Supreme Court in Anna Nicole Smith case: Bankruptcy Courts Cannot Decide Debtors’ State Law Counterclaims

In a decision that may have significant practical implications to the practice of bankruptcy law, the U.S. Supreme Court recently declared, on constitutional grounds, that a bankruptcy court cannot exercise jurisdiction over a debtor’s state law counterclaims, thus considerably limiting the ability of the bankruptcy court to fully and finally adjudicate claims in a bankruptcy case. Stern v. Marshall, No. 10-179 (June 23, 2011).

Stern is the latest chapter in the long-running saga over entitlement to nearly half a billion dollars from the estate of oilman J. Howard Marshall II. The key players are Vickie Lynn Marshall (aka Anna Nicole Smith) and her late husband’s son, Pierce Marshall.

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