Judge Rejects Defamation Suit on Undercover Report

Complaints by a Van Nuys finance company that it was defamed by a public-interest law firm and a Los Angeles TV station in a sweeps-period “undercover” report on home-repair rip-offs were rejected Friday by a Los Angeles Superior Court judge.

A $1-million lawsuit filed by DFS Financial Services against the Bet Tzedek Legal Foundation and KTTV-TV Channel 11 was dismissed by Judge Ernest M. Hiroshige.

The finance company had alleged that the Fairfax District legal foundation assisted the television station in preparing a two-part November sweeps “Fox Undercover” news report that falsely suggested it illegally peddles home improvement loans and tricks elderly homeowners into signing mortgages.

But Hiroshige indicated that DFS failed to show that the report was not substantially true or that it contained more than “minor inaccuracies.”

DFS officials could not be reached for comment late Friday. But John Frenzel, program director for KTTV, and David Lash, head of Bet Tzedek, said they were pleased.

The TV report included interviews with senior citizens who said they didn’t realize they were mortgaging their homes to pay for repair work. Some complained they were steered into signing for loan payments they couldn’t afford.

The lawsuit named television reporter Jeff Michael, who was shown in the TV segment warning that DFS could have seized the elderly homeowners’ property “if they missed a single payment.”

Also named was Bet Tzedek lawyer Manuel Duran, who asserted on the air that DFS “indiscriminately lends money and doesn’t care about their borrowers.”

DFS officials contended the reports were full of errors and were false. They said business dropped sharply after the report was televised.