Key Ruling Anticipated on Move to Throw Out Hoiles Family Lawsuit

The long-running feud among the family members who own and operate Freedom Newspapers Inc. may go on for years, but the lawsuit to dissolve the media chain could be thrown out of court as early as this week.

Orange County Superior Court Judge Leonard Goldstein said Friday he will try to decide within a week whether to grant a defense motion for judgment against dissident shareholder Harry H. Hoiles in his long-running legal battle.

Hoiles has alleged that company management breached its fiduciary duties and that he should be allowed to take one-third of the company’s assets.

Continue Another Month

Should the judge deny all or part of the defense motion, the trial--already two months long--would be expected to continue for perhaps another month while the defense presents its side.

Attorneys for the Hoiles family and for the defendants--the families of his sister and his late brother, as well as the Irvine-based company and its president--argued in court last week about whether Hoiles’ attorneys had presented enough evidence to prove his case.

Hoiles, whose family owns about a third of the media chain, alleged that the other two branches froze him out of a key management position and took actions that damaged the value of his family’s stock. Freedom Newspapers owns the Orange County Register, 28 other daily newspapers and five TV stations.

Hoiles has also alleged that the other two family branches’ actions violated Libertarian principles espoused by company founder R. C. Hoiles and were so unfair that they warrant dissolving the company or, at least, substantial damages for breaching ethical obligations.

Protective Actions

The families of Mary Jane Hoiles Hardie and the late Clarence H. Hoiles, each of which also owns about a third of the company, have responded that they took only what actions were necessary to protect the company and themselves in light of Harry Hoiles’ threats to sell his stock to outsiders.

“Harry learned perhaps one thing too many from R. C.: persistence at everything,” Leonard A. Hampel, the Costa Mesa attorney for the majority shareholders, told Goldstein. “Every disagreement became a matter of principle.”

The result, Hampel told the court, was that Harry Hoiles lost his ability to “see the big picture.”

In late 1981, the majority offered to buy the Hoiles family stock at a discount price of $74.1 million, when the stock was appraised at $214.1 million.

Vernon W. Hunt Jr., the Santa Ana attorney representing Hoiles, painted a picture of a power play in which the two families holding the majority interest conspired to gain the benefit of an increased value in their stock by buying out Hoiles at a discount.