A bitter battle over the $2 billion estate of the late shopping mall tycoon Melvin Simon has ended with a confidential settlement.
Hamilton County Superior Court Judge William J. Hughes signed off on the agreement following a hearing Wednesday morning attended by sisters Deborah Simon and Cynthia Simon-Skjodt. They had objected to changes to their father’s will that gave stepmother Bren Simon a larger chunk of the estate after Melvin died in 2009.
The judge agreed to close the hearing and accept the settlement under seal because some of the financial terms involve the estate’s holdings in publicly traded Simon Property Group Inc. All of the principals in the case had to sign off on the deal, as did not-for-profit organizations, including Indiana University, that are set to receive charitable gifts from the estate.
An IBJ reporter attending Wednesday’s hearing was asked to leave shortly after it began around 10:45 a.m. Closed hearing are unusual in estate cases, and the newspaper registered its objection.
An attorney for trustee Theodore R. Boehm, the former Indiana Supreme Court justice, requested the hearing be closed, and none of the other parties objected.
Cynthia Simon-Skjodt declined to discuss the agreement but said she’s “glad it’s over” as she stepped onto a courthouse elevator with Deborah Simon, the plaintiff in the case. After the elevator doors closed, one of them let out a loud “Yeah!”
Attorneys for Bren Simon, who did not attend the hearing, declined to comment.
The judge’s order accepting the settlement describes the resolution as “just and reasonable.” It also notes that the agreement marks an end to bi-weekly estate distributions of $125,000 to Bren Simon.
There have been suggestions in court records that a settlement was near, particularly after attorneys for both sides agreed in October to vacate a scheduled July 2013 trial date and put discovery on hold, a development IBJ reported in November.
The largest argument in favor of a settlement: The fortune they’re fighting over has swelled in size since the legal battle began in January 2010, four months after Melvin died at 82.
The co-founder of Simon Property Group Ieft an estate worth about $2 billion. His principal holding was Simon Property stock, which was a good investment during his lifetime and has only gotten better since. Simon shares now fetch $156 apiece, more than double where they were when his daughter Deborah filed to contest the will.
Deborah is one of Melvin’s children from his first marriage. The other surviving children from that marriage are Cynthia Simon-Skjodt and David Simon, chairman and CEO of Simon Property Group. She and her siblings contend Mel was suffering from dementia and didn’t understand what he was doing when he revised his estate plan in February 2009, boosting the share of his fortune going directly to Bren from one-third to one-half.
The changes also wiped out a portion that was to go directly to the children and left charitable gifts stipulated in prior versions to Bren’s discretion.
Bren, 69, who was married to Mel for 37 years, contends the changes fully reflected his wishes. She said Mel wanted to compensate her for the negative impact of the financial crisis, which had knocked Simon shares into the $40 range and caused the board to sharply reduce the cash dividend.
The court fight has exposed deep division between Mel’s children and their stepmother. In one e-mail quoted in court, Bren said of the three: “I hope they rot in hell.” Bren also gave an emotional deposition, in which she said her stepchildren have been “cruel, insensitive and hurtful on a fairly regular basis” since she joined the family. (Watch portions here.)
Hefty attorney’s fees typically give parties a strong incentive to settle and halt the bleeding, but the Mel Simon estate is so large that the many millions of dollars in fees represent barely more than a rounding error.
Still, the rising value of Mel’s estate made it possible for a deal both sides could embrace as a victory. The template was the resolution in the fall of a side dispute with Simon Property Group, which had blocked Bren’s attempt in early 2010 to cash in Simon holdings held by a Mel Simon trust.
The settlement allowed the sale to go forward, with the estate reaping $944 million—far more than the original transaction would have generated but a $100 million discount to the market value at the moment of the conversion. A win-win.
Settlement ends bitter battle over Mel Simon estate
December 12, 2012
Indianapolis Business Journal
Melvin Simon heirs settle estate feud
Daughter had accused stepmother of coercing father to change will
December 12, 2012
More than three years after Melvin Simon’s death, his nearly $2 billion estate finally will be divvied up.
How the assets will be split, however, could remain secret.
A Hamilton County judge Wednesday approved a sealed settlement in the nearly 3-year-old dispute over the division of the Simon estate, whose main holdings were shares in shopping mall giant Simon Property Group.
The settlement ends a bitter family fight over the estate of Simon, who died in 2009 at age 82.
The settling parties were Simon’s daughter Deborah Simon, who challenged his will, the court-appointed trustee of the estate and Simon’s widow, Bren Simon.
“Just and reasonable” was the way Superior Court Judge William J. Hughes characterized the settlement in a court order that came well before the scheduled summer trial date.
Caught up in the dispute were numerous Central Indiana charities, which now can expect to collect the gifts earmarked for them in the will.
Melvin Simon, who cofounded Indianapolis shopping mall developer Simon Property Group, made significant charitable pledges during his life to Indiana University, St. Vincent Hospital, Riley Children’s Foundation and Indianapolis Museum of Art, among other recipients.
The sometimes heated dispute over the will ended with a surprising absence of controversy. The judge said not a single person who had an interest in the settlement filed an objection to it.
The dispute reached the courts when Deborah Simon asked that her father’s will be invalidated, alleging that her stepmother, Bren Simon, coerced her ill husband to revise it some seven months before he died. The revised will boosted Bren Simon’s share of the inheritance and significantly reduced the portion going to her three stepchildren.
The other stepchildren are Cynthia Simon Skjodt and David Simon, who is chairman and chief executive of Simon Property Group, the nation’s largest shopping mall operator.
The company itself got involved in the dispute after refusing Bren Simon’s request to cash out or do a stock swap on untradeable founder’s units that were held by the estate. That side dispute was settled out of court two months ago when the company agreed to swap $900 million of tradable shares for the units.
Documents filed in the case showed intrafamily hostilities were running high even before the family’s patriarch died.
In a deposition, Bren Simon admitted she had referred to David Simon as a “terrorist” and called Deborah Simon “Debbie bin Laden.” She also acknowledged telling her staff to refuse to admit her three stepchildren into the couple’s California mansion while her ill husband was staying there.
The judge himself became a subject of the infighting when Bren Simon’s former attorneys asked him to step down after he got arrested for drunken driving in North Carolina during the case and briefly hired attorneys from the same law firm that represented Simon Property Group in its case.
The Indiana Court of Appeals ultimately decided Hughes should stay as judge in the estate dispute. In the North Carolina case, Hughes pleaded guilty to misdemeanor reckless driving.
The appeals court also ruled in the judge’s favor on his removal of Bren Simon as trustee. The judge replaced her with former Indiana Supreme Court Justice Ted Boehm.
During the course of the lawsuit, the estate’s squabbling heirs have benefited from a run-up in the price of Simon Property stock. The stock price has risen from around $83 a share in early 2010 to $156.40 on Wednesday.
With the settlement reached, the extended Simon family will continue to hold enough shares in Simon Property Group to control four of the 12 board seats on the publicly traded real estate investment trust, according to Melvin Simon & Associates, an entity that holds most of the family shares.
Holding those four board seats was a concern of David Simon, according to documents in the lawsuit.
The Simon family, through MSA, now holds 26.45 million shares and units, which make up 8.55 percent of the outstanding shares in Simon Property Group, according to a statement from MSA. That is more than the 5 percent stake required to hold onto the four board seats.
Attorneys for Bren Simon and Deborah Simon didn’t return calls for comment on the settlement.