legal issues in Anna Nicole Smith case

Here is the decision of the District Court:

http://www.cacd.uscourts.gov/CACD/RecentPubOp.nsf/0/3e2b24e60e29602788256b75005ef293/$FILE/SACV01-97DOC.pdf

She also tried to get the judgment increased:

And here is the District Court’s order on Subject Matter jurisdiction:

Great links!! The more I read, the less I like Dastardly Son. And the more I read, the more I wonder whether the bankruptcy/district court overreached.

That’s the problem. Neither law nor tradition are as clear as you say. As the 9th Circuit pointed out, the probate exception has in fact been applied in bankruptcy cases. And those cases have been around for a while. *Harris v. Zion’s Sav. Bank & Trust Co. (1943)

Id. *

So it seems that bankruptcy courts have a longstanding lack of authority to decide probate matters, at least as far as the Supreme Court is concerned.

Right.

Actually, the sister issue that I mentioned before arises frequently in divorce cases where one spouse files for bankruptcy. I’ve litigated it several times.

No. The court held that the District Court lacked the power to hear the case. It didn’t have jurisdiction. That’s not deference, that’s no power to hear the case.

Kind of a weird thing to say. This is what makes the probate exception so “mysterious and esoteric.” http://caselaw.lp.findlaw.com/data2/circs/8th/012898p.pdf. It’s a judge- made exception. As I pointed out before, none of the jurisdictional statutes bear it out in their text. I think we can expect Scalia and Thomas to hate it. But see, *Ankenbrandt * (Scalia and Thomas join the majority adopting a statutory construction reading an exception into the diveristy jurisdiction statute). But essentially the court ruled that it would have jurisdiction were it not for the fact that it doesn’t. All it is saying is that the probate exception is an exception.

In Ankenbrandt, the court reviewed the much revisited sister exception to federal jurisdiction: the domestic relations exception.

The Court found that the exception was not required by Article III. Tracing the history of the doctrine, the Court found that Congress intended to include the exception in the term “all civil actions” because the exception existed when the statute was amended.

By the same logic, section 1134 was enacted five years after Harris, and has been amended several times since then. 28 U.S. Code § 1334 - Bankruptcy cases and proceedings | U.S. Code | US Law | LII / Legal Information Institute . The Court could well conclude that Congress must have intended to include the exception in the term “all civil proceedings,” which is what section 1334 gives the district courts the power to hear. That’s not much of a stretch at all. “All civil actions” looks very similar t “all civil proceedings.”

Yes. That’s definitely a possibility.

Possible, but it would be very unlikely in this case. The probate court held that the case was required to be brought in probate court.

This is an unassailable legal claim. In other words, the Court would have to contradict the state court’s jurisdictional determination and find that a federal court gets to decide whether a case is really a probate matter even when the state has already decided it is. Cases cited in the opinion really say that the court can’t do that.

I agree. It is one of the many legal doctrines that has become ingrained in the law despite a very situational origin.

I agree, the interfering bit in *Harris *is dicta, and it has taken on a life of its own. And see, Ankenbrandt, (permitting a domestic relations-related tort action because,“the domestic relations exception encompasses only cases involving the isuance of a divorce, alimony, or child custody decree.”) The cases are similar because they both arise out of a party seeking a friendlier forum in a federal court while state court proceedings are ongoing. *Ankenbrandt *demonstrates that the court, at least back in 1992, was restricting implied exceptions to federal jurisdiction.

You might be right.

Problem is, the first court to reach judgment gets to decide what its judgment includes. It gets to decide what it decided, what it should have decided, and whom is bound by the judgment. I cited case for most of this stuff before. They call it the first-in-time rule, and it gets pretty complicated. If you want some citations, I’ll be happy to provide them.

The conflict is that it the second court can’t rewrite the first judgment. If the first judgment, in its home state, precludes the litigation of the tort claim (as is undisputed in this case) the second court must follow that law. That’s what happened here.

But it gets even more complicated. The rule about the preclusive effect given foreign judgments only applies to the judgment. It doesn’t wrest a court of jurisdiction. Therefore, if the district court had reached the issue first, its decision would win the day.

And the second court usually gets to decide how the first court would interpret its judgment. Cf. Sun Oil v. Wortman (1988) (to be unconstitutional misconstruction of state law must contradict law of the other State that is clearly established and that has been brought to the court’s attention). So there is some play in the joints there.

A good point. I hadn’t noticed. But this was a non-core proceeding, according to all of the courts, in a non-core proceeding,

What is the effect of a bankruptcy courts decision in a non-core matter?

(Emphasis added).

and this from the 9th Circuit:

In other words, the bankruptcy court only had authority to propose findings of fact and conclusions of law; it’s judgment wasn’t final. This may be a technicality, but it is one that is well-established. A judgment must be final to have preclusive effect. E.g., http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=wa&vol=188230maj&searchval&invol=1 (res judicata requires a final judgment on the merits). Therefore, the state court wins.

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.
Right. My point was that the specific abstention provisions show that Congress did not intend the district court to entertain every case over which the statute might grant it jurisdiction.

Actually it does, at least at one level. One of the mysterious issues here is federalism. Should a federal court decide state law issues? Section 1334 (c) answers that question, “no.” It provides for two kinds of abstention:

Discretionary: Section (c)(1) says that a court can abstain in the interest of comity with state courts or respect for state law even* if the claim arises under the bankruptcy code.* This means the court gets to decide, and as we have discussed, this decision is unreviewable. That means you ask the court, and it’s decision is final. All of the policies that support a probate exception support abstention under (c)(1).

Mandatory: A court that decides that it will not abstain under section (c)(1) must make sure that it is not required to abstain under section (c)(2). Decisions under section (c)(2) are in fact reviewable. Section (c)(2) requires a district court to abstain

sounds good so far . . .

. . .

again, that’s us. . .

Oooh, that give me a headache. . . wait . . . Ok. So the Court does not have to abstain if there is an independent ground for the court’s jurisdiction, right?

Well, they are apparently citizens of different states and the amount in controversy is sufficient so, I’ll go with diversity jurisdiction.

But wait another second . . . this whole case is about whether an exception that everyone agrees applies in diversity cases, also applies in bankruptcy cases. So if the exception applies, then there is no independent ground for jurisdiction. In this case, that means that the district court would lack diversity jurisdiction. Because the district court would lack diversity jurisdiction, the district court is required to abstain. :eek: What a long strange trip . . .

Of course you are right that this case is not about abstention right now . . . but if the Court was required to abstain, the Court got the right result for the wrong reason.

(c)(2) abstention is specifically carved out of the unreviewablity provision of section 1334(d).

I’m sure you are right.

Actually, it is a common precept of appellate law that a court will affirm a lower court that gets the right result for the wrong reason. http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=va&vol=1615012&invol=1; http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=mt&vol=98&invol=257; http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=ar&vol=1998a/980709/98-670&invol=2; http://www.michbar.org/opinions/appeals/2005/090205/28604.pdf; http://caselaw.lp.findlaw.com/cgi-bin/getcase.pl?court=6th&navby=case&no=99a0314p

Gotta wonder how much this has cost the heirs in legal fees. They could’ve paid Smith off long ago.

Should be $474M. $474,754,134, to be precise.

The Texas probate court awarded Pierce Marshall $541,000 in attorneys’ fees, according to the 9th Circuit opinion. In sure he paid substantially more than that, and the estate’s fees would probably not be included.

OTOH, Smith got close to half a billion dollars from him in the bankruptcy case.

Hey, Gfactor. Many thanks for an interesting discussion.

Let’s start with whether a bankruptcy court has jurisdiction to hear a probate-related dispute. For the view that it doesn’t, you cite Harris. I don’t read the case the same way. Rather, by my reading, all Harris says is that the powers of a decedent’s representative under state law are derived from and limited by state law. In that case, the representative sought bankruptcy protection on behalf of the decedent, notwithstanding having been denied power to seek such relief by the probate court. It was in this context, then, that the Supreme Court ruled that the probate court was the appropriate forum to resolve the issue. That’s a far cry from ruling that bankruptcy courts are inherently disqualified from hearing probate-related disputes.

As for the “sister” problem of divorce property settlements, my observation is similar to yours but slightly different. In particular, I’m aware of no body of case law which disables a bankruptcy court from addressing such issues on jurisdictional grounds. Rather, the cases of which I’m aware, e.g., Robbins v. Robbins, 964 F.2d 342 (4th Cir. 1992) speak of this as a practical resolution of the conflicting-jurisdictions problem. Thus, and I assume your personal litigation experience is consistent, this is a prudential not a jurisdictional issue.

Conversely, the Sianis case, which you cite for the proposition that the probate exception is “mysterious and esoteric,” actually held that the federal district court could and should have heard the petitioner’s challenge to a disputed trust (as distinguished from a disputed will). If Sianis is good law, how wrong can the bankruptcy/district courts in Marshall have been?

Then we have the problem of whether the Texas probate court’s assertion that it had exclusive jurisdiction over the dispute between Trophy Wife and Dastardly Son had to be respected by the bankruptcy court as a matter of “full faith and credit.” To me, the simple answer to this is that the Supremacy Clause trumps the state court claim, unless some principle of federal law compels a different result. Stated a little differently, federal law may choose to respect the exclusive prerogatives of a state probate court, but it isn’t required to do so.

Finally, we have the issue of appealability of a failure to abstain. I stand corrected. As you say, pursuant to 28 U.S.C 1334(d), mandatory abstention (or failure to abstain pursuant to 1334©(2) is appealable. In my defense, I note that (i) your original float of the issue, based presumably on ©(1),spoke of it as nonappealable; (ii) I’ve never seen such an appeal taken, perhaps because of the final judgment rule; and (iii) the Ninth Circuit did not rest its decision on this ground. That said, you’re on solid ground when you assert that if the Ninth Circuit reached the right result, albeit on the wrong grounds, that’s okay. It’ll be interesting to see whether the Supremes duck this one on that basis.

I am certainly no legal expert but is it legal to cut your wife out of a will without a ‘spite clause?’ Just not mentioning her is enough? I did not know that.

(How like the case of that poor lady in Florida. She was married, the husband made a decision about her care. The Mother and Father objected, not realizing that marriage trumps being a parent. Excitement ensued.)

Simple answer. In this case, yes. See, http://writ.news.findlaw.com/grossman/20001121.html for a discussion of the probate issues. It has to do with community property law and marrying a really old guy for a short period of time.

There are definitely some similarities. And I don’t hear any Senators crying out that the 9th Circuit is activist in this case.

Thank you. It has been very challenging. I’ve had to think about, and find citations for, all sorts of esoterica that a litigator gets to blow the dust off of once every decade or so.

Right, the rest is dicta. But they seemed so sure.

Right. And after Ankenbrandt, there is little left of the doctrine in bankruptcy court. I’ve even seen an unpublished case where a bankruptcy court did divide marital property. The problem in either case is that specialized state law governs the property rights, and the assets of the estate can’t be known for sure until the state law issues are decided by some court.

In this (6th) Circuit, In re White controls the issue. That case deals with modifying the stay and abstention. It also rejects the all-too-common claim that “bankruptcy law” should govern the distribution of marital assets because of the Supremacy Clause. As I pointed out a a while back, bankruptcy law does not establish property rights. Those are governed by state law. Anyway, I’m pretty sure White does not directly address the domestic relations exception head on, but it does say that a district court sitting in bankruptcy has concurrent jurisdiction over the property distribution aspects of a divorce case.

Sianis* correctly considered state law dispositive. It looked to state law to determine whether each claim could be heard in a court of general jurisdiction or was required to be heard in probate court. The challenge to the will was properly dismissed because under Nebraska law, it had to be brought in probate court. Regarding the challenge to the trust:

Because the challenge was not permissible in a probate court, this claim was not covered by the probate exception. The 9th would have agreed with this analysis.

The Court also considered the res judicata effect of the probate proceedings. It applied Nebraska law when it did so.

I see the results as consistent. Nebraska has the right to determine the jurisdiction of its probate court, just as Texas does.

BTW, I only cited *Sianis * because it was the first case I found with the “mysterious and esoteric” stuff from Posner’s 7th Circuit opinion. :smiley: I didn’t actually read it until just now.

Parson’s Steel, Inc. v. First Alabama Bank* (1986). So the Supreme Court has already ruled the Supremacy-Clause-as-trump theory invalid.

Guilty on all counts.

I agree.

Well, that clears things up. When I thought it was a mere $474,000 in dispute, I wondered why the heirs didn’t just pay her off with the loose change in their couch cushions.

I’m bad with numbers. Sorry. And I was probably in shock. I mean come on, four hundred million dollars . . . :eek: Your comment inspired me to take a second look.

By and large, I think we’ve answered the OP’s question. One clarification. I didn’t mean to suggest that the Supremacy Clause means a federal court may ignore a decision by a state court. Clearly it may not. That’s the issue and claim preclusion issue we were discussing earlier. What I meant is merely that a state cannot, by fiat, declare that disputes of a certain kind may be heard only in its courts. Under the Supremacy Clause, assuming there’s statutory jurisdiction, federal courts may hear such cases, unless they choose not to.

And the winner is … federal jurisdiction. :smiley:

Anna Nicole has just become even more attractive in my eyes.

Interesting. Thanks for following up.

Here is the decision, for those playing at home:

This whole thing is too damned complicated. It could really benefit from a song by this guy to explain just what’s happening.

“…she met a 90 year old man who bought her two great big titties
it’s clear he knew what he was doing it don’t take a committee
to know he didn’t think she wed for looooove
but the issue is not what he saw in her
it’s inheritance law and 'yers
Yes it is.”

Kid: So the Supreme Court ruled in her favor! Yeaaa! That means she gets $550 million and it’s gonna be fun watching somebody spend that much and wind up broke in three months, right!

Animated Educational Character: If only it were that simple…

You see now she’s back to the state courts where she’ll wait in the docket
with a lot of other cases while her lawyer exposes his c_ck at
cameras on her next reality show
and that is where she’ll stay yes she will
but today she is still
just a plaintiff."

Here, Dahlia Lithwick answers the *real *questions in the case:

All I want to know is whether or not Clarence Thomas got the chance to offer her a Coke. :wink:

:smiley: