In a rare public airing of a dispute over an unfulfilled donation, the Kansas City Art Institute has won a $4 million court judgment against Lawrence and Kristina Dodge, a Southern California couple who say they can no longer honor the $5 million pledge they made to the institute in 2005, the Kansas City Star reports.
The Dodges, who until recently were at the center of a business empire that included American Sterling Bank, American Sterling Insurance Co., and a film production company, agreed in 2005 to donate $5 million to the art institute over eight years. With the Dodges' pledge in hand, the school went ahead with construction of a $7 million, 34,000-square-foot building to replace an existing facility and dedicated the new Lawrence and Kristina Dodge Painting Building in 2006.
Back in California, the couple was lauded for their generous spirit and deep pockets — in addition to the pledge to KCAI, they gave $20 million to Chapman University in 2004 and $6.8 million to the California Republican Party between 2001 and 2008 — before the roof fell in. The Dodges made the first three installments of the KCAI pledge in Sterling company stock, of which the school sold $1 million before the rest became unredeemable, according to a response to a lawsuit filed by the school in California Superior Court of Orange County. In doing so, the couple claimed they no longer had the money, having lost nearly everything in part because of a mortgage-fraud scheme that cost American Sterling Bank more than $8.5 million. In 2009 the bank was seized and sold. The couple, who claim to have put $22 million of their own money into keeping the bank afloat, will lose their house next month and expect to file for bankruptcy.
While pledges sometimes fall through in the private world of deep-pockets fundraising, the public airing of such disputes is rare. "It doesn't happen much, and when it does happen the institutions tend to do their utmost to keep it under wraps because this can only be bad for them, both showing that they had a pledge that was not fulfilled and that they were willing to take a donor to court," said Andrew Mytelka, an editor at the Chronicle of Higher Education. "I think it's a deterrent to future donors."
Lawrence Dodge told the Star that he had been in talks with KCAI to restructure the terms of the pledge, but the school filed the suit without explanation, citing breach of contract and unjust enrichment — a reference to the favorable publicity the Dodges received as a result of their pledge. "KCAI built a building based on a contract that the college had with the Dodges, and we still expect them to live up to the contract," the school said in response to an inquiry from the Star. "That's why we're leaving the name on the building."