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Sunday, July 14, 2024 | Back issues
Courthouse News Service Courthouse News Service

Homeowners Call California Program a Magnet for Fraud

An elderly California woman suffering from stroke, dementia and cancer claims in court that she was charged $129,000 — “more than double the normal price” — for work on her home she did not need, and to replace items she had recently upgraded. Five other poor, elderly homeowners also sued Oakland-based Renew Financial Holdings, on similar charges, in April.

(CN) — An elderly California woman suffering from stroke, dementia and cancer claims in court that she was charged $129,000 — “more than double the normal price” — for work on her home she did not need, and to replace items she had recently upgraded. Five other poor, elderly homeowners also sued Oakland-based Renew Financial Holdings, on similar charges, in April.

These lawsuits and dozens of others in the past two years involve California’s Property Assessed Clean Energy program, or PACE, which the Legislature authorized local governments to implement in 2008.

The program, according to Los Angeles County’s PACE webpage, “enables homeowners to install energy efficiency, renewable energy and water-saving improvements to their properties without putting any money down!”

Los Angeles County adopted the PACE program in 2012 and “delegated administrative responsibility to Renew Financial and Renovate America in 2015,” according to two April 12 lawsuits in L.A. Superior Court.

As the county’s private lender partners, Renew Financial and Renovate America oversee — or fail to oversee — the contractors who do the work, and tack on administrative fees, generally about 15 to 20 percent.

On April 12, five homeowners sued Renew Financial and L.A. County, and four sued Renovate America and the county. Lead counsels in both suits were Irell & Manella and Public Counsel, both of Los Angeles. Both lawsuits claim that Renew Financial, Renovate America and L.A. County “have spread a plague on thousands of low-income, elderly, and non-native English-speaking homeowners”.

Dozens of other lawsuits, whose defendants include the counties of Los Angeles, San Diego, Riverside, Kern, and San Bernardino, make similar claims against Renew Financial and Renovate America, and the contractors that do the work, and allegedly overcharge for it.

The 40 PACE-related lawsuits filed in California in the past two years assert charges that include fraud, negligence, elder financial abuse, breach of contract, and violations of state laws, including unfair competition and breach of contracts.

Renew Financial has been sued 14 times this year, 13 of them in California courts, according to the Courthouse News database. Charges in the similar lawsuits include financial elder abuse, forgery, bad faith, fraud, misrepresentation, negligence, unfair business practices and infliction of emotional distress.

A July 30 lawsuit in San Diego Superior Court seeks class action certification. The attorney in that lawsuit, James Swiderski, could not be reached immediately for comment Wednesday.

Renew Financial spokesman Colin Bishopp said in an email Tuesday that the company “cannot comment on pending litigation.” Renew’s four top-ranking executives, including its CEO, founder, general counsel and executive vice president for governmental affairs, did not respond to requests for comment.

Renovate America has been sued 27 times on similar charges since 2016, according to the Courthouse News database. Renovate America, based in San Diego, said it could not comment Wednesday.

As for the county defendants, Kern County Counsel Mark Nations said his county was sued for alleged violations of the Public Records Act. “That lawsuit was resolved and dismissed,” Nations said in an email to Courthouse News. “I am unaware of any other lawsuit regarding PACE.”

The Los Angeles county counsel said he was unaware of any PACE-related lawsuits. County counsels for San Diego, Riverside and San Bernardino counties did not respond to emailed requests for comment.

The most recent lawsuit, 71-year-old Valerie Morehouse’s Oct. 19 claim in Contra Costa County Superior Court, includes Green Bay Remodeling, of Concord, as co-defendant with Renew Financial.

Morehouse’s attorney Thomas McCormick, of Orinda, told Courthouse News: “My personal opinion is that the contractors are taking advantage, since they know they do not need to qualify homeowners for the loans — contractors sell the program basically as free improvements to unknowable homeowners. Then the private finance companies, like Renew Financial, are letting the contractors get away with taking advantage of homeowners because the private finance companies get a 15 to 20 percent ‘administration fee.’ This encourages the private finance companies to not monitor the contractors.”

An office worker at Green Bay Remodeling on Tuesday referred a request for comment to the company’s attorney, Efrat Levy, who said she was busy, and did not return the call Tuesday or Wednesday.

According to Morehouse’s 30-page lawsuit: “Green Bay, as a certified ‘PACE Contractor,’ was the source from which Ms. Morehouse received, or did not receive, information about the PACE program. … Ms. Morehouse did not receive a copy of the PACE financing contract until after the improvement work had already started and then she became obligated to pay for that work.”

The complaint continues: “Defendant Green Bay acted as an unscrupulous contractor by selling Ms. Morehouse overpriced goods and services, items that she did not need, items that were not necessary for her home, and items which she had recently updated, all financed by the PACE program. All the while, Ms. Morehouse suffered from cancer treatments, a stroke, and dementia.”

Green Bay charged Morehouse $111,065 “for work that would have normally cost less than $50,000,” according to the lawsuit. Renew Financial tacked on 16 percent in fees, and billed her $129,268, according to the lawsuit, which itemizes the charges, which include $29,004 for 11 windows and two sliding glass doors.

Another itemized charge — for three windows, a “slider” and a front door — came to $16,740 for Green Bay, and a total of $19,745 after Renew Financial tacked on an 18 percent fee.

“Green Bay was able to charge Ms. Morehouse more than double the normal price because Ms. Morehouse is an elderly person with limited knowledge and was suffering from dementia,” attorney McCormick wrote.

Renew Financial recorded five PACE liens on her home, at an average interest rate of 9.4 percent, making her liable for 20 years of payments at $15,608 a year, for a total of $312,158. Her home is valued at about $375,000, according to the lawsuit. McCormick calls the interest rate “usurious” in the complaint.

He seeks an injunction, discharge of the liens, and damages for financial elder abuse, breach of contract, unfair competition, fraud, negligent misrepresentation and negligence.

“This is why regulation and oversight is necessary — to keep unscrupulous people from taking advantage of others,” McCormick said in an interview. “Hopefully, Renew Financial will do the right thing and correct this situation.”

(After this article was published, San Bernardino County spokesman David Wert said in an email that his county’s PACE program is administered by the San Bernardino County Transportation Authority, which is a regional government agency separate from county government.)

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