Article Courtesy of the Los Angeles Times

By Michael Hiltzik
Published September 13, 2004

The group of activists one might label the Leisure World Eight raised their record to two for two last week.

The mark was notched at small-claims court in Westminster, where a judge sided with the group in ordering the management of the 9,000-resident Seal Beach retirement community to disclose how it has been spending more than $11 million a year in homeowner fees and other income.

It was the second such ruling in less than three months.

This battle, which has been raging in Orange County courts for six months, is as absurd an example as you could ask for of what happens when people in positions of public responsibility start to think that their communities work for them, instead of the other way around.

In this case, a couple of Leisure World's supervisory boards seem to take it personally that members have asked to review their financial ledgers.

A tidy gated community in which the average age is 77 and condos have lately been selling for $80,000 to $300,000, Leisure World is governed by two sorts of entities. There's the Golden Rain Foundation, which is responsible for the development's common areas. Beyond that, there are 16 sub-boards, known as mutuals, which oversee individual residential tracts. The boards at both levels — whose members are elected by the homeowners — collect monthly fees totaling about $250 per condo to pay for such expenses as upkeep, gardening and managerial staff.

A couple of years ago, some residents started to question whether this money was all well spent. The incredulous included Ed Loritz, a retired salesman, and his neighbor Carol Franz, a retired municipal official from Skokie, Ill. Both had served briefly on their mutual board.

As my colleagues Kimi Yoshino and David Reyes reported, Loritz and Franz asked such questions as why their monthly fees kept going up each year, even though the joint mortgage on their condo buildings, which accounted for a big piece of the assessment, had been paid off.

They also asked about the financial connections of Leisure World's long-term chief administrator, Harbir "Bill" Narang — including whether his business relationship with a Glendale man named Richard Domasin had anything to do with Domasin's winning contracts to handle the landscaping at Leisure World. (Domasin says he used to own property jointly with Narang but not any longer. He wouldn't reveal anything more about their relationship. Narang didn't return my call.)

"It's really not expensive living here," Franz told me. "But I don't want to be ripped off."

What happened next only reinforced her suspicions. When she, Loritz and six other neighbors asked to see the foundation's financial records, including Narang's salary and benefits, they got the cold shoulder.

Even though the state's Davis-Stirling Act requires homeowners associations to open their books to members, Golden Rain claimed it wasn't governed by the law, as though it were some new kind of private club.

The foundation's attorney, Jay Picking of Long Beach, wrote Franz a letter filled with the usual moonshine that lawyers spout when they're paid to blow someone off. He called Franz's list of requested documents "vague," complained that she didn't specify whether her intention was to copy the papers or merely inspect them and demanded a written explanation of why she was interested.

If she cleared up all these matters, Picking suggested, the foundation would think about it. You would have thought she was Roy Disney demanding to see Michael Eisner's expense receipts.

"They pretty much stonewalled these people," says Steven Rice, an Irvine attorney who signed on last month to handle the residents' case pro bono.

Rice's arrival on the scene may have led the foundation to realize that the Leisure World Eight weren't going to simply disappear. The day before the scheduled small-claims hearing last week, the management invited them to examine many of the records they'd been seeking for months. But it continued to withhold Garang's salary information on grounds that disclosing it would be an invasion of his personal privacy. (Never mind that he's paid by the residents.) It also refused to divulge a few other salient facts, such as how much it's paying its attorneys.

At the courthouse the next day, Superior Court Judge Stephanie George, sitting as a small-claims judge, crisply dismantled the foundation's case. She concluded that nothing the residents had asked for was out of line. As for Golden Rain's contention that it isn't a homeowners association, she said: "You look like a duck, walk like a duck, and, well, you are a duck."

The foundation hasn't said whether it intends to continue squandering its residents' money on this legal merry-go-round, but the lawyers' clocks still seem to be ticking. A hearing is scheduled for Thursday on the foundation's appeal of another small-claims ruling it lost this summer, and it hasn't withdrawn a Superior Court lawsuit it filed against the homeowners in mid-August, aimed at blocking the document request. (Foundation President Shirley Burns told me she couldn't discuss matters in litigation, on Picking's advice, and Picking didn't return my numerous phone calls.)

The foundation could also prolong the process by appealing Judge George's ruling. The residents, who have been obstructed for so long, aren't confident that it won't take that step. But they're more sure than ever that the foundation's options are disappearing fast.

"If they appeal, they're going to lose," Loritz says. "I don't know where else they can go."