Glorya Kaufman cannot shake the litigation labyrinth that is Fortress Investment Group’s battle to recoup $50 million it lent to Leonard Ross, the owner of the William Randolph Hearst mansion.
The Los Angeles County Superior Court denied Kaufman’s motion to kill a breach-of-contract complaint filed by Fortress in the multi-faceted saga.
The New York City–headquartered private equity giant is contending that Kaufman — a philanthropist to USC and fixture of L.A. high society — reneged on her guarantee of a $50 million loan Ross got from Fortress.
Ross, a lawyer, has continually refinanced the Hearst estate, with Fortress as his latest primary lender. Staring down $311 million in assorted debts, according to federal bankruptcy papers, a Ross-held LLC has listed the abode for $125 million.
The ruling, handed down by a private mediator at Judicial Arbitration and Mediation Services and published by the court, summarizes the Kaufman/Fortress dealings as ferocious and convoluted.
“A flurry of negotiations” surrounding Kaufman’s potential purchase of Fortress’s loan to Ross “became heated in tenor and tone,” wrote JAMS mediator Charles McCoy in his decision.
In trying to throw out the lawsuit, Kaufman argued that such back-and-forth is not evidence of breach of contract but “privileged communications” in the course of a business transaction.
McCoy did not rule on whether Kaufman committed breach of contract. But he dismissed Kaufman’s allegation of breach of communication “as unduly overbroad” and said that the exchanges can be grounds for Fortress’s lawsuit.
Fortress declined to comment. A message left with Kaufman’s attorney, Luan Phan, was not returned Wednesday.
Ross purchased the 21,000-square-foot property at 1011 N. Beverly Drive in 1976. Its claims to fame include being the home of Hearst’s mistress, Marion Davies, and site of John and Jaqueline Kennedy’s honeymoon. (Another former Davies home, on Long Island, hit the market in June.)
Ross put the Beverly Hills home on the market in February, with Mauricio Umansky and Santiago Arana of The Agency as listing agents.
Fortress moved to seize the property in bankruptcy court, though a federal bankruptcy judge has continually delayed rulings on the matter.