Collectibility of $540,000.00 Judgments entered against the Fila Academy and Larry Fila, Jr. Now In Doubt As School and Owner Declare Bankruptcy; Trial of 39 Additional Students Scheduled For January 3, 2012 Comes To Screeching Halt.

In a surprising reversal of fortunes, The Fila Academy of Glen Burnie, Maryland, and its owner Larry Fila, Jr., declared bankruptcy on December 20, 2011, in the United States Bankruptcy Court. The filing for bankruptcy places the $540,000.00 judgment entered by an Anne Arundel County Jury and Judge last February, in the case of Barfield, et. al. vs. The Fila Academy, Inc. and Larry Fila, Jr., in the hands of the bankruptcy trustee.

In the case scheduled for a month long trial beginning January 3, 2012, 39 additional students alleged they had been defrauded, deceived and victimized by the Fila Academy and Larry Fila, Jr. That case, entitled Schweitzer, et. al vs. the Fila Academy, et. al., involved students who were named plaintiffs in the original Barfield lawsuit, but whose claims were subsequently filed separately, and combined with a third lawsuit that had been filed against the school and its owner. The three lawsuits, ultimately combined by the Anne Arundel County Circuit Court into two lawsuits, concerned a total of 42 students of the school who claimed they were deceived and defrauded by the Fila Academy and Larry Fila, Jr. As reported below, the first trial against the Fila Academy and Larry Fila, Jr. resulted in large verdicts being entered against both defendants.

As previously reported in both Maryland and Annapolis newspapers, the first of two trials against the Fila Academy and Larry Fila, Jr. involved three students who proved to a jury that they had been victimized by deceptive trade practices at the school, as well as other wrongful conduct committed by both the school and its owner. As reported on this web site and in the newspapers, after eleven days of trial, the jury found that the school had wrongfully misrepresented to the students that the school was a "Paul Mitchell Partner School" when it was not. The jury also found the school and its owner committed other deceptive trade practices, such as misrepresenting to the students that "they could make as much as doctors or lawyers" even after the State of Maryland instructed the school to stop making such deceptive claims.

The jury also found that the owner of the school had intentionally inflicted emotional distress on all three students. The Court thereafter reversed the jury's finding that the owner intentionally inflicted emotional distress on the three students, finding that the proof offered at trial was legally insufficient under Maryland's stringent legal standards so support a finding in favor of the students for committing this violation. The Court did affirm the jury's findings that the Fila Academy and Larry Fila committed deceptive or unfair trade practices, that The Fila Academy breached the contracts with the students, and that the Defendants were unjustly enriched as a result of their wrongdoing. The Court enrollled the remainder of the judgment, and the $140,000.00 judgment in favor of the three students is now final. The Court also awarded the students lawyers $398,643.51 in attorneys fees and costs for their multi-year prosecution of this case.

Both Defendants initially appealed the jury's verdict on both the three student's $140,000.00 award, and the Court's award of $398,643.00 in attorneys fees and costs; the appeal of the students' $140,000.00 judgment was later dismissed. A second appeal filed by the school and Larry Fila, Jr., involving the award of attorneys fees and costs, came to a screeching halt on the day of the appellate hearing, when Fila's attorneys informed the appellate judges in the afternoon before the scheduled oral argument, that the Defendants had just declared bankruptcy, thus staying all legal procededings pursuant to federal bankruptcy laws. The bankruptcy filing, just hours before the appellate judges were to hear oral argument, led to the appellate hearing being cancelled on the day of the hearing, despite the preparation of all three appellate judges (and the students' attorneys) to rule on the pending appeal.

It is unclear how the bankruptcy will affect the operation of the school. The Fila Academy has two locations; the first is in Glen Burnie, Maryland (where all 42 students attended the school), and the second location is in High Point, North Carolina. It further remains to be seen what will happen to any other potential lawsuits or investigations of the school in light of the bankruptcy filing. The Fila Academy's assets, and those of its owner, will now be subject to the bankruptcy court's jurisdiction, as the victimized students, both those with judgments and those awaiting trial, seek justice in the United States Bankruptcy Court.

The first trial began on February 1, 2011, and ended on February 15, 2011. The second trial, now halted, was to begin on January 3, 2012. Anyone who has a claim against the Fila Academy, Inc., or its owner, Larry Fila, Jr., must timely present claims in the United States Bankruptcy Court.

The students' claims are especially troublesome in light of the millions of dollars obtained by private for profit trade schools (like the Fila Academy) and for profit private colleges who are awarded Title IV funds from the federal government for student loans. Ultimatel, the taxpayers are saddled with the bills when students who are deceived by these school fail to obtain jobs and default on their student loans. The large number of defaults in student loans in for profit trade school settings, obtained by the schools pursuant to Title IV funding is currently under investigation by federal and local authorities.

In the two lawsuits filed against the Fila Academy and Larry Fila, Jr., the students alleged (and in the Barfield case showed) that the school received millions of dollars in Title IV funds from the federal government. In Barfield v. The Fila Academy, et. al., the students proved that they had been deceive into enrolling in the Fila Academy based on false statements and misrepresentations, and that they were then saddled with huge amounts of Title IV loans to repay. Since they could not obtain jobs, the students could not repay their loasn, and like many other students in the similar situation, were ultimately sued or subject to collection efforts that damaged their credit.

The students' lawyers in both trials are Allan W. Steinhorn, of Clark & Steinhorn, LLC, and George Hermina and John Hermina of the Hermina Law Group. Both law firms are located in Laurel, Maryland. The students' lawyers say they will continue to pursue the students' claims, and collection of the judgments, in the United States District Court.










Clark & Steinhorn serve the following areas from their office in Beltsville-College Park, Maryland:

Prince Georges County, MD: Beltsville, Laurel, College Park, Bowie, Hyattsville, Adlephi, Riverdale, Lanham, New Carrolton, Greenbelt, Bladensburg, Mitchelville, Landover, Cheverly, Capitol Heights, District Heights , Oxon Hill, Clinton, Seat Pleasant, Upper Marlboro, Suitland, Temple Hills.  Washington, D.C. Montgomery County, MD: Silver Spring, Bethesda, Rockville, Gaithersburg, Chevy Chase, Kensington, Burtonsville, Wheaton, Takoma Park, Olney and Potomac,  Baltimore,  Howard County, MD: Jessup. Anne Arundel County, Annapolis, Crofton, Maryland City, Davidsonville, Edgewater, Pasadena, Charles County, MD. Frederick, MD.