A New York attorney who serves as an executor of the Paul Mellon Estate has been accused of defaming a nonprofit organization the estate endows to care for more than 1,000 retired thoroughbreds.

What began as a “well-intentioned” effort by executor Frederick A. Terry Jr., who is of counsel to Sullivan & Cromwell, to become more involved in the operations of the Thoroughbred Retirement Foundation “descended into an unjustified attempt to wrest control of the TRF from its current board and officers that threatens to undermine the vitally important mission of the TRF,” a suit filed on Jan. 5 by the foundation against Mr. Terry in Manhattan Supreme Court alleges.

Paul Mellon, an heir to the Mellon Bank fortune, was a noted philanthropist and horseman. The year before his 1999 death, Forbes Magazine estimated his wealth at $1.4 billion.

His estate has contributed $7 million to the foundation’s endowment, with the stipulation that the group can use up to 5 percent of the funds annually for care of retired race horses.

The complaint in Thoroughbred Retirement Foundation v. Terry, 150012/2012, contends that Mr. Terry falsely claimed in a Nov. 11, 2011, letter to the foundation’s accounting firm that the foundation’s financial report for 2010 was “incomplete and misleading.”

He objected specifically to a 2007 loan of $500,000 from the foundation from endowment funds. Mr. Terry also questioned the propriety of the foundation using Mellon funds to secure another $500,000 loan from a South Carolina bank, in part to pay off the 2007 loan.

The foundation’s complaint maintains that Mr. Terry also shared his concerns with the New York Attorney General’s Office, which prompted an inquiry.

In addition, the complaint argues that Mr. Terry and a co-executor of the Mellon Estate, Beverly Carter, who is not named as a defendant, hired veterinarian Stacey Huntington, who the foundation says misrepresented the condition of horses being cared for with Thoroughbred Retirement Foundation aid.

Ms. Huntington reported that a large percentage of the horses she examined were malnourished or in ill health. She was eventually fired by the foundation’s board, as the foundation and Mr. Terry and Ms. Carter bickered over what the foundation maintains was meddling by the two co-executors in its operations.

According to the complaint, the veterinarian’s report resulted in a series of negative articles about the Thoroughbred Retirement Foundation, including one in The New York Times on March 17, 2011, “Ex-Racehorses Starve as Charity Fails in Mission to Care for Them.”

In addition, the complaint alleges that Mr. Terry made uncomplimentary verbal statements about the foundation’s financial status and its operations to people within the horse racing industry. The group’s fundraising has fallen off as a result, the complaint alleges.

“Defendant’s oral statements were false and defamatory, impeached the honesty, integrity and business conduct of the TRF and exposed the TRF to public hatred, contempt, and/or disgrace,” the complaint says.

The foundation seeks at least $400,000, which it estimates it has lost due to Mr. Terry’s actions, plus punitive damages and legal fees.

Under the endowment agreement, the foundation is allowed to use up to 5 percent of the “annual fair-market value” of the endowment each year for its operating expenses. The lawsuit states that the endowment provides some 12 percent of the TRF’s annual budget.

According to the Times, the organization ran a deficit of $1.2 million in 2009.

Foundation chairman John C. Moore said in an interview that Mr. Terry and Ms. Carter have not talked directly with the foundation in a year, choosing instead to communicate with the accountants and the state attorney general.

“It’s a heck of a shame that we have to sue these people,” Mr. Moore said. “It is really simple for them to pick up the phone if they had a problem with us. Call us. Negotiate with us and if you can’t do that, don’t accuse us of doing something illegal. What they did was distinctly unhealthy to the horses because they damaged our ability to raise money.”

Mr. Moore called the article about the veterinarian’s report “distorted.”

“No horses died of starvation last year or because of neglect,” he said. “That is nonsense.”

Robert J. Giuffra Jr. of Sullivan & Cromwell said the executors have been “working diligently to improve the operations” of the TRF.

“The executors have no interest other than the protection of the horses in the care of TRF,” he said. “This lawsuit is regrettable and baseless.”

Mr. Terry, who was unavailable for comment, joined Sullivan & Cromwell in 1957, according to the firm’s website. He also has served as a trustee of several foundations and is an executor of the estate of Frank Perdue, the former CEO of Perdue Chicken.

Michael Ledley of Wollmuth Maher & Deutsch is representing the Thoroughbred Retirement Foundation, which is based in Lexington, Ky. , and has an office in Saratoga Springs, N.Y.

Among the programs it funds in New York state is a farm for retired thoroughbreds maintained by inmates at the Wallkill Correctional Facility in Ulster County.