A judge's orders Tuesday may spur restitution for some of the 491 people who paid for membership in the failed World Gym health club in Ellicott City.
Efforts for repayment stalled early this year when managers of the club, which never opened, asked Circuit Judge James Dudley to change or reverse his Jan. 8 decision holding Fitness Management Inc., the company hired to manage World Gym and Family Fitness Center Inc., liable for memberships that were not bonded as required bystate law.
In a decision Tuesday, Dudley rejected those motions, and the owner and managers of the health club remain liable for as much as $135,000 in restitution to club members.
The club was to open in December 1988 in Normandy Shopping Center. But prospective members began filing complaints after the club cited construction delays and failed to open. The Consumer Protection Division of the State Attorney General's Office sued in May 1989 to retrieve membership fees.
Rachel Hess, attorney for the management company and its owners, Anthony Ferraro, Scott Rybak and Craig Witz, said her clients intend to fight the restitution claims.
"They don't believe they're liable. They neverhave believed they're liable," she said, because they were assured by the club's owner, Baltimore-area businessman Philip Porter, that the memberships were bonded.
Porter, who hired FMI to set up the club and sell memberships, was not a party to FMI's January motions and has been at odds with Ferraro, Rybak and Witz since he was tried withthem last May. He has filed for bankruptcy, but the state is seekingto exclude the restitution from any federal debt protection he mightbe granted.
Dudley also gave the state attorney general's office 21 days Tuesday to give all evidence supporting individual claims to Columbia attorney Barry Silber, the special master appointed to resolve disputed claims.
The defendants then will have 10 days to file objections to any of the claims.
Dudley also extended Silber's appointment 90 days. Silber was to have issued his findings to Dudley onApril 5, but problems getting hearings scheduled and getting information from the Consumer Protection Division made the extension necessary, Silber said.
"I'm not so sure we even need the full 21 days," said Attorney General J. Joseph Curran Jr. "We just want to get this behind us. it's been dragging on too long."
The case's weeklong non-jury trial concluded in June.
Silber said he expects to receive more than 1,000 documents in the next three weeks supporting the claims, which range from $5 to $1,500.
Silber said he doubts smaller claims will be contested.
"I would imagine that if it's not a substantial claim they'll just pay it," he said, because it would be too costly to hold a hearing for a claim of $50 or $60.
On Tuesday Dudley also ordered Fitness Management Inc.'s owners to place $1,500 in escrow to pay Silber's fee.
At least 379 members received partial payments out of a $50,000 surety bond, but the remaining members' claims lack proper documentation and are disputed by the defendants.
Silber said his first task will be to find out which claims are not disputed by the state or defendants, and send a letter to those claimants asking if they agree with the amounts.
If they do not agree, Silber will have a hearing for the individual's claim.
An undetermined number of claimants may have gotten double their money back, Silber said, because they were eligible for refunds through credit card purchase guarantees as well as restitution from the $50,000 bond.
Steven Sakamoto-Wengel, the assistant attorney general handling the case, said it was possible that had happened, but restitution records have yet to be checked against credit card refunds.
Silber said he plans to send each claimant a form listing what the state believes isowed on his or her membership, what the defendants contend and asking what the claimant believes is owed.
Anyone who has a claim and wants to know its status should call his Columbia office, Silber said.Callers should leave their name, address, telephone numbers, the amount of their claim and the amount of any restitution they have received.