With control of $80 million at stake, Turner family returns fire

Dollar General heirs respond to former asset manager's litigation with a lawsuit of their own

Email | Print By Walker Duncan and E. Thomas Wood

05-23-2006 5:12 PM —

After being sued last week by former employee Jane Cleveland, the Turner family of Dollar General fame, along with investor David M. Wilds, have filed their own legal action against Cleveland. The lawsuit accuses her of fraud, breach of fiduciary duty and other misconduct in her capacity as manager of certain family-owned real estate entities.

As NashvillePost.com reported last week, Cleveland's case against a Turner family company and Wilds asserted that she was wrongly fired last month and should retain control over, and some ownership share in, partnerships holding portions of the Turner fortune. The new lawsuit, filed yesterday in Davidson County Chancery Court, reveals that the Turners have made or committed to make almost $80 million of investments into these vehicles.

Cleveland, who went to work for the Turners in 2000, also claimed in her lawsuit that Wilds had made "inappropriate overtures" in an effort to "develop a personal relationship" with her. The lawsuit against her makes no reference to those claims.

The Turner family/Wilds complaint contends that Cleveland fraudulently arranged for the drafting of partnership documents that appeared to give her control over the real estate investments. The plaintiffs claim to have been under the impression that Beech Street Management, an umbrella limited liability company controlling several partnerships, would be member-managed, as is the default setting for companes incorporated in Delaware. Cleveland oversaw the drafting of both the limited liability agreement and the limited partnership agreements, it is claimed, and provided that the entities would be managed under her authority.

The complaint seeks Cleveland's legal removal as manager of the various entities over which she claims control, and it seeks an unwinding of provisions that appear to limit the Turners' control over those entities. It also asks for compensatory damages against Cleveland, as well as "punitive damages ... sufficient to punish her for her intentional, fraudulent, malicious and/or reckless misconduct."

While putting a dollar figure on the assets involved, the new legal action also reveals some of the large investment vehicles into which the money was directed. They include highly regarded funds such as Praedium V and Praedium VI, one or more of the Walton Street funds, and others such as the Blackstone IV fund that has achieved annual returns of 70 percent, according to Forbes.

Buck Cole, attorney for Cleveland, issued a statement late this afternoon stating that the claims against her "will not stand the scrutiny of the court or a jury" and that her original complaint "was well founded and should prevail."

Cleveland never engaged in the "self-dealing or deception" described in the lawsuit, Cole said. "The documents in question were actually developed at the direction of Mr. Wilds."

The statement continues: "Ms. Cleveland did not seek this public battle. She did her job, followed the direction of Mr. Wilds on business matters, and managed the affairs of her investors and employers in a highly professional manner. She believed so strongly in her investment recommendations that she invested a significant amount of her personal funds into them. Her desire is that her former employers honor the documents and agreements that they signed and that have governed her actions for the past several years.

"Ms. Cleveland has the highest regard for members of the Turner family and regrets that the actions of Mr. Wilds have forced her to defend her interests and her integrity from wrongful dismissal as well as false and detrimental allegations."

Cole's statement concludes by expressing Cleveland's belief that it will be possible to reach a "mutually acceptable resolution" to the parties' competing claims but affirming that she is prepared to go to trial if necessary.

Bringing the new lawsuit for the Turner family and Wilds are Aubrey Harwell, Jon D. Ross, Trey Harwell and Elizabeth Tipping of Neal & Harwell. Representing Cleveland are Cole and David Houston of Greenebaum Doll & McDonald.

Each side has engaged heavyweights from the public relations field to spin its case to the masses. Local political consultant and PR man Bill Fletcher of Fletcher Rowley Chao Riddle Inc. is working on behalf of Cleveland, while the Turners and Wilds have retained Pat Nolan and John Van Mol of Dye, Van Mol & Lawrence Inc.

Link: Complaint as filed May 22, 2006 in Davidson County Chancery Court