Evidently Anna Nicole Smith’s inheritance case is going to the Supreme Court. The actual legal issue involved is something about which court has jurisdiction, right?
If it’s going to SCotUS then it has to be an issue of constitutionality. I can’t figure what that would be. (Or is it going to the Texas supreme court?)
Hmm. It is SCotUS.
Yep. That’s what I gathered. That the federal judge’s decision that said she shouldn’t get squat-doodley was invalid because it was a probate/will case, and he should not have had that authority.
At least that’s what their (Smith’s team) point seems to be. I’ll defer to others as to whether it has any merit.
I think Anna Nicole is as empty-headed and loathsome a waste of flesh and divine fire as ever staggered her way across a podium; she should be used for parts and that’s about it.
However, her husband knew exactly what he was doing. He had no delusions she married him for love- she was his fifth wife, they met in a topless bar and she was his mistress for two years. She got a sugar daddy, he got a great big pair of boobies to play with, she deserves some of his estate. I don’t understand what the deal is.
Earl Snake-Hips Tucker has it right. There is a line of cases that say that federal courts do not have jurisdiction over probate cases. I’ll find a citation soon. There are some exceptions to the doctrine. I’d have to see the lower court opinion in order to see what the beef is really about, but the issue for SCOTUS is one of federal court jurisdiction.
Here is a start.
This is how a Friend-of-the-Court brief should be worded! Legal terms even I can understand.
I think the actual legal term would be “tittia majorca of the first part”.
Ok. Here goes.
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Smith, whose real name is Vickie Lynn Marshall, was left out of the will. She filed claims in probate court in Texas, but then abandoned them. The Texas court gave her no money from the estate.
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While the Texas probate court was considering her claims, she filed bankruptcy in California (Chapter 11), and filed some lawsuits (they call them adversary proceedings) in that case, claiming that the decedent’s son, interfered with the decedent’s plan to leave her money. She won that case. The court awarded her $474K. She won on a technicality: the court sanctioned the son for not cooperating with discovery, and denied him the right to put on a defense.
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On appeal, the son argued that the Bankruptcy Court lacked subject matter jurisdiction (i.e., it is not allowed to hear this kind of case) over probate related matters. As I mentioned before, this is a well-established doctrine with respect to the diversity jurisdiction of federal courts. The part that was slightly more controversial was whether it applied to federal question jurisdiction. More controversial yet, IMO, is whether the exception applies to Bankruptcy Court jurisdcition. Also slightly complicating the matter was the fact that Smith did not allege matters that are typically heard by probate courts (undue influence, duress, fraud, incompetence), but instead sued in tort.
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The 9th Circuit, after reviewing cases nationwide, decided that the bankruptcy court lacked jurisdiction, vacated the judgment, and remanded the case for further proceedings.
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I was unable to get a look at the order granting cert, so I can’t specifically identify the questions presented in the Supreme Court, but it is pretty easy to see the main issue. Does the probate exception apply to bankruptcy proceedings?
Here is a two-part article that discusses the probate issues.
Eh, it’s just an excuse for Clarence Thomas to try and chat her up.
Since Anna Nicole is slightly more intelligent than a fern, her lawyers have been handling every step of this I’m sure. I wonder why they would do such odd things? (The one who lived with her on the reality show [name: Howard Stern, but distinguished from the talk show host by the fact he’s the sleazier of the two] seems more interested in being on TV and exposing himself to hookers than in filing briefs actually.)
I do hope that if she gets money then at least a chunk will be put in trust for her son so he’ll be able to afford keepers for Mommy after she blows most of it on scratch-off tickets, high end coke and Lear Jet rides to “see where the fairy people live”.
Forum shopping, plain and simple. They knew her claims were surefire losers under Texas state law. So they gave it their best shot in federal court in California; to their credit, they were successful in the lower courts. “If we do not wish to fight, we can prevent the enemy from engaging us even though the lines of our encampment be merely traced out on the ground. All we need do is to throw something odd and unaccountable in his way.” Sun Tzu, The Art of War.
I probably would have at least considered the same (or similar) tactics. Stern probably had some smart lawyers actually doing the work for him.
Not true, actually, but I can’t blame you for getting it wrong, as every elementary school in the country does the same thing. The Supreme Court can hear any case presented to it that treats any issue of federal law, and there’s quite a lot more of that than just the Constitution.
The federal court system also has jurisdiction over most state law claims as long as the parties are from different states and the “amount in controversy” is over $75,000. The Supreme Court can hear appeals from these cases, even if no issue of federal law is on the table. (Although this is pretty rare.)
–Cliffy
The distinction you note between ordinary federal question jurisdiction and bankruptcy jurisdiction is crucial. Pursuant to 28 U.S.C. 1334(b), the latter extends to "all civil proceedings arising under title 11, or arising in or related to a case under title 11. The bolded phrase (“related to”) brings into the bankruptcy case, among other things, causes of action of the debtor against other people, so the proceeds can be used to pay claims. See Collier on Bankruptcy (15th ed. 2004), ¶ 3.01[4][c]. It’s done all the time.
What makes this case interesting is that, as you say, traditionally, probate is a state-level proceeding. Haven’t reviewed the issues here in detail, but in my understanding, what the S.Ct. has to decide isn’t so much whether the federal court has jurisdiction. IMHO, the answer to that is “yes.” See, e.g., Celotex Corp. v. Edwards, 514 U.S. 300, 307 (1995) (related to jurisdiction to stay execution on supersedeas bond issued by third party surety) (quoting with approval language from a Third Circuit case stating that “Congress intended to grant comprehensive jurisdiction to the bankruptcy courts so that they might deal efficiently and expeditiously will all matters connected with the bankruptcy estate.”). Rather, the issue is whether the 11th amendment or some other principle of state’s rights precludes interference in a probate proceeding on a cause of action which is merely related to a bankruptcy case.
Close, but that’s only half the story.
- First the statutory complexity: You have to read on. The very next subsection says:
The states’ rights thing is built right into the statute. If a party raises the issue of state court jurisdiction in a “related to” case, the court has discretionary jurisdiction. It can abstain from hearing the case and leave the parties to their state court remedies. A decision uner section 1334(c)(1) is unreviewable on appeal. *See *, 28 U.S.C. section 1334(d).
While abstention is the decision of a federal court that has jurisdiction, not to exercise it, the difference has little practical bearing, and . . .
- Meanwhile the other jurisdictional statutes do not contain such an exception. *E.g., * 28 U.S.C. section 1332 (diversity jurisdiction). Under these provisions, the Court has told us that a federal court has a “virtually unflagging obligation of the federal courts to exercise the jurisdiction given them.” *Colorado River Cons. Dist. v. U.S. * In other words, the case is stronger for a federal court to resolve a state law claim under the diversity jurisdiction statute, than it is for a district court to do so under bankruptcy jurisdiction.
Essentially, the doctrine is one of abstention. Though the court insists its sister doctrine imposing a domestic relations exception is jurisdictional:
Elk Grove Unified School Dist. v. Newdow (Rehnquist, J., Concurring). And see *Ankenbrandt v. Richards * (exeption from diversity jurisdiction based on narrow construction of diversity jurisdiction statute).
- What makes the case complicated is the bankrupcty trustee has a duty to marshall the assets of the debtor. In some cases the family law and probate exemptions to federal jurisdiction make less sense in a bankruptcy case. In some state courts can be abused to the detriment of the creditors in the bankrupcty case. Therefore, there are cases that say that bankruptcy courts have concurrent jurisdiction over determinations regarding property settlements. It works like this in domestic relations cases: On the one hand the bankruptcy court has jurisdiction over all property of the estate. But the bankruptcy court applies state law in determining ownership of property. http://caselaw.lp.findlaw.com/cgi-bin/getcase.pl?court=6th&navby=case&no=950029p. If a divorce is pending at the time a bankruptcy is filed by one debtor, the debtors property rights are inchoate. A court needs to figure out who gets what before non-exempt assets can be distributed to general creditors. If it makes sense to do so–domestic relations courts are experts in state domestic relations law, and so it usually does–the bankruptcy court can lift the automatic stay and permit the state court to distribute the assets. http://www.paulpost.com/estate.html; Cf., http://www.kscourts.org/ca10/cases/2005/05/04-1277.htm; http://www.meb.uscourts.gov/Judges/cox_00-20427.pdf (collecting cases); (District Court abstained to permit state court to determine property rights).
On the other hand, sometimes the bankruptcy court has to take a more active role in the determination. Let me give an example, suppose my wife has $500,000 in debt chasing her. Her creditors are closing in. Unfortunately we have $250,000 in assets together and doesn’t want to give any of them up in a bankruptcy. If we collude, I can sue her for divorce. Then she can file for bankruptcy. If the court lifts the stay, I can ask the domestic relations court to equitably distribute all of the assets to me. Some state courts might even assist me in this attempt, believing the assets serve my children and family better than my wife’s creditors. Even if the court would not help, all that I really need to do is sue her and have her not file an answer. In my complaint, I accuse her of all sorts of mayhem and fraud, justifying an award of all assets to me. When she doesn’t answer, the court enters a default and gives me all of the assets.
In re White , 851 F.2d 170 (6th Cir. 1988) suggests that, even in those circumstances, the trustee could avoid this problem by intervening in the divorce case and defending the bankruptcy estate’s interest in my wife’s equitable share of our marital estate. However, the case also suggests that in some cases, the bankruptcy court should retain jurisdiction. Another good reason the court might retain jurisdiction is efficiency. If the state court is likely to take too long, and the bankruptcy court has a clear docket. Cf., http://www.sdb.uscourts.gov/Decisions/2003%20Decisions/2003%20-22%20Tri%20State%20Ethanol.htm
The implications of this for probate law are clear. First, the bankruptcy court has concurrent jurisdiction over determinations of the debtor’s rights to property. The same considerations that justify deference to state courts in domestic relations cases apply to probate: States have created specialized courts to deal with the issue; the issues all involve state law; there is a general nervousness about federal courts interpretting stat law when a specialized court exists. But the same risks are here too. For instance, suppose a long lost uncle dies and leaves me a bundle, he also makes me the personal representative (executor) of his estate. I have a huge debtload, and want to get a discharge without paying any of the estate money to my creditors. I can either disclaim my inheritance, allowing it to pass to some other beneficiary with whom I make arrangements or I can have an associate file a bogus claim against the estate.
As personal representative, it is my responsibility to determine the validity of claims. In that capacity, I can simply not object to the claims, which means they will be allowed (I might have to add other beneficiaries to the conspiracy in order to buy their silence). If the claim is allowed, then my associate gets his claim paid, and my claim will be reduced. I can split the money with my associate after my creditors claims are discharged in bankruptcy. Therefore, in some cases, it makes sense for the bankruptcy court (or actually a federal district court) to adjudicate the claim.
In other words, the case law says that a bankruptcy court can hear these cases, but there is a preference for state courts to hear them. It is because bankruptcy courts have been held to have some jurisdiction over these cases that they don’t seem to fit with the blanket exception described by the 9th Circuit in this case. But the 9th probably got the right result for the wrong reason. In this case, there was no risk of collusion, and the debtor’s state law claims could have been resolved, probably on motions practice, in probate court. See http://news.findlaw.com/hdocs/docs/annanicole/ansmith52401.pdf (District Court opinion noting that the case could have been brought in state court and holding that claim was a non-core proceeding); and see, 9th Circuit Opinion at 17568-17570 (reviewing the invalidity of Smith’s claims under Texas law).
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http://www.paulpost.com/estate.html; link should read http://www.paulpost.com/estate.html
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The case actually presents an interesting issue that seems to have been completely missed. Jurisdiction and choice of law. The bankruptcy court held that it had personal jurisdiction over the son because he had filed a proof of claim in the bankrupcty case. If instead, Smith had sued him in federal court or in California state court, would the court have had jurisdiction? That is less clear, and we don’t have enough facts to decide the issue. Nevertheless, it remains. Assuming a court in California had jurisdiction over the claims,
The 9th Circuit cites Texas law on all of the state law issues that it discusses, and the lower court decided that the Texas Supreme Court would recognize a cause of action for intentional interference with the expectancy of a gift, but is this the right law to apply to the dispute? A federal court applies the choice of law principles of the forum state. http://caselaw.lp.findlaw.com/cgi-bin/getcase.pl?court=9th&navby=case&no=9715127 (the rule applies no matter the source of federal jurisdiction; see footnote 2). California would apply the law of the place where the tort occured. http://caselaw.lp.findlaw.com/cgi-bin/getcase.pl?court=9th&navby=case&no=9616435 (sexual assault occurring in France governed by French law). The place where the tort occured, is normally the place where the injury was suffered. http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=ks&vol=ctapp/2002/20021108/&invol=88409 (Mexican law applied to injury occurring in Mexico, despite the fact that all litigants were residents of Kansas). Again, we don’t have enough facts, and the law is murky, but a good argument could be made that California law should apply to the dispute. Unfortunately, I’m not sure that California law is any better for Smith than Texas law on the issue. As of April 2003, this summary (pdf) suggests that neither state’s courts had recognized or rejected the claim.
- There is also the issue of the preclusive effect to be given the desisions of the probate court, and the concomitant full faith and credit issues. “A State must give a judgment from another State the same preclusive effect it would have in the State where the judgment was entered.” http://caselaw.lp.findlaw.com/scripts/getcase.pl?navby=search&court=US&case=/us/290/202.html . So arguably, any court would have to give the Texas case whatever preclusive effect a Texas court would give it. The Texas court decided that the probate court judgment precluded Smith from litigating her claims in any other court. http://www.ca9.uscourts.gov/coa/newopinions.nsf/40E591FE947FF24488256F79006F684C/$file/0256002.pdf?openelement (pdf) at 17593. Therefore, the federal court should probably have applied Texas law, found Smith’s claims precluded, and dismissed the case. The 9th Circuit did not address this issue because it found that the lower courts lacked jurisdiction in the first place. These issues were preserved on appeal:
*Id. * It’s not clear that they were raised in the petition for certiorari. But it doesn’t appear that they were. http://www.bna.com/bblr/score.htm ; http://sig.nfshost.com/aggregator/categories/6.
Have now had a chance to read carefully the Ninth Circuit decision. My take is a little different.
Essentially, the issue is how to reconcile the prerogatives of two courts with expansive jurisdiction, in this case a Texas probate court and a California bankruptcy court. By law and tradition, a probate court has the power to adjudicate all disputes pertaining to a decedent’s estate. By law and tradition, a bankruptcy court has the power to adjudicate all disputes related to a debtor’s estate. What to do if those two broad jurisdictional grants conflict?
Let’s begin with the background. In 1991, J. Howard Marshall II (Sugar Daddy) met Anna Nicole Smith, nee Vickie Lynn Marshall (Trophy Wife). They were married in June 1994. Trophy Wife claims that, before they were married, Sugar Daddy promised to establish a trust in her favor worth several hundred million dollars (ultimately, she obtained a judgment for “only” $88+ million). Further, Trophy Wife claims that, in July 1994, Sugar Daddy’s son, E. Pierce Marshall (Dastardly Son), fraudulently and/or maliciously caused Sugar Daddy to arrange his affairs in a way that froze Trophy Wife out of the estate. Sugar Daddy died in September 1995 (ninety years old) without having executed a trust in favor of Trophy Wife. Whether she’s entitled to any money, how much and from whom are what’s at issue. Who gets to decide those questions is what the Ninth Circuit (and now Supreme Court) case is about.
IMHO, there’s both less and more here than meets the eye. On the one hand, it’s a screwy fact pattern and not a problem any of us is likely to see. In an important sense, is hardly matters who wins or loses. On the other hand, it’s an interesting legal question that doesn’t lend itself to easy resolution. As the saying goes, this scenario would make an excellent exam question.
The Ninth Circuit decided that the bankruptcy court was required to defer to the probate court. In particular, it accepted Dastardly Son’s argument that recognizing Trophy Wife’s claim would interfere with the probate court’s jurisdiction. By contrast, the bankruptcy and district courts accepted Trophy Wife’s argument that her claim was directly against Dastardly Son, hence, outside the probate court’s exclusive jurisdiction and not subject to the probate exclusion. As an aside, note that the Ninth Circuit acknowledged (as I asserted) that the bankruptcy court had related-to jurisdiction, but concluded that the probate exclusion removed the proceeding from federal jurisdiction. See footnote 14.
What will happen in the Supreme Court? Hard to predict. As you say, much depends on what the Court sees as the central issue. There are two grounds on which it could reverse the Ninth Circuit. First, it could hold that the probate exclusion doesn’t apply to bankruptcy jurisdiction. Second, it could hold that the exclusion doesn’t apply to a claim pertaining to an estate dispute but doesn’t affect distribution of the estate itself.
It seems to me significant that, originally at least, the probate exclusion wasn’t an exclusion. It was merely a statement by the Supreme Court (in 1912) that federal courts sitting in equity lack jurisdiction to adjudicate in rem probate disputes. That’s a much narrower doctrine than the one adopted by the Ninth Circuit. Everyone agrees, I think, that related-to jurisdiction would not empower a bankruptcy court (which, technically, is part of the district court) to administer a probate estate, because it would have jurisdiction over only one of the claimants (as opposed to the decedent’s estate and/or the other claimants). What’s at issue, then, is whether it empowers a bankruptcy court to adjudicate an ancillary claim between claimants to the estate, which claim could and traditionally would be resolved in a probate court. To this, I think the answer could be “yes.” Thus, here, the Texas probate court could administer the estate, resulting in Dastardly Son’s getting most of the money. Then, the bankruptcy court (exercising related-to jurisdiction) could give Trophy Wife a monetary award directly against Dastardly Son, which might be collected from the estate distribution or from other assets. In other words, contrary to the Ninth Circuit’s reasoning, I don’t see a conflict between the two exercises of jurisdiction.
Now, as in any situation where two different courts are addressing factually related disputes, there are other issues. The most important of these, as you note, are those of issue and claim preclusion. Here, the question is whether the California district court should have deferred to the factual findings of the Texas probate court, which found after a five month trial that Dastardly Son had done no wrong. As you also note, this was not decided by the Ninth Circuit. There’s an important wrinkle here, though, which you don’t mention. The bankruptcy court had already ruled for Trophy Wife before the probate case went to trial. It was the district court’s review of that ruling which happened after trial. How one applies preclusion in that scenario is an intricate and subtle problem, but it’s not obvious to me that Trophy Wife loses (or wins). In any event, that’s a different set of issues and doesn’t go to jurisdiction. If the Supreme Court reverses, it presumably will be with an instruction to take up the preclusion issues.
Finally, as regards abstention, I’m familiar with the doctrine. Doesn’t apply here for two reasons. First, abstention applies to all related-to proceedings, not just probate proceedings. Doesn’t raise the peculiar issues driving this case. Second, as you note, the decision whether to abstain is not reviewable on appeal, which (I assume) is why the Ninth Circuit doesn’t discuss it. Reading between the lines, one gets the impression that’s what they thought should have happened here (I think so too) and were frustrated at not being able to reverse on that ground. For good or bad, though, that’s how the statute works and the Ninth Circuit doesn’t become right by using the probate exclusion to back-door a reversal of the failure to abstain.