Stern v. Marshall
United States Supreme Court
564 U.S. 462 (2011)
Vickie Lynn Marshall (defendant) sued Pierce Marshall (plaintiff) in Texas probate court, alleging Pierce fraudulently induced his father to leave her out of his will; Pierce ultimately won that suit, but only after Vickie had already filed for bankruptcy in California. In the bankruptcy case, Pierce filed a proof of claim alleging Vickie had defamed him, and Vickie counterclaimed that Pierce had tortiously interfered with her intended inheritance. The bankruptcy court ruled for Vickie; the district court, after the Texas judgment for Pierce came down, concluded Vickie's counterclaim wasn't a "core proceeding" for the bankruptcy court to decide but nonetheless reviewed the merits itself and awarded Vickie over $88 million. After a Ninth Circuit reversal, Supreme Court remand, and further Ninth Circuit proceedings holding the Texas judgment should have been given preclusive effect, Vickie sought certiorari.
Whether a federal statute authorizing bankruptcy courts to enter final judgment on a debtor's compulsory counterclaim to a creditor's proof of claim is constitutional when the counterclaim is an independent state-law tort claim not necessarily resolved by ruling on the creditor's claim.