MUTH’S TRUTHS

Last month Anna Nicole Smith’s will was admitted to probate. Up for grabs is $710,000 - maybe more depending on the final outcome of Marshall v. Marshall. Yes, that’s right. Even though Smith is dead, her lawsuit seeking hundreds of millions of dollars from the estate of octogenarian billionaire J. Howard Marshall continues. The heirs of the heirs are now fighting this fight.

Most people are familiar with Smith - the stripper who caught Marshall’s eye when he visited her club. She scored a marriage license in June 1994; he died the following year. His death set in motion costly litigation which has grown like The Blob.

Inheritance rules vary greatly state-by-state, and messy estate fights are best settled by state trial judges. And whatever else you say about the Smith case, it’s certainly been messy.

Smith claimed that Marshall promised to leave her half his money. Although he was generous while alive, he neither adjusted his will nor filed a trust fund for her. His son, Pierce Marshall, got the bulk of the estate. So Smith sued.

Anna Nicole and Pierce Marshall disputed what Howard Marshall intended and fought over Smith’s claim that Pierce had defrauded her. Smith originally filed suit in Texas probate court, but she soon played a game of jackpot justice and went “forum shopping,” the practice of looking for the most favorable court in which to file a lawsuit.

Apparently Smith’s lawyers warned her that Howard Marshall’s fellow Texans weren’t looking favorably upon her claims, so she filed for bankruptcy in federal court in California. The bankruptcy claim looked like a fake from the get-go, but the case allowed Smith to go after Pierce Marshall for money in a second, non-Texas venue. By filing two separate cases, Smith improved her odds. Fifty percent was equivalent to a perfect score, since she only had to win one judgment to get the money.

Ambulance-chasing lawyers look for deep pockets when suing. Allowing them to sue pockets deep enough to be worth picking multiple times in multiple jurisdictions will make a liability system already costing $250 billion or more a year a LOT more expensive.

Giving litigants unlimited swings at the bat without ever being out would eliminate the predictability which is so important for an efficient legal system. If people are never certain that they are done fighting over the enforceability of a contract, validity of a tort claim, or size of a bequest, they will find it almost impossible to plan for the future.

Moreover, allowing federal judges to decide state claims further unbalances the political system. While some issues must be decided nationally, estate law is not one of them. But Anna Nicole Smith cared more about personal gain than judicial integrity. And so far her strategy has succeeded.

She was unlucky in her 95-day Texas trial. A jury decided that she was entitled to nothing.

But the federal judge in California punished Pierce Marshall for allegedly failing to comply with his pre-trial “discovery” instructions. The penalty: Accepting Smith’s claims, including that Pierce Marshall defrauded her of her rightful inheritance. The judge awarded Smith $475 million.

But even the bankruptcy verdict didn’t end the matter.

Pierce Marshall appealed to the District Court, which vacated the bankruptcy judgment and issued a new judgment for $88 million. Later, the Ninth Circuit Court of Appeals overruled the district court judge citing the “probate exception,” under which federal courts are to defer to state courts in such matters. Then the Supreme Court provided another reversal. The high court returned the case to the appellate judges, instructing them to use a narrower definition of probate exception. An end is not in sight.

I think the case is next scheduled to be heard in the Kangaroo Court.

Who would have imagined that Anna Nicole’s Smith’s most enduring contribution to America might be a legal ruling? Her litigation should spark a legislative fix by Congress, or a rethink by the Supreme Court. Her seemingly mundane inheritance fight threatens to undermine America’s judicial system and economy.

Posted on July 15th, 2007 by Chuck Muth
Filed under: National