Forbes.com reported recently Anna Nicole Smith’s Will contest case may be over…or maybe not so fast. This mess of a case started nearly 19 years ago after the death of J. Howard Marshall.
The case started as a Will contest, pitting Anna Nicole Smith against Mr. Marshall’s son, Pierce Marshall. The Texas Court then ruled in favor of Pierce, leaving Ms. Smith out in the cold.
Bankruptcy Court Interferes by Claiming Interference
Before the Texas court could rule on the Will contest, Anna Nicole Smith filed for Bankruptcy in California, which gave her California Bankruptcy Trustee the power to pursue claims on her behalf. And pursue they did, with a lawsuit filed in the California Bankruptcy Court directly against Pierce for intentionally interfering with Ms. Smith expected inheritance. The California Bankruptcy Court ruled in favor of Ms. Smith to the tune of $425 million, later reduced to $90 million.
How is it possible that one court could rule for Ms. Smith while the other ruled against her? Mainly because the two courts were looking at completely different legal claims. The Texas court had to decide if the Trust and Will created by Howard prior to his death were valid or not. While the California Bankruptcy court had to decided if Pierce (the son) intentionally interfered with Ms. Smith receiving an inheritance from her elderly husband, Howard. One is a lawsuit about the Trust and Will creation, while the other is a lawsuit by Ms. Smith directly against Pierce.
U.S. Supreme Court Cuts Anna off at the Pass
Ultimately, the $90 million judgment was overturned by the U.S. Supreme Court for various legal reasons, leaving Ms. Smith, or rather her estate now that she is deceased, out in the cold once again.
Interestingly, when this entire case started in the California Bankruptcy Court, back in 2002 or so, California law did not recognize the tort of Intentional Interference with an Expected Inheritance (the tort Ms. Smith used to sue Pierce directly). So how did that claim come to be filed? The Bankruptcy Court used Texas law to allow the suit against Pierce. Ultimately, the U.S. Supreme Court decided the Bankruptcy Court overstepped its bounds by ruling in Anna Nicole Smith’s favor, thereby reversing the holding.
But all is not lost for Anna’s estate, as there is still an appeal of the Texas Court’s ruling to uphold the Trust and Will. Somehow that appeal had been put on hold until the Bankruptcy Court finished its business with Anna’s estate. Now that the Bankruptcy Court is done, the Texas appeal can continue. But the issues will be limited to the Trust and Will contest, as opposed to the interference claim that was pursued in Bankruptcy Court.
The Moral of the Story
With big money, and complicated family (or rather “family”) dynamics, comes big fights. And it seems like some estates are destined for a fight no matter what planning is put into place. Here’s a few lessons I derive from Anna Nicole Smith’s case:
1. Never Give Up…Intentional Interference Claims. Just because you cannot bring or win a Trust contest does not mean you have no rights. The newly recognized claim in California of Intentional Interference with an Inheritance can provide a needed legal remedy to the problem of having someone interfere with your inheritance. Want to learn more, see my prior post explaining this interesting claim.
2. No Seriously, Never Give Up…Trust Appeals. Trust and Will contests are not appealed all that often as compared to many other types of civil cases. And it is rare in California for an Appellate Court to overturn the decision of the trial court, but appeal is always an option to consider if things don’t go your way at trial. Plus, it may give you an option to negotiate a settlement if a resolution can be reached between the parties voluntarily. If not, then at least you get one more shot at winning–albeit a long shot in most cases.
3. What’s Principal Got to do with it? Both Anna Nicole Smith and Pierce Marshall died during the 19 years it took to get this far in their Trust dispute. What may have started over a fight based on principal (they each thought there were right) seems to have stretched the reasonably boundaries of that concept after 19 years. Principal is important to most people, but as one client of mine said, principal has its outer boundaries. When the finances of a case no longer make any sense relative to the principal being fought over, you really have to ask why keep going? After 19 years of litigation and not a penny to show for it on the side of Anna Nicole Smith, is it really worth continuing the fight? That’s not for me to answer, but at least I can pose the question.