SAN JUAN CAPISTRANO : City Prevails in Ruling on Ex-Official’s House

A couple who bought a former city manager’s home from the city--and who maintain that it was damaged--have lost their bid to get San Juan Capistrano to buy it back.

City Atty. Richard K. Denhalter said that he was notified this week that an arbitrator has ruled in favor of the city, which was sued in 1992 by homeowners Meg and Richard Hassett.

The Hassetts contend that city officials knowingly sold them a damaged house in 1991 and that they discovered a number of problems after the sale, including cracked walls, an unstable foundation and a hillside that was on the verge of collapsing into the back yard. The Hassetts sued in an attempt to force the city to buy back the house.

“Unfortunately, this arbitrator bought all the smoke and mirrors the city put up,” Richard Hassett said. “We are devastated. To us, it was an open-and-shut case.”

Hassett said he didn’t know if they would appeal the decision.

City officials maintain that all transactions with the Hassetts were proper and that the couple did an extensive walk-through of the house before buying it.

The 2,650-square-foot house, in the 28000 block of Calle San Remo, has been mired in controversy since 1981, when the city lent then-City Manager Stephen B. Julian $250,000 to buy the house and pay for improvements. Six years later, before Julian repaid the loan, the city bought the house back from him for $280,000.