Morro Bay staff accused of suppressing business competition

March 10, 2014

By JOSH FRIEDMAN

Antique shop owner Jeffrey Specht and his staff spent months clearing out, cleaning and painting a shop so he could open a business in Morro Bay. But city staff refused to grant him the operating permits for Specht’s antiques and candy store. A city building inspector also tagged the building making it appear that Specht was running an illegal business.

While Specht was kept from opening his business, the neighboring taffy shop owned by Joyce Leage, a relative of Councilman George Leage, was allowed to operate without proper licensing and permitting, a review of city files showed.

Specht says he was prevented from opening his shop because it would have competed with Leage’s relative. He is not the only person to complain about the city staff in Morro Bay. A number of people have filed or are planning to file claims against the city for illegitimately suppressing their business interests at a building few blocks away that formerly housed the Morro Bay Sun Bulletin.

Though the addresses are different, in both cases, when people attempted to open businesses in Morro Bay, Police Officer Gene Stuart came out to the location followed by City Building Inspector Brian Cowen, who tagged the building. City planners also denied the businessmen licenses and permits.

Last year, Specht, the owner of Angry Woodpecker Antiques, attempted to move his business from San Luis Obispo to Morro Bay. Specht leased a vacant doughnut shop at 1130 Front Street along the Embarcadero last June. In addition to selling antiques, Specht planned to offer ice cream, candy including taffy and possibly a salad bistro.

The salt water taffy shop that sits next door is managed by Leonard Willhite, who has long been in a relationship with Joyce Leage. Joyce Leage was married to George Leage’s brother, Willhite said. George Leage’s brother died, Willhite said.

The business license on file for the taffy store at the Morro Bay Public Services Office states the name of the shop is West Coast Light Tackle. The store previously operated as a tackle shop but converted several years ago to a taffy store with a sign above the store entrance that reads Salt Water Taffy.

The taffy shop does not have proper licensing, said Cathy Weaver, a Morro Bay permit technician. A business converting from a tackle store to a taffy shop must obtain a new license, Weaver said.

“They have to apply for a new business license because the use is changing,” Weaver said. “The new license would require review by the building, planning and fire departments.”

Willhite said he could not reveal the name of the business he manages.

“I don’t have the freedom to tell you that,” Willhite said.

Additionally, Joyce Leage’s taffy store does not have a use permit, according to the city’s address file for the business. Retail businesses in the taffy shop’s location require minor use permits, said Cindy Jacinth, a Morro Bay associate planner.

“If you can’t show us where your minor use permit is, we’re going to ask that you get one,” Jacinth said.

Nevertheless, Morro Bay code enforcers have let the taffy shop operate without proper licensing and permitting.

Specht says when he tried to obtain a license and permit for his business, Capital Projects Manager Rick Sauerwein refused to even accept his applications.

“He refused to give us any permits or issue us licensing,” Specht said. “He said no matter what we are not going to allow you to open a business in Morro Bay.”

Sauerwein said he remembers the discussion with Specht and Specht’s business partner Fred Lombardi but does not recall any conversation about permits or licensing.

“I don’t have any desire to deny anybody an opportunity to open a business here,” Sauerwein said.

Lombardi attempted to record the conversation, but Sauerwein immediately ordered him to turn off the camera, video shows. Sauerwein said he later learned that the Public Services office is a public place and he did not have the right to order Lombardi to stop filming.

Before Specht’s encounter with Sauerwein, Police Officer Gene Stuart visited the antique shop and pulled Lombardi out of the store, according to a lawsuit Specht filed. Stuart claimed that Specht was running an illegal food service and that an associate of his was on the run from a building inspector, Specht stated in the lawsuit against Morro Bay realtor Addie Pedersen.

Specht sued Pederson for misrepresenting herself to the city as the property manager for the shop he leased in order to trigger an eviction.

As Stuart held Lombardi for questioning, Building Inspector Brian Cowen arrived and, along with Stuart, accused antique shop staffers of living in the store, Lombardi said. Cowen later tagged the shop with a notice stating the building was unfit for human occupation. He did so without inspecting the building, Specht’s suit alleges.

Specht and his staff had spent two months cleaning and painting the building before Cowen tagged the building, the notice, photos and videos show.

Willhite claims that Specht and his staff were living in the store. Specht and the staff denied they were doing so.

Cowen declined to comment.

A month before Cowen tagged the building, a San Luis Obispo County Environmental Health Department employee examined the store. Environmental Health Specialist Denny Brewer told CalCoastNews the store appeared cluttered, but there did not appear to be any occupancy issues.

“I didn’t see evidence of sleeping quarters,” Brewer said. “I didn’t have any problem with them being there. They just needed to solidify what was on their menu and submit a health permit application.”

A week after Cowen tagged the building, then-City Attorney Rob Schultz visited the antique shop. Schultz, too, walked around the store, video shows.

“It did not appear as if anyone was living there,” Schultz wrote in an email to city staff after visiting Specht’s shop.

After Specht was not able to open his antique shop in Morro Bay, his landlords evicted him. Specht lost the antiques he had in the building. Specht says that the power of the Leage family led city officials to unjustly target his business while ignoring code violations committed by Joyce Leage’s taffy shop.

The Leages own three nearby restaurants, including two a block away. George Leage also owns a bluff on the same block of Front Street. He plans to build a hotel there, city files show.

Willhite said George Leage has no connection to his business.

“I wouldn’t wipe my ass with him,” Willhite said of George Leage.

George Leage declined to comment.

Willhite refused to provide a contact number for Joyce Leage.

Former Morro Bay councilwoman and current mayoral candidate Carla Wixom owns a restaurant on a hill above the taffy shop. Wixom, a political ally of George Leage, said she knew little about the closure of the antique store other than that Willhite was worried about competition.

“The guy in the taffy store was worried they were going to carry candy,” Wixom said.