Two hours south of New Orleans, there is a patch of territory along Louisiana’s receding coastline — 50,000 acres encompassing beaches, bayous, salt marshes and rare black mangroves — that will take center stage next month in a lawsuit potentially worth many millions of dollars to Mayor Mitch Landrieu’s administration.
For decades, proceeds from what’s known as the Wisner Donation have been split five ways, with money going to Charity Hospital, Tulane University, the Salvation Army, the late Edward Wisner’s descendants and the city. Most of the cash — more than $8 million last year — comes from oil and gas royalties and the rent from Port Fourchon, a busy hub for vessels serving offshore rigs.
As long as the land remains in a trust established by Wisner in 1914, the status quo is unlikely to change. But Wisner’s arrangement was meant to last 100 years, and 100 years is almost up — cueing a nasty court battle over what happens next.
The main drama pits Wisner’s descendants, who want the existing arrangement to continue indefinitely, against the Landrieu administration, which argues not only that the trust should be dissolved, but that Wisner’s heirs never should have gotten a share of the land or its income to begin with.
“For nearly 100 years, the purported heirs of Edward Wisner have unjustly and personally benefited from trust funds that their forbears intended to serve the public good,” the Landrieu administration argued in court filings last month.
Behind these arguments are big stakes. The existing arrangement gives the Wisner heirs 40 percent of the land’s income. Cutting them out and dissolving the trust would more than double City Hall’s share of an ever more lucrative piece of real estate at a time when the budget is straining under the cost of expensive, court-ordered police and jail reforms.
In a way, the case is emblematic of the mayor’s style of governing in his first three years in office: Landrieu says he is pushing to shake up a cozy, long-standing arrangement in the name of transparency and the public good, while those on the receiving end of that shakeup complain of a ruthless power grab.
In court filings and interviews, Wisner’s heirs and people involved in the trust have painted Landrieu as a bully intent on managing the Wisner Donation without input from the other beneficiaries and unwilling to brook disagreement.
They want a judge to remove the mayor from serving as the donation’s trustee, and they worry that he is looking to sell off the property when the 100-year term of the trust ends. That’s not the only potential windfall around the corner: Whoever controls the property could also benefit from pending litigation with BP over the 2010 Macondo disaster, which damaged the Wisner land.
“For some reason, the mayor thinks he’s going to be able to take control of the whole thing,” said Jason Berry, who has chronicled the Wisner saga extensively on his blog, American Zombie. “I think Mitch is intent on just selling the thing off for a quick pop.”
Landrieu’s administration denies shopping the property, but Chet Chiasson, director of Port Fourchon, acknowledged in an interview that the mayor’s executive counsel, Michael Sherman, approached him before leaving City Hall in May about whether the port would be willing to buy the land.
A hearing in the dispute between the Landrieu administration and the heirs is set for late September in Judge Lloyd Medley’s courtroom.
A 50,000-acre gift
Edward Wisner was born in Michigan in 1861 and migrated south for health reasons, according to a family history published in 1918. “The Wisners in America” describes Edward Wisner’s “most varied and interesting career,” from banking and newspaper editing in Athens, Mich., to selling lumber in Louisiana.
He eventually landed in New Orleans in 1900, buying up more than a million acres of swampland west of the city.
He made the Wisner Donation and established the 100-year trust in 1914. Originally, the proceeds were to benefit a whole slew of pet causes, not just Charity and Tulane, but also an “agricultural department” for city schools and a “country home for newsboys.”
But Wisner died in 1915, and his survivors soon had second thoughts about the donation. His wife, Mary Wisner, and daughters Elizabeth and Harriet filed a lawsuit in 1928 to try to get the donation voided. Referred to in court filings as “the Wisner Ladies,” they settled a year later for the arrangement that stands more or less unaltered today.
The 1929 “Agreement of Compromise and Satisfaction” stipulated the five existing beneficiaries: the city got about 34.8 percent of the property and its income, Tulane and Charity each got 12 percent, the Salvation Army got 1.2 percent and the Wisner Ladies got 40 percent.
The deal also called for establishing the Edward Wisner Donation Advisory Committee to manage the land, made up of one representative from each of the five beneficiaries, with the mayor at its head.
For years, the Wisner Donation produced only a modest income: court records show $31,900 for the years 1938-39, for instance, or about $528,000 in today’s dollars.
But then oil was discovered on the property in the 1950s. And in recent decades, Port Fourchon, almost half of which sits on the Wisner property, has grown into an enormous operation, handling vessel traffic for 90 percent of the deepwater oil and gas rigs in the Gulf of Mexico; roughly a fifth of the country’s oil supply passes through each year.
Together, the royalties from oil and gas and the rent from Port Fourchon brought in more than $8 million for the Wisner trust in 2012, a record figure.
Meanwhile, the number of Wisner heirs who benefit from the income has expanded dramatically: They include not just the heirs themselves but the heirs of the lawyers who argued the 1928 lawsuit for the Wisner Ladies. Court records show the number of individuals splitting their 40 percent share stands at around 50, though it’s not clear how the total is divided.
For decades, City Hall has doled out its portion of the money with relatively little to-do, but conflicts have sometimes cropped up when members of the donation advisory committee felt the city was using its portion of the trust unwisely.
In the mid-1990s, Wisner’s great-grandson Michael Peneguy took Mayor Marc Morial to task after the recreation department used Wisner money to pay bonuses to teenagers in a summer jobs program. At the time, Morial defended the extra cash for campers as “good public policy.”
Landrieu has refused to see the committee as having any say over the city’s portion of the money at all, arguing that the mayor shouldn’t have to seek the approval of Wisner’s heirs or any other beneficiary before spending the city’s cut — and that the heirs’ portion should have been flowing to City Hall in the first place.
A rocky start
People involved in the trust say Landrieu was dismissive of the committee from the outset.
For almost a year after taking office, he simply left the trust alone without spending the city’s share, then announced in March 2011 that the city would be accepting grant applications.
That fall, Landrieu put out a list of 35 grant recipients that would share $885,000, with another $500,000 going toward his administration’s anti-murder campaign. Six months later, he named another 18 grant recipients.
The Wisner heirs argue that Landrieu should have run those grants past the advisory committee, as previous mayors have done. Peneguy has accused Landrieu of essentially establishing his own group of appointees to usurp the committee’s oversight duties.
Landrieu’s office declined to make anyone available for an interview for this story. But in a series of written responses, Landrieu spokesman Tyler Gamble acknowledged that the Mayor’s Office has not run grant requests past the original committee. He said a group of senior city officials reviews grant applications, but he disputed Peneguy’s claim that that group constitutes a committee that has replaced the Wisner advisory committee.
In legal filings, Landrieu argues that no one reviews how the Wisner descendants or any of the other beneficiaries spend their share, so there’s no reason the city should have to play by different rules.
Wisner’s heirs and Landrieu also clashed over a choice of lawyers to represent the Wisner Donation against BP after the 2010 oil disaster. As tar began washing up on the property’s beaches, the advisory committee hired environmental law attorneys Joel Waltzer and Robert Wiygul, a choice that didn’t sit well with the Mayor’s Office.
Waltzer and Wiygul represented other clients with an open lawsuit against the city over operations at the Old Gentilly Landfill. And they hadn’t been selected through a public solicitation — a point that exposed a fundamental disagreement between the Landrieu administration, which sees the Wisner trust and the committee governing it as essentially public, and the Wisner heirs, who see it as private. Whatever the case, people involved say Landrieu strong-armed the advisory committee into dropping Waltzer and Wiygul in favor of the law firm Herman, Herman, Katz & Cotlar, which also represents the city’s claims against BP.
At the time, Stacy Gerhold-Marvin was serving on the advisory committee as the representative of LSU, then-owner of Charity Hospital. She felt Landrieu was bullying the committee and that hiring the same lawyers who represented the city against BP might pose a conflict of interest.
In June 2012, LSU replaced her with a vice chancellor named Ron Gardner, a move that gave Landrieu’s administration the majority vote it needed to change lawyers.
Cathy Norman, who has served as secretary treasurer of the Wisner Donation for two decades, was taken aback. She felt Waltzer and Wiygul had served the trust well in negotiations with BP for more than a year, so she called Roxane Townsend, then serving as the head of LSU’s Health Care Services Division, to find out why Gerhold-Marvin had been replaced.
Norman said Townsend told her she had gotten a call from the Mayor’s Office asking her to replace Gerhold-Marvin because she was disrupting the committee’s meetings.
“It was a shock,” Gerhold-Marvin said. “I do believe that the reason I was replaced is because I was very vocal against what the mayor was trying to do.”
She said the Mayor’s Office more or less ignored the advisory committee at first, “but when he got involved, from that moment, they just seemed to want to take everything over.”
Gamble, Landrieu’s spokesman, told The Advocate that the Mayor’s Office met with LSU to discuss replacing the university’s previous representative, the late Everett Williams, whose failing health had kept him from attending meetings before Gerhold-Marvin took over as his alternate. Gamble did not address questions about whether Landrieu’s administration asked that Gerhold-Marvin be removed.
Townsend, who took a job with the University of Arkansas last year, did not respond to a request for comment.
A few months after Gerhold-Marvin was taken off the committee, Norman decided to step down as the trust’s secretary, citing “legal confusion and internal governance issues.”
Fight goes to court
Hovering behind the disputes over the parceling out of grants and the selection of attorneys has been a much larger question: What will happen to the Wisner land after August 2014, when the 100-year trust comes to an end?
That question has sent lawyers for both the Wisner heirs and the Landrieu administration deep into the arcane evolution of Louisiana’s trust laws.
In January, four of Wisner’s surviving heirs took their dispute with the Landrieu administration to court, asking a judge to remove the mayor as head of the trust’s advisory committee because of the way he had issued grants and meddled in committee affairs. They also argued that an obscure state law passed in 1920 had settled the question of what happens next year: It stipulates that any charitable trust should continue forever, “so long as there is a competent person or institution to administer it.”
In a lengthy cross-claim filed last month, the mayor finally laid his cards on the table, proposing an interpretation of the law that suggests the Wisners should have no say over what happens to the land and never should have benefited from it.
The city’s filing argues that the 1920 statute was unconstitutional, was repealed anyway and only applied to charitable trusts that had no expiration date — not an explicit 100-year trust such as the Wisner Donation.
Going further, the city makes a case that the Wisner Donation does not constitute a “charitable” trust at all, but a “mixed trust,” with the portion that benefits the public governed by one set of laws and the portion going to the heirs by another.
When Wisner made the donation in 1914, Louisiana did not recognize private trusts of the kind that would dole out cash to someone’s descendants. By the time the Wisner Ladies sued to get the land back, the state did recognize private or mixed trusts, but with a hitch. While a charitable trust could continue forever, the city argues, Louisiana law at the time stipulated that a private trust could continue for only 10 years after the death of the “settlor” — in this case Edward Wisner.
Since Wisner died in 1915 and the Wisner Ladies only sued in 1928 — 13 years later — they had no legal right to benefit from the trust, the city argues. And even if they did, that right should have expired when the last of the Wisner Ladies died in the 1970s, the city says.
Still, even if the share held by Wisner’s descendants reverted to the city, it’s not clear what would happen after next August, since Tulane, LSU and the Salvation Army would still own a portion of the land.
The mayor’s spokesman said the administration has not shopped the property to potential buyers and doesn’t yet have an estimate of how much the land is worth.
Gamble said it would be “premature” to discuss who should get the proceeds if the city’s lawyers are able to win a settlement from BP over the tar mats that have damaged the local ecosystem.
But none of that has quieted speculation about the mayor’s intentions. The American Zombie blog posted video of a contentious advisory committee meeting from February, in which Wisner heir Mark Peneguy asks Sherman, then Landrieu’s executive counsel, whether or not he had talked to Laney Chouest, son of the shipbuilder Edison Chouest, or Chiasson, director of Port Fourchon, about selling the property.
Sherman calls Peneguy “out of order,” accuses him of trying to distract the committee, and finally says, “I’m not going to entertain your questions.”
Chiasson confirmed to The Advocate that Sherman had approached him. He said the port would consider buying the land, though likely not for the full market price.
Chiasson argues that the port itself, which is governed by an autonomous state commission, has paid for most of the improvements on the land that gives it so much value to begin with, so it wouldn’t make sense to pay top dollar.
Sherman left City Hall in May to work in the private sector and as an adjunct professor at Tulane.
The mayor’s spokesman could not say which firm Sherman works for, and Sherman did not respond to an email sent to his Tulane address.