Paterakis estate dispute back in court after appellate ruling

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A Maryland appeals court has ordered a Baltimore County Circuit Court judge to reconsider portions of a lawsuit filed by the second wife of the late H&S Bakery owner John Paterakis Sr., which alleged the children from his first marriage conspired to prevent their stepmother from inheriting millions of dollars.

In an unreported opinion filed Thursday, the Court of Special Appeals found Baltimore County Judge Colleen Cavanaugh erred in rulings involving issues regarding stashes of cash kept by John Paterakis Sr., and a written and oral agreement between John Paterakis and Roula Paterakis that she would inherit $20 million.

“We’re gratified by that decision and that Mrs. Paterakis will now have her day in court,” said Arnold Weiner, an attorney with Rifkin Weiner Livingston LLC representing Roula Paterakis.

Jeffrey E. Nusinov, the attorney representing the family, said the matters the trial court must reconsider will not substantially change the trial court’s previous ruling in favor of his clients more than two years ago.

“We are pleased the Court of Special Appeals affirmed the Circuit Court’s dismissal of the second wife’s attempt to seize a portion of John Paterakis Sr.’s legacy and the family’s business. Her claims for hundreds of millions of dollars have been reduced to a maximum of less than $100,000,” the lawyer for the family said.

The opinion upholds Cavanaugh’s ruling that Roula Paterakis’ claim she was deprived of her rightful inheritance by “sham” trust transactions perpetrated by her stepchildren did not have merit.

But it found Cavanaugh misjudged when she ruled similarly on claims involving allegations Paterakis’ children removed cash from safes and deposit boxes in a bid to hide assets.

The amount that leaves in dispute is about $570,000. If the Circuit Court reassessed and found Roula Paterakis was indeed entitled to those funds her share would amount to about 30% of the total after-estate expenses, such as legal fees.

The appeals court also found Cavanaugh erred when she dismissed a claim for declaratory relief without declaring the rights of the parties.

Weiner said once that’s addressed with a written declaration he intends to also pursue those issues in court.

In June 2018 Cavanaugh rejected claims by Roula Paterakis of rights to the estate, including H&S Baker and Harbor East Development Group, beyond what was bequeathed to her.

Roula Paterakis filed suit in Orphans’ Court the year before alleging her late husband’s children and grandchildren conspired to deprive her “of her rightful share of John’s estate.”

That petition claimed William J. Paterakis and Venice Paterakis Smith, two of John Paterakis Sr.’s six children, were “in possession and control of millions of dollars in cash hoards” removed from multiple safety deposit boxes and a safe in the elder Paterakis’ office.

John Paterakis Sr.’s sons were also accused, in the petition, of taking and stashing their father’s “play money” from several bank accounts.

The family denied the allegations and called Roula Paterakis’ lawsuit “desperate.”

“This law suit (sic) appears to be no more than a desperate attempt by Roula to obtain more money than she was left in JP’s Will,” William Paterakis, John Paterakis Sr.’ son and chairman of H&S Bakery, wrote in a signed letter to employees in November 2017. “We intend to vigorously defend our family’s good name and the legacy of our father.”

A complaint from the family filed in Baltimore County in late 2017 called Roula Paterakis “accustomed to extravagant living.” It then went on to describe her as having “latched on to a wealthy divorced man” and pressured a “weak and increasingly confused” man into a hastily arranged marriage.

His children also accused Roula Paterakis of berating and belittling John Paterakis Sr. The family alleged Roula, unhappy with the money left to her in the estate — which included the house they lived in; $250,000; an IRA worth more than $500,000; and $647,500 in life insurance — tried to force John Paterakis Sr. to leave her $5 million.

Those efforts “failed in this last extortionate attempt, but only because of John’s age and ill health,” according to the complaint.

John Paterakis Sr., who died in 2016 at age 87, was an iconic Baltimore businessman and political player.

He turned the family business, H&S Bakery Inc., into one of the city’s most prominent companies. Eventually John Paterakis Sr. invested in real estate development, such as Harbor East, which reshaped the city’s waterfront skyline.

John Paterakis Sr.’s involvement in politics wasn’t without controversy. He was referred to as “the bread man” by some politicians, a reference to his bakery and ability to provide campaign contributions. But his political largesse landed him in hot water in 2010.

He pleaded guilty to violating state campaign finance law after paying in excess of state contribution limits for a poll for former Councilwoman Helen Holton in 2007. Paterakis was fined $25,000 and banned from making political contributions until 2012.