Gnu Theatre Embroiled in Controversy on Two Fronts : Legal moves: The company mounts a play in defiance over rights and faces an inquiry into finances.

No news would be good news for the Gnu Theatre in North Hollywood. Instead, the 50-seat theater, best known for its multi-award-winning production of “El Salvador” in 1988, is at the center of two controversies that bubbled into public view this week.

The Gnu is about to open Lee Blessing’s “Independence” concurrent with another production of the show only a few miles away--despite the fact that the Gnu’s rights to the play were withdrawn. An administrator with the company that licenses rights to the play said this would be the first time in his six years on the job that a theater has openly defied the company’s withdrawal of rights.

And in an unrelated matter, the state attorney general’s office--acting as the agency that oversees nonprofit “public benefit” corporations--is investigating the management of the Gnu in response to complaints of mismanagement and deceit filed by the theater’s former managing director, Elizabeth Reilly. Gnu artistic director Jeff Seymour denied Reilly’s allegations.

The Gnu plans to open “Independence” Thursday. The Burbank Theatre Guild will open the authorized “Independence” one day later.

The Burbank producers, veteran sound designer Jon Gottlieb and actress Rhona Blaker, have held the local “professional” rights to “Independence” since January, 1989. At one point in early 1989, Blaker inquired about the possibility of a production at the Gnu, but Seymour wasn’t interested. Gottlieb and Blaker decided to do the show in Burbank, but their production was delayed because of a city-ordered renovation of the 99-seat theater’s lighting system.

By last January, Seymour decided he wanted to do the play at the Gnu after all--but on a “non-professional” pay scale. He obtained the “non-professional” rights from Dramatists Play Service--the New York firm which licenses professional and non-professional productions of this and many other plays and collects the royalties for the playwrights.

(The Burbank rights to the play are “professional” because its producers plan to pay the actors--including former TV stars Marion Ross and Lauren Tewes--a minimum of $75 a week, the level at which Dramatists Play Service defines “professional” and guarantees a degree of exclusivity within a radius of 50 miles. By contrast, the Gnu’s payments to actors average about $8 per performance; the Gnu’s “Independence” will play three performances a week.)

When Gottlieb and Blaker learned of Seymour’s plans, they protested. Dramatists Play Service responded by withdrawing rights from the Gnu--but not before Seymour had auditioned 400 actors for his production, he said.

Craig Pospisil, the Dramatists Play Service’s non-professional rights administrator, acknowledged in a telephone interview that he didn’t check with the professional rights administrator, Anthony Damato, before he approved Seymour’s request for non-professional rights. It was “a regrettable circumstance,” he said, but he added that “no specific contract is ever really signed for the (non-professional) rights.” Added Damato: “We have the legal right to withdraw permission for (non-professional) rights at any time.”

Seymour has “no problem” with both productions going on at the same time. “People aren’t going to stand at the crossroads, trying to decide which one to go to,” he said.

But Gottlieb believes the Gnu production “impacts the profitability of my show. It’s only 2 miles away, it’s confusing to the audience, and now I’ll be compared to another production. I didn’t put in all this time and money (he estimates he has invested $10,000) to turn it into a high school skit contest.” Indeed, he said that he and Blaker secured the professional rights--despite the small size of the theaters they considered using--because they wanted exclusivity and the ability to move their production to a larger venue without having to renegotiate rights.

Gottlieb said he will “take legal action”--if Dramatists Play Service doesn’t go to court on his behalf. Damato said he couldn’t predict what his company’s attorneys would do.

Meanwhile, Seymour already faces legal action from Reilly, his former Gnu colleague and ex-girlfriend. In documents filed in Los Angeles Superior Court last August and in February, Reilly accused Seymour of mismanagement and deceit in the running of the theater and in their personal and business affairs.

Reilly claimed that she had supported Seymour and the Gnu with her earnings as a waitress and actress between December, 1984, and January, 1989, and that she and Seymour had an “oral agreement” to be “50/50 partners” in a theater that would “showcase their individual talents.” They also shared the house they rented next door to the theater. But last year, contended Reilly, Seymour arbitrarily ended their professional as well as their personal relationship, ousting her from her responsibilities at the Gnu. She also accused Seymour of using Gnu funds for his personal needs, and she requested the dissolution of Gnu Productions.

Because Reilly named the state attorney general’s office as one of the defendants, in its role as watchdog of nonprofit corporations, Patricia Barbosa, deputy attorney general, investigated Reilly’s charges. In an opinion submitted to the court on April 6, Barbosa noted that nonprofit “public benefit” corporations “cannot form the basis of a partnership agreement.” But she concurred with Reilly’s request for an accounting of Gnu Productions, Inc. and with her request to remove Seymour as a director of the corporation.

In a telephone interview, Barbosa said there were indications of “some serious violations of the Corporations Code” at the Gnu. “The books were not kept properly,” she said. “We couldn’t complete the audit.”

Seymour said he has resigned from the theater’s board. And he acknowledged that “in the early days of the theater, I didn’t have a (personal) checking account and I would write a check to my dentist from the Gnu Productions account. Later I found out you don’t do that. For two years I haven’t done that.”

However, Seymour said that over the years, “I’ve put in more money than I’ve taken back.” He called most of Reilly’s charges “the ravings of an ex,” and he denied virtually all of them in his official written response to her suit, also filed in Superior Court.

OH! CANCELLATION! The touring production of “Oh! Calcutta! has canceled its scheduled engagement at the Pantages Theatre in Hollywood, April 29-May 6. A spokesman for the show noted that this engagement was longer than most of the stops on the tour, and “the tickets weren’t selling as they expected them to.” Refunds are available at point of purchase.