Family Feud : Sisters of Merritt Adamson Jr., above, are locked in a battle with his widow over control of the family’s vast fortune. The contest may ultimately decide the future of Malibu.
When Merritt Adamson died of cancer in 1986at the age of 59, he left behind more than just his one-third share of a $75-million family fortune.
Shortly before he died, the real estate scion signed an agreement making his two sisters the sole guardians of a once-mighty Malibu land empire and leaving his widow, Sharon, with little say in the affairs of the Adamson Cos., the family firm.
Now, Sharon Adamson and her former sisters-in-law are slugging it out in court for control of the contested third of the family holdings. Barring a settlement, the case is expected to go to trial this summer. But beyond settling a feud among wealthy heirs, the outcome may also play a key role in shaping Malibu’s future.
In its rush to install a sewer system in the seaside community, Los Angeles County has struck a private deal with the sisters, Sylvia R. A. Neville and Rhoda-May Dallas, to surrender six acres they own near Pepperdine University for the site of a sewage treatment plant.
In exchange, the county offered to help expedite approval of a 300-room, $65-million hotel the sisters want to build in Malibu. The hotel, and Pepperdine’s plans to double the size of its campus, depend on the sewer system.
Suddenly, however, the sewer appears to be less than a sure thing. Malibu voters are poised to decide June 5 whether the community becomes a city, and approval is widely expected. They also will pick a five-member City Council that is likely to be far less enthusiastic than the county has been about sewers, hotels and development in general.
Last week, a judge struck down an attempt by the county Board of Supervisors to delay Malibu’s actual incorporation date until next March if voters approve cityhood. The delay had been intended to enable the county to start work on the sewer before a new local government had the chance to block it.
And despite the county’s eagerness to accept from Neville and Dallas the six-acre parcel that is intended to be the centerpiece of the $43-million sewer system, more trouble is brewing.
The property has become tangled in the nasty legal battle between Adamson and her former sisters-in-law. Adamson, who doesn’t want the sewer plant built there, claims a one-third ownership of the six acres and insists that the two sisters have no right to give it away.
She is said to be sympathetic to about 100 homeowners whose houses are uphill--and, they say, downwind--of the site. They say that if the plant is built under their noses, it could wreck the resale value of their million-dollar homes.
“We’re pawns caught in a war between major landowners, with the county wanting to sacrifice us,” said Bob Briskin, a member of the Malibu Country Estates Homeowners Assn. The group has hired well-known public interest attorney Carlyle Hall Jr., and is threatening a lawsuit to try to block the plant.
Theirs is a cause celebre among anti-sewer, pro-cityhood forces in Malibu who have long regarded the county’s efforts to install sewers as a prelude to widespread development. For many slow-growth advocates, the Adamson ruckus is an unexpected bonus.
The squabble over the plant site, however, is only a small part of the legal war between the heirs.
In her lawsuit against Neville and Dallas, in which she is seeking a third of the family fortune that some observers say may now have appreciated to $100 million or more, Adamson has asked that the partnership agreement her husband signed be nullified. She claims that Neville and Dallas exerted undue influence on her husband to sign, knowing that he was too ill to understand it.
The agreement replaced one drawn up 18 years earlier that had provided that, upon the death of any of the siblings, his or her heirs would have the right to sell their one-third share of the Adamson Cos.’ assets at full market value.
Under the new arrangement, however, the sisters became sole general partners in the family firm when their brother died, and Sharon Adamson, as a limited partner, was left with little say over what she claims should have been her inheritance. Neville and Dallas, meanwhile, say the agreement gave them the right to buy out their brother’s entire share of the family fortune for $200,000.
In a countersuit against Adamson, the sisters have asked that the agreement be enforced and that Adamson accept the $200,000 and relinquish any further claims.
Although none of the women would agree to be interviewed, friends and former business associates, as well as court documents, reveal a rift between Merritt Adamson’s widow and his sisters that has become intensely personal.
For example, one of the first things Neville and Dallas did after their brother’s death was to dismiss his son, Grant, from the company job he had held for seven years. They also quickly moved to exclude Sharon Adamson from participating in any company decisions, according to court documents.
“There’s enough family infighting there to fill several episodes of ‘Falcon Crest,’ ” said a longtime associate of the women, who spoke on condition that he not be identified. Close associates say they haven’t spoken amicably to each other in years.
In court documents, Adamson accuses Neville, 68, and Dallas, 73, of being inept managers who don’t even know how to read an annual report.
She says that they’ve failed to provide an estate plan, and that if either were to die, the company would have to sell much of its assets at distressed prices to pay inheritance taxes.
Adamson contends that the sisters have frittered away many millions of dollars through poor business decisions and by relying on individuals with little or no expertise in managing the firm’s diverse holdings.
For example, she says they erred last year in not accepting $5.17 million from the Santa Monica Mountains Conservancy for 575 acres above the Pepperdine campus that real estate appraisers had determined could not be developed.
She faults them for taking out an unnecessary $3-million bank loan that she says was placed in a bank certificate of deposit earning less than the interest on the loan.
Among the advisers, Adamson is especially critical of George Sheridan, who went to work for the company in 1984 earning $54,000 a year, and, after marrying Neville, ended up as a company executive earning $220,000.
The couple’s 2 1/2-year marriage ended in divorce in January, several months after a company lawyer came to Sheridan’s office to tell him that his wife wanted out of the marriage and that she wanted him to clean out his desk.
In court documents filed on their behalf, Neville and Dallas shrug off Adamson’s accusations as those of someone bent on breaking up assets that have been in the family for nearly a century.
Sources close to the family say privately that Neville, especially, never approved of her brother’s choice of a bride. Adamson, a graduate of Stanford and the daughter of a naval architect, was married to Merritt Adamson in 1954.
Despite the couple’s successful 32-year marriage, friends say, the two sisters always viewed her as an outsider.
It was their grandfather, Frederick Hastings Rindge, who founded the family empire in 1892 when he bought 13,300 acres of a former Spanish land grant known as the Rancho Malibu Topanga Sequit.
His widow, May Knight Rindge, later expanded the domain to 17,000 acres, stretching west from Topanga Canyon along 25 miles of coastline, and as far as three miles into the Santa Monica Mountains.
May Rindge spent the early decades of this century protecting what was hers. She thwarted the Southern Pacific’s plans to run a railroad by the ranch. And she battled for years against the Pacific Coast Highway that she knew would cut a swath through her property.
Her only daughter, Rhoda Agatha Rindge Adamson, and Rhoda’s husband, Merritt Huntley Adamson Sr., inherited the struggle, and in the 1930s almost got more than they bargained for. The Depression plunged the family beef ranch into bankruptcy, prompting trustees to sell large parcels of their land to pay creditors. Only the family dairy, Adohr Farms (Rhoda spelled backward), kept the family solvent.
It was a diminished but still substantial empire in 1962 when it passed to the next generation and came under the control of Merritt Huntley Adamson Jr., whose development initiatives transformed Malibu from a mostly private domain to a mecca for the rich and famous.
During his quarter-century as manager of the remaining Rindge-Adamson empire, he donated land for the core of a campus to Pepperdine University. He built a mobile home park, a recreational vehicle park and condominiums.
He sold thousands of acres to the state and federal governments for parkland. He subdivided big chunks of oceanfront property, on which celebrities and others built the kind of lavish homes for which Malibu is now famous.
And less than two months before his death in 1986, his company received long-sought permission from the California Coastal Commission to build Malibu’s first large hotel.
Friends say that toward the end of his life, Merritt Adamson was consumed with the hotel plan. Despite his illness, he traveled to San Francisco to appear before the coastal panel the day it was approved. Some say his devotion to the project accounts for his sisters’ determination to pursue it despite community opposition.
Their desire for the hotel also helps to explain why the Adamson Cos. has for years led the fight against Malibu cityhood. In granting its approval, the Coastal Commission stipulated that a Malibu sewer system would have to be installed before the hotel can open.
But time appears to be running out on the hotel. The company has already obtained four one-year extensions of its coastal permit, and if ground is not broken before Malibu’s incorporation, company lawyers fear they will have to start over with the application process.
Only this time, instead of dealing with the county, which has been quick to encourage development in Malibu, the Adamson Cos. would face a potentially far more hostile city government.
While opposing cityhood, the company has been a generous campaign contributor to Los Angeles County supervisors. Between 1981 and 1985, the firm was Supervisor Pete Schabarum’s largest corporate contributor, with $23,750 in cash plus hunting trips and gifts.
In the last four years, the Adamson Cos. has donated more than $40,000 to the supervisors, mostly to Schabarum and Supervisors Deane Dana and Mike Antonovich. They, along with Supervisor Kenneth Hahn, have consistently opposed cityhood for Malibu.
In their private dealings with the county, Neville and Dallas offered to give away the land for the sewer plant and said they would try to get Sharon Adamson’s cooperation.
Unable to get Adamson to relinquish her purported interest in the property, the sisters decided to offer the land to the county anyway, and agreed not to object if the county found it necessary to acquire the property by condemnation.
County officials, who acknowledge that they do not have a ready backup site if their efforts to acquire the parcel hit a snag, have been noncommittal about using condemnation proceedings.
Meanwhile, the supervisors are expected to vote Tuesday to accept the property as a gift from the Adamson Cos., after having been assured by attorneys for the firm that Neville and Dallas have the authority to donate it.
Adamson disagrees, contending that the parcel was among about $15 million in assets shared in common by her husband and his two sisters outside the firm and that the company has no authority to deal it away.
Her attorney, Hillel Chodos, called the arrangement idiotic.
“In short, (the sisters) want my client to give them her interest in the property so that they can give it away to the county without, according to them, receiving so much as a snicker,” he said.
Others suggest that the sisters may not have been entirely willing partners in the deal to give the county the land, noting that the county for a time had considered putting the sewer plant next to the hotel site.
“With this deal, the county gets some free land, and the sisters get to build a hotel where the guests don’t have to smell (excrement),” said a Malibu Country Estates resident, who asked not to be named.
County officials deny holding the threat of a sewer plant next to the hotel over the sisters’ heads and insist that they are not swapping favors with the sisters in the current arrangement.
A copy of the agreement Neville and Dallas submitted to the county indicates, however, that the offer involved more than altruism.
It states that their giving the land is intended to help “ensure the county’s cooperation in the timely processing of (the company’s) grading and foundation permits” for the hotel, as well as approval of interim sewer treatment facilities in the event work on the hotel is completed before the county’s sewer system is installed.
Harry Stone, the county’s deputy director of public works, said that such an arrangement was “not unusual,” adding that the county “tries to cooperate with an individual developer like the Adamsons just as it would any homeowner.”
Asked about the prospects for building the sewer plant if the dispute over the property isn’t resolved soon, he replied, “Then it may be back to the drawing board.”