J. Howard Marshall - Death and Ensuing Lawsuits

Death and Ensuing Lawsuits

Marshall died of natural causes at the age of 90 in Houston, Texas on August 4, 1995. Following Marshall's death, Anna Nicole Smith (who died on February 8, 2007) became involved in a court battle with her former stepson, E. Pierce Marshall (who died on June 20, 2006). J. Howard's will and trust did not include Anna Nicole or J. Howard's other son, J. Howard Marshall III. The legal dispute worked its way through both state and federal courts as Anna Nicole and J. Howard III sought to overturn the will and trust. In 2001, they both lost their cases during a six-month Texas state court jury trial, upholding Marshall's will and trust.

During the probate proceedings, Smith declared bankruptcy in California and was awarded $474 million as a sanction for alleged misconduct. In 2002, the bankruptcy judgment was vacated and her award was reduced to $88 million in a Federal District Court in California. In December 2004, a three-judge panel of the 9th Circuit Court of Appeals vacated the District Court decision under the probate exception, ruling that the federal courts lacked jurisdiction over state probate matters. The 9th Circuit decision also affirmed the primacy of Texas Probate decision which determined that no misconduct had taken place and that Smith was not one of J. Howard Marshall's heirs. However, on May 1, 2006, the Supreme Court in Marshall v. Marshall reversed the ninth circuit's decision regarding the probate exception, allowing Smith another opportunity to pursue her claims in federal court. The case was remanded to the 9th Circuit for adjudication of the remaining appellate issues. On June 25, 2009 the same three-judge panel of the 9th Circuit Court of Appeals heard oral arguments on the remaining appellate issues in the case and submitted the case for consideration and final adjudication. On March 19, 2010 the 9th Circuit Court of Appeals issued its opinion on remand, finding in favor of E. Pierce Marshall, that the California Bankruptcy Court did not have jurisdiction and the California Federal District Court was precluded from reviewing matters already decided in the Texas Probate Court. On September 28, 2010, the U.S. Supreme Court again agreed to hear the case. On June 23, 2011, the United States Supreme court decided the case in a 5-4 decision (now styled Stern v. Marshall 10-179). The majority of the Court decided Congress cannot constitutionally authorize non-Article III bankruptcy judges final order jurisdiction on state law based counterclaims to proofs of claim which are not necessary to resolve the claim itself.

Marshall's eldest son not only lost his case in Texas probate court but also lost a counterclaim against him for fraud with malice. The jury originally awarded Pierce Marshall $35 million in damages but the probate court reduced that amount to $10 million. J. Howard Marshall III then filed for bankrutpcy in California and sought relief in front of the very same bankrutpcy judge that had administered Smith's bankruptcy. This case is currently pending before the 9th Circuit Court of Appeals.