Tenants Trapped in House of Horrors : Lawsuits: Residents of a rent-controlled building in Toluca Lake claim they were harassed by their landlord. Finally, the state took over the property.

Before their landlord began a noisy renovation project that lasted for months and had stopped making repairs on their building, tenants at the Toluca Court apartments considered themselves more fortunate than most renters.

Their apartments are unusually spacious--1,400- to 1,500-square-feet--and larger than many single-family residences. The 48-unit building is on a quiet, tree-lined street in Toluca Lake just a block from a neighborhood of expensive estate-sized houses. And the landscaped grounds were neat and well-tended.

Moreover, most of the tenants, many of them elderly and on fixed incomes, paid modest rents because they had occupied their rent-controlled units for 10, 15, or even 20 years. A tenant who has lived 13 years in the building in the 10700 block of Camarillo Street, for instance, pays $575 for a 1,400-square-foot apartment.

But in June of last year, when the owners began preparing the building to begin selling the apartments as condominiums, life at Toluca Court changed from idyllic to chaotic, said tenants who still live there. The apartment building was taken over by the state Department of Corporations last month as part of an investigation of fraud by building owners, but the problems experienced by the tenants have continued.

Most of the tenants joined in filing a lawsuit in May alleging they were being harassed by their landlord in a effort to force them to move. Robert M. Hodes, the tenants’ attorney, said the owners would then raise rents on the vacant apartments, sometimes by as much as 200%, or attempt to convert them to condominiums. He said at one point the owners set up an office to begin selling the units, but it later closed and none were sold.

Hodes said the experience of the Toluca Court tenants is not uncommon in rent-controlled buildings. “These landlords do anything they can do to get tenants to move out,” he said. “This harassment is happening all over town.”

During the yearlong construction project, the constant noise of electric saws, hammers and other equipment “drove us crazy,” said Stan Evans, head of the newly formed tenants association. “It was a nightmare.”

Maintenance work on the building stopped. “Our pool looked like the Ganges River. Elevators stopped working. The pipes burst.”

In addition to the noise and the lack of repairs, Hodes said the owners handed out eviction orders without giving tenants sufficient time to move out and offered no relocation assistance. Although the owners did not follow through on the evictions and force tenants to move, some tenants left voluntarily.

According to tenants, construction work started early on six or seven mornings a week. Workers entered apartments unannounced, at least twice surprising women as they emerged from their showers. Debris filled hallways and courtyards. Pipes burst and water dripped from ceilings near bare electric wires.

“They were harassing us to death,” said Brenda Golub, another longtime tenant. “But I think they underestimated us. They didn’t expect the tenants to get together.”

Despite the state’s seizure of the building, an action that brought some satisfaction to tenants, Evans, Golub and other tenants say they will press forward with their Los Angeles Superior Court lawsuit.

On July 25, the complex was taken over by the state as part of a civil lawsuit in which the owners--Argent Alliance Corp, the Wellington Group Inc. and Pattern Real Estate Corp.--have been charged with “blatant and egregious fraud” in a complicated real estate investment scheme.

The action by the state Department of Corporations bars the three companies, part of a Beverly Hills-based real estate consortium known as the Pentagon Investment Group, from conducting business or even occupying their offices.

Hodes said he will ask for permission Aug. 30 to continue with the lawsuit now that the state has taken over the building.

“You can’t come into somebody’s living environment and destroy it and require them to put up with it,” he said. “We’re asking for the rent people paid during the construction to be returned and damages for the emotional distress all this caused.”

Efforts to contact company officials were unsuccessful. Telephone calls to the companies were answered with a recorded message saying they were in receivership. Their attorney, Ira Katz, would not comment on either the lawsuit or the state’s action.

The tenants “don’t really have a landlord and haven’t had for months,” Hodes said. “The construction work was horrible because the workmen really were unsupervised. If a landlord wants to renovate a building that has tenants living in it, if he wants the tenants to stay, he will be very careful how he handles that.”

In this case, Hodes said, the owners apparently “really didn’t care about the people who were living in the building.”

Now, only 24 of the apartments remain occupied. Some of the units have been gutted. Several have bare electric wires hanging from the ceiling, causing the Los Angeles Fire Department to issue several citations to Argent Alliance. At least 12 tenants moved out during the construction.

“No matter where you were in the building, you could hear the noise,” longtime tenant John Joachims said.

“I could not sleep for three months” because of the noise, another tenant, Anna Srour, said.

Last winter, many apartments had no heat, and earlier this year the air-conditioning broke down during a record heat spell in May and has yet to be repaired. Evans, who works at home, and others were forced to buy their own window air-conditioning units.

“My husband’s had a stroke,” Neda Margy said. “He really needs to live in an air-conditioned home.”

Margy and her husband, Fred, sold their four-bedroom residence in Canoga Park nearly five years ago when he retired. She said they felt fortunate to find an apartment with so much living space.

“We have 1,500 square feet,” she said. “I like to entertain and this was ideal. But I haven’t had anybody over since all this started. For one thing, there’s dust everywhere. We haven’t had a gardener and the grass outside is waist-high in some places.”

Just recently, Srour and her young sons were trapped for 45 minutes in a stuck elevator in the building and had to be rescued by the Fire Department.

Srour said brown water comes from her kitchen faucet and she has to run it for 20 minutes before she can use it.

“I haven’t had hot water in my kitchen for three weeks,” tenant Marv Greenberg said. “Once we had boiling water pouring down in the garage. I don’t think they ever intended to sell these as condominiums. They just wanted us all out so they could raise the rents.”

Margo Gawelko, a writer who works at home, kept a daily log of what she considered nuisances at the building until she moved out in June.

“Every day there was something,” she said. “Cars were vandalized in the garage. Doors were left open. I didn’t feel safe. The noise just drove me crazy for a year. So, I moved.”

Others, such as Brenda Golub, who shares an apartment with her mother, Anne Golub, said they cannot afford to move. Tenants for 17 years, the Golubs pay $600 a month for their large apartment.

“We’d have to move out of state,” Brenda Golub said. “We can’t afford anything comparable here.”

Ironically, Gawelko said, the people who did move out were the ones paying the highest rents. Most of the longtime residents stayed, she said.

The tenants said they hope the state’s action against the owners will prevent their apartments from being sold as condominiums.

“We like it here,” Evans said. “Hopefully, they’ll fix up the other apartments and rent them out.”

Mark Harmon, a staff attorney for the state Department of Corporations, said he does not know what will happen to the building.

He said Argent Alliance, the principal owner, paid about $5 million for the building last year. But Argent used the building as collateral against loans whose value exceeded its equity.

“It appears they were over-encumbered,” Harmon said. “They were encumbered for more than the property was worth before they bought it. But investors didn’t know that. These people were told there was equity in the building.”

Real estate consortium officials “made promises they couldn’t keep,” he said. In all, about 100 people, lured by promises of returns on investments of 15% to 20%, put more than $6 million into the building.

“There are some people who put literally hundreds of thousands of dollars in this thing,” Harmon said.

After the scheme was made public, some investors who feared they had lost their money came to the building. “One man had tears in his eyes,” Neda Margy said.