Questioning of Plaintiff Continues in Freedom Newspapers Case : Defense Tries to Show That Harry Hoiles Set Family Up for Feud

Times Staff Writer

Defense lawyers continued hammering at Freedom Newspapers heir Harry H. Hoiles Friday, trying to show that he was not the victim of an ouster attempt by his relatives but had instead instigated a bitter family feud to give himself grounds to break up the family-owned media chain.

The defense contends that Hoiles, a dissident shareholder, consulted an outside adviser several times in early 1981 about suing the majority owners--his relatives--for a third of the assets of the $1-billion Irvine-based corporation.

"He set the defendants up. He'd already decided to sue, then as a matter of tactics induced" the allegedly unfair acts that he now claims entitle him to force dissolution of the corporation to obtain his share of Freedom's assets, Leonard A. Hampel, attorney for the majority shareholders, said in an out-of-court interview.

But Harry Hoiles' lawyer, Vernon W. Hunt, disputed the portrayal of his client as a sly manipulator. "Harry doesn't even believe in suits. He only filed (the action) as a last resort" because the Hoiles family was turning away from its libertarian philosophy, Hunt told reporters.

The trial, now in its fifth week, stems from a bitter, internecine feud over control of the Freedom media empire, which operates the Orange County Register, 28 other dailies and five television stations. Harry Hoiles, whose branch of the family owns about one-third of the chain, brought the 5-year-old lawsuit to dissolve the company so he can claim one-third of its assets.

Hoiles claims that the defendants--Freedom Newspapers and the families of his sister and late brother--forced him to file a lawsuit by ousting him from Freedom's management, doing things that caused his stock to lose value and then offering him only $74.1 million for his shares in the chain, which at that time was valued at $835 million.

To prove his case under state law, Harry Hoiles must show that his relatives treated him with persistent unfairness or abused their authority.

In testimony Friday, Hoiles acknowledged to Robert E. Currie, lead counsel for Freedom Newspapers, that he consulted six years ago with business psychologist Phillip Sidwell of Atlanta, Ga., about his options with the chain. But, Hoiles testified, he had hired Sidwell--a specialist in dealing with problems in family-held companies--to explore ways to hold together the splintering chain and never considered filing a lawsuit at that point.

Currie, however, produced memos by Sidwell that showed that he had discussed ways that Harry Hoiles could strengthen his position in the company--primarily by purchasing more shares of Freedom stock from a trust.

The defense contends that Harry Hoiles wanted the stock--about 3% of the company's shares--to add to his family's share so he would have enough stock to strengthen his hand in a suit to break up the company.

And, Hampel said to Hoiles during an intense cross-examination, "You wanted to buy as many shares as you could because you thought it was a good investment. . . . You not only didn't think your stock had been devalued, but you thought (the trust stock) was worth $380 a share" in April 1982--just one month before Hoiles filed his lawsuit.

Hoiles' answer was that he had no firm idea of what the shares were worth.

The 70-year-old Hoiles, who served as publisher of Freedom's second largest paper, the Colorado Springs Gazette, before becoming embroiled in the management fight, is scheduled to resume testifying Monday.

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