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Judge Throws Out Adamson Suit : Courts: The decision will have little bearing on how the 4-year-old legal battle over control of the $80-million family fortune and Adamson Cos. is ultimately resolved.


A court trial in which heirs of the late Merritt Adamson were fighting for control of an $80-million family fortune that includes the Adamson Cos., ended abruptly Wednesday after the judge ruled that Adamson's widow had not established the legal right to break up the company's assets.

However, Superior Court Judge Michael Berg ordered that Sharon Adamson be notified before the firm engages in any transaction of more than $100,000, and temporarily barred sisters Sylvia R. A. Neville and Rhoda-May Dallas, the firm's sole general partners, from appointing an additional general partner.

The development came after 2 1/2 days of arguments in a trial that was supposed to deal with Sharon Adamson's allegations that her sisters-in-law have mismanaged the company. It is likely to have little bearing on how the 4-year-old legal battle is ultimately resolved.

Lawyers for both sides said Berg's decision will merely postpone for perhaps several months the next round in a struggle that may take months, or even years, to settle.

Hillel Chodos, an attorney for Sharon Adamson, said he will ask a state appeals court to overrule Berg's decision that, as an assignee of Merritt Adamson's limited partnership shares in the company, she does not have legal standing to remove the one-third share of the company's assets that she owns.

Both he and attorneys for Neville and Dallas acknowledged that the company, one of Malibu's largest landowners, is worth between $80 million and $130 million.

"(The company) is a sinking ship, and my client is tied to the mast," Chodos said. "If (the sisters) want to drive it into the rocks, that's their business. But we want to get off."

However, Anthony Murray, an attorney for Neville and Dallas, dismissed such claims as "fanciful," and insisted that "the company is being managed just fine."

The trial, which was to have dealt with whether the sisters have mismanaged the firm, had been expected to last four weeks.

However, Berg, who inherited the case from Judge Bonnie Lee Martin after she retired, said that it would be inappropriate to consider the mismanagement issue before one or more related matters are brought to trial.

The dispute centers on an agreement Merritt Adamson signed with his sisters shortly 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.

As an assignee, Sharon Adamson owns one-third of the firm, but she has no vote, no management role and is not entitled to information about how the company is operated.

Adamson and her two adult children, Grant Adamson and Leslie London, contend that the agreement should be invalidated since, by signing it, her husband made a gift of the couple's community property. She contends that her husband, who died of cancer, was too ill to know what he was signing and did so without her consent.

However, neither the community property issue nor the question of the agreement's validity were before the judge.

Berg said that to proceed with the mismanagement trial "might be a colossal waste of time" since, by law, Sharon Adamson's standing as an assignee is insufficient to warrant the kind of breakup of the company's assets that she seeks.

Although the judge did not spell out how he expected the matter to proceed, he suggested that it would be more appropriate to first consider the community property claim and the issue of the agreement's validity.

In arguing for the restraining order, Chodos, the attorney for Sharon Adamson, said that unless the court intervened, there was a grave threat that the company's properties could be dissipated before another trial is held.

The terms of the order were agreed to by lawyers for both sides before being presented to the judge.

In barring the sisters from adding another general partner, the order exceeds a previous one imposed by Martin in August.

However, the order excludes from the firm's notice requirement any transaction involving a proposed $65-million, 300-room hotel the firm wants to build overlooking the Pacific Ocean in Malibu. Sharon Adamson is opposed to the hotel plan, calling the project "a money loser."

The firm, which wants to start construction of the hotel before Malibu becomes a city and a slow-growth oriented City Council takes office, still needs approvals from the California Coastal Commission before the work can proceed.

In what shapes up as critical decision, the state panel is to decide next week whether to approve the company's grading plans for the 27-acre hotel site.

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