Defendants respond to Woodstock Foundation lawsuit

By Mike Donoghue, Standard Correspondent

The two sides in the legal war involving current and former trustees for the Woodstock Foundation and the WRC Holdings LLC are continuing to exchange accusations in the form of written filings in Vermont Superior Court.

Former Foundation Chair Ellen R. C. Pomeroy and former Vice Chair Salvatore Iannuzzi filed the initial lawsuit on Jan. 20 about two months after they say they were removed without notice from their posts by other trustees for investigating employee claims at the Woodstock Inn and the Billings Farm & Museum concerning possible misconduct and mismanagement. Many of the claims they investigated focused on unfair compensation, sexual harassment and discrimination of women and LGBTQ employees, the lawsuit said.

The defendant trustees, James S. Sligar, Michael D. Nolan, John T. Hallowell, Douglas R. Horne, David M. Simmons, William S. Moody, Gail Waddell and Angela K. Ardolic on Friday filed a 34-page response rejecting many of the claims made by Pomeroy and Iannuzzi in their 31-page lawsuit — and their amended complaint that added claims and defendants because of further conduct.

Sligar, Nolan, Hallowell, Horne, Simmons, Moody, Waddell and Ardolic also filed notice of 25 affirmative defenses they could try to use against the claims made by Pomeroy and Iannuzzi. 

Many of the written responses to the lawsuit filed on Friday on behalf of the defendants mirror contentions made by them in the counterclaim they filed against Iannuzzi and Pomeroy in late February.

Meanwhile, Iannuzzi and Pomeroy also filed a request on Friday asking Superior Court Judge Sam Hoar Jr. to reject four other earlier defense motions to throw out the case. The plaintiffs said none of the motions to dismiss address the merits of the claims. 

“The only things the defendants do not seek to dismiss are the plaintiffs’ request for a declaratory judgment and the count alleging unfair employment practices,” Hartford lawyer Michael F. Hanley and his two New York City co-counsel, Andrew Levander and Elkan Abramowitz, said in their latest court filings. 

Both sides filed their latest rounds of paperwork at the historic courthouse in Woodstock, next door to the Woodstock Inn — ground zero for much of the legal claims.

One key item not included in the latest paperwork filed by the defense is a copy — or a portion — of a 70-plus page internal investigation the defendants say they obtained on Feb. 16 from a New York City law firm retained to do an independent review.

The investigation did not find “any systemic discrimination or prejudice against female or LGBTQ persons with the Resort or Billings Farm,” Sligar wrote toward the end of a 3-page letter to employees.

The letter didn’t say whether the law firm found any discrimination whatsoever in talking to about 30 people.

Iannuzzi and Pomeroy have said that before they were removed they talked to over 40 people during their initial investigation documenting serious problems. The initial complaints became known in May 2022.

Female employees reported they were subjected to recurrent, offensive sexual comments and behavior by both members of management and co-employees, the lawsuit maintained. It said management also tolerated a human resource training manager’s frequent use of the “N-word.” 

The Vermont Standard has made multiple requests to no avail for a copy of the defendant’s full investigative report by the New York City law firm, Provenzano, Grann & Bader.

The Standard requested the report again in writing last week and made verbal requests this week when the defense did not include the document as part of its legal response in court.

Defense lawyer Geoffrey J. Vitt, on behalf of the Foundation, said Tuesday he expects at least part of the report will be made public at some point. The Norwich lawyer said the defendant trustees were not prepared to release it this week. He said some parts will likely need to be redacted due to personal information included in the report.

The defense’s answer to the lawsuit repeats assertions in their earlier counterclaim. 

The defense also took exception to calling Berez the “first whistleblower.” The defense does not say who or how many came forward before her.

“It is regrettable that Mr. Iannuzzi, Ms. Pomeroy, and Ms. Berez have further aggravated matters by making harmful and knowingly untrue statements to the press and others that are in further breach of the fiduciary duties of Mr. Iannuzzi and Ms. Pomeroy,” Vitt wrote on behalf of the defendants.

They cite a letter to the editor by Berez to the Vermont Standard and an interview Iannuzzi did with the Boston Globe.

Sligar, Nolan, Hallowell, Horne, Simmons, Moody, Waddell and Ardolic maintain that Berez was provided extra compensation for her work and for being a whistleblower.

The defense maintains that Iannuzzi directed Elaine Olson, the Resort’s Controller, to pay Berez $100,000 on about Oct. 22, 2022 as a bonus for “all she did.” The response claims that Iannuzzi and Pomeroy directed the money be paid from a non-payroll account at WRC Holdings so it would not be widely known. Also Berez would not have to pay taxes on it and Iannuzzi wanted the payment kept “confidential,” the filing said. 

The response claims that Olson objected that it was coming from a non-payroll account and needed two signatures. A few days later Iannuzzi agreed to put it through a payroll account and increased it to $130,000 to cover taxes, court papers maintain.

Olson made a $40,000 payment — minus withholding — on Oct. 28, 2022, Berez’s final work day, the defense said. Iannuzzi sent a note that the final payment should be cut on or about Jan. 2 to recognize her “extraordinary contributions…to the Board’s efforts to reorganize management of the Woodstock Inn & Resort.”

Iannuzzi disputed the defense claims about the payment plan to Berez in a phone interview with the Standard this week.

Iannuzzi said he has proposed that the two sides go to mediation to settle the case, but the defendants are unwilling. “The issue is the treatment of people, the salaries, treatment of those with different orientations, women and conditions at the resort,” he said.

The lawsuit is of major interest in the Woodstock community because of the important part the Foundation plays in the region as an employer and economic engine. The Foundation’s assets, worth about $100 million, consist of a substantial endowment, the not-for-profit historic Billings Farm & Museum and the for-profit subsidiary, Woodstock Inn & Resort, court papers note.

The real estate holdings also include the Woodstock Country Club, the Saskadena Six Ski Area, (formerly Suicide Six), and athletic club with tennis and pickleball courts, swimming pools and other various fitness facilities. They also have a 3.5-acre organic garden providing fresh food to the Resort’s dining facilities.

The Foundation, which was established by Laurance S. Rockefeller, is an active partner of the Marsh-Billings-Rockefeller National Historical Park.

The defendants’ response

Pomeroy and Iannuzzi filed an 8-count civil lawsuit in January that included two claims against the defendants for not upholding their fiduciary duties; one count of legal malpractice by Sligar and Nolan, who are lawyers; and fraudulent misrepresentation. The other counts cover defamation, retaliation under the Vermont Fair Employment Practices Act and requests to the court to both remove the defendants and nullify all actions they took after Nov. 11, 2022. 

The defense responded last week to each of the 180 paragraphs in the Pomeroy/Iannuzzi lawsuit. In most cases, like in other civil lawsuits, the defense provides one of two words for each claim: “admitted” or “denied.”

In some cases, the defense admitted to part of a paragraph and denied the rest.  

While many written responses to civil lawsuits often include a handful of affirmative defenses, Vitt and his legal team provided 25. They include the plaintiffs lack standing, they do not state a claim on which relief can be granted, and the plaintiffs failed to provide sufficient notice of the events so the defendants could respond.

One major issue for debate is Pomeroy and Iannuzzi maintaining that some of their claims are covered by the Vermont Fair Employment Practices Act. The defense maintains the two plaintiffs were never employees of the Foundation or WRC Holdings, so any claim of being terminated was false.

Iannuzzi and Pomeroy have said they were compensated for their service through the Holdings Board and received a W-2 tax form.

Other affirmative defenses proposed by the trustees include Iannuzzi and Pomeroy’s failure to mitigate the damages by taking reasonable efforts and that the defendants were justified in taking certain actions because they received complaints about the plaintiffs.

As far as the legal malpractice claims, the defense maintains that any legal advice given was within “the professional judgment rule.”

The defense also wrote that any claimed defamatory statements were truthful and/or privileged. 

The plaintiffs’ request

The plaintiffs in their filing on Friday requested that the judge reject defense motions to throw out the case. They noted the problems included:

  • Hallowell, Simmons and Horne failed to report employment-related problems at the Resort and Farm;
  • Horne and Hallowell failed to report they operated the Resort for short-term profit;
  • Hallowell and Horne failed to disclose improper use of Foundation resources for personal benefit;
  • Sligar, the chair of the audit committee, failed to report that audits of the Resort’s financial records for the last three years had not been completed.

“There is no question that the Complaint details that defendants Hallowell, Horne, Simmons and Sligar knew of these problems and failed to disclose the material information to the Chair and Vice Chair of the Foundation,” the plaintiffs said in their memorandum of law.

Both sides will be given a few weeks to respond to the various court filings.

No court hearings have been scheduled.