Article written by Kelly Phillips Erb, Contributor Forbes.com
That’s about how long Anna Nicole Smith (and subsequently, her estate) engaged the legal process to try and secure a portion of her husband’s estate. A federal judge has finally ruled in the matter – and the decision was not in favor of Anna Nicole and her family.
As a tax and estates attorney, I’ve followed this case for years. It’s like a bad car accident: you know you shouldn’t look but you just can’t turn away. And with all the details of a juicy Texas soap opera (oil barons, strippers, drugs, paternity suits and potentially criminal subplots), the case captivated much of the country for years. In case you’ve forgotten the details, here’s the rundown.
Anna Nicole Smith (born Vickie Lynn Hogan) began her career as an exotic dancer in a night club in Houston, Texas. It was there that she met mega-wealthy octogenarian J. Howard Marshall, an oil man originally born in Pennsylvania. Marshall was infatuated with Anna and over the span of two years, he lavished her with gifts. In 1994, just a year after Anna Nicole was named Playboy Playmate of the Year, the pair got married: she was 26 and he was 89.
Marshall died a year after his marriage began. It was alleged than during the marriage, Anna Nicole spent most of her time away from her husband – sordid court testimony tended to prove this to be true.
Marshall’s oldest son, Pierce Marshall, who controlled the Marshall familyfortune, was the major beneficiary of his father’s billion dollar estate putting him in the top half of the Forbes 400 following his father’s death. Anna Nicole did not receive anything under her ex-husband’s Will; in a strange pairing, Anna Nicole and Howard III (Howard’s younger son, who had been disinherited under the Will) both filed suit to overturn the Will. Pierce, who considered Anna Nicole a gold-digger, vowed to prevent Anna Nicole from getting anything from the estate, alleging that she had benefitted from her relationship with her husband during his lifetime. A Texas probate court eventually found in favor of Pierce, ruling that Anna Nicole was not entitled to funds from the estate (Howard III also lost his case).
While the wrangling was happening in Texas courts, Anna Nicole filed for bankruptcy in federal court in California, alleging that Pierce had interfered with her potential inheritance. Remarkably, that court ruled in Anna Nicole’s favor, awarding her a whopping $474 million. That verdict was eventually reduced to just under $90 million by a federal judge. The US Court of Appeals for the Ninth Circuit subsequently threw out the entire award, claiming that the federal courts had no right to hear the matter since it had been previously decided in Texas state court. This makes sense since typically, probate matters are relegated to state courts. However, federal courts may hear matters which are considered matters of federal jurisdiction, including disputes involving large amounts of money or federal matters.
Anna Nicole appealed the Appeals Court verdict to the U.S. Supreme Court which remarkably, agreed to hear the matter. The Court was asked to review a specific point of law: whether the federal court in California had jurisdiction over a Texas probate matter. In other words, for U.S. Supreme Court purposes, the case was not about whether Anna Nicole was a gold-digger or a wronged widow, it was about jurisdiction. The Court was charged with answering the simple question: does federal court always trump state court?
In 2006, the Supreme Court unanimously ruled in favor of Smith. They did hand Anna Nicole a piece of the estate but did allow her to continue to argue that she was entitled to the money.
About a month after the ruling, Pierce died of natural causes; his widow, Elaine Marshall, continued the legal fight over the Marshall fortune. Elaine’s subsequent inheritance landed her at #141 on Forbes’ Billionaire’s List for 2014 with an estimated worth of $9.2 billion. Yes, with a b.
In a crazy turn of events, just over six months after Pierce’s death, Anna Nicole died from a drug overdose. At her death – without Marshall’s money – Anna Nicole’s estate was said to be valued at just $720,000.
Despite the deaths of Pierce and Anna Nicole, the legal battle continued with Elaine Marshall arguing on behalf of Pierce’s estate and Howard Stern, Anna Nicole’s executor, arguing on behalf of Anna Nicole’s estate. Anna Nicole had left her entire estate to her daughter, Dannielynn Birkhead. At the time of Anna Nicole’s death, Dannielynn was named Dannielynn Hope Marshall Stern, as she was rumored to be Howard Stern’s daughter. DNA testing later concluded that Larry Birkhead was the father (if you were following the drama at the time, you’ll recall that other men also came forward, claiming to be the father). Anna Nicole’s son, Daniel Wayne Smith, died three days after Dannielynn was born.
(Still with me?)
In 2010, four years after the matter went to the U.S. Supreme Court, the Supreme Court agreed to hear the case again.
That’s right. The sensational story of Anna Nicole Smith has been heard by the U.S. Supreme Court not once, but twice.
In 2011, the U.S. Supreme Court ruled against the estate (downloads as a pdf), finding that “although Bankruptcy Court had the statutory authority to enter judgment on Vickie’s counterclaim, it lacked the constitutional authority to do so.” Writing for the majority, Chief Justice Roberts likened the story which “drags its weary length before the Court” to Dickens’ Bleak House and affirmed the ruling of the US Court of Appeals for the Ninth Circuit which had thrown out Anna Nicole’s original win.
And yet, the matter still didn’t end.
With two trips to the U.S. Supreme Court behind them, the parties nonetheless pressed on. That same year (2011), Anna Nicole’s estate filed a motion in U.S. District Court to bring sanctions against Pierce’s estate. U.S. District Court Judge David O. Carter initially allowed Anna Nicole’s camp to present evidence explaining why sanctions might be appropriate (downloads as pdf) but ultimately sided with Pierce’s estate. Anna Nicole’s estate sought more than $44 million in compensatory damages, as well as an alternative $25 million for “discovery abuses” plus fees and costs. Noting that “Stern’s counsel has litigated this case with commitment and vigor from its inception,” Judge Carter refused to allow the fees, finding “[t]here is simply no evidence before the court that justifies awarding sanctions against Pierce’s Estate.”
Assuming that the matter is now finally closed (although with Stern at the helm, who knows?) that means that litigation lasted five times longer than Anna Nicole engaged in a relationship with Marshall and nearly twenty times as long as their marriage, a fact that didn’t go unnoticed by Judge Carter.
The fact their marriage did not last long was due to death, not divorce. They may have remained happily married for years, who knows?
It appears J. Howard Marshall’s intent was not to leave his fortune to Anna Nicole. I would agree with the Court on this one. This is yet another reason why you need to ensure all estate planning needs are arranged prior to the death of a loved one. Here, the planning left his estate to his son. The court agreed.