New York judge orders $30 million sale, $3 million escrow for former faculty and staff
A Westchester County Supreme Court judge ordered the $30 million sale of Concordia College’s campus to neighboring Iona College on November 5, requiring that Concordia also set aside $3 million to settle severance claims with 27 former faculty and staff members who had objected to the sale.
“Make it $3 million and I’ll agree,” said Judge Lawrence Ecker, after hearing Concordia’s latest offer to increase the escrow from $1.5 million to $2.5 million. “I think the $3 million is a fair, adequate figure and I’m going to order it accordingly.”
Sandra Giorno-Tocco, representing the New York State Attorney General’s Office, also signed off on the order. At an earlier court appearance on October 29, she told Judge Ecker that she thought it would be appropriate to hold up the sale of Concordia’s campus while her office investigated the former employees’ claims that they were owed the balance of their contracts.
“The other way to address this would be to escrow at least that $3 million,” she said, referring to the amount Concordia borrowed from the Lutheran Church Extension Fund in March of 2021 in exchange for secured interests in several on- and off-campus properties, several weeks after announcing it would close and sell the main campus to Iona. “That $3 milllion was paid over without our office knowing about it and having the opportunity to understand that transaction and approve it or at least not object to it.”
The Fund stands to pocket $25 million from the sale to Iona. Arguing on behalf of the former employees, attorney Robert Bernstein alleged that Concordia worked together with the Fund, a religiously affiliated lender, to inflate Concordia’s indebtedness to the Fund and “take out” unsecured creditors like his clients.
Judge Ecker initially took a dim view of the former employees’ claims, saying he was constrained by judicial precedent. “Here’s the problem, I’ll let you go on as much as you want,” he said in the middle of Bernstein’s argument. “Tell me how I get around stare decisis.”
Bernstein responded by urging the Attorney General’s Office to consider the staff’s objection to the sale and intervene. “The only recourse I have is to throw the ball to my colleague here, Ms. Giorno-Tocco,” he said. “The only entity before you that can raise the concerns of the faculty and staff as to whether the propriety of the disbursement of these proceeds is something that the Court can put its imprimatur on with an order, is the Attorney General of the State of New York.”
Judge Ecker ultimately agreed, telling Giorno-Tocco, “it seems to me that I can order you to make a further investigation and recommend to the Court […] an appropriate amount that the Court believes will cover potential claims. I think you should take the opportunity and I’m perhaps ordering you to do so.” The parties adjourned without a final resolution and returned before Judge Ecker one week later, on November 5.
At the second court appearance, lawyers for Concordia College proposed increasing the escrow to $2.5 million, approximately half the amount former employees filed with the Court and the Attorney General’s Office. They claim their contracts were renewed before their official termination and guaranteed through June of 2022. Giorno-Tocco called Concordia’s offer “fair and reasonable,” though she said her office had not determined “the correct number.”
“Why don’t we just up it a little bit and get this thing done today,” said Judge Ecker, who one week earlier had told Bernstein, the attorney for the former employees, “do me a favor, take the million-five.”
“Up it [to] $3 million and I’ll agree.”
“I can’t, your Honor,” said Concordia attorney Kevin McDonough.
“Yes, you can. I’m leaving the bench. You let me know when you’re ready.”
The parties ultimately settled on the $3 million escrow, with Judge Ecker offering to assist in dispute resolution, should it be necessary. “I intend to do whatever I can to the extent I’m able to, to help you facilitate in an informal fashion […] whatever may be necessary to bring these claims to fruition.”
The signed order clears the way for the sale of the main campus to Iona, which wants to begin offering classes in Bronxville in the Fall of 2022. McDonough, the Concordia attorney, said Iona was financing the purchase “in part” with DASNY bonds, “which means at the very best that we’re not closing at this point until the last couple days of November or early December.”