Ex-California Palms property transferred despite legal dispute

AUSTINTOWN — Months after a Los Angeles-based lender purchased the California Palms Addiction Recovery Campus, the sale finally has closed — but it’s far from the end of a legal saga involving the former hotel.

Sebastian Rucci is appealing the $4 million sale to Pender Capital to the Seventh District Court of Appeals, challenging lower court orders overruling, in part, requests to vacate the sheriff’s sale and confirming the foreclosure sale and distributing the property.

Rucci purchased the four-story, 122-room hotel in 2012. Five years later, he leased it to the California Palms Addiction Recovery Campus Inc., which he also owns, with the intent to covert it into an addiction treatment center.

According to court papers, Rucci invested $5 million and borrowed $4 million from Pender Capital. The loan is the foundation of the foreclosure.

Rucci sued Pender Capital in April 2018 over the terms of the loan, asking the court to require Pender Capital to accept $3.1 million to release its lien or disperse $881,795 that was undisbursed at closing from the loan, according to paperwork filed with the appeals court.

In June 2018, Pender Capital filed a counterclaim with a foreclosure complaint.

The sale closed Friday. Pender Capital won the property at sheriff’s sale in July 2020, writing in another court filing the $4 million was the highest and best bid and exceeded the appraised value.

California Palms is on Clarkins Drive off state Route 46 near the Interstate 80 interchange. Pender Capital also states in court documents the building consists of 102 units and 138 beds with a maximum occupancy of 200 people. It also has a restaurant, outdoor sports area, entertainment area, Jacuzzi pool, fitness room, billiards, volleyball court and 800-square-foot conference room.



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