For the owners of a Hollywood apartment complex, it was a minor legal headache: three lawsuits by former tenants alleging problems at the property.
That was November. Now there are 25 suits.
The tenants’ cases against Redwood Urban and the previous owner of the 270-unit property at 1724 Highland Avenue make explosive claims — including a literal explosion.
They describe unlivable conditions and illegal short-term rentals that led to thefts, break-ins and “physical intimidation at the hands of intruders.”
On closer inspection, however, these separate lawsuits — mostly filed in the name of individual tenants — contain oddly identical allegations. For example, three-quarters of them claim to have had the same run-in with a malfunctioning parking lot gate.
“In one incident, Plaintiff’s wife almost died in a medical emergency because the gate would not open in the midst of their effort to seek medical attention,” 19 of the lawsuits say. Not one of the wives appears to have sued.
In a statement, lawyers for Redwood said the “sloppy, copy-and-paste” nature of the complaints support the company’s view that they are all “meritless.”
Of the 25 lawsuits examined, 24 were filed between August and January by one attorney — Daniel Lavi of The Tenants Law Firm. The other, filed on behalf of two tenants in March by San Francisco-based Tenants Law Group, mentions “physical altercations with drunk Airbnb guests” and inadequate upkeep, but no wife-related emergencies. Neither law firm responded to requests for comment.
Lavi’s 24 suits all say a December 2017 “explosion” created debris and caused the L.A. Fire Department to evacuate the building in case of a gas leak. The suits assert that the tenants were allowed back in after a few hours without a thorough inspection of the property.
Redwood’s lawyers called the Tenants Law Firm’s filing of 24 separate suits, instead of one with all the plaintiffs, “an obvious tactic to drive up litigation costs to use as leverage against the insurance company in any potential future settlement negotiations.”
“These types of habitability lawsuits against apartments have become a popular endeavor among plaintiff attorneys who seek the low-hanging fruit of insurance money,” Sean Smith of G&P Schick wrote in Redwood’s statement.
The attorneys recruit as many tenants as possible, then seek an early settlement, he said.
In some of the later lawsuits, tenants’ claims against the complex’s previous owner, Essex Property Trust, have been dropped.
Built in 2010 just steps from the Chinese Theater on Hollywood Boulevard, the Highland Avenue complex has 243 market-rate and 27 income-restricted units, 8,670 square feet of retail and two billboards.
Most of the plaintiffs moved in between 2012 and 2016 — when Essex was still the owner — and paid rent ranging from $1,800 to $3,036. Two living in the affordable units arrived in 2010 and paid less than $1,000 a month.
While most of the lawsuits filed in late December and January are veritable carbon copies, apart from lease-related details, the earlier lawsuits have more varied allegations.
In two suits filed in November and early December, tenants allege that “infestations of ants, gnats and other vermin” were common at the property, a claim that does not appear in later suits. In another early December suit, a couple alleges that their 5-year old “suffered medical issues arising from staying in the building.”
The earlier suits offer more detail on tenants’ circumstances. In a November complaint, one alleges that she faced discrimination because of her protected status as a recipient of public housing assistance, and faced harassment from building staff. And in the earliest tenant lawsuit, filed in August, a transgender tenant claims to have been wrongfully evicted while going through medical treatment.
The claim that a wife nearly died because of a gate malfunction first appeared in four suits filed Dec. 3.
“The allegations in some of the suits have no basis in fact whatsoever,” Redwood said in its statement.
The lawsuits’ portrayal of the complex does not quite square with the assessments of ratings agencies that gauged its ability to repay debt.
In February, the landlord refinanced the apartment complex with $90 million from MF1 Capital, a multifamily mortgage REIT focused on bridge loans and backed by CBRE Capital Markets, Limekiln Real Estate and Berkshire Group.
That loan was securitized, and as part of the process, several ratings agencies looked at the property’s finances and recent history. The picture they paint is not the disaster depicted by the lawsuits, but does reflect some complications.
“There have been several challenges and disruptions to leasing over the past few years, including unknowingly inheriting 80 Airbnb tenants at acquisition from the previous owner, ongoing renovations to the units and common areas, and, most recently, coronavirus-related restrictions,” a DBRS Morningstar analysis notes.
The landlord’s statement addressed the Airbnb issue, saying, “Redwood has never permitted short-term rentals on the property and, in fact, has always unequivocally and expressly prohibited [them].”
It also pointed out an irony of tenants’ complaints: Some were evicted by Redwood for “illegally subleasing their units as short-term rentals.”
Fitch reported that the Airbnb tenants were removed, but units remained vacant for longer than expected because contractors were not available to fix them up. Facade and exterior renovations also delayed lease-up of the property.
DBRS analysts toured the property and concluded that “the updated units and amenities showed well but do not directly compete with the newer Class A product in the submarket.”
Of the complex’s two retail spaces, one is vacant and the other has yet to be occupied by its tenant, Mayweather Boxing + Fitness, because the pandemic delayed the buildout. But DBRS said the spaces’ curb appeal and exposure to foot traffic bode well.
Redwood, in a joint venture with Beverly Pacific, the investment company of Guess co-founders Paul and Maurice Marciano, has spent more than $7 million renovating 212 of the building’s 243 market-rate units and is planning to do the rest as they become available, according to ratings documents.