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Stern v. Marshall – Supreme Court Limits the Scope of Bankruptcy Courts’ Core Jurisdiction
July 1, 2011
On June 23, 2011, the Supreme Court of the United States issued a decision on a narrow legal issue that may end up significantly limiting the scope of bankruptcy courts' core jurisdiction. The decision concerns whether the bankruptcy court overseeing the chapter 11 case of Vickie Lynn Marshall, better known as Anna Nicole Smith, had authority to render a final judgment over a state law counterclaim her estate has asserted against creditor Pierce Marshall, the son of Vickie's deceased husband, for tortious interference with her husband's efforts to grant her an inter vivos gift. In a 5-4 decision, the Supreme Court held that, although Vickie's counterclaim fell squarely within the bankruptcy court's statutory jurisdiction, Congress' grant of such jurisdiction was unconstitutional.