Rent Control Lawsuits Settled for $1 Million : Owners of San Pedro Mobile Home Park Agree to Pay Tenants Restitution

The owners of a mobile home park here have agreed to pay almost $1 million in restitution to 127 tenants whose rents were raised above the limit allowed under Los Angeles’ rent control ordinance.

The agreement, expected to be approved by a Los Angeles Superior Court judge at a hearing two days before Christmas, will pay what is believed to be the largest amount ever paid to tenants by a landlord who boosted rents more than the amount permitted by the ordinance, according to Los Angeles Deputy City Atty. Michael S. Woodward.

In agreeing to accept the money, the former and current tenants will drop two lawsuits they had filed in 1981 against the park owners, Palos Verdes Shores Mobile Estates Inc. The tenants, who had been paying between $360 and $425 a month, sued after lot rents at the park were raised an average of 65% to $600 and $700 a month, according to John C. Pitchford, president of the Palos Verdes Shores Homeowners Assn. Inc.

At the time, the city’s rent control ordinance allowed landlords to raise rents a maximum of 7% annually.

“I just knew we were right and that virtue and justice would prevail,” said the 70-year-old Pitchford, referring to the tenants’ four-year legal battle. “All we had to do was be patient and hang in there.”

‘Set It Right’

“It is really a good feeling to know you were wronged and you set it right,” said Patricia Hall, who moved into the luxurious seaside park on 25th Street when it opened in 1973.

Michael E. Deitch, a Torrance attorney representing the tenants in one of their two lawsuits, said the most money any of the former or current tenants will receive from the settlement will probably be between $5,000 and $6,000.

Attorney Joseph R. Austin, who is representing the park owners and spelled out the $944,000 settlement in a Nov. 8 letter to the tenants’ attorneys and Woodward, did not return a reporter’s telephone calls.

Bill Schweinfurth, the recently named director of operations for the park, which is owned by a limited partnership, declined to comment on the settlement until it is signed in December.

The battle between the tenants and the park’s owners began when the owners sued the city of Los Angeles soon after the rent ordinance went into effect in 1979, alleging that the ordinance was unconstitutional because it limited an owner’s right to a fair return on his investment. In June, 1981, a Los Angeles Superior Court judge declared some portions of the ordinance unconstitutional, and the owners raised the rents.

Emotional Distress

The tenants filed a lawsuit against the owners two months later, alleging that the increases violated the rent control ordinance. A second lawsuit seeking damages for emotional distress was filed by the tenants about six months later.

In 1983, a state Court of Appeal reversed the lower court’s decision, saying that the rent control ordinance provided sufficient standards to guide city officials in adjusting rents, and the owners later rolled back the rents, Woodward said.

The city of Los Angeles also filed a civil complaint with the Court of Appeal accusing the owners of violating the ordinance and using unfair business practices. Under the agreement, the city will join the tenants in dropping legal actions against the owners.

Woodward said some of the park’s tenants suffered greatly because of the rent increases. For example, because vacant mobile home lots are scarce in the Los Angeles area, he said, some of the tenants were forced to move their homes long distances.

Some tenants also were were sent threatening letters by the former operator of the park, telling them in effect that there are “no free lunches,” Woodward said.

“The things the limited partnership did under the guise of challenging the rent control ordinance were really too serious to be dealt with in any way that didn’t involve the partnership making substantial restitution to the victims,” Woodward said. “For the most part these were elderly people who had to pick up and move if they couldn’t pay the increase. (Some) had fixed incomes and were wondering if the sky was the limit.”

Woodward said the city will receive about $18,000 from the settlement to help cover its legal expenses.

Both Woodward and Claudia McGee Henry, the assistant city attorney who handled the appeal, said they believe the settlement is the largest settlement for tenants whose rents were increased above the limit allowed under the ordinance. McGee Henry estimated that the highest previous settlements or judgments levied against a landlord in cases where the city attorney’s office was involved ranged from $100,000 to $150,000.

Deitch said $370,000 of the settlement will be used to reimburse tenants for money they were overcharged in rent, plus interest and attorney’s fees. The remainder will go to pay for the emotional distress inflicted on the tenants, as well as money they may have lost when they moved out or sold their mobile homes because of the increase, he said.

Reimbursement Formula

Pitchford estimated that 54 of the park’s tenants moved or sold their homes in the wake of the rent increases. The association will recommend to the judge that those tenants who lost money when they sold their homes be reimbursed based on a formula pegged to the purchase price and any improvements made to the lot, he said. The group will ask that those who moved be reimbursed for 90% of their expenses.

The homeowners association, which was formed to fight the rent increases, will also recommend that each former and current tenant listed as a plaintiff in the lawsuits be awarded $1,000 for the emotional distress they suffered during the legal fight, Pitchford said.