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Foundation v. Opp House lawsuit can proceed, judge rules

A lawsuit to determine whether the Opportunity House is operating as a nonprofit agency and whether it can sell its building and land can proceed, Chief Resident Superior Court Judge Peter Knight said in an order last month.

The order came after a hearing on Nov. 1 on the Opportunity House’s three motions to dismiss a lawsuit brought by the Community Foundation of Henderson County. The lawsuit asks the Superior Court to decide, after a trial that figures to shed light on the nonprofit’s governance, finances and activities, whether the Opportunity House is still a tax exempt nonprofit organization and whether it has the authority to sell the real estate, valued on the tax books at $1.9 million, and to determine what should become of the assets if the court rules that it’s no longer a nonprofit organization.
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. But for a decade or longer it has seen its membership and community activities fizzle out and has stayed afloat by renting space in its building. The building and land at 1411 Asheville Highway, valued at just over $1 million, contains space that is currently rented to a music school, florist, medical transportation company and cellular phone store. The agency’s 2019 IRS form 990, which nonprofits are required to file annually, reported $83,018 in rental income.
“As happens with a lot of charitable institutions, times can be better on them or harder,” Opp House attorney Edward L. Bleynat Jr. told Judge Knight in a hearing on Nov. 1. “In 2008-10, Opportunity House was in a financial crisis.”
He and other Opportunity House attorneys — Bleynat is the third since the Community Foundation filed the lawsuit in December 2018 — depict the agency executive director, Ken Rhoads, as an experienced consultant who was hired in 2016 to stabilize the operation. Bleynat argues that the lawsuit and an accompanying lis pendens — a legal document that lets the public know litigation involving the property is pending — make it impossible for the Opp House board to sell the property and use the proceeds for community-oriented programming.

Foundation ready for trial

Community Foundation President McCray Benson said his organization has no interest in taking over the Opportunity House but instead seeks clarity in what would happen if the organization sold the property. The Opp House charter originally declared that if the organization were to fold its assets would go to the foundation. But in what Community Foundation attorney Steve Grabenstein described as a “magical amendment,” a new three-member board deleted that reference. Grabenstein told Knight in court on Nov. 1 that information the foundation has obtained through discovery raises more questions about the Opp House’s governance.
“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 is a question of fact 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.”
Benson said the foundation is ready for trial.
“We understand that a court date will be set and we should be prepared to move forward with a hearing,” he said. “The court provided us with three dates and they’re asking us which ones we could fit.” The dates are between February and June. “I think we’re ready for any one of them that is offered as long as our attorney is ready,” he said.