Mendocino Coast Television has ended its own existence, blaming the loss of their building and their lawsuit on the Footlighters play company. The plug has been pulled on public access TV for the Mendocino Coast.
In April, Mendocino County Superior Court Judge Jeanine Nadel ruled that MCTV must return the Footlighters building on Laurel Street and pay $36,315. After negotiations broke down, the MCTV board met, dissolved itself and turned off its broadcasts last Friday. They plan to be out of their building by the end of July. The closure meant the loss of two full-time and two part-time employees.
Many locals are shocked or outraged. Stories, petitions and fundraising drives have all made the rounds, some with incorrect or incomplete information.
The facts are Footlighters waited two years before making a legal claim for a mold-infested building given away by their former president, Bud Farley, in 2007. Their claim was successful because Farley didn”t conduct a proper meeting when the decision was made to give it away. Farley crossed out words and did backdating of documents, incorrectly as it turned out.
To make matters worse, MCTV did not purchase a title insurance policy for the free transaction.
How did this happen? One possible surprise is that MCTV did everything with legal advice.
MCTV retained lawyer Jone Lemos to help with the real estate transaction found to be an illegal transfer by the judge. MCTV was represented for free by Michael Saunders from a highly touted law firm.
Faced with the lawsuit, Elizabeth Swenson, executive director, said all the attorneys MCTV spoke to thought the “laches” defense was a winner. The laches defense says because Footlighters did not object in a timely fashion, MCTV could rely on the transaction, despite its flaws, because the reasonable time to make a claim had passed with no challenges.
Yet this laches defense was wholly rejected by Judge Nadel, who focused solely on the legality of the transaction and the validity of the title.
The judge saved most of her harshest words for Farley, who had been sued along with MCTV by Footlighters. The judge found against Farley but said he didn”t have to pay any money.
Comments from MCTV board
What could MCTV have done to avoid this? Since all the attention and blame has been focused on Swenson so far, we put our questions to Dan Gjerde, a board member since MCTV”s inception and board president at the time the organization committed corporate hari-kari. Gjerde sent our questions on to other board members. Alan Ferguson and David Martin were the first to respond. Some of their responses are also presented below.
After the verdict was in, Gjerde took charge of negotiating with Footlighters. That effort didn”t work.
“In May, I met with Junice Gleason of Footlighters,” Gjerde said. “However, the Footlighters” attorney [John Ruprecht] complained, instructing that no one from MCTV was to meet with Footlighters unless he was present. The Footlighters attorney never subsequently proposed a meeting. When the MCTV board offered a proposal for discussion, the Footlighters” attorney strongly objected, and did not offer a counter proposal.”
Can a legal entity merely dissolve when it has outstanding debts?
“On behalf of the Footlighters, Mr. Ruprecht rejected and did not make any counter offer to MCTV”s settlement proposal,” Martin said.
“The proposal was pretty much everything the organization could pay on the judgment and still hope to survive. Our only choice was dissolve or file bankruptcy and then we would still probably need to find money to pay a lawyer to dissolve MCTV. We had legal advice that dissolution was the better choice. The board has been advised that so long as we are not involved in depleting assets in order to avoid paying the judgment, board members should not expect to be held personally liable for a judgment against the corporation (MCTV). There has been discussion of this issue and we have been careful about how the remaining assets are handled,” Martin said.
How did a deed with scribble-outs handed over by Farley get approved without question?
“MCTV hired a local attorney to assist with the filing of the deed. The deed was transferred from Footlighters to MCTV,” Gjerde said. “MCTV was paying taxes on the property. Neither the board nor the staff had reason to think the transfer of the deed was subject to a legal challenge.”
Gjerde said efforts were made to resolve the case before trial.
“Before the Footlighters” lawsuit went to trial, MCTV board members participated in formal settlement negotiations with a court-appointed mediator. In those meetings in Ukiah, MCTV and Footlighters were unable to reach a mutual agreement,” Gjerde said.
How could MCTV have relied solely on Farley? Why didn”t the board try harder to settle the case when it was first filed?
“Where was Junice [Gleason of Footlighters]? Again, only after the building was rehabilitated did she show up with a snarling lawyer as a mouthpiece,” said Ferguson. “Have you ever tried to negotiate with people that don”t want to? She started by hiding behind a lawyer; that lawyer did not want negotiations. Building plus money equals win.”
Why didn”t the board look closely at tax returns which became controversial after the lawsuit was lost?
“I have served on two other nonprofit boards, one as president,” Martin said. “The tax returns have been handled by CPAs and since nonprofits generally don”t pay taxes, there is little reason I am aware of for me to look at them. I do study the financial reports.
“On the board where I am president, I once went to the bank to perform an unannounced verification of account balances to confirm that the financial statements accurately reflected the bank balances,” Martin said. “Considering how much Elizabeth has been able to accomplish with the meager resources available to her, I have never believed there was any reason for concern.”
Ferguson questioned why this newspaper didn”t put more questions to the Footlighters board.
“It has puzzled me since I first read your article regarding this issue why you simply present a he-said/she-said analysis that didn”t challenge the Footlighters” positions,” Ferguson said. “Why for instance are you so concerned about the actions of the MCTV board? Isn”t the real question about the actions of the Footlighters” board? They transferred the building, which was on the verge of condemnation, with unpaid taxes and incredible dilapidation, and then decided they wanted it back. Same board, different board? Did you delve into their personalities, question their abilities? Ask them about their taxes? What did their board members do before and after, do we know who they are? That board transferred the deed, that same board sues? I”m confused, and you haven”t reported. I see my name in your paper; where are the Footlighters board members? Why don”t we know them so the community can judge us all fairly?”
Gleason is president of the Footlighters board and has been since Farley was ousted as president, partly over the building matter. Ric Martin is also a member. The judge found that Farley did not hold a legal board meeting at the time of the transfer. Although other Footlighters objected, they did not do so right away.
A request for information on whether the board meetings are public and for a full list of board meetings was deferred until Footlighters” attorney, Ruprecht, could meet with this newspaper. All other questions will be answered by him as well.
Footlighters is a membership nonprofit, a more legally complicated entity than a simple nonprofit run by a board of directors.
To Ferguson the suit comes down to pursuit of money.
“So, to encapsulate, some Footlighters give the building to MCTV, other Footlighters wait until the building is updated, then hire a legal gun to get it back,” he said. “But not satisfied with that gift, they want all the money or legal gun shoots MCTV dead for being broke. Bang. It was always about the money they could get; that”s why Bud wasn”t the only one sued by Junice. Bud doesn”t have any money, but then neither did MCTV. It was always building plus money equals win; who cares about MCTV?”
Editor”s note: Coverage of the MCTV and Footlighters story is ongoing.
