Buyer of Mansion Built for Governor Seeks $3 Million

Two years ago Palos Verdes Estates developer Matt Franich was “ecstatic” at the prospect of being landlord to Gov. George Deukmejian and future governors of California.

The state had accepted his bid of $1.53 million for the rambling mansion built for California governors but never occupied by one, and had Franich’s offer to lease it back to the state at cost for the purpose it was intended: housing for the governor.

Today the eight-bedroom mansion is still without a tenant, and Franich has filed a $3-million lawsuit claiming, among other things, that the property was misrepresented to him at the time he made his bid.

According to the Los Angeles Superior Court suit, filed this week, the property was presented as 11 usable acres with a dwelling in good repair.

Instead, the suit claims that during a stormy escrow that lasted almost a year, it came to light that about four of the 11 acres were part of the flood plain of the American River and unusable and that the zoning was illegal. The suit also claims that the house was not in the state of repair that it had been when Franich made his offer. The roof leaked, the landscaping had dried up and the plumbing did not work, according to Franich’s lawyer, John Schimmenti.

That was the way it was last September, when the title finally was cleared and the escrow closed.

“The property would have had a value of at least $4 million if it had not been taken and damaged,” the suit contends. As a consequence, it had a value of “only $1,030,000.” Because of this, Franich has been damaged in the amount of at least $3 million, “which includes $300,000 to repair the damages,” according to the suit.

The house, begun during Ronald Reagan’s second term as governor and spurned by former Gov. Edmund G. Brown Jr., seemed destined to be spurned again. Franich got no response, even when he came down on the terms. He reportedly has offered to lease the house back to the state in exchange for the state’s waiving his interest payments on the loan.

Schimmenti said Tuesday that the brochure describing the property at the time it was offered for sale identified only four-tenths of an acre in the flood plain instead of four acres. “And during the time the state was clearing up the title, the property was allowed to deteriorate physically,” he said.

Further, Schimmenti said, the house and its grounds got into zoning trouble the minute the state sold it to a private citizen.

“The state, being a higher governmental authority than the county, can build something without clearing the local zoning laws,” he explained. “While the state owned it, it didn’t make any difference. Once sold, the new owners were obligated” to conform.

The property in semi-rural Carmichael, a 20-minute drive to the state Capitol, has been caught in one kind of tug-of-war or another since it was built at a cost of $1.3 million on a site donated to the state.

It was never lived in by the Reagans and was apparently too pretentious for Brown, who chose to live out his eight-year tenure in an apartment across the street from his office.

Deukmejian seemed quite willing to live there, but Democratic legislators put it up for sale to the highest bidder. Deukmejian finally found his own housing, first in a rented apartment and now in a $400,000 house, bought with leftover inaugural funds, that is about four miles from the empty Carmichael mansion.

No longer “ecstatic,” Franich said he now thinks he is cast in the role of victim. “That’s what the suit says,” Schimmenti said.