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 New Lawsuit Filed Against AEI, lists history of problems as of 6/6/07
Gayle
Posted: Jun 8 2007, 03:06 PM


Advanced Member


Group: Members
Posts: 247
Member No.: 17
Joined: 8-December 05



I have just received word that the following lawsuit was filed in the Supreme Court of New York County -- Dr. Albert Ellis vs. The Albert Ellis Institute -- on June 6, 2007. This is a new lawsuit.

It charges the AEI has breached its contract with Dr. Albert Ellis and it asks for the recovery of the Institute building, as well as recovery of Dr. Ellis' health care costs and legal fees and the return of Dr. Ellis' archives to his ownership.

It lists much of the history of the dispute.

A PDF version, with supporting documents can be found here:
http://www.rebtnetwork.org/aei/documents/E...s_Institute.pdf


QUOTE

SUPREME COURT OF THE STATE OF NEW YORK

COUNTY OF NEW YORK

      x
         
Dr. ALBERT ELLIS,       

Index No.
                              Plaintiff,     
- against -        COMPLAINT
         
THE ALBERT ELLIS INSTITUTE,       
                              Defendant.     

      x

            Plaintiff, Dr. Albert Ellis, by his attorneys, Fried, Frank, Harris, Shriver & Jacobson LLP, upon knowledge as to himself and his own actions, and upon information and belief as to all other matters set forth below, alleges as follows:

NATURE OF THIS PROCEEDING

  1. This complaint involves (1) the breach of a contract between Dr. Albert Ellis and the Albert Ellis Institute (the “Ellis Institute”) under which the Ellis Institute agreed to pay Dr. Ellis’s health care costs; (2) the unjust enrichment of the Ellis Institute to the detriment of Dr. Ellis; (3) the injury suffered by Dr. Ellis as a result of his reasonable and foreseeable reliance on a clear and unambiguous promise by the Ellis Institute to, among other things, pay for his healthcare costs; (4) the recovery of title to the Ellis Institute’s headquarters by Dr. Ellis through the imposition of a constructive trust; (5) the indemnification of Dr. Ellis, in his role as Trustee of the Ellis Institute, pursuant to NYCLS N-PCL §§722 and 724 (McKinney’s 2006), reimbursing him for the legal fees he incurred in connection with his successful lawsuit for reinstatement to the Board of Trustees of the Ellis Institute (the “Board”); and (6) a declaratory judgment that Dr. Ellis is the sole owner of all of his personal notes, papers and writings that he has amassed over the length of his career.

THE PARTIES

  2. Plaintiff, Dr. Albert Ellis, is a world-renowned psychologist, author and teacher. The American Psychological Association ranked Dr. Ellis as the second most influential psychologist of the twentieth century, ahead of Sigmund Freud, who was third, and Carl Jung. Dr. Ellis is the author of over 75 books and 600 academic papers and is the originator of a major school of psychotherapy called Rational-Emotive Behavior Therapy (“REBT”).

  3. In 1959, two years after the publication of Dr. Ellis’s first book on REBT, he founded the Institute for Rational Living, an organization dedicated to the advancement and promotion of REBT. The Institute was later renamed the Albert Ellis Institute in recognition of Dr. Ellis’s monumental achievements, his decades of service, his dedication to the advancement of REBT, and his central role founding the Ellis Institute and acquiring its headquarters.

  4. The Ellis Institute is a New York not-for-profit corporation having offices at 45 East 65 Street, New York, NY.

FACTUAL ALLEGATIONS

BACKGROUND

  5. Dr. Ellis, who is 93 years old, is the intellectual and practicing father of REBT. He founded the Institute of Rational Living, now the Albert Ellis Institute, in 1959 to advance, teach, and further develop REBT. Dr. Ellis continues to write books and articles to this day.

  6. Dr. Ellis has lent his name and prestige to the Albert Ellis Institute: he developed and initially structured its curricula and programs; he donated the proceeds from his many books (and other funds) to the Ellis Institute; he engaged in fundraising, he devoted his professional career to the promotion, teaching and advancement of REBT and the Ellis Institute. Dr. Ellis’s efforts and personal donations of time and money have been – by far – the single greatest source of revenue for the Ellis Institute and have allowed the Ellis Institute, among other things, to purchase and maintain its headquarters, a six-story townhouse at 45 East 65 Street in Manhattan, now worth well in excess of $15 million.

  7. For almost his entire tenure with the Ellis Institute, Dr. Ellis received only a stipend of $12,000 per year in compensation. It is only in the past several years that Dr. Ellis’s salary was increased to approximately $47,000.

  8. In 1964 Dr. Ellis purchased the six story building at 45 East 65th Street (the “Ellis Institute Building”) for $150,000 and transferred title to the Ellis Institute. Dr. Ellis used his own money to purchase the building. The Ellis Institute Building has functioned as the Ellis Institute’s headquarters for the past 43 years.

  9. For more than forty years, Dr. Ellis assigned the royalties from the sales of his books to the Ellis Institute. Over those same forty years, Dr. Ellis saw patients at the Ellis Institute – as many as 300 per week, and assigned all of the revenue from those therapy sessions to the Ellis Institute. He also donated any proceeds from his popular Friday Night Workshops to the Ellis Institute.

  10. In exchange for his extensive donations (including the purchase price for Ellis Institute Building and the assignment of the proceeds from his sessions with clients and from his many books), his historical significance, his past and ongoing service to the Ellis Institute, and his tireless promotion and development of REBT, Dr. Ellis and the Ellis Institute Board agreed in the 1960’s that the Ellis Institute would provide Dr. Ellis with an office (including supplies and secretarial assistance), healthcare costs as he needed them and, the freedom to continue his groundbreaking psychological research. For the benefit of the Ellis Institute, it was also agreed that Dr. Ellis would be given a permanent place to live on the sixth floor of the Ellis Institute Building – the same way a college professor is given a house on a campus in which to live. As noted, Dr. Ellis also received a very modest stipend to cover his living costs.

  11. Over the years the this contract was clearly and unambiguously discussed and reaffirmed by various board members on multiple occasions. Notes of these discussions were taken by the attorney for the Ellis Institute.

  12. This basic contract was adhered to for almost 40 years, and Dr. Ellis reasonably relied upon it. In 1979, for example, when the Ellis Institute instituted a new pension plan and long term health insurance, Dr. Ellis remained off the plan despite his chronic diabetes – which everyone knew could eventually require prolonged medical attention – because he was reassured in clear and unambiguous terms that the Ellis Institute would take care of him.

  13. By 2003, Dr. Ellis was the only original Trustee still serving on the Board. Yet when Dr. Ellis became seriously ill and required major surgery, a lengthy hospital stay, and around-the-clock nursing, the Board authorized payments to cover Dr. Ellis’s medical costs that were not covered by the Ellis Institute’s basic health care plan or Medicare.

  14. Over the course of his time at the Ellis Institute, Dr. Ellis wrote prolifically and his office and living space at the Ellis Institute became repositories for the notes, writings, and other papers he had accumulated over the span of his career – even those that predate the existence of the Ellis Institute. Dr. Ellis retained ownership of his writings but assigned the royalties from his various publications to the Ellis Institute.

  15. The Ellis Institute never disputed this arrangement and until this past month never claimed that Dr. Ellis’s papers belonged to the Ellis Institute.

  16. Starting in 2004, the relationship between Dr. Ellis and the Ellis Institute’s then executive director and Board member, Michael Broder, became strained over matters of doctrine, policy and management, including Broder’s firing of Dr. Ellis’s wife, Dr. Debbie Joffe.

  17. Dr. Joffe had received high praise and perfect evaluations for her work at the Ellis Institute. Yet Broder summarily fired her for no cause and improperly went to Dr. Ellis’s doctor and arranged for Dr. Ellis to be tranquilized with medication at the time of the firing. Broder and his cronies on the Board took these actions (among others) in order to gain near total control of the Board for himself and his cronies.

  18. Broder also began to use Dr. Ellis’s age and hearing difficulties to portray him as “losing it” while at the same time the Board refused to make reasonable accommodations for Dr. Ellis’s hearing loss. Broder and his allies on the Board gained virtually unfettered discretion to supervise the Ellis Institute, dictate its progress, hire and fire employees, and take exorbitant salaries.

  19. In November 2004, Broder and those aligned with him on the Board, threatened to remove Dr. Ellis from the Board and fire him from his position as President. The primary alleged justification for these moves was that Dr. Ellis had taken an “excess benefit” under the tax law.

  20. The alleged “excess benefit” was the money that the Board had advanced or placed in trust for Dr. Ellis to pay for his health care after his serious health crisis. This money went to Dr. Ellis under the plan that was approved by a unanimous vote of the Board, including Broder but excluding Dr. Ellis, who abstained.

  21. It was also resolved – despite the clear and unambiguous promise to do so – that the Ellis Institute would no longer cover any medical care for Dr. Ellis in excess of the Ellis Institute’s basic health plan.

  22. At a December 2004 Board meeting, as part of a compromise to try to resolve the outstanding disputes, the Board agreed, among other things, to authorize its lawyers to negotiate a settlement of all claims. Also at that meeting, Dr. Ellis agreed to become Honorary President by stepping down as President after being reelected to a three-year term on the Board.

  23. Bearing in mind its obligation to indemnify Dr. Ellis, the Board agreed to reimburse Dr. Ellis for his attorneys fees incurred in connection with the negotiations of a settlement. Dr. Ellis then authorized his attorneys to negotiate a settlement of his disputes with the Ellis Institute and of any claims that the Ellis Institute threatened to pursue against him.1

  24. Over the next eighteen months, Dr. Ellis and his attorneys attempted to negotiate a settlement of all of his disputes with the Ellis Institute. Several drafts of settlement agreements were exchanged during 2005. In addition, Dr. Ellis on several occasions offered to mediate his disputes with the Ellis Institute – to save money and to get a faster resolution – all such requests to mediate were refused by the Ellis Institute.

  25. During the negotiations, the disputes between Dr. Ellis and Broder and his cronies became even more acrimonious and personal, particularly because of Broder’s continual on-site pattern of abuse and repeated denigration of Dr. Ellis and his wife and use of executive power to poison the Ellis Institute’s staff against showing even basic courtesy to Dr. Ellis or involving him in programs of the Ellis Institute, which were part of his routine functions.

  26. Since at least early 2004, Dr. Ellis’s apartment on the sixth floor of the Ellis Institute Building had fallen into a state of disrepair. Heavy water damage and mold covered the wall behind his bed and was left to fester unchecked. Dr. Ellis was denied access to basic stationary supplies, including pens and paper, hindering his ability to work. He was also denied access to items, such as toilet paper, necessary to maintain a most basic level of quality of life.

  27. The staff at the Ellis Institute was told to ignore Dr. Ellis and his wife. And staffers were fearful of losing their jobs if they appeared to be on friendly terms with them. This took a dangerous turn when Dr. Ellis’s prescription medications were delivered to the Ellis Institute while Dr. Ellis was out visiting his doctor. The front desk refused even to sign for the package and then compounded the problem by neglecting to tell Dr. Ellis or his caregivers that the pharmacy had attempted to deliver his medications.

  28. Despite the acrimony, Dr. Ellis independently and through his counsel continued to ask the Board to try to resolve all disputes through mediation in the interest of speed and cost. The Board steadfastly refused any suggestion of mediation.

  29. On July 27, 2005, Broder suddenly suspended Dr. Ellis from all Ellis Institute activities, even cancelling Dr. Ellis’s Friday Night Workshop, a very popular weekly program that was open to the public and that Dr. Ellis had been presiding over for more than 40 years, often drawing hundreds of people. This action occurred the very same week that a glowing review of the Friday Night Workshop appeared in the popular magazine Time Out New York. The article, in part, stated: “attendees—many of whom line up each week to have photos taken with Ellis—the main draw is the doctor himself, not only for his controversial and blunt approach, but also for the mere fact that the nonagenarian is still practicing.” The sudden suspension of the Friday Night Workshop caused mass confusion for the throngs who turned out to see Dr. Ellis in the weeks that followed.

  30. On August 18, 2005, Dr. Ellis and his counsel met with Rory Stuart, then President of the Ellis Institute, to discuss Dr. Ellis’s ideas about how to resolve the ongoing dispute (including yet another proposal to mediate all disputes) and to discuss the suspension of the Friday Night Workshop. Dr. Ellis reiterated to Rory Stuart the central importance of “quality of life” issues and agreed to provide the Board with a further draft settlement agreement, subject to negotiations, which he did. The Trustees never responded to the contents of Dr. Ellis’s August settlement proposal.

  31. Two weeks later, faced with silence from the Ellis Institute on the proposal, Dr. Ellis urged Rory Stuart and the other members of the Board to respond to the proffered draft agreement. He reminded the Board that Rory Stuart (in an earlier email regarding the ongoing negotiations) had stated that “time for a 92-year-old is precious, and it is important not to delay” not only for Dr. Ellis’s sake, but for the good of the Ellis Institute. In his September 7, 2005 e-mail plea, Dr. Ellis informed the Board that: “Other than one inquiry, I have not heard a single word from you about the proposed agreement. This is particularly surprising given the urgency with which you demanded to see the proposal, which – as we told [Rory Stuart] – was largely consistent with the terms of several proposals that I had made SIX MONTHS ago.”

  32. On September 18, 2005, the Board convened a regularly-scheduled meeting. Prior to the meeting, Rory Stuart circulated an email to the members of the Board that mandated that no lawyers be present at the meeting “so we can focus on the actual running of the Ellis Institute in the available time.” In what ultimately amounted to unilateral disarmament, Dr. Ellis honored this decree and did not bring his counsel, Robert Juceam, Esq., to the meeting.

  33. Broder and McMahon, however, ignored their own decree and arranged for the Board’s lawyer to attend the meeting in order to remove Dr. Ellis improperly from the Board.

  34. As soon as the September 18, 2005 meeting began, the Board’s lawyer proceeded “almost immediately” to “co-opt” it. Ignoring the written agenda circulated before the meeting, as planned in advance by Broder and McMahon, the Board’s lawyer announced “the convening of a private discussion.” Dr. Ellis was informed that he could not participate in the meeting and the other Board members and the Board’s lawyer departed. The 92-year old Dr. Ellis, anticipating their prompt return, waited alone in the boardroom for more than an hour and a half while the Board reconvened elsewhere. With Dr. Ellis thus sequestered, the Board’s lawyer told the Board members that unless they acted immediately and in accordance with his directions, they faced personal liability.

  35. During this closed-door session, the Board’s lawyer incorrectly informed the Board that, in order to avoid personal liability, the Trustees must immediately remove Dr. Ellis from the board. There were prompt expressions of dissent. Ms. Steinberg and Dr. Velton, surprised by the advice and the tone of the presentation objected to the process and informed the rest of the Board that under the Ellis Institute’s bylaws, removing a Trustee required “at least one week’s notice that stated the purpose of the meeting.” The Board’s lawyer insisted that the bylaws be ignored and strong-armed the Board into taking immediate action.

  36. At the end of the closed-door session, and given the Board’s lawyer’s unambiguous warnings about personal liability, the Board resolved: (1) to stop paying Dr. Ellis’s attorneys’ fees; (2) to seek repayment from Dr. Ellis of the alleged “excess benefits” given to him for medical payments; (3) to remove Dr. Ellis as a Trustee and from any other positions of responsibility; and (4) to delegate all management authority over Dr. Ellis to Dr. Broder – his chief antagonist. By written report dated September 23, 2005, Trustees Deborah Steinberg and Emmett Velten submitted their objections to the procedures followed, their being ambushed and the results of the Board meeting of September 18, 2005.

  37. Left with no alternative, on September 29, 2005, Dr. Ellis filed a Petition in New York State Supreme Court to be reinstated due to his improper removal at the hands of the Broder, McMahon and their cohorts. Following motion practice and oral argument, the Court ruled that Dr. Ellis’s removal had been illegal and found that the Individual Defendants’ arguments to the contrary were disingenuous. See attached decision. The Ellis Institute never appealed this decision and the time to do so has expired.

  38. Dr. Ellis incurred significant legal fees as a result of the Board’s illegal actions. He has repeatedly requested that the Ellis Institute cover those costs, but the Ellis Institute has refused.

  39. After the Court ruled that the Board had acted illegally, the Board fired its lawyer and retained new counsel.

  40. The parties have attempted to negotiate a settlement of all claims, but those settlement discussions have broken down.

  41. Recently, the Board’s new lawyer has (for the first time) claimed that Dr. Ellis’s notes and personal papers, over which the Ellis Institute has never claimed ownership, belong to the Ellis Institute.

FIRST CAUSE OF ACTION

(Breach of Contract)

  42. Dr. Ellis realleges and incorporates by reference each and every allegation contained in Paragraphs 1 through 40 above.

  43. Dr. Ellis and the Ellis Institute entered into a contract in the 1960’s under which Dr. Ellis agreed to provide the Ellis Institute with its building and enormous sums of money generated by Dr. Ellis through his publications, his therapy session, and other events.

  44.  The Ellis Institute’s refusal to pay Dr. Ellis’s medical costs and its refusal to provide Dr. Ellis with a safe and habitable dwelling constitute a breach of contract.

  45. By reason of the foregoing, Dr. Ellis is entitled to damages in an amount to be proven at trial.

SECOND CAUSE OF ACTION

(Unjust Enrichment)

  46. Plaintiff realleges and incorporates by reference each and every allegation contained in Paragraphs 1 through 45 above.

  47. The Ellis Institute was and continues to be unjustly enriched at Dr. Ellis’s expense because the Ellis Institute benefits from Dr. Ellis’s good name for publicity and fund raising purposes and from his numerous contributions to the Ellis Institute.

  48. The circumstances are such that equity and good conscience require the Ellis Institute to repay Dr. Ellis for the amount that the Ellis Institute has been unjustly enriched.

THIRD CAUSE OF ACTION

(Promissory Estoppel)

  49. Plaintiff realleges and incorporates by reference each and every allegation contained in Paragraphs 1 through 48 above.

  50. Dr. Ellis relied on the Ellis Institute’s promise to pay his medical costs for life in exchange for his financial and sweat equity contributions to the Ellis Institute.

  51. As a result of that reliance Dr. Ellis did not purchase insurance policies to cover his medical costs and did not demand an increase to the meager stipend he received from the Ellis Institute and therefore is currently paying for his medical costs out of his own pocket.

  52. By reason of the foregoing, the Ellis Institute must reimburse Dr. Ellis for the out of pocket medical expenses Dr. Ellis incurred as a result of his reliance on the Ellis Institute’s promise.

FOURTH CAUSE OF ACTION

(Recovery of The Ellis Institute Building through the Imposition of a Constructive Trust)

  53. Plaintiff realleges and incorporates by reference each and every allegation contained in Paragraphs 1 through 56 above.

  54. Dr. Ellis was in a relationship of trust and confidence with the Ellis Institute.

  55. Relying on the Ellis Institute’s promise to, among other things, pay for his medical care and to provide him with a place to live and work in the building, Dr. Ellis transferred title of the Ellis Institute Building to the Ellis Institute.

  56. In light of the Ellis Institute’s unconscionable treatment of Dr. Ellis and continued profit from Dr. Ellis’ good name, the Ellis Institute’s continued ownership of the Ellis Institute Building would be unjust.

  57. By reason of the foregoing, a constructive trust should be imposed on the Ellis Institute Building.

FIFTH CAUSE OF ACTION

(Indemnification of Legal Fees)

  58. Plaintiff realleges and incorporates by reference each and every allegation contained in Paragraphs 1 through 57 above.

  59. Despite his good faith efforts to resolve the dispute between himself and the Ellis Institute, Dr. Ellis was improperly and illegally removed as Trustee.

  60. Dr. Ellis was forced to file a lawsuit seeking reinstatement to the Board.

  61. This lawsuit was successful, the Court ruled that Dr. Ellis’s removal had been improper and illegal and found that the Individual Defendants’ arguments to the contrary were disingenuous. Dr. Ellis was thereafter reinstated to the Board.

  62. By reason of the foregoing, Dr. Ellis is entitled to the indemnification of his legal fees incurred in fighting his improper removal from the Board, the amount of which will be determined at trial.

SIXTH CAUSE OF ACTION

(Declaratory Judgment that Dr. Ellis is the Sole Owner of his Notes, Records, and Other Papers)

  63. Plaintiff realleges and incorporates by reference each and every allegation contained in Paragraphs 1 through 62 above.

  64. Throughout his career Dr. Ellis has been a prolific writer and thinker. Over time he has amassed a collection of notes, papers and other writings that reflect his entire life’s work. While he has consistently donated the proceeds from his books to the Ellis Institute, he has never given ownership rights to his notes, papers, and other writings to the Ellis Institute.

  65. The Ellis Institute has recently and for the first time ever, claimed that it owns all of Dr. Ellis’s notes, papers, and other writings.

  66. By reason of the foregoing, Dr. Ellis is entitled to a declaratory judgment that his notes, papers and other writings are the sole property of Dr. Ellis and that he retains any and all rights flowing out of such ownership.

DEMAND FOR RELIEF

      WHEREFORE, Plaintiff demands judgment against the Defendants as follows:

            a. on his primary cause of action, awarding monetary damages, equaling the amount the court deems is owed Dr. Ellis in unpaid medical fees;

            b. on his second cause of action, awarding compensatory damages in an amount to be determined at trial;

  3. on his third cause of action, awarding compensatory damages in an amount to be determined at trial, equaling the total cost of out unreimbursed out of pocket medical fees incurred by Dr. Ellis;
  4. on his fourth cause of action, imposing a constructive trust on the Ellis Institute Building;
  5. on his fifth cause of action, awarding compensatory damages, in an amount to be determined at trial, equaling the total cost of the litigation that successfully reinstated Dr. Ellis as a Trustee of the Ellis Institute;
  6. on his sixth cause of action adjudicating and declaring that Dr. Ellis’ notes, papers and writing are the sole property of Dr. Ellis;

            g. granting Plaintiff costs and disbursements of this proceeding, including reasonable attorneys' fees; and

            h. granting Plaintiff such other relief as this Court deems just and proper.

Dated: New York, New York
May __, 2007

FRIED, FRANK, HARRIS, SHRIVER
& JACOBSON LLP

By: 

Michael B. de Leeuw
(A Member of the Firm)

One New York Plaza
New York, New York 10004-1980
(212) 859-8000

Attorneys for Plaintiff
Dr. Albert Ellis, Ph.D.
548563

1  The claims that the Ellis Institute threatened to bring against Dr. Ellis related to alleged ethical conflicts that the Ethics Committee of the Ellis Institute ultimately decided not to pursue after what – at most – can be called a cursory investigation.
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Gayle
Posted: Jun 8 2007, 03:17 PM


Advanced Member


Group: Members
Posts: 247
Member No.: 17
Joined: 8-December 05



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Gayle
Posted: Jun 14 2007, 09:02 PM


Advanced Member


Group: Members
Posts: 247
Member No.: 17
Joined: 8-December 05



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Gayle
Posted: Jul 29 2007, 07:48 PM


Advanced Member


Group: Members
Posts: 247
Member No.: 17
Joined: 8-December 05



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