Judge Turns Down Irvine Co. Motion to Shorten Trial
A judge Monday rejected an Irvine Co. motion to shorten the trial of its suit against heiress Joan Irvine Smith. Afterward, a lawyer for the company said the trial now threatens to run another year and cost the company an additional $6 million.
Smith and her mother, Athalie Clark, contend that Irvine Co. Chairman Donald L. Bren offered them an unfairly low price for their stock in the company when he bought out most of the other shareholders in 1983.
Bren offered $110 million for their 11% stake in the huge landowning and development company based in Newport Beach. Clark and Smith say a fair price was $330 million and with interest is now $500 million.
The trial has run intermittently since August in Michigan, where the Irvine Co. is incorporated. It is now in the midst of a break, and the hearing on the company’s motion was held in a Costa Mesa law office for convenience.
Smith’s lawyers have tenaciously cross-examined Irvine Co. witnesses, including Bren. During the first half of the trial, the company took only 17 days to present its case, while Smith’s lawyers used 45 to cross-examine witnesses.
Smith’s attorneys began presenting their defense in late January, when Clark testified. But William B. Campbell, an Irvine Co. lawyer, estimates that the defense may take up to a year to complete the trial, which he said has cost the Irvine Co. $20,000 a day since August. That would bring the company’s costs so far to about $4 million.
Smith’s lawyer, Howard I. Friedman, disputed Campbell’s estimate of the possible length of the trial.
In the motion heard Monday, Michigan Circuit Court Judge David F. Breck rejected the company’s request to bar Friedman from presenting a string of real estate consultants and accountants, whose testimony is expected to be a major factor in prolonging the trial.
The consultants are expected to testify that their assessment of the Irvine Co.’s worth in 1983 was far greater than what Bren paid for it.
Campbell, on the other hand, contends that the other investors Bren bought out were all shrewd business people and couldn’t possibly have underestimated the worth of their stock by hundreds of millions of dollars.
Campbell, in his motion, argued that the consultants’ valuations are worthless, contending that the true value of a business is what someone is willing to pay for it on the market.
Since Bren was willing to value the company at $1 billion in order to buy it in 1983, Campbell argued, and most stockholders accepted his offer, that amount is what the company was worth, not the $3 billion cited by Smith and Clark.
Breck on Monday said he would allow the consultants’ testimony when the trial resumes near Detroit later this month. But the judge said he was not rejecting Campbell’s assessment of the Irvine Co.’s value and would consider it when he determines the worth of the company at trial’s end.
