Demolition sparks lawsuit explosion.

When boosters celebrated the 40th anniversary of Century City earlier this year, it wasn't surprising that they met at the former headquarters of Welton Becket, the architect who designed the area's early high-rises.

What was surprising were the crews ripping apart Becket's self-designed building. Much of the exterior, including a mosaic band that wrapped around all four sides of the structure, had been destroyed.

"It was pretty horrible," said Chris Nichols, chairman emeritus of the Los Angeles Conservancy. "It's horrible that they would treat art like old building materials and just discard it."

Welton Becket fans aren't the only ones upset with the building's owner, 10000 Millenium Plaza LLC--an investment group led by Larry Taylor.

From his Malibu office, Taylor has amassed a large portfolio of apartment buildings, shopping centers and office buildings through syndication. Essentially, he sells shares to wealthy investors, who profit from the revenues and appreciation that the properties can bring.

It's the method Taylor used to buy 10000 Santa Monica Blvd. But Taylor's hard-nosed tactics to redevelop the property has left behind a saga of litigation.

The demolition has sparked a legal battle with California National Bank, which loaned Taylor's group the money to buy the office property. The bank claims that its mortgage terms forbid tearing down the building.

Taylor wants to capitalize on the Century City housing market, which has some of the highest prices in Southern California, and build two, 34-story condominium towers on the roughly 2.5-acre site.

Though he doesn't have city approvals, Taylor has struck a deal with Lehman Bros. Holdings Inc. and New York-based developer Related Cos. to be a partner on the development.

That project, however, is now in jeopardy. California National won a string of legal victories, temporarily wresting control of the building from Taylor's group and stopping demolition.

Then, last month, 10000 Millenium Plaza filed for Chapter 11 bankruptcy protection, which stalls California National's efforts to force a sale of the property to recoup the $23 million remaining on the loan.

For now, demolition has stopped. Only the frame of the building, partially obscured behind a blue construction fence, remains. The roof and fifth floor are gone, and the remaining floors will be dismantled, one at a time. "It's an extraordinarily significant building because so many designs that changed the face of Los Angeles came out of there," said Nichols. "It's a significant loss."

Filing for bankruptcy

In the five years that Taylor's investment group has owned 10000 Santa Monica Blvd., it has become entangled in a string of lawsuits involving former tenant Fox Sports, local restaurateur Jimmy Murphy of "Jimmy's" fame, and billionaire Donald Sterling, who claims to own a stake in the property.

In that case, Sterling accuses Taylor of reneging on a handwritten contract to sell him several Santa Monica apartment buildings and a stake in 10000 Santa Monica Blvd.

Taylor says he never signed off on the deal, and that the handwritten note with Sterling doesn't constitute a binding contract. Taylor appealed and the case is now pending before the California Supreme Court.

Sterling's suit has put Taylor's group in a bind. Lehman and Related won't move forward until the Sterling case has been resolved. Without its partners' money, Taylor's group hasn't been able to pay off the $23 million remaining on its mortgage with California National.

California National convinced the courts to take control of the building and put it under the control of a neutral party.

Taylor wouldn't cooperate with the court-appointed receiver, George R. Monte, who complained that the group defied court orders by refusing to give him certain financial records. "Although (Taylor's group) produced a 3-inch stack of miscellaneous documents ... the documentation proved to be incomplete and woefully inadequate," Monte said.

Monte asked the court last month to force 10000 Millenium Plaza, its managing partner William Broder and Taylor's company, Christina Development Corp., to cooperate.

But a day after the court sided with Monte, Taylor's group filed for bankruptcy. Once under bankruptcy protection, Taylor's group took the building back from the receiver and was able to put the California National lawsuit on hold while it reorganizes. That plan is supposed to be filed in bankruptcy court by February.

Joshua D. Weyser, an attorney with Lord Bissell & Brook LLP representing California National, said the bank doesn't comment on litigation with its borrowers. Messages seeking comment from Taylor's attorney, Robert D. Crockett with Latham & Watkins LLP, weren't returned.

Litigious history

When Taylor's group bought 10000 Santa Monica Blvd. in 2000, Fox Sports occupied the 139,000-square-foot building. A year after Taylor's group bought the building, Fox Sports decided it had outgrown the space and wanted to move into a larger building that had been recently built on the Fox studio lot.

Negotiating an exit from its lease, a fairly routine procedure in real estate, quickly turned bitter. A Fox official said they negotiated one price with Taylor's group, but at the last second the landlord asked for more money.

Fox initially fought Taylor on the increased amounts and filed suit. Before the case could go to trial, Fox settled with Taylor's group. The Fox source said Taylor got close to the $5.5 million he had demanded.

About the time Fox exited the building, L.A.'s office market--even on the tony Westside--was in the doldrums. Landlords were dropping rents and making excessive concessions to attract tenants. At the same time, historically low mortgage interest rates had ignited the region's housing market.

Taylor's group decided that the 1960s-era office building and its parking garage would be more profitable as the site of high-rise condominium buildings. The group also negotiated with Murphy to buy out his lease in order to completely empty the building.

As with Fox, the negotiations with Murphy descended into a legal brawl. Murphy vacated the space, but sued the Taylor group because Murphy says they never paid him the $3.8 million buyout.

Kenneth R. Blumer, an attorney at Troy & Gould PC representing Murphy, says the restaurateur is still waiting to be paid. That could be a while since 10000 Millenium Plaza is now in bankruptcy and Murphy's claims are subordinate to California National Bank and other creditors, Blumer said.

"Jimmy Murphy is the little guy and the victim in all this," Blumer said. "He's semi-retired now and he has been counting on that money."

BY ANDY FIXMER Staff Reporter