Hours before a $30 million class-action lawsuit was scheduled to be filed in Circuit Court, Pacific Retirement Services and Rogue Valley Manor residents reached an interim agreement enabling the parties to avert litigation.
The parties hammered out a deal that was announced in a joint release late in the day.
"A letter of intent has been signed with the Rogue Valley Manor Resident Steering Committee, enabling the parties to avoid litigation, and to begin re-building the relationships that have led to success for both Rogue Valley Manor and PRS," Brian McLemore, PRS president and chief executive officer, said in a statement.
Key components of the compromise were the appointment of two residents as voting members of the Rogue Valley Manor Board, limits on the ability to remove board directors, and a cap on PRS management fees for the next three years, the announcement said.
"I didn't think it could happen this quickly, but it did," said John Gurling, a member of the steering committee. "There was pressure put on by PRS to get it done quickly, and we responded as best as we could in view of their desire for urgency."
The Manor has been in operation for 51 years and PRS was set up as a management firm in 1991. It has grown to be the 13th-largest not-for-profit provider for senior accommodations. Residents of the retirement community have been at odds with the corporate parent for months, saying that PRS and its board have exceeded their authority and removed virtually all decision-making power from the Manor's board.
In a 50-page draft complaint, residents sought removal of PRS control over the Manor; rescission of an Aug. 24 bylaws amendment that reduced the Rogue Valley Manor board from nine to three members; and reinstatement of dismissed Manor board members or appointment of an independent board that cannot be appointed or removed by PRS.
PRS's counteroffer concerning board structure earlier this month apparently was enough to get the ball rolling toward settlement.
"Things are progressing; there isn't an agreement yet," Gurling said.
He said Portland attorney David Markowitz, who is representing several hundred Manor residents, will meet with another Portland attorney, Bob Newell, to hash out the final elements of the agreement.
"Once it's completed, it will be passed on to the residents for their approval," Gurling said. "Everyone was wanting to know if it could be done before Christmas, but I doubt it."
In August, after a judge declined to intervene on residents' behalf, Executive Director Kevin McLoughlin was fired from his post and PRS dismissed seven of nine Manor board members. PRS Chief Operating Officer Mike Morris assumed McLoughlin's duties on an interim basis.
The dispute first arose over concerns by Manor residents that they were being charged excessive fees to cover expenses related to PRS properties beyond the Manor. PRS operates 10 retirement facilities in five states as well as other operations, including a hotel and two golf courses in Medford. The Manor residents say that when PRS was established, it was agreed that management services would be charged at a break-even rate, with no profits to PRS.
"Both the Steering Committee and the PRS Board moved on their positions and made compromises in order to reach an agreement that serves the best interests of the community and the residents in the long term," said Lyn Hennion, chairwoman of the PRS Board, in a statement.
Efforts to reach McLemore were unsuccessful.
Reach reporter Greg Stiles at 541-776-4463 or email firstname.lastname@example.org.