Anna Nicole Smith's Daughter Loses Fight For Marshall Millions
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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.”
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.
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.”
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.