LOUISVILLE, Ky. (WDRB) -- Two factions seeking control of the St. Joseph Catholic Orphan Society are in a legal battle over a move that ushered out the nonprofit agency's board of directors amid accusations that a trustee sexually harassed staffers.

Court records show the schism occurred as Louisville Archbishop Joseph E. Kurtz raised concerns that the board was not acting in the best interest of the organization, which oversees an iconic children's home on Frankfort Avenue and is perhaps best known for its annual picnic. The archbishop is represented on the board.

Specifically, Kurtz was concerned that the board ignored the advice of its attorney in August 2012 to remove a trustee with "several past accusations of harassment," potentially exposing board members to "personal liability," the archbishop wrote in a letter included in a lawsuit filed last April.

In the wake of that meeting, at least 12 board members resigned, according to court records.

Earl Hartlage, a former Jefferson County Commissioner who served on the board until last fall, is accused in court documents of harassing St. Joseph staff members. The harassment allegations, which are not identified in detail in the lawsuit, are "baseless" and "untrue," Hartlage said in a telephone interview Friday.

In a letter dated Oct. 9, St. Joseph executive director Pamela Cotton told society members that nearly two-thirds of the board had resigned in protest after former board leaders "mishandled" a third allegation of "inappropriate conduct of a sexual nature" by a board member she doesn't name.

A St. Joseph's official declined to discuss the status of the complaints.

A spokeswoman for the Archdiocese of Louisville issued a statement Friday afternoon saying it looks forward to the "day when these differences are resolved."

Despite the archbishop's correspondence with board members -- and connection to the board through a representative -- spokeswoman Cecelia Price said in a statement: "In light of the limited role of the Archdiocese and the Archbishop of Louisville, it would be best to seek comment from St. Joseph about the legal issues surrounding its Board of Directors."

In the lawsuit in Jefferson Circuit Court, eight people who say they are the rightful board members and the president of the St. Joseph Home Alumni Association claim they were "wrongfully removed" from their leadership positions in February by a group that included the board members who had resigned in protest over the board's failure to remove Hartlage.

The events that led to the installation of the new board – whose members now include Stock Yards Bank & Trust President James "Ja" Hillebrand and Louisville Gas & Electric spokeswoman Chris Whelan – began in August 2012, according to court records.

While a majority of the board members at the August meeting supported removing Hartlage, the action didn't receive the needed two-thirds vote, according to the lawsuit.

Ten days after the meeting, Kurtz wrote to the board's acting president expressing concern that the trustees were not acting in the best interest of St. Joseph.

Kurtz said the board's refusal to remove Hartlage could potentially expose his personal representative on the board and the other trustees to "personal liability," according to court records. The archbishop also refused to restore his personal representative to the board.

And Kurtz met with the St. Joseph board a month later to discuss Hartlage's continued presence on the board, saying in another letter in October 2012 that he remained concerned about the "unresolved issue related to a board member with several past accusations of harassment."

Hartlage resigned in November 2012, according to court documents. He told WDRB.com that he quit the board because Cotton, the executive director, "is absolutely no good." He declined several requests to elaborate.

But according to the court record, other trustees convinced Hartlage to resign at the archbishop's urging.

Founded in 1849 by parishioners from two of Louisville's German Catholic churches, the St. Joseph Catholic Orphan Society established a home for children whose parents had died in a cholera epidemic, according to the Encyclopedia of Louisville. The society bought more than 20 acres on Frankfort Avenue in 1883, and the first children moved in three years later.

The St. Joseph campus includes housing for abused and neglected children and a day-care center. Staff members also place children in foster care and help with adoptions.

Kurtz wrote in a letter in the court case that he was worried about "reports we have heard from organizations and individuals in the community who have concerns about St. Joseph's governance and stewardship of resources."

The society's $5.5 million capital campaign went into a "free fall" as a result of the board exodus, losing an estimated $2 million in committed donations, Cotton wrote in a letter to members this week. However, those funds were restored after the current board took over in February, she wrote.

At the center of the lawsuit is what occurred on that day during the society's annual meeting at the St. Joseph Orphanage. The Feb.6 meeting also included a dinner for trustees, the orphanage's director, a priest and a group of Ursuline nuns, among others, according to court documents.

The plaintiffs allege the board members who had resigned the previous August entered the meeting room "accompanied by about 120 persons, some of whom claimed to be members of the Society. The crowd far exceeded the capacity of the room."

Board president Bob Beam and Vice President Frank Campisano asked that those not invited leave, "but the former members and their supporters refused to leave," according to the lawsuit.  A motion to end the meeting, following a prayer, was ignored, and Thurman Senn, who was among the board members who had resigned, took over the meeting, the plaintiffs allege.

"Tempers flared and there was a great deal of shouting and jostling," according to the plaintiffs. Ultimately, society members voted 113 to 8 to approve a resolution electing them as the new trustees, of which Kurtz approved, according to court documents.

Beam's group alleges that they were ousted in violation of the society's bylaws because the proper procedures weren't followed.

Senn's group counters in court filings that its election was approved by Kurtz and consistent with church law, but the plaintiffs deny that account and say he has taken no action and made no such decision.

In a February 14 letter to Beam, documented in the court record, Kurtz wrote that he will continue to observe the change In leadership.

The current board members asked Jefferson Circuit Court Judge Brian Edwards to dismiss the case, claiming he didn't have jurisdiction over the church's matters.  Edwards denied the motion to dismiss on July 26.  

The former members have asked Edwards to issue a temporary injunction precluding the current members as "holding themselves out as members of the board."  

In a letter earlier this month, Beam told society members about the lawsuit and said the former board members were confident "we will be successful in our effort to prove that the bylaws have been violated and that the hostile takeover was both unjust and unlawful."

Beam noted that before the Feb. 6 meeting, the locks on the building had been changed so "we could no longer use the facility to conduct business."

In her letter, Cotton defended the decision to change the locks.

"We need to know who has keys and access to the locked portions of our campus for safety and security reasons that our obvious. Having an unknown number of keys floating about is simply dangerous," she wrote.

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