Dolan sues former partners at Mendocino Wine

  • Paul Dolan at VML Winery in Healdsburg, April 3, 2012.

Veteran wine executive Paul Dolan has filed a lawsuit against his former partners at Mendocino Wine Co., alleging he was fired as president of the Ukiah company and has not been offered the full amount for his stake in the business.

The partnership came to a messy end in January, when Mendocino County sheriff's deputies were called to intervene. The rupture, which stunned Wine Country, left Tim and Tom Thornhill in control of the company they co-founded in 2004 with Dolan to buy Parducci Wine Cellars.

Dolan declined to discuss details of the incident, saying only that there was a "disagreement on how to move forward with the partnership."

"I think they looked at it like they're going to fire somebody, they've got to have the cops involved," Dolan said in an interview. "I don't know why they thought that. I completely dedicated myself to the company, worked for a year and a half without a salary to make sure we were successful. ... I don't know why they did what they did. It was a surprise."

Tom Thornhill, now managing partner at Mendocino Wine Co., did not return a call for comment.

"This is now a legal issue and in the hands of attorneys," said Michael Fineman, a spokesman for the company.

Dolan's lawsuit, filed in Mendocino County Superior Court last month, alleges the Thornhills undervalued his share of Mendocino Wine Group, which operates the business. It contends the Dolan family trust is owed an undisclosed amount — likely in the millions of dollars, according to his attorney.

"We had a disagreement about what the Dolan Trust's interest in Mendocino Wine Group is, and we weren't seeing a way that we were going to get an agreement any time soon," said Gregory Spaulding, a Santa Rosa attorney who is representing Dolan.

Dolan owned about 30 percent of the company at the time that he left, Spaulding said. The Mendocino Wine Group hired Eureka Valuation Advisors to determine the value of the company and Dolan's stake in the business, but Dolan believes the amount was too small, Spaulding said.

"(Mendocino Wine Group) has been in existence for almost eight years and in that time, MWG has increased in value well beyond the members' capital contributions," the lawsuit states. "It was never the intent of the parties that a departing member would receive only the balance of the member's unreturned capital, rather than the member's percentage share of the value of MWG."

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