January 08, 2001
Cite this Page: 2001 LWUSA 25
At A Glance
Verdict: $474.7 million total $25 million punitive damages
Type of case: Inheritance
Trial: 7 days
Deliberations: Bench trial
Case name: In re Vickie Lynn Marshall
Status: On appeal.
Date of verdict: Oct. 6, 2000; Dec. 6, 2000
∑† Philip W. Boesch Jr., Law Offices of Philip Boesch, in Los Angeles, 3 lawyers
∑† Joseph A. Eisenberg of Jeffer, Mangels, Butler & Marmaro, L.P., in Los Angeles, 100 lawyers
Anna Nicole Smith - former Playboy pinup and "plus size" fashion model - became plus-size in a different way Oct. 6, when a Los Angeles bankruptcy judge awarded her a staggering $450 million from the estate of her late husband, 90-year-old oil tycoon Howard Marshall II.
"I'm so excited," the six-foot platinum blonde told reporters following the verdict. "No one ever took care of me in my whole life, and this man did and I loved him for that."
Marshall's son, E. Pierce Marshall, doesn't buy a word of it. He claims that Smith, now 33, is a gold digger who duped his elderly father - once a top player in the Texas business and political arenas - into buying her millions of dollars in gifts, including jewelry, cars and houses.
Alleging numerous legal and factual errors in the judge's decision, Pierce immediately appealed the award.
But with that appeal still pending, the bankruptcy judge ordered Pierce to pay Smith an additional $25 million in punitive damages for discovery abuses and tortious interference with his father's efforts to leave Smith a substantial portion of his estate.
How large a portion he intended to give her will be decided in a Houston probate court, where Smith and Pierce are facing off in a battle that began in October and is expected to continue into February or March.
The outcome of that case will not affect Smith's ability to collect the California verdict. According to the judge's order, she will get her $400-plus million either directly from Marshall's estate or - if the probate judge rules her out of her inheritance - from Pierce's share of the estate.
The ruling raises the obvious question of why a California bankruptcy judge would rule in a Texas probate matter. The answer is as odd as the case itself.
Back in 1998, Smith - having failed to receive the inheritance she expected following Marshall's 1995 death - filed for bankruptcy in her new home town of Los Angeles. Learning of this, Pierce, angry over Smith's accusations in the press that he had thwarted his father's intentions and engineered her disinheritance, filed an adversary proceeding alleging libel and a claim against her bankruptcy estate for his damages.
That turned out to be a major mistake, especially after Smith counterclaimed for tortuous interference with her inheritance.
Bankruptcy Judge Samuel Bufford decided that Smith was telling the truth - that Pierce had conspired with a trusted family lawyer and an accountant to thwart his father's intentions and to cheat Smith out of her inheritance.
In addition, Bufford found that Pierce had engaged in extensive discovery abuse, including the destruction and alteration of key documents.
So in Bufford's view, the California award is compensation for Pierce's misdeeds rather than a strictly mathematical apportioning of the estate. After all, Bufford noted in his decision, Smith "has actually been damaged only to the extent that she does not receive a share of the probate estate in Texas."
Anna Nicole Smith - born Vickie Lynn Hogan - was raised, poor and uneducated, by a single mother in rural Mexia, Texas. Taking advantage of her good looks and ample figure, she eventually made her way to Houston, where she changed her name and became a popular stripper at Rick's Cabaret, an upscale topless nightclub.
Her usual audience consisted of corporate executives and wealthy tycoons, who tipped generously for her attentions. But she had no bigger fan than old J. Howard Marshall - reported in court documents to have been "the richest man in Texas," holding assets worth as much as $1.6 billion by some estimates.
According to Smith's testimony in the California trial, Smith and Marshall first met in 1991, at which time he immediately proposed to her. She initially turned him down, but he persisted for several years until she finally said yes.
The two married in 1994, when she was 26 and he was 89. A prenuptial agreement was drafted but never signed by either of them. As an inducement to marriage, Marshall had promised Smith that he would leave her half of what he had. He made this promise repeatedly, both before and after the marriage.
To make it happen, Marshall apparently intended to pursue one of two alternatives: He instructed one of his lawyers to arrange the inheritance through a complex gifting arrangement. At the same time, he told another lawyer to prepare a "catch-all trust" for Smith's benefit.
But, according to Bufford, "Neither of these projects was completed because Pierce fired [one lawyer] and conspired with [the other] to prevent the drafting and execution of the documents that would have accomplished the gift that J. Howard had directed."
Instead, Bufford found that Pierce had the lawyer alter an existing living trust his father had set up years ago to hold most of his assets.
Pierce and his family were the sole beneficiaries of this earlier trust. However, J. Howard had the power to revoke the trust at any time, in which event the trust assets would revert to J. Howard to dispose of as he saw fit.
This would enable J. Howard "to provide for Vickie [Anna Nicole Smith] from the living trust" - and that, according to Bufford, was Marshall's plan.
"No evidence has been offered that these instructions [from J. Howard to his lawyers] were ever rescinded," he wrote.
To avoid this outcome, Pierce and the lawyer devised a document that would make the trust irrevocable, but told J. Howard it was the trust for Smith. This deception led J. Howard to sign the document.
"By that time, J. Howard's eyesight had deteriorated to the point where he was not able to read any text finer than a newspaper headline," Bufford noted in his decision, adding that Pierce and the lawyer made further changes to the document after they had secured J. Howard's signature.
The end result, according to the judge, was J. Howard's plan to will a fortune to Smith was never enacted and this, in turn, forced her into bankruptcy.
This was the end result - but getting there wasn't easy.
The Anna Nicole Smith verdict was a landmark victory against seemingly overwhelming odds for Los Angeles bankruptcy attorney Philip Boesch. After all, on its face, the written evidence of Marshall's will seemed to clearly favor Pierce. By contrast, Smith's claims were based on Marshall's supposed oral promises and unfulfilled intentions.
On top of that, the first impression made by the background facts was a real problem. A gorgeous young model marries a filthy-rich 86-year-old 14 months before he dies and she gets half his estate? Either he was a fool, she was a schemer, or, more likely, both.
For his part, Pierce adamantly refused to surrender any potentially damaging documents - challenging every request with a barrage of objections and technicalities. This technique ultimately angered the judge, and worked against Pierce. But in the meantime, Boesch was left with a paucity of direct evidence.
So instead, he decided to present to the court a steady accretion of circumstantial evidence - hundreds of peripheral documents and hours of testimony that would gradually erode Pierce's initial advantage.
"What you're trying to do is put pieces of a puzzle together when you're being deprived of the files," Boesch explains. "There was no single item of proof that I could call decisive."
But taken together, Boesch says the dozens of pieces of circumstantial evidence established Howard Marshall's intent to will a substantial portion of his estate to Smith. He began to make his case by submitting the handwritten notes he obtained from a lawyer whom Marshall had instructed regarding his final wishes.
"He sought not only to protect her and provide for her," says Boesch, "he left instructions to his lawyers [to give her what would amount to] half of all his assets, which was then primarily stock in Koch Industries" - stock Marshall frequently called the "crown jewel" of his portfolio.
These instructions were never carried out. But was that because he changed his mind, or because Pierce thwarted his will?
Boesch argued, of course, for the second scenario.
He presented videotaped testimony from Glen Johnson, Marshall's only independent, court-appointed guardian, who had been effectively sidelined, circumvented and avoided by Pierce and his lawyers during the final months of Howard Marshall's life.
"He was riveting," says Boesch. "He was right on point as far as the timing of the various transactions that were [carried out by Pierce] around and behind him," without providing the guardian with notice as required by law.
Johnson went into great detail about his conversations with Marshall, and Marshall's desire to provide for Smith by leaving her large amounts of Koch Industries stock. He also testified about how later, Pierce began surrounding his dying father with armed guards to prevent him from seeing Smith or Johnson.
"Mr. Johnson [testified] that the situation was quite intimidating for both Anna and himself," Boesch says.
On the emotional front, Boesch's biggest coup was the presence of Marshall's eldest son, J. Howard Marshall, III - Pierce's half-brother - who testified on Smith's behalf.
"This case has often been portrayed as Anna Nicole Smith versus the Marshall family - which is a myth, not true," Boesch says. "And the first one to puncture that balloon was Marshall's elder son, who came in and testified quite forthrightly that his father really loved Anna, and wanted to provide for her both before and after he passed away."
The eldest son told the jury his father considered Smith "the love of his life and the light of his life."
"He was a very powerful and compelling witness," Boesch says.
Almost as powerful was the testimony of Marshall's private driver, who recounted the many private conversations he'd heard between Marshall and Smith during the four years of their courtship and marriage.
"The public perception would have Anna Nicole Smith, gold digger, chasing around this poor elderly man," he says. "But our testimony brought out the truth that J. Howard Marshall was the pursuer, and the driver was a compelling witness to his pursuit."
The driver testified that, for three years, Marshall repeatedly proposed to Smith, and that she repeatedly refused him, "on the grounds that marrying an elderly gentleman in that situation would affect her ability to [pursue] her own career."
After she had became a Playmate of the Year, and gleaned a number of lucrative modeling contracts, she finally accepted Marshall's proposal.
"Only after she had achieved fame did she say yes," Boesch explains. "By that time she had a job and a lifestyle where she had innumerable opportunities laid at her doorstep by all kinds of men."
So you have a big picture with a legitimate marriage between two well-to-do people with an older man who has a pattern of focusing his generosity on his women rather than his offspring.
Lest the judge assume that Marshall was just an old fool, half out of his wits and pathetically trying to buy Smith's love, Boesch presented evidence of the tycoon's past relations with women to show a lifelong pattern of generosity.
"He made his previous wives [as well as a longtime mistress] quite wealthy women," Boesch notes. "He was, frankly, a woman's man. He wasn't much for gifts to family, his sons. He was one of those men whose attention centers on his woman, or women."
Boesch illustrated this point to the judge by showing Marshall's gift-giving patterns on dramatic charts that clearly showed the flow of Marshall's generosity.
Finally, to help the court place a value on Marshall's estate - and thus on Smith's proper share of that estate - Boesch's best economic witness was Wayne Elggren, an Arthur Andersen economic consultant, who provided such a credible analysis of the value of Marshall's estate that the judge cited his analysis at length in the written decision.
"If the witness ends up being cited in the court's opinion as the best authority on a subject, I think that's a good place to start," says Boesch.
In the end - after months of discovery and deposition and seven days of trial - Boesch's strategy paid off.
He says Pierce also helped to dig his own grave by engaging in such blatant discovery abuse. Because he failed to turn over documents that would either confirm or deny Boesch's theories, the court ultimately determined that Pierce was hiding something big, and that Boesch's darkest scenarios were probably true.
"It wasn't a precipitous ruling in any way, shape or form," Boesch says. "The full record shows that it was the [cumulative effect] of months of measured steps, and attempts to get [discovery] compliance."
'Massive Discovery Abuse'
This pattern of deception continued throughout the bankruptcy proceeding, according to Bufford, with Pierce engaging in "massive discovery abuse" to cover his tracks. In addition to withholding a hoard of discoverable documents, claiming they were privileged, Pierce also ignored court orders to produce documents, and even "destroyed a substantial quantity of documents that were subject to a pending discovery request."
Bufford's award - $449,754,134 - equals 50 percent of the lowest of three estimates of J. Howard's wealth at the time of his marriage to Smith, as calculated by three economists who testified at trial.
This figure, Bufford ruled, is "the most appropriate measure of Vickie's damages from Pierce's tortious interference with her expectancy of a gift from J. Howard."
On Dec. 6, Bufford augmented this award with an additional $25 million in punitive damages.
He noted that "Pierce Marshall's behavior toward the debtor [Smith] is intentional and reprehensible, and that it constitutes malice toward her." Furthermore, Pierce has "shown no remorse whatsoever" for his actions and "has continued to disobey the court's orders … and has raised objections that the court has repeatedly found to be frivolous."
Earlier, Bufford had chastised Pierce for adopting "a scorched-earth approach to the conduct of this litigation," doing "his best to make it look like World War III." This behavior, Bufford added, was particularly damaging because of the intense media coverage of the case.
"Pierce Marshall's conduct substantially promotes a disrespect for the federal courts and the degree of justice that they dispense," he wrote.
The Battle Continues
Joseph Eisenberg, Pierce Marshall's L.A. lawyer, said the bankruptcy court had essentially ignored the law and reached its conclusions without giving Pierce sufficient opportunity to rebut.
As his appeal put it, Bufford's court amounted to "the modern equivalent of a Star Chamber proceeding in which the accused is presumed guilty and foreclosed from presenting evidence in his defense."
While the war in the courts rages on, Smith is consciously positioning herself to win the battle of public opinion - and she appears to be succeeding.
In the earliest days of the dispute, Smith played right into the hands of her detractors, apparently relishing her role as the stereotypical gold digger.
She began by scandalizing Marshall's funeral by appearing in a backless wedding gown, complete with veil and bouquet. This demeanor continued during jury selection for the probate trial in Houston this past October.
"She went for a nightclub look," reported the Baltimore Sun. "A form-fitting black pantsuit, cut in a low V-neck and adorned with a metallic gold pattern on the lower arms, shoulders and belt. A thick black headband set off her lemon-yellow ponytail, and her full lips were generously painted blood-red, a color she freshened up occasionally with a dainty compact."
Her protests of love for Marshall carried similar comic overtones.
"I don't care what anybody says, I loved that man," Smith said during the California trial. "I went into a real depression after his death. I stayed in bed and had panic attacks. I went from sex symbol to fat blob, [taking] painkillers and antidepressants, and [washing] down chocolate bonbons with Cristal champagne."
But Smith has modified her persona in more recent appearances.
In preparation for her turn on the stand in Texas, Smith has reportedly "been tutored by an acting coach, worked with a personal trainer to lose 50 pounds, and purchased a more businesslike wardrobe," according to Newsweek.
Even so, public sympathy seems to be firmly with Smith.
On the street, her efforts are being met "if not quite with respect, certainly not with universal disgust either," noted a commentary in the Boston Herald. "Instead, there's a sort of 'go, girl!' enthusiasm for the 'grieving' widow. That surely says something, [though] we're not sure what, about America 2000."
For her part, Smith continues to insist that it's all about love.
"I hope it ends up like my husband wanted it to," she told reporters outside the Houston courtroom recently. "I hope it ends up that I get everything that he wanted me to have."
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