Update: Case of elderly Berkeley homeowner burdened by major code repair debt will continue in the fall

Leonard Powell hopes the court will find that Berkeley and a receiver mismanaged his home code problems.

man standing on steps of house
Leonard Powell in front of 1911 Harmon St. Photo: Friends of Adeline

Update, June 22 The court process to end receivership status of Leonard Powell’s home at 1911 Harmon St. is continued until fall, according to lawyers involved with the case. 

A May 20 hearing in Alameda County Superior County Court didn’t reach any resolution or result in a judge’s ruling on the case, nor did several earlier hearings held over the last couple of years.

“Case did not settle. Maintain trial date and/or all other future dates,” said a court document on the May hearing.

The court discussed an October hearing, but no dates are yet confirmed.

The court is trying to end receivership of Powell’s house, which is called “releasing the receiver.”  Powell’s house was put into court-ordered receivership in 2017, after he failed to fix numerous city health and safety code violations over a few years.

Powell, 80, has owned the house for almost 50 years.

Under the receiver, Gerald Keena, the two-story Victorian was repaired and renovated, including restoring it to its original legal status as a duplex, which the city required. The work included cosmetic upgrades such as marble countertops. 

Powell, who raised six kids in the house, had converted it to a single-family home, without getting required permits for the work. He’s been living in the house since 2020, with permission from the court and city to return, and is renting the second unit.

In a challenge to ending the receivership, Powell, through his pro bono legal team, is claiming Keena went beyond the necessary scope of work in fixing code violations, which ended up costing the homeowner about $700,000 for construction and receivership expenses, such as legal work. The receiver is also asking the court to approve an additional roughly $290,000 in fees.

Powell’s lawyers also claim the city violated the law in its handling of administering the code violations and directing the receiver.

The receiver is claiming he has done everything by the book on a complicated and costly property, as proven by the required court approvals for his spending decisions along the way. 

Receivership accounting must get periodic court approval during the process.

The judge overseeing the case for the past few years, Jeffery Brand, has already ruled that previous court accounting work and approvals stand, and won’t be revisited.  But he has also said the court can hear evidence on Powell’s claims of mismanagement of the case (by the receiver or the city) if it’s new and distinct from evidence presented in earlier rulings.

Brand also ruled that outstanding receiver fee claims will be addressed separately from previous matters.

Original post, April 21 After eight years of what few would dispute has been a tense homeowner limbo, the case of a South Berkeley house under receivership since 2017 is heading back to court with the aim of ending the legal system’s hold on the property.

In a series of Alameda County court hearings scheduled over the next two months, a judge is expected to decide several unresolved issues around the court-ordered receivership of 1911 Harmon St., the longtime home of Leonard Powell, 80. 

The new hearings will review the scope and costs of the repair work and whether the project was mismanaged by the receiver or the city, according to a tentative ruling issued Wednesday by Judge Jeffery Brand, who has presided over the case since 2018.

Powell’s attorneys allege mishandling of the receivership, which cost Powell roughly $700,000: $500,000 for renovations and $200,000 for receivership and legal fees.

Also at issue is an outstanding $290,000 bill from Gerard Keena, the court-appointed receiver of the house for administrative and legal fees.

 “This receivership has taken a considerable toll on my family and me,” Powell recently said through his lawyers. “ I am 80 years old. It is painful and exhausting that I continue to be put through this ordeal. …  I’m simply hoping for a just and expeditious end to this receivership so my family and I can move on with our lives.” 

Powell, a veteran and retired U.S. Postal worker, has owned the two-story Victorian for 48 years, raising his six kids there. Today, he lives in one of the home’s two newly redone units and is renting the other. 

The house went into court-ordered receivership in 2017, at the request of the city of Berkeley because the house had numerous health and safety code violations which Powell didn’t fix, even after receiving a $100,000 interest-free loan. The city said it worked with Powell on repairing the problems for years, but deadlines were missed, and projects not completed.

Receivership is a mechanism cities and counties can use to deal with building code-challenged properties that potentially risk the safety of residents or the community. It’s often considered drastic or a last choice for “problem” properties with absentee or irresponsible landlords, or owners who for whatever reasons simply can’t find a way to repair their homes. 

A court-appointed property receiver essentially is given legal authority over all matters relative to the property to bring it into building code compliance. Receivers are required to update the court with progress reports and accounting.

Receivership is legally ended by the courts when code issues are resolved – called releasing the receiver.  This typically occurs when the property owner, the jurisdiction (such as a city) and the receiver reach an agreement the court approves. 

Keena ordered extensive repairs to 1911 Harmon St. including a new foundation, granite countertops and stainless steel appliances for the kitchen and new plumbing and electrical work. The house also had to be reconverted into a duplex. Powell had converted the house at one point into a single-family home but did so without a permit.

Disagreements among Powell, the receiver and the city on the legalities and fairness of the case have persisted, taking time to sort through, with much still up in the air

How did a senior end up in hundreds of thousands of dollars of debt?

The roughly $700,000 price tag for the process, nearly a third of which are receivership administrative type charges, prompted many following the situation to wonder how a senior citizen ended up in hundreds of thousands of dollars of debt trying to hold on to his beloved if deteriorated, old house.

Powell largely blames the city for its handling of his situation. 

These are some of the issues, Judge Brand will attempt to resolve in the upcoming hearings.

In 2019, Brand partially discharged the receiver when Powell moved back into his restored home. But Powell refused to sign off on fully releasing Keena. In court documents, he said he had questions about the honesty and accuracy of the receiver’s actions.

Keena, meanwhile, said he wouldn’t charge for a chunk of his personal time on the case if the receiver was released then – which didn’t happen. The outstanding $290,000 includes this, as well as receivership fees over the past three years, mainly for legal costs. 

New team of lawyers questions aspects of Powell’s treatment

In 2020, a new team of lawyers took over representation of Powell, from the San Francisco law firm of Gibson Dunn. This work is pro bono, said Andre Guiulfo, the lead lawyer on the team.

The team has filed briefs questioning many aspects of Powell’s treatment including on the legality of the city’s code enforcement process, the receiver’s accounting of expenses, the scope of work completed, and the city’s liability in helping pay for receivership.

Brand’s tentative ruling covered most of these issues. The ruling was emailed to all lawyers, essentially saying, Here is my thinking and rationale; now you get the chance to convince the court otherwise if you disagree.

Though not final, Brand weighed in on a few key points, including saying previous court orders stand and can’t be reconsidered. This includes court approvals of work and costs that were required as the project progressed. 

But he also said the extent of construction and receiver compensation can be reviewed relative to current regulatory standards and rules, in consideration of mismanagement.

The judge also tentatively agreed with a motion filed by Berkeley that it can’t be held liable for paying receiver costs. But he also said if the city or receiver ordered or asked for work beyond what was legally required, they can be accountable for remedy. 

Brand also suggested that the outstanding $290,000 in receiver bills be addressed after the review of the work project. 

The first hearing on the case is Friday. Two additional hearings are scheduled for May 13 and May 27. 

Keena and his lawyer, Nathaniel Marston, would not comment on the case.

The city of Berkeley’s attorney’s office also said they don’t comment on cases in litigation.

Powell’s attorney said he believes the receivership system failed his client at many points, and his home could have become code compliant for much less money. 

1911 Harmon Street House after it was extensively rebuilt. Credit: Kate Rauch

The Leonard Powell case provoked strong emotions in Berkeley and beyond, as a longtime elderly African American homeowner faced having to sell his house or take on hundreds of thousands in debt to cover a complete renovation.

The receiver maintains he was following a scope of work presented by the city; a document that the city claims it didn’t issue, but nonetheless is included with city documents with “approved” initialed by a city planner.

In Berkeleyside’s earlier reporting. Powell didn’t argue that the house hadn’t fallen into disrepair. He said he was confused by the city’s code repair process and had taken steps to get the required work done.

In addition to taking on a Veterans Affairs loan for and receiving donations and help from family, Powell was granted a $100,000 zero-interest loan from the city’s Senior and Disabled Home Renovation Program, which doesn’t need to be repaid until he dies, or the house is sold, whichever is first.

But the Berkeley City Council asked city staff to look further into what happened with Powell’s case, including how this kind of situation can be prevented in the future. 

Cities must legally enforce building codes, a process that is usually complaint-driven. Someone complains about a building, and the city inspects. But receivership appears rare for the city. 

Berkeleyside sent a public records request to the city on Feb. 2 asking for all documents on the city’s use of receivership going back 50 years, and has received none to date. 

In 2020, the council unanimously approved a set of recommendations for staff, including that the city manager hold an informational session for the council on how residential code enforcement issues are handled, the timeframe and mechanisms of compliance, assistance programs for homeowners with code issues, and specific lessons learned from the Powell case.  The council also asked for information on the number of code complaints and violations, and how many went to receivership. It also asked the city manager to assist in planning a public meeting on the subject.

“This referral happened in February 2020, a month before the shutdown,” Matthai Chakko, the city’s spokesperson, said this week. “This project was put on hold to prioritize pandemic response.”

Kate Rauch, a Bay Area native, has been contributing to Berkeleyside for almost 10 years, and in journalism for many more, with a few other interesting gigs along the way.