The oak-studded grasslands and lush rolling hills that make up the 21,000-acre winery and ranch near California's storied Napa Valley is the unlikely target of one of most heated boardroom battles in Hawai'i.

For more than a year, the fight for the control of the closely held Langtry Estate & Vineyards, Guenoc wine label and its Hawai'i-based owner Malulani Investments Ltd. has played out in courts in Honolulu and Los Angeles, pitting several kama'aina investors against a scion of the Magoon family, which started the winery more than a quarter of a century ago.

The legal battle has cost the company millions in legal fees and threatens to disrupt plans to expand the winery, which produces around 100,000 cases of wine annually. In the worst-case scenario, it could lead to the the liquidation of one of the largest contiguous private land holdings in California, whose value was once appraised at $110 million.

"(This) case presented a titanic struggle between the majority shareholders and the minority shareholders," state Circuit Judge Gary Won Bae Chang said during a hearing Tuesday. "Each side to this battle is sophisticated and well-armed. Each side is also allegedly undertaking strategies and counter-strategies against one another."

TRADING ACCUSATIONS

The minority shareholders — which include one-time corporate raider James Cotter and Eaton Magoon Jr., whose family is descended from Hawaiian royalty — have accused the owners of the winery of mismanagement and self-dealing in a December 2006 Circuit Court lawsuit. They also allege that management is trying to dilute their holdings by issuing $10 million in new stock, thereby squeezing them out of the company.

Easton Manson — who controls Malulani Investments — has accused Magoon and Cotter of attempting to "greenmail" the winery in a counter-claim filed earlier this month. Greenmailing is when a corporate raider agrees to sell back his stock in a company at a premium in exchange for not taking over the company.

According to Manson, Magoon and Cotter also are trying to deplete the company's funds by filing the costly lawsuit and by seeking numerous challenges to the company's business plans.

Attorneys for both sides declined comment, saying the case is ongoing. Trial is scheduled for September.

To be sure, boardroom disputes are nothing new when it comes to California's wine business.

For instance, the Mondavi family's ownership of the Charles Krug Winery descended into acrimony during the 1960s, prompting son Robert Mondavi to start a competing label under his own name, which he later sold due to the mounting litigation.

"This kind of stuff happens in any industry but more so in the wine industry," said Jay Stuller, author of the 1989 book "Through the Grapevine: The Business of Wine in America." "This is a constant in the business."

But the degree of rancor generated in the Guenoc saga may have hit a new high.

In their initial lawsuit, Magoon and Cotter allege that management refused to provide access to information about the company to Cotter, who is a board member. They also allege that the company wouldn't allow one of Cotter's executives to inspect the winery in 2006, even though the facilities were open to the public at the time.

As further harassment, the company scheduled a shareholders meeting on Thanksgiving Day in 2006 and wouldn't let the Los Angeles-based Cotter participate in a Nov. 13, 2006, board meeting by telephone, the minority shareholders said.

GROUNDBREAKING RULING

In court papers filed last month, Manson's attorneys Glenn Sato and Miles Furutani said Cotter is a corporate raider and quoted a witness who said Cotter's end game "was the appointment of a receiver ... to ultimately liquidate the assets of Malulani and its subsidiaries, including Guenoc Winery and the Langtry Ranch properties."

They say Cotter has made excessive demands for information on company business deals, then interfered with lenders and business partners in an attempt to sabotage their efforts and further his alleged greenmail attempt.

For instance, Guenoc and Langtry recently tried to increase a $40 million loan with UBS last year but were turned down after Cotter and Magoon served a subpoena and a copy of their lawsuit on the bank.

Sato and Furutani in their March countersuit also cited several instances in which Cotter allegedly greenmailed publicly traded companies on the Mainland and cited a 1989 article in Forbes magazine in which Cotter was described as "street fighter" and "corporate raider" who's willing to file "lawsuits, starts proxy fights, launches tender offers."

Today, Cotter is chief executive officer of Reading International Inc., the former railroad company that now owns real estate and theaters throughout California, Australia and New Zealand. Last month, Reading paid $69.3 million to buy 15 movie theaters in Hawai'i and California from the parent of Consolidated Theatres.

The Forman family of Los Angeles, which has owned Consolidated for decades, are Cotter's longtime investment clients.

In response to the bickering, Circuit Judge Chang ruled on Tuesday that Cotter and other minority shareholders owe a fiduciary duty to the company and cannot engage in endless squabbles with a company to deplete its assets.

The groundbreaking ruling could force the minority shareholders to tone down their challenges against the company — at least until the September trial for the lawsuit.

"Minority shareholders in a closely held corporation may not act out of avarice, expedience or self-interest in derogation of their loyalty to other shareholders and to the corporation," Chang wrote.