On the heels of losing $1 million in public funds and a parcel of land through foreclosure last month, the Santa Monica Mountains Conservancy was hit in a separate action with a $6 million judgment against the Mountains Recreation and Conservation Authority (MRCA), the purchasing arm of the conservancy, for failing to pay off a promissory note. Both actions come at a time when the state Legislature is considering expanding the authority of the conservancy to include the entire Los Angeles and San Gabriel River basins, despite claims of critics of the conservancy that the state agency is misusing public funds.
The $6 million court judgment involved the sale of a promissory note to the MRCA, a joint powers agency in which the conservancy has a controlling interest. The note was secured by two trust deeds on property in the Brentwood section of the Santa Monica Mountains, upon which the conservancy anticipated foreclosing.
The MRCA paid for the note by issuing its own unsecured note. The principal on that note, approximately $6 million, became due in January. Rather than pay the principal, the MRCA filed suit against the company that had sold the secured note, Tucker Land Co., claiming breach of contract.
But Beverly Hills Superior Court Judge Irving Shimer ruled in February that the state agency had breached the contract by not paying off the note.
In a separate motion, the conservancy argued it had no contractual obligations altogether, but, in June, Shimer ruled that it could not escape its obligations, and he awarded Tucker the amount owed on the note, plus attorneys’ fees.
Laurie Collins, staff attorney for the conservancy, said the agency has filed an appeal in the case.
If the conservancy does not prevail on its appeal, it has indicated Tucker will not be able to execute on the $6 million judgment. According to a brief filed in the lawsuit, attorneys for the MRCA argued that Tucker will not be able to collect the judgment because the MRCA “has only limited funds for its operations, certainly insufficient to pay against any judgment.”
“That’s a terrible way for a government entity to talk,” said Alvin Kaufer, attorney for Tucker. “Hopefully, a federal court won’t allow that to be the law.”
Collins would not comment on the conservancy’s assertion in the brief that the judgment is not collectable.
Peter Wolf, chairman of Tucker, said he supports the aims of the conservancy, but he faults their business practices.
It is, he said, “quite distressing for us that we signed a contract in good faith, and we thought we could take back an unsecured note from the government.”
Wolf said he could not understand why the MRCA would argue that the judgment is not collectible. “Why are they allowed to enter into a contract?” he asked. “Are they above the law?”
The judgment follows the conservancy’s loss of a parcel near Malibu Canyon Road in June through foreclosure, also the result of the conservancy’s failure to pay off the balance due on a promissory note. Through the foreclosure, the conservancy lost the $1 million down payment it paid to the owners of the parcel, funds which were made available by Proposition A, approved by voters in 1992 and 1996.
Bill Pending in Legislature
The state Senate, in April, approved a bill, sponsored by Sen. Tom Hayden, that would add the watersheds of the L.A. and San Gabriel rivers, and their tributaries, to the zone within which the conservancy may acquire parkland to protect it from development.
The conservancy’s original mission was limited to the Santa Monica Mountains, but gradually, over the years, the zone has expanded to include the other hills and mountains that border the San Fernando Valley.
Hayden’s bill would extend the boundaries of the conservancy to the nonmountainous and highly urbanized areas near the two rivers.
The bill glided easily through the Senate and passed there on a vote of 21 to 12, but before the Assembly’s Natural Resources Committee it met with opposition from critics of the conservancy and 39 cities and local agencies within the conservancy’s zone, including Malibu.
Opponents say they do not object to the restoration of the rivers, but rather to any enhanced authority for the conservancy and its longtime executive director, Joseph Edmiston. Opponents also say they have long-standing concerns about the lack of oversight of the conservancy and what they say is mismanagement of public funds.
Malibu City Manager Harry Peacock wrote, in a letter to Assemblywoman Debra Bowen, chair of the Natural Resources Committee, that Malibu residents have related to him “and members of the City Council a string of broken promises relating to the activities of the conservancy, especially in terms of its acquisition, operation and use of the Streisand Center.” Peacock added, “Residents feel that there has been a gross abuse of authority by the Director [Edmiston], that there is little or no oversight responsibility being exercised nor is there any body of elected officials to turn to for a redress of the problems which have been visited upon them by the Conservancy and its Director.”
Conservancy critic Patricia Bell Hearst of the Federation of Hillside and Canyon Associations said she, too, is concerned about the fiscal management of the conservancy and the power of Edmiston, who, she said, “is accountable to no one.”
The bill failed in a vote in committee, but it is scheduled for reconsideration.
Similar bills are pending if Hayden’s bill goes down to defeat.
“If those politicians are smart, they’re going to drop those bills like a hot potato too,” said Hearst.