Monday, September 1, 2014

Anna Nicole Smith's Daughter Loses Fight For Marshall Millions

Anna Nicole Smith's Daughter Loses Fight For Marshall Millions



A federal judge has ended what may be the last chance for Dannielynn Birkhead — better known as the daughter of Anna Nicole Smith — to collect tens of millions of dollars from the estate of E. Pierce Marshall, the son of Anna Nicole’s billionaire husband, J. Howard Marshall II.
In an order today expressing regret over the outcome, U.S. District Judge David O. Carter dismissed as moot the attempt by Birkhead’s lawyers to win sanctions from the Marshall family over tactics the deceased heir and his lawyers employed in the long-running battle over the Marshall fortune. Carter last year indicated he might award more than $40 million in sanctions for behavior he described as “too pervasive and too egregious to be ignored.”
Anna Nicole Smith at the 2003 E3
Anna Nicole Smith  (Photo credit: Wikipedia)
Carter noted he was “one of the few remaining observers still alive” after nearly 20 years of litigation, which included a precedent-setting ruling from the U.S. Supreme Court, and he said the record shows Marshall and his lawyers had “a distinct disinterest in rules or ethics.” But Birkhead’s lawyers failed to provide sufficient evidence of actual damages for him to award sanctions, the judge said.
The Court is not immune to the equitable pleas from Vickie Lynn’s estate. It is tempting to invoke the broad doctrines of discretion, equity, and inherent powers to follow the pull of one’s heart and one’s conscience. But the powers granted to the federal courts are not all encompassing… The Court also must consider the very real concerns attendant in sanctioning Pierce Marshall, who is deceased and therefore cannot be present, cannot attend the hearing, and cannot answer for himself the allegations against him.

The decision appears to ends a case which, aside from its celebrity quotient, triggered important changes in bankruptcy law. (But see additional notes below.) Under the 2011 decision Stern v. Marshall, bankruptcy courts were largely precluded from issuing judgments of the sort that Anna Nicole Smith — formal name: Vickie Lynn Marshall — won after filing for bankruptcy in California. In her case, a judge in 2000 awarded Anna Nicole $475 million due to E. Pierce Marshall’s improper interference with his father’s estate. After a separate review under his authority as a federal district judge, Carter reduced the award to $90 million in 2002.
But the Ninth Circuit Court of Appeals reversed Carter and found the Texas probate court’s decision rejecting her challenge to the will precluded her suit in California. The Supreme Court later ruled that the bankruptcy court couldn’t enter a judgment in the case anyway because it wasn’t a “core proceeding” in her bankruptcy.
Celebrity lawyer Phil Boesch, who represented Anna Nicole’s estate, sought sanctions because Marshall’s delaying tactics cost him the opportunity to win a judgment in California before the Texas court handed down its ruling. He wasn’t immediately available for comment. But Carter said too much time has passed for that argument to succeed.
Time spent litigating the relationship between Vickie Lynn and J. Howard has extended for nearly five times the length of their relationship and nearly twenty times the length of their marriage. It is neither reasonable nor practical to go forward.
“All of us who knew Pierce wish he was here with us to see the outcome of this case,” said G. Eric Brunstad, Jr., a Dechert partner and attorney for the Marshall family.  “Pierce was a conscientious and honest man of great integrity.  The family is in complete agreement with Judge Carter that it is time to put an end to this litigation.”

Maybe not complete agreement. In his ruling, Carter said Marshall and his earlier legal team supplied false testimony, attempted to manipulate a sitting federal judge, destroyed documents, ignored discovery requests and wilfully disobeyed court orders. He had particular criticism for attorney Edwin Hunter, who represented the Marshall family holding company, saying his “conduct was perjurious, obfuscating, and execrable.” Hunter previously settled with Anna Nicole’s estate, the judge said, meaning Dannielynn likely received something from the litigation.
Pierce died in 2006. His estate is still tangled in a dispute with the Internal Revenue Service over more than $100 million in taxes the government says it is owed because of questionable estate-planning moves. That case, too, involves a potentially precedent-setting question of whether the heirs can be forced to pay tax penalties that J. Howard incurred by making excessive gifts during his lifetime, which had the effect of making him insolvent.
Marshall’s fortune stems from a 14% interest in Koch Industries Koch Industries that he obtained in the 1950s. He married Vickie Lynn in June, 1994 and died 13 months later. She filed for bankruptcy the following year in California. Pierce, in a maneuver he probably later regretted, sued her for defamation for suggesting he’d used forgery and fraud to gain control of his father’s assets. The bankruptcy judge dismissed his case but awarded Vickie Lynn $475 million on a countersuit accusing Pierce of interfering in her inheritance. That judgment was reversed in 2011 after going to the U.S. Supreme Court twice.
There is one wrinkle left in this long-running case that may breath new life into it. E. Pierce’s brother, J. Howard Marshall III, also appealed the judgment of the Texas probate court that effectively precluded Anna Nicole’s efforts to get a piece of the Marshall fortune. (He was cut out of the will by his father after siding with the losers in a fight for control of Koch Industries.) But in the bitter infighting over the Marshall estate, E. Pierce sued his brother and won a judgment that put him in bankruptcy. And then for reasons no one has been able to explain to me, there the Beverly Hills resident sat, for more than a decade, as first E. Pierce and then his widow refused to settle the judgment the son of one of the world’s richest men said he couldn’t afford to pay. His bankruptcy stayed the Texas appeal.
Finally last year, J. Howard Marshall exited bankruptcy. And that means the appeal of the probate judgment is back under consideration, including motions by lawyers for Anna Nicole’s estate to set it aside. In that case Judge Carter's CRI +0.06% earlier ruling in favor of her estate might be reinstated, and little Dannielynn would be back in the money.

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