City drops legal bombshell in dispute over oil-rich property


Posted on July 15, 2013 at 10:28 PM

Updated Monday, Jul 15 at 10:41 PM

Mike Perlstein / Eyewitness News
Email: | Twitter: @mikeperlstein

NEW ORLEANS -- Since 1914, the donation of oil-rich property from a wealthy philanthropist has provided tens of millions of dollars to the city of New Orleans.

As laid out in Edward Wisner’s will, dozens of non-profit community organizations still benefit from his generosity, but an escalating legal dispute between the city and the heirs is threatening to stop the funding in 2014 when the 100-year agreement runs out.

Now there's a possibility the end could come even sooner. The city just dropped a legal bombshell that questions whether the existing Wisner family heirs have any legal standing at all.

In a legal memorandum filed last week, the city maintains that Wisner’s modern-day descendants aren't the rightful heirs at all. The city maintains that their claim ended with the deaths of Wisner's two daughters in the 1970s.

“When the last of the Wisner ladies 'passed out of existence,' their entire 40 percent interest inured to the benefit of the city – not the Wisner heirs,” the city states in its memo.

The 50,000 acres of land – most of it in and around Port Fourchon – generates millions of dollars each year in port fees and oil and gas royalties. The proceeds from the land are donated to the beneficiaries as Wisner and his heirs dictated decades ago: 40 percent to his descendants, 34.8 percent to the city, 12 percent to Charity Hospital (now LSU), 12 percent Tulane University and 1.2 percent to The Salvation Army.

The city is now arguing that the 40 percent donation that has been going to the heirs for more than four decades should be going to the city.

WWL-TV legal analyst Chick Foret said the move could prove to be a huge gamble over the lucrative donation.

"This is perhaps a billion dollar pie that both sides are fighting over now. Anytime you have tremendous reward, you have tremendous risk," Foret said. "Are we at the point now where it's a winner-take-all situation?"

Tension has been building ever since the city took the grant-making process away from the five-member advisory committee, a body made up of one representative for each beneficiary.

At the same time, the city made the previously private meetings open to the public, arguing that the business of the trust is the same as any other function of government.

That led the removal of the Wisner office from City Hall, as well as a lawsuit by the heirs seeking to remove Landrieu as the fund’s trustee.

Amid the legal disputes, 20-year trust manager Cathy Norman said she was forced out of her job by a hostile city administration.

In her resignation letter, Norman wrote that she “can no longer work under the difficult and stressful conditions that now exist as a result of the legal confusion and internal governance issues.”

Now, not only is the end of the donation looming, but the courts may be forced to decide who gets the lion's share of the donation left by Edward Wisner, property that last year brought in more than $8 million.

A hearing over the dispute is scheduled to be held in civil court on July 26 before Orleans Parish Civil Court Judge Lloyd Medley Jr.