Career Academy court action lives on

Former owners Mastropietros pressing case against province

Ashley Fitzpatrick
Published on July 12, 2014

After 10 years, a lawsuit continues to be pressed against the provincial government by the former owners of the Newfoundland Career Academy.
The question now is, will any creditors from the Career Academy’s bankruptcy choose to join in the legal action?

Lorraine Lush Mastropietro and John Mastropietro claim changes made in the distribution of student aid in 1997 resulted in a delay of $3 million in aid funding to the school.

The school encountered cash flow problems and, in August of 1998, the business shuttered, with 15 campuses closing.

Bankruptcy proceedings ensued. That process includes the identification of any assets of the company by an appointed, independent trustee.

According to lawyer Geoff Budden, now working for the Mastropietros on their case against the province, the identification includes review of any incomplete or potential future legal claims, anything that might generate cash.

In the case of the Career Academy, the trustee decided not to pursue any claim against the provincial government.

The Mastropietros launched their lawsuit in 2004, claiming damages as a result of the decisions made around student aid. They are allowed to pursue the action, even if the trustee chose not to go down that road, so long as the Court approves.

The Court has since granted the Mastropietros leave to pursue the case.

At the end of June, notices were mailed out offering creditors from the Career Academy bankruptcy the opportunity to join in the Mastropietros’ action.

The idea is if the creditor is willing to share in the risk and requirements of pressing the case, they may receive benefits at the end of the day.

“Obviously (the Mastropietros) still have to prove their damages and be successful in this action,” Budden said.

“The Mastropietros believe there’s a cause of action out there that should be pursued,” Budden said, adding there is now an opportunity for creditors to decide if it is worth their while to pursue the same.

“They have that option,” he said.

In 2007, according to The Telegram’s archives, a statement of defense was filed in the case.

The province argues it wasn't responsible for the academy's failure and denies many of the Mastropietros' claims.