Supreme Court ruling closes books on Tri-State Brick fued
by Ted Carter
Published: July 12,2013
Legal settlements upheld by an arbitrator remain valid regardless of whether the arbitrator made errors of fact or law, the Mississippi Supreme Court said in a late June ruling.
Unless an arbitrator violates Mississippi’s arbitration law in deciding a dispute, the state can’t nullify his decision, the court said, emphasizing its finding was one it has made “time and again.”
In the ruling, the Supreme Court rejected an argument that a third party – in this instance lien holder Trustmark National Bank – should have had authority to say yes or no to a settlement between the Robinson and Henne families over control of the now-foreclosed-on Tri-State Brick & Tile.
The June 20 ruling seemingly closes the book on the family feud involving the collapse of Jackson’s multi-million dollar Tri-State Brick and Tile, a company founded in 1946 by Robert H. Robinson and whose common shares were passed on to his son, Robert D. Robinson, and later his widow Jerry Robinson. The shares essentially gave operational control to first Robinson, who died in 2006, and later his widow.
In a July 2011 Hinds County Circuit Court trial, the children of Robert D. Robinson’s sister, the late Martha Robinson Henne, claimed that the Robert and Jerry Robinson used Tri-State to support a luxury lifestyle that included a yacht with a full-time captain, a horse farm and an American Express tab nearing $150,000.
The Hennes, as preferred shareholders, sued to stop what they said was Jerry Robinson’s destructive management of the family business. They argued that soon nothing would be left of Tri-State.
On the fourth day, the trial came to a sudden end. The Hennes and Jerry Robinson had agreed to settle – or so it seemed.
The Hennes would take control of the company and its finances, according to a term sheet signed by the Hennes and Jerry Robison. The settlement would undo an arrangement by which company founder Robert H. Robinson left common shares of the company to son Robert and preferred shares to daughter Martha. The common stock would now go to the Hennes.
Jerry Robinson later had second thoughts about the agreement and refused to honor its terms, arguing that Trustmark as major lien holder must consent to the settlement, which the bank had no intention of doing. The bank had outstanding loans to the company of around $10 million, a sum lent over a half decade period.
While the two families wrangled over the validity of the legal settlement, Trustmark foreclosed on the brickyard on July 10, 2012. Today, the yard is closed and Trustmark is selling off the once-thriving company’s inventory of brick and tile.
It’s doubtful any assets remain for the Hennes to claim, making the upholding of the settlement a mostly symbolic victory, said Shane F. Langston, a Jackson lawyer who represented the Hennes.
“They have absolutely not a dime to show for it,” he said.
Langston said he thinks had the Hennes taken control of the common stock they could have at least tried to save the brickyard, starting with making loan payments to Trustmark, which had continued to extend Jerry Robinson and Tri-State a line of credit despite payments from the company being interest only for several years.
Financial reports provided Tri-State Brick & Tile’s board show the company owed Trustmark $4 million in 2004 and $5.8 million in 2005. The debt jumped to $10.1 million in 2006 with Tri-State’s purchase of an automated kiln.
Not long after, Tri-State began limiting its payments to interest on the principal, according to the financial statements.
But, in the meantime, the line of credit grew from $2.5 million in 2007 to $3.5 million in 2008, the statements show. Long-term debt at the end of 2008 stood at $9.4 million and at $9.8 million at the end of 2009.
The $9.8 million of long-term debt remained in place through 2011, the last year for which financial statements are available.
Langston said the challenge to the settlement posed a contrasting pair of questions: “The lien holder doesn’t have standing to interfere with a settlement. But in this case, ‘What standing did the Robinsons have to transfer the stock when it was under a lien?’”
The Supreme Court’s answer: Mediator Robert L. Gibbs may have made an error in fact or law in upholding the agreement but his action did not violate the state’s arbitration statute. Without such a violation, the approval Gibbs gave the legal settlement must stand.
Ultimately, the parties might have agreed to something they could not implement, Langston said, though as the prevailing attorney in the case he is pleased the Supreme Court ruled the settlement can be enforced.
Fred L. Banks Jr., attorney for Jerry Robinson and tri-State, was unavailable for comment.
To sign up for Mississippi Business Daily Updates, click here.
Top Posts & Pages
- Warden who lives hundreds of miles from jail resigns
- BankPlus recognized for alternative program to payday lending
- Jail kitchen supervisor pleads guilty to stealing food
- (UPDATE) Gov. Bryant: $1.2 billion aluminum plant is a very exciting proposition for the state of Mississippi
- Analyst: KiOR Columbus plant may end up sold as scrap
- Top 10 finalists chosen for C Spire Conerly Trophy
- Prison-contract task force working in wake of Epps' indictment
- Stricklin: Deer parasites don't affect quality of venison
- Bryant wants free tuition for students with technical diploma