In the Matter of: Marshall, No. 09-55573 (9th Cir. 2013)
Annotate this CaseThis case stemmed from disputes over the estate of the late Texas oil magnate and billionaire J. Howard Marshall. J. Howard died in 1995, leaving nearly all his assets to his son, Pierce, but excluding his wife, Anna Nicole Smith (Vickie), and his other son, Howard, from receiving any part of his fortune. Howard and his Wife eventually filed for Chapter 11 bankruptcy and their case was assigned to Judge Bufford, who had previously presided over Vickie's Chapter 11 bankruptcy case. Judge Bufford published three separate opinions: (1) denying Pierce's motion for reassignment or recusal; (2) confirming the Plan and denying Pierce's motion to dismiss with respect to his constitutional arguments; and (3) confirming the Plan and denying Pierce's motion to dismiss with respect to his statutory arguments. Elaine, Pierce's widow, now appeals the district court's decision, contending that the district court erred in affirming the bankruptcy court's orders. The court addressed the various issues on appeal related to the motion for recusal or reassignment, constitutional issues, and non-constitutional issues, and ultimately affirmed the district court's decision.
Court Description: Bankruptcy. The panel affirmed the district court’s affirmance of bankruptcy court decisions arising from the dispute over the estate of J. Howard Marshall, II, who left nearly all of his assets to his son, E. Pierce Marshall, but excluded his wife, Vickie Lynn Marshall, also known as Anna Nicole Smith, and his other son, J. Howard Marshall, III, from receiving any part of his fortune. The panel held that non-random assignment of the Chapter 11 case of Howard III and his wife Ilene (Debtors) to Bankruptcy Judge Bufford, who presided over Vickie’s Chapter 11 case, was within the court’s discretion and in the interests of efficiency. The panel held that Judge Bufford did not abuse his discretion in denying the motion of Pierce’s widow, Elaine T. Marshall, for recusal. For the reasons outlined in the second amended opinion of the bankruptcy court filed on October 9, 2003, the panel concluded that the district court correctly affirmed the bankruptcy court’s confirmation of the Debtors’ Chapter 11 Plan and denial of Elaine’s motion to dismiss with respect to the constitutional issues raised in the motion. The panel held that the “Best Interests of Creditors” test in 11 U.S.C. § 1129(a)(7)(A) did not apply to Pierce or his Texas fraud judgment against Howard III, where Pierce never filed a proof of claim in the Debtors’ Chapter 11 proceedings, and the deadline for doing so had passed by the time the bankruptcy court confirmed the Plan. The panel held that the bankruptcy court’s finding that the Debtors’ Plan was proposed in good faith was not clearly erroneous, and that the confirmation of the Plan was not an abuse of discretion. The panel likewise held that the bankruptcy court’s finding that the Debtors’ Chapter 11 petition was filed in good faith was not clearly erroneous, and that the bankruptcy court did not abuse its discretion in denying Elaine’s motion to dismiss.
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