Heir Challenges Hammer Art Ownership : Art: Industrialist’s late wife’s niece tells Delaware court that the estate may have a ‘substantial interest’ in $250-million collection.

In a move that may complicate the future of the controversial Armand Hammer Museum of Art and Cultural Center, the heir to the estate of Hammer’s late wife is challenging the ownership of the industrialist’s $250-million art collection.

In a new Delaware court filing, Frances Hammer’s niece Joan Weiss of Los Angeles claims that the estate may be “the owner of a substantial interest in the works of art” being donated to the museum now under construction in Westwood. Weiss’ husband, Robert, is executor of the estate.

The couple’s filing is in the form of a March 28 letter from a Delaware law firm to the judge who is scheduled to hold a hearing next week in a shareholder lawsuit against Occidental Petroleum Corp., which is funding the museum in honor of Hammer, its chairman.

Occidental and Hammer denied the claims made by Mrs. Hammer’s heir in the letter. In a Thursday court filing, the oil company said that Mrs. Hammer waived her rights to the art collection.

“She had no ownership interest in the art,” said Occidental vice president of communications Frank Ashley. “She waived any right to the art.”

According to the Weiss’ letter, the Los Angeles law firm of Milbank, Tweed, Hadley & McCloy has been empowered “to initiate appropriate legal proceedings to recover any property belonging to the estate that is now in the possession of third parties.”

The ownership status of Hammer’s art has already been the subject of substantial confusion in the wake of disclosures that Occidental Petroleum actually paid $5.8 million for one of its major elements--a collection of Leonardo da Vinci drawings--and contributed $12 million more to the Armand Hammer Foundation during the period in which the art collection was being built.

Entry of the Weiss claim, which the couple had been pondering for several weeks, compounds the problems that Delaware Vice Chancellor Maurice Hartnett may face in deciding whether to accept a contested-settlement proposal in shareholder litigation. The suit challenges the $96 million Occidental is spending to build and endow the Westwood museum as a waste of company money that was committed to satisfy Hammer’s personal vanity.

Occidental and Hammer answered the Weiss claim by asserting that Frances Hammer signed away her rights to include a share in Armand Hammer’s art collection in community property that makes up her estate. Items listed in her will include an extensive array of costly jewelry and a large Westside house, where Hammer resides.

Occidental’s Thursday filing included an affidavit from Hammer claiming that he and his late wife entered into a agreement in 1983 that “all works of art, of any description, standing in my name, or purchased by me, is my separate property.”

Hammer also referred to other agreements with his wife signed in 1989.

The Hammers were married in 1956, after she was widowed and his marriage ended in divorce. Frances Hammer died in December at age 87 after a brief bout with pneumonia.

But lawyers familiar with the situation noted that a challenge to Frances Hammer’s waiver may be possible because the the document was executed within a month before she died--at a time she was very ill--and because she may not have had her own, independent attorney. Lawyers who handled it said attorneys familiar with the case apparently were retained either by Occidental or Armand Hammer.

“The estate believes it is the owner of a substantial interest in the works of art which are subject to the agreements by Armand Hammer and the (Armand Hammer) Foundation which purport to donate these works of art to the museum,” the Weiss letter said.

It said that the community property waiver is “unenforceable” and that the ownership question--since it involves probate of a California will--”ultimately will be resolved by the appropriate courts in California.”