Firm Routinely Denies Rent Deposit Refunds : Housing: Hundreds have complained about Elerding Properties of Garden Grove. Scores sued and won court judgments, but even the Marines have trouble collecting.

More than 100 Orange County renters say they have been illegally denied refunds of their apartment security deposits by a firm run by sons of a late Newport Beach millionaire, noted for contributing $1.75 million to the USC football team.

Civil court files from Westminster to Fullerton to Laguna Hills contain at least 113 small claims lawsuits that have named Elerding Properties of Garden Grove or its officers since 1988. Of 65 cases reviewed by The Times, all resulted in judgments against the company.

“No other apartment (complex) or property management (firm) comes close to the number of cases we hear against Elerding Properties,” said Commissioner Matthew J. Flynn, who has presided in South County Municipal Court for the last 18 months, hearing cases against Elerding Properties about once a week.

Complaints lodged by military personnel grew so frequent last year that the Marine Corps took the extraordinary step of banning Elerding Properties from the service’s approved housing list. From the list of 450 local apartment complexes and 100 hotels and motels, Elerding Properties’ 10 Orange County and two Los Angeles County complexes are the only ones to ever be ousted, officials say.

Because Marines who live off-base receive a government rent subsidy, their refundable security deposits commonly consist entirely of taxpayer funds.

Several hundred other former renters have simply written Elerding Properties to complain about not receiving their security deposits, which range from $300 to $650 each, according to two employees who spoke on the condition that they not be identified for fear that they will be fired.

The employees also said that office workers with the firm frequently deflect telephone complaints by telling callers that their cases are being handled by a momentarily absent clerk named “Violet.” But no such person exists, the employees say. Several renters have addressed their letters of complaint to “Violet,” and a few suits have included the name on the lists of defendants.

Joseph J. Elerding, general manager of Elerding Properties, has repeatedly declined to comment over the past two weeks, at one point saying, “I’m not talking to anybody from the news.” His attorney, Arthur Morello, also had no comment.

Apartments owned by Elerding Properties, meanwhile, are under investigation by health and building authorities in response to dozens of complaints that conditions in several complexes are apparently substandard and in violation of housing codes.

Jim Huston, assistant director of the Orange County Environmental Health Division, said last week that 43 complaints have been filed against Elerding Properties since January of last year. Huston said he recently sent the firm a certified letter warning that inspectors have noticed “repetitive problems” at its complexes.

Huston said the most common complaints against Elerding Properties involve:

* No heat.

* No hot water or no water at all.

* Overflowing trash and garbage dumpsters.

* Interior problems that include leaky ceilings, broken toilets, insect infestations and rotting carpets.

Several city building inspectors have also been critical of apartments owned by Elerding Properties.

Records show that after an April inspection of the Tustin Arms complex, for example, building officials in the city of Orange prepared a four-page list of apparent housing violations that included “lack of smoke detectors . . . and broken and crumbling hazardous staircases, landings and walkways.”

“From our records,” county official Huston said, “it seems that the conditions were being allowed to exist and the company was waiting to get caught. We cannot allow ongoing complaints of the same type to exist. It’s not acceptable for tenants to be calling here every month to report the same problems.”

Officials with the Orange County Fair Housing Council say the failure of landlords such as Elerding Properties to promptly return refundable security deposits is a significant problem that contributes to homelessness in the county.

During its last fiscal year, the agency received 5,278 complaints of nonrefunded security deposits valued at about $2.85 million. (About half of the complaints--often taken over the telephone and jotted down on message pads--fail to identify the apartments involved. Of those that did, several hundred firms were named, but only one had more complaints than the five lodged against Elerding Properties, according to a Times review of the records.)

“Most of these (renters) could not afford the loss of this money at a time it was needed for relocation,” fair housing officials wrote in a recent report to the Orange County Community Development Council. “Consequently, hundreds faced homelessness due to the wrongful taking of their deposits. . . . Many managers have virtually institutionalized their own process so as to be in a best position to take a helpless tenant’s money.”

Officials at Elerding Properties’ Garden Grove headquarters also have a reputation for evading efforts by the Orange County marshal’s office to serve summonses ordering them to appear in court. In several court records, marshals describe firm officials as “known evaders” who have “instructed” employees not to let marshals enter any corporate office.

Records show that Elerding Properties has subsequently paid many former tenants who secured default judgments against the firm, as well as some who did not file suit. But other former renters have had to obtain court permission to garnish the funds from the firm’s bank accounts.

Elerding Properties owns and operates 756 apartment units in Orange and Los Angeles counties, as well as six rental houses and two industrial centers, records show.

Company president Dr. Charles E. Elerding Jr., named as a defendant in many of the small claims suits, died on May 25 at the age of 59. A retired dermatologist and former Santa Ana school board member, Elerding was also the largest shareholder and vice chairman of the board of the Huntington Beach-based Liberty National Bank.

Two years ago, the senior Elerding was featured in Sports Illustrated when he and his wife, Janet R. Elerding, provided a $1.75-million endowment to the Trojan football team to pay the head coach’s salary and provide an annual scholarship for the punter. The donation, school officials say, was the largest single contribution ever made to USC’s athletic program.

The Sports Illustrated article noted that upon Elerding’s retirement in 1986, he bought a $125,000 Rolls-Royce “and took off for weeks at a time to the Mexican Riviera or to San Francisco on his $700,000 yacht.” His house, overlooking Newport Harbor from the gated community of Linda Isle, is assessed at $3.2 million, property records show.

But by 1988, the article said, Elerding became ill, an illness that was diagnosed as cancer. Employees say that Elerding became detached from the operations of his property management firm soon after the diagnosis.

Elerding’s son Joseph, 29, now serves as general manager, and two other sons--Charles III, 30, and James, 21--identify themselves in various records as managers or landlords with the firm.

The Orange County complexes owned by the firm include: Amberwood, in Buena Park; Casa Madrid, in Cypress; Mountain View Apartments and Villa Viejo Apartments, in El Toro; City Park Plaza, in Garden Grove; Huntington Apartments and Bahia Puerto, in Huntington Beach; Tustin Arms Apartments, in Orange; and Cerritos Apartments and Pine Tree Apartments, in Stanton.

Among the former tenants who have sued Elerding Properties are Russell and Joji Logan, residents of the Mountain View Apartments from May, 1988, to July, 1989, when they moved to Sandy, Utah, a suburb of Salt Lake City. Records show that last September they wrote to request a refund of their $300 deposit, as provided in their lease. In October, they telephoned the manager to complain about not receiving the money and followed up with a second letter.

In December, they made another phone call and sent another letter, this one addressed to “Violet” and signed by Joji Logan.

“If there’s anything you can do, send it soon, we will really appreciate it,” Logan pleaded. “We are counting on this amount to buy our children their Christmas presents. Please, anything you can do to help us with this, we will always be thankful.”

Still receiving no reply, the couple sued Elerding Properties on Feb. 9, and the case is pending.

Wanda Walker, who lived with her Marine husband at Mountain View, meticulously documented her attempts to recover their $400 deposit before filing suit.

Walker mailed the firm a copy of her telephone bill showing that over eight days from last Dec. 7 to Dec. 15 she made 27 calls to its Garden Grove headquarters in an effort to reach someone who could return her deposit. In a recent interview at the Rancho Santa Margarita Taco Bell where she works as an assistant manager, Walker said she won a judgment earlier this year and finally got her money back.

Problems with the Marine Corps came to a head last October after the service’s legal assistance center tried repeatedly--but unsuccessfully--to recover deposits for at least five Marines who had lived at the firm’s apartments in El Toro.

Maj. Jim McClain, a public affairs spokesman, said recently that Elerding Properties rebuffed the Marines, refusing to answer “numerous” letters and telephone calls.

“When we are dealt with in bad faith we use the avenues that are available to us,” McClain said. “We had our legal people talk to these folks. When they did not respond to a number of our complaints, it gave us cause to be concerned about their business.”

Capt. John Pyle, a Marine lawyer, described officials of Elerding Properties as “obstinate,” and said his efforts to recover the deposits were “like pulling teeth. . . . It’s difficult to own a business and get away with this kind of behavior.”

(In fact, the Better Business Bureau office serving Orange, Los Angeles, Riverside and San Bernardino counties reports that Elerding Properties has what the bureau considers an unsatisfactory record. “Specifically, our records show a pattern of no response to customer complaints brought to its attention,” complaint department worker Lisa McNulty wrote The Times in May.)

On Pyle’s recommendation, Marine Chief of Staff Col. J. E. Underwood took Elerding Properties off the Marines’ approved housing list.

“There are more Marines who live at the two complexes (in El Toro),” lawyer Pyle said. “When they get out of there I’m sure they’ll come looking for me. I’ve told others to tell them that they can kiss their deposits goodby unless they are willing to go to small claims court.”

According to the Orange County Renters Assn., only one of every five tenants typically follows through with lawsuits when denied refundable security deposits.

“Most tenants do not know their rights,” said Joe Caux, an association official. “They are afraid that they gonna lose to the landlord. When they don’t know their rights . . . the court system is strange and scary to them.”

Under the California Civil Code, a landlord is allowed to withhold all or part of a renter’s security deposit to cover nonpayment of rent, clean the premises or repair “damages to the premises, exclusive of ordinary wear and tear . . . “ Within two weeks of the termination of a tenancy, the landlord is required to give every former renter an itemized statement listing the basis for any amount that is being withheld.

If the code is violated, the landlord may be liable for actual damages sustained by the tenants, in addition to $200 in punitive damages.

Civil Court Commissioner Flynn says officials of Elerding Properties almost never show up in court to even attempt to defend themselves against security deposit suits.

“Why they are not here to defend the company, I really don’t know,” Flynn said. “If the case is proven and they’re not here, I gave judgment to the plaintiff. If they ask for penalties, then I give them it also. A lot of people don’t realize they can claim penalties.”

On a “few rare occasions,” Flynn recalled, a manager of one apartment complex appeared on behalf of the firm.

“But she . . . added nothing to explain why the deposits have been withheld,” Flynn said. “As a matter of fact, she said she did not know why they were withheld.”

Said Flynn: “I was waiting for someone to come in with a bankruptcy claim and say the company (Elerding Properties) is bankrupt. That would have taken the jurisdiction away from us. But no one ever did.”

Records obtained by The Times show that Elerding Properties has recently received letters from several creditors demanding settlement of overdue accounts.

For example, an Anaheim elevator maintenance company that services the Mountain View complex has sent notice that it will do no more work until it receives a $640 past due payment. Elerding Properties has received similar letters from a swimming pool maintenance service, a temporary employment service and a security patrol business.

For 10 years, Sally Carr’s Litho Graphics of Garden Grove printed a variety of business forms--including eviction notices--for Elerding Properties until earlier this year, when she filed suit for nonpayment of a bill.

“I could not imagine that they would act in such an unbusinesslike manner,” Carr said recently. “I vowed never to do business with them again.”

Times correspondents Danny Sullivan and Laura Michaelis contributed to this report. Times librarian Dan Crump provided research.