Tenants to Divide $1.7 Million in Settlement of Slumlord Suit

Tenants living in 11 Los Angeles slum properties will receive $1.7 million in a partial settlement of a lawsuit brought by the city attorney and public interest lawyers against slumlords and their business associates.

The settlement is the third-largest damage award in a slum case in state history, Deputy City Atty. Stephanie Sautner said Friday. The city attorney filed the case three years ago, charging 137 defendants with conspiring to take profits from the properties without making repairs to keep them habitable.

A total of 40 defendants, including owners such as convicted slumlord Daniel Tepper of Encino, agreed to the settlement. Also agreeing to the settlement were various notaries public, as well as so-called “straw” owners, who held title for buildings on behalf of secret owners who controlled the properties.

Between 150 to 200 families who lived in the buildings between 1976 and 1991 will participate in the settlement, said attorney Barrett S. Litt, head of a public interest law firm, which along with the Legal Aid Foundation represented the tenants.

Attorney Phil Woog, who represented Tepper and landlord Mordehai Ben-Horin, Canadian-Pacific Inc. and Ty Properties, said his clients denied liability and settled only because “the litigation costs would have been prohibitive.”

Litt said the settlement “gives substantial compensation to people in buildings, (who) without a novel approach like this wouldn’t have gotten any compensation at all.”

The case was unusual, he said, because it sought to cut through an alleged network of businesses and owners. “There were a lot more complexities than in our average case, where we know who the owner is,” Litt said.

Raul Cruz, 60, a tenant for the past 11 years at 823 S. Bonnie Brae St., said he was “very happy.”

Cruz, a baker, said that before the lawsuit was filed the building was “very bad . . . with cockroaches, rats, holes in the walls, ceilings and roof.” Under different owners, conditions have been “much better,” Cruz said, adding that he and his family will probably stay there once they receive their share of the award. He hopes to start a bakery.

In addition to the tenants’ settlement, the defendants agreed to court-ordered restrictions on owning or operating substandard rental properties in the city.

“This puts a stop to the kinds of business practices these defendants were engaging in and which were perpetuating slums,” Sautner said.

She cited defendants Richard and Elizabeth Portolan of Seal Beach as examples of straw owners. They acquired one slum property from a company called T.H.I.S., whose president, according to corporate records, was Teluce Black. Black, Sautner charged, was actually a dog owned by another defendant, Joseph Fitzpatrick, now deceased. Efforts to reach the Portolans or their attorney were unsuccessful.

The settlement was approved late Thursday by Los Angeles Superior Court Judge Barnet Cooperman. In 1991, Cooperman dismissed the principal defendant, Highland Federal Savings & Loan of Highland Park, from the case, saying the city attorney did not have the jurisdiction to sue a federal savings and loan. A city appeal of that ruling is pending.

Another major defendant in the case, Inglewood financier Alexander Spitzer, settled with the city attorney in 1989.