[A]nother former Southern Vermont College benefactor is suing the recently shuttered school in an effort to recoup their donation.
Bruce Laumeister and his wife Elizabeth Small have taken the school to court to block SVC from selling off the Laumeister Art Center – which the couple donated in 2017 – and to have their gift to the school voided. The arts center sits on nearly 6 acres on Gypsy Lane in Bennington and is worth upwards of $2 million, according to the plaintiffs.
Through their attorney, Lon McClintock, Laumeister and Small allege in a lawsuit filed last week in Bennington Superior Court that then-SVC president David Evans was “false or misleading” about the college’s financial health when negotiating the donation.
Evans promised the school was in good financial health and could afford to underwrite the center’s roughly $100,000 annual operating expenses, the plaintiffs allege. But instead, the school’s enrollment was declining and assets shaky. When it took over the center, it reduced hours and laid off a key employee.
SVC was “never ready, willing, or able to operate the former Arts Center,” the lawsuit alleges. Rather, plaintiffs suggest, the school was more concerned about improving its bottom line to look healthier before accreditors.
“SVC understood that it could lose its accreditation as an academic institution if it were not in sound financial condition. Evans knew, however, that obtaining the gifts from plaintiffs would substantially improve SVC’s balance sheet – i.e., improve SVC’s assets portfolio by over $2 million,” the suit alleges.
When the school took on the arts center, the suit argues, a restrictive covenant attached to the deed also limited the use of the space to a nonprofit arts center, museum or theater.
The college has contracted with Manchester-based TPW Real Estate to sell the arts center, according to the suit, and prospective buyers have already toured the property.
In an order granting the plaintiffs a temporary restraining order blocking the college from selling or transferring the property, Superior Court Judge David Barra wrote that there was “reasonable likelihood plaintiffs will prevail on the merits of their claims.”
The lawsuit, he wrote, “sets forth sufficient facts for the Court to conclude that the gift was the product of Defendants’ false and/or misleading representations about Defendants’ ability and intentions as to the gifts and future operation of the Arts Center.”
“If the allegations set forth in Plaintiffs’ Complaint are proved to be true,” he added, “the facts are sufficient to warrant annulment of Plaintiffs’ gifts.”
A temporary restraining order is typically only good until the other side has had an opportunity to respond. A hearing was scheduled for June 5, but McClintock said in an interview both parties had agree to postpone it while both sides try and hash out a deal.
The lawsuit was first reported by the Bennington Banner.
Evans declined to comment on the lawsuit. He also voluntarily stepped down at the end of last week, he said, in order to free up the remaining $25,000 or so in his contract to help pay outstanding obligations to employees.
“Everybody has been paid as of yesterday or today, except for some people for whom there is a question about the structure of their employment agreements,” he said.
Charles Goldstein, of 3-Cubed Advisory Services, a Maryland consulting firm specializing in restructuring, turnaround and crisis management, has been appointed SVC’s chief restructuring officer and is essentially in charge of operations.
Dirk Anderson, general counsel for the Vermont Department of Labor, said that the state had initially received five wage complaints from employees at SVC, but that all claims had been resolved before the state took action.
This is the second lawsuit filed against the college from a former donor. Frederic Poses filed suit against the school earlier this month to recoup $2 million he pledged as collateral when the college took out an $8.5 million bond in 2011. SVC defaulted on the loan in March, and Community Bank drew down the money Poses had put up to secure the loan. College officials have said the school still owes about $6 million on the bond.
The Poses suit also objects to a $900,000 loan SVC trustees made to the college to help get the school through graduation day. As part of that deal, trustees were granted a mortgage to the Laumeister Arts Center, according to court filings.