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Opportunity House again attempts to avoid trial on its governance, finances

The Opportunity House, which has shown little evidence that it’s offering services to the community, defended itself in court this week against a three-year-old lawsuit that asks a judge to determine whether the agency remains a nonprofit.

The lawsuit, filed by the Community Foundation of Henderson County, has languished in Henderson County Civil Superior Court while the coronavirus pandemic impeded court proceedings and the Opportunity House dropped two lawyers.
A third lawyer, Edward L. Bleynat Jr. of Asheville, argued before Superior Court Judge Peter Knight on Monday for the dismissal of the foundation’s lawsuit.
After seeking answers from the Opportunity House about its activities and finances for 10 months, the Community Foundation went to court in December 2018 seeking a judge’s ruling on whether the Opp House “is still a tax-exempt nonprofit organization” carrying out activities consistent with its charter and seeking clarification on “what should become of the (Opportunity House) assets” in the event it’s determined not to be a nonprofit organization.
Before it was amended in May of 2019, the Opportunity House charter said that its assets would go to the Community Foundation if the Opp House dissolved.
In his motion to dismiss the foundation’s complaint, Bleynat argued that the foundation lacks the jurisdiction to bring an action against his client. Under laws governing nonprofits, the IRS, the state attorney general, a nonprofit’s members or its board “can initiate judicial dissolution,” Bleynat told Judge Knight. “But there is no standing given by statute … for some other entity such as another not-for-profit that is not a stakeholder to bring such an action.”
Formed in the late 1950s as a senior center, the Opportunity House at its peak had hundreds of dues-paying members and offered arts and crafts classes, dances, card playing, performances, lectures, art exhibits and other activities, first at a renovated house on Fleming Street and then at its current location at 1411 Asheville Highway, once an A&P supermarket.
Bleynat told Judge Knight that the Opportunity House is trying to stay afloat by renting space in its building, which is valued at just over $1 million.
“As happens with a lot of charitable institutions, times can be better on them or harder,” he said. “In 2008-10, Opportunity House was in a financial crisis.”
Opportunity House began to rent out space in 2015 to provide funding to keep up the building, continue to provide services and started looking at longer term options such as a performing arts or fine arts center. Guiding the future of the nonprofit, Bleynat said, “is the role of Opportunity House board; it is not somebody else’s role.”

‘It’s deja vu all over again’


Steve Grabenstein, the attorney for the Community Foundation, had a simple rebuttal.
“It’s deja vu all over again,” he said. “The argument presented today and the reasons he’s citing are the very same arguments and the very same issues that were rejected by this court in the summer of 2019.”
In that hearing, Opp House attorney Jake A. Snider failed to persuade Judge Knight to throw out the lawsuit.
“Mr. Bleynat is making the same arguments that Mr. Snider made in 2019,” Grabenstein said. “The magical amendment of the charter (deleting the foundation as a receiver of its assets) about a week before the hearing on the last motion was then and remains now a clumsy attempt to avoid a trial on the real issue in this case.
“We have asked this court to determine the status of this organization and the question of whether the Opportunity House is operating as a nonprofit. The answer to all of that is clearer now than it was two summers ago.”
New information the foundation has received through discovery — the exchange of information by adversaries in a court proceeding — casts more doubt on how Rhoads came to be hired and whether the board’s decisions complied with the agency’s charter and bylaws, Grabenstein said.
The board hired Rhoads in 2016.
“Several things jump out from that procedure,” Grabenstein said. “That process (spelled out in the charter) was not followed when Mr. Rhoads assumed the helm of the Opportunity House. Similar provisions in bylaws regarding electing officers were not adhered to. … The evidence clearly shows Mr. Rhoads was not elected by officers or board members in compliance with the bylaws or charter that were then in effect. So at best what we have a question of fact with regarding did they comply with policies and principles when Mr. Rhoads took over the organization and put in a so-called board of directors. To us clearly the answer is no.”
In its IRS filings in the past three years, the Opportunity House has reported that it has three board members, with Rhoads as president.
The agency’s charter, Grabenstein said, says that the board shall have 14 members, that a nominating committee would choose officers and that a quorum of the 14-member board would elect officers.
“The additional discovery that’s been provided tells us pretty clearly that neither these bylaws nor the charter were complied with when Ken Rhoads became affiliated with the organization in June of 2016,” Grabenstein said. And further, he added, the board of only three members voted to amend the nonprofit’s charter to refuse a small annual donation the Community Foundation had been giving the Opp House and voted to delete the paragraph saying the property would go to the foundation if the Opportunity House dissolved.
“Mr. Bleynat may want to erase all that by saying, ‘Aha, we’ve amended our charter saying we don’t want your money and we’ve removed that provision that says the property would revert … ergo you have no standing.’”
The charter amendment in May 2019 came months after the Community Foundation filed its lawsuit and weeks or days before the last time the Opp House argued a motion to dismiss the lawsuit.
“You can’t try to change the rules of the game after the game has started,” Grabenstein said.
The Community Foundation’s lawsuit, he said, focuses solely on its interest in whether the Opp House remains a legitimate nonprofit agency serving the public. “It’s not a power grab, it’s not a land grab as Mr. Bleynat and his predecessor tried to make out,” he told Judge Knight. “All of these arguments were made more than two years ago and your honor rejected them.”
After the hearing, Bleynat said the lawsuit impedes the Opportunity House’s ability to provide nonprofit services because a part of the action includes a lis pendens — a formal notification that a lawsuit against an entity is pending. The filing effectively blocks the Opp House from selling the property, he said.
“You have to be able to pay your expenses first to allow you to do that (provide services) and they very much would like to do that, whether it involves selling the building and taking the proceeds and putting it in affordable housing or something of that nature,” he said. “As long as we’re not able to do that because there’s a lis pendens on it, it makes it very difficult to get that done.”
Judge Knight questioned both attorneys throughout the 35-minute hearing as to whether any North Carolina case law existed that might guide his decision in a case like this one. Both attorneys said they knew of none. Knight took the case under the advisement and will issue a ruling. If he again denied the Opportunity House to motion to dismiss the lawsuit, the case could go to trial in the next term of Civil Superior Court.