After more than 14 hours of discussion in a Fulton County courtroom, the feuding heirs of the Rev. Martin Luther King Jr. reached a settlement late Monday night that will keep the family from a public jury trial.
Martin Luther King III, Bernice King and Dexter King have aired their grievances in open court for more than a year.
Martin and Bernice sued their brother, Dexter; then Dexter sued Martin and Bernice. They disagree over how to manage their parents’ multimillion dollar estate, including how to handle various book deals and movie deals and other money-making projects that writers and producers propose, having to do with their parents’ lives and work.
The siblings began negotiations Monday morning as the threat of a civil trial loomed. The trial was expected to reveal personal and financial details about King Inc.
Dexter King’s brother and sister accused him of acting improperly as head of the their parents’ estate, which the three of them control as a private corporation, King, Inc.
They said Dexter shut them out of decisions involving King Inc. and refused to hold a shareholders meeting since 2004. Dexter suspected they would vote him out if he were to call a meeting. The three have been largely estranged for months.
In the settlement reached Monday, the Kings acknowledged they are “deadlocked” and agreed to allow Fulton County Superior Court Judge Ural Granville to appoint a custodian to be in charge of King, Inc., temporarily.
Dexter said the agreement will give them all time to come together and find a way to run the company jointly and “amicably.”
All three said independently Monday night, following the court proceedings, that they continue to love each other, even though they disagree. “We’re all we have,” Martin said.
And all three said their goal is to be good stewards of their parents’ estate in order to protect and enhance their parents’ legacy.
The agreement:
IN THE SUPERIOR COURT OF FULTON COUNTY
STATE OF GEORGIA
BERNICE A. KING, Individually And as Administrator C.T.A. of
the Estate of Coretta Scott King
and MARTIN L. KING III,
Plaintiffs
vs. DEXTER S. KING
and ESTATE OF MARTIN LUTHER KING, JR., INC,
Defendants.
FINAL ORDER
The Parties having jointly requested that the Court enter this Order, and the Court having reviewed and considered the same, it is hereby Ordered as follows:
I. BACKGROUND
This litigation was filed by Bernice King and Martin L. King, III on July 10, 2008, seeking certain relief from their brother, Dexter King, and from the Estate of Martin Luther King, Jr., Inc. and its subsidiaries (the “Corporation”) . The Corporation then asserted
Counterclaims against Bernice King and Martin L. King, III, and both sides have litigated their claims. The parties have reached a
settlement of all claims, and this Order is being entered pursuant to consent of all parties.
II. ASSIGNMENT
Certain issues have been raised in this litigation with respect to the Assignment executed by the five (5) heirs of Dr. King on or about September 27, 1995, by which all tangible and intellectual property related to Dr. King was transferred to the Corporation by Dr. King’s heirs. The Court hereby finds and holds that the Assignment, a copy of which is contained in the minute book of the Corporation, is VALID and constitutes a binding agreement executed by Dr. King’s heirs.
Certain property has been delivered by Bernice King, in her capacity as Administrator of the Estate of Coretta Scott King, to Special Master William B. Hill, Jr., who has been reviewing and preparing an inventory of that property pursuant to prior Orders of this Court. It is hereby ORDERED that Special Master Hill provide a copy of the inventory to all parties in this litigation. It is further ORDERED that Special Master Hill deliver within ten (10 days of the date of this Order (with parties or their representatives present) to Freedom Hall in the basement of the King Center to be maintained and stored by the Corporation, that property in his possession that he has determined constitutes “CSK Papers” as that term was defined by the Special Master in connection with his review. The room shall be secured, and access shall be limited except as approved by the Court until a custodian is appointed and then by the custodian.
It is further ORDERED that Special Master Hill return to Bernice King that property in his possession that he has determined does not constitute “CSK Papers.” All parties reserve the right to assert as provided by this Order that either “CSK Papers” or non-”CSK Papers” may or may not be subject to the Assignment.
The Corporation shall submit to Bernice within thirty (30) days of the date of entry of this Order a list of items that the Corporation contends clearly are the property of the Corporation pursuant to the Assignment (including, for example, the Nobel Peace Prize and Dr. King’s car). To the extent Bernice does not dispute ownership of items on that list, the Corporation shall make arrangements to pick up those items within twenty (20) days of receiving said notice. In the event Bernice disputes ownership, then the issue shall be presented to the custodian, once appointed, as set forth below.
Additionally, there may be other property in the possession, custody or control of Bernice King, either individually or as administrator of either Mrs. King’s or Yolanda King’s estates, and
there may be property in the possession, custody or control of Martin King or Dexter King, that the Corporation may claim pursuant to the Assignment. It is hereby ORDERED that prior to the closing of the Estates, Bernice shall provide to the custodian an inventory from which the custodian may determine which items he contends are the property of the Corporation pursuant to the Assignment. The custodian may request a list from the Undersigned of any items potentially covered by the Assignment. If there is any dispute as to the ownership of such items, the dispute will be submitted to the custodian as described below.
If there is any dispute as to whether a particular item should be delivered to the Corporation pursuant to the Assignment, that issue shall be presented first to the custodian being appointed herein. If the custodian cannot resolve the issue, the dispute shall be presented to the Court.
Finally, the parties are ORDERED to pay their respective shares of the bills submitted to them by Special Master Hill within ninety (90) days of entry of this Order.
III. OTHER CLAIMS
In an attempt to settle and resolve all litigation pending among them, Bernice, Martin, and the Corporation have agreed to dismiss with prejudice all remaining claims and counterclaims against each other and against Dexter that are pending in this lawsuit.
Therefore, except as to those claims that are otherwise addressed in this Order, the remaining claims asserted in Plaintiffs’ Complaint and in their Amended and Recast Complaint are hereby DISMISSED WITH PREJUDICE, and the Counterclaims asserted by the Corporation are hereby DISMISSED WITH PREJUDICE.
These dismissals shall not be deemed to have any effect upon the issue of the validity or invalidity of any contracts entered into by the Corporation with third parties prior to the date hereof.
IV. APPOINTMENT OF CUSTODIAN
Bernice, Martin, and Dexter are the only three remaining heirs of Dr. King and are the only shareholders and Directors of the Corporation. The Court finds that the three shareholders and Directors are deadlocked at this time as to the best structure for management of the Corporation. The parties have agreed that a temporary custodian be appointed to work with the shareholders in determining how they want to manage the Corporation and to act in place of the Board of Directors of the Corporation and officers for a limited period of time as hereinafter provided. The appointment of a temporary custodian shall provide a number of benefits to the shareholders and to the Corporation, including:
* providing the three shareholders and siblings with an opportunity to focus on their personal relationships as they work to achieve reconciliation, healing, and trust within their family;
* enabling the shareholders to work with a third party professional over time to develop procedures for the ultimate management and disposition of the Corporation while keeping control over Dr. King’s Legacy in the hands of his family; and
* providing assurances to third parties with whom the Corporation engages in business as to the validity and enforceability of any agreements entered into by the Corporation from and after the date hereof.
Pursuant to O.C.G.A. § 14-2-1432, “[a] court in a judicial proceeding brought to dissolve a corporation may appoint . . . one or more custodians to manage the business and affairs of the corporation.” The original Complaint in this action, which was filed by shareholders holding at least 20% of the shares of the Corporation, sought relief pursuant to O.C.G.A. § 14-2-1430.
The court has held a hearing on this issue after notification to all parties to the proceeding. Therefore, the Court has jurisdiction to appoint a custodian to manage the business and affairs of the Corporation pursuant to O.C.G.A. § 14-2-1432. No business outside of the ordinary course of business shall be engaged in until such time as the custodian has been appointed and no contracts shall be entered into other than in the ordinary course of business, except that the Corporation shall not be in violation of this provision by filing an amendment to the Corporation’s federal and State of Georgia income tax returns for 2006.
For the reasons set forth above, the Court hereby ORDERS that a custodian is appointed pursuant to O.C.G.A. § 14-2-1432 subject to the following procedures and on the following terms:
(1) The parties shall each submit three (3) names of proposed custodians to the Court within fourteen (14) days from the date of this Order. The proposed custodians must be qualified to manage a business but must also be sensitive to the nature of the Legacy to be managed.
(2) The Court shall interview at least one (1) of the custodians proposed by each party and will make a final selection as to the person or entity to be named as custodian within thirty (30) days of receiving the list of proposed custodians from the parties pursuant to the foregoing paragraph.
(3) The custodian shall execute and file with the Court an acceptance of appointment as custodian pursuant to the terms set forth in this Order, and the custodian shall verify therein that he or she has no conflict or potential conflict of interest with the parties or entities who have contracts with the Corporation, or if there is a potential conflict, it shall be disclosed therein.
(4) Pursuant to O.C.G.A. § 14-2-1432(c) and specifically § 14-2- 1432(c)(2), the powers and duties of the custodian are as follows:
The custodian shall exercise all of the powers of the Corporation, in place of its board of directors and officers, to the extent necessary to manage the affairs of the Corporation in the best interests of its shareholders. Such powers shall include but not be limited to the exclusive authority and responsibility to determine the manner in which the day-to-day operations of the business will be conducted including, without limitation, determining the manner in which i) the records and accounts, including bank accounts, shall be managed, ii) the actions of the employees shall be supervised and controlled, iii) the preparation of any reports and recommendations to the Court, iv) the preparation of the necessary tax returns, v) the performance of any review and/or audits, and vi) the negotiation and execution of contracts, agreements, instruments, and certificates on behalf of the Corporation.
(5) Annual shareholders’ meetings will be held in accordance with the provisions of the Bylaws. However, the status quo for all corporate governance issues shall be maintained during the period of the custodianship except as set forth herein, and there will be no votes or actions taken by the shareholders, officers, or Directors during the custodianship that would affect the powers and duties of the custodian or alter in any way the current corporate governance structure of the Corporation, except as provided by the Court.
(6) The custodian is entitled and encouraged, but not required, to consult with each of the shareholders, either individually or jointly as he or she deems appropriate, in connection with any decisions to be made with respect to management of the business and affairs of the Corporation.
(7) The custodian shall take into consideration, and shall seek to promote to the greatest extent possible, the benefits set forth in the bullet points above in connection with his or her management of the business and affairs of the Corporation.
(8) The custodianship established pursuant to this Order shall continue for at least one (1) year. If at the end of the one year
period, the custodian, after consultation with the members of the
Advisory Panel as constituted below, recommends that the custodianship continue for an additional period of time, the Court will consider such recommendation and make a ruling on that recommendation at that time. In no event shall the custodianship be terminated prior to the final distribution of assets from the Estates of Coretta Scott King and Yolanda Denise King except as otherwise ordered by the Court. Notwithstanding the foregoing, the custodianship may be terminated, or the custodian may be replaced, at any time upon unanimous application to the Court by all three shareholders.
(9) The custodian shall be entitled to rely upon advice of independent counsel selected by the custodian on any issue or matter that the custodian may identify and to compensation and expense reimbursements from the assets of the corporation, and such compensation shall be agreed upon with the custodian prior to the custodian’s acceptance of the custodianship.
(10) The custodian is not required to post bond.
(11) The custodian will submit a monthly written report to the Court within seven calendar (7) days after the first day of each month or upon such other interval as the custodian and the Court shall agree. The report will contain a summary of actions taken by the Corporation during the immediately preceding calendar month. The report will be distributed to all members of the Advisory Panel.
(12) Additionally, within six (6) months after the custodian’s acceptance of the custodianship, the custodian shall submit to the Court a comprehensive written report that describes the current financial situation of the Corporation, the status of key deals or negotiations being undertaken by the Corporation, the custodian’s recommendation regarding any changes to the structure of the custodianship and how long the custodian may need to stay in place, and the status of any attempts by the shareholders to cooperate in creating a workable future corporate governance structure.
(13) The Court also appoints an Advisory Panel of individuals who will be available to consult with the custodian and provide advice or information upon request by the custodian. The Advisory Panel will consist of the following: Bernice A. King, Martin L. King, III, Dexter S. King, Reverend Otis Moss, William B. Hill, Jr., John D. Steel, Rick Miller, and an industrial psychologist. The Court may replace or appoint substitute members of the Advisory Panel in its discretion. At the discretion of the custodian, the members of the Advisory Panel will be compensated at their customary hourly rates and will receive expense reimbursements from the assets of the Corporation.
It is further ORDERED that the shareholders cooperate with the custodian to the greatest extent possible in providing the custodian with the materials and information necessary for the custodian to complete his or her duties.
SO ORDERED this 12 day of October, 2009.
Ural Glanville, Judge
Fulton County Superior Court
Atlanta Judicial Circuit
Jon Shirek, AP
