Judge Indicates KADY Founder Can Foreclose

A former owner of KADY-TV has the right to foreclose on the Oxnard station because current operators violated a contract by failing to pay rent and property taxes on time in 1993 and 1994, a Superior Court judge tentatively ruled Friday.

Retired Superior Court Judge Edwin M. Osborne, sitting as a temporary jurist, ruled that station founder Donald Sterling and his partners are entitled to collect a debt they estimate at $4 million by selling the station, owned since 1991 by John and Erica Huddy.

Because the ruling is tentative, it has no immediate impact on the station. A final ruling is expected within 45 days, following responses from both sides. And that decision can be appealed.

“We won on absolutely everything,” said Sterling, a retired accountant, from his home in Boulder, Colo. “All I’ve ever asked is for Mr. Huddy to pay his rent and live up to his obligations. This forces him to.”

Huddy, chairman of Riklis Broadcasting Corp., the corporate owner of KADY, declined comment.

“Not having seen the judgment, and my attorney is out of town, it would be stupid of me to comment on it,” he said.

Erica Huddy said three weeks ago that she and her husband had put the financially troubled station, which they once pledged to build into the most influential in Ventura County, up for sale.

At that time, Sterling asked Osborne to seize control of the station because it was bouncing checks to employees, failing to pay rent and allowing station equipment to deteriorate. The judge declined the motion without comment.

But Friday, Osborne resolved larger issues raised by a 1994 lawsuit by the Huddys. He dismissed their claims that Sterling had wrongfully applied to take over their broadcast license and had spread false information that undercut the value of the station.

In finding for Sterling, the judge upheld his counterclaim that the Huddys had violated their purchase agreement by missing about $43,000 in tax payments and rent. He also granted reasonable attorney’s fees, which Sterling estimated at $150,000.

Sterling’s biggest victory was the judge’s ruling that he has a security interest in proceeds from the sale of KADY’s broadcast license and its equipment--and that he has a right to foreclose to get what is due him.

“That means we can put the assets of the station up for sale and if no one overbids us, we would become the owners,” said lawyer James C. Fedalen, who represents Sterling.

“But there are so many things that still need to be decided I can’t tell you if foreclosure is going to happen,” the lawyer said.

Sterling said he hopes the Huddys can sell the station and pay off their debt to him without foreclosure. He said the Huddys’ companies owe him $3.9 million in station equity, $1.85 million for the KADY building and $150,000 in legal fees.

“They’ve got 45 to 60 days to pay us off and get us out of this,” Sterling said. “Now they’ve got new incentive to do so.”

Sterling said the Huddys turned down a purchase offer two weeks ago. And on Thursday, he said the Huddys offered to pay him less than 50% of what they owe him to make another deal work.

“They said they could have come out with substantial remuneration for themselves,” Sterling said. “But I don’t know what they have to sell. In fact, if I foreclose, they have zero, zip, nothing.”