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Foppiano Vineyards Caught In Sibling Legal Battle

December 21, 2011

Sonoma’s oldest family-run winery, Foppiano Vineyards, is facing the twin threats of plummeting sales and a lawsuit between family members over its management, reports Wine Spectator. Louis M. Foppiano, chairman of the 115-year-old winery in Healdsburg, is being sued by his sister, Susan Valera. She claims Foppiano threatened the health of the family trust that controls the winery by using it as collateral for loans to the company. She also accuses him of using some of that money for executive bonuses.

A Sonoma County judge began hearing arguments yesterday. As first reported in the Santa Rosa Press Democrat and according to documents filed for the case, Valera is asking that Foppiano be stripped of his title as co-trustee, leaving her in charge of the family trust. Neither side could be reached for comment on the pending case, but the documents include evidence that the winery has struggled for several years as the siblings have clashed over its management. Foppiano Vineyards’ annual sales, once over 100,000 cases, are now down below 20,000 cases, documents say.

Giovanni Foppiano, a native of Genoa, Italy, founded the winery in 1896. His grandson Louis J. Foppiano was only 14 when his father died, leaving him and his mother to tend the ranch and winery. They barely scraped by during Prohibition and the Great Depression. Foppiano—known as Lou Sr.—remembers a day in 1926 when government agents dumped 100,000 gallons of the family’s wine into a creek.

Today, Lou Sr. is 101. In 2009, he relinquished his rights to a family trust that controls 49% of the winery and vineyards, naming his son and daughter as co-trustees. Louis M., 64, known as Lou Jr., has worked in the winery since he was a boy and has managed it since 2003. He has spent several years trying to upgrade the old cellar, hired a new winemaker, replanted old vineyards and focused on Petite Sirah and Pinot Noir. Wine quality had declined in the final years of Lou Sr.’s management.

In legal papers filed with the court, Lou Jr. claims that Valera and other family members supported him when he brought in an outside consultant in 2008 to suggest how to revitalize the brand. Foppiano then hired a manager and took out close to $4 million in loans to pay for improvement projects, using the family trust as collateral. But the plan ran straight into the recession. Revenue was 35% less than projected in the 2009 fiscal year.

Foppiano alleges that Valera and her husband began demanding financial documents and pressuring him to sell the business. But in her suit, Valera accuses Foppiano of financial mismanagement and of paying himself sizable bonuses. She also alleges that when she began asking questions about the company’s finances, Foppiano fired her. Her brother responds that her position was eliminated, along with several others, as part of cost-cutting measures.

Arguments are expected to last a week, and the judge will decide the future of the family trust. The winery still has impressive assets in its cellars and vineyards, and a well-known brand name. With investors recently scooping up several old Sonoma wineries, Foppiano would be a tempting acquisition. Seghesio Vineyards, Sonoma’s second oldest family-owned winery, was sold to Crimson Wine Group earlier this year.

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