A West Hollywood-based church is suing the West Hollywood Community Housing Corporation and real estate developer David Aghaei for fraud and breach of contract over the sale of property in Norma Triangle. The lawsuit also seeks to rescind the sale and return the property to the church.
The First Baptist Church of Beverly Hills, located at 9025 Cynthia Street in West Hollywood’s Norma Triangle neighborhood, is suing over the sale of property it owned behind the church at 910-916 Wetherly Drive. That property is home to a church parking lot and two small houses.
The property in question is where the West Hollywood Community Housing Corporation (WHCHC) announced in Jan. 2020 that it would build the Wetherly Palms project, a seven-story, 100-unit “affordable” housing project for moderate- and low-income residents.
The WHCHC is a nonprofit which constructs affordable housing projects and also renovates older buildings into affordable housing, including more than a dozen buildings in West Hollywood.
According to the lawsuit filed in June 2020, but just recently obtained by WEHOville, David Aghaei approached the church in Oct. 2016 inquiring about purchase of the property for development as a luxury condominium building.
Aghaei is a 30something real estate attorney turned real estate developer, who has also served on the city’s Planning Commission.
The lawsuit says Aghaei offered $1.475 million in cash and the deeds to two luxury condominiums in the proposed building, saying the value of the condos would be over $2 million. He also offered to set aside 18-20 parking spaces in the building’s parking garage for use by church staff and visitors.
The contract that was ultimately signed by both parties, included as part of the lawsuit, does not use the word “luxury” to describe the condos. Instead, it describes it as “a residential housing project containing condominium units.”
Aghaei initially conducted these negotiations through his Oak Road Capital LLC, but later created 916 Wetherly LLC as a subsidiary. The church and 916 Wetherly entered into an option agreement for sale of the property in Feb. 2017.
The option agreement was necessary while Aghaei investigated whether he could get the needed entitlements for constructing the condo building.
The West Hollywood Planning Commission is the governmental body which would grant those entitlements. During this time, Aghaei was a member of the Planning Commission, serving on that body from 2011 to 2018 as the direct appointee of then Councilmember John Heilman. However, if this project had gone before the Planning Commission (which it never did), Aghaei would have been required to recuse himself from the deliberations.
The option agreement was amended in Sept. 2018, changing it so that rather than deed the two condos to the church, they would be leased to the church at $1 per year over a 99-year lease. The amended agreement also raised the purchase price slightly.
On June 26, 2019, escrow closed on the property and Aghaei, through his 916 Wetherly LLC, paid the church $1.5 million for the property.
According to the suit, on Aug. 13, 2019, less than two months later, Aghaei sold the property to the West Hollywood Community Housing Corporation for $2.65 million.
Five months after that, in Jan. 2020, the West Hollywood Community Housing Corporation announced its plans to build the seven-story Wetherly Palms affordable housing project on the site. Since that announcement, some Norma Triangle residents have been protesting this project over its size and height, as well as the fact state law allows 100% affordable residential buildings to be constructed without any parking, therefore potentially leaving many extra cars searching for parking in an area that is already short on parking.
The lawsuit contends Aghaei made a $1.15 million profit – 76% more than what he paid – for property he owned less than two months.
The lawsuit contends this was an act of fraud, that Aghaei never intended to develop the property and entered into secret negotiations to sell the property to WHCHC. It contends Aghaei deliberately made false representations to the church.
“Aghaei did not intend to diligently pursue the entitlements for a luxury condo project and in fact had abandoned seeking them by the time escrow closed,” reads the lawsuit. “Aghaei’s true intent was to purchase the properties for $1,500,000, then flip them to WHCHC for a handsome profit without regard for how WHCHC would develop the properties or meet Aghaei’s obligation to transfer or lease to the church the two luxury condo units.”
It further contends that Aghaei fraudulently concealed his intention to flip the property and charges breach of contract for not pursuing the entitlements for the luxury condos.
The church is also suing the WHCHC for anticipated breach of contract, contending the housing corporation has not pursued entitlements for building the luxury condominiums either.
It also states that the WHCHC must either build the luxury condos promised and deed/lease them to the church or compensate the church for the value of those promised condos.
It also seeks to rescind the sale and return the property to the church.
Finally it seeks a monetary judgement for damages and punitive damages from the WHCHC. It does not list a specific amount, instead leaving it to the court to determine.
WEHOville contacted attorney Mark Kawa who filed the lawsuit on behalf of the First Baptist Church of Beverly Hills, but he declined to comment for this story.
WEHOville also spoke with Aghaei, but he opted not to comment for this story.
WEHOville also contacted the West Hollywood Community Housing Corporation for comment. A spokesperson provided this statement, “WHCHC has no comment. We remain focused on our mission to build homes and provide services that move community members from insecurity to stability.”