Tainted Carson site clears hurdle days before its NFL nod.

The 157-acre former landfill in Carson now being considered as the site of an NFL stadium hasn't been a dump since 1964. But some old garbage still needs taking out.

On May 16, four days before the National Football League unexpectedly announced it would commit $10 million toward development of the Carson stadium on the site, a U.S. 9th Circuit Court of Appeals ended a long-running legal wrangle over ownership of the property, clearing the way for its sale.

A metal and glass workers pension trust that owns the site through LA MetroMall LLC has spent the last four years trying to extricate itself from a relationship with a former savings and loan executive who brought it into the deal.

The trust claimed that the former executive, Peter Sardagna, had blocked its previous attempts to sell the property, tying its hands as it tried to recoup its more than $34 million investment.

These included former super agent Michael Ovitz's play to bring a football team to the property, according to Richard Mainland, a partner at Fulbright & Jaworski LLP representing the pension fund. "One of the problems over the years is Sardagna would not give his consent," Mainland said.

"There was an agreement to sell the property to Michael Ovitz, who hoped to use it for an NFL franchise," Mainland said. 'The agreement provided that the (trust) would have to obtain the consent of Sardagna before the sale, and if they couldn't do that, there would be no sale. He was holding up the deal."

Last month's ruling that Sardagna is no longer a partner in the property clears the way for the trust to sell the land "free and clear," Mainland said.

Opportunity knocks

For the trust, which benefits the Southern California, Arizona, Colorado and Southern Nevada Glaziers, Architectural Metal and Glass Workers, the timing couldn't have been better.

Four days after the ruling, NFL owners meeting in Philadelphia said they would authorize a $10 million investment toward assessing whether to acquire a two-year option to buy the land, which is under option by a shopping center developer.

"We're familiar with the litigation," said league spokesman Greg Aiello. "I'm not saying whether it's a concern or not. I'm not addressing what our concerns are."

Aiello said the NFL had discussed the site, south of the intersection of the Harbor (110) and San Diego (405) freeways, with GMS Realty LLC, which holds the option.

GMS Realty and brownfields investment firm Cherokee Investment Partners announced last June that they had struck a deal to acquire the site for development of a 1 million-squarefoot, $100 million retail and entertainment center and that it would begin development as soon as environmental remediation was completed.

That process was expected to take between 12 and 18 months.

Mainland, who spoke on behalf of the pension fund, could not say whether the legal troubles have affected the plans of GMS Realty. William Gerrity, president and chief executive of GMS Realty, declined to comment on the retail center.

To date, there have been no entitlement applications to the city.

Troubled from the start

The Glaziers' troubles with the Carson site began in 1989, when it made the first of several payments totaling more than $24 million to acquire the property from World Industrial Centers Ltd.

WIC, the operating entity under bankruptcy protection, was the largest asset of Irvine-based Consolidated Savings & Loan, which Orange County developer Robert Ferrante owned with Sardagna. The S&L collapsed in 1986 because of bad loans associated with the Carson property, according to news reports at the time.

Ferrante and Sardagna brought in the Glaziers to buy the property out of bankruptcy for $47 million, with the plan to gain entitlements for a shopping center and resell the land to a developer, according to the fund's brief.

But in 1991,. Ferrante and Sardagna were indicted on charges of making insider loans to family and friends while running Consolidated, according to news reports. They were acquitted in 1992, and both declared bankruptcy in 1993.

According to court papers, the Federal Deposit Insurance Corp. took the first trust deeds on the Carson property in 1994.

Meanwhile, the pension fund's option to buy back the land from WIC had expired, the brief says. So the Glaziers, which by that time had put $18 million into the property, paid the FDIC another $5 million to acquire the land in 1994.

A year later, Sardagna and Ferrante were back. The pair convinced the Glaziers to build a large regional outlet mall, called the L.A. MetroMall, on the Carson site, the brief says.

Under the 1995 agreement, the Glaziers and Sardagna formed LA MetroMall LLC. The trust owned 99 percent of LA MetroMall LLC and Sardagna owned 1 percent, the brief says. Ferrante, who had a consulting agreement with the entity, had no equity stake.

The Glaziers would finance the deal, while Sardagna would try to attract a developer, the brief says. Under the 1995 agreement, Sardagna had the right to consent to any sale of the property, it says.

"At any given time, it would've been possible for a buyer to say to the Glaziers, 'We're interested in buying your property, but our offer is conditional on the consent of your partner, Mr. Sardagna,"' Mainland said.

By 1997, the property had become a drain on the Glaziers' fund, placing it "in dire financial straits," the brief says. The Glaziers replaced its investment manager, William Seay, with one real estate consulting firm and then quickly replaced that manager with CB Richard Ellis Investors, Mainland said.

In April 2002, Seay pled not guilty to nine counts of mail fraud related to the Glaziers' investment in the Carson property, according to a report in the Financial Times.

Headed to court

The Glaziers' fund, whose total investment in the property reached $34 million, filed suit against Sardagna, Seay and Ferrante in August 1999.

"The Ovitz transaction had come and gone," Mainland said, "and it was fairly evident there were major issues. We felt there were significant violations of law that had been committed, and we sued to get a remedy for those violations."

In its brief, the Glaziers attempted to undo the 1995 agreement by claiming it was void under the federal Employees Retirement Income Security Act, which governs pension funds. The fund lost its case in August 2001 after Sardagna argued successfully that the Glaziers exceeded the statute of limitations to file the suit.

But after filing a post-trial motion in its defense, the Glaziers fund got the case reinstated. At that point, Seay and Ferrante, who had been part of the initial litigation, settled and were removed from the case.

Hillel Chodos, Sardagna's lawyer, declined all comment.

In April 2002, a federal judge ruled that the Glaziers fund had not exceeded its statute of limitations to file suit because it did not discover the violations until replacing Seay, Mainland said. The judge also ruled that the 1995 agreement violated ERISA because Sardagna was acting as a consultant while in a partnership agreement with a pension fund, he said.

Sardagna had argued he was not a service provider to the Glaziers' pension fund, but to LA MetroMall LLC. He lost that argument in the May 16 ruling.

"His conceivable options would be to ask for a hearing from the 9th Circuit or petition the U.S. Supreme Court," Mainland said of Chodos. "I have heard nothing from his office. But it's a low likelihood they would agree to hear it."

Meanwhile, city officials are preparing to move ahead on a new environmental impact report, waiting only to see whether it would be for a shopping mall or a football stadium.

Ron Winider, Carson's economic development manager, stopped short of drawing a connection between the ruling and the NFL's announcement.

"Maybe the moon was in alignment at the right time," he said.

RELATED ARTICLE: More 'Football' for Carson

THE Los Angeles Galaxy, reigning Major League Soccer champions, will inaugurate the $150 million Home Depot Center in Carson on June 7. The 1 p.m. game, against the Colorado Rapids, is the first of 15 home games scheduled this year.

The 27,000-seat soccer stadium is just one component of the 125-acre complex located the northwest corner of the Cal State University at Dominguez Hills campus in Carson.

The facility also has an 8,000-seat tennis stadium, a 2,000-seat track and field facility, nine training soccer fields, 30 tennis courts and a three-mile jogging trail. The tennis and track stadiums are expandable to host larger crowds.

"We consider this to be the cathedral for our sport," said Trey Fitz-Gerald, a spokesman for MLS. "It will be one of the finest soccer facilities in the world."

The Galaxy has sold close to 10,000 season tickets for the 2003 season, up from about 6,000 last season, according MLS league officials. Season ticket prices range from $370 to $1,750 for a club seat.

Advance sales, vital to any sports organization, create a solid fan base and reduce the amount of funding needed for marketing. The new stadium also creates the prospect of Scarcity because the facility is far smaller than the Rose Bowl, the Galaxy's previous home in Pasadena.

"With 90,000 seats at the Rose Bowl, there was not a lot of reason to buy tickets early because people could walk up to the gate on game day and get a good seat," said David Simon, president of the L.A. Sports Council.

League officials anticipate average attendance figures will surpass last years mark of 19,047 per game.

Completion of the complex follows the 1999 opening of a $30 million stadium for the Columbus (Ohio) Crew. A $65 million facility in Frisco, Texas for the Dallas Bum is expected to open in 2005.

Unlike other pro sports leagues, the MLS operates as a single limited liability company with only three owners with a financial stake. The league, not individual teams, control player contracts.

Denver-based Anschutz Entertainment Group owns the largest stake, including the Galaxy and five other teams. AEG also owns the Staples Center, the LA. Kings, part of the Lakers and the Sparks, as well as movie theaters.

Dallas-based Hunt Sports Graup and the Foxboro, Mass.-based Robert Kraft family own the remaining MLS teams.

The Home Depot Center will host the MLS AllStar Game on Aug. 2 and the MLS Cup Nov. 23, with the San Diego Chargers scheduled to use the complex for its training camp July25 through Aug. 22. It also may host part of the Women's World Cup in fall, which has been moved from China to the U.S. because of SARS.

David Greenberg