OWENSBORO - The state attorney general's lawsuit against Daymar College Group was back in Daviess Circuit Court on Wednesday, after a year-long attempt to settle the dispute failed, attorneys for both sides said.
Attorney General Jack Conway's office sued Daymar College Group LLC, Daymar Learning Inc., Daymar Learning of Paducah, Daymar Holdings Inc. and Draughons Junior College Inc. in 2011.
In the lawsuit, the attorney general's office accused Daymar officials of engaging in a series of "unfair, false, misleading or deceptive acts or practices" to enroll students into the for-profit colleges who did not meet Daymar's own admission standards.
The suit alleges Daymar officials used similar practices to control students' access to their federal student loan funds and to prevent students from being able to purchase textbooks anywhere other than Daymar College. The suit also alleges Daymar officials gave "false and misleading" statements to students that Daymar credits would transfer to other colleges and universities.
The suit also names the estate of Daymar founder Mark Gabis, who died in 2012.
Wednesday's hearing before Daviess Circuit Judge Jay Wethington was to consider motions regarding the types of questions the attorney general's office has to answer when its investigator is questioned under oath by Daymar's lawyers.
The process of discovery, where both sides provide information to one another, had been on hold for about a year while the parties attempted to reach a settlement, Assistant Attorney General Maryellen Mynear said.
"Both parties tried hard and very diligently to reach an agreement and got close on a couple of occasions," Mynear told Wethington. "Unfortunately, those discussions broke down."
Later in the hearing, when Wethington asked why the parties weren't able to negotiate an agreement, Winston Miller, the Louisville attorney for Gabis' estate, said: "It really, fundamentally, got down to money, the unavailability of sufficient resources."
Kenyon Meyer, a Louisville attorney representing all the Daymar entities except the Gabis estate, said the negotiations were "exhaustive."
Mynear said the attorney general's office objected to specific questions asked by Meyer during the AG investigator's deposition last year. Meyer and Miller argued they had received insufficient answers from the attorney general's office, particularly about the allegations that initiated the AG's suit.
"We're not just trying to find out what the underlying facts are; we're trying to find out what they're accusing us of," Meyer said. Attempts to question the investigator at last year's deposition about the origins of the lawsuit were met by objections from the AG's attorneys, Meyer said.
"What our frustration is, when we would ask the witness, 'What is the attorney general basing this claim on?' the answer in our view was, 'We've given you all the documents,'" Meyer said. "We would (ask), 'What documents are you talking about?' and (the investigator) would say, 'You've got all the documents, you can look at them yourself.'"
Mynear argued many of the questions asked during the deposition were beyond the investigator's scope and could only be answered by a lawyer from the AG's office and that some of the questions violated the state rule protecting "work product," which includes notes taken by an attorney or investigator while working on a case.
"They were asking, 'Who did you talk to? What did they tell you in the interviews?' That's work product," Mynear said. "... We tried our best to comply and prepare that witness. It was the matter of the questions that made it impossible to prepare that witness."
Wethington ordered the investigator's next deposition, which was scheduled for next week, to go forward. Mynear could continue to object to questions she believed were inappropriate, Wethington said.
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