In an interesting decision, the 9th Circuit U.S. Court of Appeals decided Marshall v. Stern. The case is a good review of the complex interplay between federal and state law in matters concerning probate and bankruptcy. Of course, the case is also interesting because of the notoriety of the individuals involved.
Anna Nicole Smith married Texas oil tycoon J. Howard Marshall II. When Marshall died, litigation ensued between Marshall’s son, Pierce Marshall, and Smith. There were simultaneous actions in probate court in Texas and bankruptcy court in California. The Texas court determined that Marshall intended to leave his assets to his son and not Smith. The bankruptcy court ruled that Smith was entitled to $474 million from Pierce Marshall for tortuous interference related to the estate. The federal district court reduced that to $88 million. The Ninth Circuit reversed, finding that a bankruptcy court did not have subject matter jurisdiction to resolve probate issues. The U.S. Supreme Court granted cert and reversed and remanded for a resolution of the issue.
Now the Ninth Circuit decides that the Texas probate court was binding on the federal courts because it was the first final decision on the matters at issue. So, Smith’s claims to Marshall’s fortune may be put to rest after years of litigation. Unless, of course, there is an appeal of the Ninth Circuit’s decision.
What do you think? Did the Ninth Circuit make the right decision? Did the U.S. Supreme Court?
Steve Hartnett, J.D., LL.M.
Associate Director of Education
American Academy of Estate Planning Attorneys, Inc.