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IN THE CHANCERY COURT FOR DAVIDSON COUNTY, TENNESSEE AT NASHVILLE
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FISK UNNERSITY, ) No. 05-2994-III ~,r: G1
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'il'" ,.-' PRE-TRIAL BRIEF OF INTERVENOR ATTORNEY GENERAL AND REPORTER FOR THE STATE OF TENNESSEE
The Attorney General and Reporter for the State of Tennessee, as Intervenor in this
proceeding, hereby submits this Pre-Trial brief with respect to Fisk University's Second
Amended Petition for Cy Pres Relief
A court must exercise cy pres powers "sparingly" because "a settlor must have assurance
that his solemn arrangements and instructions will not be subject to the whim or suggested
expediency of others after his death."]
Here, Fisk University is invoking cy pres law not "sparingly" but rather to convert
Georgia O'Keeffe's spectacular public gift of the Stieglitz Collection into its own private fund to
support the general operation of the school. The Tennessee Court of Appeals, however, has
carefully defined the charitable intent of Ms. O'Keeffe and Alfred Stieglitz in making this gift:
I W. McGovern & S. Kurtz, Wills, Trusts and Estates § 9.7, at 370 (2d ed. 2001) (discussing NY law).
[Tjhe charitable intent motivating the gifts ... was to make the Collection available to the public in Nashville and the South for the benefit of those who did not have access to comparable collections to promote the general study of art .
.. . Considering the facts in the record, we have concluded that the clear intent for giving the Collection to the University was to enable the public - in Nashville and the South - to have the opportunity to study the Collection in order to promote the general study of art.'
This charitable intent, defined by the Court of Appeals and now the law of the case, does not
include the conversion of the Stieglitz Collection into a financial asset. This omission was not
accidental; Ms. O'Keeffe specifically prohibited such action by imposing the "no sale" clause in
1949 and took no other action through her death in 1986 to support the university. In short, the
result urged by Fisk in 'this case would be a frustration of Ms. O'Keeffe's clear intent and an
abuse of cy pres law. It would undermine future charitable giving in this state. It should not be
allowed to occur.
The Attorney General expects the trial to show the following. First, because Ms.
O'Keeffe never intended that the Stieglitz Collection be used to support Fisk financially, Fisk
cannot show that its financial issues constitute a legal basis under New York cy pres law to void
the prohibition on selling the Collection. Second, Fisk cannot satisfy the cy pres requirement of
impossibility or impracticability. Third, Fisk cannot show that the proposed relief - the sale of a
half-interest in the Collection to the Crystal Bridges Museum in northwest Arkansas - would
satisfy the demanding requirement under cy pres law that any relief "most closely approximate"
Ms. O'Keeffe's charitable intent. Intertwined with these issues is the fact that Fisk cannot show
how the proceeds of the sale would resolve the underlying financial problems on which Fisk
bases its petition.
20 'Keeffe Foundation v. Fisk University, 312 S.W.3d 1, 17-18 (Tenn. Ct. App. 2009), p.t.a. denied (2010).
Fisk is a worthy institution deserving of support. But that support cannot come in a
manner that is contrary to law and so abusive of donor intent that it would undermine charitable
giving in this state. Fisk's petition should be denied.
This case has been remanded to this Court "to determine what cy pres relief, if any, the
University may be entitled to receive based on the unique facts of this case.,,3 The Court of
Appeals clearly stated that it made no determination that cy pres relief was available to Fisk and
that any such determination would be "premature." Rather, the Court of Appeals said that such a
decision "must be held in abeyance unless and until" this Chancery Court fmds that literal
compliance with the conditions imposed by Ms. O'Keeffe is "impossible or impracticable" under
New York law and that any cy pres relief "most closely approximates Ms. O'Keeffe's charitable
intent.,,4 Accordingly, this case comes before this Court with no presumption that Fisk is entitled
to any relief.
A. Because Ms. O'Keefe Had No Charitable Intent To Benefit Fisk University Financially, Fisk Cannot Sell The Stieglitz Collection As A Matter Of New York Cy Pres Law.
As this Court knows, New York courts have developed a three-pronged test for
determining whether cy pres relief is available: "(1) that the gift or trust be charitable in nature;
(2) that the donor must have demonstrated a general, rather than a specific, charitable intent; and
(3) that circumstances have changed subsequent to the gift that render literal compliance with the
3 OKeeffe Foundation v. Fisk University, 312 S.W.3d at 18 (emphasis added).
4 [d. at 18, 20.
restriction impossible or impracticable. liS In light of the Tennessee Court of Appeal's decision,
only the third prong of this analysis is left to be determined by this Court.
Fisk's argument is straight forward. The University asserts that because of its precarious
fmancial condition, it is unwilling to expend the funds necessary to continue to display the
Stieglitz Collection and therefore complying with Ms. O'Keeffe's charitable intent is
impracticable. It further states that "[i]t is impossible for Fisk to meet the specific conditions of
the gift of the art because, without an infusion of cash, there is very little likelihood that Fisk will
meet its financial obligations.t" Accordingly, Fisk's petition seeks permission, contrary to the
"no sale" condition on the Stieglitz Collection, to realize $30 million from selling the Collection,
so that it can apply those funds to the general operations of the university in a manner not yet
Even assuming these allegations are true, the cases under New York cy pres law, as
discussed below, make clear that any modification of restrictions on a charitable gift due to the
fmancial distress of the charitable institution is permitted only where the overriding
charitable purpose of the gift was to ensure the continued existence and operation of the
charitable institution. Here, the Court of Appeals has found that Ms. O'Keeffe's intent was to
display her deceased husband's art collection for the benefit of the residents of Nashville and the
5 In re Estate of Othmer, 815 N.Y.S.2d 444, 447 (N.Y. SUIT. ct. 2006); see also O'Keeffe Foundation v, Fisk-University, 312 S.W.3d at 16.
6 Second Amended Petition ~ 25.
7 In its Second Amended Petition, Fisk alleges that a number of the conditions related to the maintenance and display of the art in the Collection are outdated and that the agreements with the Crystal Bridges Museum would follow best industry practices for the care of the Collection. The Attorney General does not object in principle to the modification of the maintenance and display conditions. The implementation of these best practices, however, does not require this Court to approve the sale of the Collection to the Crystal Bridges Museum.
South, particularly those without access to comparable collections, to promote the study of art. Only if Ms. O'Keeffe had also intended to support Fisk financially with the Stieglitz Collection would the University's financial difficulties represent a frustration of her charitable intent and satisfy the requirement of impossibility. But since Fisk's financial well-being was never Ms. O'Keeffe's objective, the University's financial challenges provide no basis for cy pres relief.
The holding in Lutheran Hospital of Manhattan v. Goldstein, 46 N.Y.S.2d 70S (N.Y.
Sup. Ct. 1944), is clearly on point. The testatrix had died and left funds to the Lutheran Hospital with the limitation that "the income only [was] to be used by the said hospital for free beds for the poor in memory of my husband, Rev. Dr. George U. Wenner.,,8 Several years later, the hospital filed a petition seeking relief from the "income only" restriction due to the hospital's deteriorating financial condition. Indeed, the court found that without access to the fund's principal, "the hospital may be compelled to close its doors.,,9 Like Fisk, the plaintiff hospital contended that this unfortunate result would defeat the donor's purpose.!"
The court, however, concluded that "well established and settled law" in New York required that it deny relief to this "worthy and deserving institution."ll The court noted that its duty in the application of the cy pres doctrine "is to give effect to the testator's general intent.,,12 The court found that intent to be stated "in language entirely clear and wholly unambiguous" that only income from the bequest was to be applied "for free beds for the poor in memory of her
SId. at 707. 9 [d.
II Id. at 708. 12 Id. at 709.
husband.,,!3 By so restricting her gift, the court concluded, the testator plainly sought to prohibit
the employment of the principal for any other purpose, including the survival of the hospital. 14
The court concluded that accomplishing the testatrix's intent would not be impossible or
impracticable under cy pres law because New York law would permit the fund to be transferred
to another hospital in the event the Lutheran Hospital subsequently merged or ceased to exist.
Conversely, the court noted that if it permitted the relief sought by Lutheran Hospital, and the
fund's principal was subsequently exhausted yet the hospital still closed its doors, "the ultimate
result would be the complete frustration and destruction of the donor's intent.'?" Both of these
conclusions have obvious relevance to Fisk's petition.
Consistent with the holding in Lutheran Hospital, New York courts have allowed
recipients to invade the corpus of restricted charitable gifts only where there was clear
evidence that the donor's charitable intent included the recipient's financial survival. For
example, in the case of Knickerbocker Hospital v. Goldstein, 41 N.Y.S.2d 32 (N.Y. Sup. Ct.
1943), the court granted cy pres relief to keep the hospital in operation because, in doing so, it
14 As the court explained:
The testatrix was not desirous nor was it her intent that the principal should be used for the continued operation of the hospital; she evidently felt that it had the necessary means to carry on as a hospital and would so continue; if she thought otherwise, it seems evident that she would have made some provision for use of the principal to that end; her intent and desire were to perpetuate the memory of her husband in the form expressed and she plainly sought to inhibit the employment of the principal for any purpose other than to produce an income which was to be used and applied for free hospital beds in memory of her husband and made that intent unequivocal by the phrase 'income only.'
Id. at 709-10.
15 [d. at 709, The Lutheran Hospital case, of course, dealt with money, which is fungible and capable of being restored through a reinfusion of cash. The art collection at issue in this case, in contrast, is unique and could never be reassembled or recaptured "for Nashville and the South" if lost.
would further the donor's "expressed charitable purpose ... to have the hospital carry on the work of ministering to the sick and the indigent.'?"
There, the donor had left the Knickerbocker Hospital approximately $1 million in his will with the limitation that only the income could be used for the hospital's operating expenses. Some fifty years later, the hospital sought relief from this restriction, asserting "that unless it is granted the emergency relief sought in this action, it will be compelled to suspend operations and close its doors."l7
The court noted that the donor's charitable intent to benefit Knickerbocker Hospital specifically was set forth in his will, which spoke of the hospital's "continuing operation.?'" The court further found that the donor's close association with the hospital as its president for many years, his activities on its behalf and his general support as a patron and benefactor during his lifetime evidenced the donor's overriding charitable purpose that the hospital endure, and thus, if the hospital were to cease operating this charitable purpose would be frustrated. The court further found that the donor could not have foreseen the vast changes that had occurred since his death, i. e., the advent of a world war and of economic stress.l" Accordingly, the court granted the requested cy pres relief"
Similarly, in a set of related cases involving the bequest of restricted funds by Donald and Mildred Othrner to a university and to a hospital, the court found that unless it modified the
16 Jd. at 36. (emphasis added). 17 Jd. at 34-35.
18 Jd. at 36.
19Id. at 35-36.
=m. at 37.
restriction limiting the institutions' use of the funds to income only, the overriding charitable
purpose of the donors in ensuring the continued existence and operation of the charitable
institutions would be frustrated. 21 In each of these related cases, just as in the Knickerbocker
Hospital case, the court found that, during their lifetimes, the Othrners had enjoyed a significant
relationship with the charitable institutions and had displayed a historic pattern of philanthropy
and generosity to them.22 In light of the donors' substantial relationship and support during their
lives as well as the substantial gifts they left to the charitable institutions in their wills,23 the court
concluded that the Othrners' overriding charitable intent was to ensure the continued operation
and existence of the institutions.
In all of these cases, the intent of the donor is paramount. The New York courts specify
that, in exercising their power under cy pres, "care must be taken to evaluate the precise purpose
or direction of the testator, so that when the court directs the [gift] towards another charitable
end, it will 'give effect insofar as practicable to the full design of the testator.",24 Here, Ms.
21 See Estate oj Donald F. Othmer, 710 N.y'S.2d 848 (N.Y. Sur. Ct. 2000); Estate oj Mildred Othmer, 815 N.y'S.2d 444 (N.Y. Sur. Ct. 2006); In the Matter of Polytechnic University, 812 N.Y.S.2d (N.Y. Sur. Ct. 2006); In the Matter of Polytechnic Institute of New York University, 2009 WL 294892 (N.Y. Sur. Ct. Sept. 11,2009).
22 For example, the Othmers had given $2 million to the hospital; Donald served on the hospital's Board of Regents for 22 years and was a member of many hospital committees; and Mildred began volunteering with the hospital's Women's Guild in 1969 and promoted numerous fund-raising events for the hospital. Estate of Donald Othmer, 710 N.Y.S.2d at 850, fn. 1. With respect to the university, Donald Othmer had been a professor at the university and he and his wife were part of the university community from the 1930's until their deaths in 1995 and 1998. They were involved in the educational mission and welfare of the university and contributed in a number of ways, from paying for renovations with their personal funds to giving personal financial assistance to students. In (he Mauer oj Application of Polytechnic Institute oj New York University, 2009 WL 2948492 at *6.
23 The hospital received approximately $135 million combined from the estates of Donald and Mildred Othmer; the university received over $130 million from the estate of Mildred Othrner and "substantial moneys" from the estate of Donald Othrner. In the Matter oj Polytechnic University, 812 N.Y.S.2d at 306,311; Estate of Donald Othmer, 710 N,y'S.2d at 850, 853; Estate oj Mildred Othmer,815 N'y.S.2d at 450; In the Matter of Polytechnic Institute of New York University, 2009 WL 2948492 at *6.
24 In the Matter oj Wilson, 465 N.Y.S.2d 900,905 eN,yet.App. 1983) (quoting Matter of Scott, 8 N.Y.2d 419,427 (N.Y.Ct.App. 1960)).
O'Keeffe's intent in giving the Stieglitz Collection to Fisk was not to perpetuate Fisk's
existence. Rather, as found by the Termessee Court of Appeals, her intent "was to enable the
public - in Nashville and the South - to have the opportunity to study the Collection in order to
promote the general study of art." That finding of intent is now the controlling law of the case
and forecloses the relief sought by Fisk.
Even if this Court were to reexamine the record as to Ms. O'Keeffe's relationship with
Fisk, there is simply no evidence to indicate that Ms. O'Keeffe had any desire or intent that the
Collection be used for the continued operation of Fisk University. In fact, just like the donor in
Lutheran Hospital, she plainly sought to inhibit the employment of the Collection for any
purpose other than to promote the study of art in Nashville and the South and made that intent
unequivocal by imposing the "no sale" condition upon the Collection.25
Furthermore, unlike the Othmers and the donor in Knickerbocker Hospital, there is no
evidence that Ms. O'Keeffe, or Alfred Stieglitz, had any personal connection with or sentiment
for Fisk University. She did not teach or hold any sort of position at the University. She did
not solicit funds on behalf of or make monetary contributions to the University (other than
specifically for the care and conservation of the Collection). She did not even visit the
University other than to install the Collection in 1949. Clearly, outside the gift of the Stieglitz
Collection, Ms. O'Keeffe had no other personal attachment with Fisk.26
25 Further indication that Ms. O'Keeffe did not intend to allow Fisk to convert the Stieglitz Collection into a source of revenue is the fact that while she also imposed a "no-sale" condition upon the artwork given to the Philadelphia Museum of Art, that condition was only limited to a period of twenty-five years. She did not place any similar time limit upon Fisk's no-sale condition. See Letter from Georgia O'Keeffe to Fiske Kimball dated June 8, 1949.
26 Indeed, Fisk President O'Leary testified that the gift of the Stieglitz Collection did not result from any relationship Ms. O'Keeffe had with Fisk, but that "the history behind the gift that had to do with a number of
Also unlike the Othmers and the donor in Knickerbocker Hospital, Ms. Q'Keeffe clearly
was aware that Fisk was not financially healthy for many years prior to her death in 1986.27
Certainly, if Ms. Q'Keeffe had any intent or desire that the Collection be used for the continued
operation of Fisk, she could have modified the "no-sale" condition, made a provision for Fisk to
receive a bequest from her considerable estate, or taken some other action to assist Fisk with its
financial difficulties between 1949 and 1986. She did none of these.
The case of In re Application of the Board of Trustees of Huntington Free Library and
Reading Room, 771 N.Y.S.2d 69 (N.Y. App. Div. 2004), follows these same principles of donor
intent and offers no support for Fisk's petition. In that case, the Huntington Free Library sought
cy pres relief allowing it to transfer to the New York State Historical Association a collection of
books and other written materials it had received from the Museum of the American Indian
pursuant to a transfer indenture in 1930. In return, the Association agreed to certain
undertakings that the Library asserted would continue the purpose of the 1930 indenture and
agreed to pay $2.5 million to the Library to ensure the Library's continued viability. The court
granted the petition, including the monetary payment, because the charitable purpose of the
original transfer in 1930 included the "future existence" of the Library and because the terms of
the 1930 transfer did not prohibit such a cash payment. 28 Thus, just as with the other cases
discussed above, cy pres relief was allowed because the overriding charitable purpose of the gift
relationships emanating from Charles S. Johnson to Carl Van Vechten into that broad circle of the intelligentsia with artists and writers, critics in New York at the time of the Harlem Renaissance." Deposition of Hazel O'Leary at pp. 222-223 (July 26,2010).
27 See Deposition of Fisk President Dr. Walter J. Leonard at pp. 54,56-59.
28 [d. at 71.
was to ensure the continued existence and operation of the charitable institution and because
without such relief, that charitable purpose would be frustrated.
In contrast, there was no overriding intent or purpose ofthe gift of the Stieglitz Collection
to ensure the continued future existence of Fisk. Indeed, the record is devoid of any evidence
that either Alfred Stieglitz or Ms. Q'Keeffe sought to help Fisk financially or assure the
accomplishment of its general educational mission. Accordingly, allowing the cy pres relief
sought by Fisk because of its financial condition would convert the Stieglitz Collection into a
source of revenue for the University which is inimical to Ms. O'Keeffe's intent and the specific
charitable purpose of the Collection and, as such, is not permitted under New York cy pres law.
B. Fisk Cannot Meet Its Burden Of Proof That It Is Impossible Or Impracticable To Comply With The Conditions Of The Gift.
In determining whether circumstances have so changed as to render impracticable or
impossible a literal compliance with the conditions of a charitable gift, this Court must be
satisfied that "the elimination of the otherwise lawful condition is essential, from the standpoint
of practicality, to the accomplishment of [the overriding charitable] purpose" and that "the
variation from the terms . . . is not merely a matter of satisfying the desires and suiting the
convenience of the trustee.,,29 In other words, cy pres may not be employed simply to promote
what the petitioner views as a worthy charitable agenda; cy pres rather is a power whose
permissible use is confined to the perpetuation and advancement, to the extent possible, of the
particular charitable purpose.i"
29 In re Estate ofHawley, 223 N.V.S.2d 803,805 (N.V. Sun. Ct. 1961) (citations omitted).
30Board of Trustees of The Museum of the American Indian, Heye Foundation v. Board of Trustees of The Huntington Free Library and Reading Room, 610 N.Y.S.2d 488,499 (N.V. App. Div, 1994).
As previously discussed, Fisk asserts in its Second Amended Petition that, because of its
precarious financial condition, it is unwilling to expend the funds necessary to continue to
display the Stieglitz Collection, and, therefore, complying with Ms. O'Keeffe's charitable intent
is impracticable. Fisk further states that "[i]t is impossible for Fisk to meet the specific
conditions of the gift of the art because, without an infusion of cash, there is very little likelihood
that Fisk will meet its financial obligations.v" Accordingly, Fisk asks this Court to find that the
"continuing obligation of Fisk to display, maintain, preserve and restore the art is impracticable
or impossible," so that Fisk can realize $30 million from selling the Collection and apply those
funds in a manner not yet determined.
The probability of Fisk's closing its doors is based primarily upon speculation as to what
action the Southern Association of Colleges and Schools (SACS) will take with respect to Fisk's
accreditation. Indeed, when Fisk first asked this Court for cy pres relief in 2007, it was based
upon the assertion that, without the $30 million from the sale to Crystal Bridges, Fisk would not
be able to present a realistic plan for financial stability and, therefore, would not be re-accredited
by SACS in 2009, which would eventually lead to Fisk filing bankruptcy or closing its doors.32
Fisk did not receive the $30 million, and yet it was still re-accredited by SACS in 2009.
Moreover, the evidence in the record will show that the possibility of receiving $30 million from
the sale of the Stieglitz Collection as part of Fisk's financial plan played no role in SACS's
determination to re-accredit Fisk.33 Rather, as acknowledged by President O'Leary, SACS's
31 Second Amended Petition 'If 25.
32 See Fisk's Amended Petition for cy pres relief at 'If'lf 41-43 and Exhibit 13 (Affidavit of Hazel O'Leary) at 'If'lf 10-12.
33 See Deposition of SACS Director for Commission Support Carol Luthman at pp. 58-59.
core requirement of financial stability is only focused on two components: (1) enrollment and
donations and (2) management of budget. 34
Now, three years later, Fisk is again asking this Court to fmd that it is impossible or
impracticable for Fisk to comply with the conditions of the gift of the Stieglitz Collection based
on speculation as to what actions SACS might take in the future. Indeed, when asked in
deposition if Fisk would close its doors if it did not receive the $30 million, Fisk President Hazel
O'Leary qualified her answer by asserting that Fisk's financial outlook depended primarily upon
what action SACS will take after Fisk files its monitoring report in November 2010.35 However,
the record will show that SACS has never removed an institution from membership while that
institution was in its first monitoring review without the institution also being on sanction (e.g.,
warning or probation)." It is undisputed that Fisk is not currently subject to any sort of sanction
from SACS and is in its first monitoring review.
President O'Leary further testified that, even if SACS withdrew Fisk's accreditation in
December 2010, Fisk would still reopen in the Fall semester of 2011, albeit with a significantly
lesser number of students. 37 Moreover, Fisk was actually sanctioned once by SACS in the past,
when it was placed on probation for financial stability concerns, and Fisk was able to resolve that
sanction satisfactorily without a large cash infusion from the sale of its art collection and without
34 O'Leary Deposition at pp. 163-66 (July 26,2010). 35. O'Leary Deposition atpp. 21 (July 26, 2010).
36 Luthman Deposition at p. 90.
37 Deposition of Hazel O'Leary at pp. 19-26 (July 26, 2010). President O'Leary testified that if Fisk lost its accreditation, the school would essentially be in the same situation as Morris Brown College. Morris Brown lost its SACS accreditation in 2002 but remains opens today.
closing its doors.38 Thus, the specter of Fisk closing its doors in the imminent future due to any
actions by SACS is not supported by the evidence and is not sufficient to establish impossibility
Additionally, in July 2007, President O'Leary testified that Fisk would easily need $30-
$31 million to avoid a "going concern letter" from its auditors for the next two years. 39 Fisk
received only a fraction of this amount, but its auditors still did not issue a going concern letter.4o
In fact, Fisk received unqualified opinions as to its audited financial statements for fiscal years
2007,2008 and 2009.
Furthermore, while Fisk's financial expert Rhonda Sides testified in her updated
disclosure that Fisk "has a significant deficit of net assets ... which requires an extraordinary
infusion of cash ... to remain in business.?" she could provide no indication during her
deposition of when such a cash infusion was needed or how much cash was required.Y For
example, Ms. Sides testified that she had no opinion as to whether the $30 million proceeds from
the Crystal Bridges sale would constitute such an "extraordinary infusion of cash," or what
amount of cash infusion was needed for Fisk to remain in business. 43 Ms. Sides could not
38 Luthman Deposition at pp. 46-48. It should further be noted that during this period of probation, the Stieglitz Art Collection was listed in Fisk's financial statements as a permanently restricted asset instead of an "investment in art" as it is currently listed.
39 See Deposition of Hazel O'Leary at pp. 178, 189-190 (July 5,2007). A going concern letter is a letter issued when an auditor determines that there is a question as to whether a company will continue to operate, i.e., continue to be a going concern, for the next twelve months.
40 O'Leary Deposition at p. 211-12 (July 26,2010).
41 See Expert Witness Disclosure of Rhonda Sides, copy attached.
42 See Deposition of Rhonda Sides at pp. 55-57.
43Id. at pp. 55-56, 66, 76, 83. The most that Ms. Sides would opine about the $30 million proceeds from the Crystal Bridges sale was that it would be a "great start" for Fisk. Id. at pp. 63-64, 76, 83.
provide an opinion as to how long Fisk would remain in business absent a cash infusion."
Moreover, Ms. Sides could not even provide an opinion as to Fisk's current financial condition,
since she had only reviewed Fisk's audited financial statements through June 30, 2009.45 Her
only opinion was that if things did not change, i.e., if Fisk did not create revenue and/or cut costs
thereby reversing the trend of expenses exceeding revenues, then at some indefmite point Fisk
would no longer be able to remain in business, but she could not say when.46
Ms. Sides testifed that Fisk is running a $2 to $3 million operating deficit annually and
that this number is growing.V But Fisk has stated on the record that it currently has no plan for
how to use the $30 million to address this operating deficit or any other issue, and the plans it has
previously articulated in this litigation would not have closed the operating deficit but rather
would have generated new sources of expense. Consequently, even if Fisk were allowed to sell
the Stieglitz Collection, Fisk would still be facing the same unresolved financial obstacles. Thus,
as noted by the court in Lutheran Hospital, if this Court grants the relief sought by Fisk, "the
ultimate result would be the complete frustration and destruction of the donor's intent.?"
44 Id. at pp. 59-61 and 66-67.
45 Id. at pp. 74-75. In fact, Ms. Sides's expert disclosure indicates that she only reviewed the audited financial reports for Fisk for the years 1945 through 2009,with the exception of the two years in the 1950's and two in the 1960's, for which records could not be located, and 1948 and 1949, for which the audited financial reports could not be located but the adjusted trial balances were available. Ms. Sides testified that since her first expert disclosure in January 2008, she only reviewed Fisk's audited financial reports for the years 2004-2009 in preparing her updated expert disclosure. ld. at 40.
46 Id. at 58-60.
471d. at pp. 54, 57. 4846 N'y'S.2d at 709.
Finally, it cannot be said that Ms. O'Keeffe 's intent is inherently "impossible or
impracticable" of being achieved. As found by the Court of Appeals, Ms. O'Keeffe's gift of the
Stieglitz Collection was "to make the Collection available to the public in Nashville and the
South for the benefit of those who did not have access to comparable collections to promote the
general study of art.';49 While Ms. Q'Keeffe sought Fisk's participation, the university's role as
steward of the Collection was incidental to Ms. O'Keeffe's primary intent. Thus, as found by the
court in Matter of Estate of Wilson, modification or severance of the initial donee's role as
steward will not necessarily frustrate the donor's charitable intent. Rather, the donor's intent in
such cases can be accomplished with the assistance of a new steward that can carry out the
charitable intent. 50 The proof will show, in fact, that another Nashville institution, the Frist
Center for the Visual Arts, met with Fisk in May 2008 and suggested to Fisk that it would be
willing to discuss displaying the Stieglitz Collection in space at the Center dedicated to Fisk.
Accordingly, the Attorney General submits that Fisk cannot carry its burden of proof that
it is inherently impossible or impracticable to comply with the conditions of the Stieglitz
Collection and, therefore, is not entitled to the cy pres relief requested.
C. The Proposed Agreement With The Crystal Bridges Museum Does Not Most Closely Approximate Ms. O'Keeffe's Charitable Intent And Therefore Should Not Be Approved.
Even if this Court determines that cy pres relief is available to Fisk, it still must
determine whether the relief requested - the proposed Agreements with the Crystal Bridges
49 OKeeffe Foundation v. Fisk University, 312 S.W.3d at 17.
50 Matter of Estate of Wilson, 465 N.Y.S.2d 900, 906 (N.Y.Ct.App. 1983); see also Lutheran Hospital v.
Goldstein, 46 N.Y.S.2d at 709-710.
Museum - "most closely approximates Ms. O'Keeffe's charitable intent."Sl Here, Fisk urges
that, because the Agreements with the Crystal Bridges Museum would provide a "detailed
structure with regard to the care and preservation of the art, far beyond the ability of Fisk to
accomplish" and the "opportunity to participate with a future world-class museum" thereby
increasing the exposure to the Collection, the Agreements are the "most effective means" to
accomplish the general purpose of the donors "to make the art available to the public to promote
the study of art.,,52 In other words, Fisk asserts that what it describes as the general purpose of
the gift - to promote the study of art - will not be defeated or impaired but will be substantially
strengthened by selling a fifty percent interest in the Collection to the Crystal Bridges Museum,
because more people will visit the Crystal Bridges Museum and Crystal Bridges will require that
"best practices" be used for the care and display of the Collection.
Even if one accepts Fisk's incomplete description of the gift's charitable purpose, this
argument was .specifically rejected by the court in Huntington Free Library, in which the
Museum of the American Indian sought cy pres relief, arguing that the Smithsonian Institute
would be able to provide a better, more sophisticated and more convenient library facility for the
Museum's American Indian book collection than what was currently being provided by the
Huntington Free Library. The court specifically recognized that cy pres does not authorize
judicial alteration of a charitable gift simply because there "may be some even more efficacious
way of achieving" its charitable purpose, stating:
510 'Keeffe Foundation, 312 S,W..3d at 20. This "most closely approximates" standard has been adopted by the Tennessee Court of Appeals and is controlling in this case. In articulating this standard, the Court of Appeals cited the New York cy pres statute as well as a New York case interpreting that statute.
S2 Second Amended Petition at ~~ 45,47 and 49.
The unsettling effect of such a promiscuous resort to the cy pres power can hardly be overstated; courts would be constantly involved in the redeployment of charitable assets, sanctioning their transfer from institution to institution upon the merest showing that the assets might be more usefully situated. Cy pres is not a means for the comprehensive rearrangement of charitable holdings, but only of those holdings whose use in accordance with the literal terms of a governing disposition has become "impracticable or
. ibl ,,53
Thus, the fact that the Agreements with Crystal Bridges Museum may ultimately result in
better care for and more exposure of the Collection than Fisk can provide is simply not relevant
to a determination of whether the Agreements most closely approximate Ms. O'Keeffe's
charitable intent. Rather, in determining how to "most effectively accomplish" Ms. O'Keeffe's
intent, this Court must take care to "evaluate the precise purpose or direction" of Ms. O'Keeffe
so that itwill "give effect insofar as practicable to the full design" of Ms. O'Keeffe.54
Fisk's argument also relies upon a misstatement of the charitable intent that the
Tennessee Court of Appeals found controlling. Contrary to Fisk's assertions, Ms. O'Keeffe's
intent and purpose was not limited to the general purpose of making the Collection available to
promote the study of art. Rather, as specifically found by the Court of Appeals, her charitable
intent and purpose was "to make the Collection available to the public in Nashville and the South
for the benefit of those who did not have access to comparable collections to promote the general
study of art.,,55 The Agreements with Crystal Bridges on their face would unlawfully dilute by
half Ms. O'Keeffe's intent that the Collection be available to the public in Nashville and the
53 Board 0/ Trustees 0/ The Museum 0/ the American Indian, 610 N.Y.S.2d at 499.
54 In the Matter 0/ Abrams, 574 N.Y.S.2d 651,655 (N.Y.Sup.Ct. 1991) (citing Matter a/Wilson, 59 N.Y.2d at 472 and Matter a/Scott, 8 N.Y.2d 419,427 (N.y.et.App. 1960)).
55312 S.W.3d at 17 (emphasis in original).
Southr" Furthermore, the proof will show, by demography and geography, that Crystal Bridges'
home in Bentonville, a small town in northwest Arkansas that is the headquarters for Wal-Mart
Stores, Inc., does not offer the same ability to satisfy Ms. O'Keeffe's intent as does Nashville.
Indeed, the proof will show that Nashville closely resembles the South in racial, income and
educational characteristics whereas Bentonville is notably wealthier, more educated and less
diverse. 57 Nashville, with its southeastern location, is accessible to a much larger southern
population than Bentonville. Nashville also has 14.8 times more elementary, 16.6 times more
secondary, and 29.3 times more tertiary students than Bentonville, thus providing a significantly
greater audience to use the Stieglitz Collection for the study of art.
More importantly, by dispensing with the no-sale condition and converting the
Collection into a source of revenue for Fisk, the relief sought by Fisk would unlawfully
transform Ms. O'Keeffe's charitable intent and purposes. Clearly, the cy pres power may not be
permissibly used to dilute those purposes much less to dispense with them completely.
Fisk will call this arrangement with Crystal Bridges the best of all possible deals, hoping
to convince this Court to "split the baby" by keeping the art in Nashville half of the time while
giving Fisk its $30 million payment. In addition to its legal flaws, this argument does not
survive factual scrutiny. The record will show that Fisk has made no promises or plans to use
any part of the $30 million for the display and care of the Stieglitz Collection. Yet under the
Agreements with Crystal Bridges Museum, a committee controlled by Crystal Bridges will set
new "best practices" for the care and display of the art. These best practices will entail
56 In contrast, the alternative suggested to Fisk by the Frist Center for the Visual Arts in May 2008 to display the Collection in space dedicated to Fisk, had Fisk pursued it, would have more closely approximated Ms. O'Keeffe's intent.
57 MTSU professor Dr. Foster Arney will testify about these characteristics based on data from the u.s.
significant new ongoing costs, of which Fisk is legally obligated to pay half under the
Agreements. If Fisk fails to pay its share, and it has shown no ability or intent to do so even with
the additional $30 million, Crystal Bridges will pay those expenses and thereby under the
Agreements acquire a greater percentage ownership interest in the Collection, up to one hundred
percent. Fisk's petition is not a proposal t6 "split the baby." It is a proposal to give Crystal
Bridges Museum full custody of the Collection over time.58
Finally, as noted by the Huntington Free Library court, to "so easily dispens[ e] with a
grantor's directions," so as to "maximize the utility of the assets" would undermine future
While there may exist perfectly sound reasons of a curatorial, scholarly, aesthetic or other sort, why it would be desirable for the Indian book collection to find a home in an institution as eminent as the Smithsonian, we are not free to move charitable assets from one institution to the next simply to maximize the utility of those assets in some broad sense. What the law recognizes in its imposition of far more stringent, disposition ally based conditions on the use of the cy pres power, is that the consequences of so easily dispensing with a grantor's directions would be to discourage charitable giving and to rob charitable institutions of the stability necessary to the discharge of their purposes. Doubtless it is better in the end for society to reap the benefit of charitable giving even in the form of dispositions imperfectly suited to the achievement of their purposes, than to forgo the benefits of charity altogether in the course of pursuing by judicial means some almost certainly elusive reallocation of charitable resources. 59
Accordingly, the Attorney General submits that the Agreements with the Crystal Bridges
Museum do not most closely approximate Ms. O'Keeffe's charitable intent and should not be
5S The "Secured Loans" clause (Joint Operating Agreement at 12) is not the only provision in the Agreements that ultimately will give the Crystal Bridges Museum full ownership of the Stieglitz Collection. Crystal Bridges would also have a right of first refusal in the event that Fiskwishes to sell any part of its remaining interest in the Collection (Joint Operating Agreement at 13-15).
59 Board of Trustees of The Museum a/the American Indian, 610 N.Y.S.2d at 501 (emphasis added).
T M. KLEINFELTER ( De' uty Attorney General
blie Interest Division
JOE SHIRLEY (BPR 22287) Assistant Attorney General Financial Division
P.O. Box 20207
Nashville, TN 37202
WILLIAM N. HELOU (BPR 22839) MGLawPLLC
2525 West End Avenue Suite 1475
Nashville, TN 37203 (615) 846-8000
For the reasons discussed herein, the Attorney General submits that Fisk cannot show
either as a matter of New York cy pres law or factually that it is entitled to the cy pres relief
requested and, therefore, that such relief should be denied.
ROBERT E. COOPER, JR. Attorney General and Reporter
CERTIFICATE OF SERVICE
I hereby certify that a copy of this Pre-Trial Briefhas been sent by electronic transmission and by first class U.S. Mail, postage prepaid, to:
John P. Branham David C .. Briley
C. Michael Norton
Bone McAllester Norton PLLC 511 Union Street, Suite 1600 Nashville, TN 37219
this 9.!!:_ day of August, 2010.
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