Harley Douglass testifies about working with late father

Spokane developer Harley Douglass sought out his father, the late Harlan Douglass, in 2018 after he began hearing around town that the mercurial business giant had been complaining to others that Harley, his eldest son, owed Harlan money and had inappropriately obtained his land.

Harley said he drove that late October day to Harlan’s office in north Spokane. Harlan, who with his late wife Maxine built a real estate empire worth more than $1 billion, made his son wait.

Eventually, Harlan jumped into Harley’s pickup along with Douglass Properties CEO Deanna Malcom. The three then drove to the Costco parking lot at 12020 N. Newport Highway.

The father and son discussed business and the rumors.

“He told me, ‘You don’t owe me any money,’ ” Harley recalled from the witness stand Tuesday in the ongoing trial against his two siblings over Harlan’s will and estate.

“At the end of that conversation, did you have the impression that your father believed you didn’t owe him any money,” attorney Steve Hassing asked.

“Yes,” Harley replied.

A couple days later, Harlan left for a monthlong vacation with his partner, Jeri Via, to Hawaii.

“Did you ever hear from your father again?” Hassing asked.

Harley replied: “No.”

It’s that break with his father that has become the crux of a legal fight over Harlan Douglass’ will, estimated to be worth $600 to $700 million, according to court testimony.

Harley Douglass is seeking a ruling by Superior Court Judge Jacquelyn High-Edward to revert back to Harlan Douglass’ 2018 will that split his estate evenly between his three children.

However, his siblings, Lanzce Douglass and Stacey Douglass Boies, are seeking to have High-Edward enforce a will signed on May 2, 2019, that gave 65% of Harlan’s estate to Lanzce and 35% to Stacey. That same will left Harley $1,000.

The legal fight over the will is the second major legal battle over the estates of Harlan and Maxine Douglass. The matriarch died in 2016 after living several of her last years with Alzheimer’s disease and in a care facility.

In an earlier case, Superior Court Judge Raymond Clary ruled in 2023 that Lanzce used his own attorney to fabricate a document that would have shifted most of his mother’s estate from Harley and given it to himself and Stacey.

Appellate judges last week upheld Clary’s ruling in which he wrote: “The scheme was not only shown by the totality of the evidence,” Clary wrote, “but it was clear, convincing, and inescapable.”

Good will hunting

The weeks long trial underway before High-Edward centers on the circumstances by which Harlan Douglass changed his will in 2019.

Harley Douglass is arguing that his father’s declining mental state made him vulnerable.

“By exploiting his cognitive impairment, Lanzce and Stacey succeeded in turning their father against the one child with whom he had consistently shared a genuine and enduring relationship,” Hassing wrote in court records.

In court testimony, Hassing asked Harley to describe his relationship with his father from 2007 to 2018. “Fantastic,” Harley replied.

While Stacey and Lanzce earlier testified that they barely spoke to their father during most of that same time frame, Harley was busy helping his father with developments.

Four of those projects are now part of the dispute.

They include the Northgate Shopping Center, some 15 acres at the southeast corner of North Division Street and Lincoln Road in Spokane; the Reserve at Shelley Lake, a 256-unit apartment property at 215 S. Conklin Road in Spokane Valley; the StoneHorse at Wandermere, 252 lots of property just off North Perry Street in Mead; and the Max Storage Spokane Valley, a mini-storage business, at 214 S. Eastern Road .

As part of the deals, consummated from 2010 to 2012, Harlan and Maxine Douglass signed over ownership of the land from those developments to Harley, who then built the buildings, apartments and storage units. Harley then signed leases to his parents so they reaped all the rents and profits from those buildings for 20 years.

At the end of those leases, Harley would own both the land and all the improvements. Harley estimated in an earlier trial that those properties would be worth about $400 million at the end of the 20-year leases.

In March 2019, Lanzce flew Harlan to Tacoma to meet with his attorney, a meeting also attended by Stacey. In addition to signing over promissory notes worth $155 million to Lanzce and Stacey and their five children, Harlan also signed documents transferring those four lease agreements to Lanzce and Stacey.

That means those siblings would reap the rents and profits from those properties at the time of Harlan’s death for as long as the leases remained intact, according to court testimony.

On Tuesday, after Hassing wrapped up the case on behalf of Harley, attorney Gregory Porter, who is representing Lanzce, asked High-Edward to immediately decide the case in his favor.

Porter argued that because Hassing had not been able to show that Lanzce and Stacey coerced Harlan into changing his will to their benefit, Harley had not met the legal burden to continue.

“The question is, did Lanzce and Stacey conceive of a scheme” to turn their father against Harley? Porter said. “That hasn’t been shown.”

Hassing argued the case should continue.

“I think we have clear and convincing evidence, which means it’s highly probable, that Lanzce and Stacey turned Harlan against Harley,” he said.

Ruling from the bench, High-Edward denied Porter’s motion to end the case in favor of Lanzce and Stacey.

The evidence established that Mr. Douglass may have been a “vulnerable adult at the time of the will signing in May of 2019,” she said. “I do believe that there is enough evidence for moving forward … for a final decision on this case.”

Siblings’ case

Karolyn Hicks, the attorney for Stacey, then delivered opening arguments for the daughter’s side of the dispute.

“This case is about honoring Harlan Douglass’ intent and not trying to unwind it or set it back years to when he favored his older son, Harley,” Hicks said. “It very easily could have been any one of his three children who were iced out at the time he signed his last will.”

She noted that Harlan called his longtime attorney, Joe Delay, with instructions on March 20, 2019, with changes he wanted to make to the will.

Delay, who died just days after Harlan’s last will was signed in May 2019, noted in a letter why Harlan reduced Harley’s award to $1,000 while boosting Lanzce’s percentage to 65% and Stacey’s to 35%.

“You have intentionally treated Harley differently because you have already gifted him several properties,” Delay’s letter read. “In addition, you have paid off over $14 million in debt from Harley’s unsuccessful business ventures.”

Hicks noted that Harlan included a clause in his will that anyone who contests the will would “forfeit all benefits and must pay the estate’s legal fees.”

“The evidence will show that Harlan intentionally chose these strong provisions to protect his estate from the exact type of litigation that Harley has now brought before the court,” she said.

She argued that Harlan, despite other testimony showing how he got lost in his own office and later was diagnosed with dementia and Alzheimer’s disease, had not become a vulnerable adult at the time the will was signed.

“Harlan was independent. He was capable. He knew exactly what he wanted,” Hicks said. “This case is about making things fair and even.”