Summary
The Kentucky Supreme Court reviewed consolidated appeals concerning attorney fees paid to Dolt, Thompson, Shepherd & Conway in connection with the Commonwealth's Purdue Pharma litigation. The Court held that the Model Procurement Code applied to the contract and that equitable estoppel was unavailable, but concluded that the 2016 budget law clearly authorized payment of the attorney fees and expenses despite the contract's expiration. The Court reversed the Court of Appeals and reinstated the Franklin Circuit Court's summary judgment, with one justice concurring in part and dissenting in part.
Topics
Practice areas
Questions Presented
- Whether contracts entered into by the Kentucky Office of the Attorney General are subject to the Kentucky Model Procurement Code.
- Whether equitable estoppel can validate or prevent recovery under an unauthorized or expired state-government procurement contract.
- Whether the 2016 budget bill clearly suspended or otherwise authorized payment of attorney fees and expenses from the Purdue Pharma settlement despite the contract's noncompliance with the Model Procurement Code.
- Whether factual discovery was necessary before resolving the parties' summary-judgment motions.
Holdings
- Contracts entered into by the Office of the Attorney General are subject to the Kentucky Model Procurement Code, KRS Chapter 45A. Commonwealth contracts must be written, may not extend beyond the applicable biennium, and contract modifications must receive the required written approval.
- Equitable estoppel does not apply to validate payment under a state-government procurement contract that was not entered into as required by law.
- The 2016 budget bill clearly authorized payment of the Purdue Pharma attorney fees and expenses and temporarily suspended any otherwise applicable procurement-law impediment to that payment, even if the contract did not fully comply with the Model Procurement Code.
- Further discovery was unnecessary because no factual issue could change the legal effect of the clear language enacted in the 2016 budget bill.
Key quotations
“The only requirement in this suspension of statutes is that the Legislature clearly manifest its intent to do so—as it did in this instance.” (at 9)
“Whether this is the reason is irrelevant because we are bound to follow the clear and unambiguous language of the law.” (at 11)
“There are no facts the Cabinet may discover which will change the words enacted by the Legislature and signed by the Governor in the budget.” (at 12)
Factual background
The Office of the Attorney General hired Dolt Thompson under a contingency-fee contract to assist in litigation against Purdue Pharma. Purdue Pharma later settled for $24 million, and the firm received the initial $12 million payment and paid itself attorney fees and expenses. The written contract had expired before the settlement and payment, and the parties did not complete a documented renewal under the Kentucky Model Procurement Code. A 2016 budget bill nevertheless directed that attorney fees and expenses from the Purdue Pharma settlement be paid before other specified disbursements.
Procedural history
The Office of the Attorney General sought a declaration that its 2016 contract with Dolt Thompson was enforceable and that payment of attorney fees from a Purdue Pharma settlement was proper. The Finance Cabinet filed a related action against Dolt Thompson, and the Franklin Circuit Court consolidated the cases and granted summary judgment to the OAG and Dolt Thompson. The Court of Appeals reversed and remanded for discovery. The Kentucky Supreme Court reversed the Court of Appeals and reinstated the Franklin Circuit Court's summary judgment.
Remand instructions
The Court of Appeals' decision was reversed, and the Franklin Circuit Court's orders granting summary judgment to the OAG and Dolt Thompson were reinstated.