Tutor Doctor Settles Dispute With Attorney Kestenbaum
Tutor Doctor has settled its lawsuit that sought $20 million in damages from East Meadow, New York, attorney Harold Kestenbaum for $3 million, putting to rest allegations Kestenbaum failed to properly register the franchise in nine states.
Franchises were sold in those states nonetheless, thus exposing the education franchise to demands for rescission (also known as canceling the contract and getting their money back) by certain franchisees.
Through March 2015, Tutor Doctor paid $755,771, $543,800 and $211,971 to franchisees that demanded rescission, or about $1.5 million total. It accrued an additional $52,700 against the possibility that a further payment may have to be made to another franchisee, according to its most recent franchise disclosure documents.
Tutor Doctor and Preceptor Advantage, a franchisee, also agreed to settle their dispute, with Tutor Doctor permitting Preceptor Advantage to resell its two franchise agreements to a third party for $97,000, the payment of which Tutor Doctor guaranteed, the FDD said.
Kestenbaum is a long-time franchise attorney well-known for offering low prices, charging what he calls a reasonable fee, such as $1,500 per month, when other attorneys may charge up to $800 an hour. “We were under a very, very strict confidentiality agreement so I can’t comment,” Kestenbaum said about the settlement with Tutor Doctor.
Tutor Doctor filed a $20-million lawsuit against Kestenbaum and two law firms in 2014, alleging he allowed Tutor Doctor’s registrations to lapse in nine states, but still wrote agreements for new franchisees within several of those states.
Frank Milner, CEO of the Wilmington, Delaware-based Tutor Doctor, did not return a request for comment. In the FDD, Tutor Doctor said the $3 million settlement was “against its former legal counsel for professional malpractice that resulted in costs incurred by the company and its affiliated companies.”