BIRMINGHAM, Mich. — After 156 days in the courtroom and 27,000 pages of trial transcripts, an attorney for Joan Irvine Smith on Thursday made his final argument that she was cheated out of more than $200 million when Irvine Co. Chairman Donald L. Bren bought most of the giant land developer's stock in 1983.
Bren scored "the coup of the century" in that deal, under which the company was valued at $1 billion, attorney Howard I. Friedman said.
Friedman has produced a string of experts who say the company was then worth $2.7 billion to $3.3 billion. One of them testified for 30 days last year and wound up in the hospital after cross-examination by Irvine Co. attorneys.
The company produced its own experts, who said the firm was worth about $1 billion at the time. A Michigan state court referee will rule sometime in the coming months on the question of the company's value in 1983.
The trial, held in Michigan because the company is incorporated there, was scheduled to end Thursday afternoon. But Irvine Co. attorneys, who presented their closing arguments Wednesday, said they need time to prepare responses to Friedman's final arguments. The trial is expected to finish today, nearly two years after it began.
During a day of highly technical arguments--punctuated by Friedman's trademark rhetorical flourishes--he accused the Irvine Co. on Thursday of downplaying its worth by overestimating its taxes and underestimating the value of its landholdings.
"Every dollar that comes out of these artificial haircuts is a dollar that goes into Mr. Bren's pockets," Friedman said. "The windfall time is over, and now it's valuation time."
With interest, Smith now demands half a billion dollars for her 11% stake in the company.
Bren sat just a few feet away in a crowded conference room of the law office where final arguments were heard. Surrounded by the company's attorneys, he remained expressionless while jotting notes on a legal pad.
Here is what the dispute is about: In 1983 Bren paid shareholders $200,000 a share for stock they bought in 1977 at $6,000. Some of the wealthiest men in America--among them Detroit shopping center magnate A. Alfred Taubman and Henry Ford II--sold to Bren, who already owned 34% of the company.
Bren later increased the offer to $208,000 a share for Smith and her mother and fellow shareholder, Athalie Clarke. That would have come to $114 million, on stock bought for $3 million.
The company wants the court to set its 1983 value at the $1 billion that shareholders used as a basis for selling. The company's attorneys accuse Smith--granddaughter of the company's founder, James Irvine II--of being "greedy" and seeking a "windfall" for her stock.
But Smith contends that the court should also consider the privately held company's earnings and assets in setting a fair price, which she says would be closer to $3 billion.
That argument has dominated the lengthy trial, which the Irvine Co. says has cost it more than $16 million already. Both sides concede that an appeal is likely.
The Irvine Co., with headquarters in Newport Beach, owns 68,000 acres across the middle of Orange County, squarely in the path of the county's booming growth.
The company sells land--including much of what is now the city of Irvine--to home builders. But it also develops and keeps its own commercial buildings, which include the Newport Center office and retail complex and the Irvine Spectrum industrial park. At the junction of the Santa Ana and San Diego freeways, the Spectrum is said to be one of the choicest landholdings in Southern California.
The attorneys have painted unflattering portraits of Bren and Smith, both in their mid-50s and two of the county's wealthiest and most prominent residents. Smith says Bren started arguments with the other shareholders in a scheme to get them to sell their shares. Bren's attorneys say Smith is "irrational" and filed the lawsuit to cause trouble for the company.
The suit is one of the biggest such cases on record because of the amounts involved, Irvine Co. attorneys say. They contend that a ruling for Smith would significantly broaden the ability of dissident shareholders to threaten or hold up the sale of their companies.