978-1285770178 Case Printout Case CPC-31-08

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547 U.S. 293, 126 S.Ct. 1735, 164 L.Ed.2d 480, 74 USLW 4224, 46

Daily Journal D.A.R. 5171

Vicki Lynn MARSHALL, Petitioner,

E. Pierce MARSHALL.

Argued Feb. 28, 2006.

Decided May 1, 2006.

Justice delivered the opinion of the Court.

In Chief Justice Marshall famously cautioned: “It is most true that this Court will

not take jurisdiction if it should not: but it is equally true, that it must take

jurisdiction, if it should…. We have no more right to decline the exercise of

longstanding limitations on federal jurisdiction otherwise properly exercised are

the so-called “domestic relations” and “probate” exceptions. Neither is

compelled by the text of the Constitution or federal statute. Both are judicially

created doctrines stemming in large measure from misty understandings of

revealing vulnerability of historical explanation for domestic relations exception);

Winkler, The Probate Jurisdiction of the Federal Courts, 14 Probate L.J. 77, 125–

126, and n. 256 (1997) (describing historical explanation for probate exception as

pronouncement, courts have sometimes lost sight of his admonition and have

rendered decisions expansively interpreting the two exceptions. In , this Court

similarly to curtail the “probate exception.”

Nevertheless, the Ninth Circuit in the instant case read the probate exception

broadly to exclude from the federal courts’ adjudicatory authority “not only direct

challenges to a will or trust, but also questions which would ordinarily be decided

by a probate court in determining the validity of the decedent’s estate planning

exclusive jurisdiction over probate matters in a special court strips federal courts

no warrant from Congress, or from decisions of this Court, for its sweeping

extension of the probate exception.

Petitioner, Vickie Lynn Marshall (Vickie), also known as Anna Nicole Smith, is the

in October 1991. After a courtship lasting more than two years, they were

lavished gifts and significant sums of money on Vickie during their courtship and

Bankr.Ct.Dec. 122, Bankr. L. Rep. P 80,505, 06 Cal. Daily Op. Serv. 3604, 2006

Respondent, E. Pierce Marshall (Pierce), one of J. Howard’s sons, was the

ultimate beneficiary of J. Howard’s estate plan, which consisted of a living trust

and a “pourover” will. Under the terms of the will, all of J. Howard’s assets not

already included in the trust were to be transferred to the trust upon his death.

Competing claims regarding J. Howard’s fortune ignited proceedings in both state

and federal courts. In January 1996, while J. Howard’s estate was subject to

ongoing proceedings in Probate Court in Harris County, Texas, Vickie filed for

bankruptcy under Chapter 11 of the Bankruptcy Code, et seq., in the United

States Bankruptcy Court for the Central District of California. See In June

1996, Pierce filed a proof of claim in the federal bankruptcy proceeding, see ,

alleging that Vickie had defamed him when, shortly after J. Howard’s death,

lawyers representing Vickie told members of the press that Pierce had engaged

in forgery, fraud, and overreaching to gain control of his father’s assets. Pierce

sought a declaration that the debt he asserted in that claim was not

dischargeable in bankruptcy. Vickie answered, asserting truth as a defense.

She also filed counterclaims, among them a claim that Pierce had tortiously

interfered with a gift she expected. see App. 23-25. Vickie alleged that Pierce

prevented the transfer of his father’s intended gift to her by, among other things:

effectively imprisoning J. Howard against his wishes; surrounding him with hired

guards for the purpose of preventing personal contact between him and Vickie;

making misrepresentations to J. Howard; and transferring property against J.

Howard’s expressed wishes.

Among debts not dischargeable in bankruptcy, see , are those arising from

“willful and malicious injury by the debtor,” .

Vickie’s tortious interference counterclaim turned her objection to Pierce’s claim

into an adversary proceeding. see Fed. Rule Bkrtcy. Proc. 3007. In that

proceeding, the Bankruptcy Court granted summary judgment in favor of Vickie

on Pierce’s claim and, after a trial on the merits, entered judgment for Vickie on

her tortious interference counterclaim. See . The Bankruptcy Court also held

that both Vickie’s objection to Pierce’s claim and Vickie’s counterclaim qualified

as “core proceedings” under , which meant that the court had authority to enter a

final judgment disposing of those claims. See . The court awarded Vickie

compensatory damages of more than $449 million-less whatever she recovered

in the ongoing probate action in Texas-as well as $25 million in punitive

damages.

Pierce filed a post-trial motion to dismiss for lack of subject–matter jurisdiction,

Meanwhile, in the Texas Probate Court, Pierce sought a declaration that the

living *1743 trust and his father’s will were valid. Vickie, in turn, challenged the

validity of the will and filed a tortious interference claim against Pierce, but

voluntarily dismissed both claims once the Bankruptcy Court entered its

Court “did not assert jurisdiction generally over the probate proceedings … or

take control over [the] estate’s assets,” the District Court observed, “[t]hus, the

probate exception would bar federal jurisdiction over Vickie’s counterclaim only if

such jurisdiction would ‘interfere’ with the probate proceedings,” (quoting

proceedin[g] arising under , or arising in a case under .” ; see A bankruptcy

court may exercise plenary power only over “core proceedings.” See . In non–

core matters, a bankruptcy court may not enter final judgment; it has authority to

issue only proposed findings of fact and conclusions of law, which are reviewed

“(B) allowance or disallowance of claims against the estate or exemptions

from property of the estate, and estimation of claims or interests for the

purposes of confirming a plan under chapter 11, 12, or 13 of title 11 but

not the liquidation or estimation of contingent or unliquidated personal

“(F) proceedings to determine, avoid, or recover preferences;

“(G) motions to terminate, annul, or modify the automatic stay;

“(H) proceedings to determine, avoid, or recover fraudulent conveyances;

“(I) determinations as to the dischargeability of particular debts;

from claims brought by the estate against persons who have not filed

claims against the estate;

“(O) other proceedings affecting the liquidation of the assets of the estate

or the adjustment of the debtor-creditor or the equity security holder

prepare an inter vivos trust for Vickie consisting of half the appreciation of his

assets from the date of their marriage. See It further found that Pierce

conspired to suppress or destroy the trust instrument and to strip J. Howard of

his assets by backdating, altering, and otherwise falsifying documents, arranging

recognized that Vickie’s claim “does not involve the administration of an estate,

the probate of a will, or any other purely probate matter.” Nevertheless, the

court held that the probate exception bars federal jurisdiction in this case. In the

Ninth Circuit’s view, a claim falls within the probate exception if it raises

jurisdiction. In this regard, the Court of Appeals stated: “Where a state has

relegated jurisdiction over probate matters to a special court and [the] state’s trial

courts of general jurisdiction do not have jurisdiction to hear probate matters,

then federal courts also lack jurisdiction over probate matters.” Noting that

decisions, we reverse the Ninth Circuit’s judgment.

In , we addressed both the derivation and the limits of the “domestic relations

exception” to the exercise of federal jurisdiction. Carol Ankenbrandt, a citizen of

holding that Ankenbrandt’s suit fell within “the ‘domestic relations’ exception to

diversity jurisdiction.” The Court of Appeals agreed and affirmed. We

reversed the Court of Appeals’ judgment.

Holding that the District Court improperly refrained from exercising jurisdiction

cases, the Court in anchored the exception in Congress’ original provision for

diversity jurisdiction, Beginning at the beginning, the Court recalled:

“The Judiciary Act of 1789 provided that ‘the circuit courts shall have original

cognizance, concurrent with the courts of the several States, of all suits of a civil

Court stressed, remained in successive statutory provisions for diversity

jurisdiction until 1948, when Congress adopted the more economical phrase, “all

civil actions.” 1948 Judicial Code and Judiciary Act, 62 Stat. 930, .

The majority, we acknowledged in did not expressly tie its announcement of a

Such relief, in other words, would not fall within the diversity statute’s original

grant of jurisdiction over “all suits of a civil nature at common law or in equity.”

We concluded in that “it may be inferred fairly that the jurisdictional limitation

recognized by the Court rested on th[e] statutory basis” indicated by the

jurisdiction to ‘suits of a civil nature at common law or in equity.’ ” (quoting 1

Stat. 78). We further determined that Congress did not intend to terminate the

exception in 1948 when it “replace[d] the law/equity distinction with the phrase ‘all

civil actions.’ ” Absent contrary indications, we presumed that Congress meant

that some lower federal courts had applied the domestic relations exception “well

beyond the circumscribed situations posed by and its progeny,” we clarified that

only “divorce, alimony, and child custody decrees” remain outside federal

jurisdictional bounds, While recognizing the “special proficiency developed by

Decisions of this Court have recognized a “probate exception,” kin to the

domestic relations exception, to otherwise proper federal jurisdiction. See see

also ; . Like the domestic relations exception, the probate exception has been

linked to language contained in the Judiciary Act of 1789.

probate exception described in We therefore need not consider in this case

whether there exists any uncodified probate exception to federal bankruptcy

jurisdiction under .

We note that the broad grant of jurisdiction conferred by is subject to a

States absent jurisdiction under this section, the district court shall abstain

from hearing such proceeding if an action is commenced, and can be

timely adjudicated, in a State forum of appropriate jurisdiction.”

That provision is, in turn, qualified: “Non-core proceedings under , shall

asserted rights regarding a decedent’s estate. Jurisdiction was predicated on

§ 24(1) of the Judicial Code, now , which provides for federal jurisdiction over

suits brought by an officer of the United States. At the time the federal suit

commenced, the estate was undergoing probate administration in a state court.

authorizes the President to appoint an official known as the “alien property

custodian,” who is responsible for “receiv[ing,] … hold [ing],

administer[ing], and account[ing] for” “all money and property in the United

States due or belonging to an enemy, or ally of enemy….” The Act was

Reversing the Ninth Circuit, which had ordered the case dismissed for want of

federal subject-matter jurisdiction, this Court held that federal jurisdiction was

properly invoked. The Court first stated:

“It is true that a federal court has no jurisdiction to probate a will or administer an

Next, the Court described a probate exception of distinctly limited scope:“[W]hile

a federal court may not exercise its jurisdiction to disturb or affect the possession

of property in the custody of a state court, … it may exercise its jurisdiction to

adjudicate rights in such property where the final judgment does not undertake to

against a decedent’s estate, “so long as the federal court does not interfere with

the probate proceedings.” (emphasis added). Lower federal courts have

puzzled over the meaning of the words “interfere with the probate proceedings,”

and some have read those words to block federal jurisdiction over a range of

plaintiff’s expected inheritance).

We read enigmatic words, in sync with the second above-quoted passage, to

proscribe “disturb[ing] or affect[ing] the possession of property in the custody of a

state court.” True, that reading renders the first-quoted passage in part

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.

receiving from a third person an inheritance or gift that [s]he would otherwise

have received is subject to liability to the other for loss of the inheritance or gift.”).

Vickie seeks an in personam judgment against Pierce, not the probate or

annulment of a will. Cf. (suit to annul a will found “supplemental to the

The Court of Appeals advanced an alternate basis for its conclusion that the

federal courts lack jurisdiction over Vickie’s claim. Noting that the Texas Probate

Court “ruled it had exclusive jurisdiction over all of Vickie Lynn Marshall’s claims

to its probate courts the exclusive right to adjudicate a transitory tort. We have

long recognized that “a State cannot create a transitory cause of action and at

the same time destroy the right to sue on that transitory cause of action in any

court having jurisdiction.” . Jurisdiction is determined “by the law of the court’s

Texas appellate courts have on occasion held claims of tortious

interference with an expected inheritance “barred” by a prior probate court

judgment, apparently applying ordinary principles of preclusion. See,

e.g., (final probate court judgment bars claim of tortious interference with

probate judgment, and failed to state the elements of the claim). Neither

nor questions the Texas trial courts’ subject-matter jurisdiction over the

claims in question.

Pierce maintains that and other Texas decisions support his contention

36-38. Vickie argues to the contrary. See Brief for Petitioner 42 n. 30

(urging that preclusion does not apply because (1) Vickie’s claim was not

litigated to final judgment in the Texas probate proceedings; (2) having

presented her claim in the Bankruptcy Court years before she joined the

stands only for the proposition that a state court’s final judgment determining its

own jurisdiction ordinarily qualifies for full faith and credit, so long as the

jurisdictional issue was fully and fairly litigated in the court that rendered the

judgment. See At issue here, however, is not the Texas Probate Court’s

After determining that Vickie’s claim was not a “core proceeding,” the District

Court reviewed the case de novo and entered its final judgment on March 7,

2002. The Texas Probate Court’s judgment became final on February 11,

2002, nearly one month earlier. App. to Pet. for Cert. 41. The Court of Appeals

is reversed, and the case is remanded for further proceedings consistent with this

opinion.

It is so ordered.