A retired physician who had an ownership share in the Harvard Medical Park in Roseburg has filed a complaint against the company for allegedly shorting him by more than $450,000 when he tried to cash out.
Robert J. Bennett filed the complaint against Harvard Medical Park, LTD, in Douglas County Circuit Court on Dec. 30. He is seeking $690,000 in damages, plus interest and attorney fees.
According to the complaint:
Bennett, a diagnostic radiology specialist with more than 40 years experience, was formerly a limited partner in the Harvard Medical Park. He retired from medical practice in 2014 and moved to Portland.
The Harvard Medical Park, whose facilities are located at 1813 W. Harvard Ave., is a physician-owned and managed medical complex. Under its partnership agreement, ownership shares are divided into “units.” Bennett holds 460 units in Harvard Medical Park, which constitutes about 15% of the current units outstanding.
The partnership agreement spells out the method for how the units are to be valued. By Dec. 15 of each year, the General Partner “shall determine for the ensuing calendar year” the value for each unit, according to the agreement.
The determination is made by a committee of four Harvard Medical Park limited partners who will take into account “the fair market value of all assets, the indebtedness of the partnership, the income or losses of the partnership,” and anything else that may affect the unit value for the ensuing calendar year.
On March 27, 2019, Bennett formally withdrew from the Harvard Medical Park and tendered his 460 units for payment, pursuant to the partnership agreement. On that date the value for each unit was $1,500.
The next day, Alan Liesinger, William Hollander, Angela Jones and Knut Torvik, held a board meeting for 1800 West Harvard Management Group, which is the managing partner of the Harvard Medical Group.
At that meeting, those members of the board voted to lower the value of each Harvard Medical Park unit to $500, according to the complaint.
‘Done in bad faith’On April 4, 1800 West Harvard Management Group convened a meeting of the valuation committee, which was comprised of Liesinger, Hollander, Jones and Brad Townsend. Townsend was the only committee member who was not also a member of the Management Group. After a motion by Jones, seconded by Townsend, the committee voted to reduce the value of each unit to $500.
At $1,500 a unit, Bennett’s 460 units would be worth $690,000. At $500 a unit, Bennet’s ownership share would be worth $230,000, a difference of $460,000.
On April 23, Harvard Medical Park notified Bennett that he would be getting $500 a unit instead of the $1,500 a unit Bennett claims he is entitled to.
Under the terms of the partnership agreement, the valuation committee has the power to set the unit value for the “ensuing calendar year.” That means the committee only had the authority to set the unit value for 2020, according to the complaint.
Furthermore, the valuation committee did not meet until April 4, after Bennett had already formally withdrawn his ownership rights to Harvard Medical Park and tendered his units back. That means when Bennett tendered his units they were still worth $1,500, the complaint said.
“By failing to honor the true value of Plaintiff’s units and by failing to abide by the express terms of the partnership agreement in appointing a valid valuation committee, 1800 LLC and HMP breached the partnership agreement,” the complaint said. “Plaintiff is entitled to payment of $690,000, which represents the sum of Plaintiff’s 460 units at $1,500 per unit, plus interest at 4.5%, pursuant to the terms of the partnership agreement.”
The decision to reduce the value of the units from $1,500 to $500 each was “unprecedented and unjustified,” the compliant said, and can only be explained by Harvard Medical Park’s concern that “honoring the true and proper value of Plaintiff’s units would cause significant financial problems stemming from Plaintiff’s substantial 15% stake.”
“1800 LLC and HMP’s failure to honor the true and proper value of Plaintiff’s units was unjustified and done in bad faith,” the complaint said.
Harvard Medical Park has not been officially served with the complaint. Representatives for the park did not return phone calls seeking comment for this story.
Bennett is represented in the complaint by Laura T.Z. Montgomery, with the Eugene law firm Hutchinson Cox.