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.