Widow’s Lawsuit Accuses Prominent Law Firm of Double-Dealing
A 78-year-old Point Loma widow says she’s been taken for a ride by the state’s largest law firm, Gibson, Dunn & Crutcher.
In an 81-page lawsuit, Blanche Pope charges that the very lawyer who was giving her legal advice on a northern San Diego County land deal also represented two Orange County developers on the same deal, and subjugated her best interest to the developers’.
Worse still, she claims, is that her attorney had a secret business tie with the two developers, so his legal advice to her was tainted with his own profit in mind.
The bad advice delivered to her, Pope claims, came at times she was most vulnerable, including literally on the eve of her husband’s cancer surgery and later, after she was grieving his death.
The woman’s lawsuit was filed in Vista Superior Court in June and refiled Aug. 26. The suit, which has yet to be rebutted by the other side, contends that on three different business deals--the land deal near Fallbrook and two other business deals in Costa Mesa--her own attorney gave her short shrift to the advantage of his other clients and business partners.
The suit alleges that Gibson, Dunn & Crutcher and one of its partners in its Irvine office, John C. Wells, are guilty of fraud, malpractice, malfeasance and breach of contract. The firm boasts 12 domestic and six overseas offices and a roster of nearly 700 lawyers.
Pope contends she lost $4.6 million in one bad business deal with two Orange County developers, Gerald L. Rewers and Dean A. Pollinger, because Wells was watching out for his own interest, not hers.
Attorneys for the two developers and the law firm sternly denied the lawsuit’s accusations.
“The claim by the Pope family that there was any kind of wrongdoing by Mr. Rewers and Mr. Pollinger or any of their companies is wholly without merit,” said Wayne Call, who represents the two developers. “We’re confident that that will be established during the course of the case.”
The Popes also were fully aware that Gibson, Dunn & Crutcher had Rewer and Pollinger as clients, said an attorney for the law firm, and even signed a September, 1980, letter recognizing the potential conflict.
“Mr. Wells suggested several times to Mr. Pope that he have his own attorney present in discussions with Rewers and Pollinger, and he declined,” said Steve Croft, a Beverly Hills attorney representing Gibson, Dunn & Crutcher.
The Popes’ suit alleges that Wells and the law firm acted against Pope’s best interests by failing to fully disclose “the repeated conflicts of interest involved in the joint representation” of both her and the two Orange County developers.
That conflict lasted for a dozen years, from when she first retained Gibson, Dunn & Crutcher for legal advice in 1980, until she broke with the firm last March--after she had paid it $600,000 in legal fees.
The suit charges that Wells and the law firm violated lawyers’ rules of ethics by taking on clients with conflicting interests, “without their free and intelligent written consent.”
It was only after hiring another law firm, Jennings & Drakulich of San Diego, that Pope learned that she was suckered with bad advice because of her previous attorney’s conflict of interest, the suit says.
It was Rewers and Pollinger themselves who first directed Pope to Wells for legal representation--at a time when Wells already had a pure business relationship with the two Orange County men, the lawsuit alleges.
By learning the intimacies of Pope’s business intent, attorney Wells was able to give his other clients and secret business associates the inside scoop, and used his own influence over the woman to the advantage of the developers, the suit charged.
Wells and Gibson, Dunn & Crutcher “abandoned the Popes’ best interests in deference to the conflicting and favored interests” of the two developers and one of their companies, Willington Entities.
The suit alleged that Wells was “a business associate” with Rewers and Pollinger and held a “secret ownership” in one of their companies, Wellington Entities, without telling Pope. Wells and his law firm were “the primary architects of the wrongful machinations” of the two developers at Pope’s expense, in violation of his own obligations and fiduciary responsibilities to Pope, the document reads.
The law firm should have known of Wells’ conflict and put a stop to it, Pope contends.
But Gibson, Dunn & Crutcher attorneys said the Popes signed a 1980 letter acknowledging that their firm had been representing Rewer and Pollinger “long before” the Popes came along and that the firm would side with Rewer and Pollinger if they were ever to be at odds with the Popes.
Pope’s attorney, Gordon Jennings, said “the authenticity of that letter is in dispute” and that it “failed entirely to address the business relationship between John Wells and Rewers and Pollinger and their related companies.”
Croft bristled at Jennings’ implication of wrongdoing, saying that “what he is suggesting is completely unthinkable.”
Call, the attorney for Rewers and Pollinger, said his clients dealt primarily with Edker Pope, “who was a very sophisticated man.”
“Since Mr. Pope’s death, Mrs. Pope has been influenced to believe that her husband was a dunce in business matters, that she should not live up to agreements he and she made with my clients, and that my clients should be denied any compensation for over a decade of hard and successful work on joint venture projects with the Popes.”
Blanche Pope’s lawsuit came in response to a suit filed against her in May by the developers, who felt that she was trying to renege on a joint venture agreement.
To illustrate her complaint, Blanche Pope focuses on three different business dealings between Pope and her late husband, Edker Pope, and the two Orange County businessmen.
The first has to do with Blanche and Edker Pope’s purchase in 1979 of 470 acres of undeveloped property, known as Lake Rancho Viejo, just southeast of the junction of Interstate 15 and California 76, next to the San Luis Rey River near Fallbrook.
This is how Pope’s lawsuit lays out this part of the story:
In August, 1982, the Popes and Rewers formed Lake Rancho Viejo Associates, to develop 300 acres of the site for ultimate sale. Should the Popes ever sell their interest in the property, they would be entitled to $6.8 million plus any other “additional expenditures” advanced by the Popes in connection with the development of the property.
A year after the partnership was formed, the Popes transferred their interests in the project to their own, new company, Rancho Viejo Investment Co., while Rewers transferred his share to Rancho Viejo Development Co. Gibson, Dunn & Crutcher aided both sides in forming their new corporations.
Six years later, in September, 1989, Rewers and Pollinger asked the Popes for permission to receive 13.5% of the gross sales proceeds from any sale of the property. Because their proposal “failed to provide for the preferential reimbursement to the Popes . . . as was previously agreed by the parties,” the Popes said no.
In December of that year, 75-year-old Edker Pope was found to have colon cancer which had invaded his stomach, spleen and diaphragm, and surgery was set for the following month, Jan. 30.
Before that potentially fatal surgery, Wells recommended to the Popes that their family trust be amended and that The Pope Foundation be established.
On Jan. 29, literally on the eve of that surgery and when the Popes were “under great distress and anxiety,” Wells sent Rewers and Pollinger to the Popes’ home to execute the various documents.
Those documents included a letter of agreement that 13.5% of the gross sales proceeds of the Fallbrook development be paid to Rewers and Pollinger. The Popes signed it “while under extreme stress, anxiety and pressure.”
The Popes were “unduly influenced in their weakened condition” by Rewers and Pollinger, who “over-reached and took unfair advantage of the Popes.”
Moreover, Wells, the Popes’ attorney, “knew that Rewers and Pollinger intended to obtain the Popes’ execution (of the 13.5% agreement) during their weakened and distracted state and took no action whatsoever to either advise or caution the Popes or otherwise to protect their interests.”
Edker Pope died nearly 11 months later, Dec. 22, 1990, and six months after that, even as Blanche Pope was still grieving the loss of her husband of 57 years, another letter of agreement was presented for her signature.
That letter increased the amount of property to be developed by Rewers and Pollinger from 300 acres to all 470 acres that the Popes originally purchased. Pope signed the letter “in all innocence” and now believes that Wells and his law firm assisted Rewers and Pollinger “in drafting the deceptive” agreement.
The lawsuit’s second illustration of alleged wrongdoing by the two developers, the shared lawyer and the law firm centers on a colony of wood-sided office condominiums known as Creekside, in the 2900 block of Bristol Street in Costa Mesa.
This is the lawsuit’s contention:
The Popes owned the property in 1979, before it was developed.
In anticipation of doing business with the Popes, Rewers, Pollinger and attorney Wells formed Northside Business Park Inc. and its wholly owned subsidiary, Bristol/Randolph Inc., a predecessor to Wellington Equities Ltd. Wells was a shareholder of Northside Business Park Inc.
Later that year, in 1979, Bristol/Randolph Inc. and the Popes formed Bristol Business Plaza Ltd., to develop the Creekside property for office condominiums, and the Popes personally ground-leased the property to the new partnership.
In 1981 and 1982, Wellington Properties Inc., a successor to Northside Business Park Inc., purchased the property from the Popes for $4.6 million in promissory notes, secured by the property itself.
The Popes then agreed in July, 1982, to subordinate their deeds of trust to a $7.45-million construction loan for the project, meaning they would play second fiddle as creditors, behind the bank construction loan, should the project default.
Five months later, in December, 1982, the Popes were “induced” to extend their $4.6-million promissory note for another seven years--and to subordinate their trust deed to a new, $18.5-million construction loan. Out of those loan proceeds, the Popes allege that $3 million was sidetracked from the Creekside project and used instead by Rewers, Pollinger and Wellington Properties to buy seven single-family homes for their own profit.
In November, 1984, Wellington Properties defaulted on the $18.5-million loan, and in a settlement negotiated by Rewers on behalf of the Popes--without the Popes’ knowledge--the Point Loma couple lost their $4.6-million promissory note.
Attorney Wells and the law firm “secretly conspired” with Rewers and Pollinger to draft that settlement letter to resolve the default, “falsely interpreting” it, “intentionally suppressing material facts,” and “inadequately disclosing the alternatives and consequences to the Popes.”
The final business deal alleged by the Pope lawsuit to illustrate the alleged wrongdoings of Wells and Gibson, Dunn & Crutcher had to do with Mesa Square, a strip commercial center located at 19th Street and Newport Boulevard in Costa Mesa, owned by the Popes.
According to the lawsuit, Rewers and Pollinger in 1983 pitched Armitage Realty Inc.--their company--to serve as property managers for Mesa Square, for $650 a month plus leasing commissions.
But in January, 1991--within 30 days of Edker Pope’s death--Rewers and Pollinger told Blanche Pope that Armitage Realty was due $150,000 for prior management of Mesa Square, to cover its services for the previous 10 years, even though Armitage had been paid $650 per month for its work.
A follow-up agreement, which Pope signed because she was “secure in the comfort of Wells and Gibson, Dunn & Crutcher’s legal representation,” called for Armitage Realty to provide property management of Mesa Square in exchange for $650 a month--plus 20% of the eventual sale value of Mesa Square, less than $150,000 that was paid to Armitage, according to the lawsuit. That agreement was drafted by attorney Wells for the profit of Rewers and Pollinger, the suit contends.
In all three property deals--in Fallbrook and the two in Costa Mesa--Pope contends she was manipulated by her business partners and by the attorney whom all three shared: Wells.
“Rewers, Pollinger and Wells agreed to conspire to defraud the Popes in furtherance of their common business relationship . . . (and) Wells compromised his professional integrity and relationship with the Popes,” the lawsuit alleges.
