VIP files breach-of-contract suit against Cape County Board for Developmentally Disabled for $200,000

Monday, March 28, 2011

VIP Industries has filed a lawsuit seeking nearly $200,000 from the Cape County Board for Developmentally Disabled, an amount it claims it is owed for six months of insurance, maintenance and other costs related to operating the sheltered workshop that employs more than 150 developmentally disabled workers.

The lawsuit, which was filed Feb. 14 in Cape Girardeau County Circuit Court, also says the board must resume making those payments immediately or it will continue to be in breach of contract. The lawsuit says the board's actions also defy the will of the people, who voted to fund such workshops more than three decades ago.

But the board responded March 22 with a motion to dismiss the suit and its attorney said the charges asserted by VIP are groundless.

"We don't have any doubt that we will be able to answer all the charges in the lawsuit successfully," said Cape Girardeau lawyer J. Michael Ponder.

Ponder also points out that the ballot language from the April 1, 1975, election doesn't specify who has to provide a sheltered workshop.

"I don't think the voters of Cape Girardeau County ever anticipated that there'd be an exclusive arrangement with one provider for services," Ponder said. "The ballot language only stipulates that the community be well served by one or more workshops."

A hearing has been scheduled for 9 a.m. April 4 at the Common Pleas Courthouse before Judge Ben Lewis, though a change of venue request by the board may cause that hearing to be postponed. The board is seeking a change of venue, Ponder said, because those who live in Cape Girardeau County may find it difficult to be impartial about a tax they pay.

Calls to board president Dory Johnson and organization executive director Bob Dale were not returned Friday.

The board, created by a 1969 law, collects about $870,000 annually in property taxes and spends it through contracts with VIP Industries and two other not-for-profit organizations. VIP employs 150 to 200 developmentally disabled people and 150 to 200 staff members.

The lawsuit is the culmination of months of feuding between the two sides that began last summer with a change in board leadership, which had questions about the way VIP was spending the money. The dispute came to a head when the board stopped funding VIP last year. A board offer in January of mediation never happened.

VIP chief executive Hillary Schmittzehe declined to comment except to say VIP has not received any payment from the board in 10 months and that there have been no discussions between the two sides. He referred all other questions to their attorney, John Toma of St. Louis, who also did not return phone calls.

The lawsuit alleges that the board is in breach of the contract because it has failed to pay for utilities, insurance and maintenance on the workshop buildings as well as transportation costs and employee per-diem allowances. The $198,309 is what VIP is owed through Dec. 31, but the lawsuit asks that damages be awarded for each month since as well.

The lawsuit claims that the board is obligated to renew the contract each year because of the results of a special election on April 1, 1975, which authorized collection of a property tax to pay for the creation and maintenance of a sheltered workshop and residence facility for handicapped people. The tax is not to exceed 10 cents per $100 assessed valuation. VIP and the board, formerly known as the SB40 board, has had a contract since 1975.

The dispute started over a $60,000 kitchen renovation, which caused the board to want to renegotiate the contract, which VIP does not want to do.

The lawsuit has arisen because the board is trying to fulfill its responsibilities to the taxpayers, Ponder said.

"The board is trying to provide sufficient oversight," Ponder said. "But VIP is unwilling to negotiate a new contract that will allow the board a financial review. The board is just trying to make sure the needs of the developmentally disabled are well served."

The lawsuit also asks for a resolution to several questions, including whether the board has the right to arbitrarily stop providing funding to VIP or to establish additional sheltered workshops in the county. The lawsuit says VIP is still working under a contract with the board, because the contract requires a 60-day notice for termination which VIP says it did not receive.


Pertinent address:

1330 Southern Expressway, Cape Girardeau, MO

Map of pertinent addresses

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