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Burden of Proof

Anna Nicole Smith Trial: Former Playmate Wants Part of Late Husband's Estate

Aired September 29, 2000 - 12:30 p.m. ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

ROGER COSSACK, CO-HOST: Today on BURDEN OF PROOF, a former "Playboy" playmate has been awarded nearly $450 million by a bankruptcy court judge in California. The publicity of that ruling delays a Texas trial over who should inherit more than a billion dollars from her late husband.

Anna Nicole Smith draws a line in the sand and defends her marriage to a 90-year-old man.

(BEGIN VIDEO CLIP)

HOWARD MARSHALL III, DISINHERITED SON: This judgment yesterday just adds to the tragedy that exists in my family. It's tough.

RUSTY HARDIN, ATTORNEY FOR MARSHALL ESTATE: I'm shocked that a judge would issue an order that would create any publicity while a jury is being picked on the same matter.

So what we've got to do is go in and talk to the judge and see if this will have any impact on this case.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

QUESTION: Do you think is a big victory for you?

ANNA NICOLE SMITH: I think it's a wonderful victory.

(END VIDEO CLIP)

ANNOUNCER: This is BURDEN OF PROOF, with Greta Van Susteren and Roger Cossack.

COSSACK: Hello and welcome to BURDEN OF PROOF. Greta is off today.

Well, it's being called a bombshell. A Los Angeles bankruptcy judge has awarded former "Playboy" playmate Anna Nicole Smith $447 million from the estate of her former husband. Now the ruling, as you can imagine, stunned her stepson -- of course, who is the son of the late husband, and also the executor of the estate. It also delayed another court fight over Marshall's will, which excluded Smith. Now the dancer, sometimes model, sometimes actress is suing in a Houston courtroom for a much larger piece of the Marshall fortune. Now, Smith met oil tycoon J. Howard Marshall while dancing in a topless bar in 1994. She was 26, he was 89. The billionaire died just 14 months after their marriage.

Joining us today here in Washington is bankruptcy attorney Alfreda Fuller. And here in our studio: Jessica Zapf (ph), estate attorney Michael Curtin and trusts and estates attorney Julia O'Brien.

In the back: Julie Vejayvargiya (ph) and Anita Pantankar (ph).

Let's go right to you, Michael.

The first question I want to ask is, how -- I'm not going to ask you about why a 26-year-old and an 89-year-old -- but what I am going to ask you is: How did it end up that Anna Nicole Smith is in bankruptcy, in a bankruptcy court in California, where she has filed a petition to save her from her creditors because she, apparently, doesn't have any money and owes more than she has -- and suddenly a judge stands up and says, by the way, I've made a ruling, you're entitled to $450 million.

MICHAEL CURTIN, ESTATE ATTORNEY: Roger, as I understand it, Nicole Smith filed bankruptcy because there was a judgment entered against her and she had more potential liabilities than assets. She listed as a potential asset this expectancy she had from her husband.

The executor of the husband's estate, the son, went into the California bankruptcy court and filed a claim against her. Thus, he was asserting himself as a creditor against her, probably as a ploy.

COSSACK: OK, let's stop a second and go back -- see if we can put this into somewhat-English here.

She now has a -- she now goes into the bankruptcy court and says, bankruptcy court, protect me, my creditors are after me, I don't have any money.

CURTIN: Right.

COSSACK: The bankruptcy court judge then says, well, wait a minute, what do you have. We have to put everything in order. Both your liabilities and your assets.

She says, well, I owe all this money and the only thing I have is, I think I have -- I'm entitled to half of my late husband's estate, which is billions.

Then her, I guess, stepson, comes to court and said, just a second, you're not only entitled not to half of his estate, but you owe me money because you took money from my father -- I almost said my old man -- from my father, and wasted his money; and now you owe money back to me. And that's when the party began in California, right?

CURTIN: That's how the court got jurisdiction over this. She counter-claimed, or counter-sued, and said, I'm entitled to my expectancy from this estate; my husband promised it to me, and you interfered with my right to get this and, therefore, I have a claim against you, Mr. Executor, for torturously interfering with my expectancy.

COSSACK: All right; now what did Anna Nicole say to the judge? What was her claim?

She said, OK, you, son -- Pierce I think his name is -- you interfered with my right -- I have a right to get this money and you made sure, you did things to make sure that I didn't get the money.

What did she claim he did?

CURTIN: As far as I can tell from what I've read, Roger, she claimed that he, the son, poisoned the well with the husband-slash- father -- wouldn't allow him to make a will, wouldn't allow him to carry out her promise.

He manipulated the father so that the will, which would have left her something, never came into being.

COSSACK: In fact, as we understand it, he left -- he made, changed I suppose, six wills; and in the final will, all the money went to the son who was complaining and there's another son who got nothing and poor Anna Nicole got nothing.

CURTIN: That's right. And both that son and poor Anna Nicole are also in the Houston court making similar claims, i.e., there was a torturous interference with this -- what I was supposed to get; the son has that claim, Nicole has that claim.

Both of them are claiming there was a contract between the deceased person and them to get the money. They're independent claims, but there's an awful lot of litigation riding on that Houston proceeding.

COSSACK: All right, so now we have a $450 million judgment in favor of Anna Nicole Smith in a California bankruptcy court, right?

CURTIN: Right.

COSSACK: All right, Julia, now we're going down to Texas.

Now in Texas the son, Howard, who is also one that was left out of the will, has joined forces with his stepmother, or Anna Nicole Smith, and they're, together, making a claim that says, we're entitled to half this money.

What is this based on?

JULIA O'BRIEN, TRUSTS AND ESTATES ATTORNEY: Well, certainly the spouse might -- we're not Texas lawyers -- but a spouse has a claim, potentially, under various aspects of Texas law; Texas is a community property state, Roger, so she might have that sort of claim. She might have what's called a statutory forced share; she might be electing against the existing will. There's also, potentially, the oral contract issue -- oral contracts to make a will can be enforceable, although they're difficult to prove.

So she has one of several possible bases on which she can make a claim. The son, similarly, could probably claim that there was an oral contract to make a will in his favor, but he wouldn't have the spousal -- the other spousal rights.

COSSACK: Alfreda, one of the claims that they're making in Texas is, of course -- they're saying that there was undue influence put upon the husband, and that's why Anna Nicole was left out of the will.

What does undue influence new mean?

ALFREDA FULLER, BANKRUPTCY ATTORNEY: Well, undue influence means that, obviously, there were relatives -- for example, in this case, maybe the son that was involved, maybe other parties that were involved, that were connected to the father or Anna Nicole's husband, that influenced him possibly not to even make an amendment, or changes to his will, prior to his death.

So this influence, obviously, would be labeled, at this point, undue influence because, of course, it was to her disadvantage; and this influence was negative in the sense that it's not in alliance with the will as it is written to the extent that it's claiming all would be due to the son.

COSSACK: Michael, the son who did get the money, who Anna Nicole and her other stepson is fighting, claims that the father, at that time, at 90 years old, was suffering from senile dementia.

Now, it seems, on one hand, that's a tough argument to make because, on one hand, he's the son that got all the money and at the same time he's claiming that his father had senile dementia.

I mean, doesn't that seem to cut both ways?

CURTIN: It does cut both ways.

He has a real problem pushing the question, the issue that the father was not competent because, as you say, in the last will that was done, which was, apparently, around the time of the marriage -- just before or just after -- he wound up with the whole pie and he wound up the executor. So he has a difficult time using that as the sole challenge.

The issue in California -- in Texas that he is dealing with, quite frankly, is, there was no -- there was nobody -- I didn't defile my father, this is what he wanted to do and there was no contract. If there's no contract and there was no interference, she is not going to get very much in the Texas proceeding because of the fact that they -- because it's community property, they limit what she's going to wind up with.

So she either has to make sure the judgment stands up in California or she, again, proves that the son torturously interfered.

COSSACK: All right, let's take a break.

Up next, a closer look at these inheritance laws, and bankruptcy laws, for that matter. How can someone facing an $850,000 judgment file for bankruptcy and receive nearly a half a billion dollars?

We're going to search for those answers when we come back.

(BEGIN LEGAL BRIEF)

A federal grand jury yesterday charged Koch Industries, Inc. with environmental crimes and returned a 97-count indictment against them.

Anna Nicole Smith's late husband, J. Howard Marshall, had considerable holdings in Koch. They make up the bilk of his assets.

(END LEGAL BRIEF)

(COMMERCIAL BREAK)

COSSACK: Good news for our Internet-savvy viewers. You can now watch BURDEN OF PROOF live on the World Wide Web. Just log onto CNN.com/burden. We now provide a live video feed Monday through Friday at 12:30 p.m. Eastern time. And if you miss that live show, the program is available on the site at any time via video-on-demand. You can also interact with our show, and even join our chat room.

(BEGIN VIDEO CLIP)

HARDIN: I don't think anybody's ever contested the fact that he loved Anna Nicole Smith, or Ms. Marshall, and that he hoped that she would do well for the rest of her life.

JUDGE MIKE WOOD, HOUSTON PROBATE COURT: We asked them all if it would affect their ruling. They said it would not.

(END VIDEO CLIP)

COSSACK: In Harris County, Texas, former "Playboy" playmate Anna Nicole Smith is fighting for a piece of her late husband's estate. That trial has been put on hold as a $450 million bankruptcy ruling for the model threatens to taint the jury.

Julia, let's talk about Anna Nicole Smith as a client. Now, she comes into your office and says, you know, these are the facts. How do you go about proving her case. How do you go about making her sympathetic, or at least appealing to a jury or to a judge?

O'BRIEN: That's a very good question, Roger. If her underlying theory -- or she comes in saying, my husband promised to make me -- to write a will and leave me in his will, that would be an oral contract to make a will, and she's essentially saying that the stepson precluded the father from doing that. It's very tough to prove. If you get as far as getting in front of a jury or getting to court, it's very tough to prove that kind of thing. You have an evidentiary problem called the "dead man statute." The decedent is not there to talk about his side of what happened. That's a hearsay problem.

So, you're right, it is, if you can even get that far, it's a very tough thing to show that he would have done that but for his son's conduct.

COSSACK: And what -- and, look, also, what about the fact that she -- you know, he meets her in a topless bar, you know, their 70- years or so difference between their age? I mean, there's this presumption, I suppose, that people would think -- call me silly, call me wacky -- that perhaps she's a coal digger.

O'BRIEN: Well, they didn't have a prenuptial agreement, Roger, and a man like that certainly could have had one had he felt strongly about it. That cuts in her favor, I think. And I suppose some of it would depend on who's sitting on a jury. Some people would empathize with her situation: young woman being courted by an elderly man, why shouldn't she be taken care of for an extended period after his death.

So I think the jury -- the sympathy of the jury could go either way. But the lack of a prenuptial agreement, to me, is a significant factor, and he certainly could have pushed that if he had chosen to.

COSSACK: All right, Alfreda, I want to put you on the hot seat now and put you on the other side. Now you have to defend the inheritor of the will, the son, against the claims of Anna Nicole Smith. What -- you know, would you say to show that Anna Nicole Smith isn't entitled to it?

FULLER: Well, in the event that I was put in that position, by me being a bankruptcy attorney, my major concerns would be, of course, for it. But if -- in the event that the tables were turned and I was put in that position, then I would clearly go back to the argument regarding the undue influence despite the fact there was not a prenuptial, despite the fact that the will clearly indicated that the son was entitled -- would be entitled to the estate. My argument would be that he was definitely unduly influenced and never intended for her to be not a part of his estate upon his demise.

COSSACK: Michael, what happens now? Let's just say that the son wins in Texas, Anna Nicole has won in California. Short of fighting a civil war, how do these two judgments decide to get along with each other?

CURTIN: It's going to be interesting. Under federal bankruptcy law, which I know very little about, their jurisdiction -- the bankruptcy court's jurisdiction is pretty expansive. I think once the son went to California to assert the claim, the waste claim, against Nicole, he put himself in that jackpot. And I would suspect that unless there was something different than we're reading about in the press, the jurisdictional basis of the bankruptcy court proceeding is likely to hold up. And I suspect that since it is a judgment which a bankruptcy court can award, assuming they have jurisdiction, I don't think it makes a lot of difference what happens in Texas.

COSSACK: Well, but let's -- Julia, let me ask you this. She got awarded, what did we say? $450 million in California. And let's suppose that in Texas the judge says to her -- to the son, you're entitled to $450 million. And now you have two judgments with absolutely differing results, who wins?

O'BRIEN: Well, that's what we call conflicts of law, Roger, and I'm not sure. As Mike says, federal bankruptcy statutes are quite far-reaching in their effect, and that, as a result -- I'm not a bankruptcy expert, but the California judge's ruling might well hold up. But you might also have to look to the conflicts, provisions of each state's law to see how those conflicting judgments would be resolved with one another.

CURTIN: Roger, at first glance you would think this is strictly a probate matter, it belongs in the Harris County court in Texas and not in the bankruptcy court. But since the son went to California to involve himself in that, he may be hoisted upon his own petard.

COSSACK: All right, let's take a break.

Up next, Anna Nicole Smith says her late husband promised her half his fortune if she married him. Well, is a verbal agreement legally binding in a court of law? Stay with us.

(BEGIN Q&A)

Q: What pop singer could be facing 30 days in a Hawaiian jail and a $1,000 fine for allegedly possessing half an ounce of marijuana?

A: Whitney Houston.

(END Q&A)

(COMMERCIAL BREAK)

COSSACK: In Houston, Texas, former "Playboy" playmate and sometimes actress Anna Nicole Smith is fighting for an inheritance from her late husband. Even though she wasn't mentioned in the will, Smith contends she had a verbal agreement with tycoon J. Howard Marshall.

Julia, this case, I think, part of the notoriety of it is that because it is sort of -- it's so different from the traditional way wealth is transferred or inherited in most cases.

What would -- how do you suggest to someone -- what should they do to protect for these kinds of fights happening after they -- after they've died?

O'BRIEN: Well, I think it is important for -- typically for a married couple to do planning. Usually, they plan as a couple. That's -- that's not -- that's not -- always required but for there to be conversation among family members, including with children about the plan.

In a case of this sort, it is typical for a couple to do a prenuptial agreement so that what happens after death is clear. Whether someone is included or not included or partially included, but to have conversations about it beforehand and to have things clearly spelled out in writing and conversations with children and the other obvious heirs, about what the plan is, the protections that have been made for everybody, why they've been taken.

There can be good reasons to leave money to spouses. For example, saving on estate tax. But, lack of communication creates many -- and lack of proper planning create many, many problems.

COSSACK: Michael, is there anything that a wife can do or a -- can do in a situation like this? Too many times, or at least sometimes, we read about these kinds of situations where someone dies of great wealth, up pops the other woman, or someone else, who says: You know, I don't know about you, Mrs., but I was promised all these things and I'm here to get them.

What should the wife do? what can a married couple do? what do you in a situation like that?

CURTIN: Well, in that circumstance, that's the oral promise and quite frankly, that's not worth very much in and of itself.

COSSACK: But isn't that what Anna Nicole Smith had? She had an oral promise.

CURTIN: Well, she had an oral promise but she has more than that. She has this -- the son interfered with the carrying out of that promise. The oral promise on its own, that's a tough case unless you've got some pretty good facts, or pretty good documentary evidence. What she has is the promise and then we have the son allegedly interfering with the fulfillment of that promise by doing the will. That's where her case, I believe, was won in California, with that kind of spin to it.

COSSACK: But the son comes in, and says: Hey look, you know, my father, you know, was a well-meaning but old man, and acting, like, in a way that most people would think is perhaps, you know, a little peculiar. I had to go out and try to protect him because it is clear she was just trying to do nothing but get his money.

CURTIN: But, unless -- if he were to take that tact, he's running a risk because he is, in effect, saying he became an actor in this. And once he becomes an actor, then it is up to the trier of fact, in this case, the bankruptcy judge, to determine whether he interfered inappropriately with what Mr. Marshall wanted to do for his spouse. It gets to be a tricky problem.

But, the contract alone, the oral contract, without some kind documents, that's a tough case. But, when you have somebody participating in, or interfering with, the effectuation of that oral promise by putting something in a will, then she got a little life, and she got some life in California worth $450 million.

COSSACK: A lot of life, Julia, how does she go about collecting this money, now that she's been given a piece of paper that says you are entitled to 450 million bucks? Now what does she do? O'BRIEN: She will probably -- she will file a claim or try to enforce the judgment against the estate in Texas, I would imagine. You take a judgment from one jurisdiction and if the assets are in another jurisdiction, there is a mechanism by which you file the judgment in the other place and try to enforce and collect upon it.

COSSACK: Well, I don't think we've heard the last of Anna Nicole Smith and when we hear more, you know BURDEN OF PROOF will bring it to you. But, that's all the time we have for today.

Thanks to our guests, thank you for watching. Weigh in on the Anna Nicole Smith case today, on "TALKBACK LIVE." Tune in and log in with your questions and opinions in the matter.

And on Monday, Greta and I will be back with a special on the United States Supreme Court. That program will touch off a week's worth of shows commemorating our fifth anniversary. I can't -- can you believe it? Five years.

Our guests will include former independent counsel and former federal prosecutor Ken Starr, who will be joining us on Wednesday. And tune in next week, for a series of special editions on BURDEN OF PROOF. We'll see you then.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com

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