Supreme Court rules against Anna Nicole Smith's estate

Decision marks the latest chapter in the long and convoluted legal fight over J. Howard Marshall's will

Published June 23, 2011 6:10PM (EDT)

The Supreme Court on Thursday ruled against the estate of Anna Nicole Smith in the latest chapter of the long-running saga over whether a Texas billionaire's alleged promise to give millions from his $1.6 billion estate to his young Playmate wife trumped a will that left his fortune to his son.

The high court ruled that a bankruptcy judge's decision giving millions to Smith from the estate of oil tycoon J. Howard Marshall was decided incorrectly because those judges do not have the constitutional right to reach outside of bankruptcy cases into a probate case.

Chief Justice John Roberts said in a 5-4 decision that the Constitution gives lifetime tenure to federal judges during good behavior and without diminution of salary.

Bankruptcy judges "enjoy neither tenure during good behavior nor salary protection," Roberts said. "We conclude that, although the bankruptcy court had the statutory authority to enter judgment on Vickie's counterclaim, it lacked the constitutional authority to do so." Smith's real name was Vickie Lynn Marshall.

Federal bankruptcy judges are appointed and can be removed by judges on the U.S. Appeals Court and their salaries are linked to that of federal judges. Bankruptcy judges serve 14-year terms.

The family of E. Pierce Marshall, son of J. Howard Marshall, cheered the decision.

"J. Howard's wishes were always perfectly clear: He gave Anna Nicole Smith approximately $8 million in gifts during his lifetime, and those gifts were all that he intended to give her," said Eric Brunstad, the Marshalls' lawyer.

The convoluted dispute over the elder Marshall's money has its roots in a Houston strip club where he met Smith. The two were wed in 1994 when he was 89 and she 26. Marshall died the next year and his will left his estate to his son and nothing to Smith.

Smith challenged the will, claiming that her husband promised to leave her more than $300 million above the cash and gifts showered on her during their 14-month marriage. A Houston jury said Marshall was mentally fit and under no undue pressure when he wrote a will leaving nearly all of his $1.6 billion estate to his son and nothing to Smith, a decision that has been upheld by the federal appeals court.

Smith moved to California after Marshall's death and then filed bankruptcy in Los Angeles, alleging in federal court filings that her husband promised her a large share of the estate. A bankruptcy judge awarded her $475 million from Marshall's estate, with a federal judge reducing that amount to $89 million in 2002.

Smith had wanted the courts to accept that ruling. But the 9th U.S. Circuit Court of Appeals in in San Francisco appeals court threw the bankruptcy court ruling out, saying a bankruptcy judge could not rule on the probate case.

Roberts agreed with that decision, and was joined in his judgment by Justices Antonin Scalia, Anthony Kennedy, Clarence Thomas and Samuel Alito.

Justice Stephen Breyer wrote the dissent for himself and Justices Ruth Bader Ginsburg, Sonia Sotomayor and Elena Kagan.

A federal bankruptcy court "plays a critical role in Congress' constitutionally based effort to create an efficient, effective federal bankruptcy system," Breyer said. "At the least, that is what Congress concluded. We owe deference to that determination, which shows the absence of any legislative or executive motive, intent, purpose or desire to encroach upon areas that Article III reserves to judges."

This decision could throw a large number of cases being handled by bankruptcy courts into the federal courts, Breyer said, noting that there were almost 1.6 million filings in bankruptcy court compared to a federal district court docket of around 280,000 civil cases and 78,000 criminal cases.

"Under these circumstances, a constitutionally required game of jurisdictional ping-pong between courts would lead to inefficiency, increased cost, delay and needless additional suffering among those faced with bankruptcy," Breyer said.

Roberts acknowledged the long-running nature of the case, quoting from Charles Dickens' novel "Bleak House" in the opinion: This "suit has, in course of time, become so complicated, that ... no two ... lawyers can talk about it for five minutes, without coming to a total disagreement as to all the premises. Innumerable children have been born into the cause; innumerable young people have married into it;" and sadly, the original parties "have died out of it."

The younger Marshall died in 2006 and Smith died of a drug overdose in 2007. Smith's daughter, Dannielynn Birkhead, was named Smith's heir in 2008. The girl's father, Larry Birkhead, and attorney Howard K. Stern are in charge of the estate.

The case number is Stern v. Marshall, 10-179.

By Jesse J. Holland

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