In its fourth-quarter conference call to investors, Denver-based apartment investment and management company Aimco revealed that it no longer owns the La Jolla Cove Hotel & Suites or the Red Rest and Red Roost cottages, selling its interests last month “in settlement of legal actions filed in 2014 by a group of disappointed buyers who had hoped to acquire the property.”
Pending court approval, this apparently settles the contractual-interference lawsuit filed on Oct. 14, 2014 by La Jolla Cove Shops LLC against Aimco and slated for trial Feb. 23 in Superior Court, Central Division. (A trial readiness conference is set for 8:55 a.m. Friday, Feb. 9, at which both parties are expected to file paperwork stating they’ve settled their differences.)
More importantly to La Jollans, however, this potentially clears the way for restoring the dilapidated Red Rest and Red Roost cottages, since the Superior Court had ordered an injunction against any development on the property until the matter was settled.
As of 2014, La Jolla Cove Shops LLC was owned by Brian Veit, Peter Boermeester, Terry Arnett, Melody and David Abeles, Rafael and Karla Galicot, Gregario Galicot and Leonardo Simpser. (One source close the sale said that the LLC is not officially the new owner until the court recognizes it as such.)
The Red Rest and Red Roost — located at 1187 and 1179 Coast Boulevard — were built in 1894 for George J. Leovy and Dr. Joseph E. Fishburn, respectively. Also known as the Neptune and Cove Tea Room cottages, they are believed to be La Jolla’s oldest still-standing structures. But most current residents have only known them as eyesores, a visual accompaniment to the fecal stink wafting from the bevy of sea lions perched along the shoreline cliffs nearby.
In 1967, the cottages were purchased by the hotel next door (then known as La Jolla Cove Motel and Hotel Apartments and today as La Jolla Cove Hotel & Suites). New owner Jack Heimburge, a low-key boot shop magnate, intended to raze the bungalows and build an apartment complex. However, in March 1976, his demolition plans were thwarted when the cottages were designated historic landmarks on the National Register of Historic Places — a designation later also made on the State of California Register.
According to a source close to the case, who spoke to the Light last November on condition of anonymity, family members blamed a lack of funds to properly deal with the cottages, which were fenced off and tarped. Most community members, however, saw a clear case of strategic neglect. Denied permission to develop as he wished, Heimburge performed zero maintenance on them, which strongly suggested the hope that they would achieve a state of disrepair revolting enough for the City to demand their demolition. To the City’s credit, however, that never occurred — despite a series of mysterious arson fires and cinder blocks thrown through the cottages’ roofs over the years.
After Heimburge died in 1998, according to the Light’s source, his real-estate holdings were divided 50/50 between family member Krista Baroudi and Heimburge’s children. But disagreements between the parties, the source said, led Heimburge’s children to sell their 50 percent of the hotel and cottages in 2014 to Aimco. Baroudi then exercised a right of first refusal to buy the Heimburges’ interests, the source said, and entered into a $60 million contract to sell the whole enchilada to La Jolla Cove Shops LLC.
The Superior Court lawsuit alleged that Aimco previously sued to prevent the Heimburges from selling to Baroudi, and that — after a court rejected the suit — Aimco then sent a letter to the escrow company threatening to unwind the sale. This ultimately prevented Baroudi from honoring her contract. Thus, Shops’ lawsuit claimed, Aimco “acted wrongfully … to interfere with the performance of the superior contractual rights of others.”
In October 2014, the Heimburges completed their sale to Aimco, followed in December of that year by Baroudi.
In its conference call, Aimco chief financial officer Paul Beldin said that the latest sale resulted in a “true economic loss” of $10 million to Aimco that was offset “by cash distributions received during our ownership and avoided legal costs for continued litigation.”