STERN V. MARSHALL
131 S.Ct. 2594 (2011)
NATURE OF THE CASE: Vickie (D) appealed a judgment from the Court of Appeals which held
that the bankruptcy court lacked jurisdiction to enter a judgment on Pierce's (P) adversary
proceeding against Vickie (D), debtor, for defamation wherein D obtained a judgment on a
counterclaim for tortious interference with an intended gift from D's deceased spouse.
FACTS: D married J. Howard, P's, father, about a year before his death. Before J. Howard
died, D filed a suit against P in Texas state court, asserting that J. Howard meant to
provide for D through a trust, and P tortiously interfered with that gift. After J. Howard
died, D filed for bankruptcy in federal court. P filed a proof of claim in that proceeding,
asserting that he should be able to recover damages from D's bankruptcy estate because D had
defamed him by inducing her lawyers to tell the press that he had engaged in fraud in
controlling his father's assets. D responded by filing a counterclaim for tortious
interference with the gift she expected from J. Howard. The Bankruptcy Court granted D
summary judgment on the defamation claim and eventually awarded her hundreds of millions of
dollars in damages on her counterclaim. P objected that the Bankruptcy Court lacked
jurisdiction to enter a final judgment on that counterclaim because it was not a “core
proceeding” as defined by 28 U.S.C. § 157(b)(2)(C). The Bankruptcy Court concluded that D's
counterclaim was a core proceeding and gave judgment for D. The District Court held that it
was not a core proceeding and must only treat the Bankruptcy Court’s decision as proposed.
Although the Texas state court had by that time conducted a jury trial on the merits of the
parties' dispute and entered a judgment in P's favor, the District Court then went on to
decide the matter itself, in D's favor. The Court of Appeals reversed; D's counterclaim was
not “so closely related to P’s proof of claim that the resolution of the counterclaim is
necessary to resolve the allowance or disallowance of the claim itself.” The Court of
Appeals held that the District Court should have given the state judgment preclusive effect.
D appealed and the Supreme Court granted certiorari.
ISSUE:
RULE OF LAW:
HOLDING AND DECISION:
LEGAL ANALYSIS:
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