$11.2-Million Jury Award Deals Blow to Conservation Agency

A leading state conservation agency found itself beset by major financial troubles on two fronts this week--being ordered to pay part of an $11.2-million jury award in a soured land deal and separately pleading for an emergency federal bailout to prevent a default on key land purchases for the Backbone Trail in the Santa Monica Mountains.

In Los Angeles Superior Court on Wednesday, a jury ordered the Santa Monica Mountains Conservancy and a partner in the land deal to pay $8.7 million in lost profits and $2.5 million in expenses to a home-building firm. The firm had accused them of conspiring to thwart its attempt to buy 492 hillside acres above a scenic reservoir near Westlake Village.

The award, the first ever against the state parkland acquisition agency and its partner, Las Virgenes Municipal Water District, was hailed by a spokesman for the development firm as a precedent-setting victory for rights of property owners over public agencies.

“I hope government agencies will now think twice before they trample on developers’ rights,” said Eric Rowen, an attorney until recently for the developer, Village Properties.

Officials at the conservancy vowed to ask a judge to reduce the jury’s award and appeal the summary judgment it was based upon. But the officials also claimed victory in the decision because the developer, Village Properties, had asked jurors for more than $42 million.

“The outcome was not the disaster that some had predicted,” said Joseph T. Edmiston, executive director of the conservancy.

In a separate development, the conservancy said it had sent an urgent request for $4.2 million to the Interior Department on behalf of a sister conservation agency. That agency is in danger of defaulting on notes it owes on 11 properties purchased four years ago from private landholders, a conservancy spokesman said.

The properties make up about four miles of the scenic, wild, 70-mile Backbone Trail that stretches from Will Rogers State Historic Park in Pacific Palisades to Point Mugu in Ventura County.

The parcels, obtained in 1992, were surrounded by federal or state parkland and in many cases owned by elderly pensioners.

Most of the landowners sold their parcels to the Mountains Recreation and Conservation Authority--a joint powers agency co-managed by the Mountains Conservancy and the Rancho Simi and Conejo Recreation and Park districts--because they needed the money for their retirement.

The National Park Service asked the mountains authority to put up the down payment for the properties and promised to pay off the notes in three equal installments, according to the conservancy’s letter to the Interior Department.

Those notes are due March 5, April 15 and Sept. 29 this year. But after intense discussion this week, conservancy land acquisitions chief John Diaz said the Park Service acknowledged that it is unable to pay. Congress, caught in a budget deadlock with President Clinton, has not yet passed the National Park Service’s appropriations bill.

The jam has left conservancy officials embarrassed and chagrined. “We face the prospect of having to give the properties back and being forced to realign the trail,” Diaz said.

More angry than Diaz are the landowners who pressed the government for up to eight years to buy the land they could not sell on the private market because of its proximity to public open space.

Ty Sisson, who owns one of the parcels, said:

“We can’t have state agencies going out to small landowners and buying land on terms and then reneging on the payments. It’s sort of unbelievable.”

The story of the conservancy’s difficulties in the Westlake Village court case began in 1989, when the Federal Deposit Insurance Corp. acquired a 492-acre tract above the Las Virgenes Reservoir from a failed Dallas-based savings and loan.

Village Properties--a partnership controlled by owners of Baldwin Builders--paid $1.4 million for an option to buy the land. The firm planned to build 330 residences on a bluff that would have had sweeping views of the reservoir and mountains.

The company promised Las Virgenes water district it would not build right up to the reservoir’s edge in exchange for the district’s promise to support the development effort and not to try to buy the land itself.

Soon afterward, according to testimony and court documents, the water district decided to try to buy the land anyway, and enlisted the assistance of the conservancy. The water district wanted part of the property for a buffer around the reservoir; the park agency wanted to protect a rare species of flower and to build trails.

The conservancy then sued the FDIC in federal court under provisions of the Endangered Species Act to prevent the sale to the developer. Because the suit prevented Village Properties from obtaining title insurance, the FDIC ultimately sold the land to the conservancy and the water district for $6.3 million in 1993.

Village Properties won a summary judgment in its breach-of-contract suit against the FDIC in federal court last year and settled for $7 million in damages. Then it went after the water district and conservancy in state court and won another summary judgment in May.

In that ruling, Superior Court Judge Madeleine I. Flier ruled that the pair of agencies had “conspired to wrongfully interfere” with the deal between Village and the FDIC.

Conservancy Executive Director Edmiston said the conservancy will argue in a brief today that the court should deduct the $7 million already paid by the FDIC from its award, and also disallow the jury’s finding for expenses.

“That amounts to double-dipping, and that is black-letter wrong--you can’t get both,” he said.

Elden E. Hughes, a Sierra Club spokesman, said the home builder’s case is “an absurdity.”

“There are at least three levels of appeal on this and we think the conservancy will be successful in a higher court,” he said.

Brian C. Lysaght, attorney for Village Properties, said he believes the agency “acted pretty shabbily toward our client” and ought to quit fighting now.

“They’ve wasted a lot of taxpayer money up to this point,” he said. “Unfortunately, I expect them to continue to do so.”

Times staff writer Myron Levin contributed to this story.