O.C. Apartments Owner to Pay $600,000 in Rent Case
A Garden Grove property management company on Friday agreed to pay $600,000--the largest settlement ever in an Orange County consumer protection case--to avoid civil prosecution for withholding security deposits from hundreds of renters.
Dist. Atty. Michael R. Capizzi announced Friday that the company, Elerding Properties, has agreed to refund security deposits ranging from $300 to $650 to about 600 former renters and has corrected substandard housing conditions that existed at its 10 apartment complexes in Orange County.
Jan J. Nolan, who heads the district attorney’s consumer protection unit, said the penalty should serve as a deterrent to similar actions by other landlords.
“Since all 600 victims will be reimbursed, this will definitely send a message to other landlords who are doing the same thing,” Nolan said. “We want them to know that it will be costly for them if they do it.”
The lawsuit against Elerding Properties was one of the most sweeping consumer actions undertaken by the district attorney’s office. It followed a report in The Times Orange County Edition disclosing that at least 113 renters had filed small claims suits against Elerding and that the U.S. Marine Corps had taken the extraordinary step of removing the firm’s 10 Orange County and two Los Angeles County complexes from its approved housing list.
Apart from alleging that the company had engaged in certain acts of “unfair, unlawful and fraudulent business practices” by illegally withholding security deposits during the last four years, the lawsuit also claimed that substandard housing conditions existed at the company’s complexes--infestation of fleas, roaches and rodents, lack of heat, lack of hot and cold running water and a general dilapidation of the buildings.
The lawsuit named as defendants the estate of Dr. Charles Elerding Jr., his wife, Janet R. Elerding, two trusts held in each of their names, and their three sons--Charles III, James and Joseph Elerding--who manage the business.
The senior Elerding served as company president before he died of cancer last May. Two years ago, he was featured in Sports Illustrated when he and his wife provided a $1.75-million endowment to the USC Trojans football team--the largest single contribution ever made to the school’s athletic program.
The Elerdings’ lawyers have maintained that their clients are not guilty of any wrongdoing. In a telephone interview from Portland, Ore., on Friday, attorney Arthur P. Morello said his clients had decided to pay the record fine merely to avoid costly litigation.
“We are happy the matter was resolved without the necessity of a trial and without the emotional drain on the family,” Morello said.
The Elerdings could have been fined up to $2,500 for each security deposit they allegedly withheld. But the district attorney’s office decided to accept $1,000 each because the Elerdings cooperated fully with it and the housing and regulatory authorities to “remedy all violations,” Nolan said.
The Orange County complexes owned and managed by Elerding are 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 Pinetree Apartments in Stanton.
A majority of the approximately 600 former renters of these complexes have already been reimbursed from other Elerding funds, Nolan said. About $35,000 of the settlement money will be set aside to repay an additional 117 former renters who have been identified. As part of the agreement, Elerding Properties has agreed to hire an independent management service in Santa Ana to ensure that all tenants receive their deposits in a timely manner and that the practice does not recur, she added.
Nolan said that tenants who have not received their refunds should call the management service, Realecon, at (714) 540-2779.
Nolan said the remaining $565,000 will be placed in a fund that may be used for other purposes if all victims cannot be located.
The district attorney’s office may use any leftover money to buy equipment, fund law enforcement positions and prosecute consumer protection matters, she said.
Many of the 600 renters whose deposits were withheld included Marines who earn approximately $10,000 a year. Many Marines and other renters had written repeatedly to Elerding, pleading for their security deposits to be returned, to no avail.
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 “exclusive of ordinary wear and tear.” Within two weeks of the termination of a tenancy, the landlord is required to give the renter an itemized statement listing the basis for any amount that is being withheld.
Officials with the Orange County Fair Housing Council say the failure of landlords to refund security deposits is a significant problem that contributes to homelessness. During its last fiscal year, the agency received 5,278 complaints of non-refunded security deposits totaling about $2.85 million.
