By Donna Beth Weilenman
Staff Reporter

A group of Pittsburg residents who bought homes in Veranda at San Marco have filed a multimillion dollar suit against the seller and lenders affiliated with Discovery Homes, a Seeno family business.

The Seeno family owns acreage on the north side of Benicia, part of which had been proposed for development as a business park, a project unrelated to the Pittsburg subdivision.

About 200 conditions were placed on the Benicia project, which remained controversial until Jun 29, 2010, when Albert Seeno Jr. wrote then-City Manager Jim Erickson that he was withdrawing the park’s master plan and vested tentative map applications.

In April of this year, Louis Parsons, senior vice president of West Coast Home Builders, Concord, another Seeno-owned company, wrote Benicia City Council to suggest a residential development for the 530-acre site, though City Manager Brad Kilger told the Council the letter was only a preliminary inquiry. “There is no project,” he told the Council on May 21.

The plaintiffs in the lawsuit filed in Superior Court of Contra Costa County bought homes in the Veranda at San Marco from 2011 to 2012.

The Veranda at San Marco is a Pittsburg neighborhood built by Discovery Homes that offers homes ranging from three to six bedrooms and from 1,836 to 4,335 square feet, according to its website.

Prices begin at $544,643, the website said, and only two of the six floor plan styles remain available.

Two couples and six individuals, represented by attorneys Brian B. Miles and Joel M. Westbrook of Walnut Creek, are contending among other complaints that property taxes on their new homes were misrepresented.

Each of the purchasers is seeking in excess of $250,000 plus legal and court costs and punitive damages, Westbrook said.*

Seeno representatives did not respond to a written request for comment.

Westbrook said the plaintiffs, all neighbors, learned about the discrepancies in various ways.

Some noticed their mortgage payments were significantly higher than what they had been told they would pay, Westbrook said.

He said others discovered the discrepancies when their mortgages were purchased by other companies, and the new lenders told them their impound account, similar to a restricted escrow account that includes taxes, insurance and other payments in addition to the basic mortgage, had a negative balance.

They filed the suit Sept. 5, 2013, against Seecon Financial and Construction Company, Discovery Homes, Gateway Business Bank doing business as Mission Hills Mortgage Bankers, First PacTrust Bancorp, First Mortgage Corporation and 40 “John Doe” defendants.

The suit contends that Discovery Homes, Seecon Financial, Mission Hills and First PacTrust repeatedly falsely quoted property tax rates associated with the homes.

“Seeno and Lenders were well aware that quoting a flat percentage for property taxes was highly deceptive because every Veranda at San Marco home had over $3,000 worth of special assessments against it that were not based on any percentage of home value,” the suit states.

“Thus, Seeno and Lenders were aware that the ‘1.5 percent’ rate they were quoting was flat wrong, and the actual property tax against each home would be well over 2 percent,” the suit said.

Even though each home in the development is in a Mello-Roos community facilities district, the suit states, neither the developer nor lenders clearly explained the impact of the district assessment, “either orally or through any written disclosure.”

According to the California Land Title Association, a Mello-Roos, or Community Facilities, district is an area in which a special tax is imposed on property owners to finance specific public improvements and services, such as streets, water, sewage, drainage, electricity, infrastructure, schools, parks and police protection.

The assessments are used to make payments of principal and interest on bonds that were issued for those public improvements, and are paid in addition to a home buyer’s principal, interest, real property taxes and insurance, and are not subject to Proposition 13 tax limits.

Unlike some assessments that have time limits and can be paid off directly by a homeowner, a Mello-Roos assessment stays on a piece of property, Westbrook said.

The suit contends that homeowners were “deliberately discouraged by Seeno associates from reading the disclosures. When a Homeowner would request to take the disclosures out of the sales office to review them prior to signing, Seeno sales associates would aggressively discourage this, and tell Homeowners that not only was such review unnecessary, but the delay may threaten their ability to keep other prospective buyers from taking away the home.”

Homeowners also were provided inconsistent disclosures by Seeno sales associates “without any explanation,” the suit said. In some cases, homeowners didn’t receive written disclosures until just before the close of escrow, and those documents were not reviewed with the client, the suit said.

“Instead, its sales associates merely instructed Homeowners to ‘sign here’ and ‘sign there’ and assured the Homeowners not to worry as it was standard practice to sign documents without reviewing them.”

In a few cases, homeowners were provided disclosures for the wrong development, the suit contended, calling the disclosures “inadequate and deceptive.”

The suit claims the neighborhood was marketed in particular to first-time home buyers who would be unfamiliar with the purchasing process.

Among the plaintiffs listed are Redentor and Maria Gemenes, 60 Vallarta Court, who bought their home about Nov. 29, 2011, using Mission Hills as a lender; David Sisneros, 9 Vallarta Court, who bought his home April 19, 2011, using First Mortgage Corp. as the lender; and Paul Hyams, 52 Vallarta Court, who purchased his home April 29, 2011, using Mission Hills.

Also parties in the suit are Narty Palaganas, 56 Vallarta Court, who bought his home about April 29, 2011, using Mission Hills; Vuong Nguyen, 2490 El Fresco Drive, who bought his home Aug. 30, 2011, using Mission Hills; Martin Kostka, 2463 El Tambor Drive, who bought about Jan. 30, 2012, using Mission Hills; and Matt and Tiffany Allen, 2590 El Fresco Drive, who bought about July 21, 2011, using Mission Hills.

One plaintiff, Said Abedi, 1 Vallarta Court, bought his home May 23, 2011, but used Wells Fargo as his lender, the suit states.

Westbrook said Wells Fargo is not part of the suit.

The suit describes Seecon Financial (SFCC) as a “mass producer of homes” that creates subdivisions on vacant land, and Discovery Homes as an affiliate of SFCC. The suit frequently pairs the two under the label “Seeno.”

It states that Gateway Business Bank, which operates as Mission Hills Mortgage Bankers, is in a business relationship with SFCC, providing loans to those buying homes from that company. Mission Hills “is now a division of First PacTrust Bancorp,” the suit contends. First Mortgage Company (FMC) also has a business relationship with SFCC, lending to purchasers of SFCC homes.

Seeno sales representatives “aggressively encouraged the Homeowners to discuss financing with Fatima Sharif of Mission Hills,” whose sales office was in the same room with the SFCC salespeople.

If Mission Hills was unable to finance the loan, the suit said, homeowners were directed to Jeff Blackley, employed by FMC.

The suit contends that when the sellers and lenders provided written disclosures to clients, “they were disclosed in a fashion designed to deny Homeowners any reasonable ability to actually assess their financial impact. This is epitomized by Seeno’s wholesale violation of Government Code 53341.5.”

That section spells out the way such disclosures must be made. “Seeno completely failed to comply with this statute,” the suit claims.

The statute provides potential buyers with the opportunity to terminate a contract and get their deposit back; the suit states that the plaintiffs were told they would lose their deposit if they tried to back out of the sale.

The code prevents signing of a purchasing contract unless the buyer has signed a written Notice of Special Tax, but the suit contends that some received no such notice, and others belatedly got only a “flawed and inaccurate” notice that failed to identify special taxes that the buyers would have to pay.

“In sum, Seeno and Lenders robbed Homebuyers of the power to make an intelligent purchase decision,” the suit states.

In addition to legal and court fees and punitive damages, each homebuyer is seeking $1.25 million in damages as a result of several causes of action.

Those include intentional misrepresentation related to their property tax liability; concealment of pertinent information, particularly regarding the special assessments against the properties; and negligent misrepresentation for falsely representing the special assessments and estimated monthly payments.

Other causes include breach of contract for conveying homes that were burdened by improperly disclosed special assessments; violation of Government Code Section 53341.5 for failing to disclose the Mello-Roos assessments as required by law; and violation of Business and Professions Code Section 17200 for failing to comply with the Government Code and committing “fraudulent” acts to deceive or mislead the purchasers.

The plaintiffs also are seeking a court order that would permanently prevent the defendants from engaging “in their unfair and unlawful conduct as alleged herein,” as well as restitution to the plaintiffs of money that may have been acquired by practices that violate the Unfair Competition Law.

Westbrook said if his clients prevail, it shouldn’t affect their mortgages because most of their mortgages have been sold to other lenders. Those who may have loans with the defendants shouldn’t be affected either, he said, if they keep making their monthly payments.

Westbrook said his clients became stressed when their monthly payments went up several hundred dollars a month, the amount varying from person to person. “This is not something they anticipated. It wasn’t built into their budget.”

The homebuyers have coped in different ways, he said.

“Some have cut back,” he said. For others, the situation is more serious, but “thank goodness no one has lost a home.”

*CORRECTION: This article originally stated that “Each of the purchasers is seeking $1.25 million plus legal and court costs and punitive damages, Westbrook said.” It has been changed to reflect the correct figure, $250,000.