Homeowners Say Developer Reneged on Pact : Motion: Buyers who believed their houses were in Laguna Beach, not Aliso Viejo, say they haven’t gotten second settlement payment.

Homeowners who settled with a development company in 1990 after claiming they were duped into thinking the homes they bought in Aliso Viejo were actually in Laguna Beach now allege the company hasn’t made a nearly $700,000 settlement payment.

The payment from the Laguna Audubon partnership, which includes the Kathryn G. Thompson Development Co., was not received despite “several oral and written demands,” according to a motion seeking payment filed in Orange County Superior Court.

“The money was due on Dec. 28,” John Haag, a Los Angeles attorney representing the homeowners, said this week. “They owed it unconditionally.”

However, Irvine attorney Joel Kew, who represents the developers, denied the payment is late. He said his clients are simply following a procedure outlined in the original settlement and will pay after a scheduled court hearing Friday on the matter.

The dispute is the latest between the development company and the owners of about 180 homes in the Laguna Audubon planned community.

The homes are located off El Toro Road, across the street from Laguna Beach in unincorporated Aliso Viejo. However, an early billboard, sales brochures, signs and sales documents identified the development as being in the city. Property owners bought their homes in the late 1980s and in 1989 sued the company for $5 million, which they contended was the difference between the property values in Aliso Viejo compared to Laguna Beach.

The settlement granted homeowners $1.5 million in cash and up to $2.5 million more over four years if Laguna Beach did not annex the neighborhood. Although the settlement is confidential, some terms have been disclosed.

Court documents say the payment of $683,000 is the second of three installments promised in the settlement agreement.

Haag said the homeowners also needed a judge’s order last year to get the first payment as well.

“Nobody’s ever said we’re not entitled to the money but when it comes to actually opening up their wallets and paying . . . we start having problems,” Haag said.

Kew maintains that the payments aren’t automatic and that homeowners must seek a court order each time.

“All the plaintiff’s counsel has to do is wake up, smell the coffee, make the application,” Kew said. “Every time he does the things set forth in the agreement, he gets the money.”

Haag argues that the payment should have been made earlier and that he has had to “jump through all these hoops so our clients can get this money.”

“It’s not a matter of waking up and smelling the coffee, it’s a matter of meeting your obligations when they come due,” Haag said.

The homeowners also contend the developers have not tried hard enough to persuade Laguna Beach to annex Laguna Audubon. The city rejected that option last year, saying it would detract from the city’s ambience to extend its border.

However, Laguna Beach City Manager Kenneth C. Frank said this week that a lawsuit has been filed by a Laguna Audubon resident trying to force the city to annex the area. That homeowner was not involved in the Laguna Audubon settlement.

In addition to the $1.5 million cash payment, the settlement held the developer would have to pay $500,000 more if the tract wasn’t annexed in two years, plus another $500,000 if the city didn’t claim it within three years. If the development is not annexed within four years, the company is required to make a final payment of $1.5 million.

If Laguna Beach never annexes the area, the maximum that would be paid to homeowners under the settlement is $4 million.

To ensure payments, the development company purchased a bond. Haag said the current motion is intended to force payment through the bond.

In the current court action, the homeowners say the development company missed the December payment of more than $423,000 to residents who did not take a “seller’s option” and another $260,000 to homeowners who did.

The seller’s option compensated the homeowners who decided to sell and move elsewhere after learning they weren’t living in Laguna Beach.

The homeowners are requesting the company pay the amount they contend is due, plus interest and attorney’s fees.

Homeowners who settled with a development company in 1990 after claiming they were duped into thinking the homes they bought in