After today’s widely reported win by Anna Nicole Smith before the US Supreme Court (stories here and here), Pierce Marshall vowed that the only thing “Anna and her lawyers can take to the bank” from this win is a “continue[d] fight to clear [his] name in California federal court.” His lawyer, Eric Brunstad, echoing arguments he advanced to the Supreme Court, remarked that Anna will lose Round 2 before the 9th Circuit because she “can’t get a second bite at the apple” (a quote that reminded me, given the circumstances, of this great movie). Anna’s lawyer, Kent Richland, retorted: “We are confident that the 9th Circuit will have no problem in ruling in our favor on the issues that remain.” Round 2 of appellate review sure is shaping into another good ole’-fashioned Texas-style “hully-gully slopfest.”
Now to the decision, Marshall v. Marshall, 2006 WL 1131904, where Justice Ruth Bader Ginsberg, writing for a unanimous Court, swept aside “misty understandings of English legal history” and held, in no uncertain terms, that “the Ninth Circuit had no warrant from Congress, or from decisions of this Court, for its sweeping extension of the probate exception.” (p.2) Notably, Justice Ginsberg did not wipe away the “probate exception,” as Anna’s lawyers had urged and as Justice Stevens advocated in his concurring opinion (extolled here). Instead, she ruled narrowly, holding “that the instant case does not fall within the ambit of the narrow exception recognized by our decisions.” (p.8) (However, in marked contrast to Pierce’s portrayal of Anna here, the Court’s framing of events leading to the marriage as a “courtship” (p.2) suggests that Anna’s front-row teardrops during oral argument were not perceived by the Court as quite the crocodile tears some would have us believe.) [NB: But see here]
So what, then, is the “ambit of the narrow exception recognized by our decisions”? To Justice Ginsberg, the answer is found in the Court’s decision in Markham v. Allen, 326 U.S. 490 (1946), which she described as “the Court’s most recent and pathmarking pronouncement on the probate exception.” (p.11) This decision stated, in a quite “misty” and “mythograph[ic]” way (pp. 1-2), that “the equity jurisdiction conferred by the Judiciary Act of 1789…, which is that of the English Court of Chancery in 1789, did not extend to probate matters.” (p.11)
Justice Ginsberg noted that Markham is “enigmatic,” to be sure, but it remains good law. She wrote:
[I]t has been established by a long series of decisions of this Court that federal courts of equity have jurisdiction to entertain suits ‘in favor of creditors, legatees and heirs’ and other claimants against a decedent’s estate ‘to establish their claims’ so long as the federal court does not interfere with the probate proceedings or assume general jurisdiction of the probate or control of the property in the custody of the state court.” 326 U.S., at 494. (Emphasis in original). (pp. 13-14)
As regards how the term “interfere” should be construed, Justice Ginsberg wrote:
[W]e comprehend the “interference” language in Markham as essentially a reiteration of the general principle that, when one court is exercising in rem jurisdiction over a res, a second court will not assume in rem jurisdiction over the same res. (Citations omitted). 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. (p.14)
In analyzing Anna’s case in light of the foregoing principles, Justice Ginsberg concluded that Anna wins because her claim does not — quoting Markham — “involve the administration of an estate, the probate of a will, or any other purely probate matter.” (p.15) Rather, Justice Ginsberg wrote:
Provoked by Pierce’s claim in the bankruptcy proceedings, Vickie’s claim … alleges a widely recognized tort. Vickie seeks an in personam judgment against Pierce, not the probate or annulment of a will. Nor does she seek to reach a res in the custody of a state court. Furthermore, no “sound policy considerations” militate in favor of extending the probate exception to cover the case at hand. 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.” (Citations omitted). (p.15)
So Anna wins, and the judgment of the 9th Circuit is reversed, with instructions “for futher proceedings consistent with this opinion.”
Part II, coming soon, will focus on the two issues that the 9th Circuit hoped to avoid having to wrestle with by dismissing the case on jurisdictional grounds, but now will have to address head on. (So don’t be surprised to see this case back in Justice Ginsberg’s lap a year or two from now.)
The first issue is whether Anna’s counterclaim against Pierce (who clearly never should have submitted to the jurisdiction of the bankruptcy court by filing a proof of claim in Anna’s bankruptcy case) was a “core” or “non-core” proceeding. Given that the bankruptcy court found Pierce liable for almost $500 million, whereas the district court tagged Pierce for just under $100 million, Pierce’s fortune (or misfortune) may well hinge on the answer to this seemingly innocuous question, as the following very telling exchange at oral argument illustrates:
JUSTICE GINSBURG: Mr. Richland —
MR. RICHLAND [Anna’s Counsel]: Excuse me, Justice —
JUSTICE GINSBURG: — what seems to me to be involved here is what is not uncommon in our Federal system, that is, two proceedings, both dealing with the same or closely related subject matter. It is not infrequent that you have parallel proceedings in Federal court and State court, and then the one that gets finished first — that judgment is binding on the other. And as I understand it, the probate proceeding concluded first before the district judge reviewed the bankruptcy judge’s opinion.
MR. RICHLAND: Justice Ginsburg, you’re quite correct that issues — that — that the principles of preclusion ordinarily would deal with the kinds of issues here, and — and we think that — those — that should be what governs this case. But I don’t believe that it is correct to say that the probate court judgment preceded that of the bankruptcy court. The bankruptcy court judgment came first. A year later the probate court judgment then —
JUSTICE GINSBURG: Well, I’m — I’m assuming — and correct me if I’m wrong about this — that the bankruptcy court makes a proposed opinion. It doesn’t become a binding opinion until it’s affirmed by the district court.
MR. RICHLAND: Unless it’s a core matter.
JUSTICE GINSBURG: Yes.
MR. RICHLAND: And here we claim that it is a core matter.
JUSTICE GINSBURG: Well, if it isn’t a core matter. I think you lost on that in the district court.
MR. RICHLAND: If it isn’t a core matter, then in any event the district court here held that there was no preclusion, and it held it for a number of reasons.
JUSTICE GINSBURG: But that was not reviewed by the Ninth Circuit.
MR. RICHLAND: That’s correct. That was not reviewed by the Ninth Circuit. But that would be the — the appropriate manner of review.
JUSTICE GINSBURG: That would — that would be the — if you — if you’re correct about the limits of the probate exception, that issue would be open for review by the Ninth Circuit.
MR. RICHLAND: It certainly would, Justice Ginsburg. We agree with that. (Tr. at pp. 15-17)
The second issue, alluded to in the above exchange, is whether “preclusion principles bar [Anna]’s claim.” (p.16 n.5)
Thanks for reading. Those wanting to read more about the background to this decision will find posts here, here, here, here, here, and here.
You’ll find Part II to my review of the case here.
© Steve Jakubowski 2006