LISA WEISS

Staff Writer

MURRIETA -- World Gym International, the Santa Monica-based company that granted a franchise for an ill-fated Murrieta center that never opened, is responsible for making the remaining refunds to members who joined, a jury decided last week.

After a two-week trial, the jury decided that former athletic club owner Gaston "Gus" Alvarez led people to believe they were dealing directly with World Gym International and not with an individual franchisee.

World Gym International has about 300 franchises in the United States and overseas.

When World Gym International pulled its franchise agreement last February because of Alvarez's failure to open the center in a timely manner, Alvarez changed the name to Murrieta Fitness.

World Gym officials did not return calls seeking comment.

Alvarez said Monday that he did not think the jury trial was necessary.

"We agreed to pay the members back and that's what we are doing," he said.

Attorney Mitch Wagner, who filed the class-action suit last March on behalf of 3,000 Murrieta Fitness members who had not gotten their refunds of up to $1,200, said Monday he needed a guarantee that the fees will be paid even if Alvarez ran out of money.

Alvarez said he has already paid out more than $260,000 in refunds.

Last November, Wagner met with Alvarez and his attorney and representatives from World Gym to try to settle the case. Alvarez agreed to pay the refunds to the remaining members in two payments to be made this year in June and December. Last December, Riverside County Superior Court Judge Erik Michael Kaiser approved the settlement.

In October, Kaiser denied a motion for summary judgment from Wagner, which would have awarded refunds and damages to the members without going to trial. The damages would have totaled two and a half times the fees they paid.

Kaiser said then he could not determine the extent to which World Gym International was aware of Alvarez's actions.

Alvarez bought property in 1997, intending to open a World Gym franchise on California Oaks Road. Citing bank troubles, he delayed opening the 28,000-square-foot facility while people who had bought pre-paid memberships used a temporary 4,000-square-foot facility. When it became apparent that the permanent gym would not open, some of them demanded refunds. World Gym pulled its franchise agreement last February.

When Extreme Fitness opened last August on Clinton Keith Road, some former World Gym members took Extreme Fitness' offer to honor their memberships. Extreme Fitness is not affiliated with Murrieta Fitness but Alvarez is a consultant there.

Contact staff writer Lisa Weiss at (909) 676-4315, Ext. 2624 or lweiss@nctimes.com.

2/27/01