Kaplan v. Univ. of Louisville

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HENRY J. KAPLAN, M.D. APPELLANT v. UNIVERSITY OF LOUISVILLE; TONI M. GANZEL; RONALD I. PAUL; AND GREGORY C. POSTEL APPELLEES

No. 2021-CA-0166-MR

Court of Appeals of Kentucky

January 28, 2022

NOT TO BE PUBLISHED

APPEAL FROM JEFFERSON CIRCUIT COURT HONORABLE ANGELA MCCORMICK BISIG, JUDGE ACTION NO. 20-CI-004885

BRIEFS FOR APPELLANT:

Dennis D. Murrell

Kevin L. Chlarson

BRIEF FOR APPELLEE:

Donna King Perry

Jeremy S. Rogers

Matthew Barszcz

Chase M. Cunningham

BEFORE: COMBS, DIXON, AND MAZE, JUDGES.

OPINION

MAZE JUDGE:

Appellant, Henry J. Kaplan, M.D., appeals the Jefferson Circuit Court's order dismissing his complaint for tortious interference with business relationship and expectancies against Appellees, University of Louisville (the "University"), Toni M. Ganzel, M.D., Ronald I. Paul, M.D., and Gregory C. Postel, M.D. For the following reasons, we affirm.

BACKGROUND

Dr. Kaplan came to the University in 2000 to serve as chair of the Department of Ophthalmology and Visual Sciences ("Department"). Dr. Kaplan was also a professor, research scientist, and clinician, as well as the chief executive officer and president of the University of Louisville Physician-Eye Specialists (the "Practice"), which is the Department's clinical practice.

In 2018, the University announced "cost controls" for all departments due to budget shortfalls, including a salary cut for faculty clinicians in 2019. To avoid salary reductions, Dr. Kaplan began exploring potential revenue sources for the Department, including selling the Practice to a private equity group. Dr. Kaplan communicated with four investment groups, but did not enter into any agreements with these groups.

Around this same time, the Department had multiple medical offices under the Practice's name. The Department's busiest office was in the Springs Medical Center ("SMC") on Dutchmans Parkway in Louisville, Kentucky. Dr. Kaplan worked to secure a lease for more space at SMC. However, in May 2018, SMC's landlord said that the space was going to another tenant because the Department had yet to agree to a new lease. Thus, on May 21, 2018, Dr. Kaplan entered into a new lease with SMC on behalf of the Department. Shortly thereafter, on May 31, 2018, Dr. Kaplan met with Dr. Postel, the University's interim executive vice president, and told him about the lease with SMC.

Several months later, on October 16, 2018, Dr. Postel and Dr. Ganzel, the dean of the University's School of Medicine, met with Dr. Kaplan and told him that a special chair review committee would be formed to investigate complaints regarding Dr. Kaplan's aforementioned financing and leasing efforts. Dr. Ganzel summarized the meeting in a letter to Dr. Kaplan on October 25, 2018:

As we discussed in the meeting, several concerns have been brought to our attention in recent weeks regarding your actions and alleged actions as Chair. . . . Specifically, we discussed your unauthorized execution of a lease on behalf of [the Practice], failure to honor your initial obligation of the Department to occupy space and use equipment in the PMOB resulting in expense to re-stock equipment, alleged attempt to seek a loan to fund operations outside of [the Practice's] regular financing that could compromise [the Practice's] debt covenant agreement and the creation of an LLC, that if intended to spin-off the clinical practice of the Department into an outside entity, would violate the Practice Plan.

In the meeting, Dr. Kaplan was told he would be administratively suspended from his chair position.

The following month, Dr. Ganzel and Dr. Paul, the vice dean of faculty affairs for the University, informed Dr. Kaplan that the special chair review had been terminated and the issues were instead being investigated by the University's Audit Services. They also informed Dr. Kaplan that he was immediately suspended and prohibited from engaging in any University-related activity in any capacity, which meant he could not contact University personnel or enter University property. Dr. Kaplan alleges that his fellow faculty and research collaborators were warned not to communicate with him under threat of dismissal. The University also took Dr. Kaplan's desktop computer from his office and ordered him to return his University laptop, which Dr. Kaplan alleges effectively ended his medical practice and scientific career.

When the investigation ended, Dr. Kaplan was informed that Dr. Ganzel was beginning the process to terminate him from the University. And, on April 23, 2020, the University officially terminated him.

Initially, Dr. Kaplan filed suit in federal court alleging Defendants terminated him without due process and violated his Fourteenth Amendment liberty interests in his reputation and career along with his First Amendment right to academic freedom. The federal court dismissed Dr. Kaplan's claims and declined to exercise supplemental jurisdiction over Dr. Kaplan's state-law claims. Kaplan v. Univ. of Louisville, 10 F.4th 569 (6th Cir. 2021).

Dr. Kaplan then filed the underlying action for tortious interference with business relationships and expectancies in Jefferson Circuit Court. Pursuant to CR^[1] 12.02, Defendants moved to dismiss Dr. Kaplan's claim.

In their motion to dismiss, Defendants argued that the University enjoyed governmental immunity because the Department's work was in furtherance of the University's legislative mandate to become a nationally recognized metropolitan research university and, therefore, it was performing a governmental function of statewide concern. Defendants further argued that Dr. Kaplan failed to state a claim for tortious interference with business relationships because the research grants and patients at issue belonged to the University and, thus, could not serve as a basis for a valid tortious interference claim against it. Moreover, Defendants argued that Dr. Kaplan had not identified any specific anticipated business relationship with which they interfered; he had not made allegations connecting Defendants' conduct to failed employment opportunities; they could not have interfered with Dr. Kaplan's book deal because they did not know about it; Dr. Kaplan had not alleged any improper motive for their conduct; and Dr. Kaplan failed to allege any improper conduct by Dr. Postel or that he caused Dr. Kaplan any damages sufficient to state a claim against him.

In response, Dr. Kaplan asserted that the University was not entitled to immunity because it had not shown it was performing a governmental function of statewide concern. Further, Dr. Kaplan claimed he could properly base his claim on the University's interference with research grants on which he worked and, by cutting him off from his computers, office, and research collaborators, Defendants interfered with those grants, as well as the entirety of his research and scholarship. Dr. Kaplan also alleged that a January 2019 letter from Dr. Ganzel reflected that Defendants were aware of his book deal; that he had a personal relationship with patients due to his expertise in the treatment of their conditions; that the question of whether the University acted with improper motive was a question for the jury and malice could be inferred from the lack of justification for Defendants' actions; and that Dr. Postel was a proper Defendant because he was Dr. Ganzel's superior and participated in the events at issue.

After briefing was complete, the circuit court held a hearing and, on January 13, 2021, granted Defendants' motion. The circuit court held that Dr. Kaplan's asserted business relationships and expectancies were not the type from which he could stand to realize pecuniary gain beyond the scope of his University employment. Rather, such relationships were attendant to that employment. Moreover, to the extent the University was a party to the relationships, it could not tortiously interfere with its own relationships. Finally, the court found that the University enjoyed immunity.

Dr. Kaplan now appeals. Additional facts will be developed as necessary.

STANDARD OF REVIEW

"It is well settled in this jurisdiction when considering a motion to dismiss under [CR 12.02] that the pleadings should be liberally construed in a light most favorable to the plaintiff and all allegations taken in the complaint to be true." Mims v. Western-Southern Agency, Inc., 226 S.W.3d 833, 835 (Ky. App. 2007) (citing Gall v. Scroggy, 725 S.W.2d 867, 869 (Ky. App. 1987)). "Since a motion to dismiss for failure to state a claim upon which relief may be granted is a pure question of law, a reviewing court owes no deference to a trial court's determination; instead, an appellate court reviews the issue de novo." Fox v. Grayson, 317 S.W.3d 1, 7 (Ky. 2010) (citing Morgan v. Bird, 289 S.W.3d 222, 226 (Ky. App. 2009)). Finally, this Court made clear in James v. Wilson that "[t]he court should not grant the motion unless it appears the pleading party would not be entitled to relief under any set of facts which could be proved in support of his claim." 95 S.W.3d 875, 883-84 (Ky. App. 2002) (citations omitted). Accordingly, the critical inquiry is whether "if the facts alleged in the complaint can be proved, would the plaintiff be entitled to relief?" Id. at 884.

ANALYSIS

As an initial matter, we examine the meaning of the phrase "without prejudice" in the circuit court's dismissal order and any effect it may have on this appeal, as raised by Defendants. While the circuit court dismissed certain bases of Dr. Kaplan's claim with prejudice, other bases of his claim were dismissed without prejudice:

WHEREFORE, IT IS HEREBY ORDERED AND ADJUDGED that the Motion of the Defendants, University of Louisville Toni M. Ganzel, Ronald I. Paul,

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