A lawyer for heiress Joan Irvine Smith says she will not testify in a lengthy trial in which she is seeking a half-billion dollars for her share of the Irvine Co.
Smith had been expected to use her day in court to denounce the deal in which Donald L. Bren bought most of the company 5 years ago.
“We had considered calling her as a witness,” said Howard I. Friedman, her lawyer. “But we concluded her testimony wasn’t that important to the case.”
The Irvine Co. owns vast areas of land in the growing communities of Irvine and Tustin and owns Newport Center in Newport Beach and the huge Irvine Spectrum complex. Much of the land had been in the Irvine family since 1864.
$1.8-Billion Net Worth
With the boom in Orange County real estate, owning the company has made Bren one of the nation’s richest men with a worth estimated by Forbes magazine recently at $1.8 billion.
In Bren, Smith and her mother, Athalie Clarke--the matriarch of one of Orange County’s oldest and wealthiest families--the dispute pits some of the county’s most prominent residents against each other.
The trial has uncovered lots of information about the problems besetting the Irvine Co. in the early 1980s. But so far neither side seems to have delivered a knockout punch.
At issue is whether Bren paid a fair price for the company, which he bought for $1 billion in 1983.
But Smith and Clarke say the company was worth $3 billion and that they should be paid $330 million for their 11% stake instead of the $110 million Bren originally offered.
With interest, their share would now total $500 million, they say.
Trial Winding Down
The trial, which has run intermittently since August, 1987, is now winding down.
Testimony is expected to conclude sometime near the end of the year, lawyers for both sides said this week, with the judge getting written briefs summing up both sides’ positions early next year.
A decision is expected soon afterward, said William B. Campbell, a lawyer for the Irvine Co.
“At various times the judge has indicated his intention to act in an expeditious manner,” Campbell said. “I would expect a decision within several months of his receiving the briefs.”
In January, the elderly Clarke testified that she reluctantly decided to sell her stock when it became clear Bren was going to acquire most of the company by borrowing heavily on its assets. She distrusted his ability to manage the company, she testified.
After her mother testified, Smith told reporters that she, too, would eventually take the stand. She has long been critical of the way Bren acquired the company and was widely expected to repeat her charges in her court testimony.
Now as the trial nears an end, her lawyer says neither side plans to call Smith as a witness.
“We already have the testimony of her mother,” Friedman said.
Because the trial is continuing, Smith and Clarke declined to comment.
Trial in Michigan
The trial--held in Michigan, where the company is incorporated--has cost both sides millions of dollars in legal fees and expenses. These amount to about $15 million for the Irvine Co. alone in consultants’ fees, expenses and lawyers’ fees, which account for about a third of the total. The expenses include flying lawyers from Southern California and housing them in Detroit for the duration of the trial.
Lawyers for Smith have spent much of this year presenting the highly technical, detailed testimony of experts whose estimates of the company’s worth are higher than $1 billion.
Irvine Co. lawyers, however, contend that Bren’s $1-billion offer was fair because most of the savvy investors who owned stock in the company accepted it.
Before this mammoth legal battle, Smith and Bren were once allies: With other prominent investors, they bought the company in 1977 from other Irvine family members and a family trust to keep it out of the hands of Mobil Oil Corp.
But after bickering started between Bren, Smith and other investors, Bren offered to buy out the other investors.
The bickering is detailed in internal memos which Smith’s lawyers presented as evidence last year when the Irvine Co. called Bren to testify.
Smith’s lawyers said the memos painted a picture of Bren instigating the bickering as a first step toward taking over the company.
For his part, Bren in his testimony characterized Smith’s constant disagreements with the company’s management as “paranoid.”