DAY 1: In So Cal’s Rehab Riviera, sober living homes are common. So is outrage.
DAY 2: From neighbors to litigants; the gloves come off quickly.
TODAY: Sober living was a $150,000-a-month business – before legal bills brought it down.
DAY 4: To fix sober living, California might do well to look at Florida.
SAN CLEMENTE — After Joseph and Rebecca Scolari turned their former home on Via Lampara into a sober living house, complaints piled up at their Talega homeowners’ association.
Dead plants in the pots by the front door. Green-water Jacuzzi. Unmowed lawn. Faded garage door paint.
“Please clarify what exactly is wrong with my garage door,” Rebecca Scolari wrote to Talega’s property management company in May 2015.
“It appears to be in fine condition. Is everyone else on Via Lampara painting their garage doors? They are all the same age and have all been exposed to the same environmental conditions.….
“I have mentioned before that we have felt discriminated against and harassed by the neighbors and inherently the Association,” she wrote. “Receiving five complaints in one day is blatant harassment ….we are not going anywhere. It might be beneficial for the Board to consider all of the time and money wasted by all parties in continuously addressing these ridiculous allegations.”
Such tension is typical of the legal back-and-forth that can arise when sober living home operators, and their neighbors, wind up in court.
Behind the scenes, though, court documents show that the Scolaris also were not impressed with how their corporate business partner, Sobertec, handled the properties. The house managers supplied by Sobertec – one at each sober living home to make sure chores got done, manage medications and generally keep an eye on things — weren’t doing a professional-enough job, Rebecca Scolari said at her deposition. The Scolaris didn’t like the constant complaints.
The neighbors weren’t impressed either.
At one point, according to the lawsuit, neighbors were offended when the sober living residents on Via Lampara broke into a boisterous version of Lil Wayne’s “Execution Style,” singing: “Crack em like a lobster … (gunshot noise) … kill em execution style.”
So, in 2015, as the relationship between treatment provider Sobertec and the Scolaris’ real estate company, Sober Network Properties, approached its six-month anniversary, the Scolaris insisted on some changes.
The Scolaris, not Sobertec, would provide the house managers. There would be two managers at each house, not one. Each of those managers would make $2,000 per month. And the number of beds at Via Lampara would drop from 14 to 12. Also, the price Sobertec would pay to the Scolaris’ company would rise to some $30,000 per month, rather than $15,050.
Sobertec said it performed professionally in court documents, and refused the Scolaris’ terms. The Scolaris gave Sobertec 30 days to vacate.
The Scolaris then courted what was, at the time, one of the larger addiction and mental health providers in Orange County — Sovereign Health — to fill their houses with sober living clients.
“Hi Ben,” Rebecca Scolari wrote to Ben Kaneaiakala, who worked for Sovereign, in the spring of 2015.
“We are a very reputable sober living housing company that specializes in placing mid-high income clientele into high quality sober living properties, in order to facilitate recovery in a quiet, considerate, and respectful manner….. We pride ourselves on creating a conducive atmosphere for individuals to receive the treatment they need, while feeling almost as comfortable as if they were living in their own home. We also place very high standards on behavior….
“As a family, we care about the recovery community and we truly believe that the clients are the most important part of this industry. We are motivated by changing lives and helping people in need. We would love to grow with different facilities and different resources in order to increase the success rate all around.”
Soon, the Scolaris’ company, Sober Network Properties, and Sovereign, struck an alliance. During the day, Sovereign would treat people with substance use disorders at its facilities. Sober Network Properties would provide housing for those clients — along with house managers, food, and transportation to and from treatment. As part of the deal, Sovereign would pay $30,740 a month for the Via Lampara house — about $18,000 for rent and $12,000 for food, transportation and management services. Several more properties would eventually be added to the portfolio as well.
At its height, Sober Network Properties employed about 30 people, including house managers, drivers and operations workers, Rebecca Scolari said at deposition. It conducted business from an office in San Juan Capistrano. Hurwitz’s attorneys estimated Sober Network Properties grossed some $150,000 a month.
The profit margin, though, was just 15 percent, Joseph Scolari later said. And when dealing with complaints, Rebecca Scolari insisted the sober living homes themselves were not businesses.
“There is ABSOLUTELY NO business or commercial activity occurring in any of our homes,” Rebecca Scolari wrote to the Talega homeowners’ association, refusing to attend an enforcement hearing for fear of a “lynch mob.” “There is absolutely no exchange of monetary value for business purposes occurring in any of our homes.”
All three of their sober living homes in Talega were “used SOLEY (sic) for the purpose of single family residences,” she wrote. “While our families may not be a traditional ‘family’ in some eyes, they are still considered a single housekeeping unit. Our tenants/guests clean the home together, cook meals and eat together, and socialize in the same manner as any other family would.”
Attorneys for the neighbors pounced on that assertion.
“And that was true, despite the fact that you were making $20,000 or so every month on your business operations with… with Sobertec and later Sovereign?” attorney Gerald Klein asked Joseph Scolari during his deposition.
The debate — is a sober living house a business or not? — was part of a legal conflict that dragged on for years.
The fight came to include different parties. Code enforcement officers from the city of San Clemente “raided” Sober Network Properties’ homes and joined the fray. The city of Aliso Viejo sued Sober Network Properties. And there were other suits, and counter suits, involving the Scolaris’ and former business associates.
Not impressed with the quality of the treatment providers out there, the Scolaris joined forces with a former Sovereign employee to launch their own licensed addiction treatment business. It was called Altus Treatment.
But even as that business started, the legal battles were proving too costly.
“The cost of litigation became unbearable to us and wound up putting us out of business,” Scolari said recently.
“That (was) the intention of the whole process.”
In the end, the judge placed restrictions on noise and smoking at the house, and the Scolaris closed it soon after. The parties agreed to walk away with no money exchanged; the Scolaris had no money to pursue, even if the neighbors won a judgment, the neighbors reasoned.
The Scolaris briefly moved back into the house, but that didn’t last. Last year, they sold the house for $1.07 million, a bit more than they paid for it in 2014, according to property records.
Few neighbors, however, have the means to wage this kind of fight. Klein, Hurwitz’s lawyer, said Hurwitz is a modern-day hero.
“This guy stood up when no one else would,” Klein said. “He had to borrow money against his house. He spent hundreds of thousands of his own money to fight this battle, and it was disappointing that the homeowners’ association didn’t step up, and that the city didn’t do more. This fight was being carried on one man’s shoulders.”
The Scolaris said the battle cost them dearly, too.
“I’ve lost a ton of money in this business,” Joseph Scolari said in a deposition.
“I’ve lost about $2 million from the start….Financial stress has caused my wife and I to sometimes argue and (ask) ‘Why did we do this?’…
“Initially, we thought we were doing a good thing… ” Scolari added, “to help people in recovery.”