Shula, Stephens Battle Over $1 Million in Annual Alimony


Mary Anne Shula is in another courtroom battle with her former stepson, Warren A. Stephens, the CEO of Stephens Inc. of Little Rock, over a trust fund that was created to provide her $1 million a year in alimony for the rest of her life.

Shula, whose fourth husband is NFL Hall of Fame Coach Don Shula, divorced Stephens' father, Jackson T. "Jack" Stephens Sr., in 1991. Their divorce settlement granted her the lifetime income and a 12,000-SF vacation home in ultra-exclusive Indian Creek Island, Fla.

The feud between Mary Anne Shula, 64, and Warren Stephen, 53, started after the death of Jack Stephens on July 23, 2005, at the age of 81. The dispute has already cost Shula almost $160,000 in legal fees, and on Tuesday, the latest chapter of the battle is scheduled to play out in Pulaski County Circuit Court in front of Judge Ellen Brantley.

Stephens has asked Brantley for permission to distribute some jewelry and paintings from his father's estate. Shula has objected to the move, fearing that the assets of the estate would be drained, according to her response filed in the case.

"Just because there has been no default in the [alimony] payments ... to date does not mean there will never be such a default," Shula's attorneys wrote in a Feb. 2 filing.

Shula requested a bond be placed on the estate to secure her alimony money. Stephens, in response, has objected to adding a bond.

Stephens, through a spokesman, declined to comment. Shula didn't return a message left with an assistant last week at her home.

In 2008, Shula lost a lawsuit in which she accused Bank of America of breach of fiduciary duty for allowing Stephens to remove Stephens Inc. preferred stock as an asset of the trust and to replace it with an unsecured promissory note. The verdict from U.S. District Court in Little Rock was upheld on appeal by the 8th Circuit Court of Appeals at St. Louis.

Meanwhile, Shula recently made a tearful plea to the Indian Creek Island village council not to increase her property assessment for police service on the 40-home island, saying she couldn't afford the additional $3,400 annual tax.

"My husband is 80 years old. ... He's on the back nine of his life," Shula said, as quoted in an April 29 article in Miami New Times. "Don is unable to do talks and signings like he used to. If our taxes go up, he'll suffer. ... What gives you the right to do this?"

Village attorney Stephen Helfman of Coral Gables, Fla., confirmed the story last week.

"Most people are going to see a savings when this goes into place," Helfman said. "Three property owners are going to have to pay a little more." Mary Anne Shula is one of those three.

 

Meeting

The woman born Mary Anne Hurst in the Johnson County town of Coal Hill first met Jack Stephens in the fall of 1980 at a state Democratic Party convention, according to a 1993 article in the Arkansas Democrat-Gazette.

Hurst, who previously had been married to James Burl Keller and John Maddox "Johnny" Smith, was a delegate from Fort Smith and Stephens was with Vice President Walter Mondale, the article said.

At the time, Jack Stephens was the CEO of Stephens Inc. of Little Rock, an investment firm that his brother Witt Stephens founded in 1933 to trade Arkansas municipal bonds. It is now one of the largest U.S. investment banking firms outside New York.

Jack Stephens and his first wife, Mary Amerine Stephens, had divorced in 1971 after more than 20 years of marriage, and she was granted custody of their two children, Jackson T. "Steve" Stephens Jr. and Warren Stephens. Warren lived with his mother in Alabama for the next 10 years.

The May-December romance between Mary Anne and Jack Stephens quickly blossomed, and they married less than three months later, in January 1981.

Mary Anne Stephens continued to be active in politics and society events. She became a Republican after the marriage and was the co-chair of George H.W. Bush's 1988 presidential campaign in Arkansas. In 1990, she was named the March of Dimes Arkansas Citizen of the Year.

Mary Anne also worked as campaign chairwoman for Tommy Robinson, the former U.S. congressman, in his failed run for governor of Arkansas in 1990.

"In certain respects, she overshadowed the candidate himself," Rex Nelson, who was Robinson's press secretary, said in a 1993 article in the Sun Sentinel, a newspaper in Fort Lauderdale, Fla.

But her marriage was in trouble.

Apparently her involvement in the Robinson campaign didn't sit will with Jack Stephens, according to an August 1993 article in the Arkansas Democrat-Gazette.

"He was smoked-filled rooms, and she was high-profile and liked it," according to an unnamed Arkansas Republican quoted in the article.

In January 1991, 15 days after their 10th wedding anniversary, Jack Stephens filed for divorce. He cited "general indignities," including "contempt, mental abuse, neglect, embarrassment and ridicule," according to the 1993 article in the Democrat-Gazette.

"Jack was a very happy person with her," Helen Walton, wife of Wal-Mart founder Sam Walton, said in the 1993 article. "When it ended, I was just sick about it."

At the time, Jack Stephens' personal fortune was estimated at $380 million.

 

NFL Royalty

After the divorce in 1991, Mary Anne Stephens moved into the Florida mansion she received as part of the settlement. (Jack Stephens had bought the house, which was assessed for $2.3 million, from the bankruptcy tied to Charles Keating, who became notorious during the savings and loan crisis of the 1980s, according to the August 1993 Democrat-Gazette article.)

Indian Creek features one of Miami's top golf courses and is home to singer Julio Iglesias and billionaire investor Carl Icahn. Two homes in Indian Creek are on the market with asking prices of $13.9 million and $19.5 million.

Jack Stephens also established a trust that would pay his ex-wife $250,000 every three months for the rest of her life. If she died in less than 20 years, her estate would receive the money until April 1, 2011.

While attending a 1992 New Year's Day party at the home of her next-door neighbor, professional golfer Ray Floyd, the newly divorced Stephens met Shula, the newly widowed coach of the Miami Dolphins, according to an October 1993 article in the Democrat-Gazette. Don Shula's wife of 32 years had died of cancer in 1991.

Mary Anne Stephens and Shula soon started dating and were married in 1993.

Over the years, both continued making public appearances to support charities. In January 2007, the two were featured in television and print advertisements promoting NutriSystem's diet plan for men and women over age 60.

 

Stephens' Death

After Jack Stephens' death in the summer of 2005, a battle over the alimony payments ensued. Although Mary Anne Shula received every payment, she was unhappy with the handling of the trust that was established in 1991, according to court documents filed in Florida and Arkansas.

In October 2005, Warren Stephens, who was the co-executor of his father's estate, "substituted an unsecured, personal promissory note for the preferred stock Jack originally placed in the trust," according to Shula's lawsuit filed in Miami-Dade County Circuit Court in June 2006. Court records show Warren Stephens transferred shares of the Stephens' company stock out of the trust and replaced it with a promissory note from Warren Stephens and the Warren A. Stephens Revocable Trust. The note is for $15.5 million and has an annual interest rate of 6.438 percent. The annual interest payment on the note is $1 million.

Shula named only Bank of America in the lawsuit because she said the bank, as trustee of the trust, should not have allowed Stephens to make the change. In suing for breach of contract and breach of fiduciary duty, she sought an unspecified amount of damages.

Shula said she was harmed because of the "loss of security in the continued solvency of the Trust and ability to meet the alimony payments for which it was created to do," according to the amended complaint filed in U.S. District Court in Little Rock.

Shula also said she took a hit financially "due to the increased taxation based upon the changed nature of the Trust assets," although that allegation was not explained in any detail.

Her attorney, Robert Josefsberg of Miami, declined to comment last week. Another of her attorneys, Gary Rogers of Little Rock, didn't return a call for comment.

The lawsuit was first transferred from Florida state court to U.S. District Court in Florida and then to federal court in Arkansas.

In July 2008, U.S. District Court Judge Brian Miller ruled in favor of Bank of America before the case made it to a jury.

"The court finds that this case is premature," Miller wrote in his order. "The terms of the trust agreement do not require that the assets in the trust be guaranteed."

He also said the bank didn't breach its duties.

Shula "admits that she continues to receive her quarterly alimony payments of $250,000 and she does not believe that Warren A. Stephens is having any type of financial trouble," Miller said. "She fears he may have future financial trouble."

Stephens Inc. is one of Arkansas' largest private companies; its revenue in 2008 was estimated at $1.835 billion in Arkansas Business' most recent list of the state's largest private companies, but it is a shaky estimate at best.
Miller said a judgment in Shula's favor wouldn't be granted unless a danger was present, which wasn't proved.

Shula appealed, and the 8th Circuit Court of Appeals upheld most of Miller's ruling last October. The appeals court sent the issue of attorneys' fees back to the district court.

Attorneys for Bank of America asked for fees of $275,000 and expenses in the amount of $10,700. The bank was represented by Judy Simmons Henry and Stephen Lancaster, both of the Wright Lindsey & Jennings law firm in Little Rock. Lancaster said it was the policy of the law firm not to comment on cases.

In November, Warren Stephens personally entered the case and asked the court to make sure that Shula, rather than the trust, paid for the court costs and attorneys' fees.

"Any assessment of attorney's [sic] fees and expenses against the trust will, in fact, be an assessment against him," Stephens' attorney, H. William Allen of Little Rock, wrote in his court filings. Allen also declined to comment on the case.

In January, U.S. District Court Judge Brian Miller ordered that the attorneys' fees were too high.

"Although it is noted that the lawyers had a difficult time litigating the case due to the distrust between the parties, it is also noted that the portion of this case ... should not have required $274,833.62 in fees," wrote Miller.

He reduced the fees to $150,000 and the expenses to $9,300 and ordered Shula to pay the total, which she did.