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Foppiano wine family settles dispute in mid-trial
Louis M. Foppiano, left, and Susan Valera, right.
Published: Thursday, December 22, 2011 at 3:44 p.m.
Last Modified: Thursday, December 22, 2011 at 3:44 p.m.
Heirs to the Foppiano wine family of Healdsburg settled their legal dispute Thursday at the beginning of the third day of trial testimony.
At issue had been control of the Foppiano Vineyards' family trust, estimated to be worth tens of millions of dollars.
Susan Valera sued her brother Louis M. Foppiano in an attempt to remove him as co-trustee. She said he neglected his financial responsibility by taking trust-backed loans used in part for executive bonuses.
The brother denied misuse of funds, saying in court papers he was carrying out a plan to upgrade the business, which has been in continual family ownership since its founding in 1896.
Under the terms of the settlement, both siblings will step down as co-trustees and allow the court to appoint an independent third party with wine industry experience.
Both will submit names to Judge Mark Tansil by Jan. 15. He can pick one or choose his own.
Valera's husband, Tony Valera, said the settlement achieved the goal of removing his brother-in-law from trust oversight. In court papers, Foppiano had accused Tony Valera of meddling in family business.
“It's been ugly, but we got Louis off the trust,” Valera said. “We've stopped the bleeding.”
Foppiano could not be reached for comment Thursday, but his attorney, Mike Senneff, said the settlement was one of the solutions his client had been suggesting all along.
The decision will have no affect on the winery, which has been getting its loans from a bank since 2008, Senneff said.
The settlement came as Louis Foppiano was about to begin his third day of testimony. Susan Valera was the next witness.
Their father, Louis J. Foppiano, 101, could have been called to testify. He passed control of the corporation to his son in about 2005 and named both children co-trustees in 2009.
“It's been a very difficult experience for the family,” Senneff said. “It's something they and the winery need to put behind them.”
“I think it was in everyone's best interest to find a solution that worked,” said Susan Valera's lawyer, Jeff Terry.
The lawsuit revealed a family business beset by struggling sales in addition to family quarrels.
The winery has taken on $4.1 million in debt and production has dropped from 100,000 cases to fewer than 20,000 cases a year.
Louis Foppiano sought to turn it around in 2008 by hiring professional management, beefing up marketing and making tasting room improvements. He testified his father had invested little money in the business over the decades.
Part of his plan called for borrowing $2.5 million from a bank. However, he took early loans totaling $650,000 from the family trust and used the trust as collateral for other financing.
His sister, who was head of the tasting room, said she was rebuffed when she asked to see the books. She sued her brother after the man he made president, Todd Arterburn, fired her in 2010.
“It all boiled down to the fact that Louis needed to borrow money to cash his paycheck,” said Tony Valera, winery production manager from 1985 to 1992. “Now he can't do that anymore so I guess we've won.”
The fate of the winery is unclear. Valera said its petite syrah has a good reputation, but the company is stumbling under the weight of debt.
Whether the siblings can recover from the rift remains to be seen.
“Time will tell what happens to Susan and Louis,” Senneff said. “It's been a very stressful situation and they've handled it as well as they could.”
You can reach Staff Writer Paul Payne at 568-5312 or paul.payne@pressdemocrat.com.
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