The judicial dispute between the University of Chicago and one of its largest donors is escalating as the university appealed a lawsuit with the goal of denying a $ 100 million donation to the South Side School.
In a series of The University seeks to file the lawsuit filed by Thomas L. Pearson and the Pearson Family Members Foundation, which accused the university of improperly administering their nine-figure donation to establish a global studies institute on behalf of the family. The university also filed a counterclaim against the Pearsons for not paying the last installment of the donation.
The lawsuit was filed in a federal court in Tulsa, Oklahoma, where the Pearson Foundation is based.
Thomas Pearson and his brother Timothy Pearson were engaged in the gift in 2015, making it the second largest in the history of the university at that time. The money would go towards launching the Pearson Institute for the Study and Resolution of Global Conflicts, as well as the Pearson Global Forum, an annual event aimed at convening international scholars and showcasing the Institute's research.
The Pearsons agreed to pay the gift through the foundation in nine annual installments due on June 30 of each year.
The Pearsons claim that the university failed to establish a director for the institute, hire teachers or create programming and curriculum in a timely manner. In February they sued the university, requesting a refund of the $ 22.9 million they already paid to the U. de C.
Part of the initial Pearson complaint had problems with faculty members selected to fill the positions of teacher at the institute. They argued that the university hired James Robinson of the Harris School of Public Policy as the director of the faculty, then surreptitiously changed his title to institute director without the knowledge of the foundation and in order to meet an agreed deadline. The Pearsons also criticized two other appointments, saying that the background of the professors did not include universities that matched the prestige of the University of California.
In documents filed on Thursday, the university argues that the Pearsons can not prove that the university violated any of the specific obligations of the grant agreement, which is required in order to request a refund of their investment. In addition, the university argued that many of the Pearson's complaints involve problems, including the hiring of teachers, that they had no right to influence under the contract.
"The (grant) agreement protects the academic independence of the university by excluding the foundation and the Pearsons from the selection of teachers or staff, establishing the research agenda of the institute and managing other matters Academics related to the curriculum, "says the university's response. "These restrictions reflect the university's strong commitment to academic freedom."
The university is also suing the Pearsons for refusing to pay the $ 13 million portion of the gift that expired last June. The university argued that under the grant agreement, Thomas Pearson agreed to cover any payment the foundation did not make.
The foundation paid the first two installments of $ 11 million each in 2015 and 2016, then $ 900,000 in January, according to the lawsuit.
"As a result of the infractions of the foundation and Mr. Pearson, the university has suffered substantial damages, including the loss of the amount owed under the agreement and the loss of income to defray the institute's costs as a result of his disability to invest the June 2017 payment ", states the lawsuit.
There were similar high-profile cases of disputes between benefactors and universities.
In 2016, telecoms entrepreneur Eric Suder sued the University of Alabama to claim $ 1.3 million that his family foundation awarded to the university for a scholarship program that the school suspended after the initial funds ran out. A court of appeal ruled in favor of the university and dismissed the claims of the foundation in February 2017.
The descendants of Charles and Marie Robertson, who built their fortunes at a popular supermarket chain in New Jersey, sued Princeton University in 2002 for maladministration a $ 35 million endowment began in the 1960s to help support the students who were looking for careers in government. The two parties settled in 2008, with the university holding the majority of the fund, but agreed to pay tens of millions in legal fees to start a new foundation.
In 1995, Yale University returned $ 20 million to student Lee Bass, who complained that the school had not fulfilled its commitment to launch more courses in Western civilization.
drhodes@chicagotribune.com
Twitter @rhodes_dawn
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