Nonprofit sues United Way over 'abrupt' expulsion

A local nonprofit that was operating under the umbrella of Northwest Montana United Way in Kalispell until it was able to obtain its own federal nonprofit status is now suing the organization and its longtime executive director after an “abrupt and unreasonable” termination of United Way's fiscal oversight.

According to the lawsuit filed Tuesday in Flathead County District Court, Two Bears Family Center LLC and its founders, Kim Kearney and Bernadette McDonald, are suing on multiple counts, including wrongful termination, punitive damages, libel/slander and breach of contract.

Two Bears claims that after a series of unusual organizational and financial mishaps, Sharon “Sherry” Stevens, executive director for Northwest Montana United Way, essentially blindsided them with a letter terminating the relationship between the two organizations and demanding Two Bears exit its Gateway Community Center location without adequate forewarning, displacing the nonprofit and its many vulnerable clients.

According to Kearney, Two Bears — an organization that provides supervised visitation and drug-testing services to separated families seeking reunification — is now without a permanent home base for its operation that serves dozens of families in the Flathead Valley.

“We feel strongly that these families and children already have so many transitions in their lives and this [Two Bears] is a safe place for them and that was just taken away in a moment,” McDonald told the Daily Inter Lake. “I felt it was very undignified. It makes me really sad.”

The relationship between Two Bears and United Way began last September when Kearney and McDonald approached Stevens regarding their intent to launch the family center. According to court documents, Stevens agreed to operate as a fiscal agent for Two Bears and to provide a space for its operations in the Gateway Community Center. As the fiscal agent, United Way controlled the finances of Two Bears, including the organization's payroll, and took care of certain expenses such as rent for the space in the beginning.

There was no written agreement on the matter and no specified expiration date of the relationship, but “it was understood that this arrangement would continue until such time as Two Bears was financially able to operate on its own,” according to the lawsuit.

By July of 2019, Two Bears' founders believed they had reached that point, as they were bringing in enough revenue. They felt that based on this success, they were “ready to stand on their own two feet” and operate independently from United Way.

They raised this possibility to Stevens, who allegedly refused to meet on the matter, but Two Bears nevertheless supplied an estimated time-line for becoming independent from United Way.

Stevens' refusal to meet over Two Bears' proposed fiscal separation from the United Way umbrella would become one of multiple unusual financial situations to unfold over the course of Two Bears' time under the agency, according to the lawsuit.

For example, Stevens allegedly had agreed to, on a monthly basis, supply Two Bears with a spreadsheet showing the incoming payments to United Way and expenses charged to the organization. However, “Stevens rarely supplied a spreadsheet of incoming revenue from Two Bears,” the complaint stated.

The alleged lack of documentation “inhibited Two Bears' ability to cross-check any outstanding invoices” because the organization was “unaware of what invoices had been paid.” They believe as much as $8,000 in unpaid invoicing had accumulated from September 2018 to July 2019.

Two Bears alleges numerous other financial errors were conducted by Stevens, including failure to submit pay stubs along with paychecks, failure to supply paychecks altogether and “improperly categorizing a wage garnishment of one employee as falling under contributions to the ‘United Way Pledge.'”

When McDonald and Kearney pressed Stevens on why they hadn't received several paychecks, Stevens allegedly replied “no employees of United Way are getting paid because Two Bears is operating under a $36,000 deficit,” and allegedly refused to discuss the matter further.

The lawsuit states McDonald and Kearney “did not believe it was possible” that there could be that great of a deficit. They requested Stevens supply them with their organization's financial records to substantiate her claim — a request Stevens also allegedly denied.

After being denied information multiple times, McDonald and Kearney said they would take the matter to the United Way board of directors. Stevens allegedly replied by stating if they did so, they would be “out of here.” Regardless, the two proceeded to take the matter to the board.

But after several exchanges between the organization and United Way board members, Stevens served a letter to Two Bears on Sept. 17, 2019. The document claimed the United Way board had only approved a “one-year trial period” and that period was ending three days later on Sept. 20, at which time, Two Bears was expected to vacate Gateway Community Center.

According to the lawsuit, the request for immediate departure from Gateway Community Center violates Montana Code Annotated, which states any termination of a lease requires 30 days' notice. The letter allegedly made a number of “false claims,” including one of a “pending lawsuit” against Two Bears and another that the organization was “operating under an inappropriate name,” the lawsuit said.

Later, on Oct. 3, Stevens' legal counsel sent an email to Two Bears, indicating the missing paychecks for the Two Bears employees were available but that “payment is contingent on them signing an interim services agreement setting forth their status as independent contractors.” However, an investigator with the state Department of Labor said signing such an agreement could result in a fine up $1000 — an insight that prompted Two Bears to refuse the proposed agreement.

On Oct. 4, Two Bears was asked to “cease providing services at 5 p.m. that day.”

Visits with clients that had been scheduled that day and several throughout the weekend were canceled as a result of the immediate ouster by Stevens.

“Both Bernie and Kim are very committed to the work they do,” said Emily von Jentzen, legal representative for Two Bears. “They are committed to helping children and families and this is a really necessary program in the community.”

Stevens did not respond to several phone calls made by the Daily Inter Lake.

Reporter Kianna Gardner may be reached at 758-4407 or kgardner@dailyinterlake.com.