEFS FOR APPELLANT: Thomas J. Schulz Alton D. Priddy Louisville, Kentucky.

          BRIEFS FOR APPELLEE, UNIVERSITY OF LOUISVILLE: Craig C. Dilger Joseph A. Bilby Louisville, Kentucky.

          BRIEF FOR APPELLEE, UNIVERSITY MEDICAL CENTER, INC.: John B. Moore Louisville, Kentucky.



          KRAMER, JUDGE.

         This case involves a dispute between Steven F. Lipson, the University of Louisville (the University), and the University Medical Center Inc. (UMC) regarding Lipson's pay for serving as Medical Director of the Outpatient Surgery Center (OSC), a UMC facility. Lipson appeals from three separate opinions and orders of the Franklin Circuit Court: (1) a March 2, 2015 opinion and order granting the University's motion for summary judgment on Lipson's claims and partial summary judgment on the University's counterclaims (Appeal No. 2015-CA-000487-MR); (2) an April 9, 2015 opinion and order granting UMC's motion for summary judgment (Appeal No. 2015-CA-000631-MR); and (3) an October 20, 2015 opinion and order granting the University's motion for entry of judgment (Appeal No. 2015-CA-001743-MR).

         In Appeal No. 2015-CA-000487-MR, Lipson asserts the University should be liable for: (1) breach of contract; (2) failing to pay him appropriately based on the equitable remedy of unjust enrichment; (3) violating KRS[1] 337.060, part of the Wage and Hour Act; and (4) depriving him of property without due process. He further argues that the circuit court erred when it summarily found him liable to the University for unjust enrichment and conversion.

         In Appeal No. 2015-CA-000631-MR, Lipson argues that the circuit court erred when it dismissed his unjust enrichment claim against UMC.

         In Appeal No. 2015-CA-001743-MR, Lipson argues that questions of fact precluded summary judgment regarding the net amount he owed the University. He further takes issue with the circuit court's award of prejudgment and post-judgment interest.

         For the reasons explained below, we affirm the balance of the circuit court's judgments except for its determination regarding post-judgment interest in Appeal No. 2015-CA-001743-MR. As to that appeal, we reverse and remand with directions.

         Lipson is an anesthesiologist. In 2010, he received a job offer from the University and University Anesthesia Associates, PSC (UAA). The terms of his employment were derived from a March 2010 letter of intent from the University, an April 2010 written agreement with UAA, and other documents (collectively, the written employment contract). In the letter of intent, Lipson was offered the position of Supervisor of UMC's Healthcare Outpatient Center (HCOC) also known as the OSC, [2] a full-time position which would not include being on call or working weekends.[3] Lipson was also informed he would receive an annual work assignment outlining expectations for teaching, research, clinical service, and community or school service, and that he could expect a fiscal year salary increase of between 0-5% annually. The written agreement stated Lipson would be employed part time as an anesthesiologist for UAA and perform duties as assigned. Both the letter of intent and written agreement explained that Lipson would be employed by both the University and UAA and receive a salary from both entities totaling $277, 000. However, the written documentation of how his salary was allocated differed.[4]

         Lipson began his employment on July 1, 2010, and received his salary as specified by the written employment contract. In March 2011, Lipson met with Dr. Boswell, Chair of the Department of Anesthesiology and Perioperative Medicine, and others to discuss his proposed upcoming service as OSC Director and a proposed agreement between the University and UMC regarding his service in that position. Boswell then submitted a proposed Medical Director Agreement (Proposed 2011 Agreement) to Lipson, which detailed that UMC would pay the University an hourly amount for each documented hour of service by the OSC Director up to $50, 000 per year and that up to an additional $50, 000 would be provided contingent upon achieving specific metrics, for a total possible payment to the University of $100, 000. The proposed agreement was silent on whether any of the payment the University received for Lipson's services would be passed through to Lipson.

         Substantially the same Medical Director Agreement was executed in previous years between UMC and the University with the University's employee anesthesiologist, Dr. Gary Loyd, who served as OSC Director from September 2008 through December 2010.[5] Loyd, unlike Lipson, was specifically informed in his letter of intent when he was hired that he would be paid a $65, 000 supplement from UAA for serving as OSC Director and an additional $100, 000 supplement from UMC for being OSC Director.[6]

         The OSC Director position, which consisted of about 40 hours of work per month, was rigorous; it entailed highly specific duties and increased responsibilities not typical of medical director positions. Lipson told Boswell, his department chair, that he expected additional pay for these additional responsibilities, but the details of their exchange varied between the two of them. According to Boswell's affidavit and deposition, Lipson said he wanted the same arrangement as Loyd for serving as OSC Director. However, Boswell told Lipson the University would not pay him an additional salary, especially in light of his already reduced responsibilities compared to others in similar anesthesiology positions. Lipson denied these statements occurred.

         Lipson, on the other hand, recounted in his affidavit that he told Boswell "looks like I'm getting a raise." Boswell responded, "you'll have to share it with me." Lipson responded, "that's fine." Lipson claims that Boswell later told him that he would keep the money for himself, to which Lipson replied that he would not perform as OSC Director unless he was paid to do so.

         After Lipson received a letter from Boswell outlining his duties for the year including being OSC Director, his personal attorney revised the Proposed 2011 Agreement (Revised 2011 Agreement) so there was no question that he would be the person paid for performing work as the OSC Director; the agreement was also revised to allow Lipson to sign as a party rather than a University representative. Lipson submitted the Revised 2011 Agreement to Boswell, who told him he would "pass it on." Lipson followed up on the agreement's status on April 20, 2011, but he received no response.

         According to Lipson, after he signed the Revised 2011 Agreement, he served as OSC Director from April 2011 through his resignation in September 2012, in addition to performing his other duties. However, he was never advised that the Revised 2011 Agreement was accepted. While he kept time records, he never submitted any timesheets because he was never instructed to do so. When Lipson began receiving larger paychecks in July 2011 (the start of the University's fiscal year), he believed his increased compensation was due to the acceptance of the Revised 2011 Agreement and was payment for his service as OSC Director.

         In fact, the University and UMC never finalized a Medical Director Agreement for the 2011 calendar year. During the 2011 calendar year, no one submitted timesheets to UMC for the services of the OSC Director; and, UMC did not make any payments to the University.

         In February 2012, a Medical Director Agreement (2012 Agreement) was ultimately signed by representatives of UMC and the University. It was substantially the same as all the prior Medical Director Agreements between UMC and the University. Lipson was among those signing for the University. Lipson stated in his affidavit that he signed the 2012 Agreement "because I was getting paid for the additional work load and responsibilities of Medical Director and believed that the new contract was merely to cover the new calendar year."

         Beginning in February 2012, Lipson began submitting monthly time records accounting for the forty hours he expended each month as OSC Director. These time records covered January 2012 through July 2012.

         In a May 24, 2012 letter to Lipson from Boswell on behalf of UAA discussing the proposed terms of Lipson's contract for the 2012-2013 fiscal year, Boswell stated that Lipson's current annual salary was a base of $243, 271.24, supplemented by a $100, 000 stipend for being OSC Director and also supplemented by $65, 000 from UAA for taking a full call load, for total compensation of $408, 271.24. The letter indicated that Lipson's $65, 000 supplement would be eliminated going forward if he did not take a full call load.

         In a letter dated June 15, 2012, Lipson responded that he was not supposed to take a full call load, as his 2010 letter of intent indicated his position would not include call or weekends. He recognized that the terms of his employment could be altered prospectively and opted to continue in a non-call capacity despite the financial penalty.

         On June 18, 2012, Boswell emailed Lipson stating:

Regarding my letter to you dated May 24, 2012, outlining the proposed terms of your contract for the 2012-2013 fiscal year, I must inform you that due to budgetary errors, the letter contains several inaccuracies. Therefore, I am withdrawing the offer of compensation made in the letter of May 24, 2012.

         On June 21, 2012, Boswell and other University officials met with Lipson and informed him he had been overpaid $10, 472.25 per paycheck beginning July 2011 and continuing through May 2012, for a total overpayment of $115, 194.75 and that the University would recoup that amount from his prospective pay in accordance with its policy. Lipson disputed there was an overpayment. He claimed he was entitled to the additional salary for serving as OSC Director, and he demanded proof of the alleged error. However, there was no executed contract outlining his compensation for serving as the OSC Director during that time period.

         That same date, Boswell drafted a letter to Lipson proposing that Lipson receive a base salary of $217, 604.20, a supplement from UAA for OSC Director of $70, 000, and a potential $65, 000 supplement from UAA for a full call load.

         For Lipson's June 2012 paycheck, the alleged overpayment amount was eliminated. In July 2012, the University demanded repayment and informed Lipson that the overpayment would be recouped from his future paychecks at a rate of $10, 472.25 each month for a year. Lipson again disputed that there was an overpayment necessitating recoupment.

         In August 2012, Lipson informed the University he was effectively resigning September 10, 2012. The University then seized $17, 688.89 from Lipson's August 2012 payroll check and $4, 088.64 from his September 2012 payroll check. Lipson then filed a complaint against the University and UMC ultimately alleging:[7] (1) breach of contract by the University in failing to pay Lipson's full salary; (2) unjust enrichment by the University for failing to pay him appropriately for the benefit he conferred on it; (3) violation of KRS 337.060 and KRS 337.385[8] by the University because, in his view, it had unlawfully recouped funds from his salary; (4) deprivation of his salary by the University without due process; and (5) unjust enrichment by UMC for failing to pay him working as OSC director. Lipson further requested compensatory and punitive damages, including a refund of all sums seized and liquidated damages pursuant to KRS 337.385.

         UMC answered arguing it had no direct agreement with Lipson, and Lipson could not recover against it on equitable grounds. UMC ultimately moved for summary judgment and asserted the same.

         In the University's answer, it raised a number of defenses, including that the complaint in whole or in part was barred by sovereign immunity and/or governmental immunity. The University also counterclaimed, based upon what it alleged was Lipson's failure to repay the excess funds he had received, for unjust enrichment and conversion. The University also sought punitive damages.

         Subsequently, the University moved for summary judgment as to Lipson's claims of breach of contract, unjust enrichment, violation of procedural due process, and violation of Kentucky's wage and hour statutes; and, it moved for partial summary judgment as to liability on its unjust enrichment and conversion claims. The University argued the undisputed facts established it never entered into a contract with Lipson agreeing to pay him additional amounts for the OSC Director position. Instead, any such additional amounts were the product of administrative error.

         According to the affidavit of Linda J. Wilson, the University's Manager of Position Management, during fiscal year 2011 (July 1, 2010 through June 30, 2011), Lipson received compensation of $17, 666.67 per month from the University. His monthly salary was received based on the position numbers assigned to him, including $1, 721 a month under position number 90008064.[9] For that fiscal year, position number 90008064 was also used to pay Boswell.

         Wilson's affidavit further established that in fiscal year 2012 (July 1, 2011 through June 30, 2012), the University changed its policy to require that position numbers be exclusive to each employee. As of July 2011, only Boswell was to be compensated under position number 90008064; however, Lipson erroneously continued to receive monthly compensation under that same position number, in the monthly amount of $10, 472.25.[10] As a result, according to Wilson, Lipson was overcompensated by $10, 472.25 for each of the months between July 2011 and May 2012, for an overpayment totaling $115, 194.75.

         Following a hearing and a lengthy period of discovery, on March 2, 2015, the circuit court granted the University's motion for summary judgment on Lipson's claims and partial summary judgment as to liability on the University's claims. The circuit court ruled that because Lipson was adequately compensated for his services under his written employment contract, the University did not breach its contract with Lipson. Lipson had no due process claim because he had no legitimate property interest in the overpaid amounts and, regardless, he had received notice and an opportunity to be heard. There was no wage and hour violation because Kentucky law authorized the University to withhold wages that are owed. The circuit court did not directly address Lipson's unjust enrichment claim against the University. The circuit court found Lipson was unjustly enriched and converted the University's money when he retained money that was paid to him in error.

         On April 9, 2015, the circuit court granted UMC's motion for summary judgment on Lipson's claims against it. The circuit court determined that because it had already ruled Lipson was adequately compensated for his work under the terms of his employment contract with the University, he could not recover from UMC under unjust enrichment.

         On October 20, 2015, the circuit court awarded the University judgment on "a principal balance of $93, 417.22, effective March 2, 2012." The circuit court also awarded the University pre-judgment and post-judgment interest.

         As previously mentioned, Lipson appealed from each of these judgments. This Court designated the three appeals to be heard together.

         "The standard of review on appeal of a summary judgment is whether the [circuit] court correctly found that there were no genuine issues as to any material fact and that the moving party was entitled to judgment as a matter of law." Scifres v. Kraft, 916 S.W.2d 779, 781 (Ky. App. 1996). Summary judgment "should only be used 'to terminate litigation when, as a matter of law, it appears that it would be impossible for the respondent to produce evidence at the trial warranting a judgment in his favor and against the movant.'" Steelvest, Inc. v. ...

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