Supreme Court rejects Anna Nicole Smith case

Former Playboy playmate Anna Nicole Smith’s heir is not entitled to share in the $1.6-billion estate of her elderly Texas husband, the Supreme Court ruled, apparently ending a Dickensian legal struggle.

Because the battle over oil tycoon J. Howard Marshall II’s wealth outlived most of the parties to the suits, Chief Justice John G. Roberts Jr. compared it to “Bleak House,” Charles Dickens’ novel about a lawsuit that never ends.

Vickie Lynn Marshall, who was better known as Anna Nicole Smith, married the 89-year-old billionaire a year before his death in 1995. Although he had given her many gifts and apparently promised many more, she was not included in his will.

She sued in Texas probate court, alleging that Marshall’s son Pierce, a prime heir, had conspired to deny her as much as $400 million that her late husband had promised. That case went to trial, and she lost.

She filed separately for bankruptcy in Los Angeles. Pierce Marshall filed a claim against her in California bankruptcy court, accusing her of defaming him. She filed a counter-claim asserting that Pierce Marshall had schemed to deny her the money his father had promised, and won big. In 2000, the bankruptcy judge awarded her $475 million in damages, essentially the amount she had sought from the estate.

Since then, the case has been in the hands of appellate judges, seeking a ruling on which court had the authority to decide the matter: the state probate court in Texas or the federal bankruptcy court in California.

The case made several trips to the U.S. 9th Circuit Court of Appeals in San Francisco as well as two trips to the Supreme Court.

Along the way, the damages were reduced to $88 million.

But the dispute came to an end Thursday. In a 5-4 decision, the Supreme Court ruled the bankruptcy judge had overplayed his hand and should not have awarded damages against Pierce Marshall. Roberts said the bankruptcy judge had the authority to resolve Smith’s debts, but not to decide her claims against Marshall.

Eric Brunstad, a lawyer for the Marshall family, said the decision “finally puts to rest years and years of litigation, and vindicates Pierce, who passed away five years ago this week.”

Smith died in 2007. Howard K. Stern, her former domestic partner, had carried on the case as executor of her estate. Her sole beneficiary is her daughter, Dannielynn Birkhead, who will be 5 in September. Smith’s adult son, Daniel, died in 2006, days after Dannielynn’s birth.

The case of Stern vs. Marshall may well live on in bankruptcy circles, since Roberts wrote a major opinion on the constitutional limits on bankruptcy judges.

Los Angeles lawyer Kent Richland, who argued the case for Stern, called the implications “quite significant.”

Usually, bankruptcy judges seek to resolve all of the complicated side disputes involving a bankrupt person or company, but the chief justice said their authority did not extend to disputes under state law that could be handled in state court.

david.savage@latimes.com