CONFLICT POSSIBLE IN DEAL RELATIONSHIP CLOUDING LAND-BIDDING ISSUES.

Byline: Evan Pondel Staff Writer

PALMDALE - Attorneys representing the lead bidder for bankrupt Ritter Ranch have filed a request to drop their client amid allegations that a personal relationship has tainted the court's proceedings.

William Freeman, a partner in the law firm representing RR Property Holdings LLC, is the stepson of the court-appointed trustee Robbin Itkin. A colleague of Freeman represented the debtor, John Musick, when he acquired Ritter Ranch in 1998.

In a court filing, Freeman, who works for Pillsbury Winthrop LLC in Los Angeles, said Ritter Ranch's equity holders allege a relationship between Itkin and RR Property Holdings was ``somehow tainted'' because of ``an insider relationship'' between the bidder's attorneys and the trustee.

Freeman denies these allegations, stating that the purchase and sale in the transaction have not been ``influenced by any personal relationship between me (Freeman) and the trustee. Instead, I (Freeman) believe that the allegations ... are an attempt to derail the sale process,'' Freeman wrote in the filing.

Despite Freeman's denial, the attorney still believes his client, RR Property Holdings, ``will be better served if new counsel is substituted,'' the filing read.

David Osias, with Allen Watkins Leck Gamble & Mallory in San Diego, was listed in the filing as the new attorney representing RR Property Holdings.

Osias, Freeman and Itkin did not return phone calls seeking comment.

The 7,200-home Ritter Ranch project has been ensnarled in litigation for several years. But a bidding battle surfaced as the Antelope Valley's real estate market heats up after the deep slump of the 1990s.

More than 20 companies have expressed interest in the property. Two companies, RR Property Holdings and Relco, are vying for the top bids. So far, Itkin has focused her attention on Texas-based RR Property Holdings' $6 million bid, even though Relco submitted an offer about $1 million higher.

Musick said the court should still investigate whether RR Property Holdings' ``insider knowledge'' may have given the company unfair advantage over Nevada-based Relco.

``Most of all, we want the process to be fair so that the maximum bids can come in and be distributed to the creditors,'' he said.

Musick has not expressed any concern that Freeman was the stepson of Itkin.

``She (Itkin) disclosed that early on in the proceedings so we all knew that was the case,'' Musick said. ``But two months ago, I did detect a different chill in my relationship with Itkin.''

Musick believes his former relationship with Freeman's colleague, Lewis Feldman, has somehow influenced Itkin's disposition. Feldman, who currently works for Pillsbury Winthrop, worked at a different firm when he represented Musick about five years ago.

``Feldman helped me acquire the property (Ritter Ranch) in the first place,'' Musick said.

In a letter dated Jan. 21 to Musick from Pillsbury Winthrop, the law firm said it will no longer represent RR Property Holdings ``to allow the bankruptcy process to move forward without further delay.'' The law firm said its withdrawal has nothing to do with Musick's assertions.

The bankruptcy court will convene Feb. 19 to move forward with the bidding process.