Anna Nicole Smith in the Supreme Court:
Five or ten years ago, what odds would anyone have given me that I would ever write the phrase "Anna Nicole Smith in the Supreme Court"?
Nonetheless, as many are surely aware, the Anna Nicole Smith bankruptcy case is indeed in the Supreme Court.
The excellent Bankruptcy Litigation Blog has promised wall-to-wall coverage of the case. Steve Jakubowski (what is it with we Poles and bankruptcy law?) has a post up on the Amicus brief filed by the United States, supporting Ms. Smith (known in the case as Marshall, after her late husband). I'm sure we all remember the particular facts surrounding Ms. Smith's marriage to the late Mr. Marshall that eventually gave rise to this case.
Nothwithstanding the personal flamboyance of the Petitioner in the case, the issue is actually a very technical one of the scope of the "probate exception" to federal jurisdiction as it applies in bankruptcy proceedings. It is nonetheless quite an interesting case and Steve's bankruptcy litigation blog will be the place to go to follow it.
More on Anna Nicole in SCOTUS:
Steve Jacubowski has the latest briefs in the Anna Nicole Smith SCOTUS case: Anna's brief and an amicus brief by several law professors (in support of her).
Steve does suggest that there is a previously unrecognized public interest at stake here--if Anna wins, then perhaps she won't have to work for a living any more and we will be spared future episodes of "The Anna Nicole Smith" show on E. Or is that too much to hope for?
Anna Nicole Smith Has Her Day in (the US Supreme) Court.--
I had been meaning to post a few days ago on today's Supreme Court argument in the Anna Nicole Smith case (since it overlaps with one of the areas I write in: Estates & Trusts). After the 9th Circuit reversed an 88.5 million dollar bankruptcy judgment in favor of Anna Nicole Smith, Anna--using her usual restraint--told a reporter: "The judges were so paid off."
Despite Anna's ridiculous claim about the 9th Circuit, Anna's lawyers sought certiorari in the US Supreme Court. Not only did the Court grant cert., but the Solicitor General filed a brief supporting her side of the case. So going into the oral arguments today, Anna Nicole Smith (aka Vickie Lynn Marshall) had 3 things going for her:
1. The Supreme Court reverses more cases than it affirms.
2. The 9th Circuit is known, rightly or wrongly, as the most reversed circuit.
3. One of the best predictors of winning in the Supreme Court is for a private citizen to have the Solicitor General join your side.
Then Anna had a fourth thing going for her: the 9th Circuit statement of the law is clearly wrong. Before I explain why, I reprint most of SCOTUSBlog's good account of the argument held today:
For all the media fascination with the second case argued Tuesday, Marshall v. Marshall (04-1544), the actual argument was a treat mainly for experts in civil procedure and the laws of bankruptcy and inheritance. The case involves what Judge Richard Posner once described as "one of the most mysterious and esoteric branches of the law of federal jurisdiction."
The single aspect of that issue that the Court was reviewing is whether the so-called "probate exception" to federal court jurisdiction bars federal bankruptcy courts from deciding a case that might implicate an estate that is simultaneously being administered in a state probate court. The tone was set for the argument when Vickie Lynn Marshall's attorney, Kent L. Richland of Los Angeles, began his presentation this way: "This is a bankruptcy case."
Vickie Lynn (who made fame under her performing name Anne Nicole Smith) was married for 14 months to billionaire Texan J. Howard Marshall. She has been seeking in federal bankruptcy court to recover more than $88.5 million in damages awarded her, against Marshall's son, Pierce. That sum is to compensate her for the son's attempt to undermine — allegedly by fraud — her claims that her husband intended to give her, while he was alive, a substantial gift.
Richland ultimately seemed to have most if not all of the Court with him, after overcoming a somewhat shaky start when he argued excessively that bankruptcy law allows no exceptions whatsoever for estate probate matters when those involves a disputed asset — here, Vickie Lynn's recovery in her tort lawsuit against Pierce. (Texas probate courts would later award Vickie Lynn nothing from the estate itself.)
Justice Antonin Scalia bluntly suggested that Richland back off of such a sweeping claim, and other Justices joined in. Essentially, Richland did. "It is not necessary to our case," he conceded. "Obviously, this case is miles away from probate...This case has nothing to do with probate jurisdiction." The attorney was not rigorously challenged after that, as the Justices explored the interrelationship between bankruptcy law and Texas probate law, seemingly inclined to favor the former.
Richland picked up some support from Deanne E. Maynard, an assistant to the U.S. solicitor general, who urged the Court to clear up the confusion among lower courts on the "probate exception" but to do so by giving it a very narrow scope, so that it applied only when specifically interpreting a will would be at stake. Justice Scalia, however, suggested that Maynard may have suggested taking away too much of a bankruptcy court's jurisdiction if will interpretation were completely beyond its reach.
A Yale law professor, G. Eric Brunstad, Jr., of New Haven, Conn., representing Pierce Marshall, made a thoroughly competent argument that Texas probate law should prevail — but it was an argument that attracted no significant support from the bench. His plea essentially boiled down to a claim that Vickie Lynn could bring her claim based on the tort verdict only by undermining the entire "estate plan" that had been probated in Texas court. "It is never appropriate," he argued, "for a federal court to invalidae a will or an estate plan," and that is what Vickie Lynn would have to do to prevail, he said. . . .
The problem with the 9th Circuit opinion is that it assigns to state probate courts jurisdiction over matters that determine the property subject to probate (often to the exclusion of federal courts), including specifically theories based on "tax liability, debt, gift, bequest, tort." This can't be right. State probate courts do not determine federal estate tax liability under the Internal Revenue Code, nor are they the main court source determining pensions and insurance governed by ERISA. So the 9th Circuit's statement of law can't stand.
Yet, even if the law announced by the 9th Circuit is overturned, as it almost certainly must be, there may be other ways that Anna could still lose her case eventually. For example, the District Court's opinion explicitly found that Texas law would recognize tortious interference with a lifetime gift, even though Texas had no authority on this one way or the other.
For those who are interested, the district court opinion (Marshall v. Marshall, 275 B.R. 5 (C.D. Cal. 2002), reversed by the 9th Circuit) has a fascinating account of Anna's courtship and marriage, as well as the court's staggering conclusions that Anna's stepson Pierce and/or his lawyer had committed repeated fraud by altering and backdating documents involved in the litigation. One surprising courtship fact: Anna met J. Howard Marshall because she was working the day shift at the strip club since she was too heavy to be assigned the better evening shift.
By the way, according to the Forbes list of the richest Americans, Pierce Marshall is worth 1.7 billion dollars, just behind Mark Cuban.
Wonkette, not surprisingly, is having a field day, with multiple posts, including this one.
UPDATE: The Bankruptcy Litigation Blog has a nice roundup of commentary on the Marshall (Smith) case.
Anna Nicole Smith Wins This Round of Her Case.--
On Monday, Anna Nicole Smith (AKA Vickie Lynn Marshall) won her US Supreme Court appeal of a 9th Circuit decision against her. (For background on the case, see my February post.)
The U.S. Supreme Court ruled unanimously in her favor. As I had blogged at the time the case was argued, the 9th Circuit's view of the probate exception to federal jurisdiction was so broad that it could not stand.
The majority opinion by Justice Ginsburg does not delineate the scope of any probate exception, but establishes that this case is clearly outside it.
Thus, the probate exception reserves to state probate courts the probate or annulment of a will and the administration of a decedent’s estate; it also precludes federal courts from endeavoring to dispose of property that is in the custody of a state probate court. But it does not bar federal courts from adjudicating matters outside those confines and otherwise within federal jurisdiction.
As the Court of Appeals correctly observed, Vickie’s claim does not “involve the administration of an estate, the probate of a will, or any other purely probate matter.” 392 F. 3d, at 1133. . . .
Furthermore, no “sound policy considerations” militate in favor of extending the probate exception to cover the case at hand. Cf. Ankenbrandt, 504 U. S.,at 703. Trial courts, both federal and state, often address conduct of the kind Vickie alleges. State probate courts possess no “special proficiency … in handling [such] issues.” Cf. id., at 704. . . .
At issue here, however, is not the Texas Probate Court’s jurisdiction, but the federal courts’ jurisdiction to entertain Vickie’s tortious interference claim. Under our federal system, Texas cannot render its probate courts exclusively competent to entertain a claim of that genre. We therefore hold that the District Court properly asserted jurisdiction over Vickie’s counterclaim against Pierce.
After determining that Vickie’s claim was not a “core proceeding,” the District Court reviewed the case de novo and entered its final judgment on March 7, 2002. 275 B. R., at 5–8. The Texas Probate Court’s judgment became final on February 11, 2002, nearly one month earlier. App. to Pet. for Cert. 41. The Court of Appeals considered only the issue of federal subject-matter jurisdiction. It did not address the question whether Vickie’s claim was “core”; nor did it address Pierce’s arguments concerning claim and issue preclusion. 392 F. 3d, at 1137. These issues remain open for consideration on remand.
* * *
For the reasons stated, the judgment of the Court of Appeals for the Ninth Circuit is reversed, and the case is remanded for further proceedings consistent with this opinion.
So Anna Nicole Smith's 88 million dollar US District Court judgment is back to the 9th Circuit Court of Appeals for hearing on appeal, where there are a range of issues yet to be determined.
In his Supreme Court opinion concurring in part and in the result, Justice Stevens argues that the probate exception should be abolished altogether. His opinion ends:
Rather than preserving whatever vitality that the “exception” has retained as a result of the Markham dicta, I would provide the creature with a decent burial in a grave adjacent to the resting place of the Rooker-Feldman doctrine. See Lance v. Dennis, 546 U. S. ___, ___ (2006) (Stevens, J., dissenting) (slip op., at 2–3).
UPDATE: I'm seeing and reading some odd commentary on this case. A Florida estate and probate blog
The Trust Dispute Lawyers are continuing to continue their fight with the Probate Litigation[.]
Attorneys will return to Probate Court.
I just saw Dr. Phil opining on Jay Leno that now Anna Nicole will be able to press her case and that it will go to a jury.
I confess that, though estates and trusts is one of my fields, federal jurisdiction is not. But as I read the case, Anna Nicole already has a large judgment in her favor, and Pierce Marshall has an appeal to the 9th Circuit, an appeal that raises many issues that the 9th Circuit needs to decide. While the 9th Circuit could send the case back to the District Court for rehearing, it could also affirm (or overturn) the decision in Anna's favor, without any new trial.
Thus, contrary to the Florida probate blogger, I don't think that there is any "probate court" to "return" to. And, contrary to Dr. Phil's opinion, a jury trial may not be in Anna's future, since she has already had two trials on the merits, and the triers of fact in her case so far have been first a bankruptcy judge, and then (de novo) a federal district court judge.
Will Anna Nicole's Estate Win Her Case?--
At Gerry Beyer’s excellent Trusts & Estates blog, he paraphrases the views of (former Visiting Professor) Horace Cooper as put forward in a press release on the Anna Nicole Smith case:
Horace Cooper, writer and legal commentator, will be discussing the legal myths in the Anna Nicole Smith case on Tuesday, June 12 at 1:00 p.m. EDT. He will explain why Dannielynn may not be the million-dollar baby that so many have made her out to be. Cooper feels the real tragedy is that Dannielynn is more likely to be saddled with substantial legal debt if Larry Birkhead and Howard K. Stern decide to proceed with Smith’s claims. Cooper will be featured in Smith’s much hyped E! True Hollywood Story on Monday, June 11 at 8:00 p.m. EDT.
Few remember that the trial of record was not Anna Nicole Smith’s much hyped Supreme Court appearance, but rather a five-month jury trial in the Texas Probate Court in 2001 finding that J. Howard Marshall’s son Pierce was the legal heir. Furthermore, the jury found that there was no evidence to indicate that the will was interfered with and the case affirmed that Marshall had no intention of making Smith his heir.
Tuesday, June 19 will mark the first hearing in Anna Nicole Smith’s probate trial, and after the courts declare official custody this Friday, June 8, both Stern and Birkhead will begin their legal posturing to move full speed ahead with their pursuit of J. Howard Marshall’s estate. Behind the high profile, celebrity nature of the case is an example of audacious and alarming forum shopping and serious questions about state and federal jurisdiction.
I have read such discouraging remarks about Anna Nicole's suit, but IMO they seem to be at least partly beside the point. I have trouble understanding why Cooper thinks that the Texas case is "the trial of record" on the issue of her suit: tortious interference with a lifetime gift to Anna Nicole. If Cooper were right, it seems likely that Anna Nicole Smith would have lost her case in the US Supreme Court. As I seem to recall from a quick reading of the opinion some months ago, the U.S. Supreme Court held that the Texas probate case did not bar Anna Nicole's case in federal bankruptcy court under the probate exception (because her federal counterclaim did not interfere with the probate of J. Howard's estate in Texas).
Perhaps I'm missing something, but Smith's federal judgment for $88 million was NOT in a Texas probate court and did NOT purport to find her an "heir" of the estate. Her claim was based on Pierce's allegedly tortious (and fraudulent) prevention of J. Howard's attempts to give Anna Nicole a LIFETIME GIFT by setting up a trust for her.
I have no idea whether Anna Nicole's estate will win in the end, but I don't see how her case is as obviously weak as Cooper claims or that what he mentions as legal impediments are impediments at all. As her federal claims were not as an heir to Howard's estate (but rather as the victim of tortious interference with her being a beneficiary of a lifetime gift), her claims appear to be not prevented by the Texas probate case.
Of course, Anna Nicole's estate might still lose. A federal court might not find the evidence persuasive (though the lower courts did). Or the US Court of Appeals might hold that there is no action for tortious interference with an inter vivos trust under Texas law (though the lower court held there was, but with very little support for its holding). My knowledge of federal procedure and bankruptcy is limited enough that there might be other significant hurdles for Anna's estate. But without a detailed knowledge of the case, I would think that her estate's chance of winning would be somewhere between 25% and 75%--i.e., it could go either way.
Here is another view that seems to assume that the Texas case does not bar the federal action and that Anna's estate has a plausible claim.
But not being an expert on federal procedure, I might be missing something.
If there are any experts out there who know why some commentators have been so pessimistic about Anna Nicole's case, perhaps they could enlighten us in the comments below.