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MCA Investigates and Rebuts a Claim Against a Group Home for Teenagers

By May 11, 2023May 16th, 2023Insights

MCA Financial Group was retained to investigate and rebut a damage claim of $2 million against a company in Arizona that operated group homes for teenagers. The plaintiff, a member of the company, alleged that her interest in the business was unfairly diminished, resulting in financial losses due to reduced member interest and high lease rates for the group homes charged by other members’ real estate holdings. However, MCA verified that the plaintiff had agreed to the amendment to the operating agreement, which decreased her member interest as a result of her electing not to invest with other members to expand the real estate holdings that allowed the group home business to grow.  MCA was able to demonstrate that the member had not suffered any financial loss as a result of her reduced member interest or due to the alleged excessive lease rates, which were actually in line with market rates.

To complete the project, MCA analyzed the pleadings and operating agreements, financial statements, tax returns, and profitability of the group homes, as well as the metrics and occupancy levels of each home. We also developed a financial model to illustrate the economic impact of the member’s reduced interest and the alleged excessive lease rates. Despite challenges in obtaining the necessary information, we were able to prepare a succinct report within a short amount of time to meet our client’s demands.

The engagement showcased MCA’s expertise in financial analysis, modeling, and litigation support and expert testimony. It was the second case related to teen group homes that MCA had worked on, demonstrating our experience and knowledge in this industry.