The Rainier Inn sits along a stretch of South Tacoma Way with a history of low room rates and high crime rates. Lakewood city officials have focused on cleaning up and redeveloping the area for years.
The city closed the motel, then known as the Budget Inn, and three others in 2007 for health and safety violations.
The new owner, Joseph Oh, pledged to run a cleaner and safer business when he reopened it in April 2010.
“Saving (the motel) is always what Joseph wanted to do,” said his business partner Gregory Tift, whom Oh asked to respond to a reporter’s phone message.
But city officials maintain the property continues to attract crime and blight.
Oh’s story is that of a businessman who has used strong words, strong accusations and a variety of legal maneuvers in his so-far successful efforts to keep his motel open.
The University Place resident has accused the City of Lakewood and the bank that loaned him $2 million of harassment and conspiring to shut him down.
In court filings, he likened Pacific International Bank to a criminal enterprise. He has alleged that a city employee directed the secret recording of his conversations.
Oh also is defending himself against a lawsuit filed by the bank, which seeks control of the Rainier Inn property. Filing for bankruptcy protection has emerged as his key defense in the latter case.
Meanwhile, he has appealed the city’s revocation of his conditional business license for a second time to Pierce County Superior Court.
The city moved to revoke his license after several public agencies did an inspection of the motel and noted numerous violations of health and safety regulations. They included improperly installed wiring, cracked windows, several fire code violations and “generally unsanitary conditions” in about two-thirds of the 49 rooms.
Officials also noted a high number of police calls to the motel, although James O’Connor, the city’s hearing officer, didn’t use that as a basis for upholding the city’s decision following Oh’s first appeal.
Oh’s attorney, Jason Anderson, wrote in court papers that O’Connor erred by allowing evidence to be admitted improperly during a two-day hearing and failing to consider a sanction less severe than license revocation.
“The proper sanction should have been an order to repair the premises,” wrote Anderson, who didn’t respond to a phone message and email seeking comment.
Anderson contends that Oh had or was in line to address the problems. But Mike Savage, who argued the case as an assistant city attorney, said while Oh did correct most of the fire code violations, there was “a plethora of other violations that he didn’t address.”
City Attorney Heidi Wachter has filed to dismiss the latest appeal; a judge will hear the request Dec. 21.
Meanwhile, a judge’s dismissal Tuesday of Oh’s latest bankruptcy filing is another setback in Oh’s effort to keep the motel out of the bank’s control.
In December 2009, Pacific International Bank loaned $1.6 million to Oh’s company, Holly Global Investment Inc., to buy the motel and another $250,000 to make repairs. Oh personally guaranteed the loans.
When the company defaulted earlier this year, the bank sued in King County Superior Court, seeking cash judgments against Holly Global and Oh. As of Nov. 22, Oh and his company owed $2.8 million, including interest and late fees, the bank said in court papers.
On Sept. 16, Holly Global filed for bankruptcy in Seattle — the second time it had sought the court’s protection through what’s known as an automatic stay. Oh later filed a request to extend the stay to himself so the bank couldn’t go after his personal assets.
A judge dismissed Holly Global’s latest bankruptcy case for procedural reasons. The bank had accused Oh of stalling the process through “serial bankruptcy filings” and that he had failed to attend meetings, file required paperwork or seek the court’s permission before using income it claims is not his to spend.
Tift disputed those claims. Attorneys for the bank didn’t return a reporter’s phone messages seeking comment.
In August, Oh had moved the bank’s lawsuit to federal court in Seattle, although a judge later ordered its return to King County. In an accompanying countersuit, Oh accused the bank and its employees of racketeering. In his complaint, he accused the bank of inflating the motel’s purchase price, reneging on a promise to combine the loans, and conspiring with the City of Lakewood to put him out of business.
Included in his lawsuit is a signed declaration from a Rainier Inn employee that Lakewood community service officer Dawn McGinnis directed the employee to record Oh’s conversations and deliver copies of his business records without his knowledge.
McGinnis denied the accusation in an interview, calling it a ploy to discredit the city. In her declaration, McGinnis alleged Oh directed the employee to throw a set of the records in a trash can. McGinnis said the manager recovered them and made copies for her.
McGinnis said the records provided by Oh didn’t reconcile with those copied by his employee and showed that the motel was violating a condition of its business license.
The latest defeat in court hasn’t diminished Oh’s belief that he can save his motel, Tift said. He said Holly Global will continue to reach out to the bank to restructure the loans. He said Oh could apply for a new business license if he loses the current one on appeal.
“Every businessman thinks that he can pull it out,” Tift said. “That’s a person’s right.”
Christian Hill: 253-274-7390
christian.hill@thenewstribune.com
Twitter: @TNTchill
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