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Hearing Scheduled In Donor’s Lawsuit Against Beta Theta Pi Over Fraternity House

by Geoff Rushton

A Centre County Judge will hear arguments next month in Donald Abbey’s lawsuit against the Alpha Upsilon Chapter of Beta Theta Pi Fraternity.

Abbey filed a breach of contract lawsuit against the chapter of the fraternity after its recognition was revoked by Penn State following the death of pledge Timothy Piazza, a 19-year-old Penn State sophomore who suffered two major falls and other trauma during an alcohol-fueled bid acceptance event at the fraternity house in February. Abbey is seeking the repayment of $8.5 million he says he loaned to the chapter over more than a decade for repairs, renovations and operations for the house at 220 N. Burrowes St.

The fraternity says the funding was a gift, not a loan.

Judge Katie Oliver will hear arguments on July 5 on Abbey’s motion for a summary judgment.

Abbey is a 1970 Penn State graduate and alumnus of the Beta chapter. He is the founder and CEO of a California real estate investment and management company.

According to court filings, a funding agreement states that the chapter is required to repay the funds within 60 days, with interest, if it “decides not to follow the Men of Principle initiative or is determined to be out of compliance by the general fraternity;” or if it “ceases to be a chapter of the general fraternity and the [property] is utilized for a purpose other than Alpha Upsilon of Beta Theta Pi unless agreed to by Abbey.”

The agreements said that if none of the conditions were violated, Abbey would waive repayment obligations.

The former members of the fraternity, which was first banned for at least five years and then permanently following Piazza’s death, were evicted from the house in March. Though the house is surrounded by the University Park campus, it is private property owned by the Alpha Upsilon chapter.

Following Penn State’s ban, the national Beta Theta Pi disbanded the chapter.

An agreement states that if the chapter does not have sufficient resources to repay the obligation, a lien would be placed on the house until the money is repaid.

Attorneys for Alpha Upsilon wrote that because the chapter does not have the money to repay and its only significant asset is the house, the lawsuit is “in essence for ownership and control of the house,” which was constructed in 1928.

The chapter’s filings portray Abbey’s suit as the latest step in an effort to control the fraternity board and take over the house. They claim that in 2004 Abbey agreed to a $500,000 gift for renovations for the house and from there took control of the project. The chapter says that between 2004 and 2009 Abbey acted unilaterally in working with contractors and architects and donated “an unknown sum for what was originally supposed to be a $2 million structural repair project, into an exorbitant amount, not approved by the board, for unnecessary and extravagant items.”

Alpha Upsilon attorneys allege Abbey exerted undue influence on the board and that the funding agreement was signed by the board president, whom they say Abbey took on “numerous expensive vacations and trips throughout the world,” the night before a board meeting in 2009. The agreement is not mentioned in the minutes for that meeting, they wrote, and it has never been signed or voted on by members of the board. It also covered funding provided by Abbey years before the agreement was drafted.

“Simply put, the funding agreement was drafted by Abbey, for Abbey’s benefit…” chapter attorneys wrote.

The money contributed by Abbey, some of which the chapter says they largely have no accounting for, was an irrevocable gift that Abbey is trying to convert to a conditional gift, the fraternity argues. They also cite Abbey’s own exhibit of a news story that repeatedly refers to the funding as a gift, and a statement by him to fraternity alumni that refers to it as a gift.

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