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Both Sides File Appeals in Malibu Land Fraud Case

December 19, 1985|JUDY PASTERNAK | Times Staff Writer

Both the loser and the winners in a Malibu real estate fraud case have appealed a judgment ordering developer Edward Higgins Sr. to pay $1 million to three partners who claim that Higgins sold them land and then wrongfully foreclosed upon it. Higgins took back the property along with coastal permits the partners had obtained to build two houses on it.

Higgins filed an appeal earlier this month because "even if (the partners) did show wrongdoing, our wrongdoing had nothing to do with any loss that they had," said his attorney, Gregory M. Bergman.

The partners, on the other hand, appealed the October judgment last week because they do not believe they were awarded enough money, said Larry Russ, one of their lawyers. The three investors--attorney Alan Fenster, engineer Anthony Russomano and marketing consultant Philip Werber--will claim in court that Santa Monica Superior Court Judge Sara K. Radin should have ordered Higgins to pay another $1.2 million in lost profits and interest, Russ said.

Higgins' handling of the property at the heart of the dispute--seven ocean-view lots off Pacific Coast Highway in western Malibu--was controversial even before the 1978 transaction involving Fenster, Russomano and Werber.

First Person Jailed

Higgins was the first person ever jailed for developing land in defiance of a state Coastal Commission ban. He served five days for contempt of court in March, 1974, because he continued development of modular houses on that Pacific Coast Highway property as well as on other land he owns in Malibu, despite a temporary restraining order that barred construction until coastal permits were received.

Fenster has said that Higgins told the partners four years later that he would have trouble getting coastal permits for houses on the property because of his past difficulties with the commission.

Bergman has denied that his client ever said such a thing.

The investors agreed to allow Higgins' sons to join in a deal to build five houses there: one atop a bluff overlooking the sea, a second part way down the hill and three on the beach.

After repeated arguments with Higgins, however, the partners decided to sell their interest. But when they found a buyer, they discovered that ownership of the property was unclear. Liens had been placed against the lots and "title to the Malibu property was held, conveyed and reconveyed between various business entities, individuals and Higgins family trusts in a manner calculated to frustrate creditors and disguise the true ownership," Radin wrote.

Higgins' position was that the three men did not make proper payments on the land so he foreclosed upon it in December, 1979. Along with the property, he acquired two coastal permits the partners had already received. And by that time, only a septic system test was needed before the other three permits could be obtained.

Punitive Damages

Radin included $100,000 in punitive damage in her judgment against Higgins, his wife, three of their sons and two family trusts "in light of defendant Edward Higgins' intentionally malicious actions," she wrote.

The judgment also included $571,000 in profits lost when the investors were unable to sell their interest in the property because of the title problems.

Russ said he believes that Radin also should have awarded interest on that money, as well as the profits the three partners would have realized from sale of the houses.

"We might have considered just leaving it, but when they filed we decided we might as well go for the rest of it," Russ said.

Meanwhile, Russ said he has filed claims against Higgins' property in order to collect the $1 million already awarded.

That move could jeopardize a settlement of another fraud case against Higgins concerning the same property.

In January, 1980, shortly after Higgins foreclosed against Fenster, Russomano and Werber, he sold an interest in the land to builder Neland Sprik. Sprik later filed a lawsuit similar to that filed by the three partners.

In a July court settlement of that case, Higgins agreed to clear title to several lots while Sprik agreed to apply for Coastal Commission approval of the remaining three houses.

That agreement has not yet been fulfilled, although Higgins has taken steps to clear title, said Sprik's attorney, Robert Lisnow.

"If Larry Russ takes (the property), we go to court" against Higgins, Lisnow said.

But "it's too early to tell what's going to happen," Lisnow added. Higgins has until February to complete his task. Bergman said Higgins wants to post a bond for the judgment, which would allow him to stave off collection while the appeals continue.

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