After seven years, receivership is finally over for 83-year-old Berkeley homeowner 

A seven-year receivership of Leonard Powell’s Harmon Street house is over, but his attorneys plan to appeal the court’s approval of the process, which fixed code violations in an extensive remodel, leaving him around $575,000 in debt. 

After years of court hearings, inspections, loan applications, fundraising, more court hearings and scores of construction workers from top to bottom, Superior Court Judge Brad Seligman on Dec. 2 issued an order releasing the court-appointed receiver from overseeing Powell’s south Berkeley home. 

This means Powell, 83, not a court-appointed receiver, is in control of making upkeep decisions about his home of more than 50 years. 

At the same time, Seligman approved $138,000 in final receiver fees, which were charged to Powell as a lien on his property that isn’t due until six months after any appeal process. This is on top of roughly $185,000 in fees Powell has already paid, along with construction costs. 

Kristin Linsley, an attorney with the team from Gibson Dunn, the San Francisco firm representing Powell, said last week they plan to appeal.

This doesn’t affect the release of the receiver. But Powell’s lawyers hope that on appeal, new judges will draw different conclusions about the extent of work receiver Gerard Keena of the Bay Area Receivership Group undertook to bring Powell’s home into code. 

This would be Gibson Dunn’s second time arguing receiver scope-creep on Powell’s property.  Seligman ruled earlier this year that the receiver’s work, a nearly complete renovation of the loved but poorly maintained house, was allowed, having received the required regular court approvals.  

But in his rulings this year closing the case, Seligman nixed a chunk of the receiver’s fees, from around $500,000 to $320,000, finding inconsistencies in prior court filings. 

The case was so complex that it was divided into two phases, before and after Powell was allowed back in his home in 2020, with construction largely complete. At this point, the receiver was partially released by the court, but Powell didn’t want a full release yet as he was challenging many aspects of the process. As long as the receiver was on the job, he could keep charging fees.

When reached by phone, Powell said any comments on his case would have to come from Gibson Dunn. 

As it stands, receivership has cost Powell around $530,000 in construction costs and $320,000 in receiver fees, which include legal representation, staff time, assorted administrative costs and relocation during construction.

Before receivership, Powell owned his house free and clear. 

Seligman took the case this year, making him the third judge since it started in 2017, mainly due to retirements. He has consistently said he would review prior court records to ensure the receiver had the judge’s approval for his work but not revisit or retry previous court decisions. 

Different takes on the final ruling

One indication of how divisive the Powell case has been is how each side has different takes on Seligman’s final rulings.

Gibson Dunn takes credit for the court’s significant reduction of receiver fees and court decisions that don’t require Powell to pay the receiver’s final bill immediately.

The team points to Seligman’s decision that a lien to secure the outstanding receiver fees is subordinate or second to Powell’s existing roughly $530,000 mortgage, a Veterans Administration (VA) loan secured in receivership for construction costs. 

“Following the ruling in the second phase [Dec. 12 ruling], the Receiver sought to secure his outstanding fees through an immediately enforceable, super-priority lien against our client’s home — a potentially devastating result for our client that may have triggered foreclosure,” Gibson Dunn said in a statement on its website. 

“The court’s decision will allow our client and the Gibson Dunn team to pursue a full appeal from the trial court’s adverse rulings without the threat of the Receiver forcing foreclosure and the additional hurdles of posting a six-figure bond as a senior on a fixed income,” the law firm’s posting said, referring to the possibility that Powell would need to secure a bond to cover the outstanding fees, which wasn’t part of the judge’s ruling. 

However, according to Nathaniel Marston, Keena’s attorney, the judge’s ruling validates that the receiver did no wrong.

Marston said in an email the final ruling “confirmed” the receiver “completely satisfied his obligations as Receiver in this matter. . . The final order is wholly consistent with the multiple prior rulings by the Court in favor of the Receiver.

“In rejecting Mr. Powell’s claims, the Court characterized this extremely prolonged case as a “largely unsuccessful scorched earth attack mounted” by Mr. Powell,” Marston said, quoting Seligman’s order earlier this year upholding the scope of work. 

 “Ultimately, the record, when viewed as a whole, clearly demonstrates that the Court repeatedly authorized and approved the Receiver’s plan to remediate the Property through a series of orders designed to ensure that the Receiver was working within the Court’s parameters and with the Court’s authority.”

He added: “The Court further highlighted that, because of the Receiver’s work, Mr. Powell is “now in possession of a house that has benefitted from $534,586.71 in construction work.”

Linsley, of Gibson Dunn, wouldn’t share details of the legal team’s appeal plans. But they’ll likely follow a similar path as their arguments to Judge Seligman earlier this year that the major work on Powell’s house wasn’t necessary or legally required to fix the city’s code violations.

In court, Powell’s lawyers said the house could have been brought up to code for under $100,000 and that the homeowner never wanted the extensive remodel with marble countertops and new appliances. 

Keena said the scope of the job grew as workers entered the house and found more issues, such as a failing foundation, faulty wiring and extensive asbestos. 

Keena also reverted the house to its legal state as a duplex, pointing out that this allowed Powell to stay in the house, renting the second unit to help pay his mortgage. Powell had converted it into a single home without permits to accommodate his growing family. 

Ongoing since 2014

The saga started in 2014 when Powell, an Army veteran and U.S. Post Office retiree, received a notice from the city that the house had 33 health and safety code violations. The violations ranged from broken glass windows and rotted stair rails to exposed electrical wires and peeling paint.

It was never clear what prompted the city’s inspection. At the time, Berkeleyside heard it was either neighbor complaints or a police visit to the house on an unrelated matter.

Powell never argued that the house hadn’t fallen into disrepair. He said he was confused by the code repair process and had taken steps to complete the work. 

In 2017, the house still did not meet the code, and after much back-and-forth between Powell and the city, Berkeley asked for a court-appointed receiver to take over the property to remedy the problems.

Powell, who worked for a while part-time in retirement as a Berkeley school crossing guard, bought his house as a fixer-upper in 1975 with his wife, Mable, who passed away around 25 years ago. They raised six kids in the house.

In addition to the VA loan, Powell received donations and help from his family to cover his costs, including money from a GoFundMe campaign. He also received a $100,000 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. 

Facing a possible lawsuit for receivership mismanagement, the city settled with Powell, agreeing to give him $95,000, essentially loan forgiveness. As part of the agreement, the city said it will improve its communication with property owners facing receivership, including making referrals to free or low-cost legal advice. 

Powell, in turn, agreed in the settlement that Berkeley didn’t mismanage his code enforcement case or engage in any misconduct and said he’d drop all charges against the city. Previously, he blamed the city for treating him unfairly. 

When news of Powell’s predicament spread in 2015, it drew a strong response in Berkeley and across the country. Many people expressed sympathy for his plight — an overwhelmed and longtime Berkeley homeowner living in a historically Black neighborhood that has seen a sharp decline in the African-American population in recent decades. Friends of Adeline rallied behind their neighbor, and a GoFundMe campaign raised almost $89,000 to help Powell cover costs.