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Amid family’s dirty laundry, law firms clean up

Michael Schwartz August 28, 2013 2
Richmond-law-firms

Many of Richmond’s biggest law firms landed work in the saga of the Dixon family.

A family feud about an hour west of Richmond concluded last week with a large settlement for one side of the clan, and the three-year legal battle turned out to be a boon for the local legal scene.

Many of Richmond’s biggest law firms landed work in the saga of the Dixon family of Buckingham County and the mining, timber and hotel fortunes of its company the Disthene Group Inc.

Lawyers from LeClairRyan, Troutman Sanders, Hunton & Williams, Williams Mullen, McGuireWoods and others worked the case, collectively logging thousands of hours on the various facets of the dispute.

The case finally ended Aug. 23 with a $77 million settlement that avoided a faceoff in Virginia Supreme Court that had been set for September.

The case pitted siblings Curtis Colgate and Sharon Newcomb and their father, Marion Boyd Colgate, against Disthene chairman Gene Dixon. Dixon is the sibling’s uncle and the brother-in-law of Boyd Colgate.

The legal wrangling began in 2010, with disagreements over the Dixons’ handling of the company and the Colgates’ trust. The Colgate side owned just under half of the company; Dixon and his children held a controlling interest.

Disthene’s wealth is tied to three main Virginia assets: a mining operation that controls massive reserves of the valuable mineral kyanite, expansive timberland holdings, and the Cavalier hotel, a Virginia Beach icon.

The value of the assets had been pegged at about $200 million during the dispute. Dixon and his late sister inherited the company from their grandfather.

Alan Wingfield

Alan Wingfield

At each stage of the quarrel, various Richmond lawyers scored a piece of the action.

“There were many lawyers from many different law firms representing many different people,” said Troutman Sanders attorney Alan Wingfield, who with his colleague Michael Lacy fought to help the Dixons avoid the dissolution of the company.

“Most every major law firm [in Richmond] at some point or another in this saga had some involvement.”

Wingfield and Lacy went head to head with LeClairRyan attorneys Michele Burke, John Craddock and Tom Wolf, who worked the case for the Colgates, helping to win $70 million for them in the settlement.

Tom Wolf

Tom Wolf

“They were living and breathing it day in and day out for a long time, which is what it required in order to win,” Wolf said of his colleagues.

Hunton & Williams got involved when the judge in the case appointed a receiver to take over and look to dissolve the family’s holdings.

McGuireWoods and Williams Mullen were involved in the earlier stages regarding the family trust and Dixon’s actions as trustee. Kaufman & Canoles also had a piece.

The Colgates weren’t the only winners in the case. Wolf emphasized that the case sets an important precedent for the rights of minority shareholders in closely held companies.

“All [the Colgates] ever wanted was to be treated fairly and honestly by their uncle and cousins,” he said.

“What’s remarkable about this case is this kind of thing goes on all the time, but usually the minority shareholders don’t have the staying power to fight it. It took three years of litigation, but in the end they did get justice.”

While the settlement helped the Dixons retain 100 percent ownership of the company and avoid selling the mining and timberland operations, Disthene was forced to sell the Cavalier Hotel prior to the settlement being reached.

Virginia Beach developer Bruce Thompson in July bought the property for $35 million.

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2 Comments »

  1. John Thompson August 28, 2013 at 10:03 am - Reply

    No wonder I can’t find an attorney in downtown Richmond, they were all working on this case. They could have saved themselves a lot of time and money if they just settled it like gentlemen in the old Virginia fashion. Just challenge your FFV relative to a duel, winner take all. Great story biz sense.

  2. Becky Stephens September 5, 2013 at 7:47 am - Reply

    Wow, so it took 3 years for the lawyers in Richmond to decide how much they wanted to get paid out of it all.

    Sounds about right.

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