STATE OF SOUTH CAROLINA IN THE COURT OF COMMON PLEAS FOR THE NINTH JUDICIAL CIRCUIT COUNTY OF CHARLESTON CASE NO.: 2015-CP-10-3605 Allyson Haynes Stuart, Plaintiff, v. ANSWER AND COUNTERCLAIMS ‘The Charleston School of Law, LLC; and George C. Kosko and Robert ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) <2 $. Carr, both in their individual ee Sn capacities, a 4 = a3 Defendants. azn m os 2 86 2 ge Ms 26 5 Defendants The Charleston School of Law, LLC ("CSOL" and/or thk "Sch@l")Feorge C. Kosko ("Kosko") and Robert S. Carr ("Carr")(all, collectively, "Defendants"), by and through. their undersigned attorneys, hereby answer Plaintiff Allyson Haynes Stuart’s ("Stuart") Complaint as follows: FOR IRST DEFENSE AND BY WAY OF ANSWER 1A, Each allegation of Stuart’s Complaint not hereinafter expressly admitted is denied. B. Defendants respond to the allegations of Stuart's Complaint by paragraph number corresponding to the paragraph number of Stuart’s Complaint as follows: INTRODUCTION Stuart was separated from service due to a financial exigency as expressly permitted under her contract. Ironically, the financial exigency could have been avoided had Stuart and others not, sabotaged the transfer of the School to Infilaw.JURISDICTION AND VENUE Admitted, upon information and belief. Admitted. Admitted. Admitted. Denied. Admitted. FACTS A. Plaintiff's Employment Contract Defendants admit Stuart was appointed as a professor at the CSOL in or about 2004 and that she was given tenure in or about 2009. Defendants further admit that Stuart was appointed as a Full Professor in or about 2013. Defendants deny any remaining allegations in Paragraph 7 of Stuart’s Complaint. 7(a). Defendants admit Stuart was first employed by the CSOL in or about 2004, Defendants further admit that the CSOL was a new law school in 2004, Defendants lack sufficient information to admit or deny the remaining allegations in Sub-Paragraph 7(a) of Stuart's Complaint and, therefore, deny all remaining allegations in Sub-Paragraph 7(a) of Stuart's Complaint. 7(b). Admitted that in or about 2009, Stuart was awarded tenure. Defendants defer to the specific content of any correspondence related toher being awarded tenure and deny the allegations in Paragraph 7(b) to the extent Stuart's allegations are inconsistent with any such correspondence. 7(6). Defendants admit that Stuart was recommended for promotion to Full Professor and subsequently promoted to Full Professor in or about 2013. Defendants defer to the applicable CSOL Faculty Handbook for its specific content, terms and conditions and deny the allegations in Sub- Paragraph 7(c) of Stuart's Complaint to the extent the allegations are inconsistent with the applicable CSOL Faculty Handbook. Defendants deny any remaining allegations in Sub-Paragraph 7(d) of Stuart's Complaint. 7(d). Defendants assert that the American Association of University Professors ("AAUP") is a private, professional organization of which Defendants are not members and Defendants do not proscribe to AAUP standards, guidelines or statements, Defendants admit that Stuart signed a series of annual contracts, including one signed on or about August 15, 2014. Defendants defer to the written contracts for their specific terms and conditions and deny the allegations in Sub-Paragraph 7(e) of Stuart's Complaint to the extent the allegations are inconsistent with each written contract. Defendants deny all remaining allegations in Sub-Paragraph 7(e) of Stuart's Complaint. 7(@). Admitted.10. ML. 12 B. ‘The Nature of Tenure and "Financial Exigency", The allegations in Paragraph 8 of Stuart’s Complaint constitute conclusions of law that Defendants are not required to admit or deny. To the extent a response is required, Defendants deny the allegations in Paragraph 8 of Stuart's Complaint. Defendants deny that AAUP guidelines, statements or standards are in any way binding on Defendants or their contracts, Defendants deny any remaining allegations in Paragraph 9 of Stuart’s Complaint. The allegations in Paragraph 10 of Stuart's Complaint constitute conclusions of law that Defendants are not required to admit or deny. To the extent a response is required, Defendants deny the allegations in Paragraph 10 of Stuart's Complaint. Defendants would further allege and show that Krotkoff expressly permits the discharge of tenuréd faculty due to financial exigency. The allegations in Paragraph 11 of Stuart’s Complaint constitute conclusions of law that Defendants are not required to admit or deny. To the extent a response is required, Defendants deny the allegations in Paragraph 11 of Stuart's Complaint. Further, Defendants expressly deny that AAUP statements and/or guidelines are binding on Defendants or their contracts. Defendants defer to the American Bar Association ("ABA") for its specific guidelines, statements or standards, and deny the allegations in Paragraph 12 of Stuart's Complaint to the extent those allegations are1B. 14. 15. 16. 17, inconsistent with ABA guidelines, statements or standards. Defendants deny any remaining allegations in Paragraph 12 of Stuart’s Complaint. The allegations in Paragraph 13 of Stuart’s Complaint constitute conclusions of law that Defendants are not required to admit or deny. To the extent a response is required, Defendants deny the allegations in Paragraph 13 of Stuart's Complaint. Defendants defer to the applicable CSOL Faculty Handbook for its specific content, terms, and/or conditions, and deny the allegations in Paragraph 14 of Stuart’s Complaint to the extent those allegations are inconsistent with the applicable CSOL Faculty Handbook. Defendants deny any remaining allegations in Paragraph 14 of Stuart's Complaint. Admitted only that the School has adopted a tenure policy that is contained in the CSOL Faculty Handbook. Defendants deny any remaining allegations in Paragraph 15 of Stuart’s Complaint. Defendants defer to the applicable CSOL Faculty Handbook for its specific content, terms, and/or conditions, and deny the allegations in Paragraph 16 of Stuart's Complaint to the extent those allegations are inconsistent with the applicable CSOL Faculty Handbook. Defendants deny any remaining allegations in Paragraph 16 of Stuart’s Complaint and expressly deny that AAUP standards and/or guidelines are binding on Defendants or their contracts. Defendants defer to the applicable CSOL Faculty Handbook for its specific content, terms, and/or conditions, and deny the allegations in18. 19. 20. 21. Paragraph 17 of Stuart’s Complaint to the extent those allegations are inconsistent with the applicable CSOL Faculty Handbook. Defendants deny any remaining allegations in Paragraph 17 of Stuart's Complaint. Defendants would further allege and show that to the extent the CSOL! Faculty Handbook does incorporate AAUP concepts in some contract provisions but not in others, the omission of AAUP concepts from others proves the intent not to adopt or include them. Defendants defer to the written contracts for their specific terms and conditions and deny the allegations in Paragraph 18 of Stuart's Complaint to the extent the allegations are inconsistent with each written contract. Defendants deny all remaining allegations in Paragraph 18 of Stuart's ‘Complaint. Defendants defer to the applicable CSOL Faculty Handbook for its specific content, terms, and/or conditions, and deny the allegations in Paragraph 19 of Stuart’s Complaint to the extent those allegations are inconsistent with the applicable CSOL Faculty Handbook. Defendants deny any remaining allegations in Paragraph 19 of Stuart’s Complaint. Defendants deny that AAUP guidelines, statements or standards are in any way binding on Defendants or their contracts. Defendants deny any remaining allegations in Paragraph 20 of Stuart’s Complaint. Defendants deny that AAUP guidelines, statements or standards are in any way binding on Defendants or their contracts. Defendants deny any remaining allegations in Paragraph 21 of Stuart’s Complaint.22. 23. 24. Defendants deny that AAUP guidelines, statements or standards are in any way binding on Defendants or their contracts. Defendants deny any remaining alle; ns in Paragraph 22 of Stuart's Complaint. Defendants deny that AAUP guidelines, statements or standards are in any way binding on Defendants or their contracts. Defendants deny any remaining allegations in Paragraph 23 of Stuart’s Complaint. Defendants deny that AAUP guidelines, statements or standards are in any way binding on Defendants or theit contracts. Defendants deny any remaining allegations in Paragraph 24 of Stuart’s Complaint. Defendants admit as follows: At all times relevant to this lawsuit, the CSOL Faculty Handbook included in Section 8, a provision permitting the Sctiool to terminate the employment of tenured faculty’ in the event of "financial exigency." Defendants further admit that the CSOL Faculty Handbook did/does not specify a particular process or otherwise restrict the School's right or discretion to declare a financial exigency or to discharge tenured faculty in the event of a financial exigency. In or about August 2014, the School proposed additional language in Section 8 of the CSOL Faculty Handbook (proposed new Section 8.3) that would have restricted the School's right to discharge tenured faculty except by the procedure in the proposed language. The School withdrew the proposed language after Stuart and others threatened to "call in sick" or otherwise not appear to teach class if the proposed Section 8,3 was added to the CSOL Faculty Handbook. Although the proposed Section 8.3 was not26. 21. 28. adopted, no change was made to delete the longstanding provision permitting discharge of tenured faculty due to financial exigency. Defendants deny all remaining allegations in Paragraph 25 of Stuart's Complaint. Defendants admit the proposed modification to Section 8.3 of the CSOL Faculty Handbook was not adopted. Defendants lack sufficient information to admit or deny the remaining allegations in Paragraph 26 of Stuar’s Complaint and, therefore, deny all remaining allegations in Paragraph 26 of Stuart's Complaint. Defendants defer to CSOL Dean Andy Abram's ("Abram") written communication regarding modification of Section 8.3 of the CSOL Faculty Handbook for its specific statements and content and deny the allegations in Paragraph 27 of Stuart's Complaint to the extent the allegations are inconsistent with Abram’s written communications. Defendants deny all remaining allegations in Paragraph 27 of Stuart's Complaint. Defendants deny that Stuart's contract included any agreement on the subject of financial exigency, other than that tenured faculty could be discharged due to financial exigency as is expressed in Section 8 of the CSOL Faculty Handbook. Defendants deny any remaining allegations in Paragraph 28 of Stuart’s Complaint.29. 30. 32, 33, 34. c. The Events of May - June 2015 Defendants admit that Stuart and six other tenured faculty members were terminated on May 22, 2015, due to the financial exigency. Defendants defer to the termination memorandum to each terminated faculty member for its specific content and deny the allegations in Paragraph 29 of Stuan's Complaint to the extent the allegations in it are inconsistent with the termination memorandums. Defendants deny any remaining allegations in Paragraph 29 of Stuart’s Complaint. Defendants defer to the memorandum for its specific statements and content, and deny the allegations in Paragraph 30 of Stuart’s Complaint to the extent those allegations are inconsistent with the memorandum. Defendants deny any remaining allegations in Paragraph 30 of Stuart's Complaint. Denied. Defendants deny that AAUP guidelines, standards or statements are binding on them or their contracts. Defendants further defer to the memorandum for its specific statements and content, and deny the allegations in Paragraph 32 of Stuart's Complaint to the extent those allegations are inconsistent with the memorandum. Defendants deny any remaining allegations in Paragraph 32 of Stuart’s Complaint. Denied. Defendants would further allege and show that Stuart was offered an appeal hearing but she refused to attend. Denied.35. 36. 31. 39. The allegations in Paragraph 35 of Stuart's Complaint constitute conclusions of law that Defendants are not required to admit or deny. To the extent a response is required, Defendants deny the allegations in Paragraph 35 of Stuart's Complaint. Defendants defer to the memorandum for its specific statements and content. Admitted only that Defendants took reasonable steps to implement the discharge due to financial exigency that Section 8 of the CSOL Faculty Handbook expressly permits. Defendants deny any remaining allegations in Paragraph 36 of Stuart's Complaint. Defendants defer to the memorandum for its specific statements and content, and deny the allegations in Paragraph 37 of Stuart’s Complaint to the extent those allegations are inconsistent vith the memorandum. Defendants deny any remaining allegations in Paragraph 37 of Stuart's Complaint. Defendants defer to the various written correspondence alleged and noted for their specific content and statements. Defendants deny the allegations in Paragraph 38 of Stuart's Complaint to the extent the allegations are inconsistent with the various, noted written correspondence. Defendants deny any remaining allegations in Paragraph 38 of Stuart's Complaint. Admitted only that Stuart refuused to participate in the appeal hearing offered to her. Defendants deny the allegations in Paragraph 39 of Stuart's, Complaint to the extent the allegations are inconsistent with the various, 1040. 4 42. 43. 44, 45. noted written correspondence. Defendants deny all remaining allegations in Paragraph 39 of Stuart's Complaint. Admitted. D. Background and Reality of the Events Described Above Denied. Defendants admit that the CSOL is a private entity and that its owners have a right to sell the CSOL. Defendants defer to the regulatory requirements of the American Bar Association ("ABA") and the South Carolina Commission for Higher Education for any required and/or 1g allegations in necessary approval of a sale. Defendants deny all remainii Paragraph 42 of Stuart's Complaint. Defendants deny that Stuart engaged in any act of "academic expression.” Defendants further deny that Stuart's discharge was based upon or related to anything other than the financial exigency. Defendants deny all remaining allegations in Paragraph 43 of Stuart's Complaint. Defendants deny making any false or fraudulent claims, deny breaching any contract with Stuart, and deny retaliating against Stuart. To the extent Paragraph 44 alleges the making of false or fraudulent claims, breach of contract or retaliation, the allegations in Paragraph 44 of Stuart's ‘Complaint are denied. E, Founding Initial Success of Charleston School of Law Admitted. Denied. ul47. 48. 49. 50. 51 52. Denied. Admitted, Denied. F. Proposed Sale to Infilaw and Widespread Opposition Defendants defer to the content of the specific announcements made by the CSOL in July 2013, and otherwise, and deny the allegations in Paragraph 50 of Stuart's Complaint to the extent those allegations are inconsistent with the content of specific announcements and/or statements made by the CSOL. Defendants deny making any false statements and deny all remaining allegations in Paragraph 50 of Stuart's Complaint. Defendants defer to the content of the specific announcements made by the CSOl in August 2013, and otherwise, and deny the allegations in Paragraph 51 of Stuart's Complaint to the extent those allegations are inconsistent with the content of specific announcements and/or statements made by the CSOL. Defendants admit that after participating in negotiating the transfer of CSOL assets to Infilaw and negotiating terms of the redemption of their CSOL interests Sanders and McCullough resigned. Defendants deny any remaining allegations in Paragraph 51 of Stuart's Complaint. Admitted that Stuart opposed the transfer/sale of the School. Defendants lack sufficient information to form a belief as to the remaining allegations in Paragraph 52 of Stuart’s Complaint and, therefore, deny said allegations, 1253 54. 55, 37. 58. 59. Defendants lack sufficient information to form a belief as to the allegations in Paragraph 53 of Stuart’s Complaint and, therefore, deny said allegations Defendants tack sufficient information to form a belief as to the allegations in Paragraph 54 of Stuart’s Complaint and, therefore, deny said allegations Denied, G. Efforts to Gain Regulatory Approval Admitted. Admitted. Defendants admit that a public hearing was held on May 19, 2014, in Columbia, South Carolina, before the South Carolina Commission on Higher Education. Defendants defer to the specific statements made by those who spoke at the public hearing, and the meeting minutes of the South Carolina Commission on Higher Education, for the specific content of the statements. Defendants deny the allegations in Paragraph 58 of Stuart's Complaint to the extent the allegations in it are inconsistent with the specific statements made by those who spoke at the public hearing, and the meeting minutes of the South Carolina Commission on Higher Education, Defendants deny all remaining allegations in Paragraph 58 of Stuart's Complaint. Defendants admit that Infilaw withdrew its application subsequent to the referenced hearings. Defendants defer to the records of the South Carolina60. 61 Commission on Higher Education for their specific content. Defendants deny the allegations in Paragraph 59 of Stuart's Complaint to the extent the allegations are inconsistent with the records of the South Carolina Commission on Higher Education. Defendants deny all remaining allegations in Paragraph 59 of Stuart's Complaint. Defendants lack sufficient information to form a belief as to the allegations in Paragraph 60 of Stuart’s Complaint and, therefore, deny said allegations. Defendants further deny that Stuart or other third-parties had any standing or legal right to "call for" or otherwise restrict the right of the legal owners of the School to transfer of their private ownership interest. Defendants defer to any editorials published by the Charleston Post & Courier for their specific content and statements. Defendants deny the allegations in Paragraph 61 of Stuarts Complaint to the extent the allegations are inconsistent with any editorials published by the Charleston Post & Courier. Defendants deny all remaining allegations in Paragraph 61 of Stuart’s Complaint. Defendants admit that Infilaw did not re-fie its application with the CHE. Defendants defer to the records of the ABA for their specific content Defendants deny the allegations in Paragraph 62 of Stuart's Complaint to the extent the allegations are inconsistent with the records of the ABA. Defendants deny all remaining allegations in Paragraph 62 of Stuart's Complaint. 1463. 64. 65. 66. Defendants lack sufficient information to form a belief as to the allegations in Paragraph 63 of Stuart’s Complaint and, therefore, deny said allegations Defendants admit that a meeting of the Charleston County Legislative Delegation was held on or about December 15, 2014, in McClellanville, South Carolina. Defendants defer to the specific statements made by those who spoke at the meeting, and the meeting minutes of the Charleston County Legislative Delegation, for the specific content of the statements, Defendants deny the allegations in Paragraph 64 of Stuart's Complaint to the extent the allegations in it are inconsistent with the specific statements made by those who spoke at the meeting, and the meeting minutes of the Charleston County Legislative Delegation. Defendants deny all remaining, allegations in Paragraph 64 of Stuart's Complaint. Defendants admit that Ed Westbrook is a former member of the CSOL. Defendants defer to any statements made by Westbrook for their specific content and deny the allegations in Paragraph 65 of Stuart's Complaint to the extent the allegations are inconsistent with Westbrook’s statements. Defendants deny any remaining allegations in Paragraph 65 of Stuart's Complaint. Defendants admit Westbrook is no longer a member of the CSOL. Defendants defer to any statements made by Westbrook for their specific content and deny the allegations in Paragraph 66 of Stuart's Complaint to the extent the allegations are inconsistent with Westbrook's statements. 1567. 68. 69. 70, Defendants deny any remaining allegations in Paragraph 66 of Stuart's Complaint, Defendants admit only that the opposition of Stuart, acting with others, resulted in Infilaw failing to complete the transaction to purchase the School and caused damages to Defendants, including those referenced in Paragraph 64 of Stuart's Complaint. Defendants deny any remaining allegations in Paragraph 67 of Stuart's Complaint. Defendants defer to the content of the specific announcements made by Defendants in May 2015, and otherwise, and deny the allegations in Paragraph 68 of Stuart's Complaint to the extent those allegations are inconsistent with the content of specific announcements and/or statements made by Defendants. Defendants deny any remaining allegations in Paragraph 68 of Stuart's Complaint. Admitted that Defendants communicated to Stuart, and other faculty members, that faculty support of the transfer/sale of the School was needed to avoid serious financial exigencies, including the possible closing of the School. Defendants deny any remaining allegations in Paragraph 69 of Stuart's Complaint. H. Plaintiff's Opposition to the Infilaw Sale Admitted as to Stuart only. Defendants deny all remaining allegations in Paragraph 70 of Stuart's Complaint. 70(a). Defendants defer to the publicly released letter, for its specific statements and content, Defendants deny the allegations in Paragraph 161 B 14, 15. 16. 70(a) of Stuart's Complaint to the extent the allegations are inconsistent with the publicly released letter. Defendants deny any remaining allegations in Paragraph 70(a) of Stuart's Complaint. 70(b). Admitted, upon information and belief. 70(c). Defendants defer to the commentary for its specific statements and content. Defendants deny the allegations in Paragraph 70(c) of Stuart's Complaint to the extent the allegations are inconsistent with the commentary. Defendants deny any remaining allegations in Paragraph 70(c) of Stuart's Complaint. Admitted only that Defendants asked faculty members to support the sale and that Stuart, and others, continued to oppose the sale. Defendants lack sufficient information to admit or deny any further allegations in Paragraph 71 of Stuart's Complaint and, therefore, deny said allegations. Denied. 1. The So-Called Financial Exigency Defendants defer to the letter for its specific statements and content, and deny the allegations in Paragraph 73 of Stuart's Complaint to the extent those allegations are inconsistent with the letter. Defendants deny any remaining allegations in Paragraph 73 of Stuart’s Complaint. Denied. Denied. Denied, Defendants’ Manipulation of CSOL Finances 1771. 78. 79. 80. 81. 82, 83 Denied. Denied, including all Sub-Paragraphs Defendants admit that Defendants requested faculty support and advised faculty of the financial ramifications of not supporting the transfer/sale of the School to Infilaw. Defendant's deny any remaining allegations in Paragraph 79 of Stuart's Complaint. K ‘The Bottom Line: Plaintiff's Firing was Retaliatory Denied, Governance Violations Defendants defer to the "terms of employment" letter and the letter notifying Stuart of her termination for their specific content. Defendants deny the allegations in Paragraph 81 of Stuart's Complaint to the extent the allegations are inconsistent with the content of the “terms of employment" letier and/or termination letter. Defendants deny all remaining allegations in Paragraph 81 of Stuart's Complaint. Defendants defer to the applicable CSOL Faculty Handbook for its specific content, terms, and/or conditions, and deny the allegations in Paragraph 82 of Stuart's Complaint to the extent those allegations are inconsistent with the applicable CSOL Faculty Handbook. Defendants deny any remaining allegations in Paragraph 82 of Stuart’s Complaint. Defendants defer to the applicable CSOL Faculty Handbook for its specific content, terms, and/or conditions, and deny the allegations in Paragraph 83 of Stuart’s Complaint to the extent those allegations are84. 85. 86. 87, 88. 89. 90. inconsistent with the applicable CSOL Faculty Handbook. Defendants deny any remaining allegations in Paragraph 83 of Stuart's Complaint. Denied. Admitted only that Section 8 of the CSOL Faculty Handbook permits "the Law School" to discharge tenured faculty due to "financial exigency.” Defendants defer to the applicable CSOL Faculty Handbook for its specific content, terms, and/or conditions, and deny the allegations in Paragraph 85 of Stuart’s Complaint to the extent those allegations are inconsistent with the applicable CSOL Faculty Handbook. Defendants deny any remaining allegations in Paragraph 85 of Stuart’s Complaint. Denied, Defendants deny that AAUP guidelines, standards or statements are binding on them or their contracts. Defendants deny any remaining allegations in Paragraph 87 of Stuart's Complaint. Defendants deny that AAUP guidelines, standards or statements are binding on them or their contracts. Defendants further deny any remaining allegations in Paragraph 88 of Stuart’s Complaint. Admitted. Defendants defer to the ABA for its specific guidelines, statements or standards, and deny the allegations in Paragraph 90 of Stuart’s Complaint to the extent those allegations are inconsistent with ABA guidelines, statements or standards. Defendants deny any remaining allegations in Paragraph 90 of Stuart's Complaint. 1991. 92. 93. 94, Defendants defer to the ABA for its specific guidelines, statements or standards, and deny the allegations in Paragraph 91 of Stuart’s Complaint to the extent those allegations are inconsistent with ABA guidelines, statements or standards, Defendants deny any remaining allegations in Paragraph 91 of Stuart's Complaint Defendants defer to the ABA for its specific guidelines, statements or standards, and deny the allegations in Paragraph 92 of Stuart’s Complaint to the extent those allegations are inconsistent with ABA. guidelines, statements or standards. Defendants deny any remaining allegations in Paragraph 92 of Stuart’s Complaint. Defendants defer to the ABA for its specific guidelines, statements or standards, and deny the allegations in Paragraph 93 of Stuart’s Complaint to the extent those allegations are inconsistent with ABA guidelines, statements or standards. Defendants deny any remaining allegations in Paragraph 93 of Stuart’s Complaint. Defendants defer to the ABA for its specific guidelines, statements or standards, and deny the allegations in Paragraph 94 of Stuart’s Complaint to the extent those allegations are inconsistent with ABA guidelines, statements or standards. Defendants deny any remaining allegations in Paragraph 94 of Stuart’s Complaint 20FIRST CAUSE OF ACTION (BREACH OF CONTRACT AS TO DEFENDANT THE CHARLESTON SCHOOL OF LAW, 95. 96. 97. 98. 99. 100. 101 102 103. 104. 105, LLC) Defendants incorporate their responses to Paragraphs 1 through 94 as fully and completely as if set forth verbatim herein. Admitted. Admitted. Defendants defer to the applicable CSOL Faculty Handbook for its specific content, terms, and/or conditions, and deny the allegations in Paragraph 98 of Stuart’s Complaint to the extent those allegations are inconsistent with the applicable CSOL Faculty Handbook. Defendants deny any remaining allegations in Paragraph 98 of Stuart’s Complaint. Defendants admit the allegations in Paragraph 99 of Stuart's Complaint to the extent she alleges that her "terms of employment letter" and the CSOL Faculty Handbook for her "employment contract." Defendants deny all remaining allegations in Paragraph 99 of Stuart's Complaint. Denied, Denied, Denied. Denied, Denied, Denied. 21SECOND CAUSE OF ACTION (THIRD PARTY BENEFICIARY BREACH OF CONTRACT AS TO DEFENDANT THE 106. 107. 108. 109. 110. qd. CHARLESTON SCHOOL OF LAW, LLC) Defendants incorporate their responses to Paragraphs 1 through 105 as fully and completely as if set forth verbatim herein, Defendants admit that the School is accredited by the ABA. Defendants deny the remaining allegations in Paragraph 107 of Stuart’s Complaint Denied. Denied. Denied. Denied. THIRD CAUSE OF ACTION (BREACH OF CONTRACT ACCOMPANIED BY A FRAUDULENT ACT AS TO DEFENDANT THE CHARLESTON SCHOOL OF LAW, LLC) 112, 113 114, 115. 116, 17. 118, Defendants incorporate their responses to Paragraphs 1 through 111 as fully and completely as if set forth verbatim herein, Admitted that Defendant CSOL and Stuart entered into several, successive employment contracts. Defendants deny any remaining allegations in Paragraph 113 of Stuart's Complaint, Denied. Denied Denied. Denied, Denied. 22FOURTH CAUSE OF ACTION (TORTIOUS INTERFERENCE WITH CONTRACT AS TO THE INDIVIDUAL 119. 120. 121. 122 123, 124, 125, 126, 127, 128. DEFENDANTS KOSKO AND CARR) Defendants incorporate their responses to Paragraphs 1 through 118 as fully and completely as if set forth verbatim herein Defendants defer to any written employment contract and the applicable CSOL Faculty Handbook for their specific content, terms and conditions. Defendants deny the allegations in Paragraph 120 of Stuart's Complaint to the extent the allegations are inconsistent with any written employment contract and/or the applicable CSOL Faculty Handbook. Defendants deny all remaining allegations in Paragraph 120 of Stuart's Complaint. ‘The allegations in Paragraph 121 of Stuart's Complaint constitute conclusions of law that Defendants are not required to admit or deny. To the extent a response is required, Defendants deny the allegations in Paragraph 121 of Stuart's Complaint. Defendants admit Kosko and Carr are members of the CSOL. Defendants deny all remaining allegations in Paragraph 122 of Stuart's Complaint. Admitted, Denied. Denied. Denied. Denied. Denied. 23129, 131. 132. 133. 134, 135, 136. 137, 138, 139, 140, 141 (ACTION TO PIERCE THI CORPORATE VEIL) Defendants incorporate their responses to Paragraphs 1 through 128 as fully and completely as if set forth verbatim herein. Admitted. Admitted. Denied. Denied. Denied. SIXTH CAUSE OF ACTION (CONSTRUCTIVE TRUST) Defendants incorporate their responses to Paragraphs 1 through 134 as fully and completely as if set forth verbatim herein. Defendants Kosko and Cart admit they are members of the CSOL and further admit that the CSOL owns assets. Defendants deny all remaining allegations in Paragraph 136 of Stuart's Complaint. Denied, Denied Denied, Denied, Denied, SEVENTH CAUSE OF ACTION (REQUEST FOR PRELIMINARY AND PERMANENT INJUNCTIVE RELIEF) 142, Defendants incorporate their responses to Paragraphs 1 through 141 as fully and completely as if set forth verbatim herein, 24143, 144. 145. 146. 147, 148. 149, Denied. Defendants defer to any written employment contract, "terms of employment" letter and the applicable CSOL Faculty Handbook for their specific content, terms and conditions. Defendants deny the allegations in Paragraph 144 of Stuart's Complaint to the extent the allegations are inconsistent with any written employment contract, "terms of employment" letter and/or the applicable CSOL Faculty Handbook. Defendants deny all remaining allegations in Paragraph 144 of Stuart's Complaint. : Denied. The allegations in Paragraph 146 of Stuart’s Complaint constitute conclusions of law that Defendants are not required to admit or deny. To the extent a response is required, Defendants deny the allegations in Paragraph 146 of Stuart's Complaint. Denied. Denied. Denied. PRAYER FOR RELIEF Defendants deny Stuart is entitled to any recovery, including that outlined in the prayer for relief found in her Complaint. 25Mm IV VI VIL vu Ix XI FOR A THIRD DEFENSE Defendants did not breach the terms of any contract(s) or agreement(s) with Stuart. To the extent any contract(s) or agreement(s) was breached that existed by and between Stuart and Defendants, Stuart breached said contract(s) or agreement(s). FOR A FOURTH DEFENSE Stuart's breach of contract claim is barred, in part, by the parole evidence rule. FOR A FIFTH DEFENSE Stuart failed to mitigate her damages. FOR A SIXTH DEFENSE Defendants, at all times, acted in good faith, on reasonable grounds, and without mali or intent to harm. FOR A SEVENTH DEFENSE Defendants’ actions were for legitimate business reasons, in particular financial exigency. FOR AN EIGHTH DEFENSE Stuart is barred from recovery from Defendants by the doctrine of waiver. FOR A NINTH DEFENSE Stuart is barred from recovery from Defendants by the doctrine of laches. FOR A TENTH DEFENSE Stuart is barred from recovery from Defendants by the doctrine of estoppel FOR AN ELEVENTH DEFENSE Stuart is barred from any recovery from Defendants due to the doctrine of unclean, hands, 26XII XL XIV xv XVI XVI XVIII XIX XX FOR A TWELFTH DEFEN! ‘Stuart’s claims are barred under the doctrine of misrepresentation. FOR A THIRTEENTH DEFENSE Any and all alleged claims as to Defendants are barred under the doctrine of mistake. Stuart’s claims are barred by the doctrine of accord and satisfaction. FOR A FIFTEENTH DEFENSE Stuart’s claims are barred by the Statute of Frauds. FOR A SIXTE 'H_DEFENS! Stuart's claims are barred in whole or in part by the statute of limitations. FOR A SEVENTEENTH DEFENSE Stuart is not entitled to a temporary injunetion because adequate legal remedies are available to her. FOR AN EIGHTEENTH DEFENSE Stuart is not entitled to a temporary injunetion because she will not suffer irreparable harm in the absence of a temporary injunction. FORA ETEENTH DEFENSE Stuart has failed to satisfy all conditions precedent. FOR A TWENTIETH DEFENSE, Defendant CSOL did experience, and continues to experience, a financial exigency. FOR A TWENTY-FIRST DEFENSE The financial exigency Defendant CSOL did experience, and continues to experience, is the sole reason Stuart was terminated, 27FOR A TWENTY. ECOND DEFENSE XXIL_ Stuart is not a third-party beneficiary of the ABA's accreditation of the School. FOR A TWENTY-THIRD DEFENSE XXIII The alleged fraudulent acts, which Defendants deny, are not separate and distinct from the acts constituting the alleged breach of contract. FOR A TWENTY-FOURTH DEFENSE XXIV The alleged fraudulent acts, which Defendants deny, do not accompany the breach and are too remote in time or in character. FOR ATW XXV_ Stuart's action for intentional interference with contractual relations is barred to the extent she asserts it agai to the contract. 3 parti FOR A TWENTY-SIXTH DEFENSE XXVI_ Defendant CSOL is a party to the employment contract with Stuart, and an officer or agent of Defendant CSOL acting for or on behalf of Defendant CSOL is not a third-party to the employment contract. FOR A TWENTY-! XXVII Stuart's cause of action for "breaching the corporate veil” is not a valid cause of action. GHTH DEI SE XXVIII The doctrine of "piercing the corporate veil" does not apply to limited liability companies. FOR A TWENTY-NINTH DEFENSE XXIX Stuart's cause of action for constructive trust is not a valid cause of action. 28FOR A THIRTIETH DEFENSE XXX_ Stuart did not engage in any protected activity for the purposes of a retaliation claim. FOR A THIRTY-FIRST DEFENSE XXXI_ There is no causal nexus between any conduct of Stuart and her discharge. SECOND DEFENSE FOR A THIRT XXXII Stuart’s discharge was for a legitimate business reason (financial exigency) and the criteria (standard) used for selecting Stuart was narrowly tailored to meet a compelling business interest, WHEREFORE, having fully answered Stuart’s Complaint, Defendants request that this action be dismissed and that Defendants be awarded their costs and attomeys' fees. COUNTERCLAIMS Defendants, by and through their undersigned attorneys, and pursuant to the South Carolina Rules of Civil Procedure, complain of Stuart alleging and showing unto this Court as follows; FACTUAL ALLEGATIONS 1. Defendants incorporate all paragraphs above as fully and completely as set forth verbatim herein, 2 In addition to the facts specified as to each cause of action below, Defendant alleges that Stuart verified her Complaint under oath and, therefore, each specific allegation and statement, as to Stuart herself, constitutes a binding admission. Defendants incorporate those admissions herein, 29FOR A FIRST COUNTERCLAIM (Civil Conspiracy) 3. Defendants incorporate all paragraphs above as fully and completely as if set forth verbatim herein. 4. Stuart admits in Paragraph 42 of her verified Complaint “that the Charleston ndants Kosko and School of Law is a private entity and that the owners thereof, currently Def Cart, have a right to solicit a sale of the entity to another entity, contingent upon and subject to regulatory approval.” 5. Stuart, along and in concert with others, did conspire to injure the Defendants, by openly opposing and intentionally thwarting its/their lawful and legitimate business interests in transferring ownership of CSOL. Stuart admits this under oath in her verified Complaint including, but not limited to, at paragraphs 70(a) - 70(c\(“Plaintiff, along with almost every other member of the ... faculty, has been opposed to the proposed sale to Infilaw....”)(“Plaintiff, as part of a supermajority of the school’s faculty, signed a publicly released letter opposing the Infilaw deal.”), As a result of said conspiracy, Stuart, along with others, did inflict special damage upon Defendants including, but not limited to, in the following particulars. The transfer of ownership of an accredited law school is a highly regulated transaction, with potential transferees limited to those holding special licenses and/or accreditations. There are very few private-sector law schools or entities that might purchase such a school. Further, the conspiracy and acts that flowed therefrom not only ended the Infilaw transaction, but discouraged and destroyed the interests of other potential buyers. By conspiring to and successfully depriving Defendants of the opportunity to transfer ownership to Infilaw, Stuart and others have robbed Defendants of the 30only opportunity known to Defendants to transfer ownership of the CSOL for valuable consideration. 7. Stuart admits under oath in her verified Complaint that the loss of this transfer opportunity was the direct result of the action(s) of herself and her cohorts including, but not limited to, in Paragraph 67 (“As a result of the opposition to Infilaw’s takeover, Infilaw has refused to move forward with its contemplated acquisition .. FOR A SECOND COUNTERCLAIM (Breach of the Duty of Loyalty) 8. Defendants incorporate all paragraphs above as fully and completely as if set forth verbatim herein. 9. An employee has a duty to abide by his employer’s instructions and policies and owes a duty of loyalty to his employer to carry out those instructions and policies. It is implicit in any contract for employment that the employee shall remain faithful to the employer's interests though out the term of employment. An employee has a duty of fidelity to her employer. Young v. McKelvey, 286 S.C. 119 (S.Ct. 1985) 10, Stuart admits under oath in Paragraph 96 of her verified Complaint that “Defendant LLC is the corporation that owns and operates the Law School.” 11, Stuart admits under oath that she was employed by the CSOL in an “employment contract” in Paragraph 99 of her verified Complaint. 12, Stuart admits under oath that the School's (her employer's) intent was to transfer ownership of the Schoo! and/or its assets to Infilaw and that she understood that Defendants were vigorously pursuing that business interest. Such admissions are made by Stuart in Paragraph 51 (“On August 28, 2013, the School announced that it had, indeed, entered into an Asset Purchase Agreement with Infilaw.”) and Paragraph 56 (“Since announcement in mid-2013 of the proposed 31sale to Infilaw, Defendants and Infilaw have sought regulatory approval for the sale to Infilaw, including approval from the South Carolina Commission on Higher Education (CHE) and the ABA.”) of her verified Complaint. 13, Stuart admits under oath in Paragraph 70(a) of her verified Complaint that she “signed a publicly released letter opposing the Infilaw deal.” 14, A copy of the May 13, 2014, letter signed by Stuart and referenced in Paragraph 70(a) is attached to this Answer and Counterclaim as Exhibit A. 15. The May 13, 2014 letter signed by Stuart was printed or prepared on official School letterhead belonging to the School. (See Exhibit A.) 16, The May 13, 2014 letter identifies Stuart and its other signers solely in their capacities as “the undersigned current faculty at the Charleston School of Law,” (See Exhibit A) 17. Upon information and belief, the May 13, 2014 letter signed by Stuart and others was prepared using the School’s computers, printers, and other electronic devices, 18. Upon information and belief, the May 13, 2014 letter signed by Stuart and others was prepared and/or executed, wholly or in part, on the Schools premises. 19. Stuart expressly identifies her capacity at her signature line as “Professor of Law. 20. The letter identifies the intent of Stuart and the other signers as being “to voice our strong opposition to the proposed sale of the school to InfiLaw.” (See Exhibit A.) 21, Stuart and the other signers asked CHE to deny Infilaw’s application: “We believe, therefore, that InfiLaw’s application for a license to operate the Charleston School of 32Law should be denied.” (See Exhibit A.) (See also paragraph 70(a) of Stuart's verified complaint.) 22. Stuart knew and understood her request to be contrary to the business interests being pursued by the School and its owners as set forth in Paragraphs 51 and 56 of her verified ‘Complaint. 23. Upon information and belief, Stuart solicited or attempted to solicit other School employees to join in signing the May 13, 2014, letter or otherwise oppose the sale, and on other occasions actively opposed the sale of the School. 24. Stuart admits in Paragraph 69 of her verified Complaint that, on at least one occasion, she was asked or instructed by Defendant Carr to help keep the School open by supporting Infilaw’s acquisition. She further admits that she did not follow that instruetion from her employer. 25. Stuart owed the School a duty of loyalty in performing her obligations and job duties as an employee of the School. 26. Stuart breached her duty of loyalty by thwarting its legitimate business interest including, but not limited to, signing the May 13, 2014 letter on School letterhead and in her capacity as a School employee, by soliciting other School employees to similarly breach their duty of loyalty be joining her in doing so, as well as working against her employer's interests in opposing the sale of the School. 27. Asa direct and proximate result of Stuar’s actions, the Defendant suffered and continue to suffer damages. Therefore, Defendant CSOL is entitled to recover all actual, compensatory and punitive damages, and all wages paid to Stuart during the period of her disloyalty. 33FOR A THIRD COUNTERCLAIM (Tortuous Interference With A Contract) 28. Defendants incorporate all paragraphs above as fully and completely as if set forth verbatim herein. 29, Stuart admits under oath in Paragraph 51 of her verified Complaint that the School had a contract with Infilaw for the sale of assets of the School. 30, ‘The contract required Infilaw to make reasonable efforts to obtain the licenses necessary to complete the transaction. 31, Stuart was not a party to the contract. 32. Stuart was aware of the contract, and intentionally procured the contract's breach by actively opposing the takeover including opposing Infilaw’s applications to obtain the necessary license as she admits under oath in paragraphs 70(a) - 70(c) of her verified Complaint. 33. Thereafter, InfiLaw breached the contract by ending or withdrawing its application for the license required for the transfer. 34. Stuart admits in Paragraph 67 of her verified Complaint that said breach was the result of the opposition: “As a result of the opposition to Infilaw’s takeover, Infilaw has refused to move forward with its contemplated acquisition.” 35, Stuart’s interference with the contract was willful and without justification, and caused the Defendants damages. 36. As adirect and proximate result of Stuart’s actions, Defendants suffered damages. Therefore, Defendants are entitled to recover all actual, compensatory and punitive damages, including, but not limited to, loss of profits and loss of business value. 34FOR A FOURTH COUNTERCLAIM (Breach of Contract) 37. Defendants incorporate all paragraphs above as fully and completely as if set forth verbatim herein. 38. Every contact in the State of South Carolina has implied within it a covenant of good faith and fair dealing. 39. Stuart adr at Paragraphs 96-99 of her verified Complaint that she was party to an “employment contract” with Defendant CSOL. 40. Defendant CSOL gave valuable consideration for that contract including, but not limited to, salary and employee benefits. 41. Stuart breached the contract’s implied covenant of good faith and fair dealing when she acted intentionally and deliberately to harm the School’s legitimate business interests 42. But for her contractual relationship, Stuart would not have access or opportunity to have used the School’s own letterhead and resources in thwarting its legitimate business interests, nor could she have claimed to be taking such actions in her stated capacity as “current faculty at the Charleston School of Law,” nor signed her written opposition as “Professor of Law,” as shown on Exhibit A. 43, Stuart’s breach is the proximate cause of damages and loss and Defendant CSOL is entitled to recover all actual, compensatory and consequential damages, including, but not limited to, loss of profits and loss of business value. Defendant is further entitled to release from any obligations to Stuart under the contract effective as of the date of Stuart’s breach, WHEREFORE, having fully answered Stuart's Complaint and asserted defenses thereto and counterclaims, Defendants pray that this Honorable Court grant the following relief: (a) _ The dismissal of the claims against Defendants; 35(b) Award Defendants the costs of this action and related attorneys’ fees; (©) That actual and punitive damages be awarded against Stuart; and, (@) Such additional relief as this Honorable Court deems just and proper. CLEVELAND & CONLEY, L.L.C. One Seventy One Church Street, Suite 310 Charleston, South Carolina 29401 Telephone: (843) 577-9626 Facsimile: (843) 577-6672 ccleveland@clevelandlaborlaw.com beonley@clevelandlaborlaw.com icagle@clevelandlaborlaw.com Charleston, South Carolina October 15, 2015 36CERTIFICATE OF SERVICE 6 CP-10 2005 The undersigned certifies that a copy of Defendants’ Answer and Counterclaims was served on this 15th day of October, 2015, upon counsel for Plaintiff via U.S Mail, first class, with appropriate postage affixed thereto to the address below: Naney Bloodgood, Esquire Foster Law Firm 895 Island Park Drive, Suite 202 Charleston, SC 29492 Mag ee —7 fer Garrett Busbee 2 2S a3 poe TT S28 Mm os 2 an) BB = Sm 37EXHIBIT ACHARLESTON SEC Auf ONONCamOn pee LTAmW) May 9, 2014 Brigadier General John L. Finan, USAF, Retired Chairman South Carolina Commission on Higher Education 220 Holiday Road Columbia, South Carolina 29223 Re: Charleston School of Law Dear General Finan: . In response to the Committee on Academic Affairs and Licensing’s notice of May 1, 2014, the undersigned current faculty at the Charleston School of Law write to you today to voice our strong opposition to the proposed sale of the school to InfiLaw. To date, most of the school’s faculty have remained silent on the pending transaction, We have come to learn, however, that our silence has been misinterpreted as faculty approval of the sale. To remedy this misconception, we feel compelled to come forward, even though many believe we are risking our positions as faculty members—positions that we cherish at a school we love—to do so. What led us to join the faculty of the Charleston School of Law was the sense of community that has been created among its students, faculty, staff, and administration, as well as with the local and state bench and bar. Up until July 2013, the Charleston School of Law was known for its nurturing educational environment with close student-faculty relationships and a burgeoning reputation in the greater legal community. With regret, we feel that the sense of community has since been replaced by a culture of intimidation and fear—fear of reprisal for speaking out against the transaction or even voicing concerns. But given events of late, we can no longer sit by and remain silent. Simply put, we do not wish to see the Charleston School of Law mirror the admissions practices, attrition rates, transfer rates, or educational programs at the InfiLaw consortium schools. We believe, therefore, that InfiLaw's application for a license to operate the Charleston School of Law should be denied. PO Box 535, Charleston, $¢ 79402 » Office: 843.329.1000 - wna CharlestonLowedyBrigadier General John L. Finan, USAF, Retired Page 2 of 2 Pof Porn fells. Scheugrman rofessor of Law Gerald M. Finkel Professor of Law an Professor of Law MatH iter Aleatra P. Williams Professor of Law GY ibe, Miller W. Shealy’ ar. Professor of Law William M. Jfanssen Prot Respectfully submitted, Les iy. Bidwell Professér of Law . seat A. sf b : ” Professor of Law Aer Haynes ftuart Professor of Law WLliom L, Yort William Want Professor of Law fT CopStafice Anastopoulo Professor of Law Ce: Members of the Commission on Higher EducationCreveranp & Coney, Lic. TABOR AND EMPLOYMENT DEFENSE (Ove Seventy Ove Chien Sree, Suite 310 CCunsusst0N, Sour Cason 29401 Cason Wren Cuavsano Tumnont (848) 57.9626 Bon J. Comey acs (843) 577.6672 Josun D. Case October 15, 2015 The Honorable Julie J. Armstrong Charleston County Clerk of Court 100 Broad Street, Suite 106 Charleston, South Carolina 29401 Re: Stuart v. The Charleston School of Law, et al., Case Number: 2015-CP-10-3605 Dear Ms. Armstrong: Enclosed, please find one original and one copy of Defendants’ Answer and Counterclaims, in regard to the above-referenced matter. ‘We are requesting the original be filed with the court and a file-stamped copy be returned to us using the self-addressed, postage prepaid envelope provided. In advance, we thank you for your time and assistance with this matter and if you have any questions, please contact me Sincerely, CLEVELAND & CONLEY, LLC 5b JConik BICiigb Encl: as stated ce: Nancy Bloodgood, Esquire