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May 24, 2005

State Sues Heather Manor Property Owners

DES MOINES.   Iowa Attorney General Tom Miller today filed suit against the owners of Heather Manor, a Des Moines senior citizen residential facility. The lawsuit alleges that defendants Carroll Robert McClurg, Larry A. Weide, and Daniel Lee Spencer violated state law and placed the residents of Heather Manor in financial risk through their purchase and subsequent lease of the facility.

The civil lawsuit, filed in Polk County District Court by the Attorney General's Consumer Protection Division, alleges that the defendants purchased the property for much lower than market price through their company, Heather Manor, L.L.C. The defendants then entered into a lease with a company they also controlled, Horace Mann Home for the Aged, Inc., to operate the facility. Miller said that, because they controlled both companies, the defendants signed the January, 2003 lease as both tenant and landlord. That lease contained higher rent payments to the defendants and resulted in greater financial risk for the residents of Heather Manor.

"We allege the defendants acted for their personal financial gain with little consideration of the harm that would result for the residents of Heather Manor," Miller said. "By signing on both sides of the lease the defendants benefitted themselves at the expense of the home and its residents. This deal put continued operation of the facility at risk."

Miller said that the lawsuit alleges defendants' actions violated Iowa laws by committing unfair practices in violation of the Iowa Consumer Fraud Act and breaching their fiduciary duties as Trustees of the Board of Horace Mann Home for the Aged, a non-profit corporation. The defendants' company, Heather Manor, L.L.C., is also named as a defendant in the lawsuit.

Miller said the lawsuit seeks a court order to prevent the defendants from acting to put the facility at further risk, require them to pay restitution and damages to residents and pay civil penalties.

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UPDATE as of June 1, 2005:

On June 1, Polk County District Court Judge Donna L. Paulsen issued an "Order Granting Temporary Injunction." The Order enjoins or prohibits defendant Heather Manor, LLC, "from evicting or filing a forcible entry and detainer action against Horace Mann Home for the Aged, Inc., or the current individual residents of the Heather Manor facility or Heather Manor Health Center." The Order also said, "The Court recommends the parties continue to communicate and develop long-term solutions to the complex issues raised in this case."

Following is a statement by Attorney General Tom Miller:

"We are very pleased with the Judge's Order. We believe that preventing the defendants from evicting the tenants of the facility, particularly the Health Center, is vital. This order will prevent further harm to tenants while the case is pending," Miller said.

"We welcome the Judge's recommendation in the Order for the parties to work together to develop a long-term solution. We look forward to working with all interested parties to resolve this matter in a way that protects the health, safety and financial welfare of the tenants of Heather Manor."


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