A longstanding private family dispute between Chevy Chase shopping center magnate Theodore N. Lerner and his younger brother has become public with the filing of a lawsuit in Montgomery County Circuit Court.
Lawrence E. Lerner, 52, alleges that his developer brother defrauded him of tens of millions of dollars, which he said represented his share of the proceeds in several business ventures.
The family's business, a management firm known as Lerner Corp., has built thousands of apartments and developed many of the major shopping centers in the Washington area, including White Flint, Wheaton Plaza, Landover Mall and Tysons Corner.
The lawsuit, which seeks $56 million in compensatory and punitive damages, said Theodore Lerner, 59, owns 70 percent of the company and Lawrence Lerner owns 25 percent, although Lawrence Lerner said his brother removed him from the company's board of directors in 1983. Since then, Lawrence Lerner said, he has "not been permitted to participate actively in the operation of Lerner Corporation and he Theodore Lerner has not provided any detailed information of the affairs of the corporation."
"There were reasons for Lawrence Lerner's removal ," Theodore Lerner said in an interview yesterday. He would not elaborate. Theodore Lerner said his brother's employment with the corporation ended upon filing the lawsuit April 8.
"I understand that he is constructing homes locally," Theodore Lerner said, but added that he had not been in contact with his brother.
Neither Lawrence Lerner nor his attorney, Arnold M. Weiner of Baltimore, could be reached for comment yesterday.
In the suit, Lawrence Lerner charges that on a number of occasions Theodore Lerner used the resources of Lerner Corp. to develop real estate properties, and then diverted the proceeds "to other entities from which only he [Theodore Lerner] would benefit from . . . . "
In one example described in the lawsuit, Lawrence Lerner contends he had a 30 percent interest in 32 acres on Layhill Road, near Georgia Avenue, which was condemned in 1982 for the Metro rail system. But Lawrence Lerner said that when it came time to get his share of the $2 million that Metro paid for the parcel, he learned that no stock certificates for the deal had been issued in his name.
Theodore Lerner said yesterday that he acquired and paid for the Layhill Road property without any financial contribution from Lawrence Lerner. He said his brother was only to have gotten a share of the proceeds if houses had been built on the land.
Theodore Lerner said he was disappointed that his brother had filed the suit. He said that for several years, the family has attempted to work out differences privately.
"Family problems cannot be solved by lawsuits and the courts should not be burdened with them." He said his legal response will show "that my brother joined a company which I started and he now finds himself a very fortunate person in terms of material wealth."
Theodore Lerner's attorney, Jacob Stein, said yesterday that Lawrence Lerner's allegations are untrue. He also noted that Lawrence Lerner has no real estate experience; that he was trained as a pharmacist and was taken into the business by his older brother years ago when he was unemployed. Stein said that as a result the younger brother is now a millionaire.
Theodore Lerner's wife, Annette Lerner, vice president of the corporation, and Maurice M. Myers, chief financial officer of the firm, were named codefendants in the suit.
Several years ago, Theodore Lerner was involved in a bitter dispute with his longtime business partners over Tysons II, which was one of the most valuable pieces of undeveloped real estate in the Washington area. After Lerner and his associates, Homer Gudelsky and Max Ammerman, could not agree on who should develop the 117-acre site, west of Tysons Corner shopping center, Fairfax County Circuit Court Judge Richard J. Jamborsky ordered it be sold.
Lerner then bought out his partners for $21 million. Since then, work has begun on a $550 million project there.