Supreme Court Agrees to Hear Anna Nicole Smith Case

Wednesday, September 29, 2010

Page 1

Supreme Court Agrees to Hear Anna Nicole Smith Case

From Staff and Wire Service Reports

The long-running legal fight over whether former Playmate Anna Nicole Smith should have gotten part of the fortune left behind by her elderly Texas billionaire husband went back to the U.S. Supreme Court yesterday as justices announced cases to be argued in the upcoming term.

The justices, who begin hearing arguments on other cases on Monday, decided they would hear an appeal from the estate of the now-deceased Smith later this year or in early 2011.

Smith’s estate wants some of the $1.6 billion estate of her husband, J. Howard Marshall, who died in 1995 leaving nearly all his money to his son, E. Pierce Marshall, and nothing to Smith.

The convoluted dispute pits a federal bankruptcy court decision against a state probate court decision, and has its roots in a Houston strip club where J. Howard Marshall met Smith. The two were wed in 1994 when he was 89 and she 26. Marshall died the next year and his will left his estate to his son.

Smith’s estate says the elder Marshall promised before his death to give her more than $300 million above the $7 million in cash and gifts showered on her during their 14-month marriage, and that E. Pierce Marshall interfered with that gift.

When Smith filed for Chapter 11 bankruptcy protection in California in 1996, Marshall entered the proceedings with a claim for defamation, and Smith filed a counterclaim for tortious interference with the alleged gift. The bankruptcy court ruled for Smith, awarding her millions in damages, but a Texas probate court subsequently rejected her charges against Marshall.

A federal district court in California later held that the action before the bankruptcy court had not been a “core proceeding” entitled to preclusive effect over the Texas decision, but ruled in favor of Smith on her counterclaim. The Ninth U.S. Circuit Court of Appeals reversed, reasoning that the federal court lacked jurisdiction to overrule the probate decision.

The U.S. Supreme Court, however, overturned that decision, saying that Smith had a right to pursue her tort claim in federal court. The justices directed the Ninth Circuit to determine whether Smith’s counterclaim was a core proceeding on which the bankruptcy court could make binding factual findings and legal conclusions under the federal Bankruptcy Code.

The appellate court in March of this year decided that the counterclaim was not, concluding that it was not so closely related with E. Pierce Marshall’s claim that they essentially merged, and that the bankruptcy court exceeded its authority. The Ninth Circuit then ruled that the district court should have given preclusive effect to the decision by the Texas probate court, not the bankruptcy court decision, a ruling fatal to Smith’s claim.

Smith’s estate is appealing that ruling, part of a legal battle that has outlived its main participants. E. Pierce Marshall died in 2006 and Smith died at the age of 39 in 2007 from a drug overdose in a Florida hotel.

E. Pierce Marshall’s widow, Elaine T. Marshall, represents his estate, while Smith’s 4-year-old daughter, Dannielynn Birkhead, was named Smith’s heir. The girl’s father, Larry Birkhead, and attorney Howard K. Stern are in charge of the estate.

Marshall’s estate said in a statement that it is ready to fight, and noted that other appeals in the case remain to be heard.

“We have never wavered in our commitment to uphold the clearly stated and carefully documented wishes of the late J. Howard Marshall, II concerning how he wished the estate he created be distributed after his death,” the estate said.

But Los Angeles attorney Kent L. Richland of Greines, Martin, Stein & Richland LLP, who represented Smith’s estate, emphasized that the case was not about the elder Marshall’s will, but about whether the Bankruptcy Code provision defining core proceedings was constitutional, whether Smith’s claim was a core proceeding, and whether the bankruptcy court or the Texas probate court arrived at the first judgment that was actually “final.”

He said he was not surprised that the high court granted certiorari, commenting that the Ninth Circuit decision would do “great damage” if left standing.

Richland’s co-counsel, Los Angeles attorney Bruce Ross of Holland & Knight, said their clients were “delighted” by the ruling, and speculated that the case would likely be argued in February or March.

The case, Stern v. Marshall, 10-179, was among 13 new cases the high court agreed to hear in the term that begins Monday.

Other appeals accepted yesterday include:

-An unusual freedom of information dispute over whether corporations may assert personal privacy interests to prevent the government from releasing documents about them. The issue arises in a bid by telecommunications giant AT&T to keep secret the information gathered by the Federal Communications Commission during an investigation.

A federal appeals court agreed with AT&T that it may claim a personal privacy exception in the federal Freedom of Information Act to keep the information from being released. The Obama administration says only individuals may invoke personal privacy interests under FOIA. The court’s newest justice, Elena Kagan, signed the administration’s brief in her previous job in the Justice Department and will not take part in the case.

-A bid by the Boeing Co. and General Dynamics Corp. to avoid paying the government $3 billion over the Navy’s ill-fated A-12 Avenger attack plane. The companies were the main contractors for the stealth plane, which was canceled in 1991. The legal fight has been ongoing ever since.

The case offers a narrow look at the state secrets privilege, which the government sometimes asserts in lawsuits over national security issues and terrorism. In this case, the companies say the government is trying to have it both ways. The government is demanding that the companies repay $1.35 billion, plus accumulated interest, because they did not meet the terms of the contract. At the same time, the companies say they were denied access to critical classified information that they needed to develop the plane and now can’t fully defend themselves against the government’s claims.

-Another look at the use of crime lab reports in drug, drunken driving and other trials, as part of the court’s recent examination of the constitutional requirement that defendants be able to confront the witnesses against them. A man convicted of drunken driving in New Mexico is challenging the state’s use of lab reports showing the amount of alcohol in his blood because the analyst who performed the test was not the one who testified about it in court.

The court also announced the public will have access to audio recordings of all its arguments a few days after they take place. But the justices no longer will agree to media requests for same-day release of audio in high-profile cases.