Stern, Executor for Est. of Marshall v. Marshall, Executrix for Est. of Marshall, Supreme Court of United States Decided June 23
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The Question: Whether a bankruptcy court judge hadauthority under 28 U. S. C. §157 and Article III of the US Constitution to enter final judgment on a counterclaim filed by Vickie Lynn Marshall a/k/a Anna Nicole Smith (whose Estate is Petitioner) against Pierce Marshall (whose Estate is Respondent) in her bankruptcy proceedings.
The Upshot: As set forth in §157(a) Congress divided bankruptcy proceedings into 3 categories:
- Cases under Title 11;
- Cases arising in a Title 11 case; and
- Cases related to a case under Title 11.
With respect to the first 2 categories, “core proceedings arising under title 11, or arising in a case under title 11,” District courts refer proceedings to bankruptcy judges, who intern are empowered to enter a final judgment. §§157(a), (b). Pierce argued that the bankruptcy court lacked jurisdiction to resolve Vickie’s counterclaim because his own initial defamation claim against her was a “personal injury tort” – that is, the kind of thing that the bankruptcy court lacked jurisdiction to hear under §157(b) because it did not arise under title 11 or arise in a title 11 case.
The Decision: A majority of the Supreme Court agreed with Pierce and rejected the claim made by the estate of Anna Nicole that the bankruptcy court legitimately exercised jurisdiction over the counterclaim as an adjunct of the District Court or Court of Appeals. Instead the Court held that the 1984 Bankruptcy Act and §§157(c) and 1334(c) required that some matters be sent to the State or District courts for resolution, and nothing about this situation changed that basic division of labor.