Irvine Co. and Ex-President Settle Lawsuit
An out-of-court settlement has quietly ended a two-year legal battle between Irvine Co. and its former president.
But left in court files are thousands of pages of documents that show the sometimes unusual inner workings of the giant real estate company.
On Wednesday, former President Peter C. Kremer and Irvine Co. officials confirmed that a settlement had been reached but refused to discuss its contents.
“I am precluded from discussing it under the terms of the agreement,” Kremer said in a telephone interview.
Irvine Co. and Kremer released a statement saying they had “reached an amicable out-of-court settlement of litigation.” The statement also said that “Mr. Kremer will receive an unspecified amount in settlement of the lawsuit.”
In September, 1983, Kremer, who served as president of the giant Orange County real estate company from 1977 to late 1982, sued Irvine Co. Chairman Donald L. Bren and other company executives for $5.5 million.
Alleged Securities Fraud
Kremer’s lawsuit, filed in federal court in Los Angeles, alleged that Bren committed securities fraud by valuing the company at $750 million for the purpose of cashing out Kremer’s 1% stake while Bren was telling others that the company was worth more than $1 billion.
Bren offered Kremer $7.5 million for a stock option that Kremer contended was worth $10 million, according to the court documents. Kremer, who is now a Newport Beach investor and developer, earned about $15 million during his five years as president, according to the court papers.
Thousands of pages filling eight volumes filed in U.S. District Court in Los Angeles include allegations of corporate power plays executed by Bren, Irvine Co.'s elusive chairman. In April, 1983, Bren purchased 86% of the company’s stock and later increased his stake in the privately held company to 92%. Last year, the Orange County assessor set the value of the company’s landholdings at $3 billion.
The documents reveal that several international businessmen, including Fanollah Sobhani of Iran and Othman Ben Jelloun, described as a financial adviser to the king of Morocco in 1983, apparently made inquiries about acquiring all or part of Irvine Co. in 1982 and 1983. No deals were made, and, throughout the court records, Bren’s attorneys vigorously deny that any of the discussions to sell the company were serious.
The growing schism between Bren and Kremer was decribed in several confidential letters, internal reports and memos filed with the court. A Feb. 13, 1982 letter written by Bren to former Chairman A. Alfred Taubman and shareholder Max Fisher describes Bren’s growing unhappiness with Kremer’s management style.
The letter--stamped “personal and confidential"--contended that Irvine Co.'s management sold property too cheaply. The land, which was leased to Ford’s Aeronutronics division, was sold to Daon Corp. for $17 million and resold by Daon 11 months later for $35 million. “The result was lost opportunity and lost profit for T.I.C,” Bren wrote. T.I.C. referred to the Irvine Co. The letter also said “management’s judgment and decision-making is frightful.”
Kremer, who contends in the records that he believed he was doing a good job, describes how, over Labor Day weekend in 1982, Bren invited Kremer to his Sun Valley, Ida., vacation home. It was at that private meeting that Bren suggested Kremer resign because “Eastern shareholders” were unhappy with his management, according to Kremer’s statements in the court record.
Kremer tendered his resignation on Oct. 9, 1982, but did not present his resignation to the board of directors until January, 1983.
Kremer alleged that, in the spring of 1982, Bren launched a plan to oust him and take control of the company. According to Kremer’s statements in the court record, the alleged plan included firing Kremer, “dumping Taubman” as chairman and creating “an atmosphere of distrust and dissension” that would prompt the other shareholders to sell out to Bren.
Times staff writer Leslie Berkman contributed to this article.