Appeals Court Says Property Fair Payment for Attorney : Transfer of DeLorean’s Pauma Valley Estate Upheld

Former auto maker John DeLorean was within his rights to give his sumptuous Pauma Valley estate to the Los Angeles lawyer who successfully defended him against drug charges as payment for legal fees, a federal appeals court ruled Thursday.

The 9th U.S. Circuit Court of Appeals ruled that a challenge to the transfer by the trustee of the bankrupt DeLorean Motor Co. was moot because DeLorean had paid the trustee $9 million in a settlement this March.

U. S. District Judge Lawrence Irving in Los Angeles previously had rejected the suit by the trustee, David W. Allard Jr. of Detroit, dismissing charges that the transfer was illegal and fraudulent.

Sought Money for Creditors

Allard had claimed in a suit filed in 1984 that any money gained from the transfer of the estate should be used to pay DeLorean’s many creditors, not high-profile attorney Howard L. Weitzman.

“I’m real happy,” Weitzman said Thursday. “I think (the ruling) vindicates John, and I think it vindicates, more importantly, me.” A phone call Thursday to Allard’s office in Michigan was not answered.

Weitzman successfully defended DeLorean after he was arrested in 1982 and charged with conspiring to import $24 million worth of cocaine to save his failing auto company.

DeLorean, who also paid Weitzman a $1-million retainer for his work, transferred the ranch’s deed of trust to Weitzman in July, 1983, and conveyed the property to him by quitclaim deed in March, 1984.

On behalf of the bankrupt DeLorean Motor Co., Allard filed his suit in April, 1984, to block the transfer of the property, charging that it was done to avoid paying creditors of the sports car company. The company had filed for bankruptcy in 1982.

In August, 1984, DeLorean was acquitted of the criminal charges after a four-month trial in Los Angeles.

‘Legal Miracle’

Irving subsequently rejected Allard’s suit, praising Weitzman for DeLorean’s acquittal. “He pulled off the legal miracle of the century,” the judge said, referring to what appeared to be overwhelming evidence of guilt. DeLorean was videotaped while allegedly arranging a drug deal with undercover FBI agents.

The 48-acre Pauma Valley property in North San Diego County, which reportedly was worth $2.5 million, was a fair equivalent for the $2.5 million in legal fees owed Weitzman, Irving said.

After a formal judgment recording Irving’s verdict was entered in November, 1987, and despite Allard’s appeal, Weitzman said he sold the ranch in early 1988, for “about $1 million.” He said he did not remember who bought it.

Weitzman also said he believed he was “entitled to (the $1.5 million) difference,” and plans to seek that amount from Allard.

Judge Dorothy W. Nelson wrote the appeals court opinion holding that the settlement this March made Allard’s challenge moot. Judges Betty B. Fletcher and William A. Norris concurred.

The ranch, known as La Cuesta de Camellia (The Hill of Camellias), is in the secluded Pauma Valley at the foot of Palomar Mountain, 50 miles northeast of San Diego.

Even an Aviary

The 7,000-square-foot house reportedly had six marble bathrooms; four fireplaces; an aviary for finches, turtledoves and lovebirds, and a 22-by-41-foot swimming pool. Off the master bedroom was a 10-person hot tub.

The grounds included stables, a tack room, large fenced paddocks and 17 acres of citrus trees overlooking the valley.

Weitzman said the estate costs $10,000 to $12,000 a month to keep up. He said he looked upon it only as security for a claim, not as his own getaway. “I never went through it,” he said.

DeLorean, one of the rising stars of the automobile business, left General Motors Corp. to found his own car company in 1973. The DeLorean Motor Co.’s two-seat, gull-winged sports car hit the market in 1980 with a $25,000 sticker price. But an auto slump and weak demand for the sleek, stainless-steel cars gradually destroyed the firm.