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Paterakis family feud resurrected by appeals court

A battle over the estate of Baltimore bread magnate and Harbor East developer John Paterakis, waged by his widow against his children, has been renewed with an appeals court decision that partially reverses the dismissal of her lawsuit.

The suit over the millions left behind by the H&S Bakery patriarch, filed in 2017, one year after his death, exposed a bitter rift between his second wife, Roula Paterakis, and the six grown children from his first marriage.

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It set off a series of charges and countercharges of scandalous behavior — of the children “raiding” cash from their father’s safe deposit boxes as he lay gravely ill in a hospital, of the second wife spending lavishly like “a material girl” and taking advantage of his frailty late in life — until it was dismissed in June 2018.

But in an opinion filed Thursday, Maryland’s Court of Special Appeals revived some of Roula Paterakis’ claims, including one that her husband’s children had wrongly interfered with her expected inheritance — specifically, a promise he had made to leave her $20 million.

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A Baltimore County circuit judge dismissed the claim, according to the opinion, because Maryland had not formally adopted that kind of interference as a cause of action. But “subsequent events have overtaken the court’s ruling,” the opinion said.

The opinion cited a ruling this June by the Maryland Court of Appeals in another case, which recognized interference as a wrongful act.

“Roula Paterakis is gratified that she will now have her day in court so that she can pursue this substantial cause of action — the interference with the $20 million promise,” said her attorney, Arnold M. Weiner.

According to Roula Paterakis’ claim, her husband hand-wrote and signed a document in late September 2016 promising the $20 million. Paterakis — who grew his family’s small, rowhouse-based bakery into a behemoth that supplies the likes of McDonald’s and transformed a largely industrial tract of land into glitzy Harbor East — died the following month. Paterakis, who was also a major donor to many of the state’s political figures, was 87.

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Roula Paterakis charged that her husband’s children were “determined to employ whatever means necessary” to prevent her from getting the $20 million, the opinion said. She alleged that Bill Paterakis and Venice “Vanessa” Paterakis Smith, the siblings designated as the personal representatives of their father’s estate, had tried to get him to divorce her.

Her suit described scenes of turmoil before Paterakis’ death and afterward, of fights breaking out in Harbor East restaurants and the siblings helping themselves to their father’s “cash hoards” and so-called “play money.” The siblings fired back, characterizing her as a spendthrift who once charged two Hermes Birkin handbags to her hotel room in Las Vegas and pressured him into a hasty wedding.

The suit originally included Smith’s son, the restaurateur Alex Smith, although the opinion said in a footnote that Roula Paterakis “voluntarily dismissed” claims against him.

Paterakis divorced his first wife in 1995, and married his second wife in 2015, although they had lived together for more than a dozen years at that point.

Jeffrey E. Nusinov, who represents Bill Paterakis and Smith, said Roula Paterakis’ suit, which initially sought a third of what she said was her husband’s $1 billion fortune, has been chipped away over the years to almost nothing.

“Roula was seeking one-third of the decades-run family bakeries,” Nusinov said. “All such claims were outright rejected, affirming the trial Court’s well-reasoned ruling two years ago.

“We will see if Roula continues to pursue the crumbs.”

Crumbs being relative, of course, with the Court of Special Appeals sending the issue of the alleged $20 million promise back to the lower court for review. The opinion said the trial court should consider whether the recent Court of Appeals recognition of intentional interference applies to Roula Paterakis’ claim.

“We express no view as to whether it does or does not,” the special appeals court opinion said.

Nusinov called the handwritten document “suspect at best,” characterizing it as illegible and having “no legal validity.”

Also in play is $570,000 that John Paterakis’ daughters, Smith and Karen Phillipou, took from his safe deposit boxes while he was hospitalized in December 2013. Smith said their father had instructed them to do that if he ever became seriously ill because it was intended for them. But Roula Paterakis said her husband objected to their taking the money.

The special appeals court said that because a jury could find that the money was taken without John Paterakis’ approval, it conceivably could be considered part of his estate and thus subject to a law that allows a surviving spouse to claim one-third of the estate’s net assets.

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