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Leisure World Panel Says It Will Sue to Keep Books Secret

Golden Rain Foundation, which governs the Seal Beach retirement community, answers dissidents who want to see records.

August 14, 2004|David Reyes | Times Staff Writer

The battle between a determined cadre of Leisure World residents and managers of their Seal Beach retirement community escalated Friday after management lawyers vowed to sue to keep financial records secret.

Seven residents -- who are members of the nonprofit foundation that runs Leisure World -- went to small-claims court in June to compel the foundation to open its books, saying that because they pay monthly dues, they have the right to inspect the books.

But in a small courtroom Friday, attorneys for the Golden Rain Foundation said they would preempt the residents' argument and file their own Superior Court lawsuit to keep the books out of the residents' hands.

"We wanted this to be settled today. We believe the judge had jurisdiction and should have made a decision," said Leisure World resident Carol Franz.

"If the foundation sues, this just delays things. They hope we're going to die in the meantime," she said.

Leisure World has 9,000 residents with an average age of 77. It is divided into 16 geographical areas run by nonprofit "mutual corporations," each headed by elected residents. Any resident can run for the Golden Rain Foundation Board, an umbrella group that governs the entire community.

The dissident residents are seeking answers to a number of questions about foundation finances. In particular, they want to know why monthly fees increased $30 this year, why fees are charged to cover a mortgage they say has been paid, how much chief administrator Harbir "Bill" Narang and other administrators are paid and how much the foundation pays contractors.

Golden Rain lawyers -- who have declined to comment on the case -- say residents have no legal right to financial information. The legal question is whether the foundation is a homeowners association, as residents contend. If so, by state law, its managers must make the books available for inspection by members.

Earlier this year, Judge Kirk H. Nakamura sided with the seven plaintiffs and awarded them $200 each in fines levied against the Golden Rain Foundation Board for failing to provide the financial information. The foundation appealed, which led to Friday's court hearing.

Acting as a small-claims court judge, Superior Court Judge Derek Hunt said Friday that the matter should be heard in Superior Court. After lawyers for the foundation said they would file a suit of their own as early as Monday, Hunt consolidated the seven cases into one and stayed Nakamura's ruling until the Golden Rain case is resolved.

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