Former officials sue University of Louisville Foundation over lawsuit costs
Three former University of Louisville Foundation officials have sued the organization to demand payment of their attorney fees and other costs in defending themselves against the foundation’s own allegations of financial mismanagement.
LOUISVILLE, Ky. (WDRB) -- Three former University of Louisville Foundation officials have sued the organization to demand payment of their attorney fees and other costs in defending themselves against the foundation’s own allegations of financial mismanagement.
Former foundation chief financial officer Jason Tomlinson, former U of L chief financial officer Michael Curtin and former foundation board member Burt Deutsch jointly filed the complaint Wednesday in Franklin Circuit Court.
Tomlinson, Curtin and Deutsch are co-defendants, along with former U of L president James Ramsey and his former chief of staff Kathleen Smith, in a lawsuit filed by the university and foundation on April 25.
The lawsuit alleges that the former officials depleted the school’s endowment with excessive spending and unreasonable compensation in the eight years preceding Ramsey’s resignation in 2016, while also overstating the value of the fund with unconventional accounting.
Louisville attorney Don Cox, who represents Tomlinson, Deutsch and Curtin, said the foundation’s current board shows “total irresponsibility” in refusing to pay his clients’ costs in the lawsuit since the allegations arise from their service to the foundation.
“This is just another example of the foundation and the university thinking they are above the law, and it’s ridiculous,” Cox said.
Ramsey and Smith’s attorneys have also demanded payment of their fees from the foundation.
But U of L and the foundation have said none of the defendants is entitled to the “indemnification” protection included in the foundation’s bylaws.
The foundation board affirmed that position on Tuesday in a resolution denying indemnification requests because of “the nature of the wrongful conduct” alleged in the lawsuit.
Andy Campbell, the university and foundation’s lead lawyer, said last month that the foundation’s promise to indemnify its officials “was never intended, in our view, to protect someone from their own bad-faith and fraudulent acts in the management of the foundation.”
The foundation’s position that it isn’t on hook for the attorney fees was “implicit in the decision to file suit” against the former officials, according to the resolution, which a special committee of the foundation board led by chairman Earl Reed passed Tuesday.
Keith Sherman, the foundation’s interim executive director, did not immediately respond to a request for comment Thursday.
The indemnification fight is significant because the defendants in the lawsuit will likely try to draw on the foundation’s liability insurance to pay their legal fees and other costs.
But the university and foundation are looking to tap that same pool of insurance – which Campbell has estimated at $25 million – to recoup some of the losses suffered by the university’s endowment from the alleged mismanagement.