S&L; Sues to Close X-Rated Theater After City Drops Fight

The 10-year crusade by the City of Santa Ana to close the Mitchell Brothers Theatre formally ended Thursday, only to be quickly resumed by a savings and loan association that operates a branch office near the controversial X-rated movie house.

Lincoln Savings & Loan Assn., owned by a firm headed by millionaire anti-pornography activist Charles H. Keating Jr. of Phoenix, filed a lawsuit seeking to have the West 17th Street theater closed as a public nuisance for exhibiting “lewd and obscene” films.

The suit was filed before the ink was dry on the final settlement Thursday of dozens of lawsuits in the decade-long court battle between Santa Ana officials and the theater’s owners. The city agreed to drop its efforts to close the theater and to pay the theater’s owners $200,000, bringing the cost of the city’s losing court battle to almost $700,000.

In an unusual courtroom scene, both Lincoln Savings lawyer Philip Barbaro Jr. and James J. Clancy, special counsel for the city, tried to upset the deal reached 10 days ago by City Atty. Edward J. Cooper and Mitchell Brothers lawyers.

Clancy had attacked the settlement agreement, filed Thursday morning, as “bargaining away the morals of the community.” He was excluded from the negotiations that led to the settlement.

“I’m being undercut,” Clancy told Orange County Superior Court Judge Harmon G. Scoville, insisting he was still the attorney of record and that a settlement could not be entered without his approval. “You can’t just dismiss these cases.”

Cooper, responding to a question from Scoville, said he “had advised Mr. Clancy that he is out.” Clancy was acting in violation of specific direction he received from his client, Cooper told Scoville.

“We’re here talking about dead cases,” said Mitchell Brothers lawyer Thomas Steel, advising Scoville that the dismissals of the cases had been filed earlier in the day. “Mr. Clancy can no more resurrect these cases than anyone else could.”

Scoville denied a request by Lincoln Savings to intervene in the city’s lawsuits, ruling that they already had been settled and dismissed.

Lincoln’s lawsuit asserts that the presence of the theater has damaged its reputation, amounts to an illegal unfair trade practice and “misrepresents to the world and particularly to children of tender and impressionable years . . . that the community as a whole has accepted such conduct as lawful.”

The suit asks, as did the city’s unsuccessful litigation, that the theater be declared a public nuisance and closed.

In the lawsuit, Lincoln Savings claims “special injury” because of its proximity to the theater. Employees and customers have been distressed by “illegal, immoral, corrupting and degrading influences,” the lawsuit says. In addition, it alleges that property values have gone down and sex crimes and the probability of venereal disease have increased.

Obscene pictures at the theater have subjected Lincoln and the public to “the pollution of the moral environment and the erosion of the public morality of the local community, leading to losses in peace, happiness and moral order, and moral decadence,” the lawsuit alleges.

Lincoln Savings, with headquarters in Irvine, referred inquiries to its parent corporation, American Continental Corp. of Phoenix. Through a secretary, Keating declined to be interviewed. Robert Kielty, senior vice president and general counsel, could not be reached for comment.

Keating was a founder of the Phoenix-based Citizens for Decency Through Law, a group known for anti-pornography efforts. In 1970, Keating filed a lawsuit that delayed release of a report by a presidential commission on pornography that recommended repeal of all adult censorship laws. Keating was the sole member of the commission appointed by former President Richard M. Nixon. The panel had been created by President Lyndon B. Johnson.

Keating filed a minority report, criticizing the majority recommendation as a sham.

“It’s obvious my clients feel that something should be done,” said Barbaro, adding that the Lincoln branch bank office is within eyesight of the theater. “They feel an obligation to protect their rights.”

Asked if Keating were familiar with the Santa Ana case, Clancy, who served as the Phoenix group’s first staff attorney, said, “he’s read all of the clippings. He knows what’s going on.”

Santa Ana came close to settling the court battle with the theater a year ago, but City Council members decided to continue the fight with Clancy directing the effort. Then, in January, a judge ordered the city to pay more than $50,000 to the theater’s owners in legal fees for just one of the dozens of lawsuits it has filed.

In another case, a judge had ruled the city was liable for attorney’s fees but had not determined an amount. Last year, a commissioner had imposed a $1,000 sanction against Clancy for failing to file needed papers in one of the lawsuits.

Faced with the mounting legal costs, the city threw in the towel.

One day after the settlement was revealed, United Artists Communications, which owns the building housing the theater, announced that the Mitchell Brothers lease would not be extended when it expires in 1990.

Both Barbaro and Clancy declined to say what role, if any, Clancy will play in the Lincoln Savings lawsuit. Barbaro said he is the attorney legally representing Lincoln Savings.

When Clancy was asked if that means he will have nothing to do with the Lincoln case, he responded: “I didn’t say that.”

Steel said Thursday that he had not been notified of any action on the theater’s lease. He said he is confident that his clients will prevail against Lincoln Savings, just as they did against Santa Ana.

“They say history repeats itself,” Steel said. “And the second time around is a farce.”