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The puzzling case of Anna Nicole Smith
September 29, 2000, CNN.com
By Roger Cossack
(CNN) -- If this were a law exam, the question would be: "How did Anna Nicole Smith go bankrupt and end up with a judgment in her favor for $450 million?"
And if I were a law professor I would give an A to anyone who could come up with an answer. I try to stay away from cliches in these articles, but sometimes I simply have to use one...so here it is: Truth is stranger than fiction.
Here's what happened. Anna, whose real name is Vicki Marshall, hails from a small town in Texas. Despite her humble origins she yearns for a bigger and better life. She is a model, a dancer, and sometimes an actress.
It is while performing as a dancer in a Houston strip club in 1994, that the 26-year-old meets the man of her dreams, 89-year-old J. Howard Marshall. He is dazzled, she is smitten. She is coy, he is forward.
Finally he can wait no longer and proposes marriage. And, just to sweeten the pot, he promises her one-half of his $1 billion-plus fortune if she accepts his proposal. Ah, what's a girl to do? She accepts and for the next 14 months lives happily as Ms. Marshall until cruel destiny knocks on their door and death claims her husband who by then is 90 years old.
Smith, awarded almost $450 million in a Los Angeles federal bankruptcy court, is now faces a fight for her inheritance claim in a Texas probate court.
Here's where it gets good. Comes the reading of the will and Anna gets nothing, zip, nada. Everything is left to Marshall's youngest son, E. Pierce Marshall. To make things worse for our heroine, she gets sued by her former nanny for sexual harassment and gets tagged with a $850,000 judgment against her.
Alone and penniless, Anna declares bankruptcy as she is unable to pay the judgment.
Bankruptcy court is set up to protect the debtor and to ensure that the creditors get as much of what is owed to them as possible. Anna was required to list her debts as well as her assets. One of her assets was her interest in her deceased husband's estate, even though she had been cut out of the will.
Her claim was based upon a contract: "I promised to marry him and I did, and he promised to leave me half of his estate and he didn't." He breached the contract, she claimed.
If this isn't bad enough for Anna, while her case is in court, E. Pierce Marshall files a claim against her claiming that her spending habits amounted to a "waste" of his father's estate and therefore she owed the estate and him several million dollars.
The judge listens to the evidence, including a tearful presentation by Anna, and decides in her favor. Not only does Pierce get zilch from Anna, the judge decides Anna gets the aforementioned $450 million.
But wait, there is more. You see there is another Marshall son, J. Howard Marshall. (Do you anyone who has an initial for a first name, or is this a Texas thing?) This J. Howard, who I will call Junior to avoid confusion, becomes an ally with Anna once the will reveals that he, too, has been cut out and is to receive nothing.
So Junior and Anna file a lawsuit in probate court in Texas claiming that E. Pierce, who besides getting everything in the will is also the executor of the estate, exercised undue influence over his father and failed to carry out his father's wishes for Anna's future.
Anna claims that her husband wanted a trust set up so that she would be taken care of forever, and that not only did E. Pierce Marshall persuade his father to leave him everything, he purposely made sure that the trust was not established.
In a curious bit of defense strategy, E. Pierce claims that his father was senile and that Anna knew it. I find this curious because E. Pierce is the recipient of the entire estate under the will and it would seem to me that saying that the giver of the gifts was daffy when he gave them is perhaps not the best strategy to develop.
So, as Inspector Closeau said, "What do we know?" Well, we know that Anna is up $450 million. We know that her Texas case goes to trial this week. And we know that she may even get more in California because the judge in that case is talking about punitive damages against E. Pierce also.
But more important, what exactly does this case stand for. This may be the best argument I have ever read for not abolishing the estate tax. It just seems that with all this money to be divided among these three that we taxpayers should get some, too. I'm not exactly sure why, but it just seems like the right thing to do.
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