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Irvine Co. Suit Takes Up, Drops 'No Perjury' Memo on Kremer

November 05, 1987|MICHAEL FLAGG | Times Staff Writer

BLOOMFIELD HILLS, Mich. — In an apparent bid to discredit Irvine Co. Chairman Donald L. Bren, an attorney for dissident heiress Joan Irvine Smith tried Wednesday to show that Bren was upset in 1982 because the company's then-president would not perjure himself.

But attorney Howard Friedman's questioning was shunted aside when Bren testified that he had never seen the 5-year-old memo that Friedman cited as the basis for his allegation.

The memo was introduced in the eighth day of Bren's testimony in the trial being held to establish the Irvine Co.'s market value. The three-page document was written by a top company official as a briefing paper for Bren to use in lining up support for his bid to oust the giant land development firm's president, Peter Kremer.

The memo's author, Irvine Co. Senior Vice President Gary Hunt, was not called to the stand Wednesday.

But in an out-of-court interview, Hunt said company attorneys were worried at the time that Kremer might damage the firm if he were to be fired and then called to testify in a lawsuit filed by Newport Beach homeowners over escalating lease payments for the Irvine Co.-owned land on which their homes were built.

Hunt's memo contained a notation--in response to a hypotheical reason for retaining Kremer--that "PK won't commit perjury."

Friedman asked Bren Wednesday whether the "won't commit perjury" notation meant that Kremer could not be "counted on" to lie in any testimony that he might have given if the homeowners' lawsuit had gone to trial.

But Bren said he never saw the memo, and Friedman dropped the issue, saying he might raise it again if Hunt takes the stand.

In the interview Wednesday, Hunt said the memo did not advocate firing Kremer because he would not commit perjury. Instead, it affirmed Hunt's belief that Kremer--if fired--would not lie in court because of any hard feelings over his firing, Hunt said.

"I was saying in the memo he'd never do it," Hunt said. "He's a man of very high principles."

Kremer subsequently was ousted and was never called as a witness in the homeowners' suit because it was settled out of court shortly after Bren assumed control of the company. The suit, however, scarred the Irvine Co.'s reputation and forced it to delay an expansion of its Newport Center office and retail complex in Newport Beach.

Bren, who owned 34% of the Irvine Co. when the memo was written, acquired majority ownership of the huge land development firm in 1983.

Smith and her mother, Athalie Clark, owned 11% of the company before Bren's buyout. They are battling Bren in a Michigan state court in a bid to increase the amount of money they will receive for their stake.

Bren is offering $88 million, but Smith contends the shares are worth $500 million, including interest accrued since 1983. The case is being tried in a suburb of Detroit because the company is incorporated in Michigan.

Lawyers for Smith introduced Hunt's 1982 memo Wednesday as part of their cross-examination of Bren. Smith's attorneys are trying to portray the company as being embroiled in corporate intrigue during the period when Bren was arranging his buyout.

The three-page, handwritten memo was penned by Hunt for Bren to use in a meeting with Herbert Allen, a New York investment banker and fellow company shareholder.

In his testimony, Bren has contended that Kremer was running the company into the ground after a consortium of businessmen, including Bren, bought the development firm in 1977 and installed Kremer as president.

The memo listed possible reasons Allen might have for not firing Kremer and suggested ways for Bren to counter those arguments.

The ambiguous "perjury" notation appears near the bottom of the otherwise innocuous memo, at a point where Hunt suggested that Allen might have resisted firing Kremer in the middle of a legal battle with Newport Beach homeowners over soaring lease payments.

Hunt suggested in the memo that Bren overcome Allen's potential reluctance to fire Kremer with these counterarguments: "Must settle lawsuit. Must get out of residential leases. PK won't commit perjury."

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