2 Lose County Racketeering Suit : Courts: Judge dismisses lawsuit filed by a Topanga couple who contend that officials tried to extort money from them over a building permit.

A Topanga couple, who allege that they were first denied a building permit and later prosecuted because they refused to pay bribes to county officials, have lost two rounds in court this month.

Despite the setbacks, however, Kathleen Kenny and Art Starz said they plan to pursue their complicated legal battle to prove they were the victims of extortion attempts by county officials.

A federal judge Monday delivered the latest blow to Kenny and Starz, dismissing a racketeering lawsuit they filed against Los Angeles County, several county officials and a private architect.

After a brief hearing, U.S. District Judge William D. Keller said he was confused by their contention that fraud by county officials was responsible for their inability to obtain a building permit for a 700-square-foot rental house.

However, Keller invited the couple to resubmit the case with new arguments.

Their attorney, James Fosbinder, told Keller apologetically that he could provide much more documentation for the allegation. He said he has six file cabinets full of evidence in the case and was trying to thin it down.

Earlier this month, in a related case, another judge halted an unusual hearing in which the couple cited misconduct by county employees as their defense against 14 criminal charges of zoning code violations.

After four days of testimony by both Kenny and Starz, Superior Court Judge James Albracht abruptly ruled that they had failed to show that they were victims of “invidious discrimination” and ruled against their motion to dismiss the charges.

Albracht said Kenny and Starz were responsible for their own problems, comparing them to a drunk who keeps walking into the same tree and concludes he’s in a forest. The couple “have no idea of the big picture” of the society around them, the judge said.

Fosbinder, who also represents Kenny and Starz in their criminal case, said he planned to appeal the ruling, which cut short his plan to question a county building inspector and his wife about their personal real estate transactions in a preview of the federal racketeering case. The building permit trial will be continued until the appeal is ruled on.

Kenny and Starz own three adjacent lots on Cave Way in the Fernwood Pacific area of Topanga.

They live in a house they built with a permit on one of those lots. Last year, after filing a lawsuit against Los Angeles County, they obtained a permit to build on another of the lots. Both the criminal charges against them and their federal racketeering cases involve a rental house the couple built on the third lot.

Kenny and Starz contend that they merely remodeled a previously inhabited structure without a permit, a practice technically illegal but one they said is widespread in their community. County officials have said the prior structure was not a legal habitation.

The district attorney filed 14 misdemeanor criminal charges against the couple last August, alleging that they resisted inspections and failed to obtain the permit as ordered. The case was elevated to Superior Court after several Municipal Court judges declined to hear it.

In four days of testimony before Judge Albracht, Kenny detailed her combative relationship with county officials over the past five years. As part of her testimony, Kenny read extensively from a two-inch stack of transcripts that she said represented a sampling of the rambling comments by county health inspector Arnold Fielding during 16 visits to their property, several of which she secretly tape-recorded.

Kenny quoted Fielding as speaking of wanting to help the couple and asking if they had any cash available.

Taking the stand later, Fielding conceded that he had made numerous trips to the couple’s house, but contested the accuracy of the transcripts.

However, Albracht interrupted the proceeding midway through Fielding’s testimony, without allowing the couple to play any of the tapes Fielding contested.

Albracht said they may have been singled out for prosecution among the many Topanga residents who have illegally-built structures, but he said they brought it on themselves by writing letters and putting themselves in the spotlight.

“I think that if she in fact received some selective treatment, it was because she made herself conspicuous,” Albracht said.

“She was the one who wrote letters, complained about her neighbors, wrote letters to the Board of Supervisors, wrote letters to building and safety . . . I think Ms. Kenny has evidenced, in this proceeding at least, a paranoia with regard to this. In my opinion, it is a self-fulfilling prophesy.”

Before ruling against them, Albracht tried unsuccessfully to persuade Kenny and Starz to plead guilty. He promised not to send them to jail and said their fine would be based upon their ability to pay, but would not exceed $5,000.

In terms of their record, he said, building code violations would be “a cut below a parking violation.”