'Feelings run too deep' | Family behind Louisville's Al J. Schneider Co. heads back to court after settlement talks fail
The Louisville family that owns the Al J. Schneider Co. is headed back to court after failing to settle their differences over the future of the firm and its $300 million in assets, despite private talks that went on for nearly a year.
LOUISVILLE, Ky. (WDRB) -- The Louisville family that owns the Al J. Schneider Co. is headed back to court after failing to settle their differences over the future of the firm and its $300 million in assets, including the Galt House hotel.
Infighting among the Schneider clan – primarily among Schneider’s four living daughters – erupted in early 2016 over an unsuccessful attempt to sell the iconic hotel in downtown Louisville.
The proposed sale for $135 million divided the family and fizzled as the feud spilled into Jefferson Circuit Court.
While the hotel will remain with the family company for the foreseeable future, the botched sale exposed a bitter rift between Schneider daughters Mary Moseley and Dawn Hitron – who favored liquidating the company – and their sisters Christe Coe and Nancy O’Hearn, who wanted to keep it intact.
Tim Mulloy, a public relations executive who represents the Moseley-Hitron side, declined to comment.
An attorney for the Coe-O’Hearn side did not return multiple calls for comment.
Each party has accused the other of illegal scheming to sabotage the company and their siblings’ inheritance. One lawyer said in court last year the sisters had generated “an ungodly amount of attorneys’ fees” pursuing their respective claims.
The bickering subsided late last year – at least publicly – as the family and their coterie of attorneys tried to work out their differences in private.
“I wish we could have gotten it settled,” Jefferson Circuit Court Judge Mary Shaw said during a court hearing on July 10, according to court video. “I think feelings run too deep in this, and it probably will end up going to a jury trial.”
Shaw, who had overseen the case since March 2016, recused herself last month because of “the confidences” that Schneider heirs shared with her during settlement talks, she said.
“After having met with these people so many times -- I just, you know -- know that stuff that I don’t think I should know, to be honest, if this goes to a jury,” Shaw said in court on July 10.
Shaw did not return a call asking for her to elaborate on those comments.
The case is now before Circuit Judge Brian Edwards, who is also overseeing a lawsuit involving the Schneider Co. and its business partner, developer Eric Bachelor, over the management of the Embassy Suites hotel downtown.
Edwards has yet to make a ruling, and no trial has been scheduled.
Schneider family’s vast holdings
In addition to the Galt House – the biggest hotel downtown with nearly 1,300 rooms -- the Schneider Co. owns the Waterfront Plaza and Riverfront Plaza office buildings on Main Street and the Crowne Plaza hotel near the airport. It also has a stake in the Kentucky Kingdom amusement park and the Embassy Suites downtown.
Court records show the family faction led by Coe and O’Hearn took control of the company last June and immediately fired Moseley, who had served as president of the company and chair of its board for 15 years.
The late Al J. Schneider had picked Moseley to succeed him as the company’s leader, according to an affidavit by William Cooper, the Schneider Co.’s longtime former lawyer.
The overhaul of the company’s board and management came after Schneider’s 21 children and grandchildren – including one ex-spouse -- got direct power over the company for the first time since Schneider’s death in 2001, according to court records.
Rather than giving his company to his descendants, Schneider set up a five-person trust to control the firm for 15 years following his death. The trust consisted of Moseley, Coe, Hitron, certified public accountant Michael Mountjoy and former Galt House General Manager R. Joseph Mittel.
The 15-year period ran out June 1, 2016, when the trust handed over the voting stock to the company to the broader family.
The Coe-O’Hearn side argues that the trust – controlled by an alliance of Moseley, Hitron and Mountjoy -- tried to sell the hotel at the 11th hour, over the objection of 15 of the 21 family beneficiaries.
By pursuing the sale of the hotel, the “mindset of the family” was that Moseley “wasn’t listening to the family’s wishes,” Coe said in July 2016, according to an excerpt of a deposition included in the court record.
After the broader family took over the company in June, they also demoted Hitron, who had been a board member and secretary of the company, to a "demeaning" job located in the maintenance department at the Galt House basement, according to court papers filed by the Moseley-Hitron side.
The Coe-O’Hearn side also began mining the company-owned email account that Moseley used for 15 years for evidence, sparking a fight between lawyers over whether Moseley’s communications are subject to attorney-client privilege or fair for the company and its new management to view and use.
Moseley, meanwhile, demands a severance payment of at least $500,000 for her dismissal as the company's leader, according to court records.
Side battle between lawyers
The Schneider family feud has even sparked a skirmish among attorneys serving different factions of the family.
In a separate case, the Schneider Co. – now chaired by Coe’s husband, former Kosair Charities chief Randy Coe – is suing Ackerson & Yann, the law firm that advised the Schneider Co. or its predecessors for about 60 years until last year.
The Schneider Co. alleges that Ackerson & Yann failed to turn over company records following the change in management last June, and that the firm assisted Moseley, Hitron and Mountjoy in their alleged breach of fiduciary duties to the company stemming from the botched plan to sell off its assets.
Ackerson & Yann’s attorneys are in turn asking a judge to remove the Schneider Co.’s new law firm, Lynch Cox Gilman & Goodman – arguing Lynch Cox improperly obtained confidential communications between Ackerson & Yann and its former client.