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Family Feud Over Adamson Cos. Goes to Court : Litigation: The trial to determine control of a $75-million fortune is the opening round of a legal battle that could take years to resolve.

November 04, 1990|RON RUSSELL | TIMES STAFF WRITER

After four years of feuding, the embattled heirs of the late Merritt Adamson are set to confront each other in a Los Angeles courtroom this week in their struggle to control a $75-million family fortune.

Lawyers for Sharon Adamson, whose husband headed the Adamson Cos.--one of Malibu's largest landowners--until his death in 1986, will try to convince a judge that Sylvia R. A. Neville and Rhoda-May Dallas, her sisters-in-law, have mismanaged the firm and do not belong at the helm of one of California's most enduring land empires.

The trial, before Superior Court Judge Michael Berg, is expected to last four weeks.

"I've come to the conclusion that (the sisters-in-law) feel that what's theirs is theirs and what's mine is theirs," Sharon Adamson said, in an interview at her Malibu home. "At this point, I just want to get the trial over with and get what belongs to me and my children."

Neville and Dallas declined repeated requests for interviews.

However, their attorney, Anthony Murray, expressed confidence that his clients will prevail. "I have absolute confidence that we will be able to demonstrate that the company has not been mismanaged," he said.

Besides offering an inside look at a feud between wealthy heirs, the trial promises to attract widespread interest in Malibu because it comes at a time when the Adamson firm is trying to build a $65-million, 300-room luxury hotel overlooking the Pacific Ocean there.

The land empire was founded in 1892 by Merritt Adamson's grandfather, Frederick Hastings Rindge. At its peak in the early part of this century, it stretched over 17,000 acres, from Topanga Canyon to the Ventura County line, and included all of what is now Malibu.

The trial looks to be a critical opening round of a legal battle that could take months, or even years, to resolve, depending on the outcome.

In contending that the sisters have brought the company to the brink of financial ruin, Sharon Adamson hopes to have them removed as trustees of her shares in the firm.

Several related issues, including the validity of an agreement Merritt Adamson signed with his sisters shortly before he died, making them guardians of the family holdings, are to be argued separately at a later trial.

Adamson signed the agreement with his sisters four months before he died. It made them sole general partners of the firm and left his widow, as an assignee of his limited partnership shares, with little say in the company's affairs.

The agreement replaced one drawn up 18 years earlier that had provided that, upon the death of any of the siblings, his or her heirs could take out a one-third share of the company's assets at full market value.

Although Sharon Adamson owns one-third of the family fortune, she has little voice in how her assets are managed. She receives at least $216,000 a year from the partnership as a result of the agreement.

Adamson, along with her two adult children, Grant Adamson and Leslie London, contends that the agreement should be invalidated since, by signing it, her husband made a gift of the couple's community property.

While Neville, 69, and Dallas, 73, are certain to be star witnesses called by lawyers for Sharon Adamson, the trial is also expected to include testimony from current and former company officials and numerous outside financial experts.

In her lawsuit, Sharon Adamson contends that Neville, the firm's managing general partner, has entrusted the company to advisers with little experience in managing its real estate holdings.

She is especially critical of George Sheridan, who joined the company in 1984 as an employee earning $51,000 a year, and, after marrying Neville, ended up as an executive earning $221,000 a year.

Neville dismissed Sheridan in 1988, at the same time informing him she wanted out of the marriage. They were divorced in January.

Earlier this year, Neville hired Olaf Isachsen, a strategic planning consultant, who was given the title of chairman of the executive committee, at an annual salary of $400,000.

In pretrial questioning by lawyers for Sharon Adamson, Isachsen said that his primary role was to render advice to Neville, and that he did not yet consider himself qualified to manage the company's affairs. His contract provides for the use of a company car, and the use of half of a duplex owned by the company next door to its offices in West Los Angeles and severance pay of $400,000 should he be discharged for any reason.

The firm's financial health became an especially contentious issue in August after company officials disclosed in pretrial testimony that it had run out of cash and was unable to pay the more than $1 million it owed to creditors.

At the time, company officials said that they were considering obtaining a mortgage on the Point Dume Club, a luxury mobile home park on 91 acres of Malibu coastline that provides more than half the firm's income.

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