News

In return fire, Opp House asks court to dismiss lawsuit

By Bill Moss, Published: March 13, 2019

Firing back against a lawsuit that questions whether it’s still functioning as a nonprofit agency, the Opportunity House accused the Henderson County Community Foundation of filing “frivolous litigation … as a means to try and seize the property” of the organization.

The foundation, the Opportunity House attorney’s said in a motion he filed last Wednesday, lacks the standing to force the organization to turn over financial information or to dissolve or sell its property.
“The Community Foundation has no rights to force a dissolution as it is not the Attorney General, a creditor, member or director,” attorney Zachary Kester, the general counsel of Charitable Allies Inc., said in the 22-page motion to dismiss the foundation’s lawsuit.
After spending 10 months trying to get the Opportunity House leaders Ken Rhoads and Jackie Roberts to respond to “due diligence” requests about their operations, the Community Foundation on Dec. 21 filed a five-page complaint for declaratory judgment, asking the court to clarify whether the Opportunity House was operating as a nonprofit. It further sought the creation of a trust to guard the assets in the event it is “determined not to be a tax-exempt nonprofit organization.”

Opp House ignores requests for documents

The complaint, filed by attorney Stephen Grabenstein of the Van Winkle law firm, asks the court to resolve an “actual controversy” over the Opp House’s status.
Before the foundation filed the lawsuit, Community Foundation President McCray Benson and other officials called and visited the Opportunity House seeking to meet. It sent letters last February and again in June asking for documents including the IRS-required 990 forms, an annual report describing the services the nonprofit provides, its charter and bylaws. Rhoads, the Opportunity House president, and Roberts, the executive director, made no response. Efforts through a third party to arrange a meeting also failed. The Opportunity House “has stated that it intends to sell the real property … and reinvest the proceeds from the sale,” the lawsuit says. The Community Foundation “has learned enough information to raise questions whether (the Opportunity House) continues to operate and function as a nonprofit organization.”
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‘Mere difference of opinion’

The law is clear, Kester said in his response, in giving nonprofit organizations the power to “sell, convey, mortgage, pledge, lease, exchange and otherwise dispose of” property. While the foundation’s lawsuit says that there “are questions about whether (the Opportunity House) has been or should be dissolved,” those questions don’t rise to the level of “an actual controversy” the court needs to resolve. “This is the very definition of a mere difference of opinion,” Kester argued. “It is also a far cry from the legally required specific factual assertions that the Charity has been or is being dissolved.”
Grabenstein said he prefers to respond in court to Kester’s assertions.
“I think we would respectfully agree to disagree,” Grabenstein said. “My view is that is what the courts are for. We would not have filed the lawsuit if there was not a reason for it.”
The constructive trust the foundation potentially seeks, Kester said, would be a remedy only if the property were acquired “through fraud, breach of duty” or some other improper action. “In this case,” he added, “Community Foundation has not alleged any facts that even come close to establishing fraud or some other reason that it is inequitable for the Charity to maintain possession of its property.”
“Given all the facts … it appears likely that the true purpose behind the (lawsuit) … was not to determine its rights and the rights of the Charity but rather to seize the assets of the charity for its own use,” Kester said.
Grabenstein disputed that.
“I can say that nothing could be further from the truth,” he said. “It strikes me as a bit of obfuscation on his part. The Community Foundation has no interest or plans or designs that he alleges. (The foundation has) a great reputation of longstanding service in community and with that reputation and role comes certain duties and responsibilities to make sure the money they’re distributing is going to the appropriate places and the appropriate entities. What he’s alleging may just be smoke cloud to divert attention.”
Attorneys have swapped potential dates for an appearance in Superior Court ranging from June through November, Grabenstein said.