January 25, 2008 | 1 comment
The legal inheritance of Anna Nicole Smith.
More than 150 years ago, Charles Dickens mocked the delays and foot-dragging in England’s chancery system of litigation in one of his finest works, Bleak House. Central to the story, delivered to readers at the time in 67 chapters in 20 installments over 18 months, was a lawsuit over an inheritance. The suit, Jarndyce v. Jarndyce, dragged on so long that the original parties had died, and legal costs consumed what was left of the estate, making clear Dickens’s point that justice delayed cannot only be justice denied but can amount to more injustice. The book is credited with encouraging needed reforms in England’s lackadaisical and cumbersome legal process.
Today, Americans, if they pay attention, may either enjoy or stand aghast at a modern rendition of Bleak House in another case about a wayward inheritance, Marshall v. Marshall. It is the case brought by actress and celebrity Anna Nicole Smith in 1995 to collect money from her deceased husband, J. Howard Marshall, II, after an unusually brief marriage. Fourteen years later, Anna Nicole Smith is dead.
So, too, is E. Pierce Marshall, whom a Texas probate court appointed as executor of J. Howard’s estate, and who was Smith’s primary target. The case has gone up and down, and in and out of state courts and federal courts. It’s reached appellate levels in both, rising to the U.S. Supreme Court in 2006, where it was returned for further proceedings to the Ninth Circuit Court of Appeals. Thus, as in Bleak House, all the original participants are dead, but the case lives on.
Taking Anna Nicole’s place in the litigation is her companion and lawyer Howard K. Stern. Who claims to be doing this for the livelihood of Dannielynn, the infant daughter of Anna Nicole Smith, though not by the late ancient and great J. Howard Marshall, II. Dannielynn became famous in her own right as the subject of a paternity fight between Howard K. Stern and one of Anna Nicole’s lovers, Larry Birkhead. On the other side of the litigation table sit the actual descendents of J. Howard Marshall, II. What a bleak testament to what happens when judges overreach and attempt to play detective rather than strictly apply the law.
TO MAKE THE ludicrousness of this story clear, one needs to begin at the beginning. Texas octogenarian multimillionaire J. Howard Marshall, II married young Anna Nicole on June 27, 1994. Throughout the course of their short marriage, he gave her gifts, including transfers of property, valued at approximately $6 million “in consideration of her marriage to me.” Now, the Ninth Circuit Court of Appeals specifically found in a ruling issued prior to her death that Anna Nicole “does not contend that J. Howard Marshall, II lacked the mental capacity to make these itemized gifts.” During this period (on July 13, 1994), J. Howard also revised his trust and made no provision for Anna Nicole. J. Howard then dies, thinking that he had taken care of both Anna Nicole with millions in gifts and property while protecting the family business and fortune for his other descendants.
So upon what do her lawyers base her lawsuit?
Her claim was that J. Howard gave her “oral” promises to give her a lot of money when he died. She said that she relied on such oral statements instead of his written statements that were quite to the contrary.1
So, on this slim pretext, Anna Nicole began her suit in a probate court in Texas in April 1995. And what happened? The trial judge indicated that he thought Anna Nicole’s statements were, to put it politely, lies. The jury came to the same conclusion as the judge and ruled against Anna Nicole. After years of litigation and a trial lasting nearly six months, the Texas jury entered on March 7, 2001, a unanimous verdict against Nicole’s “oral” promise, and in favor of J. Howard’s written statements. Six months later, the probate court issued a final judgment, on December 7, 2001. Case closed? Hardly.
Although the procedure was standard law, the results were not. What the Texas jury found did not end the matter because, unknown to it, Anna Nicole had filed another case before a bankruptcy court in California.
In the bankruptcy case, Anna Nicole did not have to go before a jury, and she had the benefit of appearing before a judge who did not know and appeared not to want to know all the facts that the Texas jury knew. It was like getting a second ticket in the Marshall family fortune lottery.
How did Anna Nicole get this ticket? She claimed that she was bankrupt because she had too many debts. Why did she have so many debts? Because she had lost a sexual harassment suit against her. There’s a bit of irony worthy of a novel—a woman claiming that she, as the aggrieved widow, should get more money from her dead husband’s estate by admitting that she was less than faithful during their brief marriage.
Never mind. The bankruptcy court, armed with this debt, claimed jurisdiction. And based on some procedural rulings by the bankruptcy judge against executor Pierce producing evidence against Anna Nicole’s claims, the judge then ruled all Anna Nicole’s factual allegations—the same ones a Texas court and jury after a six-month trial believed to be lies—to be true. The judge then awarded Anna Nicole $474 million.
Later on, the bankruptcy judge reversed his sanctions order against the estate, though, oddly, he did not reverse any of his other rulings on which he based the sanctions order.
THE MARSHALL ESTATE, no doubt feeling much like Mr. Bumble in another of Dickens’s novels, Oliver Twist, that “if the law says that, then the law is a ass—a idiot,” naturally, wanted a clearer set of eyes reviewing the case. So, following procedure, it appealed the case to the federal district court.
There, the court treated the bankruptcy court’s decision as a “proposed” ruling, rather than a final one, and undertook de novo review. While the federal district court was considering what to do, the bankruptcy court in February 2001 enjoined Pierce from proceeding with his affirmative claims against Anna Nicole in the Texas probate court, which enjoined Anna Nicole from proceeding against Pierce in the bankruptcy court.
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