The king of suits
Perpetual litigation. Furious tenants. Evidence of a major scam. Welcome to the strange and disturbing world of real estate mogul Richard E. Thomas.
By A.C. Thompson and George Schulz
IT SHOULD'VE BEEN a minor chore. Lisa Pierovich and a friend were lugging a heavy cedar chest of drawers less than 100 feet, from a ground-floor storage space in Pierovich's nondescript Oakland apartment building to her cramped second-story flat.
On that day in October 2001, however, things did not go as planned. When Pierovich and her pal were halfway up the rickety wooden stairs to the back door of her apartment, a wooden column supporting the stairway crumpled. Seconds later a railing collapsed.
Pierovich's friend tumbled about eight feet to the ground, leaving Pierovich clinging to the beautiful, art deco-ish 1956 Lane chest, trying to keep it too from going over the edge. She wasn't successful. After a few moments she lost her grip, and the vintage chest plummeted, the fall ripping off its legs and handles and leaving deep gouges in the finish. Pierovich's back was screaming doctors later diagnosed her with a herniated disk that may have been caused or exacerbated by the incident. Luckily, her friend got away with only a few bruises.
Photos of the collapsed stairway clearly show the structure was riddled with dry rot.
Faced with such a scenario, many perhaps most landlords would apologize profusely and hope the tenant didn't call an attorney. But Pierovich's apartment was owned by a San Leandro-based real estate mogul named Richard E. Thomas. And Thomas, who controls an empire of rental property stretching from Castro Valley to Lake Tahoe, is definitely not your average landlord.
According to Pierovich, an administrative assistant at UC Press in Berkeley, the stair fiasco enraged Thomas, prompting him to call her at work to spew. "He was yelling at me on the phone, and I had to hold it away from my ear," she recalled. "He was blaming me." The Bay Guardian obtained a letter Thomas sent Pierovich in which he suggests the stairway crumpled because of the weight of the furniture she was hauling.
At first she'd been grateful just to have a roof over her head, moving into the "tiny" flat on Hamilton Place after a lengthy apartment search. "I'd been looking for four months. It took me a long time to find something I could afford on a UC Berkeley salary," Pierovich said, her mane of long dark hair punctuated by streaks of crimson. "It was very small: one bedroom, small living room, small kitchen." Despite the gnarly dog in the downstairs flat and the neighbors who left garbage all over the place, she liked her apartment, located in an aging green-gray stucco building not far from downtown, and she even had a buddy living on the same street.
But dealing with Thomas was a nerve-fraying experience the stairway incident had been preceded by an acrimonious dispute over the storage space Pierovich was renting and by mid-2002, after two and a half years, she was ready to bail.
Before moving out she took extraordinary measures to leave the place tidy, paying Molly Maid of the East Bay, a cleaning service, $92 to scrub the apartment. In photos taken shortly after the cleaners finished, the apartment looks pristine.
Despite the effort, Thomas refused to return nearly $1,000 of Pierovich's security deposit. "Although I hired professional cleaners, and left apartment #3 infinitely cleaner than it was when I moved in, Richard Thomas stated that there was dust on top of the refrigerator," she wrote in a letter to the Alameda County District Attorney's consumer protection unit. "Prior to my tenancy, apartment #3 was not repainted, and the faded kitchen linoleum, which curled at the edges, was never replaced. Richard Thomas said that these conditions were my fault. I reminded him that the poor condition of the paint and linoleum existed prior to my moving in."
The D.A. opted to do nothing.
Her tale is as good an introduction as any to the world of Richard E. Thomas. He's reviled by tenant advocates who say he routinely screws renters out of money. He's the bane of city housing inspectors in Oakland and San Francisco who've repeatedly cited him for code violations.
But it's Thomas's mania for litigation that truly marks him as a landlord of distinction. And we're not just talking about the standard landlord-tenant stuff, i.e., occasionally evicting a tenant who won't pay rent and won't leave. He sues his neighbors. He sues his employees. He has a penchant for suing his own attorneys 14 of 'em at last count. The vast majority of the cases, however, involve Thomas, who several years ago put his own worth at $23 million, going after the working stiffs who inhabit his myriad apartments and houses.
Pulling together a complete list of lawsuits Thomas has been embroiled in either as a plaintiff or a defendant is a Sisyphean task, not unlike trying to count the number of raindrops falling to earth during a midwinter downpour. There are literally hundreds; one legal ruling concluded that he's testified in court about 300 times since 1990.
The judiciary has been known to frown on his litigation strategies. One judge declared him a "vexatious litigant" in 1994, while another publicly described him as "malicious and despicable."
• • •
We figured we should ask Thomas if he really is malicious and despicable, so on a recent evening two Bay Guardian reporters dropped by his Oakland headquarters in hopes of chatting with the entrepreneur. (We'd already phoned him, e-mailed him, contacted his lawyer, and spoken to his underlings all to no avail.)
Thomas refused to even open the front door, choosing instead to silently glower at us through a window. For a 60-year-old, he looked fairly lean and fit, a neatly trimmed beard sprouting from his wide, lined face. Thomas, who is white, was clad in casual office garb, a turquoise-and-white checked shirt and khakis.
You could call him the anti-Trump. Unlike the comb-over king, reality TV star, and über-mogul who hawks lavish condos to the overcompensated and revels in the crass display of wealth, Thomas is an understated, low-key character, giving few outward signs that he's worth tens of millions of dollars.
Though Thomas could easily afford to luxuriate in an opulent palace in Blackhawk or Pacific Heights, he chooses to dwell in unglamorous San Leandro, in a generic middle-class neighborhood of moderately sized tract homes nestled in the hills near 164th Avenue.
His six-bedroom home, which he shares with his wife and two school-age children, is immaculate, boasting a gorgeous hardwood door and entryway, backyard swimming pool, two-car garage, and tasteful paint job. It's easily the most posh house on the block. But the place doesn't scream "multimillionaire" by any stretch. Interestingly, it's equipped with a closed-circuit security camera that peers down from the front wall.
Some people who've interacted with Thomas describe him as "hostile," "nervous," "strange," and a "terror." One ex-tenant said dealing with him was "surreal." Yet others who know him well say he's not outwardly creepy or weird.
Pinning down concrete biographic information about the man is difficult, though according to court documents Thomas earned a master's of business administration in 1967 and has been in the landlord game for more than 25 years. He's no figurehead boss. He continues to actively helm and it would seem, micromanage his company, which has operated under several different monikers and is currently called Environment and Land Management. On the weekends he serves as a deacon at Castro Valley's First Presbyterian Church.
It's easier to check out his real estate empire, which we did, zigzagging around the bay on a self-guided tour of a dozen Thomas properties. Our journey took us from a small one-story duplex with busted shutters in deep East Oakland to a soot-speckled six-unit apartment house on Divisadero Street in San Francisco. It was, admittedly, a limited expedition, covering only a corner of his sprawling kingdom, which includes at least 44 structures everything from single-family homes to apartment hives to subdivided cottages containing hundreds of rental units. The core of Thomasland is the Bay Area, where he controls, by our tally of property records, 24 properties in Alameda County and 11 in San Francisco.
They're places like 3300 Kempton Ave., a looming five-story apartment block. The chunky, angular building, painted eye-burning white with teal trim, stands on a meditative, tree-lined Oakland street in a hilly district tucked between Broadway and the 580 freeway. Duct tape holds together the front-door buzzer. A sign emblazoned with yellow smiley faces advertises "1 & 2 bedrooms" with the message "WE'D LOVE FOR YOU TO LIVE HERE."
This is where Dianne Eastmead, a billing coordinator for UC San Francisco, used to live. She says the year she spent on Kempton was pretty much a continuous nightmare, with things starting badly "when we moved in, it wasn't even cleaned, and the electricity was out in half the apartment" and quickly getting worse.
You want anecdotes? Eastmead can tell you about rain dripping through the hole-ridden roof, or how Thomas often made unannounced appearances at her apartment without the legally required 24-hour notice, telling her, "I can go in your apartment whenever I want" when she protested. Her allegations are echoed by several other former renters in civil suits we've reviewed.
After a stroke left Eastmead's husband, Keith Eastmead, half paralyzed, the couple repeatedly asked if they could move to a smaller, cheaper flat across the hall. Thomas, Eastmead says, just ignored their requests.
When the pair moved out in January 2002, they found themselves in a similar situation as Pierovich: Thomas refused to return their $3,600 deposit.
The move spurred Eastmead to sue in small-claims court, arguing that they'd left the apartment in fine condition and were entitled to their deposit. Thomas was ready for the challenge. He responded with an $8,101.50 countersuit, alleging Eastmead and her frail husband had trashed the place like a pair of rowdy college students.
The couple couldn't find a lawyer willing to trade blows with Thomas and his attorneys. "No one would take the case, because they knew how Thomas works. If we'd had representation, we probably would have won," Eastmead told us.
Outgunned, the Eastmeads lost in court and were ordered to pay $1,800, something they refuse, on principle, to do. They insist they did no damage to the unit. "We have tried to forget what happened but really can't" said Eastmead, who now lives in Alameda. "We had never lost a security deposit before."
San Francisco lawyer Barry Willdorf, one of three attorneys orchestrating a class action suit against Thomas, is familiar with the guy's M.O. Willdorf's suit accuses Thomas of "knowingly, intentionally, fraudulently, and maliciously" engaging "in a scheme to wrongfully and unlawfully retain all or part of the security deposits" entrusted to him by renters.
"He's not returning deposits, basically," said Willdorf, a veteran lawyer who's tread on both sides of the landlord-tenant chasm, during an interview in his well-appointed office overlooking SBC Park. "He does a lot of other things, but this is what he does across the board."
According to Willdorf, when renters like the Eastmeads go to court to try to collect their money, Thomas "turns around and sues for $5,000 or more.... He's got a lawyer on retainer, so he's always got a lawyer available. But your typical tenant who's trying to recover a $1,200 or $1,500 deposit can't get a lawyer for that kind of money. So they end up in court with a lawyer against them, and they get their butts handed to them, quite frankly."
By Willdorf's calculations the landlord could be walking away with "hundreds of thousands of dollars" in deposits annually.
"You can make a pretty good living by not returning deposits and threatening people with lawsuits. He's abusing the system and making money by doing it.
"One of my clients is really impoverished. The others are [doing all right]. A significant number of people have a major hardship when they don't get their deposit back. They can't just go on with life as it was. That's why they bust their butts to clean the places up."
Tenant advocates are also onto the scheme. The Campaign for Renters' Rights, an Oakland-based activist group, says Thomas has improperly pocketed at least $42,000 in deposits during the past few years.
"We started to look at court files and found a huge number of people who'd had similar experiences," said Rob Rooke, an organizer for the CRR.
Our research tends to support Rooke's thesis: sorting through the mountains of paper on file at the Alameda County and San Francisco courthouses, we easily identified more than 20 instances in which people claimed to have been scammed out of their deposits by Thomas.
"Everybody was wondering how this guy could do this for so long and get away with it," Rooke said. "Our goal is to stop him or at least try to slow him down."
If Rooke and company are right, we're looking at a big-money rip-off scheme. At this juncture, however, local law enforcement officials seem unconcerned by the allegations charges that have been brought to the attention of the Alameda County District Attorney's Office and the Oakland City Attorney's Office. Despite the fact that California has arguably the toughest antifraud law in the country, so far neither agency has felt compelled to pursue the case, and neither have their counterparts in San Francisco.
We asked Richard Illgen, a deputy Oakland city attorney, why his agency appeared to be slacking. He shifted responsibility to D.A. Tom Orloff. "We don't really deal with those issues," Illgen responded, adding that the D.A. "has a whole unit that deals with those kind of issues."
Orloff's staff wouldn't comment on whether the D.A. is investigating.
While Illgen won't look into the alleged security deposit scam, he has spent a lot of time facing Thomas in court. In 2002, Illgen sued Thomas, accusing the landlord of defying the city's rental ordinance by not informing tenants of their rights. The case was settled when Thomas agreed to be monitored by city lawyers for three years and to pay $7,200 in attorney's fees and costs.
The landlord is having trouble complying with the terms of the settlement, according to Julia Ten Eyck, another deputy handling the case. "At this point he's current with all his fees, but he's still not providing the documentation that's required," she said. "We are looking at ways to beef up enforcement."
• • •
From the outside, most of the Thomas properties we visited appeared fairly neat and well kept up sure, there was some peeling paint here and a few busted windows there, but in general the places didn't look egregiously slummy. Of course, appearances can be deceiving.
Just ask Oakland's housing inspectors, who are charged with keeping rental units safe, habitable, and up to code. They've received a pile of complaints from renters dismayed by Dickensian conditions in Thomasland. Residents of 3300 Kempton Ave. are typical: people throughout the building have been aggravated by a "flooded kitchen and dining room," "mildew in kitchen and bedroom," a broken balcony, walls soggy with water from a roof leak, and electrical shortages, according to city records on file with the Building Services division of Oakland's Community Economic Development Agency. One apartment, records indicate, was filled with waste from a busted garbage disposal in a neighboring unit.
Problems at other locations have included roach infestation, mice, leaky ceilings, a lack of fire extinguishers, inoperative smoke detectors, stairs that were "cracked" and "about to fall down," and "raw sewage coming through pipes into bathtub," according to city documents.
Tenants often gripe that Thomas won't fix his properties. The words "owner refuses to make repairs" crop up repeatedly in the texts of the complaints.
Housing cops share the same lament. In fact, since 1999, Oakland has smacked the landlord with nearly $8,000 in penalties for failing to keep his properties up to code.
Across the puddle, the story is no different. Over the past five years, 25 renters have contacted the San Francisco Department of Building Inspection to complain about Thomas properties, and inspectors have meted out $4,649 in fines. "If you've been around here a little while, you've dealt with him," S.F. housing inspector Ron Dicks told us. "He will not follow the rules."
We spoke to one San Franciscan who moved into a $1,500-a-month one-bedroom last July. This renter allegedly badgered Thomas for four months to fumigate flea-ridden carpets, install smoke detectors, and repair a broken stove and windows, before calling in the city which, public records indicate, promptly cited Thomas for a slew of violations. While looking the place over, inspectors also noticed the stairs were being devoured by dry rot and hit Thomas for that as well.
The tenant, who shares the flat with a friend, plans to bolt as soon as the lease is up. "There's no way I'm living there again, ever," the renter said. "We're not giving our money to that jerk."
• • •
Howard Williams lived at 1515 Sixth Ave. in Oakland, for 24 years, moving into apartment 17 when Ronald Reagan was governor. It's a Thomas property.
The architects who designed the 24-unit apartment building obviously favored function over form it's a boxy, ultrageneric, thoroughly no-frills structure, all hard angles and cheap building materials. Slathered in beige and brown paint, the building, situated a few blocks east of Lake Merritt, dominates the better part of a 19,000-square-foot lot. The architectural style could be described as "California institutional gothic."
Williams, 73, a retired civil servant who grew up a few miles north in Berkeley and attended Berkeley High and Cal, is semifamous among East Bay lawyers for one unfortunate reason: he's been locked in litigation with Thomas for nearly a decade, with the landlord filing three suits against him, two of them nearly identical.
The story dates back to 1995, when Williams was working as building manager of the complex and got into a dispute with his boss, Thomas.
According to court documents, Williams felt he was entitled to workers' compensation for an on-the-job injury; Thomas disagreed. When the state workers' comp board ruled in Williams's favor, Thomas promptly fired him and served him with a 24-hour eviction notice. He followed that up by suing Williams for breach of contract, claiming Williams had flaked on his managerial duties.
When the first suit crumbled, Thomas proceeded to whack Williams with two more suits. All were unsuccessful. Thomas even took the unusual step of suing an attorney who was representing Williams.
All along Williams maintained that the allegations were completely bogus, that he was the one who'd been screwed. He'd lost his job and his house and has had trouble finding steady work since. "Thomas' conduct toward me was motivated by spite and malice," Williams stated in a sworn declaration. "He has shown complete disregard for my rights and my reputation and livelihood. His conduct in this matter went beyond the bounds of civilized businesslike behavior and is contemptible."
After years of being used as a courtroom punching bag, Williams is now pursuing his own lawsuit, accusing his former landlord and employer of harassment. Williams's lawyer, Richard Phelps, told us the suits "have been very hard on Mr. Williams" and described them as "frivolous" before adding, "I think a jury will be not be happy with the fact that he sued an older man who was not in good health."
Phelps isn't the only lawyer skeptical of Thomas's activities. You can definitely put Roseville attorney Robert F. Sinclair in that category. A specialist in real estate law, Sinclair is well acquainted with Thomas, as he spent nine years in his employ, litigating a complicated battle over a Placer County house Thomas was seeking to acquire.
In 1999, after nearly a decade of courtroom wrangling, Sinclair prevailed, pounding out a sweet deal that handed the property to Thomas at no cost. But the tale doesn't end here. According to court documents, "within minutes" of the deal being finalized, Thomas "refused to pay" Sinclair the $21,000 in attorney's fees he was owed.
In typically pugilistic fashion, Thomas then sued Sinclair for malpractice, accusing him of shoddy lawyering.
Sinclair, understandably, was irked. "At the time it struck me as incredibly stupid," the lawyer said in an interview, "because I was incredibly successful in the case I litigated for him." Since Sinclair lived two hours north of Thomas and had only worked on the Placer County case, he'd been unaware of Thomas's sue-'em-all tactics. Now he was about to get an education.
Sinclair had his brother, also a lawyer, tunnel into Thomas's past, camping out in the archives of Bay Area courthouses to sift through musty court files. The results of the informal investigation were fairly jaw-dropping. "He said, 'Bob, my god, this guy is all over the system,' " Sinclair recalled.
Thomas, it turned out, has made a habit of torching his own lawyers, slapping at least 14 of them with malpractice suits.
Sinclair also learned that Alameda County Judge Leo Dorado had dubbed Thomas a "vexatious litigant" back in 1994, in part due to his propensity for suing his own lawyers. (California courts define a vexatious litigant as someone who "repeatedly files unmeritorious" suits or engages in legal tactics "that are frivolous or solely intended to cause unnecessary delay.") The designation bars Thomas from filing lawsuits without a lawyer something he's done repeatedly in the past unless the presiding judge of the court approves in advance. Obviously, it hasn't slowed him down.
Equipped with a better understanding of the Tao of Thomas, Sinclair went on the offensive. Instead of quietly settling the case and getting on with his life the tack taken by some of the other lawyers sued by Thomas Sinclair shelled out $134,000 to ward off the legal attack, eventually getting the case dismissed and bringing a countersuit for fraud against his former client.
This time the courts did not smile on the landlord. The testimony of Douglas Watts, another former Thomas lawyer, was particularly devastating. Under oath Watts testified that the landlord openly spoke of suing lawyers as a money-making venture, saying it was "easy money" and a "piece of cake." From Watts's perspective, his ex-boss's propensity for filing suits went "way beyond the bounds of anything that was called for."
Sinclair, meanwhile, uncovered evidence that Thomas was dropping $150,000 annually on legal fees.
Thomas repeatedly failed to show up in court, absences he blamed on "bleeding hemorrhoids" and the flu. The judge called those explanations "suspect."
The 12 members of the jury shredded Thomas, ordering him to pay Sinclair some $900,000, including $690,000 in punitive damages, an award that was upheld in 2003 by a trio of state appellate court judges.
Those judges did not go easy. "This case shows manipulation of the judicial system by a wealthy and litigious man," they wrote. The hefty jury award, in the view of the judges, might even have been "too small given the nature of Thomas's misconduct, his repetitive use of the courts for base purposes against lawyers, and the great wealth which gives him the power to commit these acts."
Reflecting on the decision, Sinclair told us, "I think they hammered him pretty well. He was misusing the judicial system time after time just to make a few coins."
• • •
John Quintero is a hardcore Christian. He's not a Passion of the Christ-loving fundamentalist or anything, but he's a practicing Catholic, and he takes it seriously. A thirtysomething single dad with a reddish beard and a heap of brown hair, Quintero is also a former Thomas tenant.
He was evicted last year unjustly, he believes from a modest ranch-style house in Hayward after a protracted, multiyear legal conflict with the landlord. For a time, Quintero, who works graveyard shifts in a Hayward homeless shelter, was stuck sleeping in a van.
Last spring Quintero and other renters picketed outside Thomas's church, and Quintero penned a letter to the congregation's then-pastor, writing, "It appears to us, the community of renters, that Mr. Thomas has not got his priorities correct, and is placing mammon and the affairs of the world over the Word."
He didn't get a response from the pastor, though he did get one from Thomas.
The landlord marched into court seeking a restraining order against Quintero.
Research assistance by Claudia Eyzaguirre and Michael Louie.