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Ruling Gives $90M to Crain Daughters

3 min read

The daughters of Fort Smith businessman H.C. “Dude” Crain Jr. have received about $90 million from his estate after the 8th U.S. Circuit Court of Appeals in St. Louis ruled in their favor.

The messy battle over the nine-figure estate started in 2020 when Crain’s four daughters sued their stepmother, Shirley Crain, in U.S. District Court in Fort Smith. The daughters said that she refused to give them half of their father’s estate, as he had promised in a 1989 settlement agreement with his first wife. Shirley Crain controlled her husband’s assets after he died and either kept them, gave them away or sold them, the suit said.

The daughters, Lisa Crain, Cathee Crain, Marillyn Crain Brody and Kristan Snell, who all live in Texas, won a legal victory last year when U.S. District Judge Timothy Brooks ruled after a three-day bench trial that the 1989 property settlement agreement was enforceable. He awarded the daughters about half of their father’s assets in January 2022. Shirley Crain appealed Brooks’ decision.

But the three-judge 8th Circuit panel agreed with Brooks’ ruling. The circuit judges found that Dude Crain breached the property settlement agreement “when he did not leave half of his estate to [his daughters] and the district court did not abuse its discretion in fashioning equitable relief.”

The case was before Circuit Judges Raymond W. Gruender, William D. Benton and Bobby E. Shepherd, who wrote the decision.

“Dude breached his contractual obligation to [his daughters], allowing property which should have gone to them to pass to his new wife, Shirley,” Shepherd wrote.

Dude Crain owned Crain Industries Inc., which made polyurethane foam and polyester fiber items. The company was one of the largest privately owned companies in the state. Arkansas Business reported its revenue as $154 million in 1990. The company sold in 1995 for $130 million.

Dude Crain filed for divorce from his first wife, who like one of the daughters is named Marillyn, in 1988. She was entitled to “at least a substantial” share of the couple’s assets, Shepherd wrote. Instead she “chose to forgo her share in favor of the couple’s children,” he wrote in the 18-page opinion in June.

Dude Crain didn’t do any estate planning until 1993, when he had a will that left nothing to his daughters and everything to Shirley Crain. In 2012 a new will was created, and in it, Shirley Crain was named as the only trustee and beneficiary. Dude Crain’s daughters and his stepson would inherit any assets that were left in the trust after Shirley Crain’s death.

The problem with that arrangement, according to the daughters’ court filings, was that Shirley Crain could do anything she wanted to with assets in the trust, including spending all the money or giving it to her son, violations of the property settlement.

When Crain died in 2017, his assets were worth about $200 million. In the years before his daughters filed their lawsuit in 2020, Shirley Crain sold or exchanged several of the assets.

After the ruling from the Appeals Court, Shirley Crain decided to pay the daughters cash instead of transferring a percentage interest in certain properties, according to a court filing in September.

Shirley Crain said in a court filing that she intends to ask the U.S. Supreme Court to consider the case.

“While this Court concluded otherwise, its decision conflicts with precedents from this Court, creates a circuit split, and departs from the Supreme Court’s recent reaffirmation that the power to govern domestic relations lies with the states alone,” according to her filing in August. Christopher Blaesing of Bryan Cave LLP of St. Louis, one of Shirley Crain’s attorneys, didn’t return a call for comment.

Dude Crain’s daughters were represented by attorneys Tim Hutchinson, Bo Renner, Taylor Baltz and Lisa Geary of RMP LLP of Springdale.

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