He paid world-record prices for some of the world’s rarest automobiles, and he often bought several high-end cars in a single weekend Here’s a car story that has all the ingredients of a soap opera: A billionaire dies in a car crash, and his longtime girlfriend is left out of his will. He owned hundreds of cars worth millions of dollars—and owed millions of dollars. To cap it off, all this turns into a high-stakes courtroom battle just before the sale of some of the cars at a high-profile auction. The girlfriend claimed: Her boyfriend bought the cars as gifts for […]
He paid world-record prices for some of the world’s rarest automobiles, and he often bought several high-end cars in a single weekend
Here’s a car story that has all the ingredients of a soap opera: A billionaire dies in a car crash, and his longtime girlfriend is left out of his will. He owned hundreds of cars worth millions of dollars—and owed millions of dollars. To cap it off, all this turns into a high-stakes courtroom battle just before the sale of some of the cars at a high-profile auction.
The girlfriend claimed: Her boyfriend bought the cars as gifts for her, so they belonged to her. No matter that none of them were titled in her name—in fact, they were still held by “open titles” in the name of previous owners and were never reregistered.
The estate countered: Just because your boyfriend said he was buying cars for you, that didn’t make them your cars. He paid for them with his money and retained possession and control of them, so they were still “his” cars.
John O’Quinn’s passions
The decedent we are referring to here is billionaire Houston attorney John O’Quinn, who burst upon the collector car scene in 2003. O’Quinn was an auto mechanic’s son born into near poverty in a hardscrabble area of Houston. By all accounts, he was a workaholic who obtained verdicts for his clients worth billions of dollars, most notably as a leader of the huge tobacco company class-action lawsuit, and he made a fortune for himself along the way.
Forbes magazine once described O’Quinn as “the lawyer from hell.” He was certainly a polarizing figure, with some seeing him as a saint and others describing him—and his legal tactics—as despicable.
O’Quinn’s automotive passions began as a young man, when his father took him to a car show and pointed out Duesenbergs as “the best cars in the world.” The passion simmered until 2003, when he began building one of the country’s most significant car collections at lightning speed.
O’Quinn thought nothing of paying world-record prices for some of the world’s rarest autos—if he wanted them. He had a voracious auction appetite, and he often bought multiple high-end cars in a single weekend.
At the time of his death, O’Quinn owned 850 cars, including a jaw-dropping 23 Duesenbergs. O’Quinn’s Duesenbergs included the Whittle Mistress Car, the Rudolf Bauer car (the last Duesenberg) and the recently restored Father Devine “Throne Car.” He reportedly also had the world’s largest collections of Rolls-Royce Silver Ghosts and electric cars. And he had stated that he was going to assemble the world’s largest collection of Figoni et Falaschi.
Virtually every marque and type of car was represented in his collection: Auburn, Bugatti, Cord, Delahaye, Duesenberg, Ferrari, Packard, Maserati, Mercer, Stanley, Stutz, Talbot-Lago and more. He also owned gas cars, steam cars, electric cars, brass cars, antique cars, classic cars, special-interest cars, muscle cars and super cars.
The girlfriend
At the time of his death, O’Quinn had been in a relationship with his constant companion, Darla Lexington, for more than ten years. Both had been married and divorced previously. Even though they were not married, O’Quinn frequently introduced her as his wife, and they both wore wedding rings. They were always seen at car events together, often bidding together at auctions. In fact, it was Lexington who encouraged O’Quinn to attend his first car auction.
During the last few years of O’Quinn’s life, Lexington assumed management of his car collection. She controlled much of what happened with the cars, and she hired the numerous employees who cared for the cars.
O’Quinn repeatedly spoke of his intention to open a museum to house his car collection, but he never took any steps to create a museum or a charitable entity for that purpose.
The estate
O’Quinn died on October 29, 2009, in what can only be described as a freak accident. He was driving his Chevrolet Suburban on wet Houston streets when he apparently lost control, veered off the road, and hit a tree. Both he and his companion, a longtime law firm employee, died in the crash. Neither was wearing a seat belt.
The disposition of O’Quinn’s estate is controlled by his 2008 will. It leaves the bulk of his estate to the John M. O’Quinn Foundation, a charitable entity he established in 1986 which focuses on helping children, public education and the environment. Oddly, no provision was made for Lexington, although she was named as the beneficiary of a substantial life insurance policy. Perhaps even more oddly, no mention is made of what should be done with his car collection. It is simply lumped in with the remainder of the estate that passes to the Foundation.
Legal battles follow
The legal battles started soon enough. Lexington claimed that she owned 28 of the most significant cars and she intended to honor O’Quinn’s wishes and use those as the nucleus for a world-class car museum.
“If I can show what John wanted and intended, everything will work out fine,” Lexington said.
Dale Jefferson, a friend of O’Quinn’s—and once Lexington’s attorney—was now the attorney for the executor of the O’Quinn estate. Jefferson took exception to Lexington’s statement.
“John O’Quinn was unmarried at the time of his death,” Jefferson said. “It is our position that all of his property, including the cars in question, belongs to his charitable foundation.”
Jimmy Williamson, Lexington’s attorney, responded, “John and Darla lived together as husband and wife for many years, and his estate has a fiduciary responsibility to her beyond his death—and to carry out his wishes which he stated publically on many occasions.”
The legal battle intensified when the estate executor contracted to sell five of the estate’s most significant cars: a 1938 Talbot-Lago T150-C Speciale Teardrop; a 1936 Mercedes-Benz 540K Special cabriolet; and three rare Corvettes, including a pilot production vehicle, at RM’s Monterey auction in August 2010. Lexington filed suit and asked for a temporary injunction to prevent the sales, arguing that the five cars were among the 28 that she owned.
In tearful testimony, Lexington lamented that the people administering the estate, “act as if I never knew John O’Quinn.” She produced several witnesses who claimed that O’Quinn had, in fact, gifted the cars to her. Her legal team even showed a Discovery Channel TV segment, where O’Quinn stated that he had purchased the Talbot-Lago for her.
The estate argued that O’Quinn’s statement that he purchased a multi-million-dollar car “for Darla” didn’t mean that it belonged to her. To have given the car to her, he would have had to either title it in her name or made some affirmative transfer of ownership to her—neither of which occurred.
O’Quinn was a very experienced attorney, and he would have known that such a large gift to her would have required the payment of a substantial amount of gift tax. No such gift tax returns had been filed. Further, the estate said that the sale of these cars was critical to prevent a default on O’Quinn’s $100 million credit line.
Lexington’s legal hurdles were quite high. An executor has broad powers to sell estate assets as deemed necessary to administer the estate. Establishing that O’Quinn wanted her to have the cars—or that she deserved them—would not be enough. She had to prove that she actually owned the cars before O’Quinn died, which would be very hard to do without written documentation. And she had to establish that preventing the sale was necessary, as she could still claim entitlement to the sales proceeds from the sale of “her” cars.
The decision
The case was heard by the judge on August 6, 2010. On August 9, just three days before the start of RM’s Monterey auction, the judge ruled that the sales could go forward, stating that Lexington failed to establish “a probable right to recover ownership of the five automobiles at issue.”
These five cars have been sold, but that does not end the litigation. Lexington still has a common-law marriage action pending, and she still seeks recovery of the funds generated at Monterey—and ownership of the 23 other cars.
Many who knew O’Quinn are amazed that his will leaves nothing to Lexington, as they are sure that he would have wanted her to be very well provided for. They are equally amazed that nothing specific was provided for the car collection. Many believe that he planned to make such changes to his will, but he just never got around to doing so.
Lessons to be learned
This case points out some very important lessons for car collectors. First off, no one ever expects to die the next day, but it happens.
Under our system of law, one’s wishes about the disposition of their property are considered only if included in a will or a living trust. No matter how convincing any other evidence might be about what someone “wanted” to happen, that evidence will be ignored. If you want a loved one to inherit any part of your estate, you’d better get it written into your will or trust.
More specific to car collectors, your automobiles require specific attention in your estate-planning documents. There is not much doubt that O’Quinn was serious about creating a museum for his collection, but he never did it, and he didn’t create any mechanism for its creation after his death.
Note that his existing foundation probably can’t do that now, as its stated purposes are very different, and a car museum would probably not be an attractive investment. The foundation probably has no alternative than to sell the cars and put the proceeds to a more productive use—from its perspective.
To gain assurance that your car collection is going to remain intact after your death, you not only need to establish a legal structure for it, but you also need to provide a reliable funding mechanism for it to happen.