Ex-Employees Sue Apartment Company : Courts: Three former apartment managers and other staff members said they were fired for refusing to falsify records and help the company in an ongoing scheme to defraud tenants.
A Garden Grove property management company ordered some of its workers to fabricate a story in Municipal Court so that the firm could defraud hundreds of renters of their security deposits, according to a lawsuit filed by five former employees.
The employees alleged that officials with the firm, Elerding Properties, fired them after they refused to “engage in such unlawful conduct.”
Arthur P. Morello Jr., the company’s attorney, on Tuesday denied the allegations, charging that the former employees are “trying to take opportunistic advantage of a different situation.”
Morello was referring to the $600,000 settlement paid by the firm a year ago to avoid civil prosecution by the Orange County district attorney for withholding security deposits from hundreds of former tenants. It was the largest settlement ever in an Orange County consumer protection case.
During the legal battle last year, the district attorney accused Elerding of engaging in “fraudulent and unfair business practices” by illegally withholding security deposits during the previous four years. Prosecutors also maintained that the firm’s 10 Orange County and two Los Angeles County apartment complexes suffered a litany of substandard-housing problems, including infestations of fleas, cockroaches and rodents.
In the settlement, the company agreed to correct the code violations and to refund security deposits ranging from $300 to $650 to about 600 former renters.
The consumer protection action against Elerding was one of the most sweeping consumer actions ever undertaken by the district attorney’s office. It followed a report in the Times Orange County Edition that at least 113 renters had filed small claims suits against Elerding and that the 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.
The employees are suing Elerding, claiming that they were wrongfully terminated from their jobs. They are seeking compensation for loss of earnings, and other unspecified damages for losses “resulting from humiliation, mental anguish and emotional distress.”
The lawsuit filed by the employees does not mention the district attorney’s action, but it accused the company of fraud, violating public policy and breach of contract.
It states that the firm instructed its apartment managers--identified in documents as Cheryl Birch, Gerald Birch and Rachelle Baldouc Hoag--”to lie and otherwise perjure themselves concerning the conduct of the (company’s) tenants with respect to security and cleaning deposits justifiably owed (to) the tenants.”
The managers said they were dismissed because they refused to falsify records, perjure themselves and help the company in its ongoing scheme to defraud the tenants. The three apartment managers said they also were evicted from their apartments shortly after their dismissals.
The managers were joined in their lawsuit by Jacqueline Young, who worked as a secretary for the company for several years, and Randall B. Young, a maintenance worker. The lawsuit was filed in Orange County Superior Court in Santa Ana by the law firm headed by San Francisco attorney Melvin Belli.
Responding to the allegations, Morello said the firm was vigorously opposing the lawsuit. He said some employees were terminated for cause while the others were dismissed after Elerding Properties contracted the management of its 12 complexes to another property management 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.
The company is owned by Newport Beach resident Janet R. Elerding who, with her late husband, Dr. Charles Elerding Jr., provided in 1989 a $1.75 million endowment to the USC Trojans football team--the largest single contribution ever made to the school’s athletic program.
