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Lawsuits and legal judgments dog Eucasia Schools Worldwide and the Laureate School

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The judgments against Eucasia Schools Worldwide total about $457,680, combined. If the operator of the Laureate School in San Luis Obispo loses the most recent lawsuit filed against it, it can expect to pay another $172,126 in alleged back rent, property taxes, and other charges.

That lawsuit, which Eucasia’s current landlord, Full Circle Laureate, filed on March 11, makes the third significant legal obstacle for Eucasia in about as many years. In July 2013, Eucasia lost on appeal a case against its former landlord, DW August Co., resulting in a court-ordered $124,997 judgment, plus additional costs.

Eucasia owns and operates the business side of the Laureate School on the outskirts of SLO. During a 2010 New Times visit, school administrators reported that there were approximately 250 students in 2007, but some students had left amid the economic crash and ongoing conflicts with the school’s landlord at the time, DW August Co., which led to further financial hits.

And on March 18 of this year, Eucasia was ordered to begin making monthly payments toward a $293,500 judgment the court issued as a result of a lawsuit filed by one of the school’s founders, Laura Lehmann.

According to court documents, the Laureate Child and Family Center, of which Lehmann is listed as president, sued Eucasia, alleging the company had failed to make good on a promissory note. Eucasia denied the allegations, but court documents show a judgment was awarded to the Laureate Child and Family Center in 2012. In fact, in September 2011, the court notified Eucasia and its attorney that an $800 check to the court had bounced back as having “insufficient funds.”

Neither Lehmann nor her attorney could be reached for comment.

But in the most recent lawsuit, which Full Circle Laureate filed amid allegations that Eucasia has failed to meet the terms of its lease, attorney Gregory Connell said his clients filed a formal complaint essentially to find a place among the other creditors owed money.

“We got a little concerned because now we’re becoming a creditor,” Connell said. “… We wanted to file this action just to get in line.”

Full Circle Laureate filed and later retracted a notice of eviction action earlier this year. Connell told New Times he couldn’t say specifically why Full Circle Laureate filed and pulled the eviction notice, citing client confidentiality, but he hinted that his clients felt it would be better to re-collect their allegedly unpaid rent rather than shut down a school that has been in existence in its current location since 1994.

“The owner decided they didn’t want to evict the school,” Connell explained.

Full Circle Laureate is not Eucasia’s first landlord; that title goes to DW August Co., which sold the school amid its own legal battles with Eucasia.

The arrangement at the Laureate School is a complicated mixture made up of Eucasia’s ownership of the private school as a business, and now Full Circle Laureate’s ownership of the physical buildings, which Eucasia rents. When the school began, its founders Lehmann and Jeannine Schmid owned both the school and the buildings. But after the pair retired and sold the school to Eucasia in 2007, the buildings were carved out separately and sold to DW August Co., which rented back to Eucasia.

It only took about two years for that relationship to turn sour. At the time, DW August Co. notified Eucasia in a letter that it was “entitled to terminate the lease and obtain immediate possession” of the property. From there, things only got worse, as both sides became embattled in legal conflicts.

Eucasia sued DW August Co. after a company inspector cut a chain to access the property as part of a planned sale of the buildings. Eucasia claimed $2.5 million in damages, but when the case went to the 2nd District Court of Appeal in California, the judges ruled that DW August Co. was within its rights to inspect the property and issued a judgment against Eucasia.

Last July, Eucasia filed a lawsuit against its original attorney, Dennis Balsamo, claiming that he “did not act in a competent manner in the course of [his] representation.”

Balsamo said in an email response that his firm had done nothing wrong, adding that he couldn’t speak about the case of an ex-client.

Eucasia’s CEO and one of its founders, Ruthjean Kennedy, would only agree to comment during an in-person interview accompanied by her attorney on April 18. Eucasia attorney Stephen Ronca then scheduled an interview with New Times and said he was drafting a response to the Full Circle Laureate lawsuit, but did not respond when contacted again by email and phone.

 

Senior Staff Writer Colin Rigley can be reached at crigley@newtimesslo.com.

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