Old World Developer Must Pay Damages

Jurors in the civil fraud suit against Old World shopping center developer Josef Bischof ordered him Monday to pay more than $2 million in actual and punitive damages to the center’s business owners’ association and a group of 12 store owners who claimed they had been harassed for questioning Bischof’s handling of association finances.

The verdict, which came after two days of deliberations on the nine-part suit, awarded total punitive damages of $777,500 to the individual store owners and an equal amount to the Old World Owners Assn. In addition, jurors ordered Bischof to pay $516,094 in actual damages to the association.

Barring an appeal by Bischof, which the attorney for the victorious Old World Owners Assn. said is “very likely,” the jury’s action ends a four-year legal battle between Bischof and the store owners--who accused him of systematically defrauding the owners’ association and conducting a “reign of terror” against his opponents on the association’s board.

The suit said Bischof’s conduct began as soon as the unusual residential-commercial center opened for business in Huntington Beach in 1978.

The case, which Orange County Superior Court Judge James L. Smith called a very “complex” one, involved numerous allegations that Bischof misused his position as developer and, for a time, as the controlling property owner on the owners’ association board. Owners alleged that Bischof fraudulently reduced the advertising and maintenance assessments that he was required to pay the association each month and used association funds to pay bills for his own business.

Additionally, the suit charged that Bischof had failed to fulfill his promise as developer to build a clubhouse for use of the residents of the 50-store center, where shop owners or their managers are required to live above the stores.

Part of the award called for Bischof to pay the owners’ association $110,798 to build a clubhouse. He also was ordered to pay more than $370,000 in assessments to the association--assessments he avoided by understating the size of his business property at Old World by more than 75%. The monthly advertising and maintenance assessments at the center are based on square footage and Bischof claimed that his restaurant and beer garden occupied only 8,380 square feet. The jury found that the actual total was 33,251 square feet.

Several of the store owners who sued Bischof as individuals also testified during the nearly two-week trial that they received anonymous threats which they attributed to their opposition to Bischof’s actions.

Bischof, his family and his Newport Beach attorney, Joseph R. Donahue, left the courtroom immediately after the jury was dismissed and could not be reached later for comment.

But a jubilant Julietta Lewis, who owns two stores in the mock Alpine village and who teamed with store owner Yvonne Rofer to lead the fight against Bischof, burst into tears and hugged her husband as the court clerk read each of the 15 decisions.

Lewis and her husband, along with Rofer and her husband and one other couple, each were awarded $194,375 in punitive damages. The jury said that the remaining $194,375 should be divided equally among the remaining six plaintiffs.

Robert Lewin, attorney for the 12 individuals, had asked for almost $1.2 million in damages, while Gerald J. Van Gemert, the attorney for the owners’ association, had asked for $375,000 in punitive damages.

Although the jurors divided the award differently, “we got everything we asked for,” Van Gemert said.

“I’m so happy,” Lewis said. “All through this, I’ve always said that justice would prevail.”

Bischof prevailed against only one of the nine allegations when jurors found that he had not charged a number of shop owners an illegal interest fee when he tacked a $2,000 management fee onto the mortgage loans his company privately financed for them.

But juror Wendell Wood, a Placentia resident, said the panel never doubted the major allegations. A separate verdict was required for each of the nine charges and for the six separate monetary awards, and in 10 of the 14 decisions that went against Bischof, the vote was unanimous. In the other four verdicts, jurors voted 11 to 1 against Bischof.

Lewis, a Peruvian, had testified during the trial that she was the victim of a number of incidents, including an attempt to smash her shop’s display window with a brick, because of her opposition to Bischof. She also testified that Bischof had made disparaging remarks about her South American heritage on numerous occasions.

Lewis and Rofer said they intend to keep their stores at Old World. Rofer said she originally purchased a store there because she thought the idea of a European-themed shopping center had a lot of potential

The center, she said after Monday’s verdict was returned, “still is a wonderful concept. That’s what we’ve been fighting to protect.”