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Anna Nicole Smith’s Estate Loses at High Court on Fortune

June 23 (Bloomberg) -- The U.S. Supreme Court upheld a ruling that gave Anna Nicole Smith’s estate nothing from the $1.6 billion fortune left by J. Howard Marshall II, the former Playboy model’s late husband.

The justices, voting 5-4 in a case that limits the power of federal bankruptcy judges, today rejected claims stemming from a half-billion-dollar trust Smith said her husband, a Texas oil tycoon, sought to set up for her before his 1995 death. Smith had accused her late stepson, E. Pierce Marshall, of illegally interfering with the trust.

Smith at one point won an $89 million award on her claim, which she filed with the court handling her bankruptcy case. The Supreme Court today said the bankruptcy judge lacked the constitutional authority to issue that award.

Unlike federal district and circuit courts, bankruptcy courts are part of the legislative branch of the federal government, created by Congress through its power under Article I of the Constitution.

Writing for the court, Chief Justice John Roberts called the award to Smith a “prototypical exercise of judicial power” that must be handled by a so-called Article III judge. Those judges have life tenure, are confirmed by the Senate and are protected from having their salaries reduced.

Ideological Lines

The case divided the justice along ideological lines, with Roberts and the court’s other four Republican appointees in the majority. The four justices appointed by Democratic presidents dissented.

A federal appeals court had said that Smith’s estate couldn’t recover the $89 million because a Texas court handling Howard Marshall’s will had already ruled that he didn’t intend to leave any of his $1.6 billion to her.

Smith was 26 when she married 89-year-old Howard Marshall in 1994. She died in 2007 at age 39 of an accidental overdose of prescription drugs, leaving behind a daughter who is now 4 years old. Smith’s onetime lawyer and boyfriend, Howard K. Stern, is serving as executor of her estate.

The ruling marked the second time the nation’s highest court has ruled in the dispute. The high court revived Smith’s claim for the $89 million in 2006.

The case is Stern v. Marshall, 10-179.

To contact the reporter on this story: Greg Stohr in Washington at gstohr@bloomberg.net.

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net.

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