Dr. James Taylor and Mrs. Dinah Taylor
v.
University of the Clmberlands Dr. James Taylor and Mrs. Dinah Taylor
v.
University of the Cumberlands
Index
1. Plaintiffs Motion for Summary Judgment
2. Defendant’s Response in Opposition to Plaintiffs’ Motion for Summary Judgment
3. Plaintiffs’ Reply in Support of Motion for Partial Summary Judgement
4. Taylor v. Univ, of the Cumberlands, No. 6:16-CV-109-GFVT, 2018 WL 1546350 (E.D. Ky. Mar. 29, 2018)
5. Jury Instructions
993053.873053/8092572.1
Case: 6:16-cv-00109-GFVT-HAI Doc #: 38 Filed: 08/16/17 Page: 1 of 2 - Page ID#: 582
UNITED STATES DISTRICT COURT EASTERN DISTRICT OF KENTUCKY LONDON DIVISION CIVIL ACTION NO. 6:16-CV-109-GFVT
DR. JAMES TAYLOR MRS. DINAH TAYLOR ) PLAINTIFFS ) Electronically Filed V ) ) PLAINTIFF’S MOTION UNIVERSITY OF ) FOR SUMMARY JUDGMENT THE CUMBERLANDS )
DEFENDANT
Come the Plaintiffs, Dr. James H. Taylor and Dinah L. Taylor, by counsel, and for their
Motion for Partial Summary Judgment against the University of the Cumberlands (“the
University”) state as follows:
Plaintiffs’ breach of contract claim may be decided at this juncture as a matter of law, under
the doctrine of apparent authority. Plaintiffs’ arguments in favor of partial summary judgment on
this issue are set forth in the Memorandum in Support of Partial Summary Judgment filed herewith.
Respectfully Submitted,
/s/ D. Duane Cook______D. Duane Cook John M. Sosbe Cook & Watkins, PLC 306 North Hamilton Street Georgetown, KY 40324 (502) 570-0022 [email protected] [email protected] Case: 6:16-cv-00109-GFVT-HAI Doc #: 38 Filed: 08/16/17 Page: 2 of 2 - Page ID#: 583
CERTIFICATE OF SERVICE
I hereby certify that on August 16, 2017, a copy of the foregoing was filed with the Clerk
of Court via the Court’s ECF system, which will serve notification of such filing on all counsel of
record.
Zs/ D. Duane Cook______Counsel for Plaintiffs Case: 6:16-cv-00109-GFVT-HAI Doc #: 38-1 Filed: 08/16/17 Page: 1 of 12 - Page ID#: 584
UNITED STATES DISTRICT COURT EASTERN DISTRICT OF KENTUCKY LONDON DIVISION CIVIL ACTION NO. 6:16-CV-109-GFVT
DR. JAMES TAYLOR MRS. DINAH TAYLOR ) PLAINTIFFS ) Electronically Filed V ) ) PLAINTIFF’S MEMORANDUM UNIVERSITY OF ) IN SUPPORT OF MOTION THE CUMBERLANDS ) FOR SUMMARY JUDGMENT ) DEFENDANT
Come Dr. James H. Taylor and Mrs. Dinah Taylor, by counsel and for their Memorandum in Support of their Motion for Summary Judgment against the University of the Cumberlands (‘the
University”), state as follows:
INTRODUCTION
Dr. Taylor is a well-respected university President who raised over 300 million dollars for his institution during a nearly thirty-five year term. Such people take to heart the sage advice: “Get it in writing.” In April 2012, Dr. Taylor did just that with promises made to him years earlier by the University’s Board of Trustees. The result was an Agreement (“Referred to in this action as the Disputed Agreement”) executed immediately following the April 19, 2012 Board of Trustees meeting by Dr. Taylor and the then-Chairman of the University’s Board of Trustees1. The
Chairman acknowledges having signed the agreement. The University’s Board minutes reflect that the Agreement was approved by the Board. The University has claimed that the execution of the
Agreement was unauthorized. That claim is immaterial for two reasons: First, even absent actual
1 The University has admitted Dr. Oaks was the Chairman of the Board of Trustees on the date in question. See Response to Request for Admission No. 2., attached hereto at Exhibit A.
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authority, the Chairman 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. Second, the University may not introduce parol evidence to contradict its official
Board of Trustees’ minutes.
The University clothed the Chairman, Dr. Jim Oaks2, with apparent authority to sign the
Agreement. Indeed, its current President acts today pursuant to a contract signed by the same
Chairman, as the sole signatory on behalf of the University. The University, must therefore prove
that the Agreement was not approved, and that Dr. and/or Mrs. Taylor knew that the Board had
not approved the Agreement.
The University’s burden is insurmountable because (a) neither Dr. nor Mrs. Taylor was permitted to be present for the Executive Session in which the Agreement was discussed, (b) the
Chairman and other members who had been in the executive session informed Dr. Taylor that the
Agreement had been approved, and (c) the University’s records of the executive session unambiguously state that the Agreement was read to and approved by the Board. Moreover, as to this last point, the official minutes of the University’s Board of Trustees cannot be contradicted by parol evidence.
STATEMENT OF FACTS
In the Spring of 2012, Dr. Taylor asked Steve Moore, an attorney in Corbin, Kentucky, to draft a contract between the University and Dr. and Mrs. Taylor. Dr. Taylor’s purpose in doing so was to get in writing the promises the University’s Board of Trustees had previously made to him
2 Jim Oaks is referred to herein as Dr. Oaks because that is how he is referred to within the University community. He is the holder of an honorary degree presented to him by the University. Referring to him in this way also serves as a reminder of the many years of dedicated service he has given the University which now sullies his reputation with its unfounded claims.
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concerning his benefits and salary upon leaving the office of President of the University. Mr.
Moore had frequently done legal work for the University. The Agreement was delivered to Dr.
Oaks on April 19, 2012. Dr. Taylor provided a draft of the Agreement to the Board Chairman. At
the end of the regularly scheduled Board Meeting that day, Dr. Oaks called for an executive
session, and all non-members of the Board were dismissed; this included Dr. Taylor.
The official minutes of the University of the Cumberlands Board of Trustees for the
Board’s April 19, 2012 meeting state in relevant part:
Executive Session Chair Oaks called for Executive Session. All non-Board members were dismissed. Dr. Oaks complimented Dr. Taylor's leadership of the University and read to the members a contract which Oaks recommends be approved by the Board members concerning Dr. Taylor's retirement benefits. Scott Thompson moved the contract be approved and Cookie Henson seconded the motion. All approved.
Board Minutes April 19, 2012. (Emphasis in Original). The relevant portions of these minutes, signed by Dr. Oaks and Board Secretary Lonnie Waldon, are submitted herewith as Exhibit B.
Immediately after the Executive Session, which was the last item prior to adjournment, Dr.
Oaks informed Dr. Taylor that the contract had been approved. The two men then executed the contract, with Dr. Taylor signing on his own behalf and on behalf of his wife. That document still exists, and both men acknowledge their signatures. On October 18, 2012, at the University’s next regularly scheduled Board of Trustees meeting, the minutes state the following concerning consideration of the minutes of the April 19, 2012 meeting.
Consideration of Minutes Each member's packet contained the Minutes from the Full Board Meeting, April 19, 2012; Finance, Budget & Investment Subcommittee: June 18, 2012, Phone Conference; Finance, Budget & Investment Subcommittee: June 28,2012; Finance, Budget & Investment Subcommittee: July 23, 2012; Phone Conference, Finance, Budget & Investment Subcommittee: July 25,2012; Finance, Budget & Investment Subcommittee Meeting, August 17, 2012; Phone Conference, Finance, Budget & Investment Subcommittee: August 20, 2012; Finance, Budget & Investment Subcommittee Meeting, September 11, 2012. Dr. Oaks noted that the Minutes
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would be considered collectively and asked if there were any corrections or additions. Mr. Thompson moved the Minutes be approved as presented, and Dr. Hancock seconded the motion. All approved.
Board Minutes October 18, 2012 (Emphasis in original). Relevant portions of the minutes of this Board Meeting, signed by Chairman Oaks and Secretary Lonnie Walden, are submitted herewith as Exhibit C.
Dr. Taylor continued to work following the execution of the Agreement until he retired from the position of President on October 17, 2015. On that date he assumed the position of
Chancellor of the University of the Cumberlands, and the Agreement’s terms went into effect.
SUMMARY JUDGMENT STANDARD
“The moving party bears the burden of showing the absence of any genuine issues of material fact. “Sigler v. Am. Honda Motor Co., 532 F.3d 469, 483 (6th Cir. 2008). “(T]he burden on the moving party may be discharged by “showing”—that is, pointing out to the district court— that there is an absence of evidence to support the nonmoving party's case.” Celotex Corp. v.
Catrett, 477 U.S. 317, 325, 106 S. Ct. 2548, 2554, 91 L. Ed. 2d 265 (1986). "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. Corp, of the President of the Church, 521 F. Supp. 2d 577, 582 (E.D. Ky. 2007).
ARGUMENT
I. Dr. Oaks had Apparent Authority to Execute the Agreement on the University’s Behalf.
There is a dispute about Dr. Oaks’ actual authority in connection with signing the April 19,
2012 Agreement. There can however be no dispute that he had apparent authority to execute the
Agreement on behalf of the University. “Apparent authority... is not actual authority but is the authority the agent is held out by the principal as possessing. It is a matter of appearances on which
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third parties come to rely.” Mill St. Church of Christ v. Hogan, 785 S.W.2d 263,267 (Ky. Ct. App.
1990). The law is well settled that even where the appearance relied upon by a third-party (with
no knowledge that the appearance differs from the reality) is counter to the actual authority given
to the agent by the principal, that the principal is bound to the appearance he has created, not the
reality.
It matters not that the agent acts contrary to the instructions of his principal where a third person with whom he deals is ignorant of his circumscribed authority or has no reason to believe he is exceeding it or violating the instructions of his principal. ... If that were not the rule, commercial relations would be constantly disturbed and chaos result.
Clark v. Burden, 917 S.W.2d 574, 579 (Ky. 1996). Quoting American Nat. Red Cross v
Brandeis Machiner & Supply Co. 151 S.W.2d 445, 451 (1941).
Therefore, even assuming arguendo that the University is correct that Dr. Oaks lacked
actual authority, unless Dr. and Mrs. Taylor knew of a limitation to his authority, the appearance
of authority created by the University permits the formation of a binding contract.
“[AJpparent authority is established where (1) the principal represents that the agents have
the authority to act on its behalf; (2) the third party reasonably believes the agents have such
authority; and (3) the third party's belief is traceable to the principal's representations.” Mark D.
Dean, P.S.C. v. Commonwealth Bank & Trust Co., 434 S.W.3d 489, 499 (Ky. 2014). Citing with
approval the Restatement (Third) ofAgency § 2.03 (2006). Each of these elements is met.
As to the first element of the test for apparent authority, the University concedes that Dr.
Oaks was the Chairman of the University Board of Trustees at the time of the April 2012 Board
Meeting. That title and its responsibilities were given to Dr. Oaks by the University. As part of
those responsibilities, Dr. Oaks signed contracts on behalf of the University. There was not at the
time (and apparently there is not today), a policy requiring the signature of multiple Board
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Members on behalf of the University. Dr. Taylor’s affidavit, attached at Exhibit D makes clear that he was aware of Dr. Oaks signing other contracts on behalf of the University prior to the execution of the Agreement, and that he knew of other contracts before and after his own signed by Dr. Oaks.
Likewise, as to the second element, Dr. and Mrs. Taylor reasonably believed Dr. Oaks had the authority to sign the Agreement on behalf of the University. The University will attempt to question the reasonableness of Dr. and Mrs. Taylor’s reliance. It will no doubt claim that Dr. Taylor was not an outsider unaccustomed to the University’s policies and procedures, and will likely claim that Dr. Taylor should be held to a higher standard for his reliance to be deemed reasonable. While it is fair to say that Dr. Taylor was not an outsider, and that he knew that Dr. Oaks could not act without the Board’s approval, such arguments miss the point. The University is not asserting that
Dr. Oaks could never sign a contract on its behalf, or even that he could not sign a contract between the University and the President. What the University argues is that Dr. Oaks was never authorized to sign this Agreement.
In determining what is reasonable to rely upon in this circumstance, Dr. and Mrs. Taylor’s status as “insiders” or their knowledge of University policy and procedure is irrelevant. When the
Board of Trustees went into Executive Session, and all non-members were excused from the room, the University literally and figuratively shut a door on the Taylors. All that the Taylors can possibly know about what occurred behind that closed door is what the University says in its official records. For the Taylors to rely upon the official records of the University when the University made obtaining firsthand information impossible is per se reasonable. The Court should determine that as a matter of law. In fact, as a matter of law, relying upon any source of information other than the Board minutes, absent some valid reason to doubt their veracity, would be unreasonable.
“The minutes of private corporations are the best evidence of actions of the board of directors
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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 v. Madison Sales Co., 95 S.W.2d 604, 608
(1936).
As to the last element of apparent authority, it is obvious that Dr. and Mrs. Taylor’s beliefs
about Dr. Oaks’ authority are traceable to actions of the University. Most obviously, the
University’s board minutes and their subsequent confirmation at the next meeting are actions
traceable directly to the University. More subtly, the grant of authority to Dr. Oaks, which
permitted him to be in the meeting at all is an action traceable to the University which leads directly
to Dr. and Mrs. Taylor’s belief regarding Dr. Oaks’ authority.
A recent case from this very Court, Suhail v Univ, of the Cumberlands, 107 F. Supp. 3d
748, (EDKY 2015) is instructive on applying the doctrine of apparent authority, and can serve as
a guide on the same issues here. More than just the name of the defendant should seem familiar to
the Court. In that action, the University was sued for breach of contract in connection with an
employment contract offered to a professor by the University. There, as here, the University
claimed the contract was not properly authorized. There, as here, the Plaintiff filed for summary
judgment on the issue of breach of contract. The Court granted summary judgment to the Plaintiff
in that case on the breach of contract claim, finding apparent authority, and finding that the
professor lacked knowledge of the agent’s supposedly circumscribed authority. The crux of the
Court’s opinion granting summary judgment on the breach of contract claim was that “without
evidence that [plaintiff] was aware of [agent’s] lack of authority, the Court cannot find for the
University on this point.” Here as there, the University is without such evidence.
a. The University Cannot Present Any Evidence that Dr. or Mrs. Taylor Knew of Dr. Oaks’ Supposed Lack of Authority.
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In light of the undisputed facts of this case, the University is unable to prove that Dr. Taylor knew that Dr. Oaks was unauthorized to sign on behalf of the University. It is not as if the
University can say that Dr. Oaks never signs contracts between the University and its president, in fact the current president’s employment contract bears only one signature on behalf of the
University: that of Dr. Oaks. It is not as if the University can claim that the circumstances made it clear that Dr. Oaks had no authority. It would be enough to defeat such an argument that the
Taylors could not know what went on in the closed session. However, we know from the testimony of Dave Huff, and Dr. Oaks, that even some of those who were in the meeting believe the
Agreement was approved, and the official minutes echo their recollection it was approved.
No evidence about what happened in the meeting can change the fact that what was actually written indicated to Dr. and Mrs. Taylor, and to any other person who cared to look, that the Board approved the Agreement. Moreover, if there was the slightest hesitation by the Board as to what actually occurred, it had the opportunity in October, 2012, after six months of sober reflection, to dispute what was written in the minutes. Yet not a single member of the Board disagreed with the minutes from April 19, 2012 when they were unanimously approved at the
October 2012 Board meeting. Simply put, the University cannot produce any evidence that Dr. and Mrs. Taylor had any indication that Dr. Oaks could not execute their Agreement. Nor did Dr.
Oaks himself have any such indication that the Board had not approved the Agreement. Under such circumstances, the University cannot put forth any plausible arguments that Dr. Oaks lacked apparent authority. For that reason, Dr. and Mrs. Taylor’s breach of contract claim should be ruled upon as a matter of law.
II. The Board Meeting Minutes Cannot be Contradicted by Parol Evidence.
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Not only do the duly kept and subsequently approved minutes of the April 19, 2012 Board of Trustees Meeting make it impossible for the University to prove that the Taylors knew that Dr.
Oaks supposedly lacked authority to execute the Agreement, the minutes themselves may not be contradicted by parol evidence. “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 v. Madison
Sales Co., 95 S.W.2d 604, 608 (1936). The court in Bennett went on to acknowledge a “conflict among Kentucky decisions as to whether or not parol evidence is admissible to vary or contradict the properly authenticated minutes of a directors' meeting where there is no element of ratification or estoppel.”
In favor of the general proposition that parol evidence cannot contradict the minutes of a corporation, the Bennett court cites Harlan-Kellioka Coal Co. v. Kelly, 262 S.W. 259, which held that parol evidence is inadmissible to vary or contradict the terms of a resolution of the board of directors, contained in the minutes fixing the salaries of corporate officers and the fund from which they should be paid, where the integrity of the corporate record is in no way impeached.
The leading case cited by the Bennett Court for the proposition that the corporate record can be contradicted by parol evidence is Kelley-Koett Mfg. Co. v. Goldenberg, 207 Ky. 695, 701,
270 S.W. 15, 18 (1924). In that case, according to the Bennett court:
It was said in that case that corporate minutes, when properly authenticated and presented, are admissible as competent evidence for and against the corporation and its stockholders or members, but they are not conclusive but only prima facie evidence of the proceedings, and parol evidence is admissible for the purpose of proving what actually occurred.
Bennett v. Madison Sales Co., 95 S.W.2d 604, 608 (1936).
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There is however an exception mentioned in Kelly-Keott Mfg. Co. v Goldenberg, which is
applicable to the Taylors’ circumstance:
There are recognized qualifications upon the conclusive effect of corporate records as is shown by the authorities referred to, one of which is that if a stranger has acted upon the faith of the truth and it would be to his detriment to allow the corporation to impeach the record by parol testimony it will not be allowed to do so, but that exception is in the nature of an estoppel
Kelley-KoettMfg. Co. v. Goldenberg, 207 Ky. 695, 701, 270 S.W. 15, 18 (1924).
No doubt the University will say that Dr. Taylor, the President of the University for three
decades, was not a stranger, and that this estoppel exception does not apply. While true that he is
not a stranger within the ordinary meaning of that term, with respect to the transactions undertaken
here, he and Mrs. Taylor are, by virtue of having been excluded from the Executive Session, in the
same predicament as a stranger who must rely upon the corporate record to sort out the authority
of the agent with whom they are dealing.
The Bennett court’s discussion of the authority on each side of the issue, (without
necessarily resolving the issue) was not the last occasion for Kentucky’s highest court to review
whether parol evidence could be introduced to alter corporate records. In the subsequent case of
Martin v. Holian, 126 S.W.2d 465 (1939), the Court of Appeal appears to have put to bed any
lingering question following the Bennett Court’s decision:
It is further argued by appellant that 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. Ample authority is cited in support of this contention and generally speaking it may be accepted as correct.
Martin v. Holian, 277 Ky. 291, 294-95, 126 S.W.2d 465, 467 (1939).
Here there is no allegation of fraud with respect to the minutes of the April 19, 2012
meeting. The University has no evidence that there was any fraud in the drafting of the Board
minutes. In fact, the Board Secretary, Lonnie Walden, testified very much to the contrary:
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Q Let me refer you to right above your signature. It says, "Executive session. Chair Oaks called for Executive Session. All non-Board members were dismissed. Dr. Oaks complimented Dr. Taylor's leadership of the University and read to the members a contract which Oaks recommends be approved by the Board members concerning Dr. Taylor's retirement benefits. Scott Thompson moved the contract be approved and Cookie Henson seconded the motion. All approved." Do you remember that that happened at that April 2012 meeting? AI can't say as I do. Q Okay. Can you say affirmatively that it didn't happen? A No, sir. Q You just don't remember? A Don't remember. Q Would you have signed something that was untrue as far as the minutes are concerned? A No, sir.
Deposition of Lonnie Walden at Page 13 Line 22 to page 14 Line 18 (Emphasis supplied).
Further undercutting any attempt by the University to claim fraud in connection with the
meeting minutes is the fact that the minutes were approved at the next following Board meeting.
Unless the University is prepared to claim that its entire Board of Trustees were complicit in the
fraud, the subsequent approval speaks to the authenticity of the minutes. Absent any allegations
of fraud, the Board minutes are conclusive of the issue of whether the Board voted to approve the
Agreement. Moreover, even if the Board minutes were seen as only prima facie evidence of what
went on behind closed doors on April 19, 2012, the University is estopped from challenging with
parol evidence what was written in the minutes and subsequently approved by the full Board of
Trustees. The rationale for such a rule is obvious, what was written at the time, absent some proof
of fraud, should be more readily considered to be correct than the recollections of board members
years after the fact.
CONCLUSION
For the foregoing reasons, the Court should enter summary judgment on Dr. and Mrs.
Taylor’s claims for breach of contract, on the basis of Dr. Oaks’ apparent authority. The Court
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should further determine as a matter of law that the University may not, by parol evidence
challenge the contents of its own minute books.
Respectfully Submitted,
/s/ D. Duane Cook______D. Duane Cook John M. Sosbe Cook & Watkins, PLC 306 North Hamilton Street Georgetown, KY 40324 (502) 570-0022 [email protected] j [email protected]
CERTIFICATE OF SERVICE
I hereby certify that on August 16, 2017, a copy of the foregoing was filed with the Clerk
of Court via the Court’s ECF system, which will serve notification of such filing on all counsel of record.
Counsel for Plaintiffs
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UNITED STATES DISTRICT COURT EASTERN DISTRICT OF KENTUCKY LONDON DIVISION CIVIL ACTION NO. 6:16-CV-109-GFVT
DR. JAMES TAYLOR MRS. DINAH TAYLOR ) PLAINTIFFS ) Electronically Filed V ) ) PLAINTIFF’S MOTION UNIVERSITY OF ) FOR SUMMARY JUDGMENT THE CUMBERLANDS )
DEFENDANT
Come the Plaintiffs, Dr. James H. Taylor and Dinah L. Taylor, by counsel, and for their
Motion for Partial Summary Judgment against the University of the Cumberlands (“the
University”) state as follows:
Plaintiffs’ breach of contract claim may be decided at this juncture as a matter of law, under the doctrine of apparent authority, and on the University’s inability to vary the minutes of its Board by parol evidence. Plaintiffs’ arguments in favor of partial summary judgment on this issue are set forth in the Memorandum in Support of Partial Summary Judgment filed herewith.
Respectfully Submitted,
/s/ D. Duane Cook______D. Duane Cook John M. Sosbe Cook & Watkins, PLC 306 North Hamilton Street Georgetown, KY 40324 (502) 570-0022 [email protected] j ohn@cookwatkins. com Case: 6:16-cv-00109-GFVT-HAI Doc #: 38-2 Filed: 08/16/17 Page: 2 of 2 - Page ID#: 597
CERTIFICATE OF SERVICE
I hereby certify that on August 16, 2017, a copy of the foregoing was filed with the Clerk of Court via the Court’s ECF system, which will serve notification of such filing on all counsel of record.
Zs/ D. Duane Cook Counsel for Plaintiffs Case: 6:16-cv-00109-GFVT-HAI Doc #: 38-3 Filed: 08/16/17 Page: 1 of 4 - Page ID#: 598
and/or that can be obtained as easily by Plaintiffs and/or their counsel as by the University and/or
its counsel.
6. The University objects to the Requests to the extent that they seek information
protected from disclosure because such information is confidential and proprietary in nature.
The University will only produce discoverable information of a confidential and proprietary
nature subject to any protective orders entered by the Court in this case.
7. The University reserves all rights to object to the competency, relevancy,
materiality, and/or admissibility of the information disclosed in response to the Requests.
8. The University hereby incorporates these General Objections into each of the
responses herein, and failure to include each such General Objection in the response to each
Request shall not waive the University’s objections in this regard.
CONTINUING REQUEST
Discovery in this case is ongoing; therefore, the University reserves its right to revise,
correct, or supplement any of the information and/or responses provided herein.
REQUESTS FOR ADMISSION
REQUEST NO. 1. Please admit that the signature of Jim Oaks appearing on the Taylor
Contract is genuine.
RESPONSE: Subject to and without waiving the foregoing General Objections, the
University states that the information it knows or can readily obtain is insufficient to enable it to admit or deny this Request and, therefore, denies the same.
REQUEST NO. 2. Please admit that on April 19, 2012 Jim Oaks was the duly elected chairman of the Board of Trustees.
Exhibit A
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RESPONSE: Subject to and without waiving the foregoing General Objections, the
University admits this Request.
REQUEST NO. 3. Please admit that the Board Chairperson has either previously or
subsequently executed other retirement contracts.
RESPONSE: The University objects to this Request to the extent that it is overly broad, vague, and ambiguous. Subject to and without waiving this objection and the foregoing
General Objections, the University denies this Request.
REQUEST NO. 4. Please admit that you did not repudiate the Taylor Contract at any time prior to Dr. Taylor’s retirement as President of the University.
RESPONSE: Subject to and without waiving the foregoing General Objections, the
University denies this Request.
REQUEST NO 5. Please admit that you have taken no action to remove Dr. Taylor from his post as Chancellor.
RESPONSE: Subject to and without waiving the foregoing General Objections, the
University denies this Request.
REQUEST NO. 6. Please admit that the attorney who drafted the Taylor Contract had previously been engaged by you for other matters
RESPONSE: The University objects to this Request to the extent that it is overly broad, vague, and ambiguous. Subject to and without waiving this objection and the foregoing
General Objections, the University admits this Request.
REQUEST NO. 7. Please admit that you have made statements to third-parties, and to members and honorary members of your Board of Trustees to the effect that the Taylor Contract
Exhibit A
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minutes here means the collection of Board of Trustees meeting minutes that was maintained as
the complete and correct set of those minutes to which anyone interested in reviewing the
historical record of meetings of the Board would likely be referred.
RESPONSE: Subject to and without waiving the foregoing General Objections, the University
admits this Request.
REQUEST NO. 11. Admit that the minutes attached hereto as Exhibit 1 were included in the
packet sent to members of the University Board of Trustees prior to the October 18, 2012 meeting of the Board and were unanimously approved as presented, without corrections or additions, by the University Board of Trustees at its October 18, 2012 meeting.
RESPONSE: The University objects to this Request to the extent that it is vague and ambiguous.
Subject to and without waiving this objection and the foregoing General Objections, the
University states that the information it knows or can readily obtain is insufficient to enable it to admit or deny this Request and, therefore, denies the same.
INTERROGATORIES
INTERROGATORY NO. 1. Identify the person answering these discovery requests on behalf of the University, and any person consulted by the person answering, or any document consulted by the person answering.
ANSWER: The University states that it prepared these discovery responses with the assistance of counsel as well as Dr. Larry Cockrum, President of the University. Dr. Cockrum can be contacted through the undersigned counsel.
INTERROGATORY NO. 2. Identify each member or honorary member of the Board of Trustees of the University who has expressed a belief to you that a contract providing compensation and
Exhibit A
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benefits to the Plaintiffs (after Dr. Taylor’s retirement as President of the University) was
authorized in the April 2012 meeting of the University Board of Trustees.
ANSWER: The University objects to this Interrogatory to the extent that it seeks information
which is protected from disclosure by the attorney-client privilege or work-product doctrine.
INTERROGATORY NO. 3. Identify each member or honorary member of the Board of Trustees
of the University who has expressed a belief to you that a contract providing compensation and
benefits to the Plaintiffs (after Dr. Taylor’s retirement as President of the University) was NOT
authorized in the April 2012 meeting of the University Board of Trustees.
ANSWER: The University objects to this Interrogatory to the extent that it seeks information which is protected from disclosure by the attorney-client privilege or work-product doctrine.
INTERROGATORY NO. 4. For each person identified in Interrogatory Nos. 2 or 3 above, please state the substance of that person’s recollections, including any facts supporting their recollections.
ANSWER: The University objects to this Interrogatory to the extent that it seeks information which is protected from disclosure by the attorney-client privilege or work-product doctrine.
INTERROGATORY NO. 5. For each person identified in Interrogatory Nos. 2 or 3 above, state precisely the wording of any questions submitted to each person concerning their recollection of the Taylor Contract or any Board of Trustees meetings discussing the Taylor
Agreement.
ANSWER: The University objects to this Interrogatory to the extent that it seeks information which is protected from disclosure by the attorney-client privilege or work-product doctrine.
INTERROGATORY NO. 6. Identify each of those persons listed in the University’s initial disclosures who is currently not a member of the Board of Trustees, an honorary member of the Exhibit A
6 Case: 6:16-cv-00109-GFVT-HAI Doc #: 38-4 Filed: 08/16/17 Page: 1 of 1 - Page ID#: 602
Dr. Knock moved the above policy on Bullying be approved, and Mr. Steely seconded the motion. AU approved.
Petitions and Communications Each member’s packet contained a listing of upcoming events. Everyone was encouraged to participate in as many of these activities as possible.
Dr. Taylor expressed appreciation to Dick Knock and his son, David, for their purchase of the property in Northern Kentucky. The 3rd floor of the building is being leased to the University for build-out to accommodate its programs. The building, which has high visibility from Interstate 75, is being named the Richard Knock School of Lifelong Learning.
President Taylor also announced that the University has met the $1.5 million challenge of the Reeves Foundation and has qualified to collect the Foundation’s $500,000 gift for the renovation of the Health and Wellness Center. To complete Phase III, we still must raise a minimum of $1.1 million.
Also of note: 1. The coal fields scholarship program to be fimded with coal severance tax money did not pass legislative approval. 2. The university will receive an additional cut in cooperative program funds next year from the Kentucky Baptist Convention. 3. Approximately $1.5 million in funds must be made up in this year’s budget for unfunded expenses (scholarships, state grants, swimming pool) or cuts (KBC).
Executive Session Chair Oaks called for Executive Session. All non-Board members were dismissed. Dr. Oaks complimented Dr. Taylor’s leadership of the University and read to the members a contract which Oaks recommends be approved by the Board members concerning Dr. Taylor’s retirement benefits. Scott Thompson moved the contract be approved and Cookie Henson seconded the motion. All approved.
Adjournment There being no further business. Dr. Oaks adjourned the meeting.
Lonnie Walden, Secretary
______Exhibit B April 19,2012 Page 18
Cumberlands_000423 Case: 6:16-cv-00109-GFVT-HAI Doc #: 38-5 Filed: 08/16/17 Page: 1 of 3 - Page ID#: 603
UNIVERSITY of the CUMBERLANDS BOARD OF TRUSTEES October 18,2012,8:30 a.m. Cumberland Inn
Members Present Mr. Phillip Armstrong, Mr. Doyle Baker, Dr. Paul Estes, Mr. Bill Gullett, Dr. Tony Hancock, Dr. French Harmon, Dr. William Henard, Mrs. Cookie Henson, Dr. Oscar Hornsby, Dr. Roland Mullins, Dr. Jim Oaks, Mr. Donnie Patrick, Mr. J. Hunt Perkins, Dr. Carolyn Petrey, Dr. Dallas Petrey, Dr. Charles Roesel, Mr. Paul Steely, Mr. Scott Thompson, Dr. John Mark Toby, Mr. Lonnie Walden, Mr. Jon Westbrook, Mr. Jerry Winchester
Honorary Members Present Dr. Charles Barnes, Dr. Linda Booth, Mr. Ed Fish, Dr. Marion Forcht, Dr. Orville Griffin, Dr. Calvin Perry, Mr. Donnie Rains
Others Present Dr. Jim Taylor, Mr. Steve Allen, Ms. Jana Bailey, Dr. Larry Cockrum, Dr. Mike Colegrove, Mr. Kyle Gilbert, Mr. Steve Morris, Mr. Randle Teague, Mr. Randy Vernon, Ms. Sue Wake
Devotion, Prayer Dr. Charles Barnes led the devotional time, reading from Psalms 127.
Call to Order, Agenda Review Chair Jim Oaks called the meeting to order and welcomed all present. He noted that we have with us a number of honorary board members who are always welcome to attend the meeting and to participate in discussions. Honorary Trustees, however, may not make motions or vote on motions.
Dr. Oaks thanked the members of the Finance, Budget and Investment Committee and Subcommittee for their work over die summer in regard to working with Graystone and with Fifth Third and others on the possible refinancing of the University’s loan currently held by Fifth Third Bank.
Dr. Oaks shared with all present an invitation to attend the dedication of a building in London, KY this afternoon. The building is being named for a deceased friend, Jim Rose, and husband of a former trustee, Judy Rose. Dr. Oaks said he would try to speed today’s meeting along so that those who wanted to do so could stop by to visit with Judy Rose at the dedication.
Dr. Taylor thanked everyone for their attendance and for their help as we move this institution along.
Consideration of Minutes Each member’s packet contained the Minutes from the Full Board Meeting, April 19, 2012; Finance, Budget & Investment Subcommittee; June 18,2012, Phone Conference;
October 18,2012 OTTHbit C
CONFIDENTIAL Cumbeiiancis_000424 Case- 616-cv-00109-GFVT-HAI Doc #: 38-5 Filed: 08/16/17 Page: 2 of 3 - Page ID#: 604
Finance, Budget & Investment Subcommittee: June 28,2012; Finance, Budget & Investment Subcommittee: July 23, 2012; Phone Conference, Finance, Budget & Investment Subcommittee: July 25,2012; Finance, Budget & Investment Subcommittee Meeting, August 17, 2012; Phone Conference, Finance, Budget & Investment Subcommittee: August 20,2012; Finance, Budget & Investment Subcommittee Meeting, September 11,2012. Dr. Oaks noted that the Minutes would be considered collectively and asked if there were any corrections or additions. Mr. Thompson moved the Minutes be approved as presented, and Dr. Hancock seconded the motion. All approved.
The Minutes of the Audit Committee, August 27,2012 were reviewed. Dr. Oaks asked everyone to look at page 5 of the Minutes and asked that the action approved by the Audit Committee “Dr. Oaks recommended that the University stay with Graystone Consulting, and write off Bluepoint Consulting” be tabled for reasons that will become evident as the meeting progresses. Mrs. Henson moved and Mr. Thompson seconded the motion to approve the Audit Committee Minutes with the exception of tabling the recommendation on page 5, “Dr. Oaks recommended that the University stay with Graystone Consulting, and write off Bluepoint Consulting. ”
Minutes were distributed from the June 2012 Telephone Poll of the Board of Trustees. Dr. Estes moved and Dr. Dallas Petrey seconded the motion that the Minutes be accepted. All approved.
Although Minutes were not available. Dr. Oaks reviewed the high points of the October 17,2012 Executive Committee Meeting. After review the following recommendations were made: Mr. Thompson moved and Mr. Patrick seconded the motion that the University continue to negotiate with Fifth Third on extending the tax exempt loan and adding forward the starting interest rate swap. The negotiable goal for the “all in rate” from 11/1/17 to maturity of 11/1/22 is 3.20% to 3.26%. AU approved.
Mrs. Henson moved and Mr. Perkins seconded the motion that the University purchase the Cedar Ridge property and buildings for $433,000 and that the University negotiate with Mrs. Bart Bailey for the property and home she owns located between the Cedar Ridge property and the Cumberland Inn property for $300,000 cash plus a $300,000 unitrust. All approved.
President Taylor cautioned the Board to keep this information confidential because we are still tn the negotiating phase on the above transactions.
Cumberland Wellness Properties Report Jana Bailey gave the report that Cumberland Wellness Properties is in the maintenance phase. Cumberland Wellness Properties Inc. is the result of a new market tax credit transaction involving University of the Cumberlands, Kentucky Highlands and Fifth Third Development Corporation.
October 18, 2012
CONFIDENTIAL Cumbertands_000425 Case- 616-cv-00109-GFVT-HAI Doc #: 38-5 Filed: 08/16/17 Page: 3 of 3 - Page ID#: 605
(2015). Mrs. Henson moved the slate be accepted and Mr. Steely seconded the motion. Al! approved.
Prior to the meeting, Chairman Oaks distributed the report of the committee (Oaks, Westbrook, Walden) that conducted the Annual Evaluation of President Taylor. Dr. Mullins moved the report be accepted and Mrs. Henson seconded the motion. All approved.
President Taylor noted that he appreciated the kind remarks in the evaluation and said that he accepts the Board’s commendations with the Board’s realization that he relies heavily on his administrative staff and that he stands on their shoulders.
Petitions and Communications Chair Oaks noted that the following Trustees will be rotating off the Board for at least one year: Dr. Paul Estes; Dr. Dallas Petrey and Dr. Tom Raper. Dr. Oaks thanked each person for his service to the Board and invited each to continue as an Honorary member until such time as each can be nominated to serve again as a full member.
The following upcoming events were announced: Kentucky Baptist Convention - November 12, 2012; Hanging of the Greens - November 27,2012; Madrigals, November 29 - December 1,2012; Board of Trustees, April 18,2013
Adjournment There being no further business. Dr. Oaks adjourned the meeting.
October 18,2012 p«e23 Exhibit C
CONFIDENTIAL Cumberiancls_000446 Case: 6:16-cv-00109-GFVT-HAI Doc #: 38-6 Filed: 08/16/17 Page: 1 of 2 - Page ID#: 606
UNITED STATES DISTRICT COURT EASTERN DISTRICT OF KENTUCKY LONDON DIVISION CIVIL ACTION NO. 6:16-CV-109-GFVT
DR. JAMES TAYLOR ) MRS. DINAH TAYLOR ) PLAINTIFFS ) Electronically Filed V ) AFFIDAVIT OF UNIVERSITY OF DR. JAMES H. TAYLOR THE CUMBERLANDS
DEFENDANT
Comes the Affiant Dr. James H. Taylor, and having been first duly sworn, states and deposes as follows:
1. As of April 19, 2012, the date on which the Agreement was executed, I believed that Dr. Jim Oaks, the Chairman of the University Board of Trustees, was authorized to execute the Agreement on behalf of the University. This belief stemmed from several factors.
2. I knew Dr. Oaks was the Chairman of the Board of Trustees at the time.
3. I was aware of other Agreements signed by Dr. Oaks prior to the execution of this
Agreement, and I am aware of others he has signed since.
4. Neither my wife, nor myself were in the executive session when the Agreement was voted upon.
5. Neither my wife nor myself have any reason to believe the Agreement was not authorized. Even upon reviewing the minutes of the Board of Trustees meeting, I had no indication that Dr. Jim Oaks was in any way without authority to execute the Agreement on behalf of the
University.
Exhibit D Case: 6:16-cv-00109-GFVT-HAI Doc #: 38-6 Filed: 08/16/17 Page: 2 of 2 - Page ID#: 607
6. My wife and I have fully complied with the Agreement, and there is nothing the
University has asked us to do which we have not done.
Further the Affiant sayeth naught. zx .
Exhibit D Case: 6:16-cv-00109-GFVT-HAI Doc #: 38-7 Filed: 08/16/17 Page: 1 of 1 - Page ID#: 615
UNITED STATES DISTRICT COURT EASTERN DISTRICT OF KENTUCKY LONDON DIVISION
DR. JAMES TAYLOR ) MRS. DINAH TAYLOR ) ) Case No. 6:16-cv-109 PLAINTIFFS ) V ) ) UNIVERSITY OF ) THE CUMBERLANDS ) DEFENDANT )
PROPOSED ORDER GRANTING PLAINTIFFS’ MOTION TO FOR SUMMARY JUDGMENT
This matter is before the Court on Plaintiffs’ Motion to for Summary Judgment. The Court, having reviewed the record and being otherwise sufficiently advised, hereby ORDERS as follows:
The Plaintiffs’ Motion for Summary Judgment is hereby GRANTED.
This the day of, 2017.
Judge, US District Court for the Eastern District of Kentucky
Case: 6:16-cv-00109-GFVT-HAI Doc #: 46 Filed: 09/20/1',
UNITED STATES DISTRICT CO1 m '.J « x CD O CD ' •-* »-*■ -■ * > oj m ; CD 23 m O EASTERN DISTRICT OF KENTU w ™ ? c & □3 O CD O " LONDON DIVISION g ct £ cd O N ct 1 1/1 cr> z O a = o c-i tn CIVIL ACTION NO. 6:16-CV-109-( t <5 o ' cd n> o □ in h-*- <
DR. JAMES TAYLOR fD O CO CD * XI tn MRS. DINAH TAYLOR, O OJ q (£3 Plaintiffs,
v.
UNIVERSITY OF THE CUMBERLANDS,
Defendant. 3 3 : DEFENDANT’S RESPONSE IN to PLAINTIFFS’ MOTION FOR SU
Defendant University of the Cumberlands (the
hereby submits this Response in Opposition to Plainti
38] (the “Motion”): N) CT —. A * io rf in INTRODUCTION
Plaintiffs Dr. James Taylor and Mrs. Dinah Taylor prematurely seek summary judgment
on their claim for breach of contract against the University painting an overly simplistic picture
of the circumstances of this case that omits crucial facts and is far from reality. Dr. and Mrs.
Taylor want the Court to enforce an agreement dated April 19, 2012, signed by only one of them
and the former Chairman of the University’s Board of Trustees, Jim Oaks (the “Disputed
Agreement”), which would provide Dr. and Mrs. Taylor with lifetime compensation and benefits
even if they did nothing for the University in return. Indeed, Dr. and Mrs. Taylor go so far as to
ask the Court not only to grant them summary judgment at this early stage, but also to forbid the
University from taking any further discovery in this case until the Motion is ruled upon, Case: 6:16-cv-00109-GFVT-HAI Doc #: 46 Filed: 09/20/17 Page: 2 of 40 - Page ID#: 726
including any discovery that might be used to defeat the Motion. Even disregarding the
Motion’s prematurity, it is baseless in light of the evidence uncovered thus far in this case.
Dr. and Mrs. Taylor’s Motion glosses over the issues presented, completely ignoring the
University’s defenses to their claims and disregarding key pieces of evidence that support the
those defenses and demonstrate that the University was defrauded and that the Chairman of the
University’s Board of Trustees did not have authority, actual or apparent, to execute the Disputed
Agreement. In particular, Dr. and Mrs. Taylor focus only on the existence of the Disputed
Agreement and vague Board of Trustees meeting minutes referring to a contract, but fail to
address in any manner the University’s position that Dr. Taylor masterminded a clever scheme to
defraud the University and secure benefits for himself and his wife by obtaining the invented
Disputed Agreement and assisting with the preparation of bogus minutes. The University never
approved such a bizarre, one-sided agreement, which Dr. Taylor actually had prepared for
himself and his wife and which he took steps to conceal from others at the University.
Dr. and Mrs. Taylor feign ignorance, arguing that they could not possibly have known
that the University’s Board of Trustees never approved the Disputed Agreement, but they were
anything but innocent bystanders. Rather, the evidence shows Dr. Taylor’s deceit. Dr. Taylor
unilaterally selected an attorney to draft a contract that provided for him and his wife to receive
millions of dollars in compensation and benefits in addition to the generous benefits already
provided through their retirement plans funded by the University. Indeed, Dr. Taylor alone
provided the attorney with the terms to be included in the Disputed Agreement, and the former
Chairman of the Board of Trustees only saw the Disputed Agreement on the very day it was
executed. Even the former Chairman, who purportedly signed the Disputed Agreement, has
testified that he is not familiar with a number of the terms included in it and has disavowed
2 Case: 6:16-cv-00109-GFVT-HAI Doc #: 46 Filed: 09/20/17 Page: 3 of 40 - Page ID#: 727
others. Dr. Taylor knew that the Disputed Agreement was never shown to any other members of
the Board of Trustees either before or after its execution. Moreover, numerous members of the
Board of Trustees have testified or affirmed that the Disputed Agreement was never read to
them, that they never received a copy of it, and that they never approved of the terms included in
it. Finally, after its purported execution, Dr. Taylor made sure that the Disputed Agreement
stayed hidden from others at the University for years until he wanted to use it for his benefit.
Dr. and Mrs. Taylor refer to and rely heavily upon minutes of the meetings of the
University’s Board of Trustees to support their claim that the former Chairman of the Board had
authority to execute the Disputed Agreement; not only do the minutes not back up this argument,
but they further demonstrate Dr. Taylor’s deception. Dr. Taylor regularly facilitated the creation
of secretive, sealed minutes that were never reviewed or approved by the full Board of Trustees.
Indeed, Dr. and Mrs. Taylor have relied upon “Closed Minutes” from October 21, 2005, to
support their contention that the Board of Trustees voted years ago, in a second meeting
following the already adjourned regularly scheduled meeting, to provide them with
compensation and benefits for life, even though these minutes contradict the official minutes
from the October 21, 2005 meeting of the Board of Trustees maintained in the University’s
records and every witness except Dr. Taylor has testified that such a second meeting never
occurred. Moreover, none of the minutes relied upon by Dr. and Mrs. Taylor include any
reference to the terms of the Disputed Agreement such that Dr. Taylor could reasonably believe
that they were disclosed to and approved by the Board of Trustees. While the minutes from the
April 19, 2012 Board of Trustees meeting include a vague reference to the former Chairman
reading an undisclosed contract to the Board of Trustees, none of the members of the Board
present at that meeting recall this happening, and the handwritten notes from which those
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minutes were transcribed do not include any mention of a contract. Given these circumstances,
Dr. and Mrs. Taylor surely knew that the former Chairman of the Board of Trustees did not have
the authority to execute the Disputed Agreement on behalf of the University.
The facts of this case are unusual and the terms of the Disputed Agreement are peculiar to
say the least. For over thirty-five years Dr. Taylor ran the University. He was well liked and
well respected and raised much money for the University, but his personal greed and resentment
finally got the best of him. Dr. and Mrs. Taylor were not satisfied with the generous retirement
fund that the University created for them over the years, which totaled over $1.2 million and
provided Dr. Taylor $120,000 annually upon his retirement, not including his and Mrs. Taylor’s
Social Security benefits. Rather, Dr. and Mrs. Taylor claim that they are entitled to more: they
present a written contract to the Court and ask it to interpret and enforce its terms—despite the
University’s contention that the contract was never authorized—so that they can collect both
their normal retirement benefits and a lifetime salary and benefits from the University and so that
they can make more doing nothing for the University than they ever made during the thirty-five
years that Dr. Taylor served as President of the University.
There is no question that Dr. and Mrs. Taylor’s claim for breach of contract is fraught
with genuine disputes of material fact such that it is wholly inappropriate for disposition on
summary judgment at this juncture. Moreover, Dr. and Mrs. Taylor filed this motion when there
was still four months left for discovery and despite that the University continues to gather
evidence to support its defenses. The fact that the Motion is premature and has been filed before
the University has been able to gather all of the evidence necessary to its defense of the case is
reason alone for its rejection. Because of this and because it is baseless given the evidence,
which must be viewed in the light most favorable to the University, the Motion should be denied.
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FACTUAL AND PROCEDURAL BACKGROUND1
I. Dr. Taylor Served As President Of The University Until October 2015.
Dr. Taylor served as President of the University for thirty-five years before stepping
down from that position in October 2015. While serving as President of the University, Dr.
Taylor was involved in all aspects of the University’s administration, including the business of
the University’s Board of Trustees. Dr. Taylor attended the meetings of the Board of Trustees
and, along with his long-time assistant and former Vice-President of Institutional Advancement
for the University, Sue Wake,2 prepared the official minutes from those meetings. (See Exhibit
1, Excerpts from Dr. Taylor Depo., at 26-27, 30). Moreover, the former Chairman of the Board
of Trustees, Jim Oaks, served in that role for almost the entire duration of Dr. Taylor’s
presidency, and they worked hand-in-hand on Board of Trustees’ matters, even sealing and/or
concealing records related to certain Board business so that they were accessible only to them.
(See id. at 40-59; Exhibit 2, Excerpts from Oaks Depo., Vol. I., at 5-6, 86-87, Vol. II, at 154-55,
167-70, 243). In addition, Dr. Taylor hired Mrs. Taylor, who was employed by the University as
Development Field Staff from September 1984 through April 2016.
When Dr. Taylor decided to resign from his position as President, he and Mr. Oaks
devised a transition and succession plan. They revealed portions of this plan to the full Board of
Trustees immediately prior to its October 2014 meeting. (See Exhibit 3, 9/30/2014 Letters from
1 Dr. and Mrs. Taylor fail to attach excerpts of any deposition testimony to their Motion and cite to very little evidence to support their arguments. The University, on the other hand, is attaching to this Response excerpts of relevant testimony along with a multitude of other information demonstrating that summary judgment in favor of Dr. and Mrs. Taylor is unwarranted. While Dr. and Mrs. Taylor might attempt to correct this deficiency in their Reply, this is wholly inappropriate, and, to the extent that they raise any new information, evidence, or issues in their Reply, it should be stricken or, at the very least, the University should be given an opportunity to respond thereto. 2 As noted below, the University issued a subpoena requesting documents and noticing soon-to-be-rescheduled date to depose Ms. Wake. The University has reason to believe that Ms. Wake’s testimony will provide further support for the University’s defenses to Dr. and Mrs. Taylor’s claims. Moreover, the University has learned through discovery that, incredibly, Ms. Wake took a number of documents from the University and provided them to Dr. Taylor and/or his counsel, raising yet another issue about which the University plans to question Ms. Wake. 5 Case: 6:16-cv-00109-GFVT-HAI Doc #: 46 Filed: 09/20/17 Page: 6 of 40 - Page ID#: 730
Dr. Taylor to the Board of Trustees). Because it was believed at the time that Dr. and Mrs.
Taylor had served the University admirably during Dr. Taylor’s tenure as President and because
the University hoped to continue to receive his assistance with fundraising after he stepped
down, the Board of Trustees agreed to the transition and succession plan devised by Dr. Taylor
and Mr. Oaks and sought to create a position for Dr. Taylor as Chancellor of the University after
his resignation. According to the plan, Dr. Larry Cockrum would serve as President-Elect and
Chief Executive Officer of the University from October 2014 to October 2015 and Dr. Taylor
would continue serving as President of the University until October 2015 at which point in time
he would become Chancellor of the University and Dr. Cockrum would become President. (See
Exhibit 4, October 15, 2014 Minutes, at 14-15). The Board of Trustees planned to take up the
issue of Dr. Taylor’s duties and compensation in the role of Chancellor at its October 2015
meeting.3 (See id. (“The duties of the office of Chancellor shall be as assigned by the Board.
The salary and benefits of the Chancellor shall be those in effect for Dr. Taylor on the date of the
October, 2015, Board meeting.”)). Significantly, at no point in time during the Board of
Trustees’ consideration of this transition and succession plan did Dr. Taylor or Mr. Oaks present
to the Board any written agreement between the University and Dr. Taylor.
II. The Disputed Agreement Was Not Discovered Until July 2015.
It became apparent to the University’s current President, Dr. Cockrum, and others
working at the University during the summer of 2015 that Dr. Taylor already had certain
expectations regarding what he would be doing and what he would be paid in the role of
Chancellor even though the Board of Trustees had not yet decided these things. (See Exhibit 5,
3 The minutes from the October 2014 meeting of the Board of Trustees mention the approval of a “Benefit Package” for Dr. Taylor, but they absolutely do not state that the Board agreed to pay Dr. Taylor his same salary and benefits after his resignation as President for his and Mrs. Taylor’s joint lives, regardless of whether or not he served as Chancellor, and numerous members of the Board of Trustees have testified or affirmed that they never approved such an arrangement. See infra. 6 Case: 6:16-cv-00109-GFVT-HAI Doc #: 46 Filed: 09/20/17 Page: 7 of 40 - Page ID#: 731
Affidavit of Dr. Cockrum, at | 6). In particular, Dr. Taylor began making representations that he
had a contract with the University, which supposedly provided for him to receive the same
amount of compensation and benefits after his resignation as he was receiving as President. (See
id.). There was no such contract maintained with or otherwise included in the University’s
corporate records. (See id. at 8). For months. Dr. Cockrum inquired of others at the
University, including Ms. Wake, about the existence or location of a purported contract for Dr.
Taylor, and everyone asked indicated that they had never seen one and were not aware of one.
(See id. at 7). However, on or around July 1, 2015, the Disputed Agreement curiously appeared
for the first time on Dr. Cockrum’s desk, without any indication of where it came from or who
had left it. (See id. at 9). Dr. Taylor has now testified that Ms. Wake put the Disputed
Agreement on Dr. Cockrum’s desk, even though she previously told Dr. Cockrum that she had
never seen it. (See Exh. 1 at 221). Upon discovering the previously “lost” contract, Dr.
Cockrum immediately sent the Disputed Agreement to the current Chairman of the Board of
Trustees, Jon Westbrook, who shared it with other members of the Board. (See Westbrook
Affidavit [DE 9-1] at | 5). This was the first time that anyone on the Board of Trustees, other
than Mr. Oaks, saw the Disputed Agreement.
The Disputed Agreement [DE 14-1] includes numerous extravagant and excessive
obligations to be undertaken by the University, including:
• to pay to Dr. and Mrs. Taylor “the yearly salary of President Taylor ... for the rest of both of their individual lives;”
• to “appoint Dr. Taylor as Chancellor of the University . . . upon Dr. Taylor’s retirement as President;”
• to “continue to provide and/or pay all benefits to Dr. and Mrs. Taylor, for the rest of their joint lives that they are currently receiving . . . including but not limited to, all health benefits;”
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• to “provide and/or pay to Dr. and Mrs. Taylor amounts for long term health care, for the rest of their joint lives, including but not limited to, any assisted living facilities;”
• to allow Dr. Taylor’s brother and sister-in-law to live in a University-owned residence at a below-market rate and for the University to pay the maintenance, taxes, and insurance on the property;
• to “provide an apartment or residence for Dr. Taylor and/or Mrs. Taylor, after Dr. Taylor’s retirement as President... in Williamsburg, Kentucky;” and
• to designate Mrs. Taylor as the beneficiary of a one-million-dollar insurance policy that the University has on the life of Dr. Taylor in order for Mrs. Taylor to “receive the entire proceeds of said insurance policy ... free and clear, upon the death of Dr. Taylor.”
(DE 14-1 at § 1.1 - 1.9). Strangely, however, the Disputed Agreement imposes absolutely no
reciprocal obligations on Dr. and Mrs. Taylor. (See id. at § II.2 (the parties “agree that the
compensation and other benefits included in this agreement are not conditional upon Dr. Taylor
remaining as President ... or accepting the position as Chancellor”)). In other words, the
Disputed Agreement does not require Dr. or Mrs. Taylor to do anything in order to receive the
benefits outlined therein, which Dr. and Mrs. Taylor have valued at nearly seven million dollars.
(See Exhibit 6, Plaintiffs’ Initial Disclosures, at Ex. C).
III. The Board of Trustees Never Authorized The Disputed Agreement Or Its Terms.
Because the Board of Trustees had no prior knowledge of the Disputed Agreement and
never agreed to pay Dr. and Mrs. Taylor their salary and benefits for life without receiving
anything in return, the University disputes that the Disputed Agreement is a valid and
enforceable contract binding on the University. In their Amended Complaint, Dr. and Mrs.
Taylor rely on actions allegedly taken by the Board of Trustees and Mr. Oaks during the Board’s
meetings in October 2005 and April 2012 to support their claim for breach of contract. In their
Motion, however, Dr. and Mrs. Taylor refer only to the latter meeting and the minutes related
thereto. Regardless, the Board of Trustees never authorized the Disputed Agreement or its terms
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at either meeting and never otherwise held out Mr. Oaks as someone having authority to execute
such an agreement without the Board’s approval. Instead, Dr. Taylor and Mr. Oaks executed the
Disputed Agreement entirely on their own.
A. The Board of Trustees did not authorize the Disputed Agreement or its terms at its October 2005 meeting.
While Dr. and Mrs. Taylor have claimed that the Board of Trustees first took steps to
approve sustained compensation and benefits for them in an executive session during its October
2005 meeting, even the official minutes from that meeting do not support this contention.
Instead, the minutes from the October 21, 2005 meeting of the Board of Trustees state only as
follows regarding an executive session during that meeting:
Chair Oaks called for Executive Session. Dr. Oaks praised the leadership and guidance of the University by President Taylor. Others added their words of praise as well as their concerns for President Taylor’s health because of his long hours on the road and his sleepless nights worrying about the University. Dr. Oaks noted that it is time to begin thinking about President Taylor’s retirement. While Dr. Taylor has a contract as President, when he retires he should be asked to continue to work in some capacity, and he should be given a salary for his work. Thought needs to be given to finding a person who can be in training for the job as president when Dr. Taylor retires. A motion was made by Mr. Hacker to table any action until the April meeting. Dr. Huff seconded the motion. All approved.
(Exhibit 7, October 21, 2005 Minutes, at 5). There is no mention in these minutes of any
agreement to continue paying Dr. and Mrs. Taylor any particular compensation, nor any
compensation at all after their retirement. The handwritten notes from this meeting, which are
maintained in the University’s files in the President’s Office on campus, track what is included in
these official minutes. (See Exhibit 8, October 21, 2005 Executive Session Handwritten Notes).
Dr. and Mrs. Taylor, however, have produced in discovery a mysterious set of “closed
minutes” purportedly from an executive session of the Board of Trustees on October 21, 2005,
which contradict the official minutes from that meeting and state that the Board did in fact vote
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to approve certain compensation and benefits for Dr. and Mrs. Taylor upon Dr. Taylor’s
retirement. (See Exhibit 9, October 21, 2005 “Closed Minutes,” at 1-2). Dr. and Mrs. Taylor
have not explained where these conflicting minutes came from, why they were “closed,” and
why they are not included in the University’s official minute book. These highly irregular
“closed minutes” do not even state what members of the Board of Trustees supposedly attended
this meeting, are not mentioned in any way in the official minutes from the meeting, and are not
included in the University’s corporate records. (See id.; Exh. 7). Moreover, these “closed
minutes” are not mentioned in the minutes as having been reviewed and approved by the Board
of Trustees at its following meeting in April 2006. (See Exhibit 10, April 20, 2006 Minutes, at
1). According to notations thereon, these “closed minutes” were placed in a sealed envelope kept by Mr. Oaks and not to be opened until authorized by the Board of Trustees—but it is unclear how the Board would even know to authorize opening something that it did not know existed or why these minutes would need to be kept secret. (See Exh. 9 at 2-3).
Dr. Taylor offered bizarre testimony that these “closed minutes” do not contradict the official minutes from the October 21, 2005 meeting of the Board of Trustees, but instead detail additional action taken by the Board in a second meeting after the regularly scheduled meeting concluded. According to Dr. Taylor, the Board adjourned its regularly scheduled meeting after it decided to table consideration of his compensation and benefits upon retirement, as reflected in the official minutes, but he then asked Mr. Oaks to reconvene to make a decision on this issue because he needed personal insurance for his wife’s benefit. (See Exh. 1 at 109-19, 181-86).
Not only do the “closed minutes” not even mention approving any insurance for Mrs. Taylor’s benefit,4 but it completely defies logic to think that a new Board meeting could have commenced after Board members had scattered and left town immediately after the regularly scheduled
4 In fact, such insurance already was in place prior to the October 21, 2005 Board meeting. (See Exh. 1 at 203-06). 10 Case: 6:16-cv-00109-GFVT-HAI Doc #: 46 Filed: 09/20/17 Page: 11 of 40 - Page ID#: 735
meeting was adjourned, and, in fact, the University’s By-Laws would not even allow such an
action to be taken. Regardless, Dr. Taylor is the only person that has testified that on October
21, 2005, the Board of Trustees adjourned their meeting and then reconvened around an hour
later to approve benefits for him and Mrs. Taylor. (See id. at 210). Every member of the Board
of Trustees who has been deposed thus far has contradicted Dr. Taylor’s version of what he
claims occurred during this meeting. (See Exh. 2, Vol. II, at 259-60; Exhibit 11, Excerpts from
Huff Depo., at 60; Exhibit 12, Excerpts from Walden Depo., at 40). Indeed, former Chairman
Oaks flatly stated in his deposition that this “never happened.” (Exh. 2, Vol. II, at 260). These
“closed minutes” have no legitimacy, which likely explains why Dr. and Mrs. Taylor failed to even mention them or the October 20, 2005 Board meeting in their Motion.
B. Dr. Taylor procured the Disputed Agreement from attorney Steve Moore.
In their Motion, Dr. and Mrs. Taylor rely entirely on the execution of the Disputed
Agreement and the minutes from the April 19, 2012 meeting of the Board of Trustees to support their argument that they are entitled to summary judgment on their claim for breach of contract.
Dr. and Mrs. Taylor acknowledge that Dr. Taylor asked Corbin, Kentucky attorney Steve Moore to draft a contract between the University and Dr. and Mrs. Taylor. (See DE 38-1 at 2). Mr.
Moore was supposed to be representing the University in preparing this agreement, but both Dr.
Taylor and Mr. Oaks testified that Mr. Moore received his instructions from Dr. Taylor. (See
Exh. 1 at 92-98, 106-09, 129-33, 137-38; Exh. 2, Vol. II, at 182-88). While Dr. and Mrs. Taylor claim that Dr. Taylor merely was “get[ting] in writing the promises the University’s Board of
Trustees had previously made to him concerning his benefits and salary upon leaving the office of President of the University,” they do not cite to any evidence to support this contention. (DE
38-1 at 2-3). In truth, there is no evidence that any such promises had been made previously.
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Prior to drafting the Disputed Agreement, Mr. Moore had assisted the University on
numerous occasions with planned giving, making asks for donations to the University and
formalizing bequests, but even Dr. Taylor acknowledged that Mr. Moore had never prepared any
employment contracts for the University. (See Exh. 1 at 92-103). In fact, it is the University’s understanding that the Disputed Agreement is the only such contract that Mr. Moore ever prepared for it.5 Moreover, although the University was represented at that time by other counsel, who regularly provided the Board of Trustees with legal advice and services, neither Dr.
Taylor nor Mr. Oaks sought that counsel’s assistance with the Disputed Agreement. (See id.).
Dr. Taylor provided Mr. Moore with all of the terms to be included in the Disputed Agreement— terms which purported to obligate the University to provide one-sided benefits to him and his wife—and the full Board of Trustees was given no opportunity to weigh in on those terms prior to Mr. Moore drafting the Disputed Agreement.
Mr. Moore brought the final draft of the Disputed Agreement to Dr. Taylor and Mr. Oaks on April 19, 2012, the very day of the meeting of the Board of Trustees where Dr. and Mrs.
Taylor claim that the Disputed Agreement was approved. (See Exh. 1 at 137-38; Exh. 2, Vol. II, at 195-96). The fact that the Disputed Agreement was not given to anyone prior to the date of this meeting makes clear that no one had time to review it. Mr. Oaks even admitted that he did not have time to study the Disputed Agreement. (See Exh. 2, Vol. II, at 196). Moreover, both
Dr. Taylor and Mr. Oaks acknowledge that no one else on the Board of Trustees ever saw a copy of the Disputed Agreement prior to or during the April 19, 2012 meeting. (See Exh. 1 at 244-46;
Exh. 2, Vol. II, at 195-201). The Disputed Agreement was not distributed to members of the
Board of Trustees before or during the meeting nor did they receive any advance notice that such
5 The University has issued a subpoena to Mr. Moore requesting documents and noticing a deposition and believes that he will provide much evidence significant to Dr. and Mrs. Taylor’s contract claims. (See Notice of Deposition of Steve Moore [DE 44]). 12 Case: 6:16-cv-00109-GFVT-HAI Doc #: 46 Filed: 09/20/17 Page: 13 of 40 - Page ID#: 737
an agreement would be considered during the meeting as there was no mention of this in the
meeting agenda, which was sent in advance to Board members. (See Exh. 2, Vol. II, at 195-201).
In short, Dr. Taylor took it upon himself to have an attorney of his choosing prepare a one-sided
agreement benefitting him and his wife, and he deliberately excluded the full Board of Trustees
from this process.
C. The Board of Trustees did not authorize the Disputed Agreement or its terms at the April 2012 meeting.
Dr. and Mrs. Taylor contend that the Disputed Agreement was “unanimously approved by the Board of Trustees” during its April 19, 2012 meeting, but this clearly is an admittedly disputed fact. (DE 14 at 11; DE 38-1 at 4). The minutes from the April 19, 2012 meeting of the Board of Trustees state only as follows regarding an Executive Session during that meeting:
Chair Oaks called for Executive Session. All non-Board members were dismissed. Dr. Oaks complimented Dr. Taylor’s leadership of the University and read to the members a contract which Oaks recommends be approved by the Board members concerning Dr. Taylor’s retirement benefits. Scott Thompson moved the contract be approved and Cookie Henson seconded the motion. All approved.
(Exhibit 13, April 19, 2012 Minutes, at 18). Neither the Disputed Agreement nor any other written contract has ever been attached to the minutes from the April 19, 2012 meeting or otherwise included in the University’s corporate records. Moreover, none of the other members of the Board of Trustees present at the April 19, 2012 meeting that have been deposed or provided affidavits thus far in this case recalls Mr. Oaks reading a seven-page contract to them during that meeting, something that they all have said they surely would have remembered, or considering and approving the terms contained therein. (See Exh. 12 at 47-53; Exhibit 14,
Excerpts from Estes Depo., at 45-49; Exhibit 15, Excerpts from Henson Depo., 43-50; Jon
Westbrook Affidavit [DE 9-1] at 8, 11; Scott Thompson Affidavit [DE 9-3] at || 7, 9;
13 Case: 6:16-cv-00109-GFVT-HAI Doc #: 46 Filed: 09/20/17 Page: 14 of 40 - Page ID#: 738
William Gullett Affidavit [DE 9-4] at ffl] 5, 7; J. Hunt Perkins Affidavit [DE 9-6] at 5, 6).
It is unsurprising that no one remembers a contract being read during the April 19, 2012
meeting as the language to this effect was something added to the minutes entirely by Ms. Wake
and/or Dr. Taylor, neither of whom were in attendance at the executive session during the
meeting. During the time frame at issue, handwritten notes were taken by Ms. Wake during the regular Board meetings and then later transcribed into a more formal, typewritten version of the minutes by her with Dr. Taylor’s input and revision. {See Jamirae Hammons Affidavit [DE 9-2] at If 8). When the Board of Trustees would break into Executive Session, however, Dr. Taylor, the Chairman, or someone else delegated by them would take handwritten notes regarding what occurred during that session and provide them to Ms. Wake for transcription. {See id. at | 9).
Only after Ms. Wake and Dr. Taylor had finalized a draft of the minutes would they be signed by the Chairman and Secretary and approved by the Board of Trustees. {See id. at 18).
The handwritten notes from the April 19, 2012 Executive Session state only as follows:
Dr. Oaks comments on Dr. Taylor excellence Pay Dr. Taylor retirement benefits read by Dr. Oaks Motion by Scott Thompson to accept proposal Second by Cookie Henson
(Exhibit 16, April 19, 2012 Executive Session Handwritten Notes). There is absolutely no mention in these handwritten notes of a seven-page contract being read to or approved by the
Board of Trustees during its meeting, nor is there any mention of the detailed terms included in the Disputed Agreement. These handwritten notes were given to Ms. Wake and/or Dr. Taylor and maintained in the University’s files in the President’s Office on campus. {See Exh. 1 at 239-
43). Dr. Taylor knew or should have known that these handwritten notes did not indicate that the
Disputed Agreement or its terms had been approved by the Board of Trustees.
Even the official minutes that Dr. and Mrs. Taylor rely upon so heavily in their Motion
14 Case: 6:16-cv-00109-GFVT-HAI Doc #: 46 Filed: 09/20/17 Page: 15 of 40 - Page ID#: 739
do not support that the Disputed Agreement was read to or approved by the Board of Trustees.
Those minutes refer only to “a contract.. . concerning Dr. Taylor’s retirement benefits,” but that
is not an accurate description of the Disputed Agreement, which does not outline traditional
retirement benefits—which the University was already providing for Dr. Taylor through its
contributions to his retirement accounts—but instead discusses the possibility of Dr. Taylor
serving as Chancellor of the University and provides for Dr. and Mrs. Taylor to receive wide-
ranging benefits for the rest of their lives, including a salary, health benefits, fringe benefits, and
other extraneous perks. (See Exh. 13 at 18). While Dr. and Mrs. Taylor make much of the fact
that the Board of Trustees approved the minutes from the April 19, 2012 meeting of the Board of
Trustees at its next meeting in October 2012, they ignore that neither the Disputed Agreement nor its terms are specifically mentioned in those minutes and that the Disputed Agreement was not attached to those minutes or otherwise included in the University’s corporate records. (See
Exh. 5 at 8; Exh. 13).
D. The Disputed Agreement was concealed after its execution.
Dr. Taylor and Mr. Oaks testified that they signed the Disputed Agreement immediately upon the conclusion of the April 19, 2012 meeting. (Exh. 1 at 63-67; Exh. 2, Vol. II, at 212).
Dr. Taylor admitted that Mrs. Taylor did not even sign her own name. Rather, he signed his wife’s name on the agreement and made a University employee notarize Mrs. Taylor’s signature even though it was not signed by Mrs. Taylor. (Exh. 1 at 63-67). Although Mr. Oaks testified that he signed his name on the signature page of the Disputed Agreement, he disavows its terms as written. Mr. Oaks repeatedly stated during his deposition that the University never agreed to pay Dr. and Mrs. Taylor a salary and benefits for life if they did nothing in return. (See, e.g..
Exh. 2, Vol. II, at 216 (“Q: ... Dr. Taylor is telling a federal court that he should be paid salary
15 Case: 6:16-cv-00109-GFVT-HAI Doc #: 46 Filed: 09/20/17 Page: 16 of 40 - Page ID#: 740
for life, and he didn’t even have to be chancellor? Do you understand that? A: I didn’t know
that, no. Q: That’s what he’s claiming. You don’t agree with that; do you? A: No. Q: That was
never the deal by the University of the Cumberlands; was it? A: No.”)). Indeed, when asked if
he agreed to an arrangement whereby Dr. Taylor “could just move to Florida, quit, and should be paid $350,000 [a year] for the rest of his life to do nothing,” Mr. Oaks, Dr. and Mrs. Taylor’s
only supporting witness, replied, “No, I didn’t agree to it.” (Id. at 217).
The entire handling of the Disputed Agreement was a secret, misleading process. There was never full disclosure about its content or the obligations contained therein. As noted above, the Disputed Agreement was not attached to the minutes from the April 19, 2012 meeting and was not included in the University’s corporate records. In other words, a copy of the Disputed
Agreement was never provided to members of the Board of Trustees before the April 19, 2012
Board meeting and was never distributed to them after that meeting either. In addition, the
Disputed Agreement was never shared before or after its execution with officers of the
University or others that presumably would need to know of its existence, such as the
University’s auditors and attorneys, and the Disputed Agreement could not be found when those at the University began looking for it. (See Exh. 2, Vol. I, at 72, 83-94, Vol. II, at 241; Exh. 5 at
7-8). Rather, Dr. Taylor strategically concealed the Disputed Agreement from the full Board of Trustees and others at the University until after he announced his plans to retire.
After the Disputed Agreement mysteriously appeared years after it was allegedly executed, the University immediately determined that it had not been authorized by its Board of
Trustees. (See Jon Westbrook Affidavit [DE 9-1] at 6). Accordingly, the University sought to negotiate with Dr. Taylor regarding his continued employment with the University and what would be a reasonable compensation package to provide in exchange for the duties that he would
16 Case: 6:16-cv-00109-GFVT-HAI Doc #: 46 Filed: 09/20/17 Page: 17 of 40 - Page ID#: 741
be required to perform upon officially stepping down as President. Because of the University’s
status as a non-profit organization, the Board of Trustees retained an expert opinion regarding
what would qualify as “reasonable compensation” for the new, part-time position of Chancellor
in order to comply with IRS guidelines prohibiting non-profit organizations from engaging in
excess benefit transactions.6 (See Exhibit 17, January 28, 2016 Letter from J. Jordan to D.
Cook). Ultimately, the Board of Trustees voted to give Dr. Taylor a one-year renewable contract for the position of Chancellor with compensation and benefits totaling $152,005.82. (See id.).
Dr. Taylor, however, refused to accept this offer or otherwise negotiate for any form of compensation less than receiving for life the same salary and benefits that he was receiving as
President. Because an agreement could not be reached, the University and Dr. Taylor severed their relationship, and, despite his implications to the contrary, Dr. Taylor is no longer employed by or performing any services at the request of the University. (See Exh. 5 at 12). Dr. Taylor currently receives benefits from the retirement fund that the University contributed to on his behalf throughout his employment. In particular. Dr. Taylor acknowledged that he has over $1.2 million in a retirement account with the Southern Baptist Convention, that he is receiving
$10,000 per month from this account, and that combined with their Social Security benefits Dr. and Mrs. Taylor received approximately $175,000 in 2016. (See Exh. 1 at 78-87; Exhibit 18, Dr.
Taylor’s Answer to Interrogatory No. 21 (setting forth all of Dr. Taylor’s sources of income)).
IV. Dr. and Mrs. Taylor Filed Suit Against The University.
Dr. and Mrs. Taylor filed suit against the University on June 13, 2016, asserting claims for breach of contract, promissory estoppel, slander, intentional infliction of emotional distress, punitive damages, and reformation. (See Complaint [DE 1]). Two days later, Dr. and Mrs.
6 Obtaining such an opinion results in presumption in favor of the reasonableness of the compensation provided, and the University certainly would have wanted to seek an opinion had it actually properly considered and approved the compensation and benefits set forth in the Disputed Agreement. See 26 C.F.R. § 53.4958-6. 17 Case: 6:16-cv-00109-GFVT-HAI Doc #: 46 Filed: 09/20/17 Page: 18 of 40 - Page ID#: 742
Taylor filed a Motion for Preliminary Injunction [DE 3], seeking “to require the University of the
Cumberlands ... to continue providing Dr. and Mrs. Taylor’s benefits as required by their April
19, 2012 contract.” (DE 3 at 1). After the University filed its Response in Opposition to the
Motion for Preliminary Injunction [DE 9], Dr. and Mrs. Taylor voluntarily withdrew their request for injunctive relief. (See Notice of Withdrawal of Motion for Preliminary Injunction
[DE 10]). The University then filed a Motion to Dismiss [DE 12], seeking dismissal of all claims against it on the basis that Dr. and Mrs. Taylor’s contract claims fail as a matter of law.
In response, Dr. and Mrs. Taylor filed their First Amended Complaint, adding new claims for termination of ERISA protected benefits and unjust enrichment. (See DE 14 at 42-50). The
University then filed a Supplemental Motion to Dismiss [DE 18], reasserting its arguments in its original motion and adding additional arguments for the dismissal of Dr. and Mrs. Taylor’s new
ERISA and unjust enrichment claims.
On February 7, 2017, this Court entered its Memorandum Opinion and Order [DE 21] denying in part and granting in part the University’s Supplemental Motion to Dismiss. The
Court dismissed Dr. and Mrs. Taylor’s ERISA and unjust enrichment claims, but held that Dr. and Mrs. Taylor had pled facts sufficient to make out their remaining claims. (See DE 21 at 9-
32). Shortly thereafter, the Court entered the Scheduling Order [DE 27] in this case, which is based in part on the parties’ agreed upon suggested scheduling deadlines and which gives the parties until January 2, 2018 to complete fact discovery. (See DE 27 at 1; Joint Report of
Parties’ Planning Meeting [DE 25] at 2(a)).
Thus far, the parties have issued numerous written discovery requests and conducted various depositions. In particular, the University’s counsel has deposed Dr. Taylor; Dr. and Mrs.
Taylor’s counsel has deposed members of the Board of Trustees Paul Estes, Cookie Henson,
18 Case: 6:16-cv-00109-GFVT-HAI Doc #: 46 Filed: 09/20/17 Page: 19 of 40 - Page ID#: 743
Dave Huff, and Lonnie Walden; and counsel for both sides have deposed Jim Oaks. In addition,
the University has issued subpoenas requesting documents from and noticing depositions of Sue
Wake and Steve Moore and has requested a date for the deposition of Mrs. Taylor. Notably, Dr.
and Mrs. Taylor filed a motion to stay discovery simultaneous with their Motion. As set forth in the response in opposition to that motion, a stay is totally unjustified and, if anything,
demonstrates the weakness of Dr. and Mrs. Taylor’s Motion for Summary Judgment. However, as this Court has noted, unless and until it enters an order staying discovery, the parties must continue conducting the same. (See Civil Minutes [DE 36]).
ARGUMENT
I. Dr. and Mrs. Taylor Are Not Entitled To Summary Judgment On Their Claim For Breach of Contract.
Pursuant to Fed. R. Civ. P. 56(a), summary judgment is only 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.” The movant bears the burden of proving that the non-movant,
“having had sufficient opportunity for discovery, has no evidence to support an essential element of his or her case.” Harvey v. Campbell Cnty., 453 F. App’x 557, 561 (6th 2011) (quoting Street v. J.C. Bradford & Co., 886 F.2d 1472, 1478 (6th Cir. 1989)). The court is not to weigh the evidence or determine facts in considering a motion for summary judgment, but must instead view the facts and draw all inferences in the light most favorable to the non-movant. See
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587-88 (1986); Wiley v. United
States, 20 F.3d 222, 226 (6th Cir. 1994) (citations omitted). In other words, the evidence of the non-movant is to be believed, and summary judgment is not warranted “if the evidence is such that a reasonable jury could return a verdict for the non-moving party.” Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 248 (1986). The central question is “whether the evidence presents
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sufficient disagreement to require submission to a jury or whether it is so one-sided that one
party must prevail as a matter of law.” Id. at 251-52.
Dr. and Mrs. Taylor have not carried their burden of proving the absence of a genuine
dispute of material fact on their claim for breach of contract. The University has put forth
numerous defenses to Dr. and Mrs. Taylor’s contract claims, including but not limited to
asserting that the University did not authorize the Disputed Agreement, that Mr. Oaks lacked
authority to execute the agreement, that the agreement was procured through fraud or deceit on the part of Dr. and Mrs. Taylor or other third parties, and that the agreement is void as a matter of law. (Answer [DE 23] at 9). As set forth in this Response, the University has obtained copious amounts of evidence demonstrating that Dr. Taylor procured the Disputed Agreement in a deceitful and fraudulent manner and that, in turn, Mr. Oaks had neither actual nor apparent authority to execute the Disputed Agreement on behalf of the University. Moreover, the
University also has evidence to support its argument that, even if authorized (which it was not) the Disputed Agreement is void as a matter of law. Viewing these facts and evidence in the light most favorable to the University, a reasonable jury could reject Dr. and Mrs. Taylor’s contract claims. Accordingly, summary judgment is inappropriate, and the Motion must be denied.
II. Jim Oaks Did Not Have Authority, Actual Or Apparent, To Execute The Disputed Agreement On Behalf Of The University.
A. The question of Mr. Oaks’s apparent authority is inherently factual.
Dr. and Mrs. Taylor erroneously argue that they are entitled to summary judgment on their claim for breach of contract because Jim Oaks had apparent authority to execute the
Disputed Agreement on behalf of the University, making that agreement binding on the
University. To begin, Dr. and Mrs. Taylor’s arguments regarding apparent authority present an inherently factual question entirely inappropriate for summary disposition. Indeed, whether a
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party acted with apparent authority must “be determined from the circumstances and the conduct
of the parties.” See Concrete Materials Corp. v. Bank of Danville & Trust Co., 938 S.W.2d 254,
259-60 (Ky. 1997). Thus, Kentucky courts have repeatedly held that, as with all questions of
agency, the elements necessary to establish apparent authority are “chiefly factual matters” and
that summary judgment is especially unwarranted when a defendant claims that its purported
agent lacked apparent authority. See Muncy v. InterCloud Sys., No. 14-111-DLB-REW, 2016
U.S. Dist. LEXIS 151089, *9-18 (E.D. Ky. Nov. 1, 2016); Concrete Materials, 938 S.W.2d at
259-60 (“Summary judgment on such a question is improper because it is a material question of
fact as to whether any agency existed.”); Elendt v. Green Tree Servicing, LLC, 443 S.W.3d 612,
616 (Ky. App. 2014) (holding summary judgment is inappropriate where the defendant
“vociferously den[ied]” it cloaked a purported agent with apparent authority).
This is particularly true with respect to the second element of the test for apparent authority, outlined below, which asks whether an individual reasonably believed that the purported agent had the required authority. “Reasonableness is usually a question for the finder- of-fact.” Muncy, 2016 U.S. Dist. LEXIS 151089, at *15 (citing Dean v. Commonwealth Bank &
Trust Co., 434 S.W.3d 489, 500 (Ky. 2014)).7 In fact, the Restatement of Agency—which Dr. and Mrs. Taylor cite in their Motion and which has been relied upon by the Kentucky Supreme
Court, see, e.g., Ping v. Beverly Enters., 376 S.W.3d 581, 594 (Ky. 2012)—makes this point clear in the commentary, stating that “[i]t is usually a question for the trier of fact whether a reasonable person in the position of a third party would believe that an agent had the authority or the right to do a particular act.” Restatement (Third) Agency § 2.03, cmt. d.
7 Dr. and Mrs. Taylor cite Dean in support of their argument that Dr. Oaks had apparent authority to enter into the contract on behalf of the University. But even the Court in Dean acknowledged that “reasonableness in [the context of apparent authority] ‘is usually a question for the trier of fact.’” 434 S.W.3d at 500. 21 Case: 6:16-cv-00109-GFVT-HAI Doc #: 46 Filed: 09/20/17 Page: 22 of 40 - Page ID#: 746
In Muncy, for example, a court in the Eastern District of Kentucky analyzed a similar set
of facts and determined that summary judgment was inappropriate because of the numerous
factual disputes regarding a party’s reasonable belief in the purported agent’s apparent authority.
The plaintiff in Muncy filed suit against a company for securities fraud based on
misrepresentations made by the company’s executives. Both parties presented evidence
supporting their claim that the executives were, or were not, cloaked with apparent authority
when they made the misrepresentations. The plaintiff relied on the fact that the executives had
business cards issued by the company and presented him with a contract bearing the company’s
name as evidence of his reasonable belief. The company, on the other hand, argued that handwritten changes to the contract and other inconsistencies should have raised red flags about the transaction. But whether any of this evidence made the plaintiffs belief reasonable or unreasonable was a question of fact, and the court properly denied summary judgment for this reason. See Muncy, 2016 U.S. Dist. LEXIS 151089, at *15-18. Summary judgment in favor of
Dr. and Mrs. Taylor is inappropriate for the same reason in this case.
B. The facts and evidence show that Mr. Oaks lacked apparent authority.
The evidence shows that Mr. Oaks had neither actual8 nor apparent authority to bind the
University to the terms of the Disputed Agreement. The doctrine of apparent authority exists to protect individuals who reasonably rely on the manifestations of a principal to believe that an agent has authority to enter into a transaction. As Dr. and Mrs. Taylor acknowledge, however, an agent does not have apparent authority to affect a principal’s legal relations with third parties when a third party does not “reasonably believe[] the [agent] has authority to act on behalf of the principal.” Restatement (Third) of Agency § 2.03; see also Clark v. Burden, 917 S.W.2d 574,
8 Dr. and Mrs. Taylor concede that a factual dispute exists as to Mr. Oaks’s actual authority to execute the Disputed Agreement. (DE 38-1 at 4). Indeed, numerous witnesses have testified that the Board of Trustees never approved the Disputed Agreement or its terms. See supra, pp. 13-14. 22 Case: 6:16-cv-00109-GFVT-HAI Doc #: 46 Filed: 09/20/17 Page: 23 of 40 - Page ID#: 747
579 (Ky. 1996) (requiring that a third party relying on an agent’s apparent authority be “ignorant
of [the agent’s] circumscribed authority or [have] no reason to believe [the agent] is exceeding it
or violating the instructions of his principal”). Rather, to establish apparent authority, one must
establish that “(1) the principal represents that the agents have the authority to act on its behalf;
(2) the third party reasonably believes the agents have such authority; and (3) the third party’s
belief is traceable to the principal’s representations.” Contrary to Dr. and Mrs. Taylor’s
arguments in their Motion, they cannot establish these elements here.
First, the University never represented to Dr. and Mrs. Taylor that Mr. Oaks had authority to act unilaterally in approving and executing employment agreements. To the contrary, the
University’s By-Laws make clear that the Chairman of the Board of Trustees may only execute
“contracts and instruments authorized or issued by authority of the Board.” (Exhibit 19, By-
Laws, at Art. Ill, § 2). Mr. Oaks could not act without the Board of Trustees’ authorization and the Board could not consider and properly authorize an employment agreement without seeing it or approving in advance its terms, neither of which occurred here. Indeed, Dr. Taylor was well aware of the University’s procedure for authorizing the President’s employment agreement as that procedure was employed in the execution of his prior employment agreement in 1993. Dr.
Taylor’s 1993 employment agreement was prepared by an attorney at the request of the Board of
Trustees (not Dr. Taylor), was reviewed by a committee of the Board of Trustees in advance of the meeting of the full Board, was presented to the full Board of Trustees at its meeting, and was signed by two members of the Board of Trustees. (See Exhibit 20, Communications Regarding
1993 Agreement). In short, the University never represented that Mr. Oaks had the authority to execute the Disputed Agreement without presenting it and its terms to the full Board of Trustees, as was done in this case.
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Second, Dr. and Mrs. Taylor could not have reasonably believed that Mr. Oaks had the
Board’s authority to execute the Disputed Agreement or agree to its terms on behalf of the
University. Dr. and Mrs. Taylor’s arguments on this point and characterization of the
circumstances surrounding the execution of the Disputed Agreement are a complete farce.9 They
attempt to cast themselves as innocent third parties, unable to know what was going on behind
the scenes, but nothing could be further from the truth. Instead, Dr. Taylor was directing the
show, making sure that no one on the Board of Trustees other than Mr. Oaks knew about the
Disputed Agreement or its outrageous terms. Dr. and Mrs. Taylor claim that the University will argue that “Dr. Oaks was never authorized to sign this agreement” (DE 38-1 at 6), and while that is true, it leaves out an important part of the University’s position: the Board of Trustees did not authorize Mr. Oaks to execute the Disputed Agreement, and Dr. and Mrs. Taylor knew this.
Dr. and Mrs. Taylor cannot claim that they were ignorant of Jim Oaks’s lack of authority to execute the Disputed Agreement when Dr. Taylor was responsible for concealing it and its terms from the University. In particular, Dr. Taylor took the following steps to procure and then conceal the Disputed Agreement:
• Dr. Taylor went to a local attorney who had never before drafted an employment agreement for the University and provided that attorney with his hand-selected terms that had not been previously approved by the Board of Trustees.
• Dr. Taylor then supposedly arranged for the Disputed Agreement to be presented to the members of the Board of Trustees at its April 19, 2012 meeting, but they received no advance notice that such an agreement would be considered as it was not included as an item of business on the meeting agenda, which is sent out before the meeting.
• No hard copies of the Disputed Agreement were shared with the Board of Trustees prior to or during the April, 19, 2012 meeting.
9 Dr. and Mrs. Taylor foretell this response to their arguments because it is so obvious from the evidence that they are not the typical third party relying upon the authority of a principal’s agent, but instead are likewise agents of the principal, conspiring to act without the principal’s authorization. (See DE 38-1 at 6). 24 Case: 6:16-cv-00109-GFVT-HAI Doc #: 46 Filed: 09/20/17 Page: 25 of 40 - Page ID#: 749
• Dr. Taylor signed the Disputed Agreement immediately after the April 19, 2012 meeting adjourned, and Dr. Taylor signed Mrs. Taylor’s name and had a University employee notarize it as her signature.
• Mr. Oaks improperly signed his name on the signature page of the Disputed Agreement, but disavows the terms included therein.
• Dr. Taylor and Ms. Wake drafted the minutes from the April 19, 2012 Board meeting to state that “a contract” was read, even though the handwritten notes from the meeting say no such thing.
• Neither Dr. Taylor nor Ms. Wake attached a copy of the Disputed Agreement to the minutes from the April 19, 2012 Board meeting.
• Dr. Taylor did not share a copy of the Disputed Agreement with anyone else on the Board of Trustees or at the University after it was executed.
• No one at the University could locate the Disputed Agreement until Ms. Wake snuck it onto Dr. Cockrum’s desk in July 2015, over three years after it was supposedly signed.
Any one of these circumstances on its own would be sufficient to cast doubt on the legitimacy of the Disputed Agreement. In combination, they demonstrate the absurdity of Dr. and Mrs.
Taylor’s contention that they had no way of knowing that Mr. Oaks was not authorized to execute the Disputed Agreement on the University’s behalf.
Even Mr. Oaks, who has assisted Dr. and Mrs. Taylor in their case against the University and provided affidavits on their behalf, was unaware of certain terms included in the Disputed
Agreement by Dr. Taylor.10 Mr. Oaks believed that the agreement only provided for Dr. Taylor to receive a salary and benefits in exchange for continuing to work for the University; he did not believe that Dr. Taylor was to receive his salary without continuing to work. (See Exh. 2, Vol.
II, at 214-19). Moreover, Mr. Oaks admitted that Dr. Taylor slipped additional terms into the
Disputed Agreement—such as those providing a residence for Dr. Taylor’s brother and sister-in-
10 Dr. and Mrs. Taylor state that “we know from the testimony of Dave Huff, and Dr. Oaks, that even some of those who were in the meeting believe the Agreement was approved,” but the April 19, 2012 minutes indicate that Mr. Huff was not even present at that meeting, and Mr. Oaks does not remember approving a salary and benefits for Dr. and Mrs. Taylor even if they no longer worked for the University. (See Exh. 13 at 1; Exh. 2, Vol. II, at 214-219). 25 Case: 6:16-cv-00109-GFVT-HAI Doc #: 46 Filed: 09/20/17 Page: 26 of 40 - Page ID#: 750
law at below-market rent, long-term care for Dr. and Mrs. Taylor, and life insurance benefits on
Dr. Taylor’s life for Mrs. Taylor. (Id. at 219-23). Mr. Oaks stated that he did not see a problem with these terms, so he went on and signed the Disputed Agreement.11 (Id.). But Dr. Taylor and
Mr. Oaks have no authority to make such a decision without including the full Board of Trustees, and Dr. Taylor has always known this.12
Dr. and Mrs. Taylor claim that “the University literally and figuratively shut the door on the Taylors,” but if anything the opposite is actually true. (DE 38-1 at 6). Dr. Taylor shut the door on the Board by failing to include it in the drafting and creation of the Disputed Agreement and then concealing the agreement after it was signed. Dr. and Mrs. Taylor also claim that “[a]ll that [they] can possibly know about what occurred behind that closed door is what the University says in its official records,” but Dr. Taylor and Ms. Wake drafted the minutes from the April 19,
2012 Board meeting based on the handwritten notes that they received. (Id.). Those notes say nothing about a contract being read or approved. Dr. Taylor had access to these notes and the ability to discuss what was approved, if anything, with members of the Board; it is wholly incorrect for him and Mrs. Taylor to say that the University made “obtaining firsthand information impossible,” especially considering that Dr. Taylor had greater access to firsthand information than anyone else at the University or on the Board of Trustees. (Id.). Moreover, Dr. and Mrs. Taylor incorrectly state that Mr. Oaks did not “have any indication that the Board had
11 Not only do other members of the Board of Trustees deny authorizing Mr. Oaks to sign an agreement whereby the University would pay Dr. and Mrs. Taylor salary and benefits for the rest of their lives, but they do not recall ever discussing any of the other outlandish terms included in the Disputed Agreement. (See, e.g.. Exh. 12 at 47-57; Exh. 14 at 45-49; Exh. 15 at 43-50). 12 Dr. and Mrs. Taylor even go so far as to confusingly claim that the already one-sided Disputed Agreed does not include all of the terms that it was supposed to include because it does not provide for Mrs. Taylor to receive her salary and benefits for life. (See DE 16 at 39-41). It is wholly absurd for Dr. and Mrs. Taylor to claim that they knew nothing about what actually occurred other than what they have read in the Disputed Agreement and the Board minutes, but then also claim that those materials are incomplete, much less for them to argue that the Disputed Agreement that Dr. Taylor hand crafted for the benefit of him and his wife actually should have included a further benefit for them. 26 Case: 6:16-cv-00109-GFVT-HAI Doc #: 46 Filed: 09/20/17 Page: 27 of 40 - Page ID#: 751
not approved the [Disputed] Agreement.” (DE 38-1 at 8). As previously noted, numerous Board
members have testified that Mr. Oaks never read the Disputed Agreement to them and that they
never approved its terms. See supra, pp. 13-14. Neither Mr. Oaks nor Dr. and Mrs. Taylor could
have reasonably believed that the Board of Trustees authorized the Disputed Agreement.13
Moreover, even if Mr. Oaks signed the Disputed Agreement, he had no authority to do so and both he and Dr. Taylor knew that without such authority, his signature was not binding on the
University. (See Exh. 19 at Art. Ill, § 2)
Finally, Dr. and Mrs. Taylor cannot trace any supposed “belief’ that they had in the validity of the Disputed Agreement to the University’s representations. Again, Dr. Taylor knew the circumstances surrounding his procurement and concealment of the Disputed Agreement, and he likewise knew that Mr. Oaks did not have the authority to execute a contract on behalf of the
University without the approval of the Board of Trustees. Moreover, while Dr. and Mrs. Taylor rely heavily on the minutes from the April 19, 2012 meeting of the Board of Trustees, those minutes do not say anything about what was supposedly read to or approved by the Board, do not include a copy of the Disputed Agreement, and do not track the handwritten notes from the
Board meeting. (See Exh. 13).
Dr. and Mrs. Taylor cite Suhail v. University of the Cumberlands, 107 F. Supp. 3d 748
(E.D. Ky. 2015), in an effort to establish that Mr. Oaks had apparent authority to enter into the
Disputed Agreement, but that case is distinguishable from the instant matter. In Suhail, a
13 Dr. and Mrs. Taylor point to the fact that Mr. Oaks signed Dr. Cockrum’s employment agreement on behalf of the University, but this fails to prove Dr. and Mrs. Taylor’s point. Rather, the transparent manner in which Dr. Cockrum’s employment agreement was approved is entirely unlike the concealed manner in which Dr. Taylor handled the Disputed Agreement. Dr. Cockrum’s employment agreement was prepared by the University’s regular counsel, sent to members of the Board of Trustees in advance of the October 16, 2014 meeting, the agenda for the meeting included consideration of the agreement as an item of business, members of the Board of Trustees had the agreement to review and discuss during the October 16, 2014 meeting, and a copy of the agreement approved by the Board of Trustees is included in the University’s corporate records. (See Exhibit 21, October 1, 2014 Meeting Announcement; Exhibit 22, October 15, 2014 Meeting Agenda; Exh. 4 at 14-15; Exh. 5 at 5). 27 Case: 6:16-cv-00109-GFVT-HAI Doc #: 46 Filed: 09/20/17 Page: 28 of 40 - Page ID#: 752
University faculty member sent an e-mail to the plaintiff third party detailing a specific job offer,
and copied an officer of the University on that e-mail. The court found that there was no
evidence indicating that the plaintiff third party should have known that the faculty member
lacked the authority to make hiring decisions, especially given that the officer of the University
was copied and never gave any indication that the faculty member lacked such authority. Id. at
761-62. Without such counter evidence, the Court could not find that the faculty member lacked apparent authority. In contrast, as outlined above, the University has a great deal of evidence that calls into question whether Dr. Taylor knew or should have known that the Board of
Trustees had not authorized Mr. Oaks to execute the Disputed Agreement. Thus, Dr. and Mrs.
Taylor cannot conclusively establish that Mr. Oaks had apparent authority to bind the University to the Disputed Agreement.
There is a fundamental flaw in Dr. and Mrs. Taylor’s position. They argue that Mr. Oaks was authorized to execute the Disputed Agreement on behalf of the University and proclaim that they reasonably relied on the signing. They claim that their reliance was reasonable because they say it was, but have missed the entire basis for the University’s defense. The University has asserted that Dr. Taylor acted deceitfully in procuring the Disputed Agreement, misleading
Board members, fraudulently obtaining Mr. Oaks’s signature, helping to create fictitious Board minutes, and otherwise participating in a scheme to generate and obtain the benefits flowing from the Disputed Agreement. Dr. and Mrs. Taylor’s bald assertion that they reasonably relied on Mr. Oaks’s signature does not make all of the factual disputes surrounding the creation and execution of the Disputed Agreement disappear. If the jury believes that the Disputed
Agreement was honestly approved and entered into with full knowledge by all parties involved, it may find in Dr. and Mrs. Taylor’s favor, but if it instead believes that Dr. Taylor obtained the
28 Case: 6:16-cv-00109-GFVT-HAI Doc #: 46 Filed: 09/20/17 Page: 29 of 40 - Page ID#: 753
Disputed Agreement through fraud or deception, it cannot be enforced. These factual disputes
cannot be ignored and evidence is not so one-sided in Dr. and Mrs. Taylor’s favor as to warrant a
summary judgment on their behalf.
III. The Board Minutes Do Not Support The Motion.
Dr. and Mrs. Taylor incorrectly contend that the minutes from the April 19, 2012 meeting
of the Board of Trustees conclusively establish that the University consented to the Disputed
Agreement and that no parol evidence can be accepted on this point.14 Not only are they wrong, but it is not clear why they even make this argument in their Motion, which they admit seeks to validate the Disputed Agreement based entirely on a theory of apparent, not actual, authority.
Regardless, even Dr. and Mrs. Taylor implicitly acknowledge, through their reliance on the testimony of Mr. Oaks and Mr. Walden, that parol evidence is necessary for the Court to determine what the Board did or did not approve during its April 19, 2012 meeting because the minutes are completely unclear on this point.
The Motion cites Bennett v. Madison Sales Co., 95 S.W.2d 604, 608 (Ky. 1936), to support the argument that no parol evidence can be introduced to explain what did or did not occur at the April 19, 2012 meeting, but that case recognizes that there are exceptions to the general rule against introducing parol evidence to prove board actions when board minutes are accessible. One such exception is explicitly set forth in Bennett, which states 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 minutes
14 Dr. and Mrs. Taylor did not even attach a full copy of the minutes from the April 19, 2012 meeting to their Motion, much less take any steps to demonstrate that the minutes are competent evidence of the facts contained therein. See In re Indep. Distillers ofKy., 34 F. Supp. 724, 729 (W.D. Ky. 1940) (“To make [corporate books and records] competent the person who made the entries must be offered as a witness and the entries proven by him . . . [or] the person who has charge of them [must prove] that they were made contemporaneously with the transactions shown in them in the ordinary course of business by a person authorized to make them.”). 29 Case: 6:16-cv-00109-GFVT-HAI Doc #: 46 Filed: 09/20/17 Page: 30 of 40 - Page ID#: 754
from the April 19, 2012 meeting of the Board of Trustees do not clearly, completely, and
unambiguously support Dr. and Mrs. Taylor’s argument that the Board approved the Disputed
Agreement. Those minutes state only that Mr. Oaks read “a contract” and recommended taking
action regarding Dr. Taylor’s “retirement benefits.” (Exh. 13 at 18). Again, the Disputed
Agreement is not attached to the minutes or explicitly referred to in any manner in the minutes.
Moreover, the Disputed Agreement is not labeled or referred to as an agreement concerning Dr.
Taylor’s “retirement benefits” such that one could assume that it was what was purportedly read at the meeting. These ambiguities alone are enough to permit the use of parol evidence to prove what occurred, and what did not occur, at the April 19, 2012 meeting of the Board of Trustees.
Nevertheless, the above-described ambiguities are not the only issue with the Disputed
Agreement given the evidence related to Dr. Taylor’s involvement in procuring and concealing the agreement, the circumstances surrounding the preparation of Board minutes, and the fact that numerous members of the Board of Trustees have sworn under oath that they do not recall any action being taken to approve that agreement and others insist that no action was taken. The
Motion correctly points out that Kelly-Koett Manufacturing Co. v. Goldenberg, 270 S.W. 15, 17
(Ky. 1924), held that corporate records are not conclusive evidence of a corporation’s actions.
Rather, “[t]he 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.” Id. at 17-18 (citation omitted). As both Bennett and the Motion recognize, there is some conflicting authority in Kentucky on this point. In particular,
Goldenberg mentions an exception to the general rule allowing parol evidence when “a stranger has acted upon the faith of the truth and it would be to his detriment to allow the corporation to impeach the record by parol testimony.” Moreover, in Harlan-Kellioka Coal Co. v. Kelly, 262
30 Case: 6:16-cv-00109-GFVT-HAI Doc #: 46 Filed: 09/20/17 Page: 31 of 40 - Page ID#: 755
S.W. 259, 262 (Ky. 1924), the court would not allow parol evidence to alter or vary the terms of
a corporate resolution, but the court recognized that the situation would be different if the
integrity of the corporate record were attacked or impeached. See id.
The integrity of the April 19, 2012 minutes has been impeached and the issue of fraud
has been raised in this case such that neither the exception in Goldenberg nor the rule in Kelly
can or should apply here. To be sure, the evidence shows that Dr. Taylor played a role in preparing the Board minutes that are in dispute based on handwritten notes taken at the meetings.
The handwritten notes from the April 19, 2012 meeting do not track the language of the official minutes and neither makes any mention of a seven-page contract being read or the terms included therein being described. See supra, p. 14. In addition, no other member of the Board of
Trustees present at the April 19, 2012 meeting recalls Mr. Oaks reading a seven-page agreement to them or voting to approve the terms of the Disputed Agreement at that meeting. See supra, pp. 13-14. Finally, the evidence shows that Dr. Taylor employed a scheme to procure and conceal the agreement—engaging an attorney and providing him with the self-enriching terms to be included in the Disputed Agreement without the knowledge or participation of the Board, failing to provide members of the Board with a copy of the agreement at any point in time, purportedly adding consideration of the agreement to the business to be conducted by the Board without including it on the agenda or giving any prior notice to the Board, and hiding the agreement for three years after it was executed—the circumstances of which cast further doubt on the legitimacy of the minutes from the April 19, 2012 meeting. Thus, the introduction of parol evidence is even more appropriate here.
IV. The Disputed Agreement Is Void As A Matter Of Law.
Even if the Court were to find that the University authorized the terms of the Disputed
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Agreement—which it vigorously denies and which the evidence refutes—Dr. and Mrs. Taylor are not entitled to summary judgment on their contract claims because this one-sided agreement is unenforceable as a matter of law. The University has evidence that, at the very least, creates a genuine issue of material fact as to whether the Disputed Agreement is supported by adequate consideration and whether it violates public policy. Each of these issues puts into question the enforceability of the Disputed Agreement and further makes summary judgment in favor of Dr. and Mrs. Taylor wholly inappropriate.
A. The Disputed Agreement is void for lack of consideration.
First, Dr. and Mrs. Taylor cannot succeed on their claim for breach of contract because they failed to provide any viable consideration for the Disputed Agreement and, therefore, it is unenforceable. The University previously raised this argument against Dr. and Mrs. Taylor’s contract claims in its motion to dismiss, and the Court held that Dr. and Mrs. Taylor had pled facts sufficient to allege the existence of a valid contract such that dismissal at that stage was not warranted.15 (See DE 21 at 12 (applying a presumption in favor of the contract’s validity and placing the burden on the University to overcome that presumption)). Because there is evidence to support that the Disputed Agreement was supported only by past consideration, which is insufficient to create a valid contract, summary judgment in favor of Dr. and Mrs. Taylor is unjustified.
It is well-settled under Kentucky law that “past consideration is insufficient to support a promise.” Sawyer v. Mills, 295 S.W.3d 79, 86 (Ky. 2009) (quoting 17A Am. Jur. 2d Contracts §
152 (2009)) (internal quotation marks omitted); see also Greenup v. Wilhoite, 279 S.W. 665, 666
(Ky. 1926) (acknowledging that, ordinarily, “a past consideration which is some act of
15 The University incorporates by reference the arguments included in its Motion to Dismiss [DE 12] and Reply in Further Support thereof [DE 17]. 32 Case: 6:16-cv-00109-GFVT-HAI Doc #: 46 Filed: 09/20/17 Page: 33 of 40 - Page ID#: 757
forbearance in time past by which a man has benefited without thereby incurring any liability, is
not sufficient to support an executory contract”). Where an agreement is supported only by past
performance—which is no consideration at all—a binding contract does not exist. Sawyer, 295
S.W.3d at 86. “[T]he agreement and consideration must be dependent on each other.” Id.
In Sawyer, the Kentucky Supreme Court found that an agreement was unenforceable, due
to a lack of consideration, where the plaintiff-employee’s performance offered as consideration
for an agreement was completed prior to the time she entered into the contract that she sought to
enforce. Id. at 86-87. The court reasoned that because the plaintiff “had completed her performance prior to the . .. oral agreement, it was supported only by past performance, which is no consideration at all, and thus . . . there was not a binding contract.” Id. at 86. The plaintiff did not perform any new obligations pursuant to the agreement, and the fact that she continued to work after the agreement was made was of little import to the court:
Though [the plaintiff] also contends that she continued to work for [the defendant] after the agreement regarding her prior performance was made on June 25, she did in fact receive other multiple substantial payments from [the defendant] after the agreement for that work. It therefore cannot also be used as the consideration going forward from the June 25th agreement.
Id. at 86-87.
Here, the absence of valid consideration is even more apparent than in Sawyer. The
Disputed Agreement, by its express terms, makes clear that it is supported only by past performance: “[T]he compensation and benefits contained in this agreement is/are for the past decades of duties and/or work performed by Dr. and Mrs. Taylor.” (Disputed Agreement at § II,
K 2 (emphasis added)). The Taylors had undoubtedly completed their performance prior to the supposed execution of the Disputed Agreement as the Disputed Agreement spells out that they had completed such performance over the course of past decades. While the Court distinguished
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Sawyer because the plaintiff in that case “concedefd] that she had completed her performance
prior to the . . . oral agreement” (DE 21 at 11 (quoting Sawyer, 295 S.W.3d at 86)), the same is
true here. Although Dr. and Mrs. Taylor have asserted in briefing before this Court that the
Disputed Agreement is supported by promises other than past consideration, this contradicts Dr.
Taylor’s own explanations of the agreement. Indeed, Dr. Taylor has repeatedly noted that the
benefits contemplated by the Disputed Agreement were for past work only. (See Exh. 1 at 330
(“I could or could not be [Chancellor] is what the contract said, either way, because I was being
compensated for prior years.”); Exhibit 23, Excerpts from October 24, 2015 Correspondence
from Dr. Taylor (“The payments are for past work and I don’t know why that is a problem.”)).
This Court should reject Dr. and Mrs. Taylor’s contrived contention that Dr. Taylor’s
continued service as President, after the Disputed Agreement was purportedly executed,
constitutes valid consideration, as it is contrary to both the evidence and the law.16 In Greenup v.
Wilhoite, 279 S.W. 665 (Ky. 1926), the validity of a contract was challenged on the basis that the
supporting consideration constituted past performance and was thus insufficient. There, the plaintiff sought to enforce a contract made between herself and the decedent, which contemplated that the plaintiff “was to receive compensation not only for services which she had performed up to the time of the making of the contract but for all services which she was to perform for [the decedent] during the remainder of his life.” Id. at 666. The contract was upheld because part of the consideration, in the form of the plaintiffs services, was not yet given at the time of entry into the agreement. Id. This rationale—as the Sawyer Court explained in rejecting the respective plaintiffs reliance on Greenup—“further underscores that the agreement and
16 Dr. and Mrs. Taylor have attempted to remedy the Disputed Agreement’s flaws by arguing that it somehow transformed into a unilateral contract when they performed certain services for the University, but the Disputed Agreement is not a unilateral contract and did not become one by Dr. Taylor’s actions. (See DE 17 at 5). 34 Case: 6:16-cv-00109-GFVT-HAI Doc #: 46 Filed: 09/20/17 Page: 35 of 40 - Page ID#: 759
consideration must be dependent on each other.” Sawyer, 295 S.W.3d at 86 (distinguishing the
facts at issue from those in Greenup).
To the extent that Dr. and Mrs. Taylor performed services for the University after the
execution of the Disputed Agreement the evidence shows that this was not done pursuant to the
Disputed Agreement. Though the Disputed Agreement states that “Dr. Taylor agrees to continue to serve as President,” it requires that he do so only “until he may decide to retire[.]” (Id. at § II,
| 1). Moreover, it expressly provides that the compensation and benefits provided therein— those the Taylors seek to obtain by way of the instant action—are not conditional upon any
future obligation of the Taylors, stating: “[T]he 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 upon Dr. Taylor’s retirementf.]” (Id. at
§ II, Tf 2 (emphasis added)). Rather, the compensation and benefits outlined in the Disputed
Agreement are for the services that the Taylors performed up to the time of the Disputed
Agreement. Though Dr. Taylor continued to serve as President of the University after the parties allegedly executed the Disputed Agreement, he received his salary and benefits for that work under his separate, pre-existing contract to serve as President and not pursuant to any provision of the Disputed Agreement. 17 His subsequent work cannot, therefore, be used as the consideration going forward from the Disputed Agreement, especially when the document itself
17 This Court referred to Greenup v. Wilhoite, 219 S.W. 665, 666 (Ky. 1926), in its Memorandum Opinion and Order, quoting its statement that “every writing evidencing an indebtedness imports a consideration.” (See DE 21 at 12). This Court also recognized that Greenup disavowed the sufficiency of past performance as consideration for a contract. (See id.). Dr. and Mrs. Taylor’s past work for the University, raising money and exceeding fundraising expectations, does not result in the University’s having an indebtedness to them. Rather, Dr. and Mrs. Taylor were compensated for these services, which they performed pursuant to their employment with the University. 35 Case: 6:16-cv-00109-GFVT-HAI Doc #: 46 Filed: 09/20/17 Page: 36 of 40 - Page ID#: 760
unequivocally states that the compensation and benefits contained therein are for the Taylors’ past performance only and when Dr. Taylor has repeatedly reaffirmed this fact.18
It is universally understood that parties must mutually agree in order to enter into a binding contract, and an essential component of such mutual agreement is that each party is obligated to provide some consideration in exchange for the benefits that it is receiving under the contract. See, e.g., Thompson v. Henson, 209 S.W.2d 849, 851 (Ky. 1948) (“[A] quid pro quo is the veritable mainspring of legal contract.”). Not only does it defy logic to believe that the
University would ever agree to the bizarre arrangement set forth in the Disputed Agreement, but it likewise defies well-established contract principles. Enforcing such an agreement devoid of consideration would require the University to pay millions of dollars to Dr. and Mrs. Taylor, who have moved to Florida and are no longer working for the University, despite that it will receive nothing in return. The law simply does not sanction such a result. Because the Disputed
Agreement is unenforceable for lack of consideration, Dr. and Mrs. Taylor cannot succeed on the merits of their claim. Accordingly, this Court should deny the Motion.
B. The Disputed Agreement violates public policy.
Dr. and Mrs. Taylor further cannot succeed on their claim for breach of contract because the Disputed Agreement violates public policy given that it could require the University of the
Cumberlands to engage in an excess benefit transaction in violation of federal law. Courts are permitted to refuse to enforce a contract “on grounds of illegality where the contract has a direct objective or purpose that violates the federal or a state Constitution, a statute, an ordinance, or
18 In responding to the University’s Motion to Dismiss, Dr. and Mrs. Taylor pointed to certain alleged “new promises” and “new performance” that they supposedly made as consideration for the Disputed Agreement, but none of these illusory promises can overcome the fact that the agreement explicitly states that it is not conditioned upon Dr. Taylor remaining President or serving as Chancellor of the University. Each of the promises that Dr. and Mrs. Taylor have pointed to are part and parcel of Dr. Taylor’s duties as President and/or Chancellor, meaning that they, too, failed to constitute consideration for the Disputed Agreement. (See DE 17 at 8-9). 36 Case: 6:16-cv-00109-GFVT-HAI Doc#: 46 Filed: 09/20/17 Page: 37 of 40 - Page ID#: 761
the common law.” Yeager v. McLellan, 177 S.W.3d 807, 809 (Ky. 2005) (citing Zeitz v. Foley,
264 S.W.2d 267, 268 (Ky. 1954)). The Internal Revenue Code imposes tax penalties when non
profit organizations engage in excess benefit transactions. See I.R.C. § 4958. An “excess benefit
transaction” is defined as “any transaction in which an economic benefit is provided by an
applicable tax-exempt organization directly or indirectly to or for the use of any disqualified person if the value of the economic benefit provided exceeds the value of the consideration . . . received for providing such benefit.” Id. § 4958(c)(1)(A). Dr. and Mrs. Taylor are considered
“disqualified persons” because Dr. Taylor exercised substantial influence over the affairs of the organization when he allegedly procured the Disputed Agreement. See id. § 4958(f)(l)(A)-(B).
If it continued to pay Dr. and Mrs. Taylor compensation and benefits totaling nearly $400,000.00 annually, as Dr. and Mrs. Taylor contend the Disputed Agreement requires, the University could have engaged in an excess benefit transaction and subjected itself and Dr. and Mrs. Taylor to the tax penalties set forth in the Internal Revenue Code. The University plans to obtain expert evidence to support this point. Imposing such an excess obligation on the University would be against public policy and, thus, cannot be enforced.
Not only does the Disputed Agreement improperly authorize an excess benefit transaction in violation of the law, but it was procured in violation of both Mr. Oaks’s and Dr.
Taylor’s fiduciary duties to act in the best interests of the University. Such a breach of trust renders the Disputed Agreement illegal and void. See, e.g., Kessler v. Jefferson Storage Corp.,
125 F.2d 108, 110 (6th Cir. 1941) (citations omitted) (“[Wjhere the object or tendency of a contract is to constitute a breach of duty on the part of one who stands in a confidential or fiduciary relation, it is illegal and void, as tending to be, or being, a fraud on third persons.”). As an officer and director of the University, Mr. Oaks and Dr. Taylor owed fiduciary duties to the
37 Case: 6:16-cv-00109-GFVT-HAI Doc #: 46 Filed: 09/20/17 Page: 38 of 40 - Page ID#: 762
University. See KRS § 273.215; KRS § 273.229. By supposedly executing the Disputed
Agreement without properly presenting it to the Board of Trustees and without providing the
Board of Trustees any advice regarding its contents, costs, and consequences, among other
things, Mr. Oaks and Dr. Taylor breached those duties. Thus, the Disputed Agreement is
unenforceable.
V. Dr. And Mrs. Taylor’s Motion Is Premature.
Not only is Dr. and Mrs. Taylor’s Motion inappropriate because of the existence of genuine issues of material fact as outlined above, but the Motion also must be denied because it is premature, as there are still over four months remaining before the expiration of the deadline for the completion of fact discovery. Pursuant to this Court’s Scheduling Order, the parties have until January 2, 2018 to complete fact discovery. (DE 27 at | 1(d)). As noted above, the
University seeks to depose and request the production of documents from at least two third parties, Sue Wake and Steve Moore. In addition, the University has not yet even had an opportunity to depose Mrs. Taylor.19 The testimony of these witnesses is imperative to further proving Dr. Taylor’s scheme to obtain and conceal the Disputed Agreement. Indeed, the
University anticipates obtaining testimony from these witnesses to support its argument that it cannot be bound by the terms of the Disputed Agreement, which it never authorized. (See
Exhibit 24, Affidavit of Barbara B. Edelman).
Federal Rule of Civil Procedure 56(d) permits the denial of a motion for summary judgment when facts are unavailable to the non-movant, such as when a motion has been filed prematurely prior to the completion of fact discovery. A party seeking Rule 56(d) relief need
19 The University’s counsel had originally requested to depose Mrs. Taylor in April 2017 around the same time as the deposition of Dr. Taylor, but postponed taking that deposition until after receiving responses to the University’s written discovery requests to Mrs. Taylor. The University received those discovery responses in mid-July— although they have yet to be verified by Mrs. Taylor—and shortly thereafter again requested a date for Mrs. Taylor’s deposition. Rather than provide a date, Dr. and Mrs. Taylor filed this Motion. 38 Case: 6:16-cv-00109-GFVT-HAI Doc #: 46 Filed: 09/20/17 Page: 39 of 40 - Page ID#: 763
only show “its need for discovery, what materials it hopes to uncover, and why it has not
previously discovered the information.” Ball v. Union Carbide Corp., 385 F.3d 713, 720 (6th
Cir. 2004) (quoting Cacevic v. City of Hazel Park, 226 F.3d 483, 488 (6th Cir. 2000)). The
University has made such a showing in this case. Thus, it would be wholly inappropriate to
grant summary judgment in favor of Dr. and Mrs. Taylor here, where the University has not had
a sufficient opportunity to complete discovery. See, e.g.. White’s Landing Fisheries v.
Buchholzer, 29 F.3d 229, 231-32 (6th Cir. 1994). Indeed, Plaintiff will never be able to obtain a
summary judgment against the University—for the reasons outlined above—but it is even more
inappropriate now when the Court does not have all of the proof before it.
CONCLUSION
For the foregoing reasons, the University respectfully requests that Dr. and Mrs. Taylor’s
Motion for Summary Judgment be denied.
Respectfully submitted,
/s/ Barbara B. Edelman______Barbara B. Edelman Haley Trogdlen McCauley DINSMORE & SHOHL LLP 250 W. Main Street, Suite 1400 Lexington, KY 40507 (859) 425-1000 (859) 425-1099 (fax) [email protected] [email protected] and James D. Jordan GUENTHER, JORDAN & PRICE, P.C. 2100 West End Avenue, Suite 1150 Nashville, TN 37203 (615) 329-2100 (615) 329-2787 (fax) [email protected] Counsel for Defendant
39
Case: 6:16-cv-00109-GFVT-HAI Doc #: 52 Filed: 10/13/17 Page: 1 of 16 - Page ID#: 1080
UNITED STATES DISTRICT COURT EASTERN DISTRICT OF KENTUCKY LONDON DIVISION CIVIL ACTION NO. 6:16-CV-109-GFVT
DR. JAMES TAYLOR ) MRS. DINAH TAYLOR ) ) Electronically Filed PLAINTIFFS ) V ) ) UNIVERSITY OF ) THE CUMBERLANDS ) ) DEFENDANT )
PLAINTIFFS’ REPLY IN SUPPORT OF MOTION FOR PARTIAL SUMMARY JUDGMENT
INTRODUCTION
The primary substantive issue to be resolved in connection with the Taylors’ motion is whether Jim Oaks, the Chairman of the Board of Trustees at the time, had apparent authority to sign the Disputed Agreement. The University attempts to avoid summary judgment by claiming that Dr. Taylor’s reliance on Mr. Oaks’ apparent authority cannot have existed, as a matter of law, unless the University specifically instructed Dr. Taylor that Jim Oaks had authority to sign the
Disputed Agreement. The University, in other words, asks this Court to equate apparent authority with actual authority.
The University also claims, without a scintilla of evidence, that Dr. Taylor, Jim Oaks and others were a part of an elaborate conspiracy to defraud the University respecting the Board's approval of the Disputed Agreement and that, consequently, Dr. Taylor knew that Mr. Oaks did not have authority to sign the Disputed Agreement because Dr. Taylor knew that the Disputed
Agreement had not been approved by the Board of Trustees of the University.
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In addition, the University claims, even though it has interviewed or taken the depositions
of all members of the alleged conspiracy, that discovery is ongoing and the Taylors’ summary judgment motion is therefore premature. The University also asks the Court to revisit the issue of
whether the Disputed Agreement is supported by adequate consideration - an issue resolved when
this Court denied the University’s motion to dismiss the Taylors’ Complaint. Finally, the
University asks the Court to find that the Disputed Agreement is void as against public policy because the payments to Dr. Taylor create an “excess benefit transaction.” Each of these claims is addressed below.
ARGUMENT
I. THE SUMMARY JUDGMENT STANDARD.
A. The University must show that its defenses are based on more than mere speculation.
The University’s Response to the Taylors’ Motion for Summary Judgment fails to create genuine factual controversies. The University provides speculation, conspiracy theories, and conjecture instead. The University’s response to the assertion of Mr. Oaks’ apparent authority is the theory that Dr. Taylor was involved in a conspiracy to have this contract executed without the
Board’s knowledge, a theory unsupported by any testimony, any contemporaneous notes, any of the University’s official documents, or common sense. This conjecture is not enough to overcome a motion for summary judgment.
When a motion for summary judgment is made and supported as provided in this rule, an adverse party may not rest upon the mere allegations or denials of the adverse party's pleading, but the adverse party's response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial.
Fed. R. Civ. Pro. 56(e). This circuit has long held that "mere conclusory and unsupported allegations, rooted in speculation, do not meet that burden." Bell v. Ohio State Univ., 351 F.3d 240,
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253 (6th Cir. 2003). (Quoting Bryant v. Kentucky, 490 F.2d 1273(6th Cir. 1974). Other Federal
Courts in our Circuit have held similarly. See In re Swedenborg, 55 B.R. 820, 830 (Bankr. N.D.
Ohio 1985); P.H. Glatfelter Co. v. United Steel, 2012 U.S. Dist. LEXIS 118189 (S.D. Ohio 2012).
B. In this case, the reasonableness of Dr. Taylor’s reliance on Chairman Oaks’ authority is not a matter about which there is any genuine factual issue.
The University argues that the reasonableness of the Taylors’ belief in Dr. Oaks’ apparent
authority is a question for the trier of fact. It is mistaken. The University relies primarily on Muncy
v. InterCloud Sys., No. 14-111-DLB-REW, 2016 U.S. Dist. LEXIS 151089, *9-18 (E.D. Ky. Nov.
1,2016), which cites Dean v. Commonwealth Bank & Trust Co., 434 S.W.3d489, 500 (Ky. 2014)).
What Dean holds is that reasonableness is usually a question for the trier of fact, and then goes on to explain that reasonableness can and should, in certain circumstances, be determined as a matter of law.
Federal Courts have also been willing to grant summary judgment on the issue of apparent authority, finding all elements present as a matter of law. See this Court’s decision in Suhail v
Univ, of the Cumberlands, 107 F. Supp. 3d 748, (EDKY 2015). Dean involved a bank’s
(successful) claim that its reliance on a listed signatory’s apparent authority was reasonable. The
Kentucky Supreme Court there held: “A signed document—the gold standard—designating Wills as an authorized signer directly led to the bank's unquestionably reasonable belief that she had authority to do what she did.” Dean at 501. (Internal citations omitted). Here the Taylors have
“gold standard” reasons for reliance on Dr. Oaks’ apparent authority. The first is the University’s bylaws, which give the Chair the authority to sign contracts approved by the Board. See, Exhibit
1, Amended and Restated Bylaws of the University of the Cumberlands, p. 3.
The second “gold standard” reason the Taylors have for reliance on Mr. Oaks’ apparent authority are the minutes of the Board of Trustees meeting on April 19,2012 (stating that a contract
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was approved). The third “gold standard” reason that the Taylors’ reliance was reasonable is of
course the signed Disputed Agreement itself. The bylaws state that the Chairman will sign
contracts authorized or issued by authority of the Board. The Board meeting minutes from April
19, 2012 state that the Board approved a contract, and Mr. Oaks did in fact sign the agreement in
conformity with the bylaws and the Board’s authorization, confirmed by its official records.
II. THE UNIVERSITY HAS PRESENTED NO EVIDENCE THAT DR. TAYLOR KNEW THAT CHAIRMAN OAKS DID NOT HAVE AUTHORITY TO SIGN THE DISPUTED AGREEMENT FOR THE UNIVERSITY.
Central to the University’s defense is the claim that “Dr. Taylor masterminded a clever
scheme to defraud the University and secure benefits for himself and his wife by obtaining the
invented Disputed Agreement and assisting with the preparation of Bogus minutes.” DE 46 at p.
2. This conspiracy must have included, in addition to Dr. Taylor:
a. The Chairman of the Board of Trustees - Jim Oaks1 — who signed the Disputed
Agreement and has testified, unequivocally, that he read the Disputed Agreement to the Board of
Trustees in executive session on April 19, 2012, and that the Disputed Agreement was unanimously approved by the Board during that meeting. See, Exhibit 2 hereto, Excerpts from
Deposition of Jim Oaks, at p. 7-8.
b. Long-time Board member Dave Huff2 — who along with Mr. Oaks has testified, unequivocally, that the Board unanimously adopted a resolution in 2005 which granted to the
Taylors substantially all the compensation and benefits provided by the Disputed Agreement. See,
Exhibit 3 hereto, Excerpts from Deposition of Dave Huff, at p. 12-15.
1 Mr. Oaks served on the University’s Board of Trustees for 34 years, 32 of them as Chairman. (See, Exhibit 2, Excerpts from Oaks Deposition, p. 5-6) 2 Mr. Huff served on the University’s Board for 50 years. (See, Exhibit 3, Excerpts from Huff Deposition, p. 8)
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c. Dr. Taylor's long-time assistant - Sue Wake3 - who is accused by the University
of, among other things, falsifying the minutes of the April 19, 2012, meeting to indicate that a
contract for Dr. Taylor was approved on that day. See, DE 46 at p. 14.
d. University counsel Steve Moore - who was engaged by Dr. Taylor to prepare the
Disputed Agreement.
The University attributes no motive to any of the Taylors’ alleged co-conspirators. The
University's primary defense requires it to malign a group of people who served the University
faithfully for many years - without any evidence (as will be shown below).
As “proof’ of this conspiracy, the University makes nine (9) separate allegations (DE 46 at pp. 24-25) about how “Dr. Taylor took . . . steps to procure and then conceal the Disputed
Agreement.” The balance of this part of the University’s brief provides variations on these themes, each of which is addressed below:
Conspiracy Allegation #1;
Dr. Taylor went to a local attorney who had never before drafted an employment agreement for the University and provided that attorney with his hand-selected terms that had not been previously approved by the Board of Trustees.
This claim is irrelevant to the question of Jim Oaks’ apparent authority, but it is incorrect in any event. Dr. Huff, and Mr. Oaks have all testified that in 2005 the Board unanimously approved a benefit package which was substantially mirrored by the terms of the Disputed Agreement. See,
Exhibit 5, Sealed minutes of October 21, 2005 Board of Trustees meeting. There is some controversy, now 12 years after the event, about how and exactly when the Board took this action,
3 Mrs. Wake served as Dr. Taylor’s assistant for 35 years. (See, Exhibit 4, Affidavit of Sue Wake.)
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but Dr. Huff and Mr. Oaks have testified unequivocally that the Board did approve a benefit
package in 2005.
Conspiracy Allegation #2;
Dr. Taylor then supposedly arranged for the Disputed Agreement to be presented to the members of the Board of Trustees at its April 19, 2012 meeting, but they received no advance notice that such an agreement would be considered as it was not included as an item of business on the meeting agenda, which is sent out before the meeting.
This claim is not relevant to the question of Mr. Oaks’ apparent authority, but whether the contract
was on an agenda for the meeting is apparently unknowable at this point because the University
cannot produce the “board packets” that were sent to the Board prior to meetings. The Taylors
requested Dr. Taylors’ files (Req. no 4), Sue Wake’s files (Req. no 3) and the Board member
packets (Req. no 2) prepared in advance of each meeting in Plaintiffs Second Requests for
Production of Documents. The University has claimed that it had either already provided all this
material, or, in the case of the Board packets, that it was unable to identify and/or reconstruct the materials sent to members of the Board in anticipation of the other Board meetings. (See, Exhibit
6, Defendant’s Responses to Plaintiffs’ Second Discovery Requests)4
Conspiracy Allegation #3:
No hard copies of the Disputed Agreement were shared with the Board of Trustees prior to or during the April 19, 2012 meeting.
See discussion at Conspiracy Allegation #9 below.
Conspiracy Allegation #4:
Dr. Taylor signed the Disputed Agreement immediately after the April 19, 2012
4 At least part of the confusion about the University’s records in this case may stem from the fact that the University has lost or destroyed the records of Board meetings maintained by Ms. Wake and Dr. Taylor. See, Affidavit of Sue Wake (Exhibit 4 at 51 9), Affidavit of Carole Craddock (Exhibit 7 at 5| 5-6) and Exhibit 6, Defendant’s Responses to Plaintiffs’ Second Discovery Requests at p. 3-4.
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meeting adjourned, and Dr. Taylor signed Mrs. Taylor’s name and had a University employee notarize it as her signature.
This is the reddest herring in the sea of red herrings that is the University’s Response. Dr. Taylor
had his wife’s consent to sign her name to the contract (see, Exhibit 8, Excerpts from Deposition
of Dr. Taylor, p. 63-64) and the contract was not recorded and, consequently, the notary certificate
was not necessary. Neither of these claimed irregularities affect the enforceability of the Disputed
Agreement or shed any light on the question of whether Dr. Taylor knew that Mr. Oaks did not
have authority to sign the Disputed Agreement on behalf of the University.
Conspiracy Allegation #5:
Mr. Oaks improperly signed his name on the signature page of the Disputed Agreement, but disavows the terms included therein.
This claim is irrelevant to the question of whether Dr. Taylor knew that Mr. Oaks was (according to the University) committing fraud on the University when Mr. Oaks signed the Disputed
Agreement. Mr. Oaks absolutely has not disavowed the terms of the Disputed Agreement. (See,
Exhibit 2 hereto, Excerpts from deposition of Jim Oaks at p. 7-8.) Mr. Oaks’ expectation certainly was that Dr. Taylor would continue to do some fundraising for the University. (See, Exhibit 2 hereto, Excerpts from deposition of Jim Oaks at p. 115-116.) It was also Dr. Taylor’s expectation that he would continue to do some fimdraising for the University, regardless of what the Disputed
Agreement said. See, DE 46-3, letters from Dr. Taylor to the Board.
Conspiracy Allegation No. 6:
Dr. Taylor and Ms. Wake drafted the minutes from the April 19, 2012 Board meeting to state that “a contract” was read, even though the handwritten notes from the meeting say no such thing.
Of all the allegations of conspiracy made by the University, this is the only one which (if true) might possibly be relevant to the questions of whether Dr. Taylor knew, at the time of the signing
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of the Disputed Agreement, that Mr. Oaks lacked authority to sign it. There is no evidence whatsoever that Dr. Taylor participated in the drafting of the minutes of the April 19, 2012 meeting and no evidence that Dr. Taylor ever saw the handwritten notes referred to in this allegation. However, if Dr. Taylor had seen the handwritten note, it would have bolstered his confidence in Mr. Oaks’ authority to sign the Disputed Agreement on behalf of the University.
The undated and unsigned handwritten note appears as Exhibit 16 to Defendant's Response
[Doc # 46-16]. The University represents (without saying who took the note) that this note forms the basis of the Board Minutes of April 19, 2012 prepared by Ms. Wake. Contrary to the
University’s assertions, this note actually supports the notion that the Disputed Agreement was read and approved at that meeting. The note was apparently prepared by Board Secretary Lonnie
Walden.5 Mr. Walden recorded the following:
Pay Dr. Taylor retirement benefits read by Dr. Oaks. Motion by Scott Thompson to accept proposal. Seconded by Cookie Henson.
So, Mr. Walden, who has not (at least not yet) been named as a co-conspirator, recorded contemporaneously with the event, that Dr. Oaks read a proposal to pay Dr. Taylor retirement benefits and that a motion to accept the proposal was made and seconded. When a proposal is accepted, we usually call that a contract. Mr. Walden's note does not record the vote, but he later signed the minutes which said that the contract was approved unanimously. During his deposition, the following exchange took place between Mr. Walden and the Taylors’ counsel:
Q: Now the last page of these minutes, Mr. Walden, Page 18, let me let you turn to that page, if I could.
A: (Witness does same.)
Q: Let me first ask you, is that your signature there at the bottom?
5 See, Exhibit 4 Affidavit of Sue Wake at | 7.
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A: Yes.
Q: Let me refer you to right above your signature. It says, "Executive session. Chair Oaks called for Executive Session. All non-Board members were dismissed. Dr. Oaks complimented Dr. Taylor's leadership of the University and read to the members a contract which Oaks recommends be approved by the Board members concerning Dr. Taylor's retirement benefits. Scott Thompson moved the contract be approved and Cookie Henson seconded the motion. All approved." Do you remember that that happened at that April 2012 meeting?
A: I can't say as I do.
Q: Okay. Can you say affirmatively that it didn't happen?
A: No, sir.
Q: You just don't remember?
A: Don't remember.
Q: Would you have signed something that was untrue as far as the minutes are concerned?
A: No, sir.
Exhibit 9, Excerpts from Deposition testimony of Lonnie Walden at p. 13-14.
The University has not produced any other proposal that was made at that meeting - Dr.
Oaks has testified that it was the Disputed Agreement that was read at that meeting. Dr. Oaks and
Dr. Taylor have testified that the Disputed Agreement was signed immediately after the meeting.
Steve Moore and Dr. Taylor have both testified that the unsigned version of the Disputed
Agreement was delivered by Steve Moore to Dr. Taylor at the location of the April 19, 2012 Board meeting just prior to the beginning of the meeting. (See, Exhibit 8, Excerpts from Deposition of
Dr. Taylor at p. 138-139; see also, Exhibit 10, Excerpts from Deposition of Steve Moore, at p. 74-
75). The evidence is overwhelming that the proposal Mr. Walden says was read to the board and approved unanimously was the Disputed Agreement. The University has not presented the Court with any other proposal.
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The minutes of the April 19, 2012 meeting (which say clearly that a contract for Dr. Taylor was approved) were provided to each board member within a few weeks after the board meeting; and were provided to each trustee again a few weeks prior to the October 2016 board meeting. (In each case in what were generally referred to as "board packets.") The minutes of the April 19,2012 meeting were then approved, unanimously, at the October 2012 board meeting.6 Each Trustee, consequently, had at least three opportunities to say "Hold on. I don't remember voting on a contract for Dr. Taylor" or something similar. See, Exhibit 4, Sue Wake Affidavit.
Conspiracy Allegation # 7:
Neither Dr. Taylor nor Ms. Wake attached a copy of the Disputed Agreement to the minutes from the April 19, 2012 Board meeting.
See discussion at Conspiracy Allegation #9 below.
Conspiracy Allegation #8;
Dr. Taylor did not share a copy of the Disputed Agreement with anyone else on the Board of Trustees or at the University after it was executed.
See discussion at Conspiracy Allegation #9 below.
Conspiracy Allegation #9:
No one at the University could locate the Disputed Agreement until Ms. Wake snuck it onto Dr. Cockrum’s desk in July 2015, over three years after it was supposedly signed.
Conspiracy Allegation #s 3, 7, 8, and 9, and other allegations like them elsewhere in the Response are all of a piece. The theory is, apparently, that Dr. Taylor and his co-conspirators concealed the existence of the Disputed Agreement from the Board of Trustees and the incoming President, Dr.
Cockrum, because . . . because .... Dr. Taylor’s rationale for allegedly concealing the Disputed
6 Exhibit 4, Affidavit of Sue Wake at 19; Exhibit 11, Minutes of October 18, 2012 Board of Trustees meeting.
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Agreement is never made clear in the University’s response. Dr. Taylor was surely smart enough to know that, sooner or later, the person writing his salary checks (in Dr. Cockrum’s administration) would have to see the contract. This alleged concealment is not relevant to the question of whether Dr. Taylor knew that Mr. Oaks did not have authority to sign the Disputed
Agreement, but the claim merits some additional comments nonetheless.
The University’s theory must necessarily be that Dr. Taylor had the Disputed Agreement drafted by Steve Moore and delivered immediately prior to the April 19, 2012 board meeting and then decided not to submit it to the Board for approval - opting instead to involve Jim Oaks in an outright fraud on the University. In 2012 Dr. Taylor had every reason to believe that the Board would approve a generous retirement package for Dr. Taylor and his wife. He was the University’s fair-haired boy at that point. For example, in October of 2012, at the same meeting when the minutes of the April 2012 Board meeting were approved, the Board’s annual review of Dr.
Taylor’s performance (adopted by the Board) demonstrated his popularity with the Board:
In addition, Dr. Taylor continues with extensive travels in making many contacts to keep gift income at the highest levels possible. This is crucial for the University's daily operation, as well as, means to fund new programs in providing quality education and for a safe, inviting and commodious campus. His ability and reputation exceeds all expectations as President of this Institution. In addition to their total dedication to the University, Dr. Taylor and his wife, Dinah, are pillows [sic] of the community.
(See, Exhibit 11, Minutes of the October 18, 2012 Board of Trustees meeting, p. 24)
There is no indication that Dr. Taylor polled the Board before the April meeting and determined that the tide was against him.
There was no reason to discuss the Disputed Agreement or show it around until Dr. Taylor was ready to retire. (It was a retirement contract.) When he began to discuss retirement, he mentioned to the Board that he had a retirement contract. In his confidential letter to the Trustees
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of September 30, 2014, Dr. Taylor detailed his retirement plans, explained the help in fundraising
he hoped to provide after retirement, sang the praises of Dr. Cockrum and said: “There is no need
to worry about my contract because that was taken care of years ago and has been repeatedly
confirmed by vote at our various Board of Trustee meetings through the years.” DE 46-3 at p. 7 of
9. Again, no one spoke up to say the Board had not done so.
There is no more proof that Dr. Taylor tried to hide the contract than there is that Dr.
Cockrum just could not find it when he looked. And the latter is more likely. Although Dr.
Cockrum in an affidavit filed as an exhibit to the Response brief says that he asked people if they
had ever seen the contract, Dr. Cockrum did not ask either of the two obvious candidates for the
question - Dr. Taylor and Jim Oaks.7 If he had really wanted to find the contract, wouldn’t the
first thing that would come to mind be to ask Dr. Taylor and Jim Oaks for it? Moreover, after
October 15, 2014, when he became President-Elect, Dr. Cockrum, and not Dr. Taylor, had control
of all the University’s records regarding the Board’s activities.
The first indication that Dr. Taylor got from the University that there might be a problem was a long letter from University counsel Jamie Jordan which asked a whole series of questions about Dr. Taylor’s retirement benefits - most of which could have been answered from the
University’s own records. The letter, dated 8/28/2015, gave no indication that Mr. Jordan knew about the Disputed Agreement (though by this time Dr. Cockrum had found it). On its face, the letter seems a calculated attempt to get Dr. Taylor to make some kind of admission against interest.
This was no way to treat Dr. Taylor after more 30 years of selfless service to the University and more than $300 Million raised for the University. Mr. Jordan’s letter is attached at Exhibit 12
7 See, transcript of Dr. Taylor’s deposition, Exhibit 8 at p.336 and transcript of Jim Oaks deposition, Exhibit 2 at p. 239-241.
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hereto.
III. THE UNIVERSITY CANNOT NOW CLAIM THAT IT NEEDS MORE TIME TO COMPLETE ITS DISCOVERY.
The University asserts that summary judgment is inappropriate because discovery is not
complete. However, it did not meet, and cannot meet, the standard for such claims established by
Fed. R. Civ. Pro. 56(d), which requires, when a nonmovant asserts that it cannot present facts
essential to justify its opposition, that it show by affidavit or declaration the specific reasons for
its dilemma.
In the many months this case has been open, the depositions of all the "conspirators" —
except Sue Wake — have been taken, and Sue Wake was interviewed by counsel to the University more than a year ago.8 The University says that it wants to take the deposition of Dinah Taylor, but it has not even attempted to establish that it needs to take her deposition.9 The deposition of
Steve Moore by counsel to the University was taken on September 28, 2017. The University has not explained to the Court how any additional discovery will shed any additional light on the question of Mr. Oaks’ apparent authority to sign the Disputed Agreement on behalf of the
University. A recent decision out of the Federal District Court for the Eastern District of Michigan,
Southern Division, contains a good summary of the Sixth Circuit authority on the requirements of
Fed. R. Civ. Pro. 56(d) (formerly 56(f). Green v. Miller, 2014 U.S. Dist. LEXIS 64446 (E.D. MI.
2014). The opinion makes clear that the requirements of the rule are rigorous:
When a party opposing a motion for summary judgment believes that further
8 Mrs. Wake was interviewed on July 25, 2016, for more than two and a half hours by four of the University’s lawyers. See, Exhibit 4, Affidavit of Mrs. Wake. 9 The Response does not identify her as a conspirator or allude to anything she has done or not done in furtherance of the conspiracy, nor does it indicate how Mrs. Taylor might shed any light on the question of Mr. Oaks’ apparent authority to sign the Disputed Agreement on behalf of the University.
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discovery is needed to develop the issues addressed in the motion, that party must file an affidavit pursuant to Fed.R.Civ.P. 56(f) ("R.56(f)")10, to "indicate to the district court its need for discovery, what material facts it hopes to uncover, and why it has not previously discovered the information." Cacevic v. City of Hazel Park, 226 F.3d 483, 488 (6th Cir. 2000).
The University has not come close to meeting the required standard for delaying a decision for the sake of additional discovery.
III. THE UNIVERSITY’S “LACK OF CONSIDERATION” ARGUMENT ADDS NOTHING THAT WAS NOT IN ITS REJECTED MOTION TO DISMISS.
The Plaintiffs’ brief (DE 15) in response to the University’s motion to dismiss on this issue
(DE 12) is incorporated herein by reference.
IV. THE DISPUTED AGREEMENT DOES NOT VIOLATE PUBLIC POLICY.
The University claims that “the Disputed Agreement violates public policy given that it could require the University of the Cumberlands to engage in an excess benefit transaction in violation of federal law.” DE 46 at p. 37 of 40. The response then goes on to describe some, but not all of the IRS authority on the subject. The University also claims, in a few lines on page 37 of its Response, that the Disputed Agreement is void because Dr. Taylor and Jim Oaks violated their fiduciary duties to the University. DE 46 at p. 37. Dr. Taylor and Jim Oaks violated their fiduciary duties only if they engaged in the vast conspiracy alleged by the University and, as made clear above, they did not. The breach of fiduciary duty claim needs no more attention here.
However, the “excess benefit” is much more interesting.
The University alludes to the fact that it could be responsible for a tax penalty should the
Taylor benefits be determined to constitute an excess benefit - making clear that neither the IRS nor any expert has made any such determination. See, DE 46 at p. 37: “[TJhe University could
10 Now an “affidavit or declaration” under Rule 56(d) which was formerly Rule 56(f).
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have engaged in an excess benefit transaction and subjected itself and Dr. and Mrs. Taylor to the tax penalties set forth in the Internal Revenue Code.” What the University fails to include is the fact that the University Trustees could also be personally liable in these circumstances. 26 USC
Sec. 4958. If the Trustees were advised, as they should have been if the excess benefit rules were taken seriously by University counsel, it is no wonder that many have buyer’s remorse or selective memories about approving the Disputed Agreement.11 In any event, the one case the Taylors counsel has found on the subject has held that an employer cannot breach a contract and withhold benefits because of fear that the transaction might be, or even is, an excess benefit transaction.
Levy v. Young Adult Institute, Inc., 2015 U.S. Dist. LEXIS 145381 (SDNY 2015) (magistrate’s recommendation) (“YAI may not now reduce Levy's benefits by invoking the IRC. The IRS may evaluate whether Levy's executive compensation was an excess benefit transaction, but YAI's chance to make that evaluation ended when it signed Levy's contract and approved his benefits.”)
CONCLUSION
For all these reasons, and a few more, the Taylors’ partial summary judgment motion should be granted. What is abundantly clear is that the passage of time, the fear of tax liability, and just the way people are conditioned by how the questions are asked about what happened in April of 2012, make it impractical and unfair in this instance to allow the University to deny the contents of its official minutes.
11 Also omitted from the Response is any mention of IRS Regulation 53.44958-4, which provides that the underpayment of Dr. Taylor for so many prior years can be considered in determining whether his retirement benefits might constitute “excess benefits.”
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Respectfully Submitted,
Is/ D. Duane Cook D. Duane Cook John M. Sosbe Cook & Watkins, PLC 306 North Hamilton Street Georgetown, KY 40324 (502) 570-0022 duane@cookwatkins. com i [email protected]
CERTIFICATE OF SERVICE
I hereby certify that on October 13, 2017, a copy of the foregoing was filed with the Clerk of Court via the Court’s ECF system, which will serve notification of such filing on all counsel of record. /s/ D. Duane Cook
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BYLAWS OF UNIVERSITY OF THE CUMBERLANDS
A KENTUCKY NON PROFIT CORPORATION
AMENDED AND RESTATED, EFFECTIVE April 16, 2015
ARTICLE I
BOARD OF TRUSTEES
SECTION 1. All of the corporate powers of University of the Cumberlands, a Kentucky non profit corporation (the “University”) shall be vested in a Board of Trustees (the “Board”). The responsibilities of the Board shall include, without limitation, establishing institutional policies, securing financial resources to support adequately the University’s program, and selecting and evaluating the President of the University. The Board shall not be subject to undue outside pressures nor allow the administration to be subjected to undue outside pressures. The Board shall have the ultimate control over the structure and content of all academic programs of the University as well as the business, fiscal and other affairs of the University. While the institution will respect the opinions and/or theories of all individuals or organized groups, the Board of Trustees will not be bound by such opinions and/or theories in the discharge of its responsibility to manage, control and otherwise determine the structure and content of academic program either in part or in totality.
SECTION 2. Each individual member of the Board shall be referred to as a “Trustee.” The Board shall consist of twenty-eight (28) Trustees in addition to the President of the University who shall serve as a member of the Board, ex officio but without vote. At all times at least nine of the elected trustees shall be residents of Whitley County, Kentucky. No more than eight (8) of the Trustees may be residents of states other than Kentucky.
SECTION 3. Trustees shall be elected to terms of four (4) years. Their election shall be staggered so that the terms of one fourth of the Trustees expire each year. Each Trustee shall begin his or her term on January 1 of the year following the Trustee’s election and shall serve until December 31, four years later and until his or her successor shall have been elected and qualified.
SECTION 4. Trustees shall be elected by the Kentucky Baptist Convention. The President of the University shall, submit to the Committee on Nominations of the Kentucky Baptist Convention one nominee for each such Trustee vacancy, plus one or more alternate names. All Trustees shall meet such service requirements as the Board may establish from time to time.
SECTION 5. Vacancies on the Board which occur between Kentucky Baptist Convention annual sessions may be filled by the Mission Board of the Convention as the Convention ad interim upon recommendation of candidates by the Committee on Nominations. The President of the University shall submit to the Executive Board of the Convention one nominee for each such vacancy, plus one or more alternate names. These actions shall be ratified at the Convention’s next annual session.
ARTICLE II
MEETINGS OF THE BOARD OF TRUSTEES
SECTION 1. Regular meetings of the board shall be held on the third Thursday in April and October of each year unless otherwise announced by the President or the Chair of the Board. The October meeting is designated as the annual meeting.
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SECTION 2. Special meetings shall be called by the Secretary or Assistant Secretary, upon the request of the Chair of the Board, or of the President, or of three members of the Board.
SECTION 3. Notice of regular and special meetings shall be mailed by the Secretary or Assistant Secretary to each Trustee at least ten (10) days prior to each meeting. Attendance of a Trustee at any meeting shall constitute a waiver of notice of such meeting except when a Trustee attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board need be specified in the notice or waiver of notice of such meeting. Meetings of the Board shall normally occur on the University campus.
SECTION 4. A simple majority of the elected members of the Board then in office shall constitute a quorum of the Board. The action of the majority of the Trustees present at a meeting at which a quorum is present shall be the act of the Board, unless the act of a greater proportion is required by law, the University’s Articles of Incorporation, or these Bylaws. No Trustee shall be permitted to vote by proxy.
SECTION 5. Whenever any notice is required by law or under the provisions of these Bylaws to be given a Trustee, a waiver thereof in writing signed by the Trustee or Trustees entitled to such notice, whether before or after the time stated therein, shall be equivalent to the giving of such notice.
SECTION 6. Any action required by law to be taken at a meeting of the Trustees, or any action which may be taken at a meeting of the Trustees, may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the Trustees, entitled to vote with respect to the subject matter thereof. Such consent shall have the same force and effect as a unanimous vote, and may be stated as such in any article or document filed with the secretary of state.
SECTION 7. Rules of Order: The parliamentary procedure of the Board so far as applicable and not inconsistent with these Bylaws shall be the most current edition of Robert’s Rules of Order.
SECTION 8. The following order of business shall be observed, subject to modification or suspension by Board action:
1. Call to order
2. Prayer
3. Roll call
4. Consideration of the minutes of the last meeting and any special meetings held subsequently, for approval, correction, or amendment. Such minutes may be read and discussed, or they may be acted upon the basis of having been read after being mailed to the Trustees.
5. Election of Officers or Committees of the Board (if applicable)
6. Report of the President
7. Committee Reports
8. Reports of special committees
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9. Reports of officers and agents
10. Unfinished business
11. New business
12. Petitions and Communications
13. Adjournment
SECTION 9. No loans shall be made by the University to its Trustees or officers. Any Trustee or Officer who assents to or participates in the making of any such loan shall be liable to the University for the amount of such loan until the repayment thereof.
ARTICLE III
OFFICERS OF THE CORPORATION
SECTION 1. At each annual meeting, the Board shall elect the Chair of the Board and the Vice Chair of the Board to serve for one year or until their successors shall have been elected. In case of failure to elect any or all of said officers or in case any vacancy occurs, an election may be held at any regular or special meeting. The Chair and the Vice Chair shall be members of the Board. The remaining officers of the Corporation are the President who is elected by the Board as provided in Section 5 hereof and the following officers who are appointed by the President: the Vice President for Academic Affairs and Dean of the University; the Vice President for Institutional Advancement; the Vice President for Student Services; the Vice President of Student Financial Planning; the Vice President of Finance; the Vice President of Support Operations; the Vice President of Business Services; the Vice President for Athletics; the Vice President for Information Services; the Vice President for Medical Services; the Vice President for Enrollment and Communication; the Vice President for Compliance;; and the Secretary. An officer elected or appointed may be removed by the persons authorized to elect or appoint such officer whenever in their judgment the best interest of the corporation will be served thereby. The removal of an officer shall be without prejudice to the contract rights, if any, of the officer so removed.
SECTION 2. Chair of the Board. The Chair shall preside at the meetings of the Board and of the Executive Committee and shall be a voting member of all Committees, standing and special. The Chair shall sign all diplomas and execute, with the Secretary assisting, contracts and instruments authorized or issued by authority of the Board requiring the Chair’s signature
SECTION 3. Vice Chair of the Board. During the absence or disability of the Chair, as determined by the Board, the duties of that office shall be performed by the Vice-Chair, and in the absence or disability of both of said officers, the Executive Committee of the Board shall name a suitable Trustee to perform their duties. The Chair may also delegate to the Vice-Chair any of the duties that may be appropriately carried out by the Vice-Chair.
SECTION 4. Secretary. The Secretary shall attend all meetings of the Board and of the Executive Committee and shall be responsible for the keeping of accurate minutes of the proceedings of said bodies. The Secretary shall be responsible for the distribution to the Board, prior to each regular meeting, of the minutes of any special meetings of the Board, and of the minutes of all meetings of the Executive Committee held since the last regular meeting of the Board. At the opening of each meeting of these bodies, the record of its proceedings not previously acted upon shall be read by the Secretary and then acted upon unless otherwise ordered. The Secretary shall see that proper notice is given in the
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calling of the Board meetings and shall call special meetings of the Board upon request of the Chair, or of any three (3) Trustees or of the President: The Secretary shall be the custodian of the Seal of the University and shall affix it to all documents as required by law. The Secretary shall counter sign all conveyances of real estate, and shall have charge of all books, documents, and papers of the University properly belonging to his or her office. The Secretary shall authenticate records of the University. The President may appoint an Assistant Secretary to assist the Secretary in the performance of the duties of this office.
SECTION 5. President. The President of the University shall be a person of distinguished accomplishment and shall be the chief executive officer of the University. The President shall be elected by the Board of Trustees and shall have all the power and perform all the duties imposed by law upon the executive head of the University. With the counsel and subject to the ultimate authority of the Board, the President shall be fully responsible for and empowered to undertake the operation and administration of all of the academic and non-academic programs of the University. The President’s specific duties shall relate to securing and maintaining a competent teaching and administrative staff and to the development and supervision of the academic program and physical equipment of the University. The President shall have also primary responsibility as the chief development officer of the University for the development of those human and material resources and relationships essential to the support of higher learning, and for promoting understanding and communication of the institution’s purposes and needs both within the University community and without. The President may delegate the details of the office, and shall have all liberty and authority necessary for the effective performance of larger duties.
The President’s performance shall be evaluated annually. This evaluation shall be prepared by the Officers of the Board of Trustees (Chair, Vice Chair, and Secretary) prior to the fall Board meeting and submitted to the full Board for its review and action. This annual evaluation shall assess the quality of the President’s administrative leadership and management in the following areas: l)institutional advancement, 2)academic affairs, 3)student services, 4)student financial planning, 5)finance, 6)support services & physical resources, 7)business services and budgeting, and 8)any special projects or areas determined by the full Board. The Officers of the Board shall, with the approval of the fall Board, determine the format of this annual evaluation of the President.
The President shall be an ex officio member, without vote, of the Board of Trustees and shall be an ex officio member, without vote, of all standing committees of the Board. The President shall be the official medium of communication between members of the Faculty and the Trustees, and between the students and the Trustees. The President shall have general oversight of the instruction and discipline of the University, and shall perform the duties generally pertaining to this office including the evaluation of the other officers of the University appointed by the President. These performance reviews shall cover the range of responsibilities assigned to each officer. The results of these reviews shall be kept on file in the President’s Office and reported biennially to the Executive Committee of the Board of Trustees in a format agreed upon by the President and the Board.
The President shall have power to convene the Faculty on special occasions and shall appoint all standing and special committees of the Faculty. The President shall present to the Faculty such matters that are deemed appropriate for their consideration and action.
The President shall have authority to appoint a University Cabinet composed of officers, members of the Faculty, or such other persons as the President may consider appropriate, to consult with the President on problems of coordination and administration and to advise the President on the formulation and interpretation of policy. The President also shall have authority to call on officers of the Corporation, members of the Faculty, or committees of either or both, for reports and may transmit such reports to the Trustees. The President, together with the Vice President of Business Services, shall
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annually prepare a budget for the whole institution for presentation to the Board through the Finance, Budget, and Investment Committee. The President shall have oversight of all matters of publicity, the publication of bulletins, and the issuing of the annual catalogue.
The President’s signature shall be affixed to all diplomas awarded by the University together with the Chair of the Board of Trustees. The President shall preside at the public exercises of the University, shall confer all degrees recommended by the Faculty and authorized by the Board, and unless some other person shall be officially designated, the President shall be the official representative of the University on all public occasions, whether at the University, or at other places where the University is invited to be represented.
In the absence or disability of the President, as determined by the Board, the Board or the Executive Committee may appoint an Acting President who shall have the powers and duties of the President. Until a meeting can be called and such appointment has been made, the Chair of the Board shall assume the powers and discharge the duties of the President. A majority of all Trustees shall be required to declare the end of the disability and reinstate the President.
SECTION 6. Vice President for Academic Affairs. This officer is the senior academic officer of the University and reports directly to the President with oversight by the Academic Committee of the Board. The Vice President advises the President on matters of educational policy and represents the campus at the state, regional, and national levels on academic matters. This officer is responsible for the academic programs of the University which includes all undergraduate majors and minors and the graduate program, all of which are organized into departments with each department chair reporting directly to the Vice President. This officer is also responsible for the recruitment and development of members of the Faculty under the direction of the President. The registrar's office, library services, and institutional research are also under the supervision of this Vice President.
SECTION 7. Vice President for Student Services and Director of Leadership Studies. This officer coordinates programs and activities for student development and provides services for all students. The Vice President reports directly to the President with oversight by the Student Services Committee of the Board. This officer administers and has charge of the following programs and departments: Student Life, Campus Ministries, Intercollegiate Athletics, Intramural Athletics, Career Development, Health Services, Student Activities, Leadership and Community Service.
SECTION 8. Vice President for Institutional Advancement and Assistant to the President for Administration. This officer reports directly to the President with oversight from the Stewardship Committee of the Board. Under the direction of the President, the Vice President has principal responsibility to coordinate and give direction to the areas of Development, Alumni Relations, Church Relations, Mountain Outreach, and, in coordination with other officers, the Cumberland Inn. As Assistant to the President for Administration, other matters may be assigned by the President including the oversight of gift processing.
SECTION 9. There are four business officers of the University.
The Vice President of Finance. This Vice President reports directly to the President with oversight from the Finance, Budget and Investment Committee and the Audit Committee of the Board. This Vice President is the chief financial officer. This officer oversees the Assistant Director of Finance and Controller and the maintenance of the financial records and accounts of the University. Other responsibilities include overseeing accounting, bursar, loan department, investment management, banking, financial reporting and jointly with the Vice President for Business Services, this officer oversees financial budgeting.
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The Vice President of Support Operations. This Vice President reports directly to the President with oversight from the Land Development Committee, the Building and Grounds Committee and the Finance, Budget and Investment Committee. This Vice President is the senior operations officer. This officer has charge of all real and personal property of the University and oversees all capital projects, general construction, facilities management, infrastructure, plant operation, property management, real estate development, and the tel-data communications plant. This officer further oversees the safety and security of the institution as well as the faculty, staff and students. In coordination with other officers, this officer oversees the Tel-data com staff, the Cumberland Inn maintenance staff and the Mountain Outreach building program.
The Vice President of Business Services reports directly to the President with oversight from the Finance, Budget and Investment Committee and the Audit Committee of the Board. This Vice President is the senior budget officer. This officer has responsibility for human resources, administrative technology, fleet management, post office, tel-data com services, risk management, and supply center/duplication. Jointly with the Vice president for Finance, this officer oversees financial budgeting. In coordination with other officers, this Vice President oversees the Cumberland Inn, information director, purchasing coordinator, and tel-datacom director. This officer is responsible for all auxiliary services including the outsourced areas of bookstore and food service. This officer has principal responsibility for the drafting of the annual budget of the University and to authorize the expenditure of the funds of the University within the limits of the approved annual budget or other specific authorization of the Board
The Vice President of Student Financial Planning reports directly to the President with oversight from the Student Services Committee of the Board. This Vice President is the senior financial planning officer. This officer plans and budgets all student financial aid programs. This Vice President works with parents and students to identify federal, state and private aid for which the student and/or parents might qualify. In addition, the Vice President will provide all aid reports required by both state and federal government.
SECTION 10. Vice President for Athletics and Athletics Director. This Vice President reports directly to the President with oversight by the Student Services Committee of the Board. This officer is responsible for and has charge of all Athletic Sport Teams, Department of Athletic Training, and Department of Sports Information. Other responsibilities include representing the University at National Association of Intercollegiate Athletics (NAIA) and Mid-South Conference (MSC) meetings, securing coaches for all sports teams, and athletic fundraising.
SECTION 11. Vice President for Information Services and Director of Information Technology. This Vice President reports directly to the President with oversight from the Student Services Committee and the Academic Committee of the Board. This Vice President is the Chief Information Officer and is responsible for computer and network systems to meet the needs of the University. This Vice President also maintains information security and compliance with state and federal regulatory requirements.
SECTION 12. Vice President for Medical Services. This Vice President reports directly to the President with oversight from the Academic Committee of the Board. This Vice President will oversee the clinical staff of the Campus Medical Clinic and is responsible with the Vice President for Academic Affairs to expand academic programs, to address additional medical and health care needs and to develop medically related service programs that will be beneficial to our students and to society.
SECTION 13. Vice President for Enrollment and Communications. This Vice President reports directly to the President with the oversight of the Student Services Committee of the Board. This officer is responsible for providing leadership and overall direction in enrollment planning, recruitment,
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admissions and marketing efforts of the University, as well as provide leadership for the Office of Multimedia. This officer will collaborate with academic and student affairs in support of retention efforts, develop enrollment and communication goals in support of the University’s strategic plan as well as other priorities, and utilize appropriate measures to assess and document progress toward these goals.
SECTION 14. Vice President for Compliance and Assistant to the President. This Vice President reports directly to the President with oversight by the Academic Committee of the Board. The Vice President ensures the development of assessments, research, and information to drive quality decisions, continuous improvement, and compliance of academic departments and various programs of the University. This officer will provide oversight of accreditation efforts including campus-wide assessments and the collection and interpretation of institutional data. As assistant to the President, other matters may be assigned by the President as needed.
SECTION 15. By resolution adopted by the Board, the Board may (a) create other offices, prescribe the duties of the offices, and elect persons to those offices for terms not exceeding three years; and (b) vest in a person all or some of the authority of the offices of President or Secretary and assign to that person some or all the duties of the office.
ARTICLE IV
COMMITTEES OF THE BOARD OF TRUSTEES
SECTION 1. There shall be nine (9) standing committees of the Board, namely: (1) the Executive Committee, (2) the Finance, Budget and Investments Committee, (3) the Buildings and Grounds Committee, (4) the Honorary Degrees Committee, (5) the Student Services Committee, (6) the Academic Committee, (7) the Land Development Committee, (8) the Stewardship Committee and (9) the Audit Committee.
SECTION 2. The membership of each committee shall be appointed by the Chair of the Board, after consultation with the President, at the beginning of each calendar year. Each Trustee shall serve on at least two standing Committee. The Chair shall serve as Chair of the Executive Committee, the Land Development Committee, the Stewardship Committee and the Finance, Budget and Investments Committee and shall appoint the chairs of the remaining committees. All committee appointments by the Chair shall be presented to the Board at each annual meeting and be subject to the approval of the Board.
SECTION 3. The Executive Committee shall consist of at least seven (7) members including the Chair and the Vice-Chair. The other standing committees shall each consist of at least five (5) members. In addition, the Chair shall be a voting member of each committee and the President shall be ex officio member, without vote, of each committee.
SECTION 4. A majority of the members of a Committee shall constitute a quorum. Each committee may meet at any time upon notice by the chair of such committee as provided in these Bylaws for meetings of the full Board.
ARTICLE V
DUTIES OF COMMITTEES
SECTION 1. Executive Committee. This committee shall have authority to transact the business of the Board, and any special business committed to it, during intervals between meetings of the Trustees. All minutes of meetings of the Executive Committee shall be submitted to the next succeeding
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meeting of the Board; but failure to submit the same or to receive the approval thereof shall not invalidate any completed or incompleted action taken upon authorization by the Executive Committee prior to the time at which the same should have been, or were submitted as above provided. The Executive Committee shall work closely with the Chair and the President, and is subject to call at any time by either the Chair or the President. The Executive Committee shall not take action contrary to action previously taken by the Board nor shall it amend, alter or repeal these Bylaws; elect or appoint or remove any member of the Executive Committee or any Trustee or officer; amend or restate the University’s Articles of Incorporation; adopt a plan of merger or adopt a plan of consolidation with another corporation; authorize the sale, lease, exchange or mortgage of all or substantially all of the property and assets of the University; authorize the voluntary dissolution of the University or revoke proceedings therefore; or adopt a plan for the distribution of the assets of the University.
At any meeting of the Executive Committee, one or more members may participate in the meeting remotely by telephone, video conference, or other means by which all of the members engaged in the meeting may hear and speak to one another.
The Executive Committee can take an action by means of one or more written consents signed by all of the members of the Executive Committee and setting forth the action so taken. Such an action by written consent may, but need not, be taken following a meeting of the Executive Committee held by teleconference or video conference.
SECTION 2: Finance, Budget and Investments Committee. This committee is to regularly review the University’s financial statements and make any recommendations to the Board, the President, the Vice President of Finance, and/or the Vice President of Business Services that seem necessary.
It shall receive and review the proposed annual budget showing the estimated receipts and disbursements of the University for the next fiscal year as submitted by the Vice President of Business Services and as approved by the President of the University, and shall present the annual budget with any changes the Committee may make for the consideration and action of the Board at its April meeting. No moneys of the University shall be expended unless the expenditure is authorized by the annual budget or by other action of the Board or a committee of the Board delegated with such authority. All requests for expenditures not authorized by the annual budget shall be presented to the Board through the committee. All amendments or revisions to the annual budget shall be communicated to the committee by the President and the Vice President of Business Services so that such amendments or revisions can be presented to the Board for its consideration and action.
It shall maintain a constant support and concern for the overall financial status of the University, including operational and capital improvements. The committee’s work shall encompass study, advice and recommendations regarding the handling and investing of all funds and business operations of the University. It shall also, with the President, the Vice President of Finance, Vice President of Business Services and the Vice President of Support Operations, have supervision of the University’s financial records and accounts as well as all properties (both real and personal) of the University apart from the University campus.
SECTION 3. Buildings and Grounds Committee. This committee’s responsibility shall be to work with the President and the Vice President of Support Operations in the care and maintenance of the buildings and grounds comprising the University campus. The committee shall be well informed on the present status and needs of the campus, and the present and future plans of the University with respect to the campus, making any recommendations necessary. Periodic visits should be made of all buildings. The committee shall report to the Board according to the provisions of these Bylaws and shall submit an
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accounting of its activities each year, presenting recommendations to the Board for the improvement and maintenance of the University’s buildings and grounds.
SECTION 4. Honorary Degree Committee. This committee shall be composed of the President, the Chair of the Board, and at least three (3) members of the Board. The President may appoint one tenured Faculty member to serve as a non-voting advisor.
The committee will receive and consider all nominations for the awarding of honorary degrees, and present its recommendations to the full Board concerning each such nominee.. Except for special reasons, the list of nominees in each year should be limited to four (4) persons with not more than two (2) persons in any single field. Persons making nominations to the committee shall furnish a biographical sketch of the nominee and any other information that may be required from time to time by the Board as a prerequisite to granting of an honorary degree.
SECTION 5. Student Services Committee. This committee shall, on a continuing basis and in close cooperation with the President, the Vice President for Enrollment and Communications, the Vice President for Student Services, the Vice President for Student Financial Planning and the Vice President for Athletics, have responsibility for the facilities provided for the students living on campus and the care taken for the health and physical well-being of all students. It shall further be responsible for the development and implementation of admissions standards and procedures, setting charges and fees for each academic year, intercollegiate athletics, as well as programs and activities for the improvement of social and religious life on campus.
The committee may confer with the President as well as the other Officers of the Corporation, members of the Faculty, Student Government Association, social organizations, and the student body at large, and it shall lead and assist these persons and groups in the development of all phases of student services. It shall report to the Board according to the provisions of these Bylaws and shall submit an accounting of its activities each year, presenting recommendations to the Board for the improvement of these phases of University activities.
SECTION 6. Academic Committee. This committee shall, in close cooperation with the President and the Vice President for Academic Affairs, have primary responsibility for continuous evaluation of the academic program and for recommendations of policies designed to achieve the educational objectives of the University. The committee shall confer with and consider the recommendations of the President, the Vice President for Academic Affairs, the Vice President for Compliance, the Vice President for Information Services, the Vice President for Medical Services and the Faculty concerning such matters as curriculum, instruction, library, Faculty, students, degrees, and other relevant educational concerns of the University.
It shall report to the Board according to the provisions of these Bylaws and shall submit an accounting of its activities each year, presenting recommendations to the Board for the improvement of the academic programs and policies of the University.
SECTION 7. Stewardship Committee. This committee shall work in close cooperation with the President and the Vice President for Institutional Advancement and be concerned with long-range planning and have oversight of all programs and activities designed to enlist financial support or to cultivate the interest of the alumni and other constituencies of the University. It shall report to the Board according to the provisions of these Bylaws and shall submit an accounting of its activities each year.
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SECTION 8. Land Development Committee. This committee shall work in close cooperation with the President, the Vice President of Support Operations to develop the real estate holdings of the University to their maximum.
SECTION 9. Audit Committee. This committee shall be responsible for oversight of the University's financial policies and controls. In particular, the committee shall: (i) recommend annually to the Board the independent auditors to be selected in conjunction with the annual audit of the University’s financial statements and accounts; (ii) discuss with the independent auditors the scope of the audit and related fees; (iii) discuss with the independent auditors the results of their audit, including any management letters or matters of disagreement with the University’s administration; (iv) review and examine the adequacy of the University’s accounting and financial reporting systems and internal controls, making necessary recommendations for improvement of such systems and controls to the Board; (v) implement the University’s Audit Committee Standards and Conflict of Interest Policy for officers and Trustees as adopted from time to time by the Board and (vi) report annually to the Board concerning its activities and recommendations.
SECTION 10. Special committees may be created at any meeting of the Board and shall perform such duties as may be assigned by the Board.
ARTICLE VI
AMENDMENTS
These Bylaws may be amended at any meeting of the Board by a majority vote of the entire voting membership of the Board, provided that notice of the proposed amendment was included in the notice of the meeting or such notice was waived by each Trustee not notified.
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EXHIBIT 2
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1 Jordan & Price here on behalf of the University of
2 the Cumberlands.
3 THE REPORTER: Please raise your right hand.
4 DR. JIM OAKS,
5 acknowledged having been duly sworn to tell the truth
6 and testified upon his oath as follows:
7 THE WITNESS: I do.
8 DIRECT EXAMINATION
9 BY MR. COOK:
10 Q Dr. Oaks, thanks for coming. 11 A Yes, sir.
12 Q Dr. Oaks, we had talked on the telephone and 13 met for the first time last night.
14 A Right.
15 Q You are the — you at one time were the
16 Chairman of the Board of the — the trustees of the 17 University of the Cumberlands; is that right?
18 A Correct. Yes.
19 Q Dr. Oaks, I'm going to ask the court reporter
20 to mark as Exhibit Number 1 an affidavit that you have
21 signed in this case.
22 Dr. Oaks, how long were you a member of the
23 Board of Trustees of the University of the Cumberlands?
24 (Exhibit 1 was marked for identification.)
25 A From 1980 until December 31st, 2014.
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1 Q And how long were you the Chairman of the Board
2 of Trustees of the university?
3 A I was — I became chairman in 1982.
4 Q Okay. ■
5 A And other than the years that I'd have to
6 rotate off, I was chairman up until 2014.
7 Q Okay.
8 A Through 2014.
9 Q So a long time.
10 A Yes, sir.
11 Q How did you get to be --
12 MS. EDELMAN: I'm sorry. I'm sorry. I just
13 didn't hear. You said after you rotated off —
14 THE WITNESS: Well, under the —
15 MS. EDELMAN: Yeah, but, I mean, I just missed
16 the word.
17 THE WITNESS: Okay. I said I was chairman from
18 1982 through December 31st, 2014, except for the
19 years that -- there was several years I'd have to
20 rotate off. Every four years you're required to
21 rotate off for one year.
22 MS. EDELMAN: Okay. I'm sorry for the
23 interruption.
24 BY MR. COOK:
25 Q Dr. Oaks, how does one get to be Chairman of
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1 the Board of Trustees at the University of the
2 Cumberlands?
3 A Judge Eugene Siler was the chairman whenever I
4 went onto the Board in 1980, and after about two years
5 there, he asked me if I — if I would be willing to
6 serve as chairman because he was going to resign to take 7 on other duties with Kentucky Baptist.
8 Q Okay. All right. Is it an elected position?
9 A No, it's not — well, it has to be confirmed by
10 the Board. 11 Q Okay. All right. Let me take you Mr. — or
12 Dr. Oaks, to the second page of your affidavit,
13 paragraph 9. On April 19th, 2012, the board unanimously 14 approved a formal written contract with Dr. and
15 Mrs. Taylor which put into place the terms of the
16 October 2005 board resolution. A copy of this contract
17 is attached as Exhibit 1 to this affidavit.
18 Let me ask you to look at Exhibit 1 to this
19 affidavit.
20 MS. EDELMAN: Let me object to the use of the
21 affidavit in this way. It's improper.
22 Q Dr. Oaks, did the board in -- on April 19th --
23 19, 2012, approve the formal written contract that's
24 Exhibit 1 to this agreement?
25 A Yes.
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1 MS. EDELMAN: Object to the form.
2 Q Any doubt in your mind about that?
3 A No.
4 Q Dr. Oaks, let me take you to page 6 of 7 of the
5 agreement that's attached to that affidavit as
6 Exhibit 1. Is that your signature?
7 A Yes, sir.
8 Q And did you sign as Chairman of the Board of
9 Trustees of the University of the Cumberlands?
10 A I did. 11 MS. EDELMAN: Object to form.
12 Q And is there any question in your mind that you
13 had authority to sign this contract on behalf of the
14 university?
15 A No.
16 MS. EDELMAN: Objection. 17 Q Okay. Now, Dr. Oaks, I want to get a little --
18 a little background on — on you before we get into more
19 of the details about this contract. Can you tell the 20 jury a little bit about your — your post-high-school
21 education and your employment history?
22 A Sure. I was -- I was born and raised in
23 Alabama on a farm. And upon graduating from high
24 school, which was a school named Hokes Bluff, H-o-k-e-s,
25 Bluff, I immediately enrolled at the University of
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1 A Correct.
2 Q And as far — when you say never discussed, by
3 that do you mean you never discussed that with
4 Dr. Taylor? Correct?
5 A Or the board either.
6 Q Okay. And that was going to be my next 7 question.
8 So it was never your intention to propose to
9 the board a deal for Dr. Taylor to be paid anything if 10 he wasn't willing to work for the university; is that
11 correct?
12 A Well, I said it wasn't — it wasn't spelled out
13 that way, but it was -- it was put into the proposal and
14 approved by the board that he would perform duties
15 requested by the president in fundraising.
16 Q Okay.
17 A And that was it.
18 Q Okay. So your understanding throughout this
19 period of time that there were conversations about doing
20 something for Dr. Taylor, it was your understanding that 21 he was always going to have to provide some services and
22 do work for the university in order to be entitled to
23 these payments; is that correct?
24 A Well, the — with the way that — the way that
25 the board approved the minutes -- I mean the proposals.
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1 and — and the way that we had always discussed it, that
2 he would do some service for the -- for the university.
3 Q Okay. Now, you looked at these board minutes
4 that are the — the October 21st minutes that are
5 contained in Exhibit 2.
6 But now I want you to take a look at Exhibit 3.
7 You were asked about it previously briefly by Mr. Cook,
8 and these are the closed — closed minutes.
9 A Okay. 10 Q Now, here's what I'd like to ask you, sir: How
11 did this come about? You had finished your board
12 meeting. There had been a vote to table the action. A
13 decision was made to table it until the April spring 14 meeting. How did you-all end up in another session that
15 resulted in some closed board minutes? If you know.
16 A In another session? I don't know what you
17 mean.
18 Q Does -- okay. Another meeting of the board.
19 Like, there was this meeting that — and I'm holding up
20 the minutes from October 21st. 21 A Right.
22 Q And that's the one that said. Okay, we're going
23 to decide to adjourn and — but in that meeting, there
24 was the conversation about paying Dr. Taylor a salary if
25 he worked, and then there was a decision made to table
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1 Q That he was not in agreement with it. And you
2 understood that other board members were saying they
3 weren't in agreement with it; correct?
4 A I asked two of them, yes.
5 Q And — and in all of your communications with
6 Mr. Cook and your communications with Dr. Taylor, you've
7 been told --
8 A Yes. 9 Q -- that there are plenty of board members that
10 said this never happened.
11 A Right. 12 Q And you're — you've been aware of that for
13 some time. 14 A Yes.
15 Q And during that time, were you aware that no
16 one could find this contract, that nobody at the 17 university for months could ever find this so-called
18 contract? Are you aware of that?
19 A Yes. I -- I — I was told that -- that it
20 mysteriously showed up.
21 Q And who told you that?
22 A I'm trying to remember. You know, I don't know
23 if it was Dr. Taylor or who it was. It could have been.
24 Q Well, the only people you've talked to were
25 Dr. Taylor --
U.S. LEGAL SUPPORT (813) 876-4722 Case: 6:16-cv-00109-GFVT-HAI June 15, 2017 240
1 A Yeah.
2 Q Have you talked to Mrs. Taylor?
3 A Yes, I have talked to her. 4 Q And you've talked to -- to Mr. Cook.
5 A Right.
6 Q And you had the one phone call with 7 Mr. Westbrook.
8 A (Nods head.)
9 Q And you had one phone call with — I think 10 you — who did you identify, Mr. —
11 A Paul Steely.
12 Q Paul Steely.
13 A Yeah.
14 Q And you said neither one of them really talked
15 to you for any length of time.
16 A No. 17 Q So they didn't report anything to you about the
18 missing contract —
19 A No.
20 Q -- or mysterious reappearance. 21 A No. It may have been Dr. Taylor.
22 Q Have you talked to Sue Wake?
23 A No, I have not, not since all this happened.
24 Q Okay. But you — you are aware that the
25 university did not have a copy of this so-called
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1 agreement for months, and that Dr. Cockrum was looking
2 for it.
3 MR. COOK: Object as to form.
4 Q Are you aware of that?
5 A Other than the fact that it was some --
6 somebody, I guess it was Dr. Taylor, said that it just
7 showed up on his desk.
8 Q Showed up on Dr. Cockrum's desk?
9 A Yeah.
10 Q Are you aware that Sue Wake has said that she
11 found it in some papers behind her desk where she had a
12 big stack of papers that she was going to go through at
13 some point, and that —
14 A No.
15 Q -- she claims that's where she found it?
16 A I haven't heard that.
17 Q Okay. Does that soundlike the waya contract
18 of this magnitude should have been treated by the
19 university? 20 A Certainly not.
21 Q Does it seem to you that a copy of the contract
22 should have been placed into the contract file, sent to
23 the finance department, kept on file, put with the
24 minutes, things of that nature?
25 A Well, you would think so.
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EXHIBIT 3
EXCERPTS FROM DEPOSITION OF DAVE HUFF Case: 6:16-cv-00109-GFVT-HAI Doc #: 52-3 Filed: 10/13/17 Page: 2 of 6 - Page ID#: 1117 8
1 so?
2 A Oh, I — yes, last year.
3 Q All right. Before that you had
4 been on the board something like 50 years?
5 A Fifty (50) years, yeah.
6 Q Wow. And as I understand it, you
7 went to school at the University when it was a
8 two-year school ; is that right?
9 A What now?
10 Q You went to school at what was
11 then Cumberland College?
12 A Yes.
13 Q Now, have you --
14 A Could I get my wife to sit right
15 over here? My hearing — and she -- she helps me
16 hear.
17 Q Okay. That would be fine, or I
18 can speak up.
19 A Okay. Either way.
20 Q Okay.
21 MRS. HUFF: I'll just sit right here.
22 BY MR. COOK:
23 Q Mr. Huff, can you — can you tell
24 us a little bit about your health right now? And I
25 notice you're on oxygen and — and I've heard
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1 about that.
2 A Well —
3 MS. EDELMAN: Object to the form.
4 A — he raised $350 million
5 from — he was just -- Dr. Bosworth sent him out
6 and started him, and he went on and we built a lot
7 of house -- a lot of schools and a lot of
8 gymnasiums, and it just was many things was done
9 during the time he's been there.
10 BY MR. COOK:
11 Q So I gather you think that
12 Dr. Taylor did a fine job for the University?
13 A I really do.
14 MR. COOK: I'm going to ask the court
15 reporter, Mr. Huff, to mark as Exhibit
16 No. 1 the affidavit that you've signed in
17 this case.
18 (Exhibit No. 1 was marked.)
19 MS. EDELMAN: Note my objection to the
20 introduction of the affidavit.
21 BY MR. COOK:
22 Q Now, Mr. Huff, do you remember
23 signing this affidavit?
24 A Yes.
25 Q Okay. Let me take you to Exhibit
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1 A to that affidavit. Mr. Huff, these are —
2 purport to be minutes of an October 21st, 2005
3 chested meeting of the University of Cumberlands
4 board of trustees executive session and if you'll
5 turn to the second page you'll see that you signed
6 there as secretary --
7 A Right.
8 Q -- of the board. Do you
9 consider — this meeting was more than ten years
10 ago. Do you remember any of this -- the details of
11 this meeting?
12 A I remember the — it was Sue Wade
13 helped me do the minutes.
14 Q Okay. All right. Do the
15 minutes, so far as you remember, reflect what
16 happened at this meeting?
17 A Yes.
18 Q Did this meeting take place after
19 the regular meeting of the board of directors, do
20 you remember?
21 A I don't remember.
22 Q Okay. But you remembered that,
23 in fact, the board of trustees did meet to discuss
24 what would happen to Dr. Taylor after the — after
25 his retirement?
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1 MS. EDELMAN: I'm going to object to the
2 leading.
3 A Yes.
4 BY MR. COOK:
5 Q And at the bottom of the first
6 page there, Mr. Huff, it says, "The following
7 motion was made by Mr. Bill Hacker:
8 "To continue the annual compensation and
9 applicable benefits for Dr. and Mrs. Taylor, which
10 are in effect on the date of his retirement as
11 President of the University of the Cumberlands,
12 until his death. In the event Dr. Taylor precedes
13 his wife, Dinah Taylor, in death then such
14 compensation and benefits shall go to" Dr. Taylor
15 (verbatim).
16 Do you remember that Mr. Hacker did make
17 that -- make that motion?
18 A I wouldn't be able to remember
19 that far back.
20 Q All right. But if it's in the
21 minutes —
22 A I certainly did it.
23 Q Okay. All right. You
24 wouldn't -- as secretary of the University, you —
25 board of trustees, you wouldn't have signed minutes
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1 that didn't reflect exactly what happened there,
2 would you?
3 A No.
4 MS. EDELMAN: Object to the leading.
5 BY MR. COOK
6 Q Does that appear to be your
7 signature there on the second page?
8 A That's my signature.
9 Q Okay. Mr. Huff, let me ask you
10 about the second page of your affidavit.
11 A The.. .
12 Q Okay. Well, let's go to — here
13 it's -- let me show you this. Go back to the first
14 page of the affidavit.
15 A Okay.
16 Q And then the second page here.
17 A Okay.
18 Q Paragraph No. 6 there says, "On
19 April 19th, 2012, the Board unanimously approved a
20 formal written contract with Dr. and Mrs. Taylor
21 which put into place the terms of the October 2005
22 Board resolution. The copy of this contract
23 attached as Exhibit B is the contract that was
24 approved at the meeting." Do you see that?
25 A (Witness nods head.)
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UNITED STATES DISTRICT COURT EASTERN DISTRICT OF KENTUCKY LONDON DIVISION
DR. JAMES TAYLOR ) MRS. DINAH TAYLOR ) ) Case No. 6:16-cv-109 PLAINTIFFS ) V ) ) UNIVERSITY OF ) THE CUMBERLANDS ) DEFENDANT )
AFFIDAVIT OF SUE WAKE
Comes the Affiant, Sue Wake, and having been first duly sworn, and being apprised of
the penalties of perjury, states as follows:
1. My name is Sue Wake and I served as Dr. Taylor’s administrative assistant,
beginning on August 1, 1980, when he became President of Cumberland College, until October
15, 2015, when he retired as President of The University of the Cumberlands. From October 17,
2014, Dr. Taylor maintained the title of President of the University until October 15, 2015, when
he became Chancellor.
2. I also became vice president for institutional advancement in 1990 and served in
that position while also remaining Dr. Taylor’s administrative assistant.
3. Dr. Cockrum became president-elect on October 17, 2014, and assumed the day-
to-day functions of the chief executive officer of the University. After remodeling the President’s
office, he moved in. At the request of Dr. Taylor I continued to work in the office of the
President of the University. On June 30, 2015 (the final day of the University’s fiscal year, my
birthday and the day before I had surgery for kidney cancer) I tried to review papers in my “catch
1 Case- 616-cv-00109-GFVT-HAI Doc #: 52-4 Filed: 10/13/17 Page: 2 of 4 - Page ID#: 1123
all box” (my box for items I had not had time to review before and disseminate if need be
because I did not know when, if ever, I might be back in the office). During that process, 1 came
across a document that I thought might be Dr. Taylor’s contract, which I had not seen before, but
which I knew Dr. Cockrum had asked about. I had never seen that contract, if it was a contract. I
did not read beyond the heading and possibly the first few lines and I do not know how it got into
the catch all box.
4. The heading I did read led me to believe the document to be a contract. I placed
that document on Dr. Cockrum’s desk (he was out to lunch) with a note from me. I did not
“sneak” it onto his desk and he could not have been mistaken about who put it on his desk since 1
attached a hand written post-it note.
5. When I left full-time employment with the University, on January 31, 2016,1 was
allowed by Dr. Cockrum to take three computers I had used while at the University. I was not
told by anyone to delete anything from those computers, but I did provide Dr. Cockrum with a
thumb drive containing all the University related files on those computers (many of which were
Board of Trustees related). I did not leave with any University files except what was on those
computers, nor did I ever return to the University or otherwise obtain any University files related
to the Board of Trustees or the office of die President.
6. On July 25, 2016, at the request of the University’s attorneys I met with Mrs.
Edelman, her assistant, Jamie Jordan and Jim Gunther. I answered their questions for
approximately 2 1/2 hours (from 9:00 am to 11:30 Im).
7. Eight or nine months prior to that interview, 1 was asked by Mr. Jordan to review
my board meeting files (kept in accordion folders near my desk). I went to Dr. Cockrum’s office
where I was allowed to review the accordion folder under the supervision of one of Dr.
2 Case- 616-CV-00109-GFVT-HAI Doc #: 52-4 Filed: 10/13/17 Page: 3 of 4 - Page ID#: 1124
<
Cockrum’s secretaries. I discovered a handwritten note which appeared to be in Lonnie Walden’s
handwriting and which appeared to have been a note taken during an executive session of the
Board from which all non-trustees (including me) were excluded. I prepared the minutes of the
executive session of the Board on April 19, 2012 from that note. So far as I know, Dr. Taylor
never saw the note and he did not prepare the minutes which reference a Board vote on a contact
for him.
8. When I asked Jamirae Hammons the dates those Minutes were mailed to the
Board she noted that all the Board related notebooks that Dr. Taylor kept in his office and been
“digitized” and I did not have access to those notebooks any longer. She said she did not know
how to access the digitized files but would find out when her IT contact returned from lunch.
9. During the best part of my time working in the President’s office the final
“official” Board minutes were kept in a safe in the Business office or in a fireproof cabinet in the
President’s office. I also kept (in my accordion files) a set of all materials sent to Board members
prior to the meeting, my hand-written minutes of the meetings and other related materials. Dr.
Taylor kept his Board materials in 3-Ring notebooks in his office. There would have been copies
of some documents which were preserved in all three places. My files would have included all
the materials (we called them Board packets) sent to Board members within a few weeks before
each Board meeting and my hand-written notes from each board meeting. Minutes of any Board
meeting were sent to each Trustee within a few weeks after that meeting. The same minutes were
sent to each Trustee a few weeks before the next meeting and then at the next meeting the
minutes of the previous meeting would be considered for adoption by the Board. Only on rare
occasions were there corrections to the minutes by Board members before adopting the Minutes.
Further the Affiant sayeth naught.
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Sue Wake
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October 21,2005
CLOSED MINUTES OF UNIVERSITY OF THE CUMBERLANDS BOARD OF TRUSTEES, EXECUTIVE SESSION, OCTOBER 21,2005:
Following the regular Board of Trustees Meeting, date. Chairman Oaks called for an Executive Session for the purpose of discussing compensation and benefits for President, Dr. James H. Taylor and Mrs. Dinah Taylor. The only attendees included members of the Board of Trustees and Honorary Trustees, who were noted present at the regular Board meeting that date. Chairman Oaks requested total confidentiality of the contents of this meeting.
The main, and only, purpose of this meeting was to seek necessary action of the Board of Trustees to continue Dr. Taylor and Ms. Dinah Taylor’s salary and benefits following his retirement from the position of President, which he currently holds, and appoint him as Chancellor of the University of the Cumberlands immediately thereafter.
Various discussions followed including the request to investigate benefits that Dr. Taylor would be entitled to from the Kentucky Baptist Foundation; life insurance, and the amount, now in effect with Mrs. Taylor being named the beneficiary; the possibility of a position of chancellor creating conflict with the person filling the position of President, and various ideas and opinions being offered by several of the Trustees. It was further noted by Mrs. Judy Rose, with several others offering their approval, that Dr. Taylor had been dedicated, beyond the call of duty, during the past 26 plus years, however, as hard as it may be to discuss, the Board of Trustees would some day be faced with having to approve a replacement for the President’s position, although, it is everyone’s hope that it will not become necessary for several more years.
All in attendance agreed that it is not unusual for Colleges and Universities to approve these measures in like fashion upon the retirement of a President.
The following motion was made by Mr. Bill Hacker:
“To continue the annual compensation and applicable benefits for Dr. and Mrs. James H. Taylor, which are in effect on the date of his retirement as President of the University of the Cumberlands, until his death. In the event Dr. Taylor precedes his wife, Dinah Taylor, in death then such compensation and benefits shall go to Dinah Taylor. Case: 6:16-cv-00109-GFVT-HAI Doc #: 52-5 Filed: 10/13/17 Page: 2 of 2 - Page ID#: 1127
Page 2.
It is further moved to offer Dr. Taylor the first right of refusal to be named as Chancellor k of this Institution upon his retirement as President and allow his salary and benefits to be covered by the above. It shall be understood by Dr. Taylor that he will not become involved in the President’s duties and responsibilities, unless requested to do so by the President.
Also, this motion will include necessary amendments to the Bylaws of the University of the Cumberlands and to the President’s current contract to include the establishment of the position of Chancellor and the salary and benefits for Dr. and Mrs. Taylor.”
Mr. Dave Huff seconded the motion and it carried unanimously.
A motion was made by Mr. Scott Thompson to waive the requirements of the current Bylaws of the University to require any changes, thereto, to be mailed to each Trustee prior to action of such, seconded by Ms. Judy Rose and carried unanimously.
Chairman Oaks advised he would contact the proper legal representative to draft changes to the Bylaws and would have this ready for the Executive Committee to review at their next meeting or via a phone poll. He further advised he would ad-hear to the other request for certain questions raised by various Trustees and would have this available for the Executive Committee as soon as possible and all this information would then be presented at the first regular Board meeting in 2006. However, this was information only, and in no way altered the motions above.
jim Oaks, Chairman
Dave Huff, Secretary
NOTE: THESE MINUTES ARE BEING PLACED IN A SEALED ENVELOPE TO BE ATTACHED TO THE MINUTES OF THE BOARD OF TRUSTEES MEETING WHICH WAS HELD AT THE UNIVERSITY OF THE CUMBERLANDS OCTOBER 20 AND 21,2005. UNDER NO CIRCUMSTANCE WILL THIS ENVELOP BE OPENED UNTIL AUTHORIZED BY THE BOARD OF TRUSTEES OF THIS UNIVERSITY. Case: 6:16-cv-00109-GFVT-HAI Doc #: 52-6 Filed: 10/13/17 Page: 1 of 7 - Page ID#: 1128
UNITED STATES DISTRICT COURT EASTERN DISTRICT OF KENTUCKY LONDON DIVISION
DR. JAMES TAYLOR ) MRS. DINAH TAYLOR, ) ) Plaintiffs, ) ) v. ) Civil Action No. 6:16-CV-l09-GFVT
UNIVERSITY OF ) THE CUMBERLANDS, )
Defendant. )
DEFENDANT’S RESPONSES TO PLAINTIFFS’ SECOND SET OF REQUESTS FOR PRODUCTION OF DOCUMENTS
Defendant University of the Cumberlands (the “University”), by and through counsel,
and for its Responses to Plaintiffs’ Second Set of Requests for Production of Documents (the
“Requests”), states as follows:
Discovery in this case is ongoing; therefore, the University reserves its right to revise,
correct, or supplement any of the information and/or documents provided herein.
GENERAL OBJECTIONS
1. The University objects to the Requests to the extent that they seek information
and/or documents that are not relevant and to the extent that, they are not proportional to the
needs of the case.
2. The University objects to the Requests to the extent that they are overly broad,
unduly burdensome, vague, ambiguous, and/or unrestricted by any relevant date parameters.
3. The University objects to the Requests to the extent that they seek information
and/or documents which are protected from disclosure by the attorney-client privilege or work
product doctrine.
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4. The University objects to the Requests to the extent that they seek information
and/or documents already in the possession of Plaintiffs or their counsel, that are contained in or
are part of the public record, and/or that can be obtained as easily by Plaintiffs and/or their
counsel as by the University and/or its counsel.
5. The University objects to the Requests to the extent that they seek information
and/or documents contained solely in the possession, custody, and/or control of third parties.
6. The University objects to the Requests to the extent they seek information and/or
documents that are protected from disclosure because such information and/or documents are
confidential and proprietary in nature. The University will only produce discoverable
information and/or documents of a confidential and proprietary nature subject to any protective
orders entered by the Court in this case.
7. The University reserves all rights to object to the competency, relevancy,
materiality, and/or admissibility of the information and/or documents disclosed in response to the
Requests.
8. The University hereby incorporates these General Objections into each of the
responses herein, and failure to include each such General Objection in the Response to each
Request shall not waive the University’s objections in this regard.
REQUESTS FOR PRODUCTION
Request No. 1. Please produce all agendas for all your Board of Trustees
meetings and Board committee meetings during the Relevant Period.
Response: The University objects to this Request to the extent that it seeks
information and/or documents that are not relevant and to the extent that it is not proportional to
the needs of the case. The University further objects to this Request to the extent that it is
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overly broad, unduly burdensome, vague and ambiguous. The University also objects to this
Request to the extent it seeks information and/or documents that are protected from disclosure
because such information and/or documents are confidential and proprietary in nature. The
University will only produce discoverable information and/or documents of a confidential and
proprietary nature subject to any protective orders entered by the Court in this case. Finally, the
University objects to this Request to the extent that it seeks documents that have already been
produced by the University in this litigation. Subject to and without waiving these objections or
the foregoing General Objections, the University states that it is producing herewith copies of
responsive, non-privileged documents in its possession.
Request No. 2. Please produce a copy of each Board member packet sent to
Trustees prior to each meeting of the University Board of Trustees during the Relevant Period.
Response: The University objects to this Request to the extent that it is overly broad,
unduly burdensome, vague, and ambiguous. The University further objects to this Request to
the extent that it seeks information and/or documents which are protected from disclosure by the
attorney-client privilege or work-product doctrine. The University also objects to this Request to
the extent that it seeks information and/or documents that are already in the possession of
Plaintiffs or their counsel and/or documents contained solely in the possession, custody, and/or
control of third parties. Finally, the University objects to this Request to the extent it seeks
information and/or documents that are protected from disclosure because such information
and/or documents are confidential and proprietary in nature. The University will only produce
discoverable information and/or documents of a confidential and proprietary nature subject to
any protective orders entered by the Court in this case. Subject to and without waiving these
objections and the foregoing General Objections, the University states that it is producing
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herewith copies of the materials sent to members of the University’s Board of Trustees (the
“Board”) in anticipation of the following Board meetings: October 15, 2015; April 21, 2016;
October 20, 2016; and April 20, 2017. The University further states that it unable to identify
and/or reconstruct the materials sent to members of the Board in anticipation of the other Board
meetings during the Relevant Period.
Request No. 3. Please produce Sue Wake’s “accordion files” and any other files
maintained by Sue Wake concerning meetings of your Board of Trustees or any committee of the
Board during the Relevant Period.
Response: The University objects to this Request to the extent that it seeks
information and/or documents that are not relevant and to the extent that it is not proportional
to the needs of the case. The University further objects to this Request to the extent that it is
overly broad, unduly burdensome, vague, and ambiguous. The University also objects to this
Request to the extent that it seeks information and/or documents that are protected from
disclosure by the attorney-client privilege and/or work-product doctrine. Finally, the
University objects to this Request to the extent that it seeks information and/or documents
already in the possession of Plaintiffs or their counsel, contained solely in the possession,
custody, and/or control of third parties, and/or that have already been produced by the
University in this litigation. Subject to and without waiving these objections and foregoing
General Objections, the University states that it has already produced any and all relevant
documents contained in the Board-related files maintained in the President’s Office of the
University.
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Request No. 4. Please produce Dr. Taylor’s Board of Trustees meeting binders
and any other files maintained by Dr. Taylor concerning meetings of your Board of Trustees or
any committee of the Board during the Relevant Period.
Response: The University objects to this Request to the extent that it seeks
information and/or documents that are not relevant and to the extent that it is not proportional
to the needs of the case. The University further objects to this Request to the extent that it is
overly broad, unduly burdensome, vague, and ambiguous. The University also objects to this
Request to the extent that it seeks information and/or documents that are protected from
disclosure by the attorney-client privilege and/or work-product doctrine. Finally, the
University objects to this Request to the extent that it seeks information and/or documents
already in the possession of Plaintiffs or their counsel and/or contained solely in the
possession, custody, and/or control of third parties. Subject to and without waiving these
objections and foregoing General Objections, the University states that it cannot ascertain what
Plaintiffs are referring to as “Dr. Taylor’s Board of Trustees meeting binders.” The University
further states that it has already produced any and all relevant documents contained in the
Board-related files maintained in the President’s Office of the University,
Request No. 5. Please produce any document produced by or resulting from
Board of Trustees action which has been stored in any manner which indicates that access to the
document should be restricted or limited in any way.
Response: The University objects to this Request to the extent that it is overly broad,
unduly burdensome, vague, and ambiguous. The University further objects to this Request to
the extent that it seeks information and/or documents which are protected from disclosure by the
attorney-client privilege or work-product doctrine. The University also objects to this Request
5 Case: 6:16-cv-00109-GFVT-HAI Doc #: 52-6 Filed: 10/13/17 Page: 6 of 7 - Page ID#: 1133
to the extent that it seeks documents that have already been produced by the University in this
litigation. Subject to and without waiving these objections or the foregoing General Objections,
the University states it is unaware of any non-privileged documents responsive to this request
that have not already been produced in this litigation.
Respectfully submitted,
Haley Trogdlen McCauley DINSMORE & SHOHL LLP 250 W. Main Street, Suite 1400 Lexington, KY 40507 (859) 425-1000 (859) 425-1099 (fax) [email protected] [email protected]
and
James D. Jordan GUENTHER, JORDAN & PRICE, P.C. 2100 West End Avenue, Suite 1150 Nashville, TN 37203 (615) 329-2100 (615) 329-2787 (fax) JD Jordan@GJPLaw. com
Counsel for Defendant
6 Case: 6:16-cv-00109-GFVT-HAI Doc #: 52-6 Filed: 10/13/17 Page: 7 of 7 - Page ID#: 1134
CERTIFICATE OF SERVICE
I hereby certify that on this 12th day of June, 2017,1 served a copy of the foregoing, via
regular and electronic mail, upon the following:
D. Duane Cook John M. Sosbe Cook & Watkins, PLC 306 North Hamilton Street Georgetown, KY 40324 Counsel for Plaintiffs C/
11315425V1
7 Case: 6:16-cv-00109-GFVT-HAI Doc #: 52-7 Filed: 10/13/17 Page: 1 of 2 - Page ID#: 1135
UNITED STATES DISTRICT COURT EASTERN DISTRICT OF KENTUCKY LONDON DIVISION CIVIL ACTION NO. 6:16-CV-109-GFVT
DR. JAMES TAYLOR ) MRS. DINAH TAYLOR ) ) PLAINTIFFS ) V ) Electronically Filed ) UNIVERSITY OF ) THE CUMBERLANDS ) ) DEFENDANT )
AFFIDAVIT OF CAROLE L. CRADDOCK
The undersigned, having been duly sworn, states as follows:
1. My name is Carole L. Craddock. I am the Records Manager for Cook & Associates, PLC, located at 306 North Hamilton Street, Georgetown, Kentucky.
2. In my duties as Records Manager I work frequently with our litigation support software, Casemap, which allows sorting and organizing of documents produced in responses to discovery requests, at depositions, etc.
3. For every document production in a case, if the document is not produced in PDF format then each document is scanned and saved as a PDF file. Once all documents from the production have been scanned and saved in PDF format, a program is run to OCR the documents and make their contents searchable. The documents are then uploaded into the Casemap program.
4. To make sure all documents have been uploaded. Bates numbers of the documents are reviewed to ascertain that no gap in Bates numbers exists.
5. I have reviewed Defendant’s Response to Plaintiffs Second Set of Requests for Production of Documents, submitted on June 12,2017. Request No. 3 states, “Please produce Sue Wake’s “accordion files” and any other files maintained by Sue Wake concerning meetings of your Board of Trustees or any committee of the Board during the Relevant Period.” The University objected to this request and stated that it seeks information and/or documents that are not relevant and to the extent that it is not proportional to the needs of the case,” and that “the University states that it has already produced any and all relevant documents contained in the Board-related files
1 Case: 6:16-cv-00109-GFVT-HAI Doc #: 52-7 Filed: 10/13/17 Page: 2 of 2 - Page ID#: 1136 maintained in the President’s Office of the University.” Further, Request No. 4 states, “Please produce Dr. Taylor’s Board of Trustees meeting binders and any other files maintained by Dr. Taylor concerning meetings of your Board of Trustees or any committee of the Board during the Relevant Period.” The response and objections were very similar to those of Request No. 3, adding that “the University states that it cannot ascertain what Plaintiffs are referring to as ‘Dr. Taylor’s Board of Trustees meeting binders,”’ and that “The University further states that it has already produced any and all relevant documents contained in the Board-related files maintained in the President’s Office of the University.”
6. I have reviewed the documents produced as part of this document production, produced on June 14, 2017. There is nothing to indicate the documents produced were from Sue Wake’s “accordion files” or from Dr. Taylor’s Board of Trustees meeting binders. In fact, if they would have been produced there would be a number of duplicate documents as both files would have had some of the same documents in them. In fact, only eight files were produced that were indicative of Board of Trustee Meeting Minutes. Had the requested files and binders been produced, there would have been an abundance of Minutes as Ms. Wake’s files were the product of Ms. Wake’s work with Dr. Taylor. Therefore, it is my conclusion that the University only produced certain choice documents, not the entire files.
Further the Affiant sayeth naught.
Carole L. Craddock
COMMONWEALTH OF KENTUCKY COUNTY OF SCOTT
The foregoing was subscribed and sworn to before me by Carole L. Craddock, on the day of October, 2017 and executed the foregoing affidavit.
WfcttPuMiC State at Large ffon Expires.Nov '19. 2020 Notary Pubfi<
2 Case: 6:16-cv-00109-GFVT-HAI Doc #: 52-8 Filed: 10/13/17 Page: 1 of 6 - Page ID#: 1137
EXHIBIT 8
EXCERPTS FROM DEPOSITION OF DR. JAMES TAYLOR Case: 6:16-cv-00109-GFVT-HAI Doc #: 52-8 Filed: 10/13/17 Page: 2 of 6 - Page ID#: ______1138______63
1 beginning. It's your position in this case
2 that that contract was approved by the board,
3 correct?
4 A Correct.
5 Q And it's my further understanding from your
6 interrogatory answers that you say that you
7 and Mr. Oaks signed it immediately after the
8 board meeting?
9 A As I re --
10 Q Is that correct?
11 A As I recall, immediately after the board
12 meeting, Jim Oaks came out and Steve Moore
13 had him sign it. After it had been approved,
14 I signed it. Then I had to call my wife. I
15 had to call my wife and ask her for
16 permission to sign her name since I said,
17 well, there's not going to be any problem
18 anyway. You know, we've raised all this
19 money. We've got it in writing, you know, go
20 ahead. I had no idea; it was all a shock
21 when this came along.
22 Q Okay. So what I picked up in there are a
23 couple of things. One, you signed your
24 wife's name; is that correct?
25 A Correct. I asked for permission to do it and
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1 did it.
2 Q Okay. I just want the record clear. Your
3 wife never signed that contract?
4 A I asked for permission, and she gave it to
5 me.
6 Q Answer the question. Your wife never signed
7 the contract?
8 A I signed the contract.
9 Q Here's the question, the fourth time: Your
10 wife never signed the contract; isn't that
11 correct?
12 A And for the fourth time, I will tell you that
13 I signed it for her and asked for her
14 permission.
15 Q Okay. And I understand that, sir, but this
16 is a legal position here. I need an answer
17 to my question. Your wife never signed the
18 contract; isn't that correct?
19 A Herself, no.
20 Q Thank you. You also just stated that Steve
21 Moore had Jim Oaks sign the contract?
22 A After the board meeting.
23 Q Is that correct?
24 A Yeah. He said, "You need to sign this."
25 Q Are you certain of that?
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1 to you?
2 A Right before the board meeting.
3 Q So you were the lead on getting a written
4 contract from Mr. Moore?
5 A I don't know what Mr. Oaks did in that. I
6 don't know.
7 Q You're not aware that he did anything?
8 A And I'm not aware that he did not do
9 something.
10 Q Okay. You're the one that reached out to
11 Mr. Moore and gave him the terms, correct?
12 A Uh-huh (affirmative).
13 Q You have to answer yes or no.
14 A Oh, yes.
15 Q And then he gave the contract back to you?
16 A Let's see. Yeah, he — he wrote it —
17 Q Yes.
18 A — based on what the board had already
19 approved.
20 Q And Mr. Moore gave the contract, the physical
21 document, to you?
22 A Gave it to me about -- maybe it was a half an
23 hour or an hour before the board meeting.
24 Q Okay.
25 A I haven't seen that until then.
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1 Q It didn't exist, right?
2 A Until he brought it to me, no.
3 Q Okay. And but you're the one, am I correct,
4 that put this on the agenda — or it never
5 made an actual agenda, but you're the one
6 that had it raised at that particular board
7 meeting in April of 2012, right?
8 A Oh, yeah. '12, I asked -- I asked for it to
9 be addressed, yeah.
10 Q Okay. So why is it, sir, since you had
11 waited seven years, why is it that you didn't
12 go ahead and give the board advance notice of
13 what it is that you were going to ask them to
14 consider on your behalf?
15 A I don't know that I did or didn't. You'll
16 have to look in the minutes.
17 Q I have looked, and you didn't.
18 A Okay.
19 Q Do you have a different recollection?
20 A No, if it's -- it's whatever they say. You
21 know, Daniel Patrick Moynihan said,
22 "Everybody's entitled to their opinion, but
23 no one's entitled to their facts."
24 Q Okay. Well, thank you for that. But I'm
25 still trying to find out why it is, on a
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1 that since the two of you had the contract
2 and were supposedly attaching it to minutes
3 and that kind of thing?
4 A Yeah, she would have known, but she didn't
5 think I was going to step down.
6 Q Okay.
7 A She thought I was going to stay till I was
8 75.
9 Q Okay.
10 A And probably would have if my health wasn't
11 failing me.
12 Q Okay. How did -- you were asked for a copy
13 of your agreement, correct? When you raised
14 this thing about I have an agreement,
15 Dr. Cockrum and others said: Where is it?
16 Where is your agreement?
17 A No, they did not.
18 Q No one ever asked you for it?
19 A They did not.
20 Q Okay. Who did you talk to about your
21 agreement in terms of I'm talking to you
22 because I'm going to be ready to continue to
23 get these benefits and my salary and the
24 apartment and all the things that you were
25 claiming? Who --
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EXHIBIT 9
EXCERPTS FROM DEPOSITION OF LONNIE WALDEN Case: 6:16-cv-00109-GFVT-HAI Doc #: 52-9 Filed: 10/13/17 Page: 2 of 3 - Page ID#: ______1144______13
1 MS. EDELMAN: Object to the form.
2 BY MR. COOK:
3 Q Do you have any explanation about
4 why we've got two sets of minutes?
5 A I have no idea.
6 MR. COOK: Mr. Walden, I'm going to ask the
7 court reporter to mark as No. 3, Board of
8 Trustees Minutes of April 19th, 2012.
9 (Exhibit No. 3 was marked.)
10 Q Mr. Walden, on the first page of
11 Exhibit No. 3 it shows that you were present at
12 this meeting. Any reason to think that you were
13 not present at this meeting?
14 A No.
15 Q Now the last page of these
16 minutes, Mr. Walden, Page 18, let me let you turn
17 to that page, if I could.
18 A (Witness does same.)
19 Q Let me first ask you, is that
20 your signature there at the bottom?
21 A Yes.
22 Q Let me refer you to right above
23 your signature. It says, "Executive session.
24 Chair Oaks called for Executive Session. All
25 non-Board members were dismissed. Dr. Oaks
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1 complimented Dr. Taylor's leadership of the
2 University and read to the members a contract which
3 Oaks recommends be approved by the Board members
4 concerning Dr. Taylor's retirement benefits. Scott
5 Thompson moved the contract be approved and Cookie
6 Henson seconded the motion. All approved."
7 Do you remember that that happened at that
8 April 2012 meeting?
9 A I can't say as I do.
10 Q Okay. Can you say affirmatively
11 that it didn't happen?
12 A No, sir.
13 Q You just don't remember?
14 A Don't remember.
15 Q Would you have signed something
16 that was untrue as far as the minutes are
17 concerned?
18 A No, sir.
19 MS. EDELMAN: Object to the form.
20 BY MR. COOK:
21 Q Okay. So as we sit here today,
22 given what you said that it's more likely than not
23 that, in fact, this happened at that meeting, isn't
24 it?
25 MS. EDELMAN: Object to the form.
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EXHIBIT 10
EXCERPTS FROM DEPOSITION OF STEVE MOORE Case: 6:16-cv-00109-GFVT-HAI Doc #: 52-10 Filed: 10/13/17 Page: 2 of 3 - Page ID#: ______1147______74
1 minutes of the meetings or somebody's minutes of
2 the meetings, and there was typed pages also, and
3 those could have been the minutes of the meeting
4 also. But that's what he gave me.
5 Q All right. And I believe when you and I spoke
6 previously, I believe that you said that the terms
7 were laid out on a handwritten page; is that
8 correct?
9 A There was some -- that would have been the written
10 minutes of the meeting. That's correct.
11 Q Are you sure they were minutes of a meeting?
12 A That's my understanding.
13 Q Do -- what made you believe they were minutes from
14 a meeting? Is that what you were told?
15 A I think that's what I was told.
16 Q But they were handwritten.
17 A And they were handwritten and there was also typed
18 pages, too. But he wanted me to have all of it
19 because I think on the handwritten there — there
20 may have been more on -- a few more terms on the
21 typed written or the handwritten, one of the two.
22 And so, you know, I just went through everything
23 that I had in front of me and put everything on
24 paper. I don't even know how many pages it turned
25 out. And I remember it was lengthy. I sat down
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1 at -- at a desk at my house and -- and wrote it,
2 and -- and then printed it out. I think I printed
3 out copies, also, and put the -- the copies in a
4 file and took them to the board meeting and walked
5 in this inn, the Cumberland Inn, into the lobby
6 and met with Dr. Taylor. I saw a few other board
7 members there, and handed off the -- the agreement
8 to them -- to Dr. Taylor.
9 Q Okay. When you say handed off the agreement to
10 them, did you give it --
11 A Well, to Dr. --
12 Q Did you give a copy of the agreement to anyone on
13 the board other than Dr. Taylor?
14 A They -- everything was in a file folder and I gave
15 it to Dr. Taylor.
16 Q Okay. So let -- let's back up again and just to
17 walk through this. You had one meeting concerning
18 the request to draft this agreement, and that was
19 the meeting in Dr. Taylor's office.
20 A That's correct.
21 Q Okay. And you were there for some other reason
22 and then he raised this issue and asked you if you
23 would prepare this agreement, words to that
24 effect. Is that correct?
25 A I — I think that's accurate.
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UNIVERSITY of the CUMBERLANDS BOARD OF TRUSTEES October 18,2012,8:30 a.m. Cumberland Inn
Members Present Mr. Phillip Armstrong, Mr. Doyle Baker, Dr. Paul Estes, Mr. Bill Gullett, Dr. Tony Hancock, Dr. French Harmon, Dr. William Henard, Mrs. Cookie Henson, Dr. Oscar Hornsby, Dr. Roland Mullins, Dr. Jim Oaks, Mr. Donnie Patrick, Mr. J. Hunt Perkins, Dr. Carolyn Petrey, Dr. Dallas Petrey, Dr. Charles Roesel, Mr. Paul Steely, Mr. Scott Thompson, Dr. John Mark Toby, Mr. Lonnie Walden, Mr. Jon Westbrook, Mr. Jerry Winchester
Honorary Members Present Dr. Charles Barnes, Dr. Linda Booth, Mr. Ed Fish, Dr. Marion Forcht, Dr. Orville Griffin, Dr. Calvin Perry, Mr. Donnie Rains
Others Present Dr. Jim Taylor, Mr. Steve Allen, Ms. Jana Bailey, Dr. Larry Cockrum, Dr. Mike Colegrove, Mr. Kyle Gilbert, Mr. Steve Morris, Mr. Randle Teague, Mr. Randy Vernon, Ms. Sue Wake
Devotion, Prayer Dr. Charles Barnes led the devotional time, reading from Psalms 127.
Call to Order, Agenda Review Chair Jim Oaks called the meeting to order and welcomed all present. He noted that we have with us a number of honorary board members who are always welcome to attend the meeting and to participate in discussions. Honorary Trustees, however, may not make motions or vote on motions.
Dr. Oaks thanked the members of the Finance, Budget and Investment Committee and Subcommittee for their work over the summer in regard to working with Graystone and with Fifth Third and others on the possible refinancing of the University’s loan currently held by Fifth Third Bank.
Dr. Oaks shared with all present an invitation to attend the dedication of a building in London, KY this afternoon. The building is being named for a deceased friend, Jim Rose, and husband of a former trustee, Judy Rose. Dr. Oaks said he would try to speed today’s meeting along so that those who wanted to do so could stop by to visit with Judy Rose at the dedication.
Dr. Taylor thanked everyone for their attendance and for their help as we move this institution along.
Consideration of Minutes Each member’s packet contained the Minutes from the Full Board Meeting, April 19, 2012; Finance, Budget & Investment Subcommittee: June 18,2012, Phone Conference;
October 18,2012 Page 1
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Finance, Budget & Investment Subcommittee: June 28,2012; Finance, Budget & Investment Subcommittee: July 23,2012; Phone Conference, Finance, Budget & Investment Subcommittee: July 25,2012; Finance, Budget & Investment Subcommittee Meeting, August 17, 2012; Phone Conference, Finance, Budget & Investment Subcommittee: August 20, 2012; Finance, Budget & Investment Subcommittee Meeting, September 11,2012. Dr. Oaks noted that the Minutes would be considered collectively and asked if there were any conections or additions. Mr. Thompson moved the Minutes be approved as presented, and Dr. Hancock seconded the motion. All approved.
The Minutes of the Audit Committee, August 27,2012 were reviewed. Dr. Oaks asked everyone to look at page 5 of the Minutes and asked that the action approved by the Audit Committee “Dr. Oaks recommended that the University stay with Graystone Consulting, and write off Bluepoint Consulting” be tabled for reasons that will become evident as the meeting progresses. Mrs. Henson moved and Mr. Thompson seconded the motion to approve the Audit Committee Minutes with the exception of tabling the recommendation on page 5, “Dr. Oaks recommended that the University stay with Graystone Consulting, and write off Bluepoint Consulting. ”
Minutes were distributed from the June 2012 Telephone Poll of the Board of Trustees. Dr. Estes moved and Dr. Dallas Petrey seconded the motion that the Minutes be accepted. All approved.
Although Minutes were not available, Dr. Oaks reviewed the high points of the October 17,2012 Executive Committee Meeting. After review the following recommendations were made: Mr. Thompson moved and Mr. Patrick seconded the motion that the University continue to negotiate with Fifth Third on extending the tax exempt loan and adding forward the starting interest rate swap. The negotiable goal for the “all in rate” from 11/1/17 to maturity of 11/1/22 is 3.20% to 3.26%. AU approved.
Mrs. Henson moved and Mr. Perkins seconded the motion that the University purchase the Cedar Ridge property and buildings for $453,000 and that the University negotiate with Mrs. Bart Bailey for the property and home she owns located between the Cedar Ridge property and the Cumberland Inn property for $300,000 cash plus a $300,000 unitrust. All approved.
President Taylor cautioned the Board to keep this information confidential because we are still in the negotiating phase on the above transactions.
Cumberland Wellness Properties Report Jana Bailey gave the report that Cumberland Wellness Properties is in the maintenance phase. Cumberland Wellness Properties Inc. is the result of a new market tax credit transaction involving University of the Cumberlands, Kentucky Highlands and Fifth Third Development Corporation.
October 18,2012 Page 2
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Ms. Bailey reported the status is good. All lease payments have been made on time; all interest payments have been made on time, and all requirements of the New Market Tax Credit transaction have teen met.
The current lease, interest and reporting requirement will remain in effect until December 2014, at which time the $10,955,789 loan will be paid with investments held by University of the Cumterlands and the $5,044,211 loan will be paid with a call/put option of $252,000 and the assets held by CWP will revert back to University of the Cumterlands.
The University is currently accruing $4,000 per month to help cover the call/put option due in December 2014.
Total CWP assets as of 6-30-12 were $16,046,188 as compared to $16,373,110 on 6-30- 11; Total liabilities as of 6-30-12 were $16,000,000 as compared to $16,000,000 on 6-30-11; Total net assets as of 6-30-12 were $46,188 as compared to $373,110 on 6-30-11; Income over expense as of 6-30-12 was $(326,922) as compared to $(326,918) on 6-30-11.
Dr. Taylor reminded the committee that the total CWP debt of $16,000,000 will be paid in full with a call/put option in December 2014. The assets will transfer back to the University at that time.
Jana Bailey noted the standing Resolution Concerning Authorized Account Signatories, was included in the report packet. The resolution is the standard resolution as presented in the past.
Dr. Oaks called for a motion to approve the standing Resolution Concerning Authorized Account Signatories for Cumberland Wellness Properties. A motion was made by Mr. Baker; seconded by Mr. Thompson. All approved.
Land Development Report Mr. Kyle Gilbert gave the Land Development report.
There has not been much change in land & off campus properties since the last report as rental property revenue is still our biggest revenue producer at around $260,000 per year. Gas revenues are low as is the market and most of our timber has been cut. We do have 3 coal leases in force but mining is at a standstill.
Jim and Linda Booth gifted a retail store building on Highway 25 here in town (old Bank of Williamsburg drive thru branch) to the University. We have leased the building with an option to buy after 24 months.
We purchased from the City of Williamsburg a house and lot on Second Street for $35,000. This property is located next to the football stadium and will immediately increase our athletic facilities parking needs and will be available in the future for expansion of athletic facilities.
October 18,2012 Page 3
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We have already developed or prepared some of our past property acquisitions, namely the Ballou property on Main Street which is the site for our new apartment style housing for married students, faculty/staff; the Fritts property next to Kleist Hall which is a future site for a dormitory and the Blaine Early property on Walnut Street which gave us space to build a new admissions parking lot and expand the service area around the admissions building for new students when they visit campus.
Currently we are raising funds for developing an apartment complex consisting of 3 to 5 buildings with each building having 6 units. Essentially these will be built as more modem, non-traditional dormitories for the more mature students, faculty/staff.
We are still pressing forward with design and permitting on the new athletic fields to be developed on Tenth Street.
We are planning the final phase of the Health & Wellness project that will probably begin sometime next year.
We are currently in the process of acquiring the Cedar Ridge property adjacent to the nine acres we already own. This property will be the site for the athletic fields complex.
The graphics and maps on display in the boardroom show how we are implementing our master plan of connecting our main campus, our athletic fields and the Cumberland Inn complex.
Building and Grounds Report Kyle Gilbert reported that we continue to keep our facilities at their best and to stay ahead of deferred maintenance. He then shared with the Board the improvements and upgrades made in past months: a. Renovations to the Gatliff gymnasium: new roof system, new doors and windows, new air conditioning and floor refinishing. b. New roof system on the Bennett building. c. Replaced the roof system on the Nicholson-Jones Building. d. Major renovations to the dining hall which included new tile throughout the building, complete renovation of the restrooms, extensive upgrades in the serving lines and cooking stations. e. All 10 residence halls were repaired, upgraded and painted. 1. All flooring in Asher Hall was replaced 2. Lobby furnishings were replaced at Kleist and Hutton Halls. f. The wrestling gym at the Luecker Building received new flooring and HVAC equipment. g. Football field was re-sodded. h. Track was spot repaired and newly painted. i. The Rollins Center arena received new overhead lighting and the floor was sanded and repainted. j. The Perkins House, home of the admissions office, was repainted and a new parking lot was built. We changed the direction of traffic flow on Walnut Street to start at the clock
October 18,2012 Page 4
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tower. Prospective students and visitors can access the admissions office and the Student Center much more easily. k. Campus wide we replaced carpets, vinyl flooring, furnishings and equipment as needed.
The update on the two major capital projects was given: Student Health & Wellness Center a. Gutted the existing student center to upgrade the facility and to prepare for the addition of phase III. b. A mansard roof system was installed. c. All mechanical and electrical systems were replaced. d. All plumbing and HVAC systems were replaced. e. Student Services offices were rebuilt and upgraded. f. Kitchen and dining area were rebuilt and upgraded. g. Flooring on the entire main floor was replaced. h. Technology and security systems were replaced. i. Backup generator was increased in capacity. j. Emergency operations center was upgraded. (The Student Center is our designated command center in case of tragedy. The facility can house students and staff on a temporary basis until contingency plans are implemented. All components of the student services offices are on the emergency system and administrators can meet to deal with a crisis.
Northern Kentucky campus: As you recall we are leasing from Dick Knock the third floor of a shell building in Florence, Kentucky. This summer the following work was done to the third floor: a. Built out the floor with classrooms, conference rooms, 2 medical laboratories, and 3 office suites that will support the academic units of lifelong learning, clinical psychology, and the physician assistant program.
Following Mr. Gilbert’s oral report, the Board members boarded the busses and were taken to campus for a tour of the Health and Wellness Center.
Audit Report Mrs. Bailey reviewed the 2011-12 annual audit financial review as presented to the Audit Committee on August 27, 2012: Total net assets were $122,184,151, an increase of $5,464,050 Unrestricted net assets increased $4,719,804 Quasi endowment decreased $(15,680) Temporarily net assets increased $761,581 Permanently restricted net assets decreased $(1,655) Total revenue, excluding agency fund, was $44,538,718 Revenue from operations $45,633,189, an increase of $5,897,145 Non-operating activity was $(1,094,471) (includes depreciation, interest rate swaps, present value adjustments on annuities, endowment gift income, and gains and losses, etc.) Total expenses were $39,074,668 Gift Income was $9,486,792 ______Unrestricted gift income______$1,650,437 October 18,2012 Page 5
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Unrestricted Ky. Baptist Convention $1,306,988 Temporary restricted gift income $5,490,067 Permanently restricted gift income (endowment) $ 1,039,3 00 Total external debt was $45,870,000. If you exclude $16,000,000 CWP, total external debt is $29,870,000 Cumberland Wellness Properties - NMTC $16,000,000 Tax exempt bonds $ 26,440,000 Taxable bonds $ 2,640,000 Term note - Byrd Apartments $ 790,000 Internal debt is $ 455,330 Net asset value for property, plant and equipment $81,100,647 an increase of $2,640,638 Total endowment $68,265,981 an increase of $ 10,233 Permanent endowment $53,501,858 Quasi endowment $14,764,123 Budget to actual: net under budget $ 1,121,611 Income over budget $ 2,409,215 Expenses over budget $ 1,287,604
The biggest increase in income came from the growth in the on-line graduate program, gift income, and the opening of the Patriot Steakhouse at the Cumberland Inn. The biggest increase in expenses was from the necessary renovation and increased contracted services at the Patriot Steakhouse and additional capital projects made possible by the increased revenue. Mrs. Bailey reported that the full detail of the budget items are documented in the report sent prior to the meeting.
Mrs. Bailey noted that the Board needs to hire the financial auditing firm to prepare the current fiscal year ending 6-30-13 report. Dr. Oaks called for discussion and a motion. Dr. Estes made the motion to stay with the current auditing firm, Marr, Miller and Myers for the 2011-12 annual audit; Second by Mr. Thompson. All approved.
Finance, Budget and Investment Report Mrs. Jana Bailey introduced the representatives from Graystone Consulting who were present to give the Graystone’s report. Present from Graystone were Jennifer Hamant, Mike Rosioniec and John Carnes. Hamant and Rosioniec are new to our team, coming to our Graystone team from the Columbus group following the departure of Michael Hull and Patrick Hull.
Ms. Hamant reviewed a number of pages of the handout which explained that Graystone is one of the largest and most experienced consulting firms in the industry working with femilies and institutions throughout the world. Currently they have more than $167 billion under consulting contract. Although Graystone is a business unit within Morgan Stanley Smith Barney, they are a completely independent focused investment consulting boutique with a model that is transparent, unbundled and impartial. The Graystone Consulting team consists of 300 professionals in 41 offices with a 35 year history of leadership. The teams consists of Research and Analytics; Consultants; and Operations and Client Services. Graystone received October 18,2012 Page 6
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an industry leading score in the 2010 Greenwich Quality Index, surveying actual client perceptions of the leading investment consulting firms in the US. Ms. Hamant continued by stating that Graystone Consulting provides what she like to call “the third solution,” meaning that Graystone provides large firm resources, small firm culture; global footprint with local service delivery; extensive wealth management resources; extensive research organization and capital markets expertise; collaborative consulting model; integration of investments, operations, and back-office sipport; cost effective implementation and scale; and non-conflicted advice. Graystone’s fee is 45 basis points (0.45%).
Graystone Consulting offers unparalleled research and resources. The firm resources include traditional and alternative investment and operational due diligence on more than 1,600 separate account managers, mutual funds, hedge funds, private equity & real estate investments. External resources include single manager hedge fund and private equity research on more than 1,700 funds.
Since the University has recently added alternative investments to the portfolio for stability, the alternative investment partners are essential in providing the necessary manager research and due diligence. In addition, Graystone’s connections with the Morgan Stanley platform allows the University to invest in good alternative investments at lower than the normal minimal required investment amount. These investments would not otherwise be available to the University.
Ms. Hamant stressed that the Graystone Columbus based team is the “team within a team” exclusively dedicated to the University.
Mr. Rosloniec continued with a market commentary describing the market conditions as a tale of two quarters.
The second quarter could best be described as “risk-off.” What worked: defensive US stocks, long duration US treasuries, and portfolio concentration. What did not work: diversification, non-US equity & fixed income securities, small cap equities, spread product fixed income (corporates & mortgages), and active management. It was better to own indexes. There was a nice run in risky assets.
In the third quarter the US sluggish economic growth continued to provide angst for investors, although die Federal Reserve’s announcement regarding “QE3” helped drive risk assets higher. China continues to show signs of slowing growth, although many forecaste continue to anticipate a “soft landing” with growth rates in the 7.5% - 8.0% range, which is well below recent annual growth rates above 9.0%. In Europe, concerns accelerated about the possibility of a crisis in Spain, with rates continuing to rise. Commodities advanced in the third quarter, as inflation expectations continued to assert themselves given the coordinated efforts of global central banks to ease monetary conditions and inflate assets. Fear lead to inflation.
US equities were higher across the board in the third quarter, with large caps slightly outperforming smaller cap names.
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International equities outperformed their domestic counterparts. Emerging market equities, as measured by the MSCI Emerging Markets index, outperformed for the quarter, but remain behind domestic equities for the 1-year, 3-year and 5-year time periods.
Longer term treasury rates backed up in the month of September, bringing 3Q returns to 0.20% on the BC US Treasury Long index. US corporate investment grade and US corporate high yield were two drivers of returns in the quarter. Year to date, US corporate high yield has performed strong in a period where defaults remain historically low and the Fed continues to push liquidity into the system in an effort to pump up assets prices.
Globally, fixed income indices performed well for the third quarter, as significant concerns abated somewhat following the ECB’s announcement of additional bond-buying measures aimed at stemming rising yields in Spain and Italy. Bonds are a concern going forward.
Mr. Rosloniec offered some personal advice, use extreme caution on “munies” in your personal portfolios.
Some of the positives were: Investors have anticipated and received more central bank action, housing is starting to bottom, and equities continue to look attractive.
Negatives include: The “Fiscal Cliff” which is the combination of the expiring Bush tax cuts, expiration of the alternative minimum tax, lapse of the payroll cut, expiration of unemployment benefits, imposition of new taxes from the Affordable Care Act, expiration of a series of business-friendly tax provisions, called “tax extenders”, the “sequester” or the required spending cuts in defense and non-defense spending and the “doc fix”, another technical budget issue that will reduce physicians’ reimbursements for Medicare patients. The total fiscal drag from the fiscal cliff is $719 Billion or 4.5% of GDP. Other negatives are the political uncertainty, continued problems in Europe, slowing global growth, global manufacturing slowdown, and possibilities of left tail events (unexpected reports that result in negative outcomes) which have been more frequent than normal.
Graystone believes the highest likelihood for market outcomes going forward is a low- return environment where investors deal with the global growth slowdown, sovereign debt issues and resulting deleveraging, and employment problems. These issues, along with many others, present a headwind for risk assets. Graystone expects to build a portfolio in a low-return environment by looking for opportunities away from low yielding treasuries in fixed income, continue to over-weight large cap companies with higher dividend yields, selectively adding exposure to emerging markets with lower PE ratios and higher growth expectation, and look to benefit from less liquid alternative opportunities that cannot be invested through long only managers.
A common misconception among the average person is that money cannot be lost in bonds. This is not so. At record low interest rates and record high interest rate sensitivity, Graystone forecast for even a modest rise in interest rates negates most of the return potential of the core fixed income asset class. In such an environment Graystone continues to advocate reducing fixed income holdings focused on interest rate risk: core mutual funds with Treasury October 18,2012 x Page8
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exposures in favor of sectors or segments with greater credit risk such as high grade and high yield corporate bonds.
In the absence of a major crisis, emerging market opportunities remain attractive whether in the short, medium or long term. Emerging market stocks continue to trade at significant discounts and continue to exhibit better growth and lower leverage relative to their developed-market counterparts.
Mr. Rosloniec continued with the University’s performance as of September 30,2012. The University’s portfolio underperformed the QTD ending 9-30-12 with a growth of 3.65% as compared to the blended benchmark of 4.44%. YTD the University’s portfolio earned 12.13% outperforming the blended benchmark of 11.53%.
Rosioniec feels we will see another five to seven years of fluctuating returns before the environment stabilizes. The question then becomes how to structure the portfolio for a low- retum/range bound market environment? Graystone believes: • In fixed income, look for opportunities away from low yielding treasuries • In equities, overweight large cap companies with high dividends • Selectively add exposure to emerging markets with lower PE ratios and higher growth expectations. • In alternatives, benefit from liquid opportunities • Opportunities in emerging markets remain attractive
Mr. John Carnes spoke about the changes made to Cumberlands portfolio since Graystone was hired. Due to the changes in personnel, the process of manager changes has taken longer than anticipated to get to the current point. It was in August when the portfolio allocations were finalized. The next step now for Graystone is to reconstruct the total fund. President Taylor questioned the loss in the quarter and lack of performance data beyond the year to date, noting that Graystone’s sells does not equal production and that performance has not been as promised. When compared with a return of 4.44% for the benchmark of 60% equities and 40% bonds, the third quarter return for Cumberlands is 3.65% with year to date of 12.13%. President Taylor asked what is going on. Mrs. Henson asked where is the money? Are the funds being closely monitored against mismanagement of the University’s assets? Mr. Carnes assured everyone that there are many checks and balances and Graystone is working diligently to produce the largest return within the guidelines given them by the Board using the managers that the Board requires them to use.
Ms. Hamant reminded the board that the new team did not take over until June and did not get approval for the assets allocation from the Investment Sub-Committee until August. The first priority was the asset allocation and the next step is to reconstruct the past history in order to have accurate data. Another important issue was, when the new team took over, Fifth Third Was not up and running. Fifth Third is now on board and trading. For most of the year we were at 65% equities but now we are at 46% equities. Fifth Third has 20.5 % in large cap core, KBF 2.3% in large cap core; Fifth Third has 7.2% in small/mid cap and KBF has.6% in small/mid cap; total US equities are 30.7%. Fifth Third has 8.5% international equities and 4.9% emerging markets; KBF has 2.3% international; total non US equities at 15.7%. Fifth Third holds 3.9% in
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real assets; Graystone managers hold 7.6% in absolute return; Hilliard Lyons holds 23.3% core fixed; Fifth Third holds 2.3% in core fixed; KBF has 4.3% in core fixed; 11.2% as of 1/9/12 was held in cash. She noted that they are currently building absolute return because they do not feel that fixed allocation is the way to go.
As shown in the charts, much of the deconstruction work has been done as of October 9, 2012. Now that the asset allocations are in place the portfolio should start taking shape, seeing added value from the managers. However, currently the most pressing issue is to address the fixed income portfolio. Investments in bonds are risky and therefore Graystone recommends a portion of fixed income needs to be moved into alternative investments for stability. A meeting with the investment subcommittee needs to be scheduled soon to discuss the recommendations.
Graystone recommends to the Finance, Budget and Investment Committee to: 1. Fund two new single manager hedge funds to complement current fund of funds 2. Full redemption of both inherited fund of fund managers.
Dr. Taylor questioned what value the University was receiving from the extra fees paid to Graystone beyond what would have been received if the University had simply stayed with Fifth Third and Hilliard Lyons managing their portfolios on their own.
Mr. Rosloniec noted that it is very unusual to see the same managers used for most of the assets allocations. The University has required Graystone to have a large investment concentration with Fifth Third. This will naturally limit the fee savings. There are other managers that would be more productive at a lower rate. The Graystone team understands the need to keep the large investment asset allocation with Fifth Third, and can work with Fifth Third to direct management to their strength. One area that the University will see a defiant value add is in the alternative investments. Graystone’s affiliation with Morgan Stanley allows the University to invest in quality alternative investments at a lower minimum, competitive rate, and provide important research and due diligence.
Mr. Thompson asked how the University could quantify the value received from Graystone’s fee of 45 basis points; going forward could the fees structure be tied to performance.
Mr. Rosloniec stated that the year to date performance reflects a gain of 12.13% as compared to the blended benchmark of 11.53%. This is a 60 basis point gain. Graystone’s fee is 45 basis points. This is a good indicator.
Ms. Hamant added that some of the underperformance was due to the UC portfolio being in flux. Now that the asset allocation and deconstruction is in place the University should see more value in the performance figures.
Mr. Rosloniec cautioned that the UC performance will always slightly underperform expectation due to the use of alternative investment used to hedge against market down turn. Where the use of alternative investments will shine is during extreme market down turn such as 2008.
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Ms. Hamant noted that the University first added alternative investment in April 2012. These investments are slightly negative. The Columbus team is recommending that after the “soft” lock down period in April 2013, the K2 and Lighthouse investments be replaced with more stable alternative investments. K2 and Lighthouse are good investments; they just think their other alternative investment funds more suitable to the UC portfolio. Mr. Thompson asked how long have alternatives been employed, and Ms. Hamant said since late April. While the alternatives are slightly negative to date, they cannot be redeemed until April or else we have to pay a 2% redemption fee..
Dr. Oaks questioned the limited performance data presented. Our board members would like to see more comparisons and in an easy to read format. Mr. Morris said that a before and after look would also be helpful because what you’re showing us doesn’t tell us where we have been or where we are headed. He then asked Graystone why have they made such a major change in the report formats? Mr. Games said the format would be changed to the Board’s specifications. Mr. Games stated that the new Columbus team had to totally deconstruct the portfolio. The deconstruction was not complete until October; not in time for accurate reports for the quarter ending September 30,2012. Future reports should be more complete.
Ms. Hamant noted that this was their first report to Cumberlands’ full board. From her experience, as a general rule, the full board likes to see reports at a higher more general level; with detail reports given to the Investment subcommittee. In the future, they will provide detail reports to the full board.
Mr. Thompson noted that Graystone has not even earned enough to pay their fees, and Mr. Mike Rosioniec said that the University’s requirements that Graystone continue to use Fifth Third and Hilliard Lyons are handicapping Graystone. He said that Graystone has made the University 12.13% year to date, and he feels this is remarkable with the restrictions they are under. He, too, promised to build the reports in whatever fashion the Board desires.
Ms. Hamant said that the undeiperformance in the third quarter was at the time that our accounts were in a state of flux and Graystone was trying to get the allocations changed.
Dr. Oaks thanked the Graystone team and asked Mrs. Bailey to set a meeting date for the Investment Subcommittee and Graystone to discuss the investment recommendations made by the Columbus team and review a detailed report of the third quarter performance of the UC portfolio. Graystone was dismissed.
Mr. Steve Morris was called on to discuss the proposed budget revisions. He began by referring everyone to their packet, tab 6, page 3 labeled “Unrestricted Income Statement by Division excluding Depreciation, September 30,2101.”
Column A represents last fiscal year actual, and column D represents what we are proposing as an amended budget based on where our undergraduate and graduate tuition has come in with the start of the fall semester. a. Line 1 - Undergraduate tuition is proposed to be budgeted at $14,666,585, an $891,000, or 6.5% increase over last fiscal year.
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b. Line 2 - Graduate tuition is proposed to be budgeted at $14,050,259, a $1,518,000, or 12.1% increase over last year.
Both of these proposed tuition changes represent the bulk of our increased income budget and they are conservative estimates of how our tuition revenues will come in for this year.
c. Line 3 - Represents a slight increase in room and board income, based on 1,150 students on campus vs. the 1,130 originally budgeted. d. Line 4 - Represents a decrease in the projected budget by $258,000 which is due mostly to a decrease in the amount of student board plan participation. Note that revenues are budgeted at $1,830,722, which is $440,000, or 32% over last year, due mostly to an increase in cash sales in the Patriot Steakhouse over last year.
The net result of these changes is a $2.4 million increase in budgeted income, which is a conservative estimate.
The group was then referred to page 8, “Expense Totals by Spend Category.” This summarizes the expenses by category that are explained in more detail by department on pages 4-7 a. Line 1 - Revised our regular payroll budgetto $12,821,601, a9.1% increase over last year. b. Line 2 - Revised our adjunct payroll to $2,248,404, a 10.8% increase over last year. c. Line 3 - Our largest revision in planned employee compensation is benefits and taxes, reflecting a $287,132 increase in our proposed budget, which incorporates a 20% increase in our employee health insurance benefit. We bid out health insurance this year, and changed our employee plan design in response to a large increase in anticipated claims. The net result was a 20% increase in expected plan costs for UC, after employees absorbed an 11% increase in their out of pocket costs associated with the new plan design. This is the first change that employees have experienced in our health plan offering in five years. d. Lines 6-26 - Represents a number of changes in our expected operational costs due to a departmental operational assessment of our needs in the next eight months.
The totals of both spend categories results in a proposed $2.4 million increase in our operational budget. In summary, we are asking the board to approve a revised 2012-2013 income budget of $44,289,668, and an expense budget of $44,283,922. Mr. Thompson moved the recommendation be accepted and Mr. Gullett seconded the motion. All approved.
Mrs. Bailey then gave a brief update on the current financial conditions. She noted that as of September 30, 2012 interim reports, the total net assets were up $5,971,800 to $128,155,951 from the beginning of the fiscal year (July 1,2012). It is important to note that the bulk of undergraduate revenue has already been posted. October revenue of $2 million is expected for the graduate on-line program; but full month expenses will continue through the end of the year.
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Dr. Oaks called for a motion to approve the Standing Resolution regarding the contracting authority of certain Officers/Directors of the University and the Standing Resolution concerning authorized account signatories. Mr. Patrick made the motion and Mr. Thompson seconded the motion to sign the Standing Resolutions. All approved.
Stewardship Report Sue Wake was called on to give the Development Report.
For the Health and Wellness project a total of $5,959,812 has been raised in cash and pledges and expenses to date total $5,981,342. Phase III of the project, the addition to the current building, will begin as soon as the funds are raised in cash and pledges to complete the work. According to the cost estimate, we need a minimum of $1.5 million to complete Phase III.
From July 1,2012 through September 30,2012, gift income (includes KBC & payment on pledges) totals $1,079,408.34.
Also discussed were the pending bequests of persons who have included Cumberlands in their estate plans and in cases where known, the amount of the bequest.
One of the most popular forms of planned giving is through the Charitable Gift Annuity. Cumberlands currently holds 85 gift annuities on persons living in 27 states. Some states have few if any laws governing the writing of gift annuities in their states; others have very restrictive laws. Recently we have begun the process of registering in those states which require that we do so. Mrs. Wake presented resolutions which must have Board approval for the states of New York, California and New Jersey along with a request that each Resolution be approved so that we can continue to write Gift Annuity Agreements in those states.
Mrs. Henson moved the three above mentioned Resolutions be approved by the Board and Mr. Steely seconded the motion. Vote unanimous.
Mr. Dave Bergman gave the Alumni Report.
The next athletic hall of fame induction ceremony will be on Saturday, February 16, 2013. The inductees are Mike Cooper, 1975-1977, Track & Field; Tim Henderlight, 1971, Track & Field; Ivan Johnson, 2003; Roger Morris, 1966, and Jerry Williams, 2001
The summer issue of CUMBERLAND TODAY was entitled Bridging the Gap, featuring a story about Cumberlands’ rise from a private college to a regional university. 5,900 copies were mailed and a line to the alumni list-serve was emailed to the remaining alumni.
The alumni have received various mailings since the last meeting, most to do with Homecoming events. These letters generally also seek financial support for the University as well as student recommendations.
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A portion of Mr. Bergman’s time is spent making development and alumni visits. In the past six months he has visited one week in Southern California and one week in Chicago. In addition he has hosted a number of campus visits.
The Alumni Survey was sent out by mail to 327 people and by email to 357 people. 98 responses were received and given to Dr. Susan Weaver for processing.
The 2013 Career Fair is scheduled for March 2013. Mr. Bergman says he hopes to increase the number of employer participants this year as well as the number of student participants.
The 50th Class Reunion event was blended with the May 5,2012 Commencement in celebration of 2nd four-year class in 1962. Breakfast was served in the Boswell campus Center and the group was then escorted to the Rollins Center where they marched in at graduation ahead of the 2012 graduates. 15 class members attended the breakfast. A total of 45 attended the breakfast including faculty, staff, and guests. 24 class members submitted a memory for the Golden Memory Book.
The Mid-Atlantic Chapter Meeting was held on Sunday, July 8, 2012 in Lorton, Virginia at the home of alumnus, Reba Morse. Six alumni attended. The Middle Tennessee (Nashville) Club Meeting held Thursday, June 7, 2012 at Shoney’s Restaurant in Franklin, TN. The East Tennessee (Greater Knoxville) Club Meeting was held Saturday, September 8,2012 at Rickard Ridge BBQ. Sixteen alumni attended the event.
Homecoming with the theme “Come Home... to UC Homecoming,” was a success. Alumnus Mike Wilson,’94 and Major General Ken Dowd,’79, were the keynote speakers. Wanda Cornelius, ’71 provided the special music. 92 persons attended the Creech-Boswell Club Dinner and 162 attended the alumni dinner. Save the date now for next year’s Homecoming, October 4-6.
Dr. Fleenor was unable to attend the meeting; Dr. Oaks reviewed the Church Relations report noting that formal Convocation programs continue to be a part of our emphasis on values and faith development. Through these programs, our goal is to nurture students spiritually, socially and academically in order to broaden each student’s worldview.
All students with less than 96 semester hours (senior status) must attend at least 8 programs per semester, 2 attendances in each of the 4 attendance categories (Major Events, Academic/Cultural, Faith Development and General Interest). These changes have already resulted in increased attendance at various campus programs sponsored to date.
This summer, two individuals were added to the university staff to assist in the area of Church Relations: Reverend Stephen Earle who serves as a supply preacher for area churches, and Dr. Steve Thompson who will be visiting KBC pastors and church leaders, with a goal of visiting approximately 200 churches this year in Indiana, Ohio and central and western Kentucky. He also serves as the director of the Master of Arts in Christian Studies program.
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The University has traditionally maintained a group of church leaders who serve as ambassadors for the university. This group has met annually on campus to learn about campus updates, new academic programs and mission opportunities so they may be well informed of all that Cumberlands offers to interested students, church groups, etc. With the opening of the Northern Kentucky Center, Dr. Fleenor has been working with Steve Thompson to develop a group of church leaders in that region who can assist with making connections with business leaders and medical contacts who can help to promote the programs offered.
This past summer Dr. Fleenor, Dr. Cockrum and Dr. Dunston developed an overall strategy and several action plans that were put into effect over the course of the summer. Key outcomes included: • Developing a plan to reduce cost of the Master of Arts in Christian Studies program for UC graduates, through the use of the James H. Taylor, Il Scholarship. • Developing a partnership with Clear Creek Baptist Bible School that would enable Clear Creek grads to benefit from the Taylor Scholarship and participate in the MACS program.
With the shift in the Youth Ministry program assignment this summer, from the Kentucky Baptist Convention to Crossings Ministries, Dr. Fleenor worked with representatives from Campbellsville University to propose a joint ministry partnership with Crossings Ministries. This type of relationship would allow greater exposure for KBC related universities to the 10,000 plus students who attend Crossings summer camps. We are still following up on this proposal and are hopeful that the details of a partnership can be finalized soon.
Mr. Marc Hensley gave the Mountain Outreach report, a copy of which was in each member’s packet. With the completion of this summer’s homes, 141 houses have been built since the program began in 1982. David Emmert, one of the two student founders returned with a group from his church to help build one of the homes this summer.
In addition to the three homes, the group also completed 33 additional projects from painting, insulating, roofing to building handicap access ramps.
Mr. Hensley shared with the Board, a slide presentation of the work of the program from the last six months.
Student Services Report Dr. Oaks called on Dr. Colegrove to give the Student Services Report. Dr. Colegrove noted that his written report was in each member’s packet. To add to that material, Dr. Colegrove stated that the school year is off to a good start with 1,166 students in campus housing. This summer we had over 3,500 individuals in housing for camps and other summer activities.
Of the students in housing this fall, 643 are male and 523 are female. The increase in male students has caused us to examine the possible configuration of housing for next fall, with the idea being to turn one of the male dorms (Kleist) into a female dorm, and to turn a female dorm (Archer) into a male dorm. Right now, this is just one possible solution to the need for more male housing. October 18,2012 Page 15
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Campus Ministries has been active since the last Board meeting with 71 workers serving in summer missions, including 20 in Whitley County, 19 in KY, 12 in USA, and 23 internationally in East Asia, Belize, Uganda, Macedonia, Haiti, Ecuador, Russia, Peru, and Honduras. A number of those serving in Whitley County served on the Appalachian Ministries (AM) Summer Team of 8 students and 3 staff. They worked with 7 KY Baptist churches, an Illinois Associational Camp, and in many communities in Whitley County, resulting in 12 salvation decisions at the camp. Another 12 students served in Whitley County on the Mountain Outreach (MO) summer team which constructed 3 homes and completed an additional 33 projects.
The NAME selected UCBCM to be a site for a semester missionary who has been assigned to work with campus ministries again for this school year.
The year has been filled with much success in the Campus Activities office. Welcome Week offered many activities through a joint effort of CAB, BCM and the Insights program. These events were well received by the students, especially the annual Patriot Party, where over 600 students, faculty, and staff attended.
The Student Government Association strives to be the voice of the student body by proposing campus improvements, increasing their video library, providing funds for different club and organizational activities, and continuing to host the ever-popular study breaks during finals week. This year, SGA continues to donate funds to help the college implement an emergency alert system for the campus community. They have made a four year commitment of $10,000 per year to the University towards the building fund for the new health and wellness center. They are continuing and expanding their recycling drive in each dorm to include plastics, paper and aluminum cans in the dorms and in the administrative building. Their continued work with the Homecoming Court and the Free Movie Night event made Homecoming a huge success.
The campus newspaper is in its eleventh year and continues to bring news to the campus and community. The 30 dedicated volunteers willingly give up their time to ensure this project is a success. The Journalism department continues to grow and become a popular major for the Communi cations Department. The Patriot can be viewed online at www.ucpatriot.wordpress.com.
Career Services provides annually various interest assessments including Focus Career Assessment to all freshmen enrolled in Insights. Upon request the Career Director presented numerous seminars to several classes regarding career planning, resume writing and interview skills. The Career Services web page had 1,916 viewing to the job postings page. Career Services continues to administer the Residual ACT and the National ACT as well as making referrals to the appropriate counselor or mental health agency (approximately 55 per year with 130 counseling sessions held last academic year). We contract with a LCSW to provide mental health counseling to our students on campus.
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Since the Hutton Leadership program began 16 years ago, 3,687 students have contributed 582,632.75 hours of community service for a total of 220 years of community service. At minimum wage this equates to $4,224,087.40. The University of the Cumberlands was once again recognized once again listed on The President’s Higher Education Community Service Honor Roll.
Intramural Sports are very popular on campus. Activities include paintball, miniature golf, flag football softball homerun derby, comhole, golf scramble, basketball, badminton and bowling.
The 2012-2013 Student Opinion Survey will be administered as part of the regular convocation schedule. The results will be included in the Spring Report.
Mrs. Erica Harris was called on to deliver the Admissions Report. She noted that the admissions information was contained in the mailed report. This year’s freshman class: ♦Average GPA 3.3 ♦Average ACT 21.2 ♦Average SAT 947 (verbal and math only) *57% (259) are Kentucky residents *31% (141) are from our primary service area (22 high schools) ♦458 freshmen enrolled. We saw an increase of 56 students in this class. ♦ The average GPA remained the same. ♦ The average ACT saw a slight decrease while the average SAT saw a slight increase.
The decrease in our ACT average may be related to the scholarship amounts that we currently offer. A committee is studying our scholarship amounts and will be making recommendations soon.
One of our goals this past year was to increase the number of students from Kentucky. We increased this number by 14, however, we saw a decrease in the number of new students from our primary service area.
Currently, the admissions counselors have begun traveling in their respective territories. As they return from their travels in November, goals will be established by county and by high school. The main goal will be to visit each of our PSA schools at least once a month to promote increased numbers of applicants from these schools.
The admissions counselors will be attending 126 college fairs and making numerous private visits and stops at high schools. Our counselor who works with transfer students will be visiting 14 community colleges this fall and recently attended a “Transfer Summit” with other colleges and KCTCS faculty/staff at Hazard Community College.
Between January and July, there were 639 individual campus visits and 17 group visits totaling 477 students. This excludes Campus Discovery Day, school field trips, and departmental programs, i.e. Math Competition, Music Opportunity Days, etc. The majority of these visitors were prospective students for 2012. There were three Med Camp groups which toured campus during the summer, as well. October 18,2012 Page 17
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This past spring we added weekday Patriot Days which are mini-Discovery Day programs. We invited our PSA schools and had a great response. Thirteen high schools brought a total of 310 students. We plan to continue these days and hope to add some for later in the fall.
Mrs. Harris noted that when she spoke to the Board last spring, she mentioned that we had contracted with Hobson’s EMT Connect, which provides a Web-based CRM (Constituent Relationship Management) that stores student contacts, manages communication flow, and creates detailed reports on recruitment efforts. Connect not only helps to manage and coordinate our interactions, but also allows us to easily tailor marketing messages for specific audiences and to create more engaging, interactive e-communications. Our email functionality has greatly increased and has become a primary channel through which we communicate many of our updates and announcements. We created several different in house templates and use them often.
Throughout the first six months we sent out 25 unique emails to various groups of students. We also greatly expanded our use of the Queued Email function where we can build an email and schedule it to go out at a certain time (weekly, daily, etc.). Connect has allowed us to communicate with all types of students rather effortlessly through this function.
We hired a full-time Social Media Coordinator last January. Her primary responsibilities have been to develop and implement innovative, effective and comprehensive social media strategies and programs to promote interaction and recruitment. She also researches other social media tools and market analytics.
Some of her projects have included the creation and utilization of iPad presentations to be used during the campus visit, updates to the website, managing the content of our Facebook page and creating the Class 2016 Facebook Group for admitted students.
Our telemarketing program continues to be effective. During the spring semester, several calling campaigns for the 2012 class were conducted by both the Adult Telemarketing team and Student Telecounseling team. The main campaign for the adult team was the pre award call offering prospective students academic scholarship information. During these months, their work focused on various groups of students, including transfer students from KCTCS, hot prospects, and purchased names from ACT. Over 13,000 pre-award calls were made during these four months, with just over 1,000 scholarship offers. The adult team also spent a few weeks calling cold admits (admitted students with little action for a period of time).
The Student Telecounseling team had two main calling campaigns; follow-up calls to students who had been pre-awarded earlier in the year but had not applied for admission and calls encouraging students to visit campus. Throughout the semester there were also smaller calling campaigns to confirm CDD registrants, to get an updated mailing address for those whose mail had been returned, etc. The student team attempted over 7,900 calls with over 1,300 successful calls.
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During the summer months, only the adult team made calls. Their calling campaigns focused on prospective students for the fall of 2013. May and June were very successful netting almost 6,000 calls and over 900 scholarship offers. Currently, they are calling 2013 prospects three nights each week
In late July, we hired 4 new freshman bloggers to journal their freshman year experience. Blogging is a great way for students, parents and alums to get a picture of what our students are like and what there is to do here.
Our first Campus Discovery Day this semester was on Saturday, September 22nd. Forty- nine students and their families attended. Our next Discovery Days will be held on Saturdays, October 20th and February 16th.
Southeastern Kentucky College Day will be held in the Rollins Center on Monday, October 29th. This is the college fair that we rotate with Union College. There will be approximately 1,600 high school seniors on our campus that day. The high schools in attendance will be:
Williamsburg North Laurel OBI Barbourville Pineville Jellico Whitley County South Laurel Clay County Knox Central Bell County Campbell County (TN) Corbin McCreary Central Somerset Christian Lynn Camp Middlesboro Rockcastle County
We are facilitating a reception hosted by The Kentucky Governor’s Scholars program on October 23rd for a three region area. All of the juniors in these regions will receive an invitation to attend the information session regarding the application process for GSP. While we are simply providing the venue, it is always a good thing to get students and their parents on our campus. So, in a roundabout way, the Governor’s Scholar Program is helping us to recruit future students!
Our Meet and Eat functions have been changed from January to December. We did this last year and saw an increase in the number of students who attended. A Meet and Eat is a dinner that we host at a popular restaurant in areas where we typically attract students. Meet and Eat functions were held in Florence, Knoxville, Lexington and Louisville. Fifty-seven students attended last December. We are planning functions in Ashland, Owensboro and Pikeville this year, as well.
Mrs. Harris noted that this is adding up to be a very busy and productive fall. Our staff goal is to be as relative, effective and efficient as possible.
Mr. Randy Vernon presented a wrap-up on the 2011-12 season. University of the Cumberlands finished second in the MSC Presidents Cup standings and 21st in the NACDA Learfield Directors Cup standings.
University of the Cumberlands was named aNAIA “Champions of Character” institution for the 12th straight year, and Jerrid Neely was named MSC Male Scholar Athlete of the Year for 2012. October 18, 2012 Page 19
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Joe Townsend was named Head Women’s Soccer Coach, and Kris Strebeck was named the new Archery Coach with Archery added this fall as our 22nd sport.
Final standings for spring sports were: Baseball-Record 26-28 overall; Finished 7th in MSC Softball-Record 10-40 overall; Finished 8th in MSC Men’s Tennis-Record 7-13 overall; Finished 4th in MSC Women’s Tennis-Record 5-14 overall; Finished 4th in MSC Men’s Golf-Won MSC regular season & conference tournament Aaron Watkins was named MSC Men’s Player of the Year. Coach Chris Kraftick was named Coach of the Year. The team finished S"1 in NAIA National Tournament. Women’s Golf-Won MSC regular season & conference tournament. Liz Stephens was named MSC Women’s Player of the Year. The team finished 14th in NAIA National Tournament. Men’s Outdoor Track-Finished 3rd in MSC Meet. Women’s Outdoor Track-Finished 2"d in MSC Meet. Darcy Mascotti named MSC Women’s Track & Field Athlete of the Year.
As of September 27th Fall Sports standings; Football-Record 4-0 overall; 2-0 MSC East; Ranked 12th in NAIA Poll Men’s Soccer-Record 4-1-1 overall; 2-1 in MSC Women’s Soccer-Record 2-6 overall; 0-3 in MSC Volleyball-Record 8-5 overall; 2-2 MSC Men’s Cross Country-Three meets to date. Berry (2nd), Cincinnati (7th), & Cedarville (3rd). Picked 2nd in MSC Pre-Season Poll. Ranked 21st in NAIA Poll. Women’s Cross Country-Three meets to date. Berry (4th), Cincinnati (4th), & Cedarville (3rd). Picked 2nd in MSC Pre-Season Poll. Ranked 24th in NAIA Poll. Men’s Golf-Won MSC Fall Tournament Women’s Golf-Finished 2nd in MSC Fall Tournament Men’s & Women’s Tennis- Participated in ITA Regionals
Mr. Vernon noted that our student athletes aren’t just about their sport. Most teams are involved in community service projects and the members are active in campus organizations.
Steve Allen gave the Financial Aid report explaining in detail each type of financial aid awarded to students including Pell Grants, Supplemental Educational Opportunity Grants, Kentucky Higher Education Assistance Authority Grants (KHEAA), SMART Grants, Academic Competitiveness Grants, Scholarships, Perkins Loans, Miscellaneous Loans Federal Workstudy, Private Workstudy, Rehabilitation Grants, Francis & Ruth Moore Scholarships, Outside scholarships, Kentucky Educational Excellence Scholarships, Kentucky Baptist Scholarships, Stafford Loans, Outside loans and Plus Loans. Total aid for 2012-13 is estimated to be $41,194,082. Notable concerning the aid is: 1. Over 50% of our students receive Pell grants. This gives you an indication of the neediness of our student population. 2. KHEAA ran out of money in early February this year. As done last year, Cumberland will subsidize the students who were eligible to receive state grants but who did not because of lack of funding. The state subsidizes students at private universities to the tune of around $3,000; at October 18,2012 Page 20
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the public universities, these students are subsidized by the state to the tune of around $12,000. 3. Total awarded scholarships keep going up; the breakdown is as follows: academic $9,917,827; athletic $2,875,833 and need $1,486,175 for a total of $14,279,835. Of that total $1,759,653 is funded. We discount the rest in order to attract more students into our undergraduate programs. 4. While graduate students receive no grants or scholarships at Cumberland, they are eligible for Stafford Loans and many graduate students take advantage of this opportunity to borrow money while a graduate student because of the relatively low interest rate. Basically that is why the Stafford Loan amount is so high.
Mr. Allen presented charts showing the tuition and fees and room and board cost for Kentucky colleges (including the community colleges) and for several out of state schools with which we compete. In all cases, Cumberlands is in the lower one-third of the charges. He then recommended that for the 2013-14 academic year, undergraduate tuition and fees be increased by $1,000 (total at $20,000) and room and board increased by $500 (to $7,500). Mr. Thompson moved the recommendation be approved and Mr. Perkins seconded the motion. All approved.
In the absence of Dr. Fleenor, Dr. Oaks gave the International Student Report noting that a copy was in each member’s packet. This fall we have 50 new international students, 22 of whom are enrolled in the Intensive English Program. In all we have 116 international students enrolled, representing 32 counties.
Academic Report Dr. Larry Cockrum gave a power point presentation regarding academics. The following enrollment figures were announced: • 1,859 undergraduate students- up 97 compared to last year- (6% increase) • 2,405 graduate students- up 383 over last year- (19% increase) • Total enrollment (not final fall enrollment) is 4,264 up 479 over last year’s final enrollment of 3,785- (13% increase) • Seven year student growth averaging 14.3% per year
Online Growth: • Online growth is up 19% over last year’s head count and up 21% in class enrollments. Eighty eight percent of our graduate students reside in Kentucky.
State Authorization- approved in 34 states
The following programmatic/curricular changes were announced:
New Programs under Development: • Master of Science in Justice Administration-SACS approved • Master of Science in Information Systems Security- SACS approved • Associate Degrees in Criminal Justice, Psychology, Business and Human Services- SACS approved • School of Lifelong Learning- 31 students this fall • MBA in Accounting- approved
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• High School Dual Enrollment- 79 students- 31 students in Florida High Schools • Partnership with Business- contract with Fortune 500 company to deliver education
Proposed Programs: • RN to BSN • Master in Health Services • Certification programs in allied health field
Accreditation Events this year: • ARC-PA- cannot increase size of program until another year of pass ratio • SACS- Fifth-Year Interim Report- completed and approved • NCATE- application ongoing
Retention: • Freshman to Sophomore- 63.18% • Sophomore to Junior- 79% • Junior to Senior- 86%
Lastly, the presentation highlighted faculty and student accomplishments and invited the Board to the Forcht Leadership program on April 9,2013, at 7:00 p.m. featuring Charles Krauthammer.
Honorary Degree Report The following candidates for honorary degrees were discussed:
-Joe Stepp -Arthur “Art” Preston -Thomas S. Haggai -Barbara Farmer Altizer -Ron D. Bryant -Michael Karmis
A motion to grant the candidates an honorary degree was made by Mrs. Cookie Henson and seconded by Mr. Scott Thompson. The motion passed unanimously.
Old/New Business Mr. Scott Thompson moved and Mr. Phillip Armstrong seconded the motion that the following actions be approved: Update Bylaws to reflect addition of Vice President for Athletics and Athletic Director; Update Policies and Procedures for all Employees as marked and included in each member’s packet; Update Policies and Procedures Addendum for Faculty as marked and included in each member’s packet; and Update Organizational Charts as marked and included in each member’s packet. All approved.
Mr. Steve Morris noted that he was not prepared to make a recommendation on amending Long Term Care Insurance Policies. This item will be presented at a later date.
Dr. Taylor noted that the nominating committee headed by Dr. Paul Estes recommends that the current officers continue to serve in their respective positions for 2013: Jim Oaks, Chair (2015), Jon Westbrook, Vice Chair (2015); and Lonnie Walden, Secretary
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(2015). Mrs. Henson moved the slate be accepted and Mr. Steely seconded the motion. All approved.
Prior to the meeting, Chairman Oaks distributed the report of the committee (Oaks, Westbrook, Walden) that conducted the Annual Evaluation of President Taylor. Dr. Mullins moved the report be accepted and Mrs. Henson seconded the motion. AU approved.
President Taylor noted that he appreciated the kind remarks in the evaluation and said that he accepts the Board’s commendations with the Board’s realization that he relies heavily on his administrative staff and that he stands on their shoulders.
Petitions and Communications Chair Oaks noted that the following Trustees will be rotating off the Board for at least one year: Dr. Paul Estes; Dr. Dallas Petrey and Dr. Tom Raper. Dr. Oaks thanked each person for his service to the Board and invited each to continue as an Honorary member until such time as each can be nominated to serve again as a full member.
The following upcoming events were announced: Kentucky Baptist Convention - November 12,2012; Hanging of the Greens - November 27,2012; Madrigals, November 29 - December 1, 2012; Board of Trustees, April 18,2013
Adjournment There being no further business, Dr. Oaks adjourned the meeting.
October 18,2012 Page 23
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UNIVERSITY OF THE CUMBERLANDS BOARD OF TRUSTEES ANNUAL PERFORMANCE REPORT OF PRESIDENT JAMES H. TAYLOR
In accordance with the By-Laws of the University of the Cumberlands the President’s performance shall be evaluated annually. Accordingly, the following evaluation has been prepared by the Chairman of the Board of Trustees, approved by the Vice Chairman and Secretary of the Board, and will be presented to the full Board of Trustees for consideration on October 18, 2012,
INSTITUTIONAL ADVANCEMENTS and Academic Affairs:
For the past several years student enrollment has continued on a steady increase. As an example the enrollment two years ago included a total of 2,733 for all students. This number has Increased for 2012-13 to 4,137, an increase of 34 percent. Graduates for 2012-2013 have reached 2,284, an increase of 32 percent, compared to the same period two years ago. This number is projected to further increase with the additional of a new campus opening in Northern Kentucky. In addition, the On-line enrollment for 2012 is 5108.
Programmatic changes for the current year and approved by SACS: Master of Science in Justice Administration, approved on Sept. 4, 2012; Master of Science in Information Systems Security approved Sept. 4, 2012.
In addition, an extension of the current Master of Business Administration (Accounting) has been added allowing students to sit for their CPA exams: The School of Life-Long Learning was started this year with 31 students: High School Dual Enrollment program was started: Partnership with Business with education to a Fortune 500 company started.
Future programs Include: RN to Bachelor of Science in Nursing will include an online program: Master of Science In Health Services Management:
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Consideration is underway for the Northern Kentucky Campus to include: Health Information Management; Radiation Therapist; Respiratory Therapist; Cardiovascular Technician; Occupational Therapist and possibly Physical Therapist.
Under the direction of President Taylor, the campus grounds and various buildings remain a priority with upgrades and maintenance in order to provide students with superior housing, classrooms, recreation areas, etc. This, in Itself, is a terrific undertaking, but is met with confidence and expectation of nothing less than a campus of beauty and warmth.
As stated above, the startup of the new campus in Northern Kentucky is another fine example of the vision of Dr. James H. Taylor to provide quality education in an extended area with continued growth and excellence.
U.S. News, in its 2013 rankings, listed University of the Cumberiands as one of “America’s Best Universities”. This examination of 625 higher education institutions placed Cumberland in the top tier in the South. This formula uses quantitative measures used by education experts as reliable indicators of academic quality. Cumberland’s full range of undergraduate majors and master’s programs placed it in the higher ranking. In addition, Cumberland offers doctoral programs, unlike many peers, which enhanced the composite weighted score.
STUDENT SERVICES:
Between January and July, there were 639 Individual campus visits and 17 group visits, totaling 477 students, a majority of which were prospective students for 2012. The admission counselors will be visiting 126 college fairs and making numerous private visits and stops at High Schools during 2012 in anticipation for prospective students for 2013. Various other programs are utilized to contact prospective students throughout the country. Programs are provided for prospective students interested in attending Cumberland. This includes web sites and campus visits covering the faculty, financial aid programs, athletic interest, etc. Telemarketing is also an effective tool in this endeavor.
Freshmen admissions for 2012 have the following statistics: Average GPA - 3.3 Average ACT - 21.2 Average SAT - 947 (verbal and math only)
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458 freshmen enrolled, an increase of 56 students in this class.
International enrollment for 2012 includes 116 students representing 32 countries with four additional students on SEVIS approved Optional Practical Training.
During the summer of 2012 three New Student Orientation sessions were held with approximately 500 students and their families. Publications were provided Including Student Handbooks, Parent Handbooks and Summer Visitor Handbooks.
Campus Ministries include missions locally, as well as, throughout Kentucky, other states and internationally in East Asia, Belize, Uganda, Macedonia, Haiti, Ecuador, Russia, Peru and Honduras.
Leadership and Community Services include a total of 45,832 hours, an increase of 5,670 from the previous year.
In Sept. 2012 Dr. Taylor announced a partnership between UC and the Kentucky Association for Academic Competition involving the Governor’s Cup, Kentucky’s most prestigious academic event. Dr. Taylor considered this an honor for UC to be able to support this competition that showcases Kentucky’s best and brightest students and he believes education is a privilege and should be based on motivation, ability, character and purpose.
In addition, Victory Media, Inc., the premier media entity for military personnel transitioning Into civilian life, has named UC to the coveted Military Friendly Schools. This list honors the top 15 percent of colleges and universities In the country that are doing the most to embrace America’s Military members, veterans and spouses as students and ensure their success on campus.
FINANCE:
While this country is struggling with overall financial concerns, under the leadership off Dr. James H. Taylor, UC continues to explore and implement cost cutting to compensate for the loss of investment income, interest bearing accounts and the overall impact of high unemployment in the US, which Impacts gift income. Dr. Taylor spends extremely long hours, day In and day out, week end and week out, traveling all over the country in reaching donors willing to invest their gifts In the University of the
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Cumberlands. In addition, the Finance, Budget and Investment Committee and Dr. Taylor are exploring various means to determine the best alternatives In securing financial means for UC.
STUDENT FINANCIAL PLANNING:
Total Aid increased $4.3 MM for 2012/2013 v. 2011/2012. This includes an increase of 11 percent in Scholarships and 57 percent in Unsub. Stafford Loans. University of the Cumberiands has consistently held tuition, room and board cost low, which is a large benefit to the students.
SUPPORT SERVICES AND PHYSICAL RESOURCES:
As mentioned above in the Student Services remarks, improvements in social networking continue for all students. In addition, UC manages and operates the Inn and Restaurant providing working opportunities for students and studies in Hotel and Restaurant Management. The Inn and Restaurant provides for many statewide conferences for community services activities, as well as, corporate needs. Also, Mountain Outreach is in its 30th year of providing service to the needy in housing, clothing, toys and other necessities, which may not be otherwise available. They have constructed 141 houses within this 30-year span. Dr. Taylor continues to fully support and encourage this program and participation by students.
BUSINESS SERVICES AND BUDGETING:
This Is a full, hands-on, priority of Dr. Taylor. He maintains constant contact with the Vice President of Finance, as well as, each of the other Vice Presidents and staff members to insure total control of all financial matters and opportunities Including cost control.
SPECIAL PROJECTS:
The Health and Wellness Center project remains ongoing and Is still a priority with Dr. Taylor to provide a badly needed service to both the Students of UC and to the overall community and surrounding areas. This project will be fully funded when construction of the building starts.
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Although the Northern Kentucky campus is now under way, Dr. Taylor continues to explore opportunities to enhance the programs as quickly as possible and to grow the enrollment to the fullest extent.
In addition, Dr. Taylor continues with extensive travels in making many contacts to keep gift income at the highest levels possible. This is crucial for the University’s daily operation, as well as, means to fund new programs In providing quality education and for a safe, inviting and commodious campus. His ability and reputation exceeds all expectations as President of this Institution. In addition to their total dedication to the University, Dr. Taylor and his wife, Dinah, are pillows of the community.
Reviewed with President Taylor October 15, 2012 (Date)
Presented to Board of Trustees Oct. 18, 2012
Motion made by Dr- Mullins tox accept decline
Second by Mrs. Henson
Motion x passed declined
5 CONFIDENTIAL Cumberlands_000451 Case: 6:16-cv-00109-GFVT-HAI Doc #: 52-12 Filed: 10/13/17 Page: 1 of 4 - Page ID#: 1177 Guenther, Jordan & Price, P.C. Attorneys at Law 2100 West End Avenue Suite 1150 Nashville, Tennessee 37203 James P. Guenther Ti-WHOie (615)329-2100 James D. Jordan* J. Terry Price TSLECOmR (615) 320-2187 * Also AoMHfeD Kentucky ano Texas [email protected] August 28, 2015
Dr. James H. Taylor 10312 Yorkstone Drive Bonita Springs, Florida 34135-5094
Re: University of the Cumberlands
Dr. Taylor:
The Executive Committee of the university’s board wants to make sure that you, Mrs. Taylor, and the Board have a common understanding on what obligations the university has to you and Mrs. Taylor after your transition from President to Chancellor. Our firm has been asked to work with a committee of the university’s Board of Trustees to accomplish the following assignment:
To study the University's duties and obligations with respect to the office of Chancellor, and to report its findings and any recommendations to the Executive Committee....
[T]he scope of the committee's review [shall] include the respective duties and obligations between the University and both Dr. and Mrs. Taylor following Dr, Taylor’s transition from the office of President.
As you recall, in its October, 2014, meeting, the Board passed the following resolution:
Dr. Taylor’s duties as Chancellor shall commence upon the adjournment of the Board’s October, 2015, Board meeting. The duties of the office of Chancellor shall be as assigned by the Board. The salary and benefits of the Chancellor shall be those in effect for Dr. Taylor on the date of the October, 2015, Board meeting.
Would you please provide the information requested below so that I can advise the committee on exactly what commitments the university has made to you and Mrs. Taylor, as well as your respective duties and obligations to the university? In order that the committee can complete its assignment on time, please provide this information bv Tuesday. September 8. Case: 6:16-cv-00109-GFVT-HAI Doc #: 52-12 Filed: 10/13/17 Page: 2 of 4 - Page ID#: 1178 Dr, James H. Taylor AugustZS, 2015 Page 2
Your Salary and, Beuefits
1. What is the gross annual salary which you understand the university has promised to pay you for serving as the university's Chancellor?
2. Has the university promised to pay this sal ary for any period of time?
3. If the university has promised to pay this salary for a period of time, what is that period of time?
4. Has the university promised wu any housing er housing benefit after October 15, 2015?
5. If so. what housing or housing benefit has the university promised you?
6. Has the university promised to provide this housing or housing benefit for any period of time?
7. If the university has promised to pay this housing or housing benefit for a period of time, what is that period of time?
8. Please list every other benefit, fringe benefit, or perquisite that the university has promised to pay to you or provide for you after October 15, 2015. For each item, please indicate for what period of time the unncrsiu has promised to pro\ide that benefit.
Mrs. Tavlor's Sakin.' and Benefits
9. Has the university promised to pay Mrs. Taylor any salary or compensation after October 15,2015?
I. 0, If yes. what is the gross annual salary which you understand the university has promised to pay Mrs. Taylor?
II. Has the university promised to pay this salary to Mrs. Taylor for any period of time? Case: 6:16-cv-00109-GFVT-HAI Doc #: 52-12 Filed: 10/13/17 Page: 3 of 4 - Page ID#: 1179 Dr. James H. Taylor August 28. 2015 Page3
12. If the university has promised to pay this salary to Mrs. Taylor for a period of time, what is that period of time?
13. Has the university promised Mrs. Taylor any housing or housing benefit that would last beyond those benefits which have been promised to you?
14. If so, please describe what those housing benefits are and how long they will continue.
15. Please list every other benefit, fringe benefit, or perquisite that the university has promised to pay to Mrs. Taylor or for her benefit after October 15,2015. For each item, please indicate for what period of time the university has promised to provide that benefit.
Any Salary or Benefits for any Third Party
16. Has the university promised you that it will provide any compensation, housing benefit, or other benefit to any person other than you or Mrs. Taylor after October 15,2015?
17. If so, please tell me who the other person is, what the benefit is, and how long the uni versity has promised to provide that benefit.
Your Job Duties and Responsibilities to the University
18. What are your job duties and responsibilities going forward after October 15,2015, in exchange for the compensation and benefits described above?
Mrs. Tavlor’s Job Duties and Responsibilities to the University
19. What are Mrs. Taylor’s job duties and responsibilities going forward after October 15 2015, in exchange for her compensation and benefits described above? Case: 6:16-cv-00109-GFVT-HAI Doc #: 52-12 Filed: 10/13/17 Page: 4 of 4 - Page ID#: 1180 Dr. James H. Taylor August 28,2015 Page 4
Documents
20, Are there any agreements, letters, resolutions, or other documents in which the compensation and benefits described above (whether for you. Mrs. Taylor, or any other person) are described?
21. If so, please provide a copy of any documents you have, and describe any documents which you do not have and tell where they can be located.
I appreciate your help and cooperation with this task. If you have any questions, please let me know.
Sincerely,
James D. Jordan
JDJ/
Case: 6:16-cv-00109-GFVT-HAI Doc #: 69 Filed: 03/29/18 Page: 1 of 16 - Page ID#: 1246
UNITED STATES DISTRICT COURT EASTERN DISTRICT OF KENTUCKY SOUTHERN DIVISION LONDON
DR. JAMES TAYLOR and MRS. DINAH ) TAYLOR, ) ) Civil No: 6:16-cv-109-GFVT Plaintiffs, ) ) V. ) MEMORANDUM OPINION ) & UNIVERSITY OF THE ) ORDER CUMBERLANDS, ) ) Defendant.
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. Case: 6:16-cv-00109-GFVT-HAI Doc #: 69 Filed: 03/29/18 Page: 2 of 16 - Page ID#: 1247
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.” [M]
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
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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 [SeeR. 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.] 2 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 “subscribfing], swfearing], and acknowledgefing]” Mrs. Dinah Taylor’s signature. [R. 16-1; R. 46 at 15; R. 46-1 at 28-30.]
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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
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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 19-
20.] 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.
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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 [non movant].” 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., Ml 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
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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
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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.l
(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
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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.ll; 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, 8-
11.] 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
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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 ofAmerica, 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. 52-
10.] 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, [/c/.] 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
3 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
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Group, Inc., 135 F.3d at 426 n.l; 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 [Disputed [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.
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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. [SeeR. 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
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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 6-
13.] 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 comers 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.
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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.l; 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.
United States District Judge
16
, Case: 6:16-cv-00109-GFVT-HAI Doc #: 169 Filed: 01/25/19 Page: 1 of,23 - Page ID#: Eastern District of Kentucky ' filed UNITED STATES DISTRICT COURT ' MN 2 5 2019 EASTERN DISTRICT OF KENTUCKY I ATLONDON SOUTHERN DIVISION I ROBERT R. CARR LONDON i CLERK U.S. DISTRICT COURT
DR. JAMES TAYLOR AND MRS. DINAH ) TAYLOR, ) ) Civil No. 6:16-cv-0010^-GFVT-HAI Plaintiffs, ) ) V. ) JURY INSTRUCTIONS
UNIVERSITY OF THE CUMBERLANDS, ) ) Defendants. )
*** *** ■ i Members of the Jury, now that you have heard the evidence and the arguments, it is my
duty to instruct you about the applicable law. It is your duty to follow the law as I will state it.
You must apply the law to the facts as you find them from the evidence in the case. Do not single
out one instruction as stating the law but consider the instructions as a whole. Dp not be
concerned about the wisdom of any rule of law stated by me. You must follow and apply the law.
The lawyers have properly referred to some of the governing rules of lajv in their
arguments. If there is any difference between the law stated by the lawyers and these
instructions, you must follow my instructions. ,
Nothing I say in these instructions indicates I have any opinion about the facts. You, not I, have the duty to determine the facts. I
You must perform your duties as jurors without bias or prejudice as to any party. The law
does not permit you to be controlled by sympathy, prejudice, or public opinion^ All parties
expect that you will carefully and impartially consider all the evidence, follow the law as it is
now being given to you, and reach a just verdict, regardless of the consequences.
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All Parties Equal Before the Law
You should consider and decide this case as a dispute between persons of equal standing
in the community, of equal worth, and holding the same or similar stations in life. A corporation
can, of course, only act through its employees, officers and agents, but is entitle^ to the same fair
trial as a private individual and generally has the same responsibilities as a private individual. All
persons, including corporations, business entities, and other organizations, stand equal before the
law and are to be treated as equals.
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Consideration of Evidence
Unless you are otherwise instructed, the evidence in the case consists of the sworn
testimony of the witnesses regardless of who called the witness, all exhibits received in evidence
regardless of who may have produced them, and all facts and events that may h^ve been
admitted or stipulated to. i Statements and arguments by the lawyers are not evidence. The lawyers (are not
witnesses. What they have said in their opening statements, closing arguments, and at other times
is intended to help you understand the evidence, but it is not evidence. If a lawyjer asks a witness
a question containing an assertion of fact, you may not consider the assertion asj evidence of that
fact. However, when the lawyers on both sides stipulate or agree on the existence of a fact, you
must accept the stipulation and regard that fact as proved unless otherwise instructed. i Any evidence to which I have sustained an objection and evidence that Ij have ordered
stricken must be entirely disregarded.
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Direct and Circumstantial Evidence ; I Generally speaking, there are two types of evidence presented during a trial-direct
evidence and circumstantial evidence. "Direct evidence" is the testimony of a person who asserts
or claims to have actual knowledge of a fact, such as an eyewitness. An example of “direct
evidence” is when a witness testifies about something that the witness knows through his own
senses—something the witness has seen, felt, touched, or heard or did. If a witness testified that
he saw it raining outside, and you believed him, that would be direct evidence that it was raining.
Another form of direct evidence is an exhibit where the fact to be proved is in existence or is a
current condition.
“Circumstantial evidence” is proof of one or more facts from which youi could find i another fact. If someone walked into the courtroom wearing a raincoat covered jwith drops of
water and carrying a wet umbrella, that would be circumstantial evidence from which you could
conclude that it was raining.
The law generally makes no distinction between the weight or value to be given to either
direct or circumstantial evidence. A greater degree of certainty is not required o|f circumstantial
evidence. You are required to find the facts in accordance with all the evidence jin. the case, both
direct and circumstantial. 1 i
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Inferences
You are to consider only the evidence in the case. However, you are not limited to the
statements of the witnesses and exhibits. You may draw from the facts you find have been
proved such reasonable inferences as seem justified in light of your experience, j
"Inferences" are deductions or conclusions that reason, and common sense lead you to
draw from facts established by the evidence in the case. In other words, you may make
deductions and reach conclusions which reason and common sense lead you to draw from the
facts which have been established by the testimony and evidence in the case. You may not draw
unreasonable inferences, such as inference based only on speculation and conjecture in the
complete absence of probative facts.
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Credibility of Witnesses !
In deciding the facts, you may have to decide which testimony to believe) and which
testimony not to believe. You are the sole judges of the credibility or “believabiljity” of each
witness and the weight to be given to his testimony. The weight of the evidence does not
necessarily depend upon the number of witnesses who testify. You may believe everything a I witness says, part of it, or none of it. In considering the testimony of any witnesi, you may take
into account many factors, including the witness’s opportunity and ability to see or hear or know
the things the witness testified about; the quality of the witness’s memory; the witness’s manner
while testifying; the witness’s interest in the outcome of the case; any bias or prejudice the
witness may have; his or her relationship to the Taylors or to the University; other evidence that
may have contradicted the witness’s testimony; the extent to which he or she has been supported
or contradicted by other credible evidence; and the reasonableness of the witness’s testimony in
light of all the evidence.
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Expert Witness
The rules of evidence ordinarily do not permit witnesses to testify as to ojpinions or
conclusions. There is an exception to this rule for "expert witnesses." An "expert witness" is a
person who by education and experience has become expert in some art, science!, profession, or
calling. Expert witnesses state their opinions as to matters in which they professjto be expert and
may also state their reasons for their opinions.
You should consider each expert opinion received in evidence in this ca^e and give it
such weight as you may think it deserves. If you should decide the opinion of an expert witness
is not based upon sufficient education or experience, if you should conclude thej reasons given in
support of the opinion are not sound, or if you feel the expert's opinion is outweighed by other
evidence, you may disregard the opinion in whole or in part. In weighing each expert opinion,
you may consider the reliability and amount of the information supporting the opinion, as well as
the factors I have mentioned for weighing the testimony of any other witness. i
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Impeachment-Inconsistent Statement or Conduct |
A witness may be discredited or impeached by contradictory evidence oij by evidence that
at some other time the witness has said or done something, or has failed to say or do something,
that is inconsistent with the witness' present testimony. If you believe any witness has been
impeached and thus discredited, you may give the testimony of that witness sucb credibility, if any, you think it deserves. '
If a witness is shown to have knowingly testified falsely about any material matter, you
have a right to distrust such witness' other testimony and you may reject all the testimony of that
witness or give it such credibility as you may think it deserves. An act or omission is
"knowingly" done, if the act is done voluntarily and intentionally, and not because of mistake or I accident or other innocent reason.
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All Available Witnesses or Evidence Need Not Be Produce^
The law does not require any party to call as witnesses all persons who may have been
present at any time or place involved in the case, or who may appear to have some knowledge of
the matters in issue at this trial. Nor does the law require any party to produce a^ exhibits all
papers and things mentioned in the evidence in the case. !
If a witness has not been called to testify in the case, you are not to speculate about the
reasons for that. You are not to draw any inferences from the fact that a witnessjhas not been
called to testify, since there are many reasons why a party may choose not to call a witness. I There is no rule or requirement that a party call all potential witnesses, or its expert witnesses, to I testify during its case.
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Use of Depositions as Evidence j
During the trial, certain testimony has been presented by way of deposition. The
deposition consisted of sworn, recorded answers to questions asked of the witness in advance of
the trial by attorneys for the parties to the case. The testimony of a witness who,jfor some reason,
is not present to testify from the witness stand may be presented by way of videb recording of the
deposition or in writing under oath. Such testimony is entitled to the same consideration and is to
be judged as to credibility, weighed, and otherwise considered by you, insofar as possible, in the
same way as if the witness had been present and had testified from the witness stand.
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Objections During Trial !
The lawyers for both sides objected to some of the things that were said 6r done during j the trial. Do not hold that against either side. The lawyers have a duty to object whenever they i think that something is not permitted by the rules of evidence. Those rules are designed to make
sure that both sides receive a fair trial. |
And do not interpret my rulings on their objections as any indication of how I think the
case should be decided. My rulings were based on the rules of evidence, not on ^iow I feel about
the case. Remember that your decision must be based only on the evidence that jyou saw and
heard here in court.
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Preponderance of the Evidence
The plaintiffs, the Taylors, have the burden in a civil action, such as this, to prove every essential element of their claims by a preponderance of the evidence. If Dr. and lylrs. Taylor, should fail to establish any essential element of any claim by a preponderance of the evidence, you should find for defendant, the University, as to that claim. i
"Establish by a preponderance of the evidence" means evidence, which as a whole, shows I that the fact sought to be proved is more probable than not. In other words, a preponderance of the evidence means such evidence as, when considered and compared with the evidence opposed i to it, has more convincing force, and produces in your minds belief that what is sought to be proved is more likely true than not true. This standard does not require proof to an absolute certainty. j
In determining whether any fact in issue has been proved by a preponderance of the evidence in the case, unless otherwise instructed you may consider the testimony of all witnesses, regardless of who may have called them, and all exhibits received in evidence, regardless of who may have produced them. 1 I I
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Contract Definition - Essential Elements j
The Taylors allege that they entered into a legal contract in which the University agreed
to pay them a salary and benefits for the rest of their lives. Under the law, a contract is defined as
an agreement or exchange of promises between two or more persons to do or not to do certain things. The University claims that it did not agree to the contract alleged by the Taylors.
You must decide whether there was a valid and enforceable legal contract;, as defined by the law, between the Taylors and the University. A contract requires proof by a preponderance of the evidence of all of the following elements: I
1) Persons with authority to enter into the contract; I 2) An offer;
3) An acceptance of that offer producing a mutual agreement, or a meeting of the minds, between the persons as to all essential terms of the agreement at the time of acceptance; and
4) Consideration. i
Each of these elements is disputed. J
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Contract Definition - Authority i
Authority means having the permission or right to enter into a contract.
Since the University is not a natural person, it can only act through its agents, or persons
authorized to act on its behalf. The Taylors claim that the then-Chairman of the Board, Jim Oaks,
was the University’s agent and that he bound the University to the Disputed Agreement when he
signed it. 1
An agency relationship may be based upon either actual authority or apparent authority.
Actual authority exists if the University gave Jim Oaks specific authority to enter into the i Disputed Agreement on behalf of the University. To establish that Jim Oaks had actual authority,
the Taylors must prove that the University manifested to Jim Oaks that he could enter contracts
on behalf of the University. i
Apparent authority exists if, based on specific actions or statements by the University, the
Taylors reasonably believed Jim Oaks had the authority to act on his own to enteif into the
Disputed Agreement on behalf of the University. To prove apparent authority, the Taylors must
prove all of the following elements:
(1) the University demonstrated its consent to Jim Oaks’s exercise of authority or
knowingly permitted Jim Oaks to exercise such authority; j
(2) the Taylors reasonably believed that Jim Oaks possessed such authority and
(3) the Taylors, relying on such appearance of authority, changed their position and will
be injured or suffer a loss if the Disputed Agreement signed by Jim Oaks does nol) bind the
University.
The Taylors claim that the Chairman of the Board of Trustees, Jim Oaks, had both actual and apparent authority from the University to enter into the Disputed Agreement on behalf of the : : I i 14 Case: 6:16-cv-00109-GFVT-HAI Doc #: 170 Filed: 01/25/19 Page: 1 of 4 - Page ID#: 7163
UNITED STATES DISTRICT COURT EASTERN DISTRICT OF KENTUCKY JAN 2 5 2019 SOUTHERN DIVISION AT LONDON ROBERT R. CARR LONDON CLERK U.S. DISTRICT COURT
DR. JAMES TAYLOR AND MRS. DINAH ) TAYLOR, ) ) Civil No. 6:16-cv-00109-GFVT-HAI Plaintiffs, ) ) V. ) VERDICT FORM ) UNIVERSITY OF THE CUMBERLANDS, ) ) Defendants. )
* * * ***
If all of you are satisfied from the evidence that either one or the other of the following statements is true, you will find for James and Dinah Taylor:
• That the Board of Trustees of the University of the Cumber lands approved a valid and
enforceable legal contract (the parties have called this contract the “Disputed
Agreement”).
OR
• That James or Dinah Taylor reasonably relied on manifestations made by the Board of
Trustees of the University of the Cumberlands and the officers of the University of the
Cumberlands that James Oaks (the chairman of the Board of Trustees) was authorized to
sign on behalf of the Board, resulting in a valid and enforceable contract.
If you believe the following statement is true, you will find for the University of the
Cumberlands:
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• That the Board of Trustees did not approve the Disputed Agreement at its April 19, 2012,
Meeting nor did the University demonstrate its consent for then-Chairman Oaks to enter
into the Disputed Agreement.
Select One:
We find for James and Dinah Taylor.
We find for the University of the Cumberlands.
If you find for James and Dinah Taylor, you must determine whether a breach occurred by completing the next section of the Verdict Form. If you find for the University of the
Cumberlands. STOP AND NOTIFY THE COURT SECURITY OFFICE THAT YOUR
DELIBERATIONS HAVE CONCLUDED.
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If all of you are satisfied from the evidence that a valid and enforceable legal contract was formed, you must now decide whether one of the parties breached the contract.
Select One:
We find that James and Dinah Taylor breached their obligations under the contract.
We find that the University breached its obligations under the contract.
If you find for James and Dinah Taylor, you must determine the amount of damages by completing the next section the Verdict Form. If you find for the University of the Cumberlands,
STOP AND NOTIFY THE COURT SECURITY OFFICE THAT YOUR
DELIBERATIONS HAVE CONCLUDED.
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Damages
We find for the Taylors and award damages for the University of the Cumberlands’s breach of the Disputed Agreement in the amount of $as the lump sum amount necessary to put them in the same position as they would have been in had the contract not been breached by the University.
Foreperson Date
4