$8.3 Million Offer : Bid for Norwalk School Rejected

Norwalk-La Mirada Unified School District officials have rejected a cash offer of $8.3 million for the Wright School, saying they cannot sell the property until several lawsuits involving past attempts to sell it are settled.

The school then will be auctioned to the highest bidder and all offers, including the $8.3-million bid by a Niles, Ill., developer, will be considered, officials said.

The offer was made in November by developer Robert R. Krilich, who has said he wanted to build and be sole owner of a $75-million complex on the campus site off Civic Center Drive that would have included a 500-room luxury hotel and a poker club.

City Ordinance

The offer was complicated by the fact that Krilich was convicted of federal income tax evasion in 1971. City ordinances say that any person who owns part of a poker club and is convicted of a felony must divest himself of ownership in the club, unless granted a special exception by the City Council.

But before the property can be sold, the district has to settle three lawsuits involving the property. One of the suits was filed against the district by Santa Fe Springs developer Johnny Johnson, who first proposed building a hotel and poker club on the site. In that suit, now under way in Los Angeles Superior Court, Johnson is seeking $10 million in damages, claiming the district conspired with other would-be purchasers of the property to cut him out of the deal.

Meanwhile, a city councilman said he was impatient with four years of waiting to develop the Wright School property. The intermediate school was closed in 1978 because of declining enrollment in the district.

Councilman Lou Banas said that if the various lawsuits are not resolved by the end of January, he would consider proposing a motion to rescind an ordinance passed in 1983 that would permit the poker club in the city.

“I don’t intend to sit around and watch that site be litigated forever,” Banas said.

Councilman Marcial (Rod) Rodriquez said he would support such a move. Councilwoman Peg Nelson said while there may be “a lot of interesting discussion” on rescinding the ordinance, she had not yet made up her mind on the subject.

Council members Cecil Green and Bob White could not be reached for comment.

Bruce Butler, the school district’s associate superintendent of business services, said he had received letters and phone calls from other prospective buyers of the Wright School but declined to elaborate.

“We’re not accepting any offers at the present time,” Butler said.

Butler said the district turned down Krilich’s offer in a letter mailed two weeks ago to Jim Clark, who has been hired to represent Krilich.

Clark, a sales representative of Coldwell Banker Commercial Real Estate Services of Newport Beach, said he was sure Krilich would extend his offer of $8.3 million beyond an original deadline of Jan. 15.

Meanwhile, Johnson and his lawyer have been giving depositions in Los Angeles Superior Court in their case against the school district. Johnson alleges that school district officials conspired with other buyers to cut him out of the sale.

Gregory M. Bergman, a lawyer for the district, said in an interview that Johnson has “no facts to support his claim.”

He said the district has countersued Johnson for holding up the sale of the school district property.

Countersuit Filed

The countersuit, filed in Los Angeles Superior Court, asks at least $75,000 a month in damages from Johnson or $675,000 since he filed his lawsuit in April, effectively preventing the sale of the property, Bergman said.

He said all parties involved in the lawsuits have been discussing possible out-of-court settlements but that nothing has been resolved.

“People are trying to get out (of the lawsuits), but nobody seems willing to take the first step,” Bergman said.

Johnson said last week that “things are just the same” in that the suits have not been settled and declined further comment. His lawyer, Glenn R. Watson, could not be reached for comment.

In 1980, the Eastern Global Corp. of Tokyo offered the school district $7.2 million for the Wright campus but defaulted on an escrow payment. Under that original offer, Johnson would have developed the poker club and Eastern Global the hotel. The school district later attempted to sell the property to Trammell Crow Co. of Los Angeles, but the firm decided against the purchase.

Johnson then sued the school district, Trammell Crow and Eastern Global, claiming they conspired to cut him out of the sale.

$850,000 Suit Pending

The district also has filed a separate lawsuit against Eastern Global, seeking $850,000 that the firm had put into escrow to purchase the property. That suit is pending, according to Gerard R. Kilroy, a lawyer for Eastern Global. Kilroy said Eastern Global officials wanted to see if Johnson won his case against the district before considering a release of its escrow money to the district.

The suit has had repercussions for local students and teachers. District officials had to postpone $3 million worth of repairs at other schools because it had not received money expected from the Wright sale. Repairs have since been made with money transferred from other projects, business manager Butler said.