[sugit]

K St. landlord: Zeiden didn't prevent arson
Lawsuit is new snag for downtown
Sacramento Business Journal - June 1, 2007 by Michael Shaw

The K Street rift widened Tuesday with the filing of another lawsuit, this time by developer Mohammed "Moe" Mohanna, who contends a fellow landlord negligently let one of Mohanna's properties fall victim to arsonists.

Alleging losses of more than $1 million, Mohanna sued Zeiden Properties LLC, which plans to build a Z Gallerie furniture store and other retail shops with revamped storefronts on K Street in downtown Sacramento. In a historic deal brokered by the city, Mohanna, Zeiden and others had originally agreed to swap several parcels to ease development along two blocks.

At least that was the plan. The redevelopment of pedestrian-oriented K Street fizzled following the fire last fall, and the deal shows no sign of progress outside of court action.

The city in February filed suit against Mohanna and his partners who were expected to take ownership of properties on the south side of K Street between 8th and 9th streets in exchange for giving up their property to Zeiden. Zeiden was not sued.

Last week, a judge backed the city by rebuffing a legal challenge to the suit, meaning Mohanna and other defendants will now have to answer the city's complaint in court. The city's suit alleges Mohanna and his partners "materially breached" the contract after the city bought several properties for more than market value to make the deal happen.

Mohanna has said he was reluctant to swap properties after the city evicted paying tenants and after his building at 810 K St., formerly a surf shop, was badly burned by arsonists on Nov. 26, less than a month after the deal was struck. It was not a building included in the proposed swap.

In his lawsuit against Zeiden, Mohanna says that his building was torched by arsonists who gained access from 812 K St., the building immediately to the east, through a 3-foot hole in a brick basement wall. Zeiden Properties owned 812 K St.

"Zeiden had received notice prior to November, 26, 2006, that transients and other trespassers were accessing the 812 K Street property," according to the suit filed in Sacramento County Superior Court. "Zeiden failed to take measures to (ensure) that transients and other trespassers were barred from entering the 812 K Street property."

Both buildings have since been demolished because of safety concerns.

Representatives from Zeiden Properties, who have likely not yet seen the lawsuit, could not be reached for comment.

The suit says Mohanna has received notices from the Sacramento Air Quality Management District for potential violations at the site.

He provided police and fire reports with the lawsuit that reinforce his claim that there was a hole in the basement between the two properties. Mohanna said he was not aware of the hole.

He told investigators at the time that he owns more than 130 properties and bought 810 K St. for a price between $500,000 and $600,000 two years ago. He said he did not carry insurance on the building.

Sacramento assistant city manager John Dangberg said recently that the city is still pursuing efforts to make redevelopment happen on K Street.