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By Brian Hews
The Montebello City Council will discuss “anticipated litigation” in closed session tonight related to Garfield Financial and its owner Michael Minasian according to the City Council agenda currently online.
The meeting was called under Government Code Section 54956.9(d)(2) which states, “a point has been reached where, in the opinion of the legislative body of the local agency on the advice of its legal counsel, based on existing facts and circumstances, there is a significant exposure to litigation against the local agency.”
Apparently something new has emerged in the case because that was not the view of the international law firm of Squire, Patton, and Boggs (Squire), which was hired in 2014 by the City to examine the issues, and who asserted the statute of limitations had run out on the case.
HMG-CN reported in May 2015 that the Montebello City Council, in a 2-2 vote with one abstention, voted to settle the “claim” filed by Michael Minasian and his company Garfield Financial Corporation (Garfield) against the City for over $3.5 million.
This despite the fact that Squire strongly asserted that Garfield’s case was “extremely weak, damn near anemic. ”
Reliable sources told HMG-CN that Mayor Hadjinian, a long-time friend of the Minasian family, led the charge for a yes vote on the issue.
Some people called the yes vote by Hadjinian to give Garfield over $3.5 million “a massive and unprecedented gift of public funds. ”
The questionable vote to settle was centered around a 2000 Owner Participation Agreement (OPA) entered into between Garfield and the RDA where Garfield agreed to develop 20 single-family detached homes, designated as affordable housing to low and moderate income buyers.
The project was called Natasha Lane (Project), located at 125 East Whittier Boulevard and was “completed” in 2005.
Why Closed Session? A 2005 Settlement Agreement Released the City of All Claims
On November 1, 2005, to avoid what both parties saw as “impending litigation,” Garfield and the RDA executed a Settlement Agreement (Agreement) signed by both parties and their attorneys that provided the City “a general release of all claims, known or unknown that Garfield might have. ”
In the Agreement, Garfield stipulated they owed the City $1.5 million.
Garfield also agreed to pay off the $1.5 million using funds from the sale of the last five lots/houses that remained.
The Agreement, as far as the City was concerned, and confirmed by their attorneys, stood on solid legal ground.
Further the City secured the agreement by filing Deeds of Trust on each house.
But that did not stop the Minasian family from trying to break the agreement and devise a long-term plan to get the $3.5 million, using their lifelong friend Jack Hadjinian.
Demand Letters From Minasian
In December 2006, and again in early January 2007, Garfield sent letters demanding that the City reimburse Garfield for more than $3 million in “public improvement costs” and “miscellaneous costs” incurred by Garfield on the Project.
According to Squire, the statute of limitations had run out, therefore the claim would not have been valid. Minasian had to file the letter within one year of the previously mentioned November 2005 Agreement.
In late January 2007, Garfield’s attorney sent another letter accusing the City of having entered into the 2005 Agreement “in bad faith.”
A very illogical argument since Garfield executed and signed the November 2005 Settlement Agreement.
The letter demanded that the City release over $3.1 million related to the new homes in the Project.
Garfield would have had to otherwise pay the RDA the $3.1 million.
Six Years Pass and More Letters
In August 2013, Garfield sent two letters addressed to Francesca Tucker-Shulyer, the Montebello City Administrator, restating the charges of the January 2007 letter.
Garfield increased their alleged damages to over $3.5 million.
Five months later, Garfield filed a claim, this one slammed by the attorneys at Squire as extremely weak, “if not damn anemic.”
The attorneys cited several reasons why Garfield’s case was extremely weak, which further called into serious question the vote by Hadjinian to award Minasian and Garfield over $3.5 million.
It also calls into question the closed session meeting occurring during tonight’s City Council meeting.
Extremely Weak Case
The reasons given by Squire that the case was weak included:
1. The statute of limitations would bar a lawsuit on a majority of the claim.
2. It was the Redevelopment Agency (RDA) that signed the agreement with Garfield not the city, and Garfield has never filed or submitted a claim against the RDA.
3. Lack of evidence to support Garfield’s claim.
4. Settlement Agreement between Garfield and the RDA.
The City has yet to exercise its right to sell the homes.
The closed session meeting is on the agenda and will be held tonight, HMG-CN will update the results of the meeting when available.
