A family feud is playing out in Baltimore-area courthouses over millions of dollars in assets that once belonged to one of the largest residential builders and managers in the area.
At issue is the estate and trust of the late Philip Macht, whose great-uncle founded the business that now includes Regional Management Inc. Macht committed suicide in 2011 and his estate owns large portions of the holding companies that own the rental properties overseen by RMI.
But Lois Macht, Philip’s wife of 62 years, has alleged in court filings that the estate would own more of the holding companies — and be worth more — if not for Amy, one of their four children, who now leads RMI. Amy, Lois alleges, conspired with a longtime family lawyer to have her ailing father change his estate documents to make Amy the personal representative of Philip’s estate and successor co-trustee of a trust created by Philip’s father.
Amy, according to Lois, also allegedly transferred shares of the holding companies to limited liability corporations she created to gain control over the assets while her father was alive and also charged excessive fees to RMI, thereby lessening the value of the estate.
As a result, “Amy had achieved complete control over the Macht family assets and had thereby deprived her mother and siblings from any voice in the management and disposition of the Macht family assets,” an amended complaint states.
Amy, the only child to follow Philip in the business, has denied all of the allegations and has countered in court filings that changes to any estate documents were done legally and with Philip’s consent.
“Plaintiff’s displaced anger towards her daughter can find no remedy at law or equity,” a motion to dismiss Lois’ lawsuit states.
The lawsuit was filed in Baltimore County Circuit Court and no trial date has been set. A separate battle in Baltimore City Orphans’ Court over Philip’s estate, which is worth about $36 million, has been stayed pending the resolution of the county litigation. Lois Macht filed exceptions last summer to Philip’s estate that were opposed by Amy, who accused her mother of “needlessly wasting judicial resources” by “trying to force parallel litigation” of her Baltimore County case.
“The notion Amy suddenly devised a scheme to enrich herself and RMI at the expense of the estate is preposterous,” Amy’s motion states.
Last month, Lois Macht and several family members who hold shares in various corporations connected with the family business filed nine lawsuits in Baltimore City Circuit Court, each seeking to inspect the companies’ books.
Arnold M. Weiner, Lois’ Macht’s lawyer, declined to comment on the litigation. Weiner is with Rifkin, Weiner, Livingston, Levitan & Silver LLC in Baltimore.
Paul Mark Sandler, Amy Macht’s lawyer, also declined to comment on the lawsuit. Sandler is with Shapiro Sher Guinot & Sandler in Baltimore.
The Macht family story goes back to 1911, when Ephraim Macht founded the Welsh Construction Co. Ephraim Macht was joined in the business by his son, Morris, and nephew, Morton, both of whom succeeded Ephraim when he died in 1944. Five years later, Philip, Morton’s son, began working for the company. Morton and Philip assumed control when Morris died in 1954. Morton died in 1966, leaving Philip in charge.
The company built homes, apartments and townhouses throughout the region but Philip shifted the company to focus on construction of apartment and townhouse rental projects owned by the family, according to the amended complaint. Welsh Construction is still incorporated but Philip stopped its construction and development operations in 1983, at which point the Macht family owned 20 residential projects consisting of more than 5,000 rental units, as well as the land under the Merritt Park Shopping Center, according to the complaint. (Regional Management, whose downtown offices on East Fayette Street are in the Macht Building, was incorporated in 1959.)
Morton Macht created a trust for his wife, Sophia, before he died. Sophia executed her last will and testament in 1972 and named Philip as a trustee with the power to appoint co-trustees, according to Lois Macht’s lawsuit. The will was amended in 1981 to make Lois the successor trustee to Philip, followed by Philip and Lois’ children, Amy, Carol, Robert and Jane, who are also beneficiaries, according to the lawsuit. Sophia Macht died in 1983; four years later, Philip named Amy as a co-trustee with Lois still listed as the successor, according to the lawsuit.
By the early 2000s, Amy became the agent for both of her parents, managing business affairs and the family estate, according to the lawsuit. Lois and Philip executed mirror wills in 2007, each naming the other as personal representative and calling for Lois to succeed Philip as trustee of the Sophia Macht trust, according to the lawsuit.
Around that time, however, years of alcohol abuse were taking a toll on Philip, according to the lawsuit. He had become “increasingly depressed, withdrawn and docile” and had failing vision, it alleges. He also “lost interest in day-to-day business affairs,” remaining at home except for a few days a week when he was brought to the office for lunch, according to the lawsuit.
Lois Macht’s lawsuit alleges it was her husband’s failing health that prompted their daughter to act.
“Amy Macht understood that if her father were to die, Lois Macht would be able to exercise the control over the apartment and townhouse rental projects in which Philip Macht held a majority interest and would be able to wield significant influence as the owner of substantial minority interests in other such projects,” the complaint states.
The lawsuit alleges Amy worked with an unidentified lawyer, who “represented Philip and Lois jointly in connection with estate planning,” to prepare a 2009 document naming Amy as successor co-trustee to the Sophia Macht trust as well as a new will for Philip naming Amy as his personal representative.
Lois Macht alleges the lawyer did not send papers related to the successor co-trustee plan to Lois for confirmation or her signature and that she was not informed of the “secret will” until after her husband’s death.
Lois met with the lawyer in July 2012 about all of the changes, after which the lawyer informed Lois of a conflict of interest and the need for Lois to find a new lawyer.
Sandra P. Gohn is listed as the lawyer in Philip Macht’s estate filings. Gohn, a partner at DLA Piper LLP in Baltimore, did not return phone calls for comment.
The lawsuit does not give a value of the Sophia Macht trust but states that Amy wanted to be named successor co-trustee because she wanted to expand RMI into shopping center development and wanted to “experiment” with Merritt Park Shopping Center.
“Amy knew that the venture would require the expenditure of large sums of money in the midst of a recession and economic downturn,” the lawsuit states.
Being named a co-trustee would allow Amy to “neutralize Lois” and “insulate RMI’s shopping center development from any effective oversight,” the lawsuit states.
Amy Macht denied all of her mother’s allegations in her motion to dismiss the case. Amy countered that the “substantive terms” of her father’s 2007 and 2009 wills are identical and that her mother “erroneously assumed she was entitled” to be the sole trustee of the Philip Macht trust.
“Philip had every right to name [as successor co-trustee] his daughter, an experienced businesswoman whom he had guided and worked with in the management of the closely held business assets for decades,” the motion states.
The legal battle between Lois and Amy has divided Philip Macht’s beneficiaries, according to court filings. Jane Macht filed a memorandum in support of her sister’s motion to dismiss their mother’s lawsuit and called the situation an “unfortunate family dispute.”
Jane Macht said all family members were aware that the Sophia Macht trust and RMI have been administered by Philip and Amy since 1987.
“Lois and two of her children, Carol Macht and Robert Macht, who had been content with Philip and Amy Macht’s administration and operation of the family assets for nearly 25 years, suddenly decided they no longer wanted Amy in that role,” Jane Macht’s memorandum states.