Battle Renewed Over Freedom Newspapers : Suit Claims Mishandling of Trust by Harry Hoiles

The battle among the families that control Santa Ana-based Freedom Newspapers erupted anew Monday as one side of the Hoiles family claimed that another is mishandling a trust, the major asset of which is company stock.

The three daughters of Clarence Hoiles, who died in 1981, alleged in an Orange County Superior Court suit that his brother, Harry, misused his role as trustee to their detriment. They seek $1.5 million in general damages plus unspecified punitive damages from Harry Hoiles.

The lawsuit comes just one month after Harry Hoiles made a $900-million offer to buy out other family stockholders in an effort to take control of Freedom Newspapers, publisher of 29 newspapers, including the Orange County Register.

“We were waiting to see whether they would file a suit,” said Kenneth P. Scholtz, a lawyer for Harry Hoiles. “Those aren’t new charges. Harry denied them before and he denies them now.”

The women--Judith Ann Threshie, Patricia Evelyn Wallace and Mary Elizabeth Bassett--filed similar claims in pending litigation over the trust. But Judge Lloyd E. Blanpied Jr. threw out the claims last summer because that litigation was not the proper place to raise the issues, Scholtz said.

The lawsuits stem from a trust set up in the will of Clarence Hoiles’ son, James, who died in 1964. The will named Clarence Hoiles as trustee and Harry Hoiles as the successor trustee. Income from the trust was to go to James Hoiles’ widow, Patricia, and the remainder to his sisters and their families.

Before Clarence Hoiles died, Harry Hoiles had become involved in a quarrel with his brother’s and his sister’s families over the direction of Freedom Newspapers.

In the lawsuit, the women claim that Harry Hoiles should never have taken over as trustee when his brother died because he had a conflict of interest.

“Harry Hoiles assumed the position of trustee for the express purpose of imposing financial and emotional burdens on the remainder beneficiaries and to obtain and utilize, in his dispute with the remainder beneficiaries, whatever confidential information and power might be derived from his office as trustee.”

They claim that he breached his fiduciary duties by a variety of actions taken to benefit him “adverse to the best interests” of the remainder beneficiaries.

Those actions, they allege, included the lawsuit that Harry Hoiles filed in 1982 to dissolve the media corporation, his alleged instigation in getting Patricia Hoiles to sue the estate of Clarence Hoiles over his alleged mismanagement of the trust and Harry Hoiles’ own lawsuit against his brother’s estate for the same reasons.

Harry Hoiles stepped down as trustee on April 15, 1983, and was succeeded by a court-appointed trustee, former Los Angeles Superior Court Judge Paul Egly. Egly decided to continue the suit that Harry Hoiles had brought against the estate.