San Jose Mercury News
By: Tracey Kaplan
April 20, 2014
With a fancy name like "California Hawaiian Mobile Estates," the trailer park on Snell Avenue should have been top-notch.
But residents say that for years it was anything but -- marred by sewage backups, potholes, electrical blackouts and a swimming pool filled with geese feces. Fed up with having their complaints ignored, a small group sued five years ago, risking the possibility that if they lost, they'd be on the hook for the park owner's substantial legal fees.
Last week, a San Jose civil jury awarded the residents $111 million, the largest such award for a failure-to-maintain lawsuit against a mobile home park in California. Previous awards in other California cases topped out around $12 million. If the verdict stands, 61 tenants out of 1,500 people who live in the park could reap an average of $100,000 each in compensatory damages, plus punitive damages of $1.57 million apiece.
The money would be quite a windfall for the tenants, many of whom live on limited incomes and say they cannot sell their mobile homes because the park has such a bad reputation.
"We always knew it was a David and Goliath thing, going up against a multibillion-dollar corporation," said resident Joan Malone, 66, who helped spearhead the effort. "Now, people are coming up to me with their faces shining. We finally have justice."
The unprecedented verdict has sent shock waves through the industry, even as the park's owner vows to try to get it overturned. Equity Lifestyle Properties, a publicly traded company chaired by billionaire Sam Zell, is the largest mobile home park owner in the nation, with 140,333 home sites in 379 properties in 32 states and Canada. The award represents about 10 percent of its assets.
"We could not disagree more strongly with the jury's verdicts," said Equity Lifestyle CEO Marguerite Nader, referring to the damage awards, which were handed down in two separate phases of trial. "This property is a well-located, 100 percent-occupied, institutional quality asset that received the Manufactured Housing Institute's Community of the Year award in 2012."
California Hawaiian was once a pristine seniors-only park. But conditions began to go downhill in 1997, some longtime tenants said, after ELS took over. It had already been converted to a family park by then.
The tenants' suit described a litany of troubles: The once-scenic artificial lakes became slick with slime. Sewers backed up into people's homes. Brownouts and blackouts were common. Street lighting was inadequate, making it dangerous to go out at night. Homeless people camped out under the clubhouse stage and roamed the streets. Once, in 2012, Malone said, the large black iron gate at the front entrance even fell over -- and lay there for about two weeks.
One of the worst problems was that the water for the entire park of 420 households would frequently be turned off -- without notice -- for up to 20 hours at a time, they said.
The residents, who own their own trailers but pay space rents of at least $800 a month plus utilities, property taxes and mortgage payments, complained -- to a series of short-term managers -- but said it was to no avail.
Residents formed a homeowners association in 2007 and sued in 2009. Gela DePutter, 59, a semiretired former Hitachi analyst, remembers getting "threatening" letters from management after the suit was filed. About half the tenants who originally joined the suit bailed out, leaving a core group of determined people.
"I had to follow through with this," DePutter said. "I knew we were going to win but I'm floored at how much."
Gary Stutzman said when the owners did make repairs, the work was shoddy. After he complained for years about the lake water lapping right up against his house, one corner of the house crumpled and the driveway wound up being laced with cracks. A crew came and chopped up the driveway, he said in an interview, but instead of hauling the pieces away, they dumped them at the edge of the lake, leaving a still-unsightly mess. Lawyers for the tenants said the jury was aghast at the "deplorable conditions," finding after a nearly three-month-long trial that even though ELS had made some significant improvements after the lawsuit was filed, the company was negligent, in breach of contract and had created a public nuisance by failing to maintain the park and provide sufficient security. Some serious problems remain to be fixed, including the substandard electrical system.
The case highlights what the tenants' lawyers contend is a common problem statewide -- the failure by some owners to maintain their mobile home parks, which can be cash cows.
For instance, ELS was spending between $101,000 and $273,000 on upkeep annually at California Hawaiian and taking in more than $4.5 million, according to the San Diego lawyers who represented the residents, James C. Allen and David Semelsberger. The lawyers will reap 40 percent of the award.
Others said the case could set a dangerous precedent. "If verdicts like these are held up," said Phil Woog, an Orange County lawyer who defends park owners, "there won't be a mobile home park industry."
Allen said the jury was won over in part because of the testimony of the residents, including Heather and Dion Berry, a clean-cut young couple in their early 30s with three young children. Among other problems, they described how difficult it was for the family to safely shower, go to the bathroom or use the tap water because of the sewer backups. Now, they're excited about the possibility of netting more than $2 million, after attorneys' fees. They have their first move already planned.
Said Heather Berry, "To get out of here, into a safe home."