After years of legal entanglements, a pending settlement in a federal court case may finally clear the way for Penn State to acquire the former Beta Theta Pi fraternity house where 19-year-old Timothy Piazza sustained fatal injuries during an alcohol-fueled hazing in 2017.
The university and alumnus Donald Abbey have agreed in principle to a settlement of Abbey’s lawsuit that contends he has a stake in the property because of a $10 million loan agreement with the fraternity in 2009, according to a filing on Tuesday.
Terms of the settlement, which Penn State’s Board of Trustees is expected to vote on in July, were not released.
Centre County Judge Marshall ruled after a 2021 trial that Penn State has the right to purchase the property at 220 N. Burrowes St. from the fraternity chapter’s alumni corporation. The 1928 deed conveying the property at 220 N. Burrowes St. stipulated that the university had the right to reacquire it if it was no longer used as a fraternity house for the Beta Theta Pi chapter.
Beta Theta Pi’s Penn State chapter was permanently banned within months of Piazza’s February 2017 death from brain injuries and a lacerated spleen after falling head-first down the basement stairs at the fraternity house.
A state Superior Court panel upheld the ruling on the deed in 2023, and Marshall has since ordered arbitration to determine the sale terms.
But Abbey, a California real estate magnate who was a Beta Theta Pi brother and Penn State football player, has long argued in multiple lawsuits that any transaction needs to account for the loan he made for renovations.
The agreement stated that if the property was no longer used as a fraternity, the money must be paid back to him, and if the alumni corporation did not have the wherewithal to do so, he would have a lien on the house. (In a separate lawsuit, the alumni corporation claimed the agreement was a sweetheart deal made by its president and was never properly approved.)
Penn State informed Abbey that it would wait until the deed case was resolved before discussing his interests in the house, according to his complaint against the university, but after the Superior Court decision told him it had no intention “to make him whole.”
Abbey claimed Penn State fraudulently represented its position before he made the loan, citing 2005 emails from then Vice President for Student Affairs Vicky Triponey that said the university had no intention of taking over the house or the authority to do so, that acquiring the property “is certainly not possible or desirable,” and that even if the chapter’s recognition was rescinded the corporation would continue to own the house.
After the Superior Court decision, Abbey claims, Penn State planned to purchase the property for less than his contributions and said the valuation would not consider what he says he’s owed. He also says his demand to participate in arbitration was rebuffed.
A federal district judge dismissed Abbey’s case against Penn State in April in part because claims were past the statute of limitations and because he failed to show how arbitration would not determine a fair sale price that would attach Abbey’s lien to the proceeds. He was permitted, however, to file an amended complaint, and did so before the two parties notified the court a tentative settlement had been reached.
Abbey’s lawsuit sought monetary damages as well as a declaration precluding Penn State from purchasing the house or giving Abbey the right to participate in arbitration.
Penn State has not specified what it plans to do with the property if it acquires it.
University officials did discuss the deed and the future of the property in the weeks and months after Piazza’s death, and contemporaneous records presented at the trial in the deed case showed then Penn State President Eric Barron said the property would not be used in the future as student housing. Barron also had multiple conversations with Piazza’s father, Jim, who suggested potential uses for the property, including demolishing the house or replacing it with an engineering building named in his son’s honor.
Barron testified at the trial, though, that acquiring the house was not a motivation behind banning the fraternity.
“What occurred was just reprehensible. It was awful,” Barron said, according to court transcripts. “It was a case where I believe a young man’s life could have been saved if people cared about him. And as an institution, any death is horrible, but we just couldn’t ignore the evidence that was there and needed to have a very strong message that we just can’t have this happen.”
