Paul Dolan, Mendocino Wine partners settle bitter legal battle

Wine executive Paul Dolan and his former partners at Mendocino Wine Co. have agreed to drop their dueling lawsuits against each other, ending a more than two-year bitter legal battle that shocked much of Wine Country.

Dolan sued Tom and Tim Thornhill after he was fired as president of the Ukiah winery in January 2012, a dispute where Mendocino County sheriff’s deputies were called to intervene. The three, brought together by their love of organic farming, had formed the company in 2004 after buying Parducci Wine Cellars.

Dolan sued the Thornhills to retrieve a 30 percent ownership stake, with his attorney alleging he was owed millions of dollars from his original $200,000 investment. Mendocino Wine Co. counter-sued, alleging Dolan leaked trade secrets and steered business opportunities away from the company to other businesses where he had a financial stake.

As part of the settlement, both parties will drop their respective suits, and Dolan will drop his federal lawsuit seeking to retain the rights to the Paul Dolan brand. No financial settlement was exchanged between the parties, but hard feelings remain.

Dolan said it was hard to walk away without any financial compensation and give up the rights to the Paul Dolan brand, but added that he could not afford his mounting legal fees.

In March, Dolan sold $1.13 million in stock in Truett-Hurst Inc., where he serves as a director, according to U.S. Security and Exchange Commission documents. Dolan said some of the money from the sale went to pay legal fees.

“I couldn’t financially keep up with (Tom’s) wealth,” Dolan said Thursday in an interview.

He added that the hardest part was giving up his namesake brand, which represents less than 15 percent of Mendocino Wine Co.’s sales, primarily to restaurants. The company touts the brand’s grapes as grown without conventional pesticides and synthetic fertilizers. “The quality is not as good as when I was making it,” Dolan said.

In a separate interview, Tom Thornhill, who serves as chief executive officer, disputed Dolan’s claims and noted that he and his brother had been interested in sustainable business practices before meeting Dolan. The 60-employee winery, he said, has continued to thrive under president Gary Glass, who previously worked for Jess Jackson, Francis Ford Coppola and Constellation Brands.

It produces 200,000 cases annually and does another 200,000 cases as a custom-crush facility for winery clients.

Thornhill noted that Dolan was the one to make the settlement offer. He said Mendocino Wine Co. had strong evidence that Dolan breached his fiduciary duties by doing side deals on company email and conference lines.

“I think he realized that if it went all through a trial it could be catastrophic for him,” Thornhill said.

Mendocino Wine Co. plans to continue to grow its volume brands, Thornhill said, such as its Parducci’s Small Lot Blends, which retails from $10 to $15, while also focusing on its high-end Moniker brand.

For his part, Dolan said he plans to focus on the 300 acres of vineyards that he owns in Mendocino County, helping spread the practice of biodynamic farming that he spearheaded when he served as president of Fetzer Vineyards. Under biodynamic farming, crops are treated without chemicals and growers strive for the farm’s ecosystem to be balanced, self-sustaining and healing. Dolan said he has been asked to join the board of Demeter USA, which certifies biodynamic farming.

He also is a partner with his son, Heath, in Premium Wine Storage and a new custom-crush facility in Healdsburg, Red Custom Crush. He previously served as chairman of the Wine Institute, the industry’s largest trade group.

“Life is strange, but I have gotten all types of opportunities since I left,” Dolan said.

You can reach Staff Writer?Bill Swindell at 521-5223 or bill.swindell@pressdemocrat.com.?On Twitter @BillSwindell.