Caruso lawsuit plot thickens

Fresh off selling his building to Americana at Brand developer Rick Caruso, Henry David testified that construction of the outdoor mall undermined his former tenant’s business.

David, whose family owned the one-story brick building at 230 S. Orange St. for 40 years, said he believed demolition of nearby buildings and construction of the Americana at Brand nearly a decade ago made it impossible for recording studio Backroom Entertainment to survive on that site.

“They had been having trouble ever since they started clearing the land” for the Americana, David testified.

Backroom is suing Glendale and Caruso Affiliated for loss of its business, which folded in 2008, shortly after the Americana was completed. The owners have testified that vibrations from dirt compactors and other nuisances drove away recording artists.

The city and Caruso Affiliated say the claim is meritless.

Asked if he believed the studio could make it at that site today, with Americana construction complete, David said continuing truck noise would make sound recording untenable.

“Despite my agreement with the city that there wouldn’t be parking across the street after 11, they allow trucks there all day long,” David said.

His testimony came a day after he and Caruso announced they had reached a deal on the sale of the Orange Street building. They declined to reveal the sale price.

In pushing his plans to expand the mall, Caruso has said a larger Americana would improve Colorado Street, create new jobs and generate about $800,000 a year in additional tax revenue for the city.

On Nov. 30, the City Council, acting as the Glendale Redevelopment Agency, ordered David and Ray Patel, owner of the adjacent Golden Key Hotel, to either agree to sell their properties to Caruso or come up with a plan to redevelop the area.

The properties are in a redevelopment zone where the city has the power of eminent domain.

Patel has so far refused to sell, turning down a $6-million offer. He also is suing the city and Caruso Affiliated for alleged loss of business. That case is scheduled for trial in June.

Attorneys for the city and the Americana say Backroom Entertainment was a renter on a month-to-month lease that cannot claim property rights and lacks documentation of business losses. They also contend they took adequate steps to protect the Orange Street property.

On Thursday and Friday, Jennifer Pancake, an attorney for the city and Caruso, asked Backroom co-owner Brad Schmidt numerous questions about his client roster. He acknowledged the studio received hundreds of thousands of dollars in payments from rap record label Ruthless Records and other artists between 2006 and 2008.

In court filings, Pancake argued the studio owners could have relocated but chose to stay during construction.

Los Angeles County Superior Court Judge Richard Rico is expected to rule next week on the claim that Backroom’s business was effectively condemned by the construction.

If he rules for the city and Caruso, the case is over. If he rules for the recording studio, a jury will determine financial damages.