News

Foundation continues to pursue Opp House information

By Bill Moss, Published: June 11, 2019

More than a year after it began making inquiries about the operations of the Opportunity House and six months after it filed a lawsuit, the Community Foundation of Henderson County has gotten no closer to gathering substantive details of the former senior center’s current status and its plans.

Instead, the two sides are locked in a court battle over the civil lawsuit the foundation filed last December asking a court to determine whether the Opportunity House is operating as a nonprofit corporation and seeking a path to protect the foundation’s interest if it is not.
The foundation’s chair, Cindy Causby, and its president/CEO, McCray Benson, say the foundation has an obligation to verify that the Opp House is operating within the rules governing nonprofit organization because it maintains a small fund for the agency. As with any fund it manages and dispenses for other nonprofits, the foundation makes regular due diligence evaluations to ensure that the nonprofit is acting within the law and the rules.
The Opportunity House board of directors amended its charter in 1989 to show that the agency’s property, furnishings and other assets would be turned over to the Community Foundation in the event it dissolved.
The foundation since February 2018 had been trying to get basic information from Opp House President Ken Rhoads and its executive director, Jackie Roberts, including federal IRS forms nonprofits are required to file, a list of board members, minutes and financial information. It filed a lawsuit in December asking a court to help determine whether the Opportunity House continues to function as a tax-exempt nonprofit organization and whether it is carrying out the purposes spelled out in its charter. If the court determines that it is no longer providing “cultural, social, education and recreational endeavors for all,” as its charter requires, the Community Foundation then would ask the court to form a trust to preserve the assets.

‘You’re playing hide the ball’

Stephen J. Grabenstein, an attorney for the Community Foundation, and Jake A. Snider, an attorney for the Opp House, squared off in court last week for the first time in the case.
A busy day of civil lawsuit motions had been consumed before Superior Court Judge Peter Knight got to the Communication Foundation v. Opportunity House. The attorneys had planned to take up several pending motions in the lawsuit.
The Opportunity House filed a motion to dismiss, which Snider wants the court to hear before several other motions. The Community Foundation, saying that the Opportunity House has stonewalled on its request for information, is asking the judge to force the Opportunity House to answer its first list of questions in the information gathering process called discovery. The foundation submitted 32 questions — 22 interrogatories and 10 requests for productions of documents — on March 14. Among other questions, the foundation demanded that the Opportunity House:
• Identify the names, addresses and phone numbers of board of directors for the last seven years, identify the officers and how much they were paid.
• “State each and every time” the board has met for the past seven years.
• Identify its current tenants and past tenants and say how much rent they pay.
• State whether the property is for sale and, if it is, with whom is it listed and at what price.
• Provide detailed accounts of revenue and expenses for the past five years.
• Explains its plans for “updating and expanding its program options,” as it claimed it was doing in its March 14 motion to dismiss the foundation’s lawsuit.
• Provide minutes of its board meetings of the past seven years, amendments to its bylaws and charter for the past 10 years, leases of tenants and copies of its income tax returns for the past five years.
Two days before Monday’s scheduled hearing, Snider, the Opp House attorney, filed an affidavit from Rhoads saying among other things that the Opp House board had amended its charter to remove language that would transfer assets to the foundation if Opp House is dissolved.
In court on Monday, Grabenstein scoffed at the idea that Rhoads’ affidavit had satisfied the foundation’s questions in its March 14 discovery filing.
There is no evidence that the actions Rhoads described were taken by “a properly constituted board,” Grabenstein told Judge Knight. “None of that is addressed in this affidavit. … You’re playing hide the ball and you’re asking the court just to take at face value everything that we said in this affidavit,” he said to Snider. “It is extremely objectionable (and) not allowed (under rules of procedure).” The foundation has not had time to “rebut what’s in that affidavit. … I think it’s wholly inappropriate to not respond to discovery in a case, come in with an affidavit two days before a hearing and say, ‘There’s a whole new set of facts out there that you’re unaware of and by the way don’t ask me any questions about the validity of any of these facts in the affidavit because you’re not entitled to ask me about those questions.’”

Foundation ‘has no standing’

The Opportunity House has argued from the start that it’s not obligated to answer the questions until its motion to dismiss is resolved. Now that the Opp House board has removed the foundation’s authority to assume the assets in the event the Opp House folds, the foundation has no grounds for its lawsuit, Snider said.
“There’s no standing for the Community Foundation to bring the Opportunity House here” into court, he said. “The affidavit illuminates points on all of that.”
Judge Knight agreed that, for now, he would not consider the Rhoads affidavit as evidence in the case. Knight granted a motion by Zachary S. “Zac” Kester to withdraw as the Opp House’s defense attorney. General counsel of Charitable Allies, an Indianapolis-based public interest law firm that provides nonprofits with legal help and guides them on board governance, fundraising and IRS compliance, Kester filed the motion to dismiss back in February.
Aside from the admissibility of the the Rhoads affidavit and Kester’s motion to withdraw, the attorneys did not get to argue any of the other pending motions. One pertains to a fight over a Community Foundation filing that could cloud a sale of the Opp House property. The action, called a notice of lis pendens, would inform potential buyers that there is pending litigation over the property. The notice, Snider said in a motion to cancel the action, “is operating to frustrate not only the sale of the land” of the Opp House but is preventing the agency from borrowing money “to assist in defending itself against the Community Foundation’s lawsuit” — the first time the Opportunity House has acknowledged that it would need financing to pay its lawyers. “Imposing the lis pendens on the property is not only unsupported under the law, but it is inequitable and is actively working a harm upon Opportunity House.”

Listed for $1.5 million

Weeks ago a for sale and for lease sign went up at the Asheville Highway property. The agent is Howard Molton, who is licensed through Southern Commercial.
“I am the broker,” Molton said in an interview. “I have a listing agreement with the Opportunity House to sell the property and to find tenants for leasing office space in there.” Asked how sales were going, he said, “We’ve put a tenant in there last month already to do wheelchair transport for hospitals.”
The Opportunity House attorneys have said there is nothing wrong or even unusual with a nonprofit agency selling or leasing its property as long as it continues its core mission. The property is listed for sale for $1.5 million, Molton said.
“To me, it would be an asset sale like nonprofits do occasionally. They buy and sell real estate,” he said. He said Rhoads, the Opp House president, had notified him of the outcome of Monday’s hearing.
“I have to disclose whatever comes from it or whatever doesn’t come from it,” he said of his obligation under the law. “They don’t give me a ton of details. All I know is what’s in the public record and what you’ve written (in the Lightning).
“I’ve encouraged them to do whatever they can to get it resolved. You would be risking a lot of money if you were to purchase that property without getting that resolved.”
Does he have a potential buyer?
“We do, we do,” he said, “but we’re just waiting it for to be resolved so we can move forward with it.”

-30-