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By Tim Leeds 

Board asks for decision in Giveaway House lawsuit

 

June 25, 2013

Lindsay Brown

The Giveaway house in North Havre is the center of a contentious lawsuit.

The board that says it has authority over a decades-old Havre charity has asked the court to move to a decision in its lawsuit alleging another board that says it has that authority has no legal status to operate the nonprofit.

A board, formed in February, has asked Judge Dan Boucher to make a summary judgment in the lawsuit, alleging the defendants have not answered any of the arguments raised in the complaint.

The charity, which collects donations of items and gives them to people in a wide region across the state, was created in the early 1970s. In 1989, co-founder Ruth Nystrom incorporated the charity as a nonprofit, and she and her husband, Karl, deeded the North Havre house where it operated to the corporation. The deed says that if the property is no longer used for nonprofit charity purposes, it reverts back to the family and heirs of the Nystroms.

The lawsuit stems from a clash between members of the two boards, who were officers of the previous board.

In January, Sue Markley, vice president of that previous board, and fellow officers Faye James and Edith Anderson formed a committee to remove Sheila Forshee, treasurer, and Kelly Ann Damson, president, based on allegations Forshee had allowed the corporation’s nonprofit status and house and vehicle insurance to lapse and had fallen behind on property tax payments. Forshee also had changed the locks on the house, preventing other board members and volunteers from getting into the property.

The committee agreed that Forshee had explained or was resolving the issues raised, and that Bernice Campbell, Judy Litzinger and Jolene Ophus had effectively resigned by not attending the meeting. The committee also agreed that, under the requirements of the deed giving the property to the nonprofit corporation, Forshee as heir of Ruth Nystrom now was the owner and director of the house.

Forshee and Roberta Beute, who was a member of the committee, declared that the board was being reorganized.

In February, the directors listed on the corporation’s 2012 annual report, Campbell, Litzinger and Ophus, signed a document reorganizing the board, appointing new directors and officers.

Markley, the president and a director of that board, filed a new annual report with the Secretary of State listing the directors and officers.

In March, Forshee filed an addendum to that report, listing with the Secretary of State the directors and officers on the board she organized.

After another month of the two groups clashing over which controlled the charity, Missoula attorney Tyler Gernant filed the lawsuit April 18 for Markley’s board, asking the judge to find that board was the legal board of the charity.

Beute filed a response, saying she was filing the document as chair of the board and representing the other defendants.

After Gernant filed a notice saying because she is not a licensed attorney, Beute could not, under Montana law, represent the others, Beute filed a document signed by the other defendants asking the judge to rule Markley’s board had to return money Markley had moved from one bank to another, and to dismiss the lawsuit.

Gernant filed replies, saying Beute had cited laws that did not apply to the lawsuit in her motion to dismiss and denying that money had been improperly converted. In an April 4 email from Gernant filed as an exhibit in the case, he said Markley had acted on her authority once the board was reorganized in February and the nonprofit’s cash was being held in a separate account until the issues were resolved.

In other actions filed with the Montana Attorney General’s Office, Beute and Gernant each accused the other of unauthorized practice of law.

In a June 10 letter to Beute, filed by the plaintiff as an exhibit in the lawsuit, a representative of the Montana Department of Justice Office of Consumer Protection and Victim Services told Beute that her filing court documents without being a licensed attorney could be subject to civil and criminal prosecution.

The Attorney General’s Office referred Beute’s complaint against Gernant to another agency.

“Ms. Beute was advised that complaints about licensed attorney conduct should be directed to the State Bar Association's Commission on Practice; this office does not have jurisdiction over those issues,” Deputy Communications Director Anastasia Burton said in an email to the Havre Daily.

Gernant has argued that the committee, which was not appointed by the board’s directors, had no authority to take action and the February reorganization created the legal board for the nonprofit.

In the April 4 email, Gernant also writes that under Montana law, Forshee as an individual cannot own a nonprofit corporation. He added that, because it was due to her failing to file required paperwork that cause the federal nonprofit tax-exempt status to lapse, her saying the property reverted to her when that status lapsed also is problematic.

In May, the defendants, the board formed in March, retained the services of Great Falls attorney Robert Kampfer, who filed a motion May 30 asking the judge to put a hold on all proceedings until he received proof that the board formed in February was a legal board and Gernant was its attorney.

In the responses of the plaintiff’s board, formed in February, and in supporting documents, Gernant argues that the May 30 motion simply asks the judge to rule on the complaint without considering the plaintiff’s arguments. He said the defense seems to simply be that the Secretary of State exhibited the report filed by Forshee in March listing her group as the board.

The Secretary of State makes no determination of the validity of a report filed for a corporation, he writes, which requires the person filing the report to swear it is true and accurate.

“Sheila (Forshee) could submit Kermit the Frog as a director and that is what would be listed with the Secretary of State,” he wrote in the email. “To make false statements on those reports, however, is a crime.”

 

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