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March 8, 2001, 1:16PM

Smith, stepson have no share of estate
Jury rules billionaire's son sole heir

By BILL MURPHY and S.K. BARDWELL

A jury found that Wednesday Houston oilman J. Howard Marshall II did not promise half of his estate to his wife, Anna Nicole Smith, and imposed $35.3 million in damages on her stepson, J. Howard Marshall III, for bringing a baseless lawsuit.

The verdicts in Harris County Probate Judge Mike Wood's court exonerated Marshall II's other son, E. Pierce Marshall, accused by Smith and Marshall III of illegally blocking their inheritances.

The five-month trial gained national attention because of Smith's celebrity, her Hollywood personality and penchant for such testimony as the now-celebrated remark: "It's expensive to be me."

The verdicts mean that Pierce Marshall, 62, of Dallas should receive all of his father's estate, valued at $1.6 billion by some estimates but at $40 million to $60 million by Marshall.

Before he can freely use the money, he must win an appeal of a California federal bankruptcy court ruling that he illegally blocked Smith's inheritance and owes her $475 million.

Kathy Bassir and several other women jurors cried as Wood read the verdicts.

"I am deliriously happy, as is my client," said Rusty Hardin, lead attorney for Pierce Marshall. "We see it as a total victory. Every single question was answered favorably."

Marshall III, 64, of Los Angeles, testified that his net worth is $26 million. He would be wiped out if the damage award is upheld, said his lawyer, Terry Giles.

"We felt that we wanted to send a message to (Marshall III) that he didn't really have a case and shouldn't be suing his family," juror Lenda Hart said.

Marshall III was devastated by the verdicts, Giles said, and will seek to have the verdicts overturned and the damage award reduced.

"I don't think there's any way a verdict could be worse for us," said Giles. "He felt he was doing the right thing, and I think he's discouraged that the jury could not see his position."

Smith was not in court and had not been since she finished testifying last month.

Called by Hardin, she told of leaving Mexia and the fried chicken restaurant where she worked to come to Houston in the late 1980s.

She took up stripping to support herself and her son, now 15. In 1991, Marshall II saw her dancing at a club here and she never stripped again, she testified.

He lavished her with clothes, cars, $5,000 cash a week, $2.4 million in jewelry and three homes, according to testimony. He spent $6.7 million on her during their relationship.

In 1994, Smith, then a 26-year-old actress who had played a role in Naked Gun 33 1/3, married Marshall II, then 89. He died the next year.

She accused Pierce Marshall of trying to have her electrocuted; possibly ordering an anesthesiologist to kill Marshall II's mistress, former stripper Jewell DiAnne "Lady" Walker, and killing Marshall II by keeping her from him.

A slew of witnesses said they never heard Marshall II promise Smith half his estate.

"Her (Smith's) testimony was so far-fetched," juror Frank Staley said. "At the end of the day, some of us had headaches from trying to keep up with what she was saying."

Bassir said, "It's not possible for her to be telling the truth and 20 other witnesses are lying."

Smith had nothing to lose or gain money-wise at the trial.

She had dropped her local suit against Pierce Marshall in January after the Los Angeles bankruptcy judge ruled for her.

Pierce Marshall's countersuit alleging she illegally interfered with his inheritance by falsely claiming part of Marshall II's estate continued to go forward in Houston.

But last month, Pierce Marshall dropped most of his countersuit after the bankruptcy judge said his findings prohibited Marshall and others from seeking monetary damages from Smith.

Only one part of the countersuit went to the jury: Did Marshall II promise Smith half his estate?

Since the jury ruled against her, Smith will likely be prevented from filing a new suit against Pierce Marshall.

She declared bankruptcy in 1996. Pierce Marshall brought what amounted to a defamation suit against her in the bankruptcy court, and her countersuit alleged she was bankrupt because Pierce Marshall had illegally blocked her inheritance.

The bankruptcy judge asserted jurisdiction over the inheritance matter, normally handled by a state probate court, by ruling Pierce Marshall had voluntarily submitted himself to his court's jurisdiction.

Pierce Marshall has appealed the $475 million award, saying the judge wrongly asserted jurisdiction. Smith has yet to receive any of the award.

Marshall II's wills and other estate-planning documents called for his entire wealth to go to Pierce Marshall.

The jury rejected all of Marshall III's claims against Pierce Marshall and his claim that their father made an oral contract in 1980 to leave the sons equal portions of his estate.

Instead, the jury found on nearly every question that Marshall III filed his lawsuit in bad faith and knew it was based on false claims.

The jury awarded Pierce Marshall, his immediate family and trusts controlled by him $16.5 million in exemplary damages.

In regular damages, the jury gave Pierce Marshall $5.9 million; his wife, Elaine, $200,000; and his sons, Preston and Pierce Jr., $200,000 each. A trust controlled by Pierce Marshall received $5.4 million.

Marshall III was ordered to pay Pierce Marshall's legal team and the interim administrator of Marshall II's estate nearly $2.9 million in legal fees.

http://www.chron.com/disp/story.mpl/metropolitan/843384.html