Ruling Deals Blow to City’s Bias Case Against Landlord

A special judge has ruled that Pasadena has failed to show that the owner of the largest housing project in the city intentionally discriminated against blacks, a potentially major setback in a lawsuit that has cost the city $3 million.

The ruling by Jack E. Goertzen, which was delivered to attorneys Wednesday, leaves undecided the question of whether practices such as credit checks conducted on potential renters by the owner of the 313-unit King’s Villages were discriminatory.

Goertzen also rejected a city argument that owner Thomas Pottmeyer had failed to provide adequate reasons for rejecting potential black tenants.

Goertzen, a retired judge, was appointed to hear the federal civil rights case and make recommendations to a U.S. District Court judge, who will make the final decision, said Dale L. Gronemeier, a private attorney for the city.

Gronemeier said he is disappointed because he believes the evidence favors the city and plans to challenge the ruling.

But Pasadena Councilman William E. Thomson Jr. said any challenge of the ruling “seemed a longshot. It looks like we spent $3 million for nothing.”

The city’s case has focused on allegations that between 1989 and 1991 Pottmeyer systematically discriminated against blacks in selecting tenants and purged blacks from waiting lists.

The city also has alleged that Pottmeyer preferred to rent to Latinos, whom he perceived as more likely to pay rent and less likely to be involved in drug dealing that has plagued the complex.

But Goertzen wrote in his ruling that “the inference drawn from this evidence is that the increase in rentals to Hispanics at the project is a reflection of the changing demographics of the Pasadena community, not a studied plan for intentional discrimination as argued by plaintiffs.”

“It is effectively over,” said Stephen Johnson, an attorney for Pottmeyer. “They failed to show any intentional discrimination.”

Johnson has maintained that his client followed federal housing rules and has said that a federal review in 1992 turned up no wrongdoing at the complex, where most renters receive federal housing subsidies.

With two private law firms, expert fees, court reporters and costs for the private judge, the case has become the most expensive litigation in municipal history, city attorneys said.

The Pasadena law firm of Gronemeier & Barker has received more than $2 million for representing the city. The Los Angeles law firm of DuBose & DuBose has received $764,000, city records show.

If Pasadena loses, it may have to pay Pottmeyer’s legal bills that have amounted to more than $1 million. The city also could face an expensive counter suit, Johnson said.

A victory by the city could mean that the landlord would be forced out of managing the project and would have to foot the city’s legal bills, said Gronemeier.

King’s Villages opened in 1969 as a U.S. Housing and Urban Development project. It reverted to city hands in 1982 when the developer went bankrupt. The city then sold it to the real estate firm of Goldrich & Kest.

In 1988, Pottmeyer was brought in as a managing partner with 49% ownership of the project. Blacks who were not allowed to rent began complaining to the city, which then filed the discrimination suit.

In 1992, Goldrich & Kest sold the project to Pottmeyer, despite city efforts to stop the transaction.