Supreme Court rules against Anna Nicole Smith estate

McClatchy NewspapersJune 23, 2011 

WASHINGTON — The estate of the late stripper and Playmate of the Year Anna Nicole Smith lost big Thursday, as a closely divided Supreme Court rejected the estate's claims for millions of dollars.

Wading into soap opera territory, the justices ruled that a bankruptcy court lacked the authority to award Smith's estate what at one point was some $425 million from Smith's late, billionaire husband.

The 5-4 ruling permanently constrains some bankruptcy court powers. It also seemingly concludes a tabloid-worthy dispute that has dragged on for about 15 years.

"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." Chief Justice John Roberts wrote for the majority. "A long procession of judges has come in and gone out during that time, and still the suit drags its weary length before the court."

Roberts was quoting the 19th century novel "Bleak House" by Charles Dickens, a literary touch in what was otherwise a highly technical ruling significant primarily in the world of bankruptcy law. Still, bankruptcy law matters: Last year, nearly 1.6 million bankruptcy petitions were filed.

Most immediately, the ruling means the Smith estate and her daughter, Dannielynn Birkhead, are cut out from the $1.6 billion estate of the late Texas oilman J. Howard Marshall II.

More broadly, Justice Stephen Breyer warned in dissent, the decision stripping some decision-making authority from bankruptcy judges could result in "jurisdictional ping-pong between courts (that) would lead to inefficiency, increased cost, delay, and needless additional suffering among those faced with bankruptcy."

Marshall married Anna Nicole Smith in 1994 and died in 1995. He spent an estimated $7 million in gifts and baubles on her during their three-year relationship but did not name her in his will.

"The decision will finally put an end to a frivolous lawsuit based on fabricated claims," the Marshall family declared in a statement Thursday. "The defense of this case is and always has been about J. Howard Marshall II's right to leave his estate to the people and institutions he wanted to benefit from his hard work and vision."

The decision Thursday marked the second time that the Anna Nicole Smith dispute reached the Supreme Court. The case's very name conveyed some of the complexity: Stern, Executor of the Estate of Marshall, v. Marshall, executrix of the estate of Marshall.

Described by Roberts as "a man believed to be one of the richest men in Texas," J. Howard Marshall II met Anna Nicole Smith at a Houston strip club in 1991. Smith was in her early 20s at the time. Marshall was 86.

In 1994, they married.

Upon her husband's death the next year, Smith claimed he had promised her half of his estate. A legal battle began that, as Roberts noted Thursday, "worked its way through state and federal courts in Louisiana, Texas, and California."

After Marshall died, Smith filed a bankruptcy petition in southern California. Smith and Marshall's son, Pierce, filed claims and counter-claims against one another.

A California bankruptcy judge in 2000 awarded Smith what Roberts described as "over $400 million in compensatory damages and $25 million in punitive damages." A judge subsequently lowered this amount owed to about $89 million.

In Texas, though, a probate court ruled that Smith deserved nothing. The long legal fight has centered in part on whether the Texas probate court or the California bankruptcy court was in charge.

Smith died in 2007 of an accidental prescription drug overdose.

In its ruling Thursday, the Supreme Court concluded that Smith's counter-claim was not part of the "core proceedings" that fall under power of the bankruptcy court system, which was established by Congress rather than directly under the Constitution.

"We cannot compromise the integrity of the system of separated powers and the role of the judiciary in that system, even with respect to challenges that may seem innocuous at first blush," Roberts wrote.

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