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A lot’s changed in the over 100 years since William Corcoran executed a “Deed of Trust” in 1869, establishing the Corcoran Gallery of Art. Falling victim to competitive market pressures, Washington’s oldest private art gallery and art college recently filed this 204-page motion and supporting memorandum of law, asking a D.C. judge to apply the cy près doctrine in support of plans to permanently close its doors.

I’ve previously written here about the cy près doctrine in the context of a contested Florida trust/estate, and the fact that the doctrine’s been codified as part of our Trust Code in F.S. 736.0413.

The Corcoran’s court motion is an excellent piece of lawyering (and a solid resource for anyone involved in similar cases in the future), explaining in detail:

  1. the underlying financial crises making its continued operations no longer viable,
  2. the gallery’s dissolution plan, which focuses on preserving the public benefits of this institution in the D.C. area to the extent possible, and most importantly,
  3. the lengths the Corcoran’s trustees have gone to confer with and obtain the prior consent of key stake holders, including D.C. Attorney General Irvin B. Nathan.

Non-profits and litigation PR:

Point #3 is especially instructive for any lawyer working on any kind of case involving a high-profile non-profit institution. I previously wrote here about the use of public relations in the context of the Robertson v. Princeton University case, a dispute where the public-advocacy facet of the litigation was in my opinion bungled. The Princeton case was an example of what not to do. In stark contrast, this time around the public-advocacy aspect of the case appears to have been handled expertly by Corcoran’s trustees (as documented here). I’m guessing the fact that no one’s objecting to the gallery’s dissolution plan (including local politicians) is a testament to months of hard work involving intensive lobbying, public education and presuit contractual negotiations. That’s exactly the way these cases should be handled.

For more on the back story to this case you’ll want to read a Washington Post piece entitled Corcoran maneuvers to keep its art from leaving the area. Here’s an excerpt:

The Corcoran’s court motion comes under the ancient legal doctrine of “cy près,” by which a court can modify restrictions placed on a charity when the charitable purpose becomes impossible to achieve. The gallery’s lawyers argue in the legal filing that chronic deficits and competition from free museums — notably the National Gallery — have doomed the Corcoran in its current form.

The Corcoran submitted annual budget summaries to the court, showing that it ran deficits in 11 of the past 13 years, including $5.5 million last year and $9.2 million in 2012.

“It is financially impracticable, and indeed in the medium- and longer-term, financially impossible, to continue the operations of the gallery and college in their current form,” Corcoran’s attorneys said in their brief.

So the Corcoran is asking the court to modify its founding 1869 [trust] deed and [federal] charter to enable the new arrangement. Those documents launched a gallery, and, in 1890, a college, and did not foresee the gallery and college being given to others. The reorganization is the next best way to fulfill the original vision, the lawyers argue.

The attorney general’s office oversees charitable institutions and is a party in the cy près proceeding. Superior Court Judge Robert Okun will have the final say, but to try to win the attorney general as an ally, the Corcoran has been sharing relevant documents for weeks.

The attorney general’s office requested the side-letter on keeping art in the building “as a condition to supporting the Corcoran’s position,” according to the letter.

Hat tip:

Credit goes to the Nonprofit Law Prof Blog for bringing this story to my attention in this blog post.