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Saturday, June 22, 2024 | Back issues
Courthouse News Service Courthouse News Service

No Injury in Huge Senior Financial Abuse Case

SAN JOSE, Calif. (CN) - A federal judge dismissed all claims in a lawsuit alleging that a Palo Alto retirement community funneled nearly $200 million of its residents' money to its corporate parent and put the seniors' cash in jeopardy.

In an order issued Tuesday, U.S. District Judge Edward Davila ruled that the six seniors who filed a class action earlier this year did not show that they've suffered any actual injuries.

Lead plaintiff Burton Richter, on behalf of the residents of the retirement community Vi, claimed in the lawsuit that the home's operator CC-Palo Alto transferred more than $190 million in resident entrance fees to its parent company CC-Development Group without obtaining collateral or a repayment promise.

Richter said CC-Palo Alto has collected more than $450 million in entrance fees from residents - which are considered loans to the company and are partially repayable if a senior dies or moves out of an apartment - but now has a deficit of more than $300 million and will not be able to return the loans when they come due.

Defendants CC-Palo Alto, Classic Residence Management Limited Partnership and CC-Development Group filed their motions to dismiss this past March.

Davila ruled that there is no actual or imminent injury to the seniors. And there's no indication that any of them have left Vi and have been denied the repayable portion of their entrance fee, Davila said.

There's also no indication that any senior is in such poor health that they'll die and soon require their fees to be repaid to their heirs, he added.

Davila also ruled that the seniors' monthly apartment fees have not been artificially inflated as they claimed.

"Nothing has occurred to run afoul of the contract terms," he said.

The seniors have 15 days to file an amended complaint.

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