« Herpes: The One Thing Michael Vick Can’t Outrun! | Main | The Daily Memo - 05/1/06 »

Supreme Court Decision Update - Marshall v. Marshall (a.k.a. The Anna Nicole Smith Case)

supreme1.jpgThe last of today’s Supreme Court decisions is Marshall v. Marshall (PDF of the opinion), which is the Anna Nicole Smith case we’ve mentioned before. You’re going to have to bare with us on this one, because we’re going to have to throw a lot at you to really explain what’s going on.

QuizLaw Analysis: if you want to skip the long discussion below, all you really need to know is that when old rich men take on young trophy wives, the shit will inevitably hit the fan.

As you are no doubt aware, Anna Nicole Smith married billionaire J. Howard Marshall II in the summer of 1994. When Marshall died a year later, he did not include anything for her in his will. According to Anna, Marshall intended to provide for her through a “catch-all” trust. However, Marshall’s son E. Pierce Marshall, the ultimate beneficiary of Marshall’s estate, argued otherwise. The whole situation got extremely messy, and the fight has been going on for ten years.

Following Marshall’s death, there were ongoing proceedings before the Texas Probate Court, which were focused on what, precisely, was to be done with the estate. Over in the California federal courts, meanwhile, Smith had filed for bankruptcy. Now here, you need to know that shortly after Marshall’s death, Anna Nicole’s lawyer had made public statements that Pierce had committed fraud and forgery in trying to take control of all of his father’s assets. Pierce claimed that these accusations were untrue and amounted to defamation and so he filed a proof of claim in Anna’s bankruptcy case, asking the court not to discharge his claim (i.e., when the bankruptcy was all done, he still wanted to be able to sue her for defamation, but if the bankruptcy court discharged his claims, he would not be able to do so). For her part, Anna Nicole claimed that there was no defamation because the statements were true. She also filed her own claims back against Pierce, arguing that he had committed tortious interference by interfering with the gift she expected from Marshall. This turned into what is called an adversary proceeding, and the bankruptcy court ultimately ruled in Smith’s favor, finding that Pierce had interfered with the gift she was entitled to. In a well publicized ruling, the bankruptcy court awarded Anna Nicole almost half a billion dollars (mostly for compensatory damages, although some was for punitive damages). Pierce then appealed this decision to a California District Court. Through some procedural wrangling that you don’t need to worry about, the District Court took a fresh look at the case and again ruled in Anna Nicole’s favor, although for substantially less money (but still, the court awarded her about $44 million in compensatory damages and another $44 million in punitive damages, so she was still sitting pretty).

Pierce appealed this decision to the Ninth Circuit, and it is here that we get into the actual issue that is the subject of the Supreme Court decision. There is something which the Supreme Court has recognized, called the “probate exception.” Basically, this exception says that even though a federal court may have proper jurisdiction over a matter, if the underlying subject has to do with the probate of a will or the administration of an estate, the federal court only has jurisdiction if it does not interfere with any of the state probate proceedings or interfere with the state court’s ability to control the underlying property. So during the appeal before the Ninth Circuit, Pierce argued that the decisions of the bankruptcy court and the District Court interfered with the Texas Probate Court proceedings and that the probate exception applies. In other words, Pierce argued that the California federal courts did not have proper jurisdiction, and the District Court decision was therefore invalid. While recognizing that Anna Nicole’s claims did not directly involve any purely probate matter, the Ninth Circuit used a very broad interpretation of this probate exception in ruling that it also applied to fraud claims that were merely related to probate. In addition, as the Texas Probate Court had determined that it held exclusive jurisdiction over any and all of Anna Nicole’s claims relating to the estate, the Ninth Circuit reasoned that the Texas Probate Court had stripped the federal courts of any jurisdiction. Thus, the Ninth Circuit reversed the District Court’s decision, ruling that these issues all had to be handled by the Texas Probate Court.

Take a breath, because we are finally at today’s decision, which was written by Justice Ginsburg on behalf of a unanimous Court (while Justice Stevens wrote a separate opinion concurring in part, he was in total agreement with the Court’s ultimate judgment). The Supremes, except for Justice Stevens, agreed that there is a probate exception which will sometimes remove jurisdiction from a federal court, requiring the issues to be handled by a state court instead. However, the Court believes that the Ninth Circuit made a “sweeping extension” of this exception and that the probate exception should not actually apply to Anna Nicole’s claims because her claims do not involve the probate of a will, the administration of an estate or any other matter which is purely based in probate. Her claims sought a personal judgment against Pierce, not against Marshall’s estate, and she was not seeking any annulment of his will. Similarly, she was not attempting to get her hands on any of the actual property which was in the Texas court’s custody - she was simply making claims against Pierce. These are issues which were properly before the California federal courts because the probation exception simply should not have been applied. Similarly, the Ninth Circuit’s reliance on the Texas Probate Court’s determination that it had exclusive jurisdiction was also misguided. While Texas law governs Anna Nicole’s claims (because they are tort claims based in state law), there was proper federal jurisdiction and no state has the right or ability to impair that jurisdiction simply by creating probate courts and claiming they, instead, have sole jurisdiction.

So ultimately, the Supremes remanded the case back down to the Ninth Circuit so that it could address some additional issues which it did not consider the first time around (specifically, these other issues relate to that “procedural wrangling” we mentioned above and told you not to worry about).

As mentioned, Justice Stevens filed a separate opinion. While he concurred with the Supremes’ ultimate judgment, he only concurred in part with the substance of the decision itself. Specifically, he wrote to explain why he believes there is no “probate exception” at all.

| Comments (1)


Comments

God Bless Danilynn and her family