Wednesday, July 15, 2015

The Asset-rich Anna Nicole Smith Saga: Houston Court of Appeals writes one more chapter - Will it be the last? [Stern v Marshall Family appeal decided]

HOWARD STERN AS EXECUTOR OF THE ESTATE OF VICKIE LYNN MARSHALL, V. ELAINE MARSHALL AS INDEPENDENT EXECUTRIX OF THE ESTATE OF E. PIERCE MARSHALL, NO. 01-02-00114-CV (Tex.App. - Houston [1st Dist.] July 14, 2015, no pet h.) (hyperlink to appellate docket)
 
Opinions issued by Texas Courts of Appeals  typically do not attract much public attention, nor does even the Texas Supreme Court receive much media coverage; -- at least not on a regular basis. But there are exceptions, such as when same-sex marriage is on the agenda, or when a prominent person with large assets, or -- as in this case -- a fight over what is left worth fighting over in the aftermath of their demise, occasions litigation that ends up in the courts of appeals; -- not to mention multiple courts of appeals; -- not to mention a couple of trips to the U.S. Supreme Court. Not to mention when what's at stake involves millions of dollars, and attorney's fees in the six-figure range. 


And so it was with Vickie Lynn Marshall (a/k/a Anna Nicole Smith) and the fight over the fortunes of her husband, who preceded her in death, but not by much, despite the huge age difference between the former playmate and the asset-rich old man with a weak spot for the erstwhile Texas store clerk and subsequent playmate -- rich in assets too -- albeit assets of a different sort. 

Judgment - HOWARD STERN AS EXECUTOR OF THE ESTATE OF VICKIE LYNN MARSHALL, V. ELAINE MARSHALL AS INDEPENDENT EXECUTRIX OF THE ESTATE OF E. PIERCE MARSHALL, NO. 01-02-00114-CV (Tex.App. - Houston [1st Dist.] July 14, 2015, no pet h.)
Judgment issued contemporaneously with
opinion in Stern v Marshall Family  

Yesterday, the First Court of Appeals wrote another chapter in the saga, and it has already attracted the attention of Forbes Magazine: "Court Ruling Likely Ends Anna Nicole Smith Estate's Fight For Marshall Family Millions"; -- with more than 3,000 pageviews within 24 hours of posting. 

The opinion, written by Chief Justice Radack, runs sixty pages and covers a number of procedural issues relating to propriety and viability of declaratory judgment claims, effect of nonsuit, and compulsory counterclaims, that were implicated in the proceeding that played out in Harris County probate court, in a protracted legal fight that also involved courts elsewhere, most notably a bankruptcy court in California. 
  
Most importantly, however, the Houston appeals court threw out the attorneys fees awarded to Pierce Marshall against the Estate of Anna Nicole in the probate court's judgment, -- also for procedural reasons. The issue of attorney's fees against Anna Nicole -- for defending against her claims -- had not been submitted to the jury, nor had any been awarded by the trial court judge based on a motion made to the court independent of the jury trial. Therefore, the award of attorneys' fees in the final judgment of the probate court - in the six-figure range -- did not have a proper basis. 
  
Writes Radack: "We agree with Stern that Pierce waived recovery of attorneys’ fees from Vickie by failing to request submission of that issue to the jury." 

Bottom line: The Houston Court of Appeals affirms the adverse ruling against Vickie (with minor modifications), but reverses the attorneys’ fees awarded to Pierce from Vickie and renders judgment that Pierce take nothing on that claim. 




THE MATTER OF PRECLUSION 
IN THE CONTEXT OF PARALLEL LITIGATION
IN DIFFERENT COURTS IN DIFFERENT STATES

The issues on appeal, however, were not as straightforward as one might think. They hinged on matters of Texas procedural law, including the viability of declaratory judgment claims covering the same issues when the opponent had dropped its claim involving those issues, and the interplay of what happened in the Texas court with what happened in Vickie's bankruptcy in California, not mention matters such as scope of bankruptcy stay and  jurisdiction. 
   In the Harris County probate case, Vickie had actually dropped (nonsuited) her claims, but the Marshall Family Defendants asserted their own claims against her and did not let her out of the case. The jury and court in the end rejected the challenges to the validity of Marshall's will and estate plan (most of his assets were transferred via a living trust), and also passed on the merits of Vickie's claims because they were closely tied to the will contest brought by  J. Howard Marshall, III, and because Vickie's opponents invoked the Declaratory Judgments Act as a basis for their counterclaim. 
  
As the surviving spouse, Vickie would have had a claim to part of the estate as an heir-at-law under the intestacy statute, had the will and estate plan documents been set aside for lack of testamentary capacity or duress. Therefore, she was deemed a necessary party, and was not permitted to get out of the case.  
     
Vickie only non-suited her claims in Texas after she obtained a favorable multi-million dollar judgment against E. Pierce Marshal in her bankruptcy case in California, in which she asserted that Pierce tortiously interfered with an intended gift from her late husband. But that legal victory was later undone based on the final judgment rendered by the Harris County Probate Court after a drawn-out jury trial, which finally adjudicated the validity of the will and living trust, subject to review by the Texas courts of appeals, of course.  
   
The principal purpose of the appeal by Howard Stern (as representative of Vickie's estate) in Houston was therefore to reverse the judgment of the probate court and thereby remove the bar to the claims Vickie had successfully pursued (initially) in California. 
  
But the reversal of attorneys fees constitutes at least a partial victory for her estate, and -- while small compared to the one-time award in California that she did not get to keep -- not exactly in a trivial amount: $541,000 for services rendered through the trial and $100,000 each for appeals to the court of appeals and the Texas Supreme Court, respectively. And as for court costs run up for the first level of appeal, the Houston Court of Appeals split them 50-50.  
    


No need for her to turn in her grave. The supreme court has not yet had a chance to weigh in on the latest issues. The story of Anna Nicole's rise, fall, and aftermath may yet grow by a few more chapters, perhaps enough for a full feature-long sequel. 


Editorial note: This blog post on the First Court of Appeal's July 14, 2015 decision in Stern v Marshall was updated and expanded on 7/16/2015) 


Click appellate cause number to link to court of appeals' docket for this case 


Opinion issued July 14, 2015
In The
Court of Appeals
For The
First District of Texas
————————————
———————————
HOWARD STERN AS EXECUTOR OF THE ESTATE OF VICKIE LYNN
MARSHALL, Appellant
V.
ELAINE MARSHALL AS INDEPENDENT EXECUTRIX OF THE ESTATE
OF E. PIERCE MARSHALL, ROBERT MCINTYRE AS TEMPORARY
ADMINISTRATOR OF THE ESTATE OF J. HOWARD MARSHALL, II,
APPLICATION TO APPOINT ELAINE MARSHALL PENDING, IV
ELAINE MARSHALL AS TRUSTEE OF THE MARSHALL
GRANDCHILDREN’S TRUST FOR THE BENEFIT OF E. PIERCE
MARSHALL, JR., ELAINE MARSHALL AS TRUSTEE OF THE
MARSHALL GRANDCHILDREN’S TRUST FOR THE BENEFIT OF
PRESTON MARSHALL, E. PIERCE MARSHALL, JR., ELAINE
MARSHALL, AND PRESTON MARSHALL AS TRUSTEES OF THE
MARSHALL PETROLEUM, INC. STOCK HOLDING TRUST, E. PIERCE
MARSHALL, JR., ELAINE MARSHALL, AND PRESTON MARSHALL AS
TRUSTEES OF THE MARSHALL HERITAGE FOUNDATION AND THE
MARSHALL LEGACY FOUNDATION, ELAINE MARSHALL AS
TRUSTEE OF THE BETTYE B. MARSHALL LIVING TRUST, ELAINE
MARSHALL AS TRUSTEE OF THE J. HOWARD MARSHALL, II,
MARITAL TRUST NUMBER TWO, ELAINE MARSHALL AS TRUSTEE 
2
OF THE E. PIERCE MARSHALL FAMILY TRUST CREATED UNDER
THE BETTYE B. MARSHALL LIVING TRUST INDENTURE DATED
OCTOBER 30, 1990, ELAINE MARSHALL INDIVIDUALLY
ELAINE MARSHALL AS TRUSTEE OF THE MARSHALL
GRANDCHILDREN’S TRUST FOR THE BENEFIT OF E. PIERCE
MARSHALL, JR., ELAINE MARSHALL AS TRUSTEE OF THE
MARSHALL GRANDCHILDREN’ TRUST FOR THE BENEFIT OF
PRESTON MARSHALL, E. PIERCE MARSHALL, JR., PRESTON
MARSHALL, TROF, INC., FINLEY HILLIARD, ELAINE MARSHALL
AND STEPHEN COOK AS TRUSTEES OF THE J. HOWARD
MARSHALL, II LIVING TRUST, E. PIERCE MARSHALL, JR., ELAINE
MARSHALL AND PRESTON MARSHALL AS TRUSTEES OF
THE MARSHALL PETROLEUM, INC. STOCK HOLDING TRUST,
Appellees
On Appeal from the Probate Court No. 2
Harris County, Texas
Trial Court Case No. 276815402

O P I N I O N

This is an appeal from a probate court judgment. We reverse the attorneys’ fees awarded in favor of one of the appellees and render judgment that appellee take nothing on that claim. We additionally modify the trial court’s judgment and affirm the judgment as modified.