BENNINGTON — The founders of the Bennington Center for the Arts have filed suit to annul their 2017 gift of the facility to Southern Vermont College, which is closing this summer after citing insurmountable financial challenges.
The suit is the second filed in Bennington Superior Court Civil Division that seeks to prevent the college trustees from selling off the 371-acre campus and its buildings to help cover mounting debt.
Bruce Laumeister and his wife, Elizabeth Small, donated thearts centeron Gypsy Lane off Route 9 to SVC in December 2017. College officials said at the time that the school would continue to operate the performance and gallery space as part of the SVC curriculum.
But the indebted college recently placed the arts center on the market as part of an apparent effort to cover SVC's mortgage and other debt of more than $6 million. The main campus off Monument Avenue is being marketed as well, including the school's historic Everett Mansion, Hunter Hunt dormitory and the Mountaineer Center athletic facility.
As part of the arts center suit, Judge David Barra has granted a temporary restraining order preventing the college from contracting to sell the center, pending a June 5 hearing on whether a preliminary injunction should be granted.
In issuing the order, Barra said he was persuaded by the supporting materials submitted in the complaint that there is "a reasonable likelihood that plaintiffs will succeed on the merits of their claims."
In the suit, filed May 21 by attorney Lon McClintock, Laumeister and Small seek to block any deal to sell the center and want their donation to the college annulled because of alleged bad faith and/or misrepresentations on the part of the college and SVC President David Evans.
McClintock sought and obtained a temporary restraining order and now seeks a preliminary injunction that could prevent a sale pending resolution of the suit.
In granting the temporary order, Judge Barra said Laumeister and Small "have shown sufficient facts, by clear and specific facts stated in affidavits or attached exhibits, to support the conclusion that the gifts were the product of SVC's false or misleading representations about its ability to operate the Arts Center and/or its intentions regarding the Arts Center and the other gifts."
He added, "If true, the allegations warrant annulment of the gifts."
The restraining order prevents SVC from selling the center and its 5.81 acres; from handling, moving or selling artworks, furnishings or equipment in the center that the plaintiffs donated to the college; disrupting the utilities or mechanical or other systems at the center needed to maintain or protect the premises; entering a residential apartment within the center without consent of the plaintiffs, or interfering with the plaintiffs to the apartment or the art collection.
The center founders are seeking a declaratory judgment from the court annulling the donation to SVC and a declaratory judgment regarding a life lease arrangement concerning the apartment and in respect to restrictions on how the center could be used by SVC. Those included that it must be a nonprofit arts center or museum and theater, according to the suit.
And Laumeister and Small seek to protect and insure the art collection housed there, which they said was the college's obligation under the donation agreement. According to the suit, the arts center property is valued conservatively at more than $2 million, and the founders' art collection there is said to be valued at $2 million.
Reached on Tuesday, McClintock said that, if the college would agreed to return the performance and exhibit center to Laumeister and Small, they would operate it as they have in the past and seek another suitable entity to continue operations into the future.
`Number of promises'
The suit contends that SVC officials, including President David Evans, "made a number of promises to plaintiffs for the purpose of obtaining a gift of the arts center and other valuable things from plaintiffs."
The founders contend that Evans and the college knew or should have known that representations made during negotiations prior to the donation "were not true when made," and that college officials failed to disclose information about the worsening financial condition of the college.
Among representations from Evans and the college that the suit contends were misleading include that SVC was in sound financial condition; that it had a small amount of debt and student enrollment was rising; that the college could underwrite the center's operating expenses of about $100,000 annually, and that the college had the financial ability to continue operation of the center as it had been operated under the founders.
Evans could not be reached for comment on the suit. SVC board of trustees Chairman David Newell said the institution is referring comment to attorney Dave Gurtman, of Dinse, based in Burlington. Gurtman could not be reached.
Laumeister and Small constructed the Bennington Center for the Arts during the early 1990s and it opened in 1994. Wings were added over about 15 years, resulting in a total of 36,000 square feet of space, including the 315-seat theater, seven galleries, offices and other spaces. The grounds include a covered bridge museum and gardens.
Another suit pending
The college also is being sued in Bennington Superior Court by Frederic Peros, of New York City. A major supporter of the college, Peros put up $2 million in 2011 as collateral for the school's principal mortgage, which is owed primarily to Community Bank and in part to Bank of Bennington.
Poses seeks a preliminary injunction to prevent the SVC trustees from assuming new debt or encumbering any campus assets without his involvement and consent. He is asking the court to appoint a receiver to manage the assets of the school.
A motion hearing is schedule in the matter on June 3.
According to his lawsuit, Poses provided $2 million as additional security to allow extension of $8.5 million in financing under a bond the college obtained for campus projects and upgrades.
His $2 million was held in an account and could be drawn down if the college defaulted on its mortgage payments to the banks, according to the suit. The suit states that Poses also concluded a separate reimbursement agreement with SVC to protect his pledge and to take effect if the college was determined to be in default, which occurred in March.
According to the injunction motion, SVC is obligated to "immediately and unconditionally pay to [Poses], upon demand," the amount that had been drawn down by the mortgage-holder, plus interest and expenses incurred.
Under the agreement, Poses said he also can "repossess the above-mentioned collateral, sell the collateral, and/or collect all revenues and proceeds of the collateral."
To further secure SVC's obligations, the suit states, Poses obtained a mortgage of "all real and personal property" of the college, which provides that upon a default "a receiver can be appointed as a right to manage the mortgaged property."
And the reimbursement agreement "prohibits SVC from taking on any new debt or pledging any assets of SVC without the consent of the plaintiff," according to the suit.
A motion for a writ of attachment on all real and personal property of the college also was filed with the suit.
Poses' attorney, Alexander LaRosa, of MSK Attorneys, of Burlington, has said one of his client's principal goals in the suit is to ensure the college's assets are disposed of in an equitable manner for all parties involved, including employees and students.
The college's struggling financial condition and declining student enrollment were cited for the continued problems that led to the SVC closure announcement in early March.
SVC at the same time was stripped of its academic accreditation by the New England Commission for Higher Education, effective on Aug. 31, based on the deteriorating financial situation and a perceived inability to fund programming.
The main campus assets are assessed by the town at more than $9 million. But property also includes restrictions that could factor in any sale, such as historic preservation issues with the Everett Mansion and a conservation agreement with Vermont Land Trust and a first purchase option on more than 200 acres of mostly wooded hillside land at the base of Mount Anthony, west of the mansion.
Jim Therrien writes for New England Newspapers in Southern Vermont, including the Bennington Banner, Brattleboro Reformer and Manchester Journal. Twitter: @BB_therrien