Chicago Tribune from Chicago, Illinois • 35

Chicago Tribune, Monday, July 18, 1988 Section 4 5 Business Volkswagen to appeal verdict on Audi 5000 William Grubcr On business It 1 Kemper wins deal in Massachusetts Schnitzler Davis McNulty or Court jury, which deliberated for four days, said Volkswagen was liable because the brake and gas pedals on the car were so close that they could be stepped on at the same time, Bennett said. The plaintiffs case argued that the placing of the pedals had resulted in both being depressed, but Audi said the driver hit a manhole cover in the road and lost control. The $3.5 million damage award included $2.8 million to Rose and $700,000 to her husband. The jury, however, reduced the award to Rose by 25 percent because her failure to wear a seatbelt made her partially responsible for her injuries, Bennett said. The case is one of about 200 suits filed over the Audi 5000.

Many of them allege that the car is subject to sudden, unintended acceleration. DETROIT (Reuters) Volkswagen of America a subsidiary of West German carmaker Volkswagen AG, will appeal a court award of $3.5 million to a woman who suffered permanent brain damage as a result of an accident involving an Audi 5000 car, a company spokesman said. "We just don't believe that this can be sustained on the evidence, and we will appeal," spokesman Joseph Bennett said of the ruling last week by a Los Angeles jury. Diane Rose, the plaintiff, was 52 in May, 1982, when the Audi 5000 she was driving in Los Angeles ran into a brick wall at a speed of about 35 m.p.h. As a result of her injuries, Rose has no memory of the accident.

There were no witnesses. The Los Angeles County Supcri- $165 million in premiums in the state. Arabella also will take over Kemper's profitable home insurance business. For the first year, Kemper will provide services such as data processing, underwriting and collections at cost It may continue to process claims for a longer period of time. The special act passed by the legislature also is unique because it allows Kemper to continue selling other lines of insurance in the state.

Three other insurers, including Fireman's Fund, lost their licenses to sell other lines when they withdrew from the state's auto insurance market, Maatman noted. Maatman predicts that Arabella, the name of a ship that brought early colonists to Massachusetts, will be able to stay above water when it goes on its own. "Its overhead costs will be much lower because it operates in only one state," he said. "It will operate as a not-for-profit company. And Massachusetts is in the process of reforming its insurance laws, although not to a degree that we wanted." Arabella is expected to hire about 600 of Kemper's 1,000 employees in Massachusetts, he said.

The new company is looking for a chief executive, a chief operating officer and a chief financial officer none of whom is expected to come from Kemper. British franchiser invades This is a variation of the old "coals to Newcastle" story. Many American franchise firms have established outposts in Britain. Now here comes a picture frame company that believes it is the first British franchiser to invade the U.S. market.

Fastframe Franchises Ltd. opened its first store in, of all places, Newcastle, England, in early 1983. It now has more than 50 company-owned and franchised outlets in Britain and 1 1 in the U.S. The firm, which offers custom picture framing in five hours or less, opened its first Chicago store at 2264 N. Clark St.

early this month. Mike Minihane, vice president of franchise marketing, says it expects to open about 20 more stores in this area in the next 18 months and up to 1,000 in the U.S. by the mid-1990s. Minihane, who once worked for Culligan Inc. in Britain, says Fastframe targeted the U.S.

market (and Australia) before the European continent because of the "growth potential." "We have found that the typical U.S. customer spends 2Vi times more on a picture frame than the British customer," he says. Fastframe has handled a number of unusual requests since it came to the U.S., Minihane says. A retired FBI agent wanted his pistol, badge and credentials framed. An elderly Navajo couple came in with an ancestral headdress.

And a hockey stick was enclosed in a plastic box frame for the Edmonton Oilers' Wayne Gretzky. BUSINESS BEAT: Equity Properties Development headed by Sam Zell, purchased Los Arcos Mall, a major shopping center in Scottsdale, Ariz. The price wasn't disclosed. A Sears, Roebuck Co. store is one of the anchor tenants.

COMING AND GOING: Reuben L. Davis, who formerly operated two YMCAs in Los Angeles, will be the executive director of the South Side YMCA to be built at 63d Street and Stony Island Avenue. Until the unit is completed in 1989, he will run the South Shore YMCA at 1833 E. 71st St. David K.

McNulty, former president of ITT Real Estate Services, has joined Lemont Savings Association as executive vice president of its income property lending division. Michael S. Schnitzler, former vice president and senior loan officer of Balcor Mortgage Group, was named senior vice president of the Lemont thrift. With the help of Massachusetts Gov. Michael Dukakis, the Kemoer Group plans to pull out of the auto insurance business in that state, where it lost $50 million from such coverage last year.

Capping a year of intense negotiations with state officials, the Massachusetts legislature sent a bill to the governor's desk this weekend that allows Kemper to create an independent firm called Arabella Mutual Insurance Co. to take over its auto lines on Oct 1. The firm, based in northwest suburban Long Grove, blames its Massachusetts auto insurance losses on that state's high accident rates, soaring cases of auto theft and fraud, what it regards as out-of-date insurance laws and a poorly designed risk pool and its compulsory insurance law. But Gerald L. Maatman, president of Kemper National Property Casualty said he doubts the action will create a.

precedent. Illinois is the latest to adopt mandatory insurance. "Our opinion would be he said. "Massachusetts was the first to pass compulsory auto insurance in the 1920s. Many other states now have it.

But Massachusetts is unique because it has tried to subsidize the cost for city residents. They pay the same rates as people in the rest of the state, except for a difference based on their driving record. But all of the rates are ridiculously low." Kemper will contribute $119 million for startup surplus funds to Arabella, which will take on Kemper's 250,000 auto insurance policies and Banks vs. money funds Bank-thrift yields Highest yields reported by federally insured banks and thrifts as of July 13, based on stated rates and method of compounding for lowest minimum deposit available. Figures in parentheses are average annual effective yields offered by 50 large banks and thrifts in the top five markets.

Individual yields for 2.5-year and 5-year CDs are average annual interest earned over entire life of account, not "annual effective yield," which would only show Interest earned the first year. $100,000 CDs (annual yield) 1 -month 7.75 7.70 7.65 Continental Savings, BeHalre, Tex. Farmers Savings, Davis, CaHL Sequoia PlkesvMe. Md. 3-month 8.13 8.13 8.10 Tesoro Federal Savings, Laredo, Tex.

Continental Savings, Bellalre, Tex. Columbia First Federal, Arlington, Va. 6-month Paris Paris, Tex. Commodore Savings, Dallas Tesoro Federal Savings, Laredo, Tex. 8.50 8.50 8.50 Marriage's end can start a business MMDA annual effective yield (Nat'l avg.

5.77 pet) Empire of America-USA, Willlamsville. Y. 7.98 Champion Savings, Houston 7.75 CitiSavings, San Antonio 7.52 First Deposit National Bank, Tilton. N.H. 7.26 Life Savings, Austin, Tex.

7.25 6-month CD annualized yield (Nat'l avg. 7.21 pet) (Annualized yields are for 12 months, and are based upon rate In effect at time account Is opened.) Atlantic Boston 8.09 Paris Paris, Tex. 7.98 CitiSavings, San Antonio 7.97 Pacific Coast San Francisco 7.95 Meridian Savings, Arlington, Tex. 7.93 1-Year annual effective yield (Nat'l avg. 7.51 pet) Atlantic 4 Boston, Mass.

8.38 New Englnd Fed Svg Bk, Wellesley, Mass. 8.30 Commodore Savings, Dallas 8.30 Brookside Savings Bank, Kansas City, Mo. 8.30 Dominion Federal McLean, Va. 8.28 (Average Annual Yields below show the average yield per year over the life of the CD. The total interest earned on the account is divided by the number of years of the CD, and the result is the average annual yield In percentage terms.) 2.5-Year avg.

annual yield (Nat'l avg. 8.36 pet) (Average annual Interest earned over entire life of account.) Atlantic Boston 9 32 Dominion Federal McLean, Va. 9.30 Columbia First Federal, Arlington, Va. 9.30 First Svgs Bank Trust. Kansas City, Mo.

9.20 New South Fed Svg Bk, Birmingham, Ala. 9.18 5-Year avg. annual yield (Nat'l Avg. 9.77 pet) (Average annual Interest earned over entire life of account.) Pacific Coast San Francisco 1 1 .36 Dominion Federal McLean, Va. 11.32 American Fed Svgs Bank, Rockville, Md.

11.23 Columbia Newport Beach, Calif. 11.05 Atlantic Boston 1 1 .02 mt ll I urn, it I I -r i rf- a jujaaj-iiiaiiijii fill' IT HT' t- Money fund yields (10 highest 7-day compound yields for period ended July 12) Government-only money funds (Avg. 6.63 pet) Kemper Money Market Gov't Port. 757 Vanguard M.M.R. Federal 7.12 Monitor U.S.

Gov M.M.F. 7.10 UMB Money Market Fund Federal 7.09 Cash Equivalent Gov't Sec. 7.09 Mariner U.S. Treasury 7.08 The Galaxy Funds Gov't Fund 7.06 HighMark US Treas Oblig Fund (k) 7.04 FFB U.S. Government Fund 7.04 Woodward Gov't Fund 7.04 General purpose money funds' (Avg.

6.93 pet) Strong Money Market Fund 7.99 Alger Money Market Portfolio (k) 7.57 Kemper Money Market 7.42 Vanguard M.M.R. Prime 7.39 Neuberger Berman Cash Reserves (k) 7.37 Evergreen M. Trust (k) 7.37 Short-Term Asset Reserves 7.37 Flex-fund M.M.F. (k) 7.35 MarketMaster M.M.F. (k) 7.34 Monitor Money Market Fund 733 Tax-free money funds (Avg.

4.57 pet) USAA Tax-Exempt M.M.F. 6.18 Calvert T-F Reserves M. 5.10 Franklin CA Tax-Exempt M.F. 4.95 Alliance T-E Res.CA Port, (k) 4.95 Vanguard Muni. BondM.M.

4.95 Vanguard CA T-F M.M.F. 4.95 Colonial Tax-Exempt M.M.T (k) 4.92 Strong Tax-Free M.M.F. 4.89 California Tax-Free M.M.F. 4.87 UST Master Short-Term Tax-Exempt 4.87 Tribune photo by Ernie Cox Jr. (x) Sources: 100 Highest Yields, North Palm Beach, Fla.

33408, 800-327-7717, and Oxioghue'a Moneyletter. Holllston. Mass. 01746, 800-343-5413. (k) Manager absorbing a portion of fund expenses.

Rhona Hoffman poses with a work on display at She got her start in gallery-owning with money the Rhona Hoffman Gallery, which she founded, from her divorce settlement. What does Frances Lear have to show for 31 years of marriage to television producer Norman Lear? Reportedly, $110 million from her divorce settlement. Frances Lear is lucky. The Displaced Homemakers Network reports that 73 percent of women have a worse standard of living after the first year of divorce, though the standard of living for 42 percent of the men goes up. And only 14 percent of divorced women are awarded alimony.

Lear is not only fortunate, she's smart. She reportedly used $25 million of her settlement to start a new magazine for women older than 40 and named it "Lear," in her own image. The publisher is one of an increasing number of women who are taking their divorce settlements big and small and starting businesses. Using your divorce settlement is frne way of solving the problem of where to find capital, but risking money you've earned for being a wife must be carefully weighed, lawyers advise. "It's good to have the goal of owning your own business, but don't take your settlement money and invest it without carefully studying the business and first getting some experience in the field," said Donald C.

Schiller, prominent divorce lawyer and former head of the American Bar Association's family law section. For 22 years, Schiller has represented affluent women in divorce cases. Recently, one of his clients used her settlement to open a boutique, which was a success. Another bought a restaurant and went broke. A third got a $400,000 settlement and is "aggressively" looking for a business to buy.

"In the past, women took their settlements and continued to be full-time homemakers," said the attorney. "Today, many women want to go into business. Yet, it's risky because the settlement is all they have." Forget your fears is one divorced woman's advice. "Take the money Carol Kleiman jf Women I ijjjitiiiieT at work Vassar College, the mother of three began collecting serious art and sculpture in 1955. Hoffman also was on the women's board of the Art Institute of Chicago and the Museum of Contemporary Art.

She gave lectures for the Museum of Contemporary Art and helped set up its gift shop. After her divorce in 1974, she took the "natural" next step: Hoffman became director of the Grace Hokin Gallery. In 1976, she opened Young-Hoffman Gallery' with a partner and in 1983, started her sole enterprise, Rhona Hoffman Gallery, 215 W. Superior St. "After my divorce, I needed a job to maintain my lifestyle," Hoffman said.

She started her gallery of contemporary art with a sense of elation. "1 felt as if I had parted the Red Sea. 1 can't believe it, it's so perfect for me." She shows artists she befriended 10 years ago, among them Robert Mangold, Robert Ryman and Sol LeWitt, whose works now sell for $40,000 and up. "Make sure you know your field, and then risk it," she advised. "Life is all about risk." conviction." Her divorce settlement was the only money that Judy Kennell of Houston had ever had of her own, though she had managed the household money.

In 1986, after 14 years of marriage, Kennell, who has three children, invested her money and artistic talent in Ursidae Enterprises, which designs and markets toys. "I'd raised so many kids, I realized what I'm best at are child-related things and working within my own time frame," the business owner said. Kennell is developing a toy to be marketed this Christmas. "It's a toy that children will be able to assemble, and the uniqueness of it lies in the way it will be packaged," its creator said. Kennell says her divorce lawyer, John F.

Nichols, told her to go for it when she discussed her plans to create toys. "Trust your instincts," Kennell said. "I feel so good about what I'm doing that I'm willing to risk my money. If I lose it, I lose it. But I'm not going to." Rhona Hoffman was an affluent suburban Chicago homemaker for 1 8 years.

An art history graduate of Continued from page 3 looking to beat them down, unless this is a smokescreen for causing confusion If that's the case, then we are not interested in dealing with them." Kavncr hinted that he is suspicious of the group's motives. "Some of those companies have tremendous investment in their own proprietary operating systems, and they are putting on the cloth of 'openess to cover that," he said. "Their timing wasn't so hot either. First we had Olson die, then we had Cas-soni leave, then four companies show up on our doorstep to say they will announce Open Software Foundation in a few days. "What we don't want to lose sight of is that Open Software Foundation came about because UNIX is taking off.

Customers arc beginning to recognize that it gives them, rather the vendors, control of their equipment. Ac- tually the foundation is the greatest compliment we could get." According to Gartner Group's Taylor, Kavner has to figure out how to settle the open standard issue, perhaps by arranging for and Sun to join Open Software Foundation, or it will confuse the marketplace and slow down UNIX efforts. Another solution might be a separate company to manage and license UNIX products. "He is going to have to work out some compromise, because the rest of them won't drop this," Taylor said. "They are going to have to fail before they back off." However, he warned, if an Open Software Foundation product does come out of this, "it will fragment the UNIX market." Kavncr's task, he suggested, "is to find some way to subtlety endorse the internationalization of UNIX without losing face." and run!" said Madeleine Gallay, owner of an exclusive boutique on Sunset Boulevard in Los Angeles that bears her name.

"I signed my divorce property settlement in October, 1987, and the lease for my store the next month," said Gallay, who has two children, ages 16 and 22. Gallay knew what she was doing: She had 17 years' experience as co-owner of a clothing store with her former husband. "But it took courage," said Gallay, whose trendy store specializes in the creations of "slightly off-mainstream" European designers. "I didn't know how I would do on my own." Gallay's store is across the street from her ex-husband's store. "It's my shot, and I had to take the chance," she said.

"I'm working hard, and I'm filled with joy and prevents United from joining the trend among major airlines to buy their regional feeder airlines, because it makes such mergers economically unappealing. The contract proposal would exempt United from the scope provision in acquisitions of aircraft with fewer than 100 seats. American Airlines and others have moved to buy their commuter partners in order to solidify their positions in smaller markets. United and union officials declined to comment on the offer or on contract negotiations, which opened in February. A union spokesman, James Damron, confirmed that the union had received a proposal but said union officials would "religiously" stick to an agreement with the company not to discuss it.

However, it's believed that the union is likely to press for further improvements in the scale and raises for all pilots. The union ofTcr to buy the company is contingent on the outcome United Continued from page 1 cally lower pay rates for junior workers. Terms call for modifying the pilot union's scale, as the new hires' lower wage scale is called. Pilots presently paid under the lower scale would be brought to wage parity in their sixth year of employment. Future hires would remain on a lower pay scale until their ninth year with the company.

In comparison, scales at other major carriers range from five to nine years in length. The offer guarantees no pilot furloughs and would give United more flexibility to acquire small airlines. It also provides for improved pension and fringe benefits. A so-called "scope" clause in the union's current contract requires United to pay union-scale wages to pilots who join the carrier in an aquisition. In effect, that provision of a lawsuit in which the union is trying to overturn parts of United machinist union contract which are designed to thwart a takeover.

"The pilots will have to withdraw their buyout offer before negotiations get serious," said Kevin Murphy, airline analyst with Morgan Stanley Co. in New York. Noting that the proposal was the first specific package presented at the bargaining table, Murphy predicted, "You won't sec any concrete results before the end of the year." Though United has been doing well financially, it hasn't kept pace with the mushrooming growth of many other major airlines. "United wants to get costs down but it wants to keep people happy, too," said Edward Starkman, analyst with PaincWcbbcr Group Inc. in New York.

"Unitcd's goal is to be cost competitive and get the most revenue out of every aircraft scat. The company really sees most of its leverage on the revenue side." AP LMtrpftoto Solid gold rust This rusty roadster, a 1936 Mercedes-Benz 500K collector, purchased what is now regarded as the Special, brought $2.7 million at a British auction world's most expensive Mercedes-Benz, one of last week. Hanz Thulin, a Swedish financier and only a handful of the models still left. 1 I.