Maddox Foundation in Tennessee Supreme Court limbo

High court now will decide whether it wants to take up the case

Email | Print By Richard Lawson

10-24-2006 2:45 PM — The Tennessee Supreme Court could be the next battleground for the Maddox Foundation.

A trial that was to begin this week over whether Robin Costa, president of the foundation, squandered millions of dollars has taken a backseat for the moment. The trial was supposed to start yesterday but has been delayed until the supreme court decides what it will do. Tennessee's highest court now has filings from both sides in order to determine whether or not it should hear an appeal of a Tennessee Court of Appeals ruling in August that the foundation had been illegally moved to Mississippi when it didn't gain court approval for the move. On Friday, attorneys for Tommye Maddox Working and Davidson County District Attorney General Torry Johnson filed their rationale for why the court shouldn't take up the case.

In the Supreme Court filings -- unlike some others in this case -- there's no talk of sex. But issues do arise as to wasteful spending on minor league sports teams, charter flights to University of Tennessee Knoxville football games and more. For the most part, though, this is strictly legal stuff. But the wording is tough.

In their filing, Working and Johnson's attorneys from Waller Lansden Dortch & Davis open their introduction with quite a barrage: "The applicants, Robin G. Costa and her alter-ego, the Maddox Foundation Corporation, have included in their application ten pages labeled as 'introduction' that are nothing more than irrelevant factual arguments about disputed issues, such as Dan and Margaret Maddox's testamentary and donative intent and the alleged motivation of Ms. Costa to change the situs of the Maddox Foundation Trust to Mississippi, that await trial a trial before the Probate Court of Davidson County," it states. The appeals court didn't concern itself with those facts, they argue.

Costa and the foundation's legal team of Neal & Harwell and Paulus & Dolan, respectively, argues that Maddox wanted the trust moved if his three children from a previous marriage tried to meddle with or gain control of the trust. The claims of Working and Johnson hinge on the claim that the invalid move renders the movement of the assets as invalid as well.

Costa's attorneys also questioned the appeals court's siding with the interpretation of a repealed statute, which was in effect at the time the foundation was moved, to gain jurisdiction over the Mississippi-based foundation and force its move back to Tennessee. The interpretation "makes no sense as a matter of basic statutory construction, even to the point of absurdity," the filing said.

"While we do not say this lightly, and while we do not suggest that the lower court was not proceeding in good faith, defendants must regretfully submit that the lower court court's decision is explicable only in terms of the positive result that it yields for the State of Tennessee, i.e., relocating a charitable organization with substantial assets to our state," the filing stated.

Costa's attorneys elevate the argument to dealing with "issues of sovereignty, federalism and comity between and among sister states." They also argue that the appeals court ruling makes many other living trusts that may have moved their locations between 1997 and 2004, the time span of the statute in question, subject to invalidation. "There is still the capacity for real mischief to flow from the Court of Appeals' decision going forward, if allowed to stand," they argue.

The Tennessee side's response on the broad issue of the relationship between Mississippi and Tennessee: hyperbole. They argue that the issue is strictly about the statutory construction of a dead letter statute not about issues of sovereignty, federalism or comity. They also argue there is no need to establish a uniform decision, noting that the appeals court decision wasn't inconsistent with any previous appeals court or supreme court decisions. No appeals court in Tennessee has dealt with the change-of-location statute, they argue.

The attorneys for Working and Johnson argue further that the application should be denied so the probate court can proceed with its trial. "This matter needs to be tried on its merits as soon as possible so that Ms. Costa's abuse and waste of trust assets – assets that were intended to benefit charities in Middle Tennessee – can be put to an end," the attorneys argue.