BLOOMFIELD HILLS, Mich. — A federal judge refused Wednesday to require the Irvine Co. to disclose its income tax returns as Joan Irvine Smith's attorneys tried to establish the value of the heiress' stake in the company.
Judge Robert Webster said Smith's attorneys failed to formally request the company's tax returns before a July 3 pretrial discovery deadline. "Cutoffs are cutoffs," Webster said in making his ruling.
Smith's lawyers had asked the court to require the company to disclose its federal and state tax returns for 1977-83 to help determine the value of the company's stock when Smith was asked to sell her shares in 1983.
Howard Friedman, Smith's lead attorney, refused during a break in the proceedings to say why the returns are important to his case.
However, Irvine Co. counsel William Campbell speculated that Friedman wants the returns because Smith's claim that the company was worth $3 billion in 1983 does not reflect future taxes the company was obligated to pay. The company maintains it was worth about $1 billion at the time.
"He (Friedman) is disturbed because he overlooked the tax liability," Campbell said. "He's admitted the tax liability. Now, he's scratching around . . . looking for a defense."
In a report estimating the company's net worth at $650 million to $950 million in 1983, Irvine Co. accountant Stan Ross deducted $600 million for taxes to be paid in the future.
Smith, whose grandfather founded the land development company, snubbed a 1983 offer made by Irvine Co. Chairman Donald L. Bren for the 11% stake owned by Smith and her mother.
Smith contends the company's 5,000 shares of stock were worth a great deal more than $200,000 each, the value the Irvine Co. maintains was established by sale of shares by other stockholders. The lawsuit was begun to determine the stock's value.
The trial, which began Aug. 4, is expected to continue through the end of the year. It is being held in a makeshift courtroom in a Bloomfield Hills office building on the outskirts of Detroit. The Irvine Co. is incorporated in Michigan.