Hoiles Loses Family Battle in Court to Dissolve Freedom Newspapers Chain

Dissident Freedom Newspapers heir Harry H. Hoiles, spurned nearly seven years ago in his bid for control of the $1-billion publishing chain, Tuesday lost his court battle to dissolve the company started by his father more than 50 years ago.

In a brief oral ruling that halted the trial at the midway mark, Orange County Superior Court Judge Leonard Goldstein said Hoiles failed to prove that he was treated so badly by the families of his sister and his late brother that the family owned media company should be dissolved and that his branch of the family should get a third of the estimated $1 billion worth of assets. The company’s flagship newspaper is the Orange County Register.

The judge also ruled that members of the other branches of the family did not breach their corporate duties toward Hoiles, thus cutting off his claim for monetary damages.

But while it ended the current phase of the 7-year-old family feud, Goldstein’s decision sets the stage for an expected appeal by Hoiles, whose attorneys introduced several unique legal motions during the trial but were overruled on each of them.

“As far as I know, we’ll appeal,” said Hoiles’ trial attorney, Vernon W. Hunt Jr. “But Mr. Hoiles and his family are very disturbed by the result, and they have to have a chance to get past the emotional reaction before they decide. . . . I don’t know if Mr. Hoiles wants to suffer through any more of this agony.”

Tuesday’s ruling, granting a defense motion for judgment in mid-trial after Hoiles’ attorneys rested their case, ends two months of testimony and eliminates the need for the defense to put on its case. The 71-year-old Hoiles and his wife, Barbara, were visibly shaken by the ruling. Hoiles was hustled away after the decision by his wife and his son, Timothy, who said the family would make a statement on Thursday.

The winning side had little more to say. “Nobody can celebrate after something like this,” said R. David Threshie, son-in-law of Harry’s brother, the late Clarence Hoiles, and apparent heir to the company’s leadership. “Personally, though, I’m pleased we’ve finally reached this point.” Threshie, who also is publisher of the Orange County Register, and Richard Wallace, another of Clarence’s sons-in-law and general manager of the Register, said they hope now to get on with business as usual.

Harry Hoiles, whose family controls about 33% of Freedom’s shares, remains a director of the company, Timothy Hoiles is publisher of the company’s Victorville Press and Harry’s son-in-law, Ricky C. Oncken, is publisher of the company’s Columbus (Neb.) Telegram and a corporate vice president.

In their suit--filed in April, 1982--Harry Hoiles and his family claimed that the other two branches of the family froze Harry out of a key management position and took a number of actions--including refusing to elect Harry chief executive of the company--that damaged the value of his family’s stock.

The actions were so unfair, the plaintiffs claimed, that they warranted dissolving the publishing company.

Each of the three families owns about a third of the company’s shares, and Hoiles claimed that the libertarian philosophy of their crusty, domineering father, R. C. Hoiles, dictated that any dissident family members could walk away with their fair share of the assets.

But Robert C. Hardie, the company chairman and husband of Hoiles’ sister, Mary Jane, maintained that the shareholders own stock, not assets, and have no right to ownership of specific Freedom Newspapers properties.

The Hardies and Threshie testified that their actions were mandated by Harry’s threats to sell his stock to outsiders, possibly corporate raiders or even competitors.

And Goldstein found that none of the actions of the majority amounted to the required “pervasive and persistent abuse of power” or “persistent unfairness” required under the law to dissolve the company.

“In failing to reelect Mr. Hoiles (to the company’s executive committee), the board of directors were motivated by sound business judgment,” Goldstein decided.