Covenant settlement finally done, but details still sketchy
The class action lawsuits filed by more than 80 residents of the former Covenant at South Hills against B’nai B’rith International and its affiliates have been settled.
Though the terms of the settlement must remain confidential pursuant to an order of U.S. District Judge David S. Cercone filed on March 17, it appears from court papers that the plaintiffs will recover at least some portion of their resident deposit fees, some of which exceeded $300,000.
The Covenant, which B’nai B’rith opened in Mt. Lebanon in 2002 as its first foray into the private senior housing market, struggled financially for years, defaulting on its payments to its bondholders. Finally, to avoid foreclosure proceedings initiated by some of its creditors, the facility filed for bankruptcy protection in January 2009.
Nine months later, Concordia Lutheran Ministries bought the facility for $15 million at a court-ordered auction. The facility is now called Concordia of the South Hills.
Under the terms of Concordia’s purchase agreement, it was not required to refund the residents’ deposits.
In addition to B’nai B’rith, the defendants in the four consolidated lawsuits include Greystone Development Company and Greystone Management Services Company, which helped B’nai B’rith develop and manage the facility, and each member of the board of directors of Covenant at South Hills.
Court papers filed recently by the defendants reveal that the parties participated in court-ordered mediation on Sept. 16, 2010, and again on Nov. 22, 2010, before attorney Louis Kushner. Following “many months of protracted negotiations,” according to the papers, the parties finalized the written settlement terms, with a material part of those terms being an agreement of confidentiality.
The defendants sought a confidentiality order to protect their reputation, according to court papers.
The defendants argued in their papers that disclosure of the settlement documents would cause “embarrassment and serious injury to the Defendants, many of whom have devoted significant time and effort to charitable work and community projects for years. The settlement may damage the Defendants’ reputations and result in a public misperception regarding their work and focus.”
The financial failure of the Covenant, B’nai B’rith’s prolonged refusal to be accountable for that failure, and the subsequent cumulative loss of some $26 million in entrance fee deposits, became notorious in the continuing care retirement community industry. In fact, former Covenant resident Charles Prine, who represented the Covenant’s residents as the chair of the Official Committee of Unsecured Creditors in the Covenant’s bankruptcy proceeding, testified before the U.S. Senate Special Committee on Aging last July at a hearing entitled “Continuing Care Retirement Communities (CCRC): Secure Retirement or Risky Investment.”
While the terms of the settlement have been finalized, the plaintiffs do not yet know the amounts each will receive, said resident Maury Deul. “I have not heard anything officially,” Deul said. “I have no idea what I will be getting, because everyone’s deposit was different. If we get anything, it will be nice.”
(Toby Tabachnick can be reached at firstname.lastname@example.org)