Executives at Mendocino Wine Group filed a cross-complaint against ousted former president Paul Dolan, claiming he leaked trade secrets, steered opportunities away from the Ukiah company and deprived it of profits with the intent to "vex, injure or annoy" them.
Mendocino Wine Group filed the cross-complaint in Mendocino County Superior Court last week, seeking unspecified damages from Dolan.
"You can say anything in a complaint, but they're not going to be able to prove this at all," said Greg Spaulding, attorney for Dolan. "The fact is Paul Dolan didn't do anything to harm Mendocino Wine Group."
The group said Dolan didn't properly disclose his role with H.D.D., an umbrella company that owns Truett Hurst Vineyards. They said Dolan claimed he was just a passive investor in H.D.D., which he founded with Phil Hurst, Bill Hambrecht and son Heath Dolan. However, the cross-complaint contends that Dolan failed to disclose he was working with H.D.D., which they say is a direct competitor.
"That's not true, they knew," Spaulding said. "His relationship was that he was an investor, but not a manager."
Mendocino Wine Group also claimed Dolan interfered with the company's relationships with wine industry producers, suppliers and financial institutions by sharing highly confidential information with third parties and competitors and diverting business opportunities to himself. Dolan's attorney disagreed.
"Up and down the chain, he used his relationships to help build Mendocino Wine Group," Spaulding said. "And they knew that and were taking advantage of it. They appreciated it."
Thomas Thornhill III, CEO of Mendocino Wine Group, declined to answer questions about the filing, stating through a spokesman that the litigation is self-explanatory.
"We elected to file the cross-complaint now, as we are just beginning to understand the extent of the financial impact of Mr. Dolan's actions on our business," Thornhill wrote in the statement.
Dolan filed a lawsuit against Mendocino Wine Group in April, alleging he was not offered the full amount for his stake in the business. The cross-complaint claims Dolan is owed $119,000 for his share of the business. But Spaulding claims Dolan's stake was worth millions. Dolan invested $200,000 for a 30 percent stake of the company in 2004, and the company grew to an estimated value of $10 million, Spaulding said.
The Thornhills sought dismissal of the lawsuit in May, but the request wasn't granted.
In 2004, Dolan and the Thornhills co-founded Mendocino Wine to buy Parducci Wine Cellars. Before co-founding Mendocino Wine, Dolan was president of Fetzer Vineyards. He led a movement to persuade the wine industry to embrace sustainable practices and served as chairman of the industry's largest trade group, the Wine Institute.