(Nashville, TN) The “Save Watkins” lawsuit is heading back to Davidson County Chancery Court in two weeks, even as a “For Sale” sign has sprung up in front of the troubled art school’s former campus--despite the fact that the ownership of the real estate remains under legal dispute.
The lawsuit, filed this past February by two former Watkins College of Art students and an instructor, challenges the attempted gift of the valuable Watkins College property to Belmont University, a private religious institution. When the Board and Commissioners of Watkins announced a “merger” with Belmont in January, they stated that Belmont would immediately sell the campus real estate, and convert the proceeds into a scholarship fund for future art students at Belmont. The real estate has been valued by Watkins and Belmont at $15-20 million dollars,
Chancellor Patricia Head Moskal granted a new hearing for Wednesday, October 14, at 2PM. The central issue in the long-simmering suit is whether Watkins College is a Public Trust under Tennessee law, and therefore can’t be given away to a private non-profit corporation without adhering to the terms of the Trust, including a public process and legislative approval. Watkins College was founded by a gift of cash and property, under terms of the will of wealthy philanthropist Samuel Watkins in 1880. The Tennessee legislature passed a law accepting that gift as a Public Trust the following year.
The lawsuit seeks to prove that the State of Tennessee, as trustees of the Watkins Trust, is the rightful legal owner of the property, while the Boards of Watkins and Belmont contend that Watkins is actually owned by a private non-profit corporation, which they have merged into Belmont in what they describe as a routine corporate transaction.
Belmont’s attorneys filed a motion September 2 to ask the judge to declare the suit "moot" --legally dead-- based on the fact that Watkins and Belmont have gone ahead and completed the merger of the two non-profit corporations, even though the judge has not yet ruled on the legality of the deal. The office of Tennessee Attorney General Herbert Slatery III has sided with Belmont and quietly rubber-stamped the non-profit merger in late July.
The Save Watkins plaintiffs filed a blistering response, charging that the actions of Watkins, Belmont, and the Attorney General’s Office threaten "the very integrity and future" of public trusts as a vehicle of philanthropic giving in Tennessee. They also charge the Attorney General's Office of being "complicit in the raiding of these public assets" by "refusing to recognize [the Watkins public trust] at all, in the face of clear evidence as to its existence".
The suit had its most recent hearing on May 20, 2020 in Davidson County Chancery Court, after which Chancellor Moskal took the case under advisement.
“This case is pivotal to the future of the guarding of public assets in Tennessee from marauding private pirates,” said Jonathon Fagan, one of two lawyers representing Save Watkins. “If Belmont gets its way here, then this will serve as a 'Public Asset Raiding 101 Guidebook'. Belmont will essentially be writing the playbook for how to snatch up struggling public charitable trusts that were created from someone’s dying wishes in a will.”
The Attorney General's office has the dual role of protecting the assets of Public Trusts and overseeing the mergers of non-profits. The Save Watkins' suit insists that this is a disqualifying conflict of interest because the AG also sits on the board of the Watkins non-profit.
“The Attorney General should have protected the public here, but instead has been complicit in destroying Samuel Watkins' testamentary gift for Nashville’s youth", Fagan stated. “We are asking the court to simply recognize how this issue of a derelict and political state Attorney General has been handled in other jurisdictions, and adopt a similar stance in invoking court power to protect the public’s interest.”
Since the completion of the merger of the non-profits, Belmont has shuttered the Watkins campus and transferred its art curriculum to the “Watkins College of Art at Belmont”. According to a sign posted in front of the property, the nearly-fourteen-acre parcel is being offered for sale by commercial real estate brokers Walker Dunlop and Cushman & Wakefield.
Any potential sale of the property will be complicated by the dispute over who owns legal title to the land. The plaintiffs have filed a “Notice of Lien Les Pendens” on the property, which gives formal notice to potential buyers of the pending litigation.
“Save Watkins” issued the following statement today:
“No one disputes that Watkins College had cash-flow struggles, which several former concerned Watkins Board members, including a distinguished judge, have publicly attributed to years of Board mismanagement and malfeasance. However, there were viable options other than killing the school and then picking its pockets. Once the takeover was announced, more than one potential partner stepped up with viable offers to help save Watkins. Sadly, Watkins’ so-called ‘leadership’ appears to have simply tired of running the school that Samuel Watkins had entrusted to them, so they concocted a secret scheme to slap his name on a building at Belmont, give Belmont a $15 million dollar gift, and declare that they had “saved” the school. They did not “save” Watkins. They did the opposite.”
State Senator Brenda Gilmore has expressed serious concerns with the deal, including the fact that no other institutions, including nearby Tennessee State University and Fisk University, were approached with the offer that was extended to Belmont. Gilmore, whose Senate district includes the former Watkins campus, was not consulted or informed of the deal before it was announced.
The key question in the legal dispute is whether the assets of Watkins College belong to the state, per the 1881 law that established the Watkins charitable trust, or whether the assets belong to a non-profit that was set up alongside the trust decades later, in the 1970’s. The “Save Watkins” suit contends that the trust still remains in force and is the controlling legal entity, so that any decision to dissolve Watkins College and dispose of its assets must be approved by the State Legislature or a court, and must follow the laws that allow public participation and scrutiny. Watkins and Belmont claim without evidence that Watkins College has, over the decades, become a private institution that can merge with another private non-profit.
The Attorney General's Office has echoed that position. In an earlier hearing in the case, Assistant AG Janet Kleinfelter made the surprising claim that the Watkins public trust is already dissolved because, she asserted, the law establishing it is "obsolete", and the legislature had simply not gotten around to repealing it. The plaintiffs countered that the legislature has had plenty of opportunities to repeal the Watkins Trust and declined to do so, and that laws don’t become obsolete just because they are inconvenient. The plaintiffs also produced evidence that the real estate had always been titled in the name of the public trust, not the non-profit.
The Save Watkins plaintiffs also presented evidence that Watkins’ leadership has remained fully aware of the current legal validity of the Trust in recent years, including a 2012 internal email from then-Board Chair, attorney Samuel Stumpf. This email stated, in part, "Watkins has a unique structure with the 'trust' set up by the Watkins will and the 'corporation' set up 30 or so years ago to house the board. Seems to make sense for most purposes to de-emphasize the difference between the two” (emphasis added).
The plaintiffs in the legal challenge are Kenneth Strawn and Amari Harris, two students who, up until the school's closing, attended Watkins College of Art, and Mark Schlicher, an alumnus and former adjunct instructor at the institution. They are represented by attorneys Kevin Teets, Jr., and Jonathon Fagan.