Developers Slap Back at Their Opponents : Housing: Critics say ‘SLAPP’ lawsuits are being used increasingly by builders to short-circuit opposition to their projects.
A Los Angeles homeowners group voicing objections over potential environmental hazards posed by the development of nearly two dozen hillside housing sites above Beverly Hills is paying a price for its protests.
The developer of the sites has filed a multimillion-dollar lawsuit against the North Beverly Drive-Franklin Canyon Homeowners Assn., claiming that the group broke an agreement not to delay the project.
Association officers say the action, by R&R; Hillcrest Development Co., is the latest example in Los Angeles of a form of litigation referred to as a SLAPP, or Strategic Lawsuit Against Public Participation. They say the suits are being used increasingly across the country by builders to intimidate homeowners groups and discourage them from opposing projects.
In recent years, a growing number of developers and public agencies have sued community activists when their building projects have been delayed. The suits usually allege nuisance, interference with economic advantage and abuse of the legal process. According to two University of Denver researchers, the average SLAPP asks for $9 million in damages and takes about three years before getting resolved.
In the San Fernando Valley, homeowner leaders said they were unaware of any pending SLAPP suits, although they said the fear of such litigation provides an unpleasant undercurrent in their dealings with developers.
“It’s in the air when negotiations or dialogue is going on,” said Rob Glushon, president of the Encino Property Owners Assn. “There has been genuine concern expressed by the leadership of homeowners associations as to the possibility of even personal liability.”
Richard Close, president of the Sherman Oaks Homeowners Assn., said the group has liability insurance to protect itself against SLAPP suits.
Close and Glushon--both of whom are lawyers--said homeowners’ concerns were fueled by a federal court decision last year in which the Westlake North Property Owners Assn. in Thousand Oaks was ordered to pay more than $700,000 in legal fees and other costs to the developers of a large residential project. The homeowners group, whose suit against the Lang Ranch project was dismissed, ultimately settled with the developers for $123,000 but had to put up its clubhouse as collateral.
Similarly, the Burbank-Glendale-Pasadena Airport Authority in spring filed liens against the houses of Burbank residents who sued over noise and expansion plans.
In the Franklin Canyon case, the association fought a decision by the city of Los Angeles this year to waive a tract map requirement that would have allowed the builder to develop the Hillcrest Drive housing sites without an environmental impact report. The city attorney’s office intervened after the homeowners protested, ruling that the planners’ decision violated the California Environmental Quality Act and that a new tract map was needed.
After city planners reversed themselves and ordered an environmental impact report, the developer last month filed a lawsuit against the association and several former officers, alleging that the requests for additional environmental studies were taken to stall or block the proposed development.
The developer is seeking unspecified damages, likely to be in the millions of dollars, alleging that the association breached a contract, committed fraud, misrepresented its intentions and cost Hillcrest nearly $2 million because of the delays.
“It’s a classic SLAPP suit in that it was done to silence them so the developer would have an easier time getting the project through the city,” said Benjamin M. Reznik, an attorney for the association. “What the developer is saying is that asking for studies on traffic, geology and noise constitutes opposition. It’s ridiculous.”
But Jonathan R. Bloch, vice president of the development company, said the homeowners failed to abide by a written agreement not to oppose the project as long as they were provided with all planning documents and building permits.
“It’s regrettable that we’ve had to take this action,” Bloch said. “Lawsuits and litigation are a last resort to us, but after working with them for over two years, we came to the conclusion that at least the board of the association is not proceeding with the agreement.”
The proposed development would include up to 22 lots, with most of the houses ranging between 5,000 and 10,000 square feet. Bloch declined to give any other specifics on the development, including the price. He described it as a “high-end, custom subdivision.”
The homeowners group has been negotiating with the owners of the property for nearly three years. The association entered into the agreement with Leland Hewitt, the original owner of the tract, in 1987. Under that plan, Hewitt would have graded about 100,000 cubic yards of dirt to accommodate 22 residences. The next year, however, R&R; Hillcrest bought the property from Hewitt, and the building company’s top officers, Michael and Gene Rosenfeld, agreed to honor the contract if the homeowners association helped to expedite the development of the home sites.
Michael Rosenfeld is a principal with the Anden Group, which recently received county approval for a highly controversial project to build 69 luxury houses in western Malibu. His father, Gene, is a former senior executive with Kaufman & Broad.
Jack Carter, president of the homeowners group, said Hillcrest’s plan called for nearly five times as much grading as Hewitt’s project and would have lowered some of the steep ridges by as much as 75 feet. Carter said that since the canyon area is prone to mudslides, the association wanted further geologic studies and a new subdivision tract map filed. The old tract map was more than 65 years old.
“Our goal all along was just to make sure that the development was environmentally safe,” Carter said. “We’ve never tried to delay the project. We just believe that more studies are needed because safety is not negotiable.”
City Councilman Michael Woo, who represents the area, agrees. Woo wrote a letter to the city’s Department of Building and Safety requesting that the developer be required to conduct a full environmental review of the Franklin Canyon project.
“I’ve heard some serious concerns raised by the neighbors about the unstable land conditions in that area,” Woo said. “If a full environmental impact report found that there were no serious environmental consequences, then I believe I could support the project. But that is a major hurdle yet to be crossed.”
Bloch said Hillcrest intends to follow whatever requirements the city places on the proposed development, including further environmental studies. But, he said, the company has no intention of dropping its lawsuit against the homeowners association.
Attorney Reznik said the lawsuit is misguided.
“It’s the city that is not giving them what they want, not the homeowners,” he said. “But the idea of a SLAPP suit is to intimidate the homeowners, even if the homeowners were right and justified in asking questions about the environmental impact of the project. And in this case, they were.”
