UPDATED Tennessee contingent scores another victory in fight over Maddox Trust

UPDATED 12:51 08/09/06 with comments from Aubrey B. Harwell Jr. -- Tennessee Court of Appeals sides with step-granddaughter of the late Dan and Margaret Maddox in ruling shift of assets to Mississippi invalid but Harwell says he will ask the Tennessee Supreme Court to consider the case

Email | Print By Richard Lawson

The Tennessee Court of Appeals has upheld part of a lower court's ruling that the Maddox Foundation Trust's assets had been moved to Mississippi without approval of a Tennessee court.

This is another victory in Tennessee in a complicated legal battle, which is detailed in the ruling, over whether the trust could move the then $100 million in assets. Mississippi courts haven't been as favorable.

"This is a major victory for the rule of law," said Joseph A. Woodruff, the lead attorney with Waller Lansden Dortch & Davis representing Tommye Maddox Working, step granddaughter of Dan Maddox and one-time trustee in returning the trust's assets to Tennessee. "The Court of Appeals has confirmed that Tennessee law prevents a trustee from high-jacking assets of a trust out of state."

UPDATED 12:51 08/09/06 Aubrey B. Harwell Jr., a partner in Neal & Harwell representing Robin Costa, a trustee of the foundation and its director, said the next step will be to ask the Tennessee Supreme Court to have a look at the case. "Obviously, we are disappointed," Harwell said of the appeals court ruling. He pulled out a positive, however, noting that the appeals court's reversed a portion of the lower court's ruling that because the trust's move was invalid, all subsquent actions of the trust were voided.

Real estate investor and developer Dan W. Maddox and his wife Margaret, both of whom died in a boating accident in 1998 on Lake Pontchartrain in New Orleans, established the foundation in 1968. In 2001, Robin Costa, a trustee and director of the trust, incorporated the foundation in Mississippi and moved the assets there.

Working, who handed over the trust's operations to Costa, has been fighting since 2004 for the return of the assets to Tennessee with Davidson County District Attorney Torry Johnson leading the charge.

Some of the claims have included charges that Robin Costa, a trustee and the trust's director, has squandered millions on investments in professional sports teams in Memphis as well as paying herself an excessive salary. An accounting done last year revealed that Costa had paid herself more than $3 million in salary and spent $9.6 million on the Memphis RiverKings, a minor league hockey team, and the Memphis Xplorers, an arena football team.

Working and her attorneys have argued that such investments didn't meet the charitable intents in Tennessee of the trust's creators. The trial on claims of Costa's mismanagement begins on Oct. 26.

Last August, the Davidson County Probate Court ruled on summary judgment that the moving the foundation and assets to Mississippi was invalid. Costa and her attorneys had argued in part that the trust didn't need approval.

Given today's ruling, the case is remanded back to the probate court.