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Lawsuit Over Napa's Schramsberg Estate Takes a Hit—But Still Alive

Son who sought a one-third interest in the family trust has only one part of his claims against his mother, winery founder Jamie Davies, still active

Eric Arnold
Posted: Friday, January 04, 2008

Most of the claims made by Moscow-based investor John Davies against his mother, Jamie, who founded Schramsberg Vineyards with her late husband, Jack, have been tossed out by a California judge. Right before Christmas, however, Judge Raymond A. Guadagni of Superior Court in Napa County denied a motion to dismiss one part of John Davies' civil claim. So the legal wrangling over one of Napa's trailblazing wine companies is expected to continue well into the New Year, but will be limited to a single dispute rather than the much more valuable share in the Schramsberg estate that was originally contested.

"I am far away geographically having lived outside of California for many years but also have a family and a future," wrote John Davies in an e-mail to WineSpectator.com. "I have done nothing in the world to be disinherited and we needed to prevent this misappropriation of my rightful property."

Davies' case was broken into two separate proceedings filed in August in Napa County Superior Court. The first was a probate petition to have his mother removed as head of the family trust, which argued that Mrs. Davies was "incompetent" to administer the trust because she is ill. That claim was dismissed by the judge and is currently being appealed. John Davies' second claim, a civil complaint, was broken into three parts, two of which have been dismissed by the judge. The third, an alleged breach of shareholder agreement, is the one still in play.

Davies alleges in his complaint that when he sought to sell his shares in the winery, which he held outside the trust, his mother made him what he felt was too low an offer. When Davies then found a new offer from Duckhorn Wine Co., his mother not only matched that offer, but called in the notes on loans she had previously made to her son, ostensibly to force him to sell his shares in the winery to her. The complaint alleges that in 2006, Mrs. Davies hit her son with a $166,000 charge in interest and principal on two of the loans.

The financial value of this particular dispute pales in comparison to the dismissed claims made by Mrs. Davies' son. As reported by WineSpectator.com in early December, John Davies, one of three sons, was seeking a one-third share in the family trust, which is run by Mrs. Davies. John Davies claims that his parents promised that an irrevocable trust including the Schramsberg winery estate and other assets would be set up in which he and his brothers would each receive a one-third share upon their parents' death. He alleged that the trust is instead being reworked to squeeze him out. (The current provisions of the trust were not revealed to Wine Spectator by any of the parties involved, nor was the existence of any written will or its contents confirmed.)

"The court has thrown out all of John's claims for breach of fiduciary duty, as well as all of his claims challenging his mother's competence," wrote Paul Carey, the lawyer for Mrs. Davies, in an e-mail to WineSpectator.com. "Only one claim remains, and it relates to John's dissatisfaction with his prior sale of his shares in Schramsberg. Mrs. Davies remains hopeful that this matter can be resolved without further court action."

Though the two parties had agreed to a mediation session for the end of the last year, it never took place. But Carey said that the scheduling of a new session is in the works.

--Jenna Hudson and James Laube contributed to this report

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