CHARLESTON – Days after Alderson Broaddus University closed its doors, two lawsuits already had been filed by students and employees.
And less than a month after the school shut down, its Board of Trustees has voted to file a petition with the United States Bankruptcy Court to liquidate assets under Chapter 7. The petition was expected to be filed August 31.
Both civil complaints were filed August 8 in Kanawha Circuit Court against ABU and James Garvin, chairman of the ABU Board of Trustees and Governors. An amended version of the employee complaint was filed August 14 with a new class representative. The complaints were filed by Anthony Majestro of Powell and Majestro in Charleston and by D. Adrian Hoosier II of Hoosier Law Firm in Charleston.
Hoosier
The first complaint, filed on behalf of students, claims the school failed to deliver on advertised promises to students and knew it likely would be unable to fulfill those obligations before the closing was announced at the beginning of the month. It also says university staff continued to recruit students despite knowing the school unlikely would continue to operate.
The student complaint accuses the school of violating the West Virginia Consumer Credit and Protection Act and created duress, undue influence and economic loss suffered by the plaintiffs. It also says promised arrangements and “implied contracts” for students to complete their degrees were not made.
The student class would include students enrolled for classes that were scheduled to begin this month.
The second complaint, filed on behalf of employees, says they were promised 90-day notice prior to the school’s closing or the termination of employees. The suit alleges that the university failed to provide that notice.
The employee class would include employees who received a letter dated November 1 regarding rumors of the school’s closure in December. That letter said employees would receive that 90-day notice of closure.
Hoosier said the legal team representing both groups have not talked to ABU or its counsel, relying only on information provided from potential class members so far.
ABU has experienced “extreme financial difficulties,” according to Hoosier, who said rumors of closure have persisted since the start of the 2022-23 school year.
The employees accuse the defendants of breach of contract, breach of covenant of good faith and fair dealing, fraud, constructive fraud, intentional misrepresentation, negligent misrepresentation, unconscionability, breach of fiduciary duties, duress, undue influence and economic loss. They seek compensatory and punitive damages.
The students claim ABU failed to disclose its financial problems, its inability to actually confer degrees and the strong possibility of closure. They accuse the defendants of breach of contract, breach of covenant of good faith and fair dealing, fraud, constructive fraud, intentional misrepresentation, negligent misrepresentation, unjust enrichment, unconscionability, breach of fiduciary duties, violations of the West Virginia CCPA, duress, undue influence and economic loss. They seek compensatory and punitive damages.
The attorneys have set up a page for further information about the lawsuit, including information and forms for potential plaintiffs in the cases, at https://www.hlfwv.com/alderson-broaddas-university/
The bankruptcy filing plan was revealed in an August 30 letter from Garvin to the West Virginia Public Service Commission. It asked the PSC to not allow the termination of utility services until the filing of bankruptcy petition and the start of the automatic stay of collection efforts that would follow.
Among other creditors, ABU owes the City of Philippi more than $750,000 in utility fees. The school allegedly is more than $30 million in debt.
That debut led the state Higher Education Policy Commission to vote July 31 to revoke ABU’s ability to confer degrees.
Kanawha Circuit Court court case numbers 23-C-673 (students) and 23-C-674 (employees)