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Trial Begins in Malpractice Case Against Orrick
The Recorder
October 30, 2008
Multimillionaire businesswoman Fritzi Benesch had a "perfect" relationship with her older daughter, Valli. The two regularly shared holidays, dinners and the opera.
But in the summer of 1999, 16 years after control of the San Francisco family clothing business had passed to her daughter, Benesch discovered that her husband, the company's co-founder, had cheated on her.
Family relationships soured, Benesch sued a plethora of defendants, and now one opponent remains: Orrick, Herrington & Sutcliffe, the firm that helped manage the Benesch estate for more than 20 years.
Benesch's malpractice suit against Orrick, brought in 2000, finally arrived at trial this week in San Francisco Superior Court.
During opening statements Wednesday, Keker & Van Nest partner Elliot Peters, defending Orrick, said it was Benesch's discovery of her husband's infidelity that turned her against the rest of her family and sparked her desire to undo decades of estate planning and stock transactions. Peters portrayed the case as, at its heart, a "family dispute" that has ensnared Orrick and William Hoisington, a now-retired trusts and estates attorney at the firm who worked for decades for the Benesch family.
The core of Benesch's case against Orrick, Peters said, rests on her claim that Hoisington never made it clear that she was giving up control of her 61-year-old women's clothing company, Fritzi California.
"Mrs. Benesch will try to have you believe that she was kept in the dark," Peters told the jury. "In fact, she is savvy and pays attention to detail."
Benesch, 86, wants tens of millions of dollars in damages to repay the amount of stock she said she was misled into giving to her daughter, Valli, whose last name is now Tandler, and Valli's husband, Robert, over the years.
The Benesches hired Hoisington in 1977. By the time he retired in 1999, he had helped Fritzi and Ernest Benesch make numerous stock transactions that gave the Tandlers control of the company.
But attorney Jonathan Bass argued Wednesday that Fritzi Benesch never intended that to happen.
"What this case is about is a law firm favoring one set of clients over another," he said. "They were getting richer as my client was getting lesser."
Bass, a partner at Coblentz, Patch, Duffy & Bass, seized on a document Hoisington prepared in 1996 to make the case that Orrick's representation of both the Benesches and the Tandlers was a conflict of interest the firm tried to hide.
Hoisington had been asked by Benesch's younger daughter, Connie, to help plan her estate and wrote a memo to the entire family, saying that "there may come a time when the disposition of property" creates a conflict, and so he must decline to represent any of them.
But in a deposition video played by Bass, Hoisington said he never sent the letter, because Robert Tandler told him it was "a bit insulting."
"You will learn during this trial there is no exception to lawyers' ethics that falls under 'I was insulted,'" Bass said.
Orrick was loyal to the Tandlers because they could get more legal fees from the couple that, unlike Fritzi Benesch, now controlled the company, he said.
A woman like Benesch, Bass said, a Jew born in Germany in 1921, who saw her parents lose their own business before fleeing to England at the start of World War II, and who started her business with her husband in the 1940s, would never knowingly reduce her own ownership stake from more than 70 percent to less than 18, as Benesch did.
But Peters called the unsent 1996 memo a "red herring" that Hoisington wrote only because Connie, the less favored of Benesch's two daughters, had entered the picture.
Hoisington never had a conflict of interest because the entire family took part in all the decisions together, Peters said, and he "doesn't need to be dragged into this litigation."
According to Peters, the Benesches earned roughly $18 million in cash from their stake in the company between 1991 and 2000, while the Tandlers had control.
"She's got a lot of money, but she's here suing," Peters said, just before Judge John Stewart quickly cut him off, and admonished him for being argumentative.
Fritzi Benesch, sitting in the gallery, remained silent and composed throughout most of the proceedings, but dabbed her eyes with a tissue as Bass described her family's wartime flight from Germany.
However, deposition videos played by Peters showed the petite, bespectacled woman, who still speaks with a German accent, betrayed some of the anger he said is at the root of the case.
What did Benesch tell her daughter, Valli, as she was considering suing, asked the off-screen questioner.
"I said it was the money that I deserved ... it was the money I worked for my whole life ... and if I want to take the money and throw it in the ocean, I can do that," Benesch said.
