Article Courtesy of the
Los Angeles Times
Published September 13, 2004
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
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
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."