Feuding Families Settle 4 Lawsuits Over Control of a St. John Division
A bitter legal feud for control of the home-store division of St. John Knits Inc. ended Thursday when the Irvine-based women’s apparel maker settled four lawsuits with a former executive.
The court battle pitted two high-profile families against each other--the Grays, who founded St. John, and the Wardys, who founded the home-store chain. The two clans were once friends and business partners but have been warring since September, when Amen Wardy Jr. was fired as chief executive of Amen Wardy Home Stores, a small chain of home furnishings stores in which both sides owned an interest.
Under terms of a settlement reached late Thursday afternoon, St. John will take ownership of five of the stores that essentially were co-owned by the two families but will change the names of any stores it keeps open. St. John is closing a store in Boston and closely watching the performance of stores in Palm Beach, Fla., and Dallas.
The Wardys, meanwhile, will keep the rights to the Amen Wardy name and take ownership of the Las Vegas store, according to attorneys for both sides.
Amen Wardy Home Stores had been 51% owned by St. John and 49% owned by AWH Direct LLC, a Colorado company owned by Amen Wardy Jr.; his father, Amen Wardy Sr.; and Bob Hightower.
The case was notable for its nastiness, and contentious courtroom hearings, between the two former allies. At one point, the judge in the case jokingly suggested that the legal proceedings should be taking place in family court because the battle had become so personal.
The legal maneuverings included an attempt by the Wardys to appoint a receiver to run the home stores, and countersuits by St. John that claimed that Wardy Jr. was an “ineffective and incompetent” manager, that he diverted assets and that one female employee accused him of sexually harassing her while he was chief executive.
Ronald Rus, attorney for the Wardy family, said St. John would be responsible for all legal fees in the case, which began in October when Wardy filed a wrongful-termination lawsuit against the company and the Grays. It accused company officials and family members of using improper accounting methods to improve St. John’s bottom line. The suit also alleged that executives used the money-losing home stores subsidiary as a “sacrificial lamb” to benefit St. John.
A second lawsuit that made many of the same allegations was filed by the Wardys on behalf of AWH Direct.
Thursday’s settlement ended the legal dispute in one swipe, attorneys for both sides said.
“This amounts to what is really a terrific business solution to what was a business problem,” said David Krinsky, a St. John director and the company’s outside legal counsel. “It was an amicable solution and one that allows both sides to go forward and pursue their own interests. So, it’s kind of a happy ending.”
St. John Chairman Bob Gray could not be reached for comment. Gray, wife Marie and daughter Kelly Gray own about 14% of St. John and are attempting to take the company private by acquiring the remaining shares they don’t own.
Rus said the Wardys are “very pleased that they get to preserve the integrity and unique design characteristics of the Amen Wardy name.” They also are pleased that they will continue to operate the Las Vegas store, which he said is the most successful in the chain. The family also owns a store in Aspen called Amen Wardy Home.
Wardy Jr. said Thursday that the home-store chain will grow again, but on the Wardys’ terms.
