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Laguna Terrace Park future in limbo

A rift in the Esslinger family has cast a shadow on the future of Laguna Terrace Park.

Paul “Duke” Esslinger is suing his son Stephen, daughter-in-law Amy, Laguna Terrace Park LLC, the Esslinger Family Limited Partnership and Does 1-1000.

Plaintiff Paul Esslinger is accusing the defendants of elder abuse, breach of fiduciary duties and fraud, among other charges related to the management of the partnership established in 1997 after family members settled a lawsuit involving the family trust created by the plaintiff’s parents in the 1970s. Esslinger alleges the settlement gave him legal and equitable title to the mobile home park that overlooks Ruby’s Diner, Montage Resort & Spa and the ocean.

“We thought they were going to settle and there would be a sale of the property,” said Dan Freeman, president of the residents Laguna Terrace Park Assn. Inc. “Both Steve and Duke issued letters to the association of their intent to sell.

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“However, it was learned that both of them had to mutually agree on terms and on the buyer. They went to court [Feb. 2] to discuss it, and the attorneys for Duke notified us that it all blew up.”

Orange County Superior Court Judge Jonathan Cannon, who is due to retire in March, set a trial date of July 9 after a mandatory settlement conference came to naught.

“The reason the trial was set for July is to allow a new judge to be appointed and get him or her up to speed,” Freeman said.

Paul Esslinger and his attorneys did not return phone calls by press time.

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Stephen Esslinger said through a spokesperson that he cannot talk about the park issues due to the pending litigation.

The case has been in the courts since April 2004.

In the complaint, the elder Esslinger claims that his son diverted rents and profits from the park for his own personal use and benefit that should have been shared and refused to account for the money. He is asking the court to award him damages in the sum of $25 million, more as proved in trial and punitive damages also subject to proof; declare him a member of Laguna Terrace Limited Liability Company and determine the percentage of his and other membership interests. In addition, he wants the court to dissolve the company and order an accounting of the income, expenses, profits and losses of the company since Feb. 6, 1997, shortly before his son formed a family partnership and appointed himself and his wife as managing partners; and to declare that the defendants hold legal and equitable title to the mobile-home park in trust for the plaintiff and to grant the plaintiff possession of the park to him.

“It is very complex, and if it goes to trial it will be nasty,” Freeman said. “We could be here for 10 or 15 years before it is resolved.”

The tenants association, which is a mutual benefit nonprofit corporation, is trying to raise the money to buy the property.

“We think we can raise the money,” Freeman said. “We don’t know what the number is, but we are working with some very knowledgeable and talented people in this area.

“The property is not officially on the market, but people are aware and are paying attention.”

Consultant Joan Gladstone scotched rumors that Athens Group and Montage Hotels and Resorts were interested in acquiring the property, although they had been approached by representatives of the park ownership about a potential sale.

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“We [Athens Group] have reviewed the offer and decided not to pursue the purchase,” Gladstone said.

Freeman opined that Athens Group and Montage would be more interested in acquiring the shopping center directly across the highway than the mobile-home park.

“I would suspect they would love to redevelop that and make it look like Crystal Cove [shopping center on Newport Coast],” Freeman said. “What you see when you arrive at the resort is one side of the road that is beautiful and the other is a 60-year-old center.”

Closure of any mobile-home park in Laguna is subject to provisions in a city ordinance, Freeman said.

“Huntington Beach has a similar ordinance to Laguna’s that is being challenged by the park owners,” Freeman said, citing case number 06CC07095.

Laguna established procedures to close a park after tenants tried and failed to buy Treasure Island Mobile Home Park to prevent their eviction and the park owners began buying up the mobile homes on the site to empty it for development.

The property eventually was sold to Athens Group, which obtained the entitlements that allowed the development of Montage Resort & Spa on the 26-acre, ocean-front parcel.

A special election was held, and the proposed project was approved 55% to 45%, but the rancorous debate took its toll, dividing the community so deeply that some former friendships have never been repaired.

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In the case of Laguna Terrace Park, it is family that is ruptured.

“It’s like a bad soap opera,” Freeman said.


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