S:\\WIP-JEH\\Stern v. Marshall\\Boston\\7-30-14 USE THIS ONE Boston Stern 2013

Federal Judicial Center National Workshop for Bankruptcy Judges

Boston, Massachusetts August 2014

Decisions Interpreting Stern v. Marshall & Exec. Benefits Ins. Agency v. Arkison Hon. John E. Hoffman, Jr. United States Bankruptcy Judge Southern District of Ohio Brian L. Gifford, Law Clerk Susan L. Thompson, Law Clerk

Volume II (January 2013 – June 2014)

TABLE OF CONTENTS I.

Broad v. Narrow Construction of Stern . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 A. Courts Broadly Construing Stern . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 B. Courts Narrowly Construing Stern . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

II.

Subject-Matter Jurisdiction v. Constitutional Authority to Enter Final Judgment or Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

III.

Bankruptcy Courts’ Constitutional Authority to Finally Adjudicate Matters That Are Core Proceedings Under 28 U.S.C. § 157(b)(2) . . . . . . . . . . . . 5 A. Matters Specifically Identified By Courts As Core Under 28 U.S.C. § 157(b)(2)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 B. Allowance or Disallowance of Claims Against the Estate/Exemptions from Property of the Estate: 28 U.S.C. § 157(b)(2)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 1. Claim Objections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 2. Objections to Exemptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 C. Counterclaims By the Estate Against Persons Filing Claims Against the Estate: 28 U.S.C. § 157(b)(2)(C) . . . . . . . . . . . . . . . 24 1. Bankruptcy Courts Have the Constitutional Authority to Finally Adjudicate the Counterclaim(s) . . . . . . . . . 24 2. Bankruptcy Courts Do Not Have the Constitutional Authority to Finally Adjudicate the Counterclaim(s) . . . . . . . . . . . . . . . . . . . . . . . . . . 33 3. Courts Identifying But Not Deciding the Issue . . . . . . . . . . . . . . 40 D. Orders in Respect to Obtaining Credit: 28 U.S.C. § 157(b)(2)(D) . . . . . 45 E. Orders to Turn Over Property of the Estate: 28 U.S.C. § 157(b)(2)(E) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 F. Proceedings to Determine, Avoid or Recover Preferences: 28 U.S.C. § 157(b)(2)(F) . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 1. Bankruptcy Courts Have the Constitutional Authority to Finally Adjudicate the Preference Action . . . . . . . . 51 2. Bankruptcy Courts Do Not Have the Constitutional Authority to Finally Adjudicate the Preference Action . . . . . . . . 55 3. Courts Identifying But Not Deciding the Issue . . . . . . . . . . . . . . 57 G. Motions for Relief from the Automatic Stay: 28 U.S.C. § 157(b)(2)(G) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

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H.

I.

J. K. L. M. N. O. P. IV.

Proceedings to Determine, Avoid or Recover Fraudulent Transfers: 28 U.S.C. § 157(b)(2)(H) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 1. Bankruptcy Courts Have the Constitutional Authority to Finally Adjudicate the Fraudulent Transfer Action . . . . . . . . . 59 2. Bankruptcy Courts Do Not Have the Constitutional Authority to Finally Adjudicate the Fraudulent Transfer Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 3. Courts Identifying But Not Deciding the Issue . . . . . . . . . . . . . . 74 Dischargeability of Particular Debts: 28 U.S.C. § 157(b)(2)(I) . . . . . . . 77 1. Power to Enter Final Judgment on Issue of the Dischargeability of the Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 2. Power to Determine the Issue of the Dischargeability of the Debt and Enter Final Judgment on the Underlying Claim for Relief in Amount Certain . . . . . . . . . . . . . 83 Objections to Discharges: 28 U.S.C. § 157(b)(2)(J) . . . . . . . . . . . . . . . . 94 Determinations of the Validity, Extent or Priority of Liens: 28 U.S.C. § 157(b)(2)(K) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96 Confirmation of Plans: 28 U.S.C. § 157(b)(2)(L) . . . . . . . . . . . . . . . . . 104 Orders Approving the Use or Lease of Property: 28 U.S.C. § 157(b)(2)(M) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108 Orders Approving the Sale of Property: 28 U.S.C. § 157(b)(2)(N) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108 Matters Specifically Identified By Courts As Core Under the Catchall Provision of 28 U.S.C. § 157(b)(2)(O) . . . . . . . . . . . . . . . 108 Matters Under Chapter 15: 28 U.S.C. § 157(b)(2)(P) . . . . . . . . . . . . . . 112

Bankruptcy Courts’ Constitutional Authority to Finally Adjudicate Matters That Are Core Proceedings Not Enumerated in § 157(b)(2) . . . . . . . . A. Lien Avoidance Under § 544(a)/Lien Preservation Under § 551 . . . . . B. Proceedings to Avoid or Recover Unauthorized Postpetition Transfers Under § 549 . . . . . . . . . . . . . . . . . . . . . . . . . . . . C. Determining Whether Property Is Property of the Estate . . . . . . . . . . . D. Approval of Settlements Under Bankruptcy Rule 9019 . . . . . . . . . . . . E. Substantive Consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F. Equitable Subordination Under § 510(c) . . . . . . . . . . . . . . . . . . . . . . . . G. Modifying Chapter 13 Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . H. Contract Assumption or Rejection Under § 365 . . . . . . . . . . . . . . . . . I. Dismissing and Converting Bankruptcy Cases . . . . . . . . . . . . . . . . . . . J. Attorney Compensation/Sanctions . . . . . . . . . . . . . . . . . . . . . . . . . . . . K. Enforcing Asset-Purchase Agreements, Settlement Agreements and Other Postpetition Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . L. Damages for Violation of the Discharge Injunction . . . . . . . . . . . . . . .

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112 112 114 115 118 121 122 122 123 123 124 127 130

M. N. O. P. Q. R. S. T. U. V. W.

Distribution of Property of the Estate . . . . . . . . . . . . . . . . . . . . . . . . . . Claims Brought to Augment the Estate . . . . . . . . . . . . . . . . . . . . . . . . . Enforcement of the Automatic Stay . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interpretation/Enforcement of Court Orders . . . . . . . . . . . . . . . . . . . . . Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Involuntary Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recovery of Fees and Costs Under § 506(b) . . . . . . . . . . . . . . . . . . . . . Exercise of Court’s General Equitable/Inherent Powers Under §105(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Motions to Extend/Impose the Automatic Stay Under § 362(c) . . . . . . Lien Avoidance Under § 522(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Creditor’s Right of Setoff Under § 553 . . . . . . . . . . . . . . . . . . . . . . . . .

132 132 132 134 138 138 139 139 141 141 141

V.

Supplemental Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142

VI.

Procedural Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A. Consent and Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. Consent and Waiver Generally . . . . . . . . . . . . . . . . . . . . . . . . . 2. Effect of Pre-Stern Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . B. Withdrawal of Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C. Abstention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D. Submission of Proposed Findings of Fact and Conclusions of Law in Matters That Are Statutorily Core But Constitutionally Noncore . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E. Default Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F. Dispositive Motions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G. Interlocutory Orders/Handling Pretrial Matters . . . . . . . . . . . . . . . . . . .

142 142 142 172 173 190

190 198 201 202

VII.

Judgments Entered Pre-Stern . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 203

VIII.

Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 204

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TABLE OF CASES 13 Holdings, LLC v. Gorilla Cos. (In re Gorilla Cos.), 2014 WL 1246358 (D. Ariz. Mar. 26, 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Acord v. Young Again Prods., Inc., 2013 WL 754144 (S.D. Tex. Feb. 7, 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163 Adas v. Rutkowski, 2013 WL 6865417 (N.D. Ill. Dec. 30, 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 Advanced Telecomm. Network, Inc., v. Flaster/Greenberg, P.C. (In re Advanced Telecomm. Network, Inc.), 2014 WL 2528844 (M.D. Fla. June 4, 2014) . . . . . . . . . . . . . . . . . . . . . . . 177, 193 Albert v. Site Mgmt., Inc., 506 B.R. 453 (D. Md. 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 5, 173 Albracht v. Hamilton State Bank (In re Albracht), 505 B.R. 347 (Bankr. N.D. Ga. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 Allied Indus. v. Hayes Lemmerz Int’l, Inc. (In re Hayes Lemmerz Int’l, Inc.), 2013 WL 1910312 (Bankr. D. Del. Apr. 25, 2013) . . . . . . . . . . . . . . . . . . 129, 170 Ariston Props., LLC v. Messer (In re FKF3, LLC), 501 B.R. 491 (S.D.N.Y. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157, 198 Atradius Trade Credit Ins., Inc. v. Mukamal (In re Palm Beach Fin. Partners, L.P.), 2013 WL 2158430 (S.D. Fla. May 17, 2013) . . . . . . . . . . . . . . . . . . . . . . . 74, 182 Baker v. Charles Hamill Jeffrey Trust (In re Baker), 2014 WL 1373471 (N.D. Tex. Apr. 8, 2014) . . . . . . . . . . . . . . . . . . . . . . 130, 134 Bakst v. United States (In re Kane & Kane), 2013 WL 1197609 (Bankr. S.D. Fla. Mar. 25, 2013) . . . . . . . . . . . . . . . . . . . . . 66 Ball Four, Inc. v. 2011-SIP-1 CRE/CADC Venture, LLC (In re Ball Four, Inc.), 2013 WL 5716889 (Bankr. D. Colo. Oct. 18, 2013) . . . . . . . . . . . . . . . 21, 38, 122

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Bank of Montreal v. Collins (In re SK Foods, L.P.), 2013 WL 1365334 (E.D. Cal. Apr. 3, 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . 163 Bankers Healthcare Grp., Inc. v. Bilfield (In re Bilfield), 493 B.R. 748 (Bankr. N.D. Ohio 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81, 95 Barker v. Fox Den Acres, Inc. (In re Barker), 510 B.R. 771 (Bankr. W.D.N.C. 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 210 Bauer v. Gen. Elec. Capital Corp. (In re Oncology Assocs. of Ocean Cnty. LLC), 2014 WL 2598747 (Bankr. D.N.J. June 10, 2014) . . . . . . . . . . . . . . . . . . . . . . 114 Beskin v. Bank of N.Y. Mellon (In re Perrow), 498 B.R. 560 (Bankr. W.D. Va. 2013) . . . . . . . . . . . . . . . . . . . . . . . . 31, 100, 113 Blixseth v. Glasser (In re Yellowstone Mountain Club, LLC), 2014 WL 1369363 (D. Mont. Apr. 7, 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . 161 Blue Cross & Blue Shield of N.C. v. Jemsek Clinic, P.A., 506 B.R. 694 (W.D.N.C. 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173, 191 Boyle v. Berkenbile (In re Berkenbile), 2014 WL 797743 (Bankr. E.D. Tex. Feb. 27, 2014) . . . . . . . . . . . . . . . . . . . . . . 91 BP RE, L.P. v. RML Waxahachie Dodge, L.L.C. (In re BP RE, L.P.), 744 F.3d 1371 (5th Cir. 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143 BP RE, L.P. v. RML Waxahachie Dodge, L.L.C. (In re BP RE, L.P.), 735 F.3d 279 (5th Cir. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 144 Brandt v. Charter Airlines, LLC (In re Equip. Acquisition Res., Inc.), 2014 WL 2746708 (Bankr. N.D. Ill. June 18, 2014) . . . . . . . . . . . . . . . . . . 73, 196 British Am. Ins. Co. v. Fullerton (In re British Am. Ins. Co.), 488 B.R. 205 (Bankr. S.D. Fla. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169, 196 British Am. Isle of Venice Ltd. v. Fullerton (In re British Am. Ins. Co.), 2013 WL 211336 (Bankr. S.D. Fla. Jan. 18, 2013) . . . . . . . . . . . . . . 170, 198, 201 Brown v. United States, 748 F.3d 1045 (11th Cir. 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142

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Burdick v. Shanahan (In re Shanahan), 2013 WL 6528812 (Bankr. D. Mass. Dec. 12, 2013) . . . . . . . . . . . . . . . . . . . . . 76 Cadle Co. v. Moore (In re Moore), 739 F.3d 724 (5th Cir. 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 Cage v. GDH Int’l, Inc. (In re Great Gulfcan Energy Tex., Inc.), 488 B.R. 898 (Bankr. S.D. Tex. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64, 114 Cage v. Smith (In re Smith), 2014 WL 2601980 (Bankr. S.D. Tex. June 10, 2014) . . . . . . . . . . . . . . . . . 50, 117 Cai v. Shenzhen Smart-In Industry Co., Ltd. (In re Cai), 2014 WL 1647730 (9th Cir. Apr. 25, 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85 Calderon v. Bank of Am. Corp. (In re Calderon), 497 B.R. 558 (Bankr. E.D. Ark. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133 Carney v. CitiMortgage, Inc. (In re Carney), 2014 WL 1203242 (Bankr. S.D. Ga. Mar. 24, 2014) . . . . . . . . . . . . . . . . . . . . . . 4 Carpenters Pension Trust Fund v. Moxley, 734 F.3d 864 (9th Cir. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 Carr v. Jacobs (In re New Century TRS Holdings, Inc.), 2013 WL 1196605 (D. Del. Mar. 25, 2013) . . . . . . . . . . . . . . . . . . . . . . 2, 15, 121 Carr v. Loeser (In re Int’l Auction & Appraisal Servs. LLC), 493 B.R. 460 (Bankr. M.D. Pa. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72, 195 Carr v. New Century TRS Holdings, Inc. (In re New Century TRS Holdings, Inc.), 544 F. App’x. 70 (3d Cir. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119, 207 Carroll v. AMJ, Inc. (In re Innovative Commc’n Corp.), 2014 WL 128204 (D.V.I. Jan. 14, 2014) . . . . . . . . . . . . . . . . . . . . . . . . 56, 69, 180 Carroll v. Benta (In re Innovative Commc’n Corp.), 2014 WL 2442173 (D.V.I. May 30, 2014) . . . . . . . . . . . . . . . . . . . . . . 56, 68, 178 Carroll v. Farooqi, 486 B.R. 718 (N.D. Tex. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77, 85

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Carroll v. Raynor (In re Innovative Commc’n Corp.), 2013 WL 2631344 (D.V.I. June 12, 2013) . . . . . . . . . . . . . . . . . . . . . . 57, 70, 182 Chen v. Huang (In re Huang), 509 B.R. 742 (Bankr. D. Mass. 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 Chesapeake Trust v. Chesapeake Bay Enters., Inc., 2014 WL 202028 (E.D. Va. Jan. 17, 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162 Ciesla v. Harney Mgmt. Partners (In re KLN Steel Prods. Co.), 506 B.R. 461 (Bankr. W.D. Tex. 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 City of Bellevue v. Paradise Park, Inc. (In re Paradise Park, Inc.), 2014 WL 2158983 (Bankr. D. Neb. May 22, 2014) . . . . . . . . . . . . . . . . . . . . . 216 Clean Burn Fuels, LLC v. Purdue Bioenergy, LLC (In re Clean Burn Fuels, LLC), 492 B.R. 445 (Bankr. M.D.N.C. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116 Clean Burn Fuels, LLC v. Purdue Bioenergy, LLC (In re Clean Burn Fuels, LLC), 2013 WL 3305549 (Bankr. M.D.N.C. June 28, 2013) . . . . . . . . . . . . . . . . . . . . 141 Cohen v. Third Coast Bank, SSB, 2014 WL 2729608 (E.D. Tex. June 16, 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . 85 Compton v. Mustang Eng’g Ltd. (In re MPF Holding U.S. LLC), 495 B.R. 303 (Bankr. S.D. Tex. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52, 105 Condon Oil Co. v. Wood (In re Wood), 503 B.R. 705 (Bankr. W.D. Wis. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 Countrywide Home Loans, Inc. v. Cowin (In re Cowin), 492 B.R. 858 (Bankr. S.D. Tex. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 Ctr. Operating Co. v. Base Holdings, LLC (In re Base Holdings, LLC), 2014 WL 895403 (N.D. Tex. Mar. 5, 2014) . . . . . . . . . . . . . . . . . . . . . . . . 40, 162

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Ctr. Operating Co. v. Base Holdings, LLC (In re Base Holdings, LLC), 2013 WL 357607 (N.D. Tex. Jan. 30, 2013) . . . . . . . . . . . . . . . . . . . . . . . . 30, 164 Dahiya v. Kramer, 2014 WL 1278131 (E.D.N.Y. Mar. 27, 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . 124 Dang v. Bank of Am., 2013 WL 1683820 (D. Md. Apr. 17, 2013) . . . . . . . . . . . . . . . . . . . . . . . 1, 41, 193 David Cutler Indus., Ltd. v. Bank of Am. (In re David Cutler Indus., Ltd.), 502 B.R. 58 (Bankr. E.D. Pa. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75, 194 Davis v. R.A. Brooks Trucking, Co. (In re Quebecor World (USA), Inc.), 491 B.R. 379 (Bankr. S.D.N.Y. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 DeGiacomo v. Traverse (In re Traverse), 485 B.R. 815 (B.A.P. 1st Cir. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112 DeGiacomo v. Traverse (In re Traverse), 2014 WL 2142521 (1st Cir. May 23, 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112 DeGirolamo v. Devonshire Fund, LLC (In re Myers), 2013 WL 6080270 (Bankr. N.D. Ohio Nov. 18, 2013) . . . . . . . . . . . . 51, 115, 172 Dietz v. Spangenberg, 2013 WL 883464 (D. Minn. Mar. 8, 2013) . . . . . . . . . . . . . . . . . . . 33, 51, 60, 163 Dilbay v. Demir (In re Demir), 500 B.R. 913 (Bankr. N.D. Ill. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95 Donahue v. Smith (In re Pinewood Buffet & Grill Inc.), 2013 WL 6899079 (Bankr. N.D. Ill. Dec. 31, 2013) . . . . . . . . . . . . . . . . . . 50, 102 Doyle v. Howie–Cox (In re Howie–Cox), 2014 WL 2957133 (Bankr. E.D. Mich. June 30, 2014) . . . . . . . . . . . . . . . . . . . . 90 Drexel Highlander Ltd. P’ship v. Edelman (In re Edelman), 2014 WL 1796217 (Bankr. N.D. Tex. May 6, 2014) . . . . . . . . . . . . . . . . . . . . . . 81 Dudley v. S. Va. Univ. (In re Dudley), 502 B.R. 259 (Bankr. W.D. Va. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79, 168

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Emerson v. Treinish, 2014 WL 2807481 (N.D. Ohio June 20, 2014) . . . . . . . . . . . . . . . . . . . . . . 68, 176 File v. Boersen Farms, Inc. (In re Stamp Farms, L.L.C.), 2014 WL 1017041 (Bankr. W.D. Mich. Mar. 13, 2014) . . . . . . . . . . . . . . . . . . 135 Fire Eagle L.L.C. v. Bischoff (In re Spillman Dev. Grp., Ltd.), 710 F.3d 299 (5th Cir. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 206 First Nat’l Bank v. Crescent Elec. Supply Co. (In re Renaissance Hosp. Grand Prairie Inc.), 713 F.3d 285 (5th Cir. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96 Frazin v. Haynes & Boone, L.L.P. (In re Frazin), 732 F.3d 313 (5th Cir. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 24 Frisia Hartley, LLC v. Wells Fargo Bank, N.A. (In re Talsma), 509 B.R. 535 (Bankr. N.D. Tex. 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8, 108 Galindo v. Whited (In re Galindo), 2013 WL 3389556 (B.A.P. 9th Cir. July 8, 2013) . . . . . . . . . . . . . . . . . . . . . . . . 85 Gause v. Citifinancial Servs., Inc. (In re Gause), 2014 WL 24147 (Bankr. M.D.N.C. Jan. 2, 2014) . . . . . . . . . . . . . . . . . . . . . . . 113 German Am. Capital Co., LLC v. Oxley Dev. Co., LLC (In re Oxley Dev. Co., LLC), 493 B.R. 275 (Bankr. N.D. Ga. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3, 4 Geron v. Peebler (In re Pali Holdings, Inc.), 488 B.R. 841 (Bankr. S.D.N.Y. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4, 47 Gilley v. Sec. & Exch. Comm’n (In re Gilley), 2013 WL 690818 (Bankr. M.D.N.C. Feb. 26, 2013) . . . . . . . . . . . . . . . . . . . . . . 83 Glassman, Edwards, Wyatt, Tuttle & Cos, P.C. v. Wade (In re Wade), 500 B.R. 896 (Bankr. W.D. Tenn. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Global Gaming Legends, LLC v. Legends Gaming of La.–1, LLC (In re La. Riverboat Gaming P’ship), 504 B.R. 439 (Bankr. W.D. La. 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 211 GMAC Mortg., LLC v. Orcutt, 506 B.R. 52 (D. Vt. 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96, 104 -x-

Goodman v. Adriatic Marine, LLC (In re Gulf Fleet Holdings, Inc.), 2014 WL 1170926 (Bankr. W.D. La. Mar. 21, 2014) . . . . . . . . . . . . . . . . . . . . . 54 Goodman v. Candy Fleet, LLC (In re Gulf Fleet Holdings, Inc.), 2014 WL 1168885 (Bankr. W.D. La. Mar. 21, 2014) . . . . . . . . . . . . . . . . . . . . . 54 Goodman v. Ferro Mgmt., Inc. (In re Gulf Fleet Holdings, Inc.), 2013 WL 3230433 (Bankr W.D. La. June 25, 2013) . . . . . . . . . . . . . . . . . . . . . . 54 Goodman v. H.I.G. Capital, LLC (In re Gulf Fleet Holdings, Inc.), 491 B.R. 747 (Bankr. W.D. La. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201 Goodman v. Reama, Inc. (In re Gulf Fleet Holdings, Inc.), 2014 WL 1168791 (Bankr. W.D. La. Mar. 21, 2014) . . . . . . . . . . . . . . . . . . . . . 54 Goodman v. S. Crane & Hydraulics, LLC (In re Gulf Fleet Holdings, Inc.), 2013 WL 1755490 (Bankr. W.D. La. Apr. 23, 2013) . . . . . . . . . . . . . . . . . . . . . 55 Goodman v. Triple “C” Marine Salvage, Inc. (In re Gulf Fleet Holdings, Inc.), 485 B.R. 329 (Bankr. W.D. La. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 Goodman v. Triple “C” Marine Salvage, Inc. (In re Gulf Fleet Holdings, Inc.), 2013 WL 968146 (Bankr. W.D. La. Mar. 12, 2013) . . . . . . . . . . . . . . . . . . . . . . 55 Goodwin v. Custom Am. Auto Parts, LLC (In re Pigg), 2014 WL 2608862 (Bankr. D.S.C. June 10, 2014) . . . . . . . . . . . . . . . . . . . 73, 170 Green Tree Servicing LLC, v. Fleishhauer (In re Staggs), 2014 WL 1796664 (Bankr. D. Mont. May 6, 2014) . . . . . . . . . . . . . . . . . . . . . 102 Guy v. Franklin Am. Mortg. Co., 2013 WL 6628550 (S.D. W. Va. Dec. 10, 2013) . . . . . . . . . . . . . . . . . . . . . . . . 180 Hackman v. Fountain Grp. Cos. (In re Hackman), 2013 WL 343714 (Bankr. E.D. Va. Jan. 29, 2013) . . . . . . . . . . . . . . . . . . . . . . 200 Hamilton v. Try US, LLC, 491 B.R. 561 (W.D. Mo. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

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Hart v. Southern Heritage Bank (In re Hart), 2014 WL 1663029 (6th Cir. Apr. 28, 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84 Hasse v. Rainsdon (In re Pringle), 495 B.R. 447 (B.A.P. 9th Cir. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151 Heller Small Bus. Lending Corp. v. Smead (In re O’Hanneson), 2013 WL 655158 (N.D. Cal. Feb. 21, 2013) . . . . . . . . . . . . . . . . . . . . 34, 185, 202 Henderson v. Bank of Am. (In re Simmons), 510 B.R. 76 (Bankr. S.D. Miss. 2014) . . . . . . . . . . . . . . . . . . . . . . . 52, 60, 99, 113 Hernandez v. Hernandez (In re Hernandez), 2013 WL 705351 (Bankr. S.D. Tex. Feb. 25, 2013) . . . . . . . . . . . . . . . . . . . . . 202 Highsteppin’ Prods., LLC v. Porter (In re Porter), 2014 WL 2875527 (Bankr. E.D. La. June 24, 2014) . . . . . . . . . . . . . . . . . . . . . . 42 Homeward Residential, Inc. v. First Bank (In re Cooper), 2013 WL 3880218 (Bankr. E.D.N.C. July 25, 2013) . . . . . . . . . . . . . . . . . . . . 102 Hyundai-Wai Mach. Am. Corp. v. Rouette (In re Rouette), 500 B.R. 670 (Bankr. D. Conn. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 In re 35th & Morgan Dev. Corp., 510 B.R. 832 (Bankr. N.D. Ill. 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139 In re 1701 Commerce, LLC, 2014 WL 2615016 (Bankr. N.D. Tex. June 11, 2014) . . . . . . . . . . . . . . 20, 65, 170 In re Archdiocese of Milwaukee, 490 B.R. 575 (Bankr. E.D. Wis. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 In re Archdiocese of Milwaukee, 2013 WL 427934 (Bankr. E.D. Wis. Feb. 4, 2013) . . . . . . . . . . . . . . . . . . . . . . . 18 In re Archdiocese of Milwaukee, 2013 WL 414205 (Bankr. E.D. Wis. Feb. 1, 2013) . . . . . . . . . . . . . . . . . . . . . . . 18 In re Archdiocese of Milwaukee, 2013 WL 414203 (Bankr. E.D. Wis. Feb. 1, 2013) . . . . . . . . . . . . . . . . . . . . . . . 18 In re Batista-Sanechez, 505 B.R. 222 (Bankr. N.D. Ill. 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104 -xii-

In re Batista-Sanechez, 2014 WL 308970 (Bankr. N.D. Ill. Jan. 27, 2014) . . . . . . . . . . . . . . . . . . . . . . . 21 In re Batista-Sanechez, 502 B.R. 227 (Bankr. N.D. Ill. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 In re Batista-Sanechez, 501 B.R. 850 (Bankr. N.D. Ill. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 In re Bradley, 495 B.R. 747 (Bankr. S.D. Tex. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126 In re Brier Creek Corporate Ctr. Assocs. Ltd., 486 B.R. 681 (Bankr. E.D.N.C. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . 11, 110, 140 In re Brown, 2014 WL 2770057 (Bankr. S.D. Tex. June 18, 2014) . . . . . . . . . . . . . . . . . . . . 140 In re Carile, 2013 WL 6253768 (Bankr. N.D. Ohio Dec. 4, 2013) . . . . . . . . . . . . . . . . . . . . 141 In re Carter, 506 B.R. 83 (Bankr. D. Ariz. 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165 In re Charles St. African Methodist Episcopal Church of Boston, 499 B.R. 66 (Bankr. D. Mass. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104 In re Christ Hosp., 502 B.R. 158 (Bankr. D.N.J. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128 In re City of Detroit, Mich., 504 B.R. 97 (Bankr. E.D. Mich. 2013) . . . . . . . . . . . . . . . . . . . . . . . 211, 213, 214 In re City of Detroit, Mich., 498 B.R. 776 (Bankr. E.D. Mich. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186 In re Cmty. Mem’l Hosp., 494 B.R. 906 (Bankr. E.D. Mich. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

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In re Cowin, 2014 WL 1168714 (Bankr. S.D. Tex. Mar. 21, 2014) . . . . . . . . . . . . . . . . . . . . . 22 In re Cyncynatus, 2013 WL 3864310 (Bankr. N.D. Ohio July 24, 2013) . . . . . . . . . . . . . . . . . . . 124 In re David, 487 B.R. 843 (Bankr. S.D. Tex. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140 In re Digerati Techs., Inc., 2014 WL 2203895 (Bankr. S.D. Tex. May 27, 2014) . . . . . . . . . . . . . . . . . . . . 106 In re Digerati Techs., Inc., 2014 WL 2123124 (Bankr. S.D. Tex. May 21, 2014) . . . . . . . . . . . . . . . . . 11, 110 In re Egorov, 2013 WL 6185401 (Bankr. S.D. Cal. Nov. 22, 2013) . . . . . . . . . . . . . . . . . . . . . 23 In re Fuentes, 509 B.R. 832 (Bankr. S.D. Tex. 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139 In re Global Aviation Holdings, Inc., 496 B.R. 284 (E.D.N.Y. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 In re Gordian Med., Inc., 499 B.R. 793 (Bankr. C.D. Cal. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 In re Green, 2014 WL 1089843 (Bankr. N.D. Ohio Mar. 19, 2014) . . . . . . . . . . . . . . . . . . . 135 In re Heinzle, 2014 WL 2442261 (Bankr. W.D. Tex. May 30, 2014) . . . . . . . . . . . . . . . . . . . 124 In re Ingram, 2014 WL 644501 (Bankr. W.D. Tex. Feb. 19, 2014) . . . . . . . . . . . . . . . . . . . . . 21 In re Jefferson Cnty., Ala., 491 B.R. 277 (Bankr. N.D. Ala. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 In re Landamerica Fin. Grp., Inc., 2013 WL 1819984 (Bankr. E.D. Va. Apr. 30, 2013) . . . . . . . . . . . . . . . . . . . . . 138 In re Lazy Days’ RV Center, Inc., 724 F.3d 418 (3d Cir. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123 -xiv-

In re Lockard, 2014 WL 1724774 (Bankr. E.D. Mich. Feb. 3, 2014) . . . . . . . . . . . . . . . . . . . . 137 In re Lupo, 2013 WL 1282423 (D. Mass. Mar. 26, 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . 125 In re Manchester Oaks Homeowners Ass’n, 2014 WL 961167 (Bankr. E.D. Va. Mar. 12, 2014) . . . . . . . . . . . . . . . . . 106, 216 In re McDowell, 510 B.R. 660 (Bankr. N.D. Ga. 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 In re Moncree, 2014 WL 2916444 (Bankr. E.D. Wis. June 27, 2014) . . . . . . . . . . . . . 19, 105, 122 In re Mut. Benefits Offshore Fund, Ltd., 508 B.R. 762 (S.D. Fla. 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 208 In re Myers, 2014 WL 585431 (Bankr. D. Kan. Feb. 13, 2014) . . . . . . . . . . . . . . . . . . . 23, 189 In re Neal, 2014 WL 1424941 (Bankr. N.D. Ill. Apr. 8, 2014) . . . . . . . . . . . . . . . . . . . . . . 106 In re NNN 123 North Wacker, LLC, 2014 WL 2212015 (Bankr. N.D. Ill. May 27, 2014) . . . . . . . . . . . . . . . . . . . . . 124 In re Nolan, 2013 WL 3153849 (Bankr. W.D.N.C. June 19, 2013) . . . . . . . . . . . . . . . . . . . 111 In re Pajian, 508 B.R. 708 (Bankr. N.D. Ill. 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 In re Petters Co., 506 B.R. 784 (Bankr. D. Minn. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121 In re Reeves, 509 B.R. 35 (Bankr. S.D. Tex. 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . 10, 22, 45 In re Ritchey, 2014 WL 2881181 (Bankr. S.D. Tex. June 24, 2014) . . . . . . . . . . . . . . . . 131, 135

-xv-

In re Ritchey, 2013 WL 3089047 (Bankr. S.D. Tex. June 18, 2013) . . . . . . . . . . . . . . . . 111, 202 In re Royal Manor Mgmt., Inc., 2013 WL 1310881 (N.D. Ohio Mar. 28, 2013) . . . . . . . . . . . . . . . . . . . . . . . . . 127 In re Settlers’ Hous. Serv., Inc., 505 B.R. 483 (Bankr. N.D. Ill. 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16, 58 In re Skoglund, 2014 WL 1089865 (Bankr. W.D. Mich. Mar. 19, 2014) . . . . . . . . . . . . . . . . . . 141 In re Smith, 2013 WL 665991 (Bankr. D. Vt. Feb. 22, 2013) . . . . . . . . . . . . . . . . . . . . . . . . . 22 In re Stomberg, 487 B.R. 775 (Bankr. S.D. Tex. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126 In re Suppies, Inc., 2014 WL 2522186 (Bankr. S.D. Tex. June 4, 2014) . . . . . . . . . . . . . . . . . . . . . . 20 In re Terzo, 502 B.R. 553 (Bankr. N.D. Ill. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123 In re Treasures, Inc., 2013 WL 4874344 (Bankr. S.D. Cal. Sept. 10, 2013) . . . . . . . . . . . . . . . . . . . . 133 In re Tres Hermanos Dairy, LLC, 2013 WL 6198219 (Bankr. D.N.M. Nov. 27, 2013) . . . . . . . . . . . . . . . . . 107, 137 In re Triumph Christian Ctr., Inc., 493 B.R. 479 (Bankr. S.D. Tex. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123 Jacobsen v. Sramek, 2013 WL 694045 (E.D. Tex. Feb. 26, 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 Jenkins v. Ward (In re Jenkins), 507 B.R. 856 (W.D.N.C. 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 Johnson v. Weihert (In re Weihert), 489 B.R. 558 (Bankr. W.D. Wis. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81, 89 Johnson v. Woodlands Dev., LLC (In re Johnson), 506 B.R. 233 (Bankr. M.D. La. 2014) . . . . . . . . . . . . . . . . . . . . . . . . . 99, 116, 165 -xvi-

JPMCC 2007–CIBC 19 East Greenway, LLC (In re Bataa/Kierland LLC), 496 B.R. 183 (D. Ariz. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Katz v. Cellco P’ship, 2013 WL 6621022 (S.D.N.Y. Dec. 12, 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . 209 Kelly v. Young-Soo Che (In re Young-Soo Che), 2013 WL 2109438 (Bankr. N.D. Ill. May 15, 2013) . . . . . . . . . . . . . . . . . . . . . . 93 Kerr v. H.E. Butt Grocery Co. (In re Cont’l Case Co.), 2014 WL 2986609 (Bankr. N.D. Ga. June 19, 2014) . . . . . . . . . . . . . . . . . . . . . 37 Kerr v. Supermarket Parts Warehouse, Inc. (In re Cont’l Case Co.), 2014 WL 2986628 (Bankr. N.D. Ga. June 19, 2014) . . . . . . . . . . . . . . . . . . . . . 32 King v. Ark Woodworks, Inc. (In re Willis), 2014 WL 2890429 (Bankr. D. Colo. June 25, 2014) . . . . . . . . . . . . . . . . . . . . . . 49 Kite v. Kite, 2014 WL 688196 (W.D. La. Feb. 13, 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . 178 Kohut v. Metzler Locricchio Serra & Co., P.C. (In re Munivest Servs., LLC), 500 B.R. 487 (Bankr. E.D. Mich. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Kramer v. Mahia (In re Khan), 488 B.R. 515 (Bankr. E.D.N.Y. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65, 129 Kramer v. Mahia, 2013 WL 1629254 (E.D.N.Y. Apr. 15, 2013) . . . . . . . . . . . . . . . . . . . 70, 184, 194 Kriegman v. 377897 B.C., Ltd. (In re LLS Am., LLC), 2013 WL 209027 (E.D. Wash. Jan. 16, 2013) . . . . . . . . . . . . . . . . . . . . . . . 71, 185 Kriegman v. Falk (In re LLS Am., LLC), 2013 WL 209510 (E.D. Wash. Jan. 16, 2013) . . . . . . . . . . . . . . . . . . . . . . . 71, 185 Kriegman v. Gyenizse (In re LLS Am., LLC), 2013 WL 209475 (E.D. Wash. Jan. 16, 2013) . . . . . . . . . . . . . . . . . . . . . . . 71, 185 Kriegman v. Janvary (In re LLS Am., LLC), 2013 WL 209030 (E.D. Wash. Jan. 16, 2013) . . . . . . . . . . . . . . . . . . . . . . . 71, 185 -xvii-

Kriegman v. Pacifica Ventures, Inc. (In re LLS Am., LLC), 2013 WL 209472 (E.D. Wash. Jan. 16, 2013) . . . . . . . . . . . . . . . . . . . . . . . 71, 185 Kriegman v. Stack (In re LLS Am., LLC), 2013 WL 209477 (E.D. Wash. Jan. 16, 2013) . . . . . . . . . . . . . . . . . . . . . . . 71, 185 Kriegman v. Stack (In re LLS Am., LLC), 2013 WL 209474 (E.D. Wash. Jan. 16, 2013) . . . . . . . . . . . . . . . . . . . . . . . 71, 185 Kriegman v. Walton (In re LLS Am., LLC), 2013 WL 209507 (E.D. Wash. Jan. 16, 2013) . . . . . . . . . . . . . . . . . . . . . . . 71, 185 Kriegman v. Wetmore (In re LLS Am., LLC), 2013 WL 209508 (E.D. Wash. Jan. 16, 2013) . . . . . . . . . . . . . . . . . . . . . . . 71, 185 Kriegman v. Yarbrough (In re LLS Am., LLC), 2013 WL 209200 (E.D. Wash. Jan. 16, 2013) . . . . . . . . . . . . . . . . . . . . . . . 71, 185 Langeland v. Cadwallader (In re Wickard), 2013 WL 1737360 (Bankr. W.D. Mich. Mar. 20, 2013) . . . . . . . . . . . . . . . . . . 200 Lee v. Christenson, 558 F. App’x 674 (7th Cir. 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77, 83, 203 Lee v. Christenson, 2013 WL 5491946 (E.D. Wis. Oct. 1, 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 Lim v. Champion Prods. (In re Dabaja), 2014 WL 2894453 (Bankr. E.D. Mich. June 25, 2014) . . . . . . . . . . . . . . . . 65, 169 Logan v. McLean (In re McLean), 498 B.R. 525 (Bankr. D. Md. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168 Lomberg & Del Vescovo, LLC v. Sash, 2014 WL 1292670 (D.N.J. Mar. 31, 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98 Lopez v. Credit Union One(In re Lopez), 2014 WL 2767397 (Bankr. N.D. Ill June 16, 2014) . . . . . . . . . . . . . . . . . . . . . 101 Loveridge v. Hall (In re Renewable Energy Dev. Corp.), 500 B.R. 77 (D. Utah 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 3, 12, 132, 175 Maas v. Northstar Educ. Fin., Inc. (In re Maas), 497 B.R. 863 (Bankr. W.D. Mich. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 -xviii-

Mansmann v. Ocwen Loan Servicing, L.L.C. (In re Mansmann), 2013 WL 2322953 (S.D. Ala. May 28, 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . 182 Marshall v. Picard (In re Madoff Inv. Sec. LLC), 740 F.3d 81 (2d Cir. 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59, 118, 204 Mason v. Ivey, 498 B.R. 540 (M.D.N.C. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 Mason v. Klarchek, 2013 WL 1869098 (N.D. Ill. May 2, 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183 Mason v. RJK Investors (In re Klarchek), 509 B.R. 175 (Bankr. N.D. Ill. 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 McCarthy v. Giron (In re C & C Gen. Builders, Inc.), 2013 WL 8632105 (Bankr. E.D. Va. Nov. 18, 2013) . . . . . . . . . . . . . 73, 197, 218 McCord v. Jonsilver Auto Sales, LLC (In re In re USA United Fleet, Inc.), 2014 WL 2960038 (E.D.N.Y. June 27, 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 Medlin v. Johnson (In re Meabon), 2014 WL 1309093 (W.D.N.C. Mar. 28, 2014) . . . . . . . . . . . . . . . . . . . . . . . . . 115 Merv Props., LLC v. Fifth Third Bank (In re Merv Props., LLC), 2014 WL 201614 (E.D. Ky. Jan. 17, 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179 Mickler v. Trujillo (In re Trujillo), 485 B.R. 797 (M.D. Fla. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 209 Miller v. Enviro Care, Inc. (In re Rock Structures Excavating, Inc.), 2013 WL 1284969 (D. Utah Mar. 27, 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 60 Mitchell v. Weinman (In re Mitchell), 554 F. App’x 756 (10th Cir. 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138 Monteleone v. A-K Valley Fed. Credit Union (In re Monteleone), 2013 WL 6531903 (Bankr. W.D. Pa. Dec. 12, 2013) . . . . . . . . . . . . . . . . . . . . . 58 Moses v. Cashcall, Inc. (In re Moses), 2013 WL 53873 (Bankr. E.D.N.C. Jan. 3, 2013) . . . . . . . . . . . . . . . . . . . . . . 32, 39

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Moyer v. Slotman (In re Slotman), 2013 WL 7823003 (Bankr. W.D. Mich. Dec 5, 2013) . . . . . . . . . . . . . . . . . . . 172 Mukamal v. ABN AMRO Fund Servs. Bank (In re Palm Beach Fin. Partners, L.P.), 2013 WL 2036161 (S.D. Fla. May 14, 2013) . . . . . . . . . . . . . . . . . . . . . . . 74, 182 Mukamal v. Newman Family Revocable Trust (In re Palm Beach Fin. Partners, L.P.), 2013 WL 2035453 (S.D. Fla. May 14, 2013) . . . . . . . . . . . . . . . . . . . . . . . 74, 183 Mukamal v. Stillwater Mkt. Neutral Fund II, L.P. (In re Palm Beach Fin. Partners, L.P.), 2013 WL 3490652 (S.D. Fla. July 8, 2013) . . . . . . . . . . . . . . . . . . . 2, 74, 181, 193 New England Nat’l, LLC v. Town of East Lyme (In re New England Nat’l, LLC), 2013 WL 812386 (Bankr. D. Conn. Mar. 5, 2013) . . . . . . . . . . . . . . . . . . . . . . . . 5 New England Nat’l, LLC v. Town of East Lyme (In re New England Nat’l, LLC), 2013 WL 812380 (Bankr. D. Conn. Mar. 5, 2013) . . . . . . . . . . . . . . . . . . . . . . . . 5 Nisselson v. Salim, 2013 WL 1245548 (S.D.N.Y. Mar. 25, 2013) . . . . . . . . . . . . . . . . 57, 70, 184, 194 NSJS Ltd. P’Ship v. Waco Town Square Partners, L.P. (In re Waco Town Square Partners, L.P.), 2014 WL 991824 (S.D. Tex. Mar. 13, 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . 139 Ogle v. JT Miller, Inc. (In re HDD Rotary Sales, LLC), 2014 WL 2930745 (Bankr. S.D. Tex. June 27, 2014) . . . . . . . . . . . . . . . . . 72, 169 Olsen v. Reuter (In re Reuter), 499 B.R. 655 (Bankr. W.D. Mo. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46, 194 Orchard v. JPMorgan Chase Bank, N.A. (In re Orchard), 2013 WL 6254037 (Bankr. D. Or. Dec. 4, 2013) . . . . . . . . . . . . . . . . . . . . . . . 217 Orcutt v. GMAC Mortg., LLC (In re Orcutt), 2013 WL 1342741 (Bankr. D. Vt. Apr. 2, 2013) . . . . . . . . . . . . . . . . . 23, 103, 107 Osborne v. Kadoch (In re Autora Capital, Inc.), 2013 WL 2156821 (S.D. Fla. May 17, 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . 182 -xx-

Pac. Addax Co. v. Lau (In re Lau), 2013 WL 5935616 (Bankr. E.D. Tex. Nov. 4, 2013) . . . . . . . . . . . . . . . . . . . . . 91 Paloian v. LaSalle Bank Nat’l Ass’n (In re Doctors Hosp. of Hyde Park, Inc.), 508 B.R. 697 (Bankr. N.D. Ill. 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Paloian v. LaSalle Bank Nat’l Ass’n (In re Doctors Hosp. of Hyde Park, Inc.), 504 B.R. 900 (Bankr. N.D. Ill. 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17, 100 Paloian v. LaSalle Bank Nat’l Ass’n (In re Doctors Hosp. of Hyde Park, Inc), 2014 WL 2860296 (Bankr. N.D. Ill. June 19, 2014) . . . . . . . . . . . . . . . . . . 19, 101 Paloian v. LaSalle Bank Nat’l Ass’n (In re Doctors Hosp. of Hyde Park, Inc.), 507 B.R. 558 (Bankr. N.D. Ill. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61, 164 Paloian v. LaSalle Bank Nat’l Ass’n (In re Doctors Hosp. of Hyde Park, Inc.), 494 B.R. 344 (Bankr. N.D. Ill. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168 Panos & Assocs., LLC v. Mitchell (In re Mitchell), 2013 WL 2422694 (Bankr. N.D. Ill. June 4, 2013) . . . . . . . . . . . . . . . . . . . . . . . 92 Patout v. Smith (In re Smith), 2013 WL 1309426 (Bankr. W.D. La. Mar. 28, 2013) . . . . . . . . . . . . . . . . . . 83, 94 Patriot Elec. & Mech., Inc. v. Mfrs. & Traders Trust Co. (In re Patriot Elec. & Mech., Inc.), 2014 WL 1761928 (Bankr. D. Md. May 1, 2014) . . . . . . . . . . . . . . . . . . . . . . . . . 1 Pereira v. Garritano (In re Connie’s Trading Corp.), 2014 WL 1813751 (S.D.N.Y. May 8, 2014) . . . . . . . . . . . . . . . . . . . . 68, 121, 178 Peterson v. Pyramid Trading Ltd. P’ship, 2013 WL 3177825 (N.D. Ill. June 19, 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . 210 Plitt Int’l, LCC v. Heckler (In re Heckler), 2014 WL 1491325 (Bankr. W.D. Tex. Apr. 15, 2014) . . . . . . . . . . . . . . . . . 82, 95

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Post Confirmation Bd. of Wadleigh Energy Grp., Inc. v. Wadleigh, 2014 WL 2943796 (E.D. La. June 27, 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . 176 Prime Alliance Bank, Inc. v. Berg (In re Berg), 2013 WL 1316685 (Bankr. D. Utah Mar. 26, 2013) . . . . . . . . . . . . . . . . . . . . . . 94 Prosser v. Springel (In re Innovative Commc’n Corp.), 2013 WL 5432316 (D.V.I. Sept. 27, 2013) . . . . . . . . . . . . . . . . . . . . . . . . . 69, 163 Pryor v. Tromba, 2014 WL 1355623 (E.D.N.Y. Apr. 7, 2014) . . . . . . . . . . . . . . . . . . . . . 56, 68, 162 Quinlan v. AFI Servs., LLC (In re AFI Servs., LLC), 486 B.R. 827 (Bankr. S.D. Tex. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117 Rainsdon v. Visser (In re Visser), 2013 WL 1337327 (Bankr. D. Idaho Apr. 1, 2013) . . . . . . . . . . . . . . . 51, 114, 117 Ramirez v. Mr. Transmission (In re Ramirez), 2014 WL 2522148 (Bankr. S D. Tex. June 4, 2014) . . . . . . . . . . . . . . . . . 133, 216 Realan Inv. Partners, LLLP v. Meininger (In re Land Res., LLC), 505 B.R. 571 (M.D. Fla. 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120 Richer v. Morehead (In re Richer), 2014 WL 105393 (Bankr. N.D. Ill. Jan. 9, 2014) . . . . . . . . . . . . . . . . . . . . . . . . 21 Rinaldi v. HSBC Bank USA, N.A. (In re Rinaldi), 487 B.R. 516 (Bankr. E.D. Wis. 2013) . . . . . . . . . . . . . . . . . . . . . . 19, 36, 58, 101 Robert J. Siragusa M.D. Emp. Trust v. Collazo (In re Collazo), 2014 WL 866075 (Bankr. N.D. Ill. Mar. 5, 2014) . . . . . . . . . . . . . . . . . . . . . . . . 82 Rock Airport of Pittsburgh, LLC v. Mgmt. Sci. Assocs., Inc., 2014 WL 1414853 (W.D. Pa. Apr. 11, 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . 160 Rothrock v. PNC Bank, N.A. (In re Parco Merged Media Corp.), 489 B.R. 323 (D. Me. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193 Rutkowski v. Adas (In re Adas), 488 B.R. 358 (Bankr. N.D. Ill. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81, 90

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S&S Food Corp. v. Sherali (In re Sherali), 490 B.R. 104 (Bankr. N.D. Tex. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Schermerhorn v. Centurytel, Inc. (In re Skyport Global Commc’ns), 2013 WL 4046397 (Bankr. S.D. Tex. Aug. 7, 2013) . . . . . . . . . . . . . . . . . . . . . 137 Schmid v. Bank of Am., N.A., 498 B.R. 221 (W.D. Wis. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Schmid v. Bank of Am. (In re Schmid), 494 B.R. 737 (Bankr. W.D. Wis. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18, 35 Scotiabank de P.R. v. Perimetro Props., Inc. (In re Plaza Resort at Palmas, Inc.), 488 B.R. 50 (D.P.R. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98, 176 Sears v. Sears, 2014 WL 905656 (D. Neb. Mar. 7, 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95 Sears v. Sears (In re Sears), 2014 WL 689883 (Bankr. D. Neb. Feb. 21, 2014) . . . . . . . . . . . . . . . . . . . . 20, 96 Sec. Investor Prot. Corp. v. Bernard L. Madoff Inv. Sec. LLC, 490 B.R. 46 (S.D.N.Y. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55, 66, 175, 191 Serra v. Salven (In re Garcia), 2013 WL 1490987 (B.A.P. 9th Cir. Apr. 11, 2013) . . . . . . . . . . . . . . . . . . . . . 156 Settlers’ Housing Serv., Inc. v. Schaumburg Bank & Trust Co., N.A (In re Settlers’ Housing Serv., Inc.), 2014 WL 2986107 (Bankr. N.D. Ill. June 30, 2014) . . . . . . . . . . 36, 101, 122, 196 Sexton v. Dep’t of Treasury (In re Sexton), 508 B.R. 646 (Bankr. W.D. Va. 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . 115, 132 Sharp v. Segal & Kirby, LLP (In re SK Foods, L.P.), 2013 WL 5494071 (E.D. Cal. Oct. 1, 2013) . . . . . . . . . . . . . . . . . . . . 69, 181, 202 Shearer v. Oberdick (In re Oberdick), 490 B.R. 687 (Bankr. W.D. Pa. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64, 168 Shelton v. Aguirre & Patterson, Inc. (In re Shelton), 2014 WL 1576864 (Bankr. S.D. Tex. Apr. 18, 2014) . . . . . . . . . . . . . . . . . 37, 170

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Shurn v. Gilbert (In re Gulf Coast Glass & Erection Co., Inc.), 484 B.R. 685 (Bankr. S.D. Tex. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 Sikirica v. Wettach (In re Wettach), 489 B.R. 496 (Bankr. W.D. Pa. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64, 169 Silagy v. Morris (In re Morris), 2013 WL 5705630 (Bankr. N.D. Ohio Oct. 18, 2013) . . . . . . . . . . . . 73, 171, 197 Silver v. Edelson (In re Edelson), 2013 WL 5145714 (Bankr. N.D. Ga. July 3, 2013) . . . . . . . . . . . . . . . . . . . . . . . 83 Slobodian v. United States (In re Net Pay Solutions, Inc.), 2013 WL 5550207 (Bankr. M.D. Pa. Oct. 7, 2013) . . . . . . . . . . . . . . . . . . . . . . . 74 Slone v. Anderson (In re Anderson), 2013 WL 8539539 (Bankr. S.D. Ohio Sept. 10, 2013) . . . . . . . . . . . . . . . . . . . 132 Smyrna Childcare Ctrs., LLC v. Melton (In re Melton), 2013 WL 2383657 (Bankr. N.D. Ga. May 20, 2013) . . . . . . . . . . . . . . . 3, 92, 171 Solomons One, LLC v. Donnelly (In re Solomons One, LLC), 2014 WL 846084 (Bankr. D. Md. Mar. 4, 2014) . . . . . . . . . . . . . . . . . . . . . 11, 110 Sommers v. Comerica Bank, N.A. (In re Terrabon, Inc.), 2013 WL 6157980 (Bankr. S.D. Tex. Nov. 22, 2013) . . . . . . . . . . . . . . . . . . . . 102 Springel v. Prosser (In re Prosser), 2013 WL 996367 (D.V.I. Mar. 14, 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Still v. Hopkins (In re Hopkins), 494 B.R. 306 (Bankr. E.D. Tenn. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . 76, 194 Stuart C. Irby Co. v. Brown (In re Brown), 2013 WL 3353829 (Bankr. N.D. Okla. July 3, 2013) . . . . . . . . . . . . . . . . . . . . . 91 Sullivan v. Glenn (In re Glenn), 502 B.R. 516 (Bankr. N.D. Ill. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 Tanguy v. West (In re Davis), 538 F. App’x 440 (5th Cir. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127

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Tex. Capital Bank, N.A. v. Dallas Roadster, Ltd. (In re Dallas Roadster, Ltd.), 2013 WL 5758632 (Bankr. E.D. Tex. Sept. 27, 2013) . . . . . . . . . . . . . . . . . . . . 39 Tobacco Square LLC v. Putnam Cnty. Bank (In re Tobacco Square LLC), 2013 WL 1246794 (Bankr. M.D.N.C. Mar. 26, 2013) . . . . . . . . . . . . . . . . . . . 114 Transcon. Refrigerated Lines, Inc. v. New Prime, Inc. (In re Transcon. Refrigerated Lines, Inc.), 494 B.R. 816 (Bankr. M.D. Pa. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 Tronox Inc. v. Kerr McGee Corp. (In re Tronox Inc.), 503 B.R. 239 (Bankr. S.D.N.Y. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . 62, 166, 172 Trost v. Trost (In re Trost), 510 B.R. 140 (Bankr. W.D. Mich. 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 Trusky v. Gen. Motors Co. (In re Motors Liquidation Co.), 2013 WL 620281 (Bankr. S.D.N.Y. Feb. 19, 2013) . . . . . . . . . . . . . . . . . . . . . 138 Tyler v. Banks (In re Tyler), 493 B.R. 905 (Bankr. N.D. Ga. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 63 Van-Voegler v. Myrtle (In re Myrtle), 500 B.R. 441 (Bankr. W.D. Va. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 Walgreen Co. v. NXXI, Inc. (In re NXXI, Inc.), 2014 WL 2219169 (Bankr. S.D.N.Y. May 28, 2014) . . . . . . . . . . . . . . . . . 20, 171 Weaver v. Piwonski (In re Piwonski), 2014 WL 210552 (Bankr. D. Colo. Jan. 17, 2014) . . . . . . . . . . . . . . . . . . . . 23, 83 Wellness Int’l Network, Ltd. v. Sharif, 727 F.3d 751 (7th Cir. 2013) . . . . . . . . . . . . . . . . . . . . . . . . 94, 147, 190, 204, 205 Williams v. McKesson Corp. (In re Quality Infusion Care, Inc.), 2013 WL 6189948 (Bankr. S.D. Tex. Nov. 25, 2013) . . . . . . . . . . . . . . . . . . . . . 54 Willson v. McPhersons P’ship (In re Cent. La. Grain Coop., Inc.),\ 497 B.R. 229 (Bankr. W.D. La. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

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Note: With the exception of bracketed text and text appearing outside of quotation marks, this summary is comprised of the original text of the opinions. In preparing the summary, certain conventions have been followed. Pinpoint citations have not been used, and any text contained in the footnotes of opinions is quoted without indicating that the text is from a footnote. For the sake of readability, certain citations, footnotes and internal quotation marks have been omitted. Omitted text is signaled with ellipses. No attempt has been made to track the subsequent history of the cases summarized.

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I.

BROAD V. NARROW CONSTRUCTION OF STERN A.

COURTS BROADLY CONSTRUING STERN

BP RE, L.P. v. RML Waxahachie Dodge, L.L.C. (In re BP RE, L.P.), 735 F.3d 279 (5th Cir. 2013) (Smith, J.; Garza, J.; Southwick, J.) (“[A]lthough the strict holding of Stern limits bankruptcy-court authority ‘in one isolated respect’ and ‘the question presented [was] a narrow one,’ id., its ‘sweeping’ reasoning, Frazin [v. Haynes & Boone, L.L.P. (In re Frazin)], 732 F.3d [313,] 319 [(5th Cir. 2013)], is broad . . . .”). Frazin v. Haynes & Boone, L.L.P. (In re Frazin), 732 F.3d 313 (5th Cir. 2013) (Reavley, J.; Prado, J.; Owen, J.) (“Although the Court stated that its decision was ‘narrow,’ its reasoning was sweeping. . . . Despite the narrowing language at the end of the Court’s opinion, Stern clearly grounded its reasoning in principles that are broad in scope.”). Dang v. Bank of Am., 2013 WL 1683820 (D. Md. Apr. 17, 2013) (Bennett, J.) (“Buttressing the conclusion that Stern applies broadly is the logic of Stern itself, which rests on separation of powers concerns. As the Supreme Court in Stern reasoned, the Constitution assigns the job of addressing ‘the resolution of “the mundane as well as the glamorous, matters of common law and statute as well as constitutional law, issues of fact as well as issues of law”—to the Judiciary.’ 131 S. Ct. at 2594. Accordingly, when a bankruptcy court hears a case under section 157’s statutory grant of final adjudicative authority, the court must meet Stern’s test or else its final decision will violate Article III. . . . This Court agrees with those courts that apply Stern broadly, because the separation of powers concerns in Stern implicate all of Congress’s grant of authority under section 157(b)(2).”). Patriot Elec. & Mech., Inc. v. Mfrs. & Traders Trust Co. (In re Patriot Elec. & Mech., Inc.), 2014 WL 1761928 (Bankr. D. Md. May 1, 2014) (Gordon, J.) (In an avoidance action brought by the debtor-in-possession asserting § 544(a) strong-arm powers, the bankruptcy court certified to the Maryland Court of Appeals “intriguing questions of first impression regarding the perfection of secured transactions in Maryland.” In so doing, the court stated that it is “mindful of the constitutionally mandated diminution of the stature and authority of bankruptcy courts when it comes to decision-making that involves state law. See Stern v. Marshall, 131 S. Ct. 2594 (2011).”).

B.

COURTS NARROWLY CONSTRUING STERN

Albert v. Site Mgmt., Inc., 506 B.R. 453 (D. Md. 2014) (Chasanow, J.) (“There is a split of authority as to how broadly Stern should be read. Some courts view the decision as narrow, pointing to the Court’s admonition that the decision ‘does not change all that much,’ because the ‘question presented here is a narrow one.’ [Stern, 131 S. Ct.] at 2620. . . . Other courts—including one in this district—have applied Stern broadly, focusing on the decision’s concerns over maintaining the Constitution’s separation of powers. . . . Those that apply Stern narrowly have the better argument. While Stern’s dicta is broad, the numerous times the Court emphasizes the limited nature of its holding cannot be ignored.”). 1

Loveridge v. Hall (In re Renewable Energy Dev. Corp.), 500 B.R. 77 (D. Utah 2013) (Dowdell, J.) (“In the two years since Stern has been decided, a large number of courts have written opinions applying Stern to various aspects of bankruptcy proceedings. Having carefully reviewed this voluminous case law, it is clear that the courts have not reached any general consensus about how to interpret the Supreme Court decision. Even within the same judicial district, opinions about the case often differ wildly. . . . [T]he court finds itself in agreement with the decisions . . . [holding] that a narrow interpretation of Stern is appropriate. Finally, the court follows the Supreme Court’s own statement that its decision in Stern did not ‘meaningfully change[] the division of labor’ in the current bankruptcy scheme. Stern, 131 S. Ct. at 2620. It is certainly possible that either the Tenth Circuit or the Supreme Court will at some point issue a decision inconsistent with this narrow interpretation, but the facts of this case illustrate the difficulty of reading the Stern decision broadly in the absence of additional clarification. The causes of action at issue here do not fit neatly into a recognized class of actions, such as fraudulent conveyance claims, state law counterclaims on a creditor’s proof of claim, or, as noted above, actions to augment the bankruptcy estate. While the court has relied on existing caselaw to determine whether the mix of state law and bankruptcy claims in this action require a jury trial under the Seventh Amendment, the court is hesitant to perform a similarly detailed analysis under Article III. Such an approach would throw into doubt the bankruptcy court’s ability to enter final judgment on a wide variety of claims, thereby substantially changing the division of labor in the bankruptcy statute. The court therefore awaits further guidance before denying the bankruptcy court’s traditional authority to enter final judgments on additional classes of claims other than the state law counterclaims explicitly mentioned in Stern.”). Mukamal v. Stillwater Mkt. Neutral Fund II, L.P. (In re Palm Beach Fin. Partners, L.P.), 2013 WL 3490652 (S.D. Fla. July 8, 2013) (Marra, J.) (“The Supreme Court also made clear that it did not intend its decision in Stern to have broad implications . . . . ”). Miller v. Enviro Care, Inc. (In re Rock Structures Excavating, Inc.), 2013 WL 1284969 (D. Utah Mar. 27, 2013) (Stewart, J.) (“[R]econciling Stern’s plain language that its holding is ‘narrow’ with its discussion of Granfinanciera can be troublesome. Nevertheless, the Court is persuaded that Stern is a ‘narrow’ holding confined to its unique facts.”). Carr v. Jacobs (In re New Century TRS Holdings, Inc.), 2013 WL 1196605 (D. Del. Mar. 25, 2013) (Robinson, J.) (“Having considered Stern and its progeny, the court adopts the narrow construction of Stern and its holding, that is, that Stern is restricted to the case of a ‘state-law counterclaim that is not resolved in the process of ruling on a creditor’s proof of claim’ as set forth in 28 U.S.C. § 157(b)(2)(C).”). Tyler v. Banks (In re Tyler), 493 B.R. 905 (Bankr. N.D. Ga. 2013) (Sacca, J.) (“After considering the merits of both the broad view and the narrow view [of the Stern decision], this Court concludes that the narrow view is the correct view . . . . Had the Stern majority intended to make a sweeping proclamation striking down a broad swath of bankruptcy court authority, it would have done so explicitly. Instead, the majority repeatedly emphasized the limited effect of its holding.”).

2

German Am. Capital Co., LLC v. Oxley Dev. Co., LLC (In re Oxley Dev. Co., LLC), 493 B.R. 275 (Bankr. N.D. Ga. 2013) (Sacca, J.) (“In his majority opinion in Stern, Chief Justice Roberts took pains to point out the limited nature of the court’s holding. He explained that the question presented there was a ‘narrow’ one; that Congress had violated Article III of the Constitution ‘in one isolated respect;’ and that removal of state law counterclaims that are not resolved in the process of ruling on a creditor’s proof of claim from the definition of core does not ‘meaningfully’ change the division of labor in the current statute.’ [Stern, 131 S. Ct.] at 2620.”). Smyrna Childcare Ctrs., LLC v. Melton (In re Melton), 2013 WL 2383657 (Bankr. N.D. Ga. May 20, 2013) (Hagenau, J.) (“Since the issuance of the Stern opinion, courts have debated whether to read it narrowly and restrict its application to similar facts or to read it broadly to significantly limit the bankruptcy court’s authority. This Court agrees with the courts which conclude the Supreme Court’s holding was narrow: as an Article I court, a bankruptcy court ‘lacked the constitutional authority to enter a final judgment on a state law counterclaim that is not resolved in the process of ruling on a creditor’s proof of claim’ in a bankruptcy proceeding. Stern, 131[] S. Ct. at 2620. Stern did not question the Court’s authority to determine the claim itself. Id. at 2616–17.”).

II.

SUBJECT-MATTER JURISDICTION V. CONSTITUTIONAL AUTHORITY TO ENTER FINAL JUDGMENT OR ORDER

Loveridge v. Hall (In re Renewable Energy Dev. Corp.), 500 B.R. 77 (D. Utah 2013) (Dowdell, J.) (“First, the court notes that Stern is not a jurisdictional decision, but one that is focused only on the bankruptcy court’s authority under Article III to enter final judgment on certain claims.”). Kohut v. Metzler Locricchio Serra & Co., P.C. (In re Munivest Servs., LLC), 500 B.R. 487 (Bankr. E.D. Mich. 2013) (Shefferly, J.) (“The debtors in these jointly administered Chapter 7 bankruptcy cases operated a Ponzi scheme in which investors lost millions of dollars. The Chapter 7 trustee filed a 16 count complaint against an accounting firm [(“Metzler”)] that provided services to the debtors. The accounting firm filed a motion requesting dismissal of 11 counts of the complaint. . . . Metzler makes [the] . . . argument that counts six through sixteen involve state common law claims that are unrelated to the bankruptcy proceeding. Citing Waldman v. Stone, 698 F.3d 910 (6th Cir. 2012), Metzler concludes that, as a result, this Court ‘lacks jurisdiction over these state law claims.’ The Court disagrees. . . . Waldman v. Stone does not hold that a bankruptcy court lacks subject matter jurisdiction when the congressional allocation of authority is found to be unconstitutional. ‘Section 157 [of title 28] allocates the authority to enter final judgment between the bankruptcy court and the district court. That allocation does not implicate questions of subject matter jurisdiction.’ Stern v. Marshall, ––– U.S. ––––, 131 S. Ct. 2594, 2607, 180 L. Ed. 2d 475 (2011) (citing 28 U.S.C. §§ 157(b)(1), (c)(1)). As a result, Metzler’s request for dismissal based upon lack of jurisdiction must be denied. . . . [E]ven if the Court lacks constitutional authority to enter a final judgment in this adversary proceeding with respect to the state common law claims against Metzler [(for actual and constructive fraudulent transfers, accounting malpractice, aiding and abetting fraud, negligence, breach of fiduciary duty, and aiding and abetting breach of fiduciary duty)], the proper remedy is not dismissal for lack of jurisdiction. Instead, the Court should treat the matter similar to the way 3

that it treats non-core proceedings, and issue proposed findings of fact and conclusions of law, as directed by Waldman, 698 F.3d at 923 (remanding and directing that “the bankruptcy court shall recast its final judgment as to these [state law] claims as proposed findings of fact and conclusions of law, which the district court shall review de novo”). . . . For these reasons, the Court will deny Metzler’s request to dismiss counts six through sixteen for lack of subject matter jurisdiction.”). German Am. Capital Co., LLC v. Oxley Dev. Co., LLC (In re Oxley Dev. Co., LLC), 493 B.R. 275 (Bankr. N.D. Ga. 2013) (Sacca, J.) (“In his majority opinion in Stern, Chief Justice Roberts . . . explained that subject matter jurisdiction was not at issue: ‘Section 157 allocates the authority to enter final judgment between the bankruptcy court and the district court’ and ‘[t]hat allocation does not implicate questions of subject matter jurisdiction.’ Id. at 2607. In fact, nothing in the Stern opinion changes anything regarding whether a bankruptcy court has subject matter jurisdiction to hear a proceeding—only whether that court has constitutional authority to enter a final order in it.”) S&S Food Corp. v. Sherali (In re Sherali), 490 B.R. 104 (Bankr. N.D. Tex. 2013) (Houser, J.) (“Stern simply clarified bankruptcy courts’ constitutional power, not their subject matter jurisdiction. The Court in Stern discussed this critical distinction at length, 131 S. Ct. at 2606–08, and expressly clarified that 28 U.S.C. § 157 is not jurisdictional. So, while Sherali has couched his arguments as an attack on the subject matter jurisdiction of this Court, that argument is premised upon an inaccurate reading of Stern. The district court clearly has subject matter jurisdiction over this adversary. Nothing in Stern has changed that or challenged the propriety of that; rather, Stern specifically addresses the Constitutional authority of this Court, as an Article I tribunal, to hear and finally determine a debtor’s common-law counterclaim to a proof of claim filed against the bankruptcy estate.”). Geron v. Peebler (In re Pali Holdings, Inc.), 488 B.R. 841 (Bankr. S.D.N.Y. 2013) (Gerber, J.) (“Stern, which affects the constitutional power of a bankruptcy judge to issue a final judgment in a matter as to which the bankruptcy court already has subject matter jurisdiction, does not in any way deprive bankruptcy courts of subject matter jurisdiction.”). Carney v. CitiMortgage, Inc. (In re Carney), 2014 WL 1203242 (Bankr. S.D. Ga. Mar. 24, 2014) (Barrett, J.) (“Before the Court is a Motion to Dismiss filed by Leslie Richards, P.C. (the “Richards Firm”) seeking dismissal of the complaint pursuant to Federal Rule of Civil Procedure 12(b)(1) and (6) made applicable to this proceeding pursuant to Federal Rule of Bankruptcy Procedure 7012. The Richards Firm seeks dismissal of Counts Two through Nine for lack of subject matter jurisdiction and failure to state a claim upon which relief may be granted. . . . William and Janice Carney filed a chapter 13 bankruptcy petition. Thereafter, they filed this adversary proceeding seeking to set aside a foreclosure on their home as well as actual and punitive damages against the Richards Firm for violations of [the Georgia Debt Adjustment Act], breach of contract, breach of warranty, and fraud and negligence relating to the unauthorized practice of law. . . . The Richards Firm argues the causes of actions against it should be dismissed in accordance with the Supreme Court’s Stern v. Marshall [decision] . . . . The firm also argues the claims asserted against it are only ‘related to’ non-core causes of actions and therefore the Court lacks jurisdiction to hear the matter. . . . District courts have jurisdiction to consider ‘all civil proceedings arising under title 11, or arising in or 4

related to cases under title 11.’ 28 U.S.C. § 1334(b). District courts may refer any and all such cases and proceedings to bankruptcy courts. 28 U.S.C. § 157(a). The District Court for the Southern District of Georgia has referred all such matters to the bankruptcy court by standing order. . . . A bankruptcy judge may hear and determine all bankruptcy cases, but may enter final orders and judgments only in ‘core proceedings arising under title 11, or arising in a case under title 11.’ 28 U.S.C. § 157(b)(1). . . . The allegations against the Richards Firm are ‘related to’ the underlying bankruptcy case as pre-petition causes of action under contract, tort, and Georgia statutory law. If Debtors had not filed for bankruptcy, Debtors would have had these stand-alone lawsuits against the Richards Firm. With Debtors’ bankruptcy filing, these causes of action became property of the bankruptcy estate pursuant to 11 U.S.C. § 541(a)(1) and § 1306(a)(1). . . . The Richards Firm argues under the U.S. Supreme Court case of Stern v. Marshall the counts against it must be dismissed since they involve non-bankruptcy, state law claims. I disagree. In Stern, the Supreme Court did not hold that the bankruptcy court lacked constitutional authority to enter final judgment on all state law claims. Specifically, the Supreme Court held that the bankruptcy court ‘lacked the constitutional authority to enter a final judgment on a state law counterclaim that is not resolved in the process of ruling on a creditor’s proof of claim,’ notwithstanding that the proceeding was core under 28 U.S.C. § 157(b)(2)(C). Stern, 131 S. Ct. at 2620. The Supreme Court stated that its decision was a narrow one. Id. Unlike Stern, the claims against the Richards Firm are non-core and do not implicate 28 U.S.C. § 157(b)(2)(C). Thus, Stern does not prevent the bankruptcy court from submitting a report and recommendation to the District Court. 28 U.S.C. § 157(c)(l); Stern, 131 S. Ct. at 2604 (“[W]hen a bankruptcy judge determines that a referred ‘proceeding . . . is not a core proceeding but . . . is otherwise related to a case under title 11,” the judge may only “submit proposed findings of fact and conclusions of law to the district court.”).”). New England Nat’l, LLC v. Town of East Lyme (In re New England Nat’l, LLC), 2013 WL 812380 (Bankr. D. Conn. Mar. 5, 2013); New England Nat’l, LLC v. Town of East Lyme (In re New England Nat’l, LLC), 2013 WL 812386 (Bankr. D. Conn. Mar. 5, 2013) (Weil, J.) (“The Supreme Court’s holding in Stern v. Marshall did not concern the subject matter jurisdiction of the bankruptcy court, but rather, the allocation of the authority as between the district court and the bankruptcy court to enter final judgments.”).

III.

BANKRUPTCY COURTS’ CONSTITUTIONAL AUTHORITY TO FINALLY ADJUDICATE MATTERS THAT ARE CORE PROCEEDINGS UNDER 28 U.S.C. § 157(b)(2) A.

MATTERS SPECIFICALLY IDENTIFIED BY COURTS AS CORE UNDER 28 U.S.C. § 157(b)(2)(A)

Albert v. Site Mgmt., Inc., 506 B.R. 453 (D. Md. 2014) (Chasanow, J.) (“Presently pending and ready for review in this breach of contract case is a motion by Defendants Site Management, Inc. t/a Site Realty Group, and Site Leasing, Inc. to modify, or partially withdraw, the reference. . . . This case traces its lineage to the bankruptcy case Jin Suk Kim Trust d/b/a La Union Mall . . . in the 5

United States Bankruptcy Court for the District of Maryland. In that bankruptcy case, Plaintiff was appointed as the disbursing agent to assist Debtor Jin Suk Kim Trust in carrying out the duties and responsibilities set forth in the Amended Plan of Reorganization (“Plan”) approved by the Bankruptcy Court . . . . Since 2009, Defendant Site Management had managed the Shopping Mall and Defendant Site Leasing leased space in the Shopping Mall. Debtor applied to retain Defendants as its property manager and leasing agents which the Bankruptcy Court approved. Pursuant to this application, ‘the terms and conditions of any lease agreement were to be subject to the Debtor’s final approval, were to be made in the Debtor’s name, and were to be executed by the Debtor.’ . . . Plaintiff alleges that on the eve of the . . . Plan confirmation, the Defendants negotiated a long-term lease, took substantial commissions, and disposed of assets, all while being instructed not to do so and without informing the Plaintiff or the Bankruptcy Court. It is further alleged that Defendants did not provide accurate receivables information to the Debtor, the Bankruptcy Court, and creditors. The bankruptcy plan was proposed and then approved by the court based upon this inaccurate information. Plaintiff alleges that Defendants failed to keep complete records; negotiated lease extensions to maximize their returns without full disclosure; failed to close accounts at the direction of Plaintiff; and prepared inaccurate monthly operating reports for submission to the Bankruptcy Court. . . . Plaintiff filed a complaint in this court. Plaintiff claims that Defendants’ actions constituted negligence, breach of contract and fiduciary duty, and fraud. . . . [T]he undersigned referred this case to [the bankruptcy court] pursuant to 28 U.S.C. § 157(a) and [the standing order of reference]. . . . Defendants argue that the reference should be withdrawn because the matter at issue is a ‘non-core’ proceeding, but even if the matter is considered ‘core,’ withdrawal conserves resources because the bankruptcy court may not enter any final orders or judgments on these state common law claims pursuant to the recent decision of the Supreme Court of the United States in Stern v. Marshall . . . . Following the Supreme Court’s decision in Stern, courts have determined that the correct way to examine the first factor of the permissive withdrawal determination is not ‘whether the matter can be classified as “core” under 28 U.S.C. § 157, but rather [] whether, under Stern, the [b]ankruptcy [c]ourt has the final power to adjudicate it.’ ACC Retail Prop. Dev. & Acquisition Fund, LLC v. Bank of Am., N.A., No. 5:12–CV–361–BO, 2012 WL 8667572, at *2 (E.D.N.C. Sept. 28, 2012) (quoting Dev. Specialists, Inc. v. Akin Gump Strauss Hauer & Feld LLP, 462 B.R. 457, 467 (S.D.N.Y. 2011)). Under that rubric, the bankruptcy court must possess both statutory and constitutional authority to issue a final decision.” After determining that the bankruptcy court had the statutory authority to adjudicate the Plaintiff’s claims, which were found to be ‘“core proceedings’ under 28 U.S.C. § 157(b)(2)(A)’s broad inclusion of ‘matters concerning the administration of the estate[,]’” the district court turned to Defendants’ argument “that Article III prohibits the bankruptcy court from deciding this case[,]” stating: “[T]he claims at issue here are of a different nature than those in Stern. The alleged wrongdoing of Defendants in this case concerns actions they took or failed to take in their court-approved roles as property manager and leasing agent for debtor’s property. This alleged wrongdoing occurred post-petition, pre-confirmation. These claims are not brought for alleged wrongdoing that occurred pre-petition or possess only a tangential relationship to the bankruptcy proceeding, but instead are by their nature intimately tied to the bankruptcy proceeding. . . . In sum, the nature of the claim, combined with the limited holding of Stern, lead to the conclusion that the bankruptcy court possesses both statutory and constitutional authority to adjudicate the claims at issue.”).

6

JPMCC 2007–CIBC 19 East Greenway, LLC (In re Bataa/Kierland LLC), 496 B.R. 183 (D. Ariz. 2013) (Sedwick, J.) (“Bataa/Kierland LLC (hereinafter “Debtor”) filed a petition for bankruptcy relief under Chapter 11 of the Bankruptcy Code. After holding a hearing, the bankruptcy court confirmed the plan of reorganization proposed by Debtor, over the objections of JPMCC 2007–CIBC 19 East Greenway, LLC (hereinafter “JPMCC”), the holder of a $28 million secured, pre-petition claim. JPMCC appeals the confirmation order. . . . Initially, the property upon which stood an office building was owned entirely by Debtor. In 2008 the property was divided into two parcels, with Debtor retaining that portion of the subdivided property that included the existing building and approximately 79 surface parking spaces. The remainder of the property, including a number of surface parking spaces, was conveyed to an affiliate, Bataa/Kierland II (hereinafter “Kierland II”). As part of the subdivision process, Debtor recorded a Declaration of Covenants, Conditions, and Restrictions (“CC & Rs”), in which Debtor reserved an easement in the parking spaces on that portion of the property conveyed to Kierland II. Subsequently, Kierland II developed its property, erecting an office building and a parking garage. Although Debtor had used some of the parking spaces in the parking garage, Debtor had not paid Kierland II for use of the parking garage prior to the filing of the petition for relief. During the course of the bankruptcy proceeding Debtor and Kierland II entered into an agreement providing for payment by Debtor for Debtor’s use of the parking garage. Under the terms of that agreement, Debtor was to reimburse Kierland II for Debtor’s proportionate share of the cost of constructing the parking garage ($5.16 million), plus its annual pro rata share of the operating costs. Payment of the $5.16 million was deferred until after payment of JPMCC’s secured claim and the unsecured creditors’ subordinated debenture in the seventh year following confirmation of the plan, effectively deferring payment until the plan had been consummated. After the proposed plan was filed, but prior to the confirmation hearing, JPMCC filed an adversary action seeking a declaration of the rights of Debtor and Kierland II under the CC & Rs. The bankruptcy court included the issue raised in the adversary proceeding in the hearing on the plan of reorganization and approved the agreement. . . . The value of Debtor’s property also was an issue in the context of determining the extent to which JPMCC’s $28 million claim was secured. The bankruptcy court accepted the base appraisal by Debtor’s expert of $12.5 million, but reduced it to $7.7 million to account for JPMCC’s proportionate share of the cost of erecting the parking structure on the Kierland II property. This left JPMCC with a $20 million unsecured claim to be paid pro rata from a $500,000 subordinated debenture. . . . During the course of the proceedings, JPMCC initiated an adversary action challenging the post-petition parking agreement between Debtor and Kierland II. As noted above, the bankruptcy court addressed that question in the confirmation hearing and approved the parking agreement as part of the plan confirmation process. JPMCC challenges the decision of the bankruptcy court on [the] procedural ground[]: . . . that the bankruptcy court lacked jurisdiction to enter the final order under Stern . . . . At the heart of Stern was the determination that, even though the counterclaim in Stern was a core proceeding under the Bankruptcy Code, the widow’s claim arose under state common law and was between two private parties, it did not flow from the federal statutory scheme, was not a matter of public right, and it would not necessarily be resolved by the process of ruling on the stepson’s proof of claim in the bankruptcy proceedings. . . . The issue in this case is significantly different. Unlike Stern, resolution of the extent to which Debtor had access to the parking spaces located on the Kierland II property was necessarily integral to the resolution of JPMCC’s claim, i.e., the extent to which the claim was allowed as a secured claim. This court agrees that, in light of Stern, the 7

authority of bankruptcy courts over state-law issues is somewhat unsettled. However, this court finds persuasive the reasoning used by the bankruptcy court in the Southern District of Texas when it determined that the dischargeability of a creditor’s claim fell outside the scope of Stern: ‘The Court concludes, however, that it may exercise authority over essential bankruptcy matters under the “public rights” exception. Under Thomas v. Union Carbide Agric. Prods. Co., a right closely integrated into a public regulatory scheme may be resolved by a non-Article III tribunal. 473 U.S. 568, 593, 105 S. Ct. 3325, 87 L. Ed. 2d 409 (1985). The Bankruptcy Code is a public scheme for restructuring debtor-creditor relations, necessarily including “the exercise of exclusive jurisdiction over all of the debtor’s property, the equitable distribution of that property among the debtor’s creditors, and the ultimate discharge that gives the debtor a ‘fresh start’ by releasing him, her, or it from further liability for old debts.” Cent. Va. Cmty. Coll. v. Katz, 546 U.S. 356, 363–64, 126 S. Ct. 990, 163 L. Ed. 2d 945 (2006); see N. Pipeline Const. Co. v. Marathon Pipe Line Co., 458 U.S. 50, 71, 102 S. Ct. 2858, 73 L. Ed. 2d 598 (1982) (plurality opinion) (noting in dicta that the restructuring of debtor-creditor relations “may well be a ‘public right’”). But see Stern, 131 S. Ct. at 2614 n.7 (“We noted [in Granfinanciera] that we did not mean to ‘suggest that the restructuring of debtor-creditor relations is in fact a public right.’”).’ Husky Int’l Elec., Inc. v. Ritz (In re Ritz), 459 B.R. 623, 631 (Bankr. S.D. Tex. 2011). . . . The court then went on to explain: ‘When a bankruptcy court determines the extent of a creditor’s [secured] claim, the court simply decides that a particular creditor is entitled to something more than the creditor would otherwise get out of the bankruptcy bargain. Such determinations are inextricably tied to the bankruptcy scheme and involve the adjudication of rights created by the Bankruptcy Code.’ Id. at 632. . . . [T]he question of the value of the property in which a secured creditor claims an interest is integral to determining the extent of the creditor’s secured claim. Furthermore, resolving the question of the scope of the easement constituted the de facto resolution of Kierland II’s scheduled (but unfiled) $4,168,000 contingent/unliquidated/disputed claim. This court finds that the Bankruptcy Court had jurisdiction to enter a final judgment on the question of the scope of Debtor’s rights under the easement.”). Frisia Hartley, LLC v. Wells Fargo Bank, N.A. (In re Talsma), 509 B.R. 535 (Bankr. N.D. Tex. 2014) (Lynn, J.) (The debtors, Klass Talsma and three affiliated corporations, were engaged in a dairy farming operation. Several years after confirmation of the debtors’ Chapter 11 plan (“Plan”), a dispute arose between the debtors and their secured lender, Wells Fargo Bank, N.A. (“Wells Fargo”) about the debtors’ payment obligations “on Wells Fargo’s claim under the Plan.” The debtors sought and obtained an order reopening their jointly administered cases and commenced an adversary proceeding against Wells Fargo, asserting “seven causes of action, including: (1) Breach of Contract; (2) Unjust Enrichment; (3A) Tortious Interference with Existing Contract—Two Sisters Dairy, LLC Contract; (3B) Tortious Interference with Existing Contracts—Contracts/Notes with Lone Star FLCA and Lone Star PCA; (4) Negligence, Gross Negligence, Negligent Misrepresentation, and Fraud; (5) Breach of Fiduciary Duties; (6) Declaratory Judgment; and (7) Application and Request for Injunctive Relief.” Wells Fargo “raise[d] questions about th[e] court’s subject-matter jurisdiction under 28 U.S.C. §§ 1334 and 157 . . . [as well as] questions of constitutional authority requir[ing] attention in light of the Supreme Court’s decision in Stern v. Marshall, 131 S. Ct. 2594 (2011), and the Fifth Circuit’s decisions in Frazin v. Haynes & Boone, L.L.P. (In re Frazin), 732 F.3d 313 (5th Cir. 2013), and BP RE, L.P. v. RML Waxahachie Dodge, L.L.C. (In re BP RE, L.P.), 735 F.3d 279 (5th Cir. 2013). . . .” Concluding that it had the 8

constitutional authority to finally adjudicate at least several of the claims for relief asserted in the adversary proceeding, the court reasoned: “All of the[] causes of action [asserted in the adversary proceeding] could have conceivable effects on distributions to Debtors’ creditors, thus invoking, at a minimum, ‘related to’ jurisdiction. Counts 1 and 6, although pled as the common law causes of action of breach of contract and declaratory judgment, both implicate the bankruptcy court’s statutory powers under 11 U.S.C. § 1142(b) and 28 U.S.C. § 157(b)(2)(O), as well as the court’s inherent power to interpret and implement its own orders. Fed. R. Bankr. P. 3020(d) (“Notwithstanding the entry of the order of confirmation, the court may issue any other order necessary to administer the estate.”); Travelers Indem. Co. v. Bailey, 557 U.S. 137, 138, 129 S. Ct. 2195, 174 L. Ed. 2d 99 (2009) (“The Bankruptcy Court plainly had jurisdiction to interpret and enforce its own prior orders. . . .”); U.S. Brass [Corp. v. Travelers Ins. Grp., Inc. (In re U.S. Brass Corp.)], 301 F.3d [296,] 306 [(5th Cir. 2002)] (“Proceedings invoking the bankruptcy court’s statutory authority to enter orders necessary for the consummation of a confirmed plan [are ‘arising in’ proceedings] because the authority can be exercised only in the context of a bankruptcy case.”); cf. Law v. Siegel, 134 S. Ct. 1188, 1198, (2014) (discussing bankruptcy court’s inherent powers under 11 U.S.C. § 105(a)) (citing Chambers v. NASCO, Inc., 501 U.S. 32, 47, 111 S. Ct. 2123, 115 L. Ed. 2d 27 (1991)); see also Nat’l Benevolent Ass’n of the Christian Church (Disciples of Christ) v. Weil, Gotshal & Manges, LLP (In re Nat’l Benevolent Ass’n of the Christian Church (Disciples of Christ)), 333 F. App’x 822, 826 (5th Cir. 2009) (“A final decree closing the case after the estate is fully administered does not deprive the court of jurisdiction to enforce or interpret its own orders.”). As a result, Counts 1 and 6 are core claims as to which the bankruptcy court may issue a final order. . . . Based on the decisions in Stern, BP RE, and Frazin, the issue of this court’s constitutional authority to determine the Adversary requires discussion. . . . Without salary protection and life tenure, a bankruptcy judge’s ability to exercise ‘th[e] [judicial] [P]ower [of the United States]’ is limited to those matters that lie ‘at the core of federal bankruptcy power. . . .’ N. Pipeline Constr. Co. v. Marathon Pipe Line Co., 458 U.S. 50, 71, 102 S. Ct. 2858, 73 L. Ed. 2d 598 (1982). Put another way, ‘Congress may not bypass Article III simply because a proceeding may have some bearing on a bankruptcy case; the question is whether the action at issue stems from the bankruptcy case itself or would necessarily be resolved in the claims allowance process.’ Stern, 131 S. Ct. at 2618 (emphasis in original). . . . Applying this test from Stern, paired with the court’s conclusion below that the alleged breach of the Plan Documents is tantamount to an alleged breach of the Plan itself, it is apparent that the court has authority to determine at least some of the counts in the Complaint. The question is: In what counts may the court issue a final determination and in what counts will that authority be limited to making proposed findings of fact and conclusions of law? The Fifth Circuit’s opinion in Frazin sheds some light on this question. . . . In Frazin, the Fifth Circuit held that a debtor’s claim against his former attorneys under the Texas Deceptive Trade Practices Act (“DTPA”) did not need to be determined in order to determine the attorneys’ fee application. 732 F.3d at 323–34. Because deciding the DTPA claim in Frazin was unnecessary as part of the claims allowance process, the bankruptcy court was without constitutional authority to issue a final judgment, even with the parties’ consent. Id. at 320 n.3, 323–34. But the Fifth Circuit affirmed the bankruptcy court’s authority to determine the other claims that were closely related to the debtor’s objections to the attorneys’ fee applications because those claims were necessarily resolved in settling the attorneys’ requests for administrative expenses. Id. at 324–25. . . . Here, although asserted by an adversary complaint, Counts 1 and 6 hinge on whether Wells Fargo 9

breached the Plan and Plan Documents. This determination is styled in a different procedural posture than the counterclaim in Stern, which was asserted by the estate in response to a tortious interference claim. See Stern, 131 S. Ct. at 2617–18. Moreover, the Adversary differs substantively as well. The counterclaim at issue in Stern was core only by way of the inclusion of counterclaims filed by the estate in section 157(b)(2)(C) of title 28. Id. at 2612. Here, the construction of the Plan and Plan Documents stems directly from the bankruptcy plan itself. So the court concludes constitutional authority exists for a final determination, at a minimum, over Counts 1 and 6. . . . The court need not address specific authority over Counts 2, 3, 4, 5, and 7 except to say that, under Frazin, authority exists over these individual counts to the extent factual findings or legal conclusions specific to those counts are necessary to finally determine Counts 1 or 6. See Frazin, 732 F.3d at 323–24. But such determinations are best made on a complete record. Moreover, the Supreme Court may clarify the bounds of bankruptcy court authority with its decision in Executive Benefits Insurance Agency v. Arkison, No. 12–1200 (U.S. filed Sept. 13, 2013). As a result, the court need only conclude that authority exists for Counts 1 and 6.”). In re Reeves, 509 B.R. 35 (Bankr. S.D. Tex. 2014) (Bohm, J.) (“At issue is how this Court should rule on the Trustee’s Motion to Compel Filing of Statement of Financial Affairs . . . . Having concluded that this Court has jurisdiction over this contested matter, the Court nevertheless notes that Stern v. Marshall . . . sets forth certain limitations on the constitutional authority of bankruptcy courts to enter final orders. This Court must therefore determine whether it has constitutional authority to sign final orders in the dispute at bar—[an] order relating to the Trustee’s request to compel the Debtors to file an amended SOFA . . . . The facts in the case at bar are easily distinguishable from those in Stern. In Stern, the debtor filed a counterclaim against a creditor who had filed a proof of claim. The debtor’s counterclaim was based solely on state law; there was no Code provision providing a basis for the counterclaim. Moreover, the resolution of the counterclaim was not necessary to adjudicating the validity of the claim of the creditor. Under these circumstances, the Supreme Court held that the bankruptcy court lacked constitutional authority to enter a final judgment on the debtor’s counterclaim. . . . In the case at bar, on the other hand, there is no state law involved. The . . . Motion is based upon express provisions of the Code and an express Bankruptcy Rule—11 U.S.C. §§ 348(f)(2), 521(a)(3), 521(a)(4) and Bankruptcy Rule 1019(5)(C). Thus, this dispute is easily distinguishable from the suit in Stern, and the Court concludes that Stern v. Marshall is inapplicable in this dispute. The Court therefore has the constitutional authority to enter final orders in this dispute. . . . In the alternative, even if Stern somehow applies, this Court concludes that the one exception articulated in Stern by the Supreme Court applies—specifically, that this Court may enter a final order over essential bankruptcy matters under the ‘public rights’ exception. . . . Disputes that are integrally bound up in the claims adjudication process—and thus involve the exercise of the Bankruptcy Court’s in rem jurisdiction over the estate—are part of the ‘public rights’ exception. See Stern, 131 S. Ct. at 2618 (noting that when determining whether Congress may bypass Article III, “the question is whether the action at issue stems from the bankruptcy itself or would necessarily be resolved in the claims adjudication process”). Disputes over rights created by the Bankruptcy Code itself as part of the public bankruptcy scheme also fall within the ‘public rights’ exception. In the case at bar, the key issues before this Court arise from a dispute over whether . . . the Debtors are required to file amended Schedules listing property as of the Conversion Date[] and . . . the Debtors are required to file an 10

amended SOFA. These issues are central to the public bankruptcy scheme, as they relate to both the exercise of exclusive jurisdiction over the property of the Debtors’ estate . . . and the equitable distribution of that property among the Debtors’ creditors. . . . For all of these reasons, this Court has the constitutional authority to enter final orders on the . . . Motion.”). In re Brier Creek Corporate Ctr. Assocs. Ltd., 486 B.R. 681 (Bankr. E.D.N.C. 2013) (Humrickhouse, J.) (“The matter before the court is Bank of America’s emergency motion for the court to stay its order entered on January 14, 2013 (the “Stay Order”). The Stay Order stayed arbitration initiated by Bank of America against the [Chapter 11] debtors’ guarantors (the “Guarantor Arbitration”). . . . [T]he debtors requested an order confirming that the automatic stay applies to the Guarantor Arbitration and granting an injunction pursuant to the court’s powers under § 105. . . . Because of this court’s ‘arising under’ jurisdiction over the § 362 request, and to the extent that the debtors’ request for § 105 relief falls under this court’s ‘arising in’ jurisdiction, it also had authority to enter a final judgment because the proceeding before the court was a ‘core’ proceeding. . . . Not only is it statutorily ‘core,’ it is constitutionally ‘core’ as well. See TP, Inc. v. Bank of America, N.A. (In re TP, Inc.), 479 B.R. 373, 384 (Bankr. E.D.N.C. 2012) (providing that a matter is constitutionally core if the “action at issue stems from the bankruptcy itself”).”). In re Digerati Techs., Inc., 2014 WL 2123124 (Bankr. S.D. Tex. May 21, 2014) (Bohm, J.) (“The Movants request that this Court grant them standing to prosecute claims on behalf of the Chapter 11 estate against the Debtor’s president. There is no provision in the Bankruptcy Code expressly allowing this Court to grant such relief. Furthermore, what scant case law exists suggests that such standing should be granted only in ‘particularly extraordinary circumstances.’ This opinion addresses whether ‘particularly extraordinary circumstances’ exist in the case at bar. . . . Stern v. Marshall, 131 S. Ct. 2594 (2011), sets forth certain limitations on the constitutional authority of bankruptcy courts to enter final orders. This Court must therefore determine whether it has constitutional authority to enter a final order in the dispute at bar. This Court concludes that it does for the following reasons. . . . In Stern, the debtor, pursuant to 28 U.S.C. § 157(b)(2)(C), filed a claim based solely on state law, and the resolution of this counterclaim did not resolve the question of validity of the defendant’s claim. 131 S. Ct. 2594, 2601 (2011). Under those circumstances, the Supreme Court held that the bankruptcy court lacked constitutional authority to enter a final order on the debtor’s counterclaim. Id. at 2606. In the case at bar, the dispute involves no state law whatsoever, but rather involves judicially-created bankruptcy law. Therefore, this dispute is easily distinguishable from the suit in Stern, and this Court concludes that there is no Stern concern here. Thus, this Court has the constitutional authority to enter a final order on the Motion.”). Solomons One, LLC v. Donnelly (In re Solomons One, LLC), 2014 WL 846084 (Bankr. D. Md. Mar. 4, 2014) (Catliota, J.) (“Plaintiff Solomons One, LLC (“Plaintiff”) is a Maryland limited liability company that filed for relief under chapter 11 on August 23, 2013. It brings this seven count complaint against defendants V. Charles Donnelly (“Donnelly”) and Deborah Steffen (“Steffen” and collectively with Donnelly referred as “Defendants”) who, along with four other individuals, are members of Plaintiff. . . . The primary dispute centers on an Assignment of Contract Rights dated December 4, 2012, (the “Assignment”) executed by Defendants. The Assignment purports to assign from Plaintiff to Donnelly, in trust for the benefit of the members of Plaintiff, 11

certain rights to construct a pier on the Patuxent River adjacent to real property partially owned by Plaintiff. The pier rights are the subject of state court litigation against the State of Maryland and Calvert County, Maryland that seeks to establish the scope and value of those rights. The litigation has been stayed by the bankruptcy case. The litigation can continue once the dispute over who holds those rights, and in turn, who can pursue the litigation, is resolved here. . . . Plaintiff disputes that the Assignment is valid or was properly authorized by its members. In four counts of the complaint, Plaintiff seeks an order avoiding the Assignment. Specifically, Count 1 seeks an order declaring that the Assignment was not authorized in accordance with the terms of Plaintiff’s operating agreement. Count 2 seeks to avoid the Assignment as a preference, while Counts 3 and 4 seek to avoid the Assignment as a constructive or actual fraudulent transfer, respectively. . . .The court has the statutory authority to hear and determine Count 1 under 28 U.S.C. § 157(b)(2)(A) (“matters concerning the administration of the estate”) and § 157(b)(2)(O) (“other proceedings affecting the liquidation of the assets of the estate”). However, in Stern v. Marshall the Supreme Court held that, even though a bankruptcy court may have subject matter jurisdiction over a proceeding under 28 U.S.C. § 1334(b), and statutory authority to resolve it under 28 U.S.C. § 157(b), the court may nevertheless lack the constitutional authority under Article III to finally adjudicate the matter. . . . The parameters of Stern have not been established. But even under a broad reading of Stern, claims brought to augment the estate based on pre-petition actions and which are not intimately tied to the bankruptcy proceeding exceed the constitutional authority of a bankruptcy court. . . . Here, the Plaintiff and Donnelly consent to the court deciding Count 1. See 28 U.S.C. § 157)(c)(2). Steffen does not consent, although she does not cite any authority or offer any argument in support of her position. Count 1 raises the question of whether a pre-petition transfer by the Plaintiff was not properly authorized by the terms of its operating agreement and should be avoided. It is a state law claim independent of bankruptcy law, and has no connection to the case other than to augment the estate. The court concludes it lacks constitutional authority under Stern to decide Count 1, and therefore submits its proposed findings and conclusions for the District Court’s consideration under Fed. R. Bankr. P. 9033. . . . In so holding, the court does not suggest that Stern would prevent a bankruptcy court from rendering a final adjudication any time it is called upon to interpret corporate governance documents under state law. For example, early in this case, the court was required to determine whether the bankruptcy petition was properly authorized under the Plaintiff’s operating agreement, and no one contended the court lacked the constitutional authority to do so. The determining factors here are that the Plaintiff seeks to avoid a pre-petition transfer based on state law rights, and the only connection to the bankruptcy case is that Plaintiff seeks control of the transferred asset to administer it as part of the estate.”).

B.

ALLOWANCE OR DISALLOWANCE OF CLAIMS AGAINST THE ESTATE/EXEMPTIONS FROM PROPERTY OF THE ESTATE: 28 U.S.C. § 157(b)(2)(B) 1.

CLAIM OBJECTIONS

Loveridge v. Hall (In re Renewable Energy Dev. Corp.), 500 B.R. 77 (D. Utah 2013) (Dowdell, J.) (Renewable Energy Development Corporation (“REDCO”), the Chapter 7 debtor in the underlying 12

bankruptcy case, had engaged in the business of negotiating packages of contract and leasehold rights to develop solar and wind energy projects. The bankruptcy court authorized the sale of substantially all of the REDCO’s assets, but the sale did not include 12 lease option agreements that it had negotiated with landowners. The legal status of those option agreements was unclear, because REDCO had failed to make the required payments to landowners following execution of the option agreements. But the landowners also allegedly had not provided REDCO with the notice and opportunity to cure required before they could exercise their rights and remedies under the agreements, including their termination rights. Certain of the defendants in the adversary proceeding (the “Hall Parties”) were asked by the Chapter 7 Trustee to conduct due diligence on the option agreements, and were encouraged to submit bids to buy a group of assets that included the option agreements. Under the belief that the option agreements had failed for lack of consideration, the Hall Parties submitted a low bid for the assets, which the Trustee subsequently sought to sell to another, higher bidder—Cedar City Wind Holdings, LLC (“CCW”). The Trustee’s complaint alleged that the Hall Parties contacted the landowners who had signed the option agreements, informing them that the agreements were void, and then entered into new contracts with some of the landowners. As a result, according to the Trustee, CCW refused to close on the approved sale of the group of assets. In the adversary proceeding, the Trustee also alleged that the Hall Parties and several landowners had executed new agreements in violation of the automatic stay. He sought a declaratory judgment that the option agreements were valid and part of the bankruptcy estate, a declaratory judgment that any agreements between the landowners and the Hall Parties violated the automatic stay and were void, damages for the stay violations, and damages for tortious interference with economic relations. Two of the Hall Parties—Kimberly Ceruti (“Ceruti”) and Summit Wind Power, LLC (“Summit Wind”)—asserted a counterclaim and third-party complaint against the Trustee and his law firm, alleging breach of fiduciary duty, legal malpractice, breach of contract, tortious interference with contract and prospective business advantage, unjust enrichment, conversion, and declaratory relief that the option agreements were void. They also sought an order disqualifying the Trustee and his law firm from continuing to serve as trustee/attorney for the trustee in the Chapter 7 case. Subsequently, the bankruptcy court approved a new sale of the group of assets, noting that the assets were being sold “as is.” Summit Wind and Ceruti filed a motion to withdraw the reference based on their demands for a jury trial and their contention that the bankruptcy court lacked the constitutional authority to issue a final ruling on the claims and counterclaims asserted in the adversary proceeding. Concluding that the bankruptcy court had the constitutional authority to enter final judgments on the Trustee’s claims and the counterclaims asserted by Summit Wind and Ceruti, the district court reasoned: “The court disagrees with the Defendants’ Article III argument and holds that the bankruptcy court has authority to issue a final ruling on the causes of action that are the subject of the Defendants’ motion. . . . [T]he court adopts a narrow view of th[e] [Stern] holding and finds that, even if an action is more appropriately considered to be a private action for purposes of the Seventh Amendment analysis, such an action may nevertheless be so intricately intertwined with the bankruptcy proceeding that the bankruptcy court maintains its authority to enter a final judgment in that action under Article III. . . . The claims and counterclaims at issue here provide an example of why the court distinguishes its analysis under Stern from its analysis under Granfinanciera. The Trustee’s claim for tortious interference and the Defendants’ counterclaims are clearly based in state law and resemble private rights of action. As a result, the Defendants may properly demand a jury trial under Granfinanciera. But it is also clear 13

that these claims spring directly out of the bankruptcy proceeding itself. The Trustee’s claims all arise out of conduct that allegedly violated the automatic stay, which is a creation of bankruptcy law. And the counterclaims relate to the Trustee’s management of the estate and whether the Trustee maintained an appropriate relationship with the Defendants while performing these management functions. Even if the claims are not themselves public rights, on the facts presented here they are closely intertwined with the public bankruptcy scheme. Given this direct relationship to the bankruptcy proceeding, the court interprets Stern to allow the bankruptcy judge to retain authority to enter final judgment on the claims and counterclaims. . . . The court also notes that the claims at issue here are clearly distinguishable from the state law counterclaims that Vickie brought against Pierce in Stern. Pierce’s alleged tortious interference with Vickie’s inheritance preceded the creation of Vickie’s bankruptcy estate and any actions taken by the bankruptcy court. Her claim against Pierce would have existed regardless of whether she sought bankruptcy protection. In contrast, all of the claims at issue here arise out of the management of the bankruptcy estate and the bankruptcy proceedings themselves.”). In re Global Aviation Holdings, Inc., 496 B.R. 284 (E.D.N.Y. 2013) (Vitaliano, J.) (“Aero Safety Graphics (“ASG”) moves, under 28 U.S.C. § 157(d) and Federal Rule of Bankruptcy Procedure 5011, to withdraw its administrative claim and objections made to it from reference to the United States Bankruptcy Court for the Eastern District of New York . . . ASG’s claim falls squarely at the heart of the bankruptcy court’s core jurisdiction. Indeed, even ASG does not seriously contest that it demands anything other than an ‘allowance . . . of claims against the estate.’ 28 U.S.C. § 157(b)(2)(B). Nonetheless, ASG seeks to exploit a proverbial chink in GAH’s solid litigation armour, arguing that, in downplaying the core/noncore distinction in Stern v. Marshall . . . the Supreme Court created more latitude for district courts to withdraw core claims from the bankruptcy court. Though Stern surely emphasized that the bankruptcy court’s constitutional authority to adjudicate a particular controversy supersedes the core/non-core distinction codified at § 157, the core/non-core distinction remains relevant in this circuit to claim withdrawal analysis. . . . ASG cannot retreat to safety in Stern’s articulation of the limits of the bankruptcy court’s constitutional authority. There has never been any doubt that a bankruptcy judge has the constitutional authority and statutory jurisdiction to enter final judgment in a core proceeding concerning the allowance of claims against a bankruptcy estate. . . . Analytically, it is clear that ASG’s claim constitutes a core claim that falls comfortably within the constitutional authority of the bankruptcy court.”). Hamilton v. Try US, LLC, 491 B.R. 561 (W.D. Mo. 2013) (Smith, J.) (“This is an appeal from the Bankruptcy Court’s entry of summary judgment determining the validity and an amount of a legal claim against the Debtor, Try Us, LLC. . . . [T]he Bankruptcy Court entered a formal judgment determining Debtor owed [the claimant,] Realco [,] a total of $1,022,549.20, representing the amount due on [a] [p]romissory [n]ote plus attorney fees. Debtor and the Trustee of the bankruptcy estate appeal, contending the Bankruptcy Court lacked authority under Article III of the Constitution to render a decision. The Court disagrees, and affirms the Bankruptcy Court’s decision. . . . Realco has a claim against the bankruptcy estate, and it has filed a Proof of Claim. The Bankruptcy Court is constitutionally empowered to resolve issues related to claims against the bankruptcy estate, and resolution of Realco’s claim required the Bankruptcy Court to determine factual and legal issues 14

arising not only from Realco’s contract claim but also those arising from Debtor’s defenses. Not only were the issues decided necessary to the resolution of the claim, in contrast to Stern the Bankruptcy Court did not decide any issues that were unrelated or unnecessary to resolution of Realco’s claim. Finally . . . it was Debtor that brought the dispute to the Bankruptcy Court and asked the Bankruptcy Court for a resolution. . . . Appellants focus on the fact that Realco’s claim is predicated on common law. While it is true that Realco’s claim is a common law claim that is not dependent on statutory authority (i.e., it is “the stuff of the traditional actions at common law tried by the courts at Westminster in 1789,” Stern, 131 S. Ct. at 2609 (quotation omitted)), this observation is not determinative. The importance of the observation is this: Congress can establish non-Article III decisionmakers to resolve claims or causes of action it creates. The fact that Congress did not create the cause of action asserted by Realco removes this possibility, but it does not mean that section 157(b)(2)(B) is not constitutional under Katchen and Langenkamp. Accepting Appellants’ argument requires concluding Katchen and Langenkamp are no longer valid, which is contrary to . . . Stern . . . . Accepting Appellants’ argument also leads to the conclusion that Bankruptcy Courts could not resolve any disputes about claims. If this remarkably broad proposition were true one would expect Stern to have said so; instead, the Court described the issue before it as ‘narrow.’ Stern, 131 S. Ct. at 2620. . . . The Court concludes Article III permits bankruptcy judges to adjudicate legal and factual disputes related to claims filed against a bankruptcy estate. The issues raised by Realco’s suit directly related to its claim against the bankruptcy estate. Therefore, the Bankruptcy Court’s resolution of Realco’s claim (and Debtor’s defenses) did not violate Article III of the Constitution.”). Carr v. Jacobs (In re New Century TRS Holdings, Inc.), 2013 WL 1196605 (D. Del. Mar. 25, 2013) (Robinson, J.) (“In April 2007, New Century TRS Holdings, Inc. (“TRS Holdings”) and its affiliates (collectively, “debtors”) filed chapter 11 bankruptcy petitions in the United States Bankruptcy Court for the District of Delaware (“bankruptcy court”). On October 5, 2009, appellant Anita B. Carr (“appellant”) commenced [the adversary proceeding] by filing a complaint against the debtors asserting claims for: (1) fraudulent conveyance; (2) violation of chapter 11 of the Bankruptcy Code; (3) fraudulent misrepresentation and negligence; (4) violation of the Truth–in–Lending Act, 15 U.S.C. § 1601 et seq.; (5) violation of the Business and Professions Code Section 17200 et seq.; (6) violation of the Real Estate Settlement Procedures Act, 12 U.S.C. [§] 2605; and (7) quiet title to real property. The claims arose out of a loan transaction between the appellant and debtor Home 123 Corporation that took place on or about January 25, 2006. The property has since been the subject of a foreclosure sale. . . . Appellant and appellee [trustee of the debtors’ liquidation trust] entered into a settlement on or about October 5, 2010 wherein appellee agreed to pay appellant a settlement sum of $60,000 ‘in full and final satisfaction of the causes of action and any other claim(s) that [appellant] may have against the Debtors or the Trust.’ The settlement sum, paid to appellant, was consideration for the full and final settlement of all claims appellant had against the trust and the debtors through appellant’s release of the debtors, the trust, the trustee, the plan advisory committee, and their respective retained professionals of and from ‘any and all claims, damages, actions, suits, causes of action, rights, liens, demands, obligations and/or liabilities.’ The settlement agreement further provided that, to the extent a dispute arose between the parties at any time after the full execution of the settlement agreement, ‘the Parties consent and subject themselves to the jurisdiction of this United States Bankruptcy Court, District of Delaware 15

in front of the Honorable Kevin J. Carey to resolve such dispute(s).’” The appellant then sought to set aside the settlement on a number of grounds, including the allegation that she was fraudulently induced to enter into the settlement agreement. She also maintained that “the bankruptcy court lacked the constitutional authority to adjudicate [her] claims.” Rejecting this contention, the district court stated: “This matter falls within the ambit of § 157(b)(2)(B), and the parties do not dispute that this is a core proceeding. Appellant, however, relies upon Stern, supra, to argue that the bankruptcy court had no authority to adjudicate her claim of fraudulent inducement of settlement. . . . Having considered Stern and its progeny, the court adopts the narrow construction of Stern and its holding, that is, that Stern is restricted to the case of a ‘state-law counterclaim that is not resolved in the process of ruling on a creditor’s proof of claim’ as set forth in 28 U.S.C. § 157(b)(2)(C). . . . Here, the bankruptcy court approved a settlement between appellant and appellee that initially resulted in dismissal of [the adversary proceeding] and settled all claims. The terms of the settlement agreement provide that the parties ‘consent and subject themselves to the jurisdiction’ of the bankruptcy court to resolve disputes, to the extent a dispute arose subsequent to execution of the settlement agreement. In addition, appellant, in her request for dismissal dated November 1, 2010, stated, ‘should any disputes or other discrepancies or any portion of the settlement be deemed unenforceable, or unlawful,’ the bankruptcy court retains jurisdiction to address those matters. Finally, during the April 20, 2011 evidentiary hearing, appellant acknowledged that the parties consented to the jurisdiction of the bankruptcy court in the settlement agreement. . . . The parties consented to the jurisdiction of the bankruptcy court. The bankruptcy court has the constitutional authority to enter the orders appealed by appellant.”). In re Pajian, 508 B.R. 708 (Bankr. N.D. Ill. 2014) (Cassling, J.) (“An objection to a proof of claim ‘stems from the bankruptcy itself’ and may constitutionally be decided by a bankruptcy court. Stern v. Marshall, 131 S. Ct. 2594, 2618 (2011).”). Paloian v. LaSalle Bank Nat’l Ass’n (In re Doctors Hosp. of Hyde Park, Inc.), 508 B.R. 697 (Bankr. N.D. Ill. 2014) (Schmetterer, J.) (“The authority of a bankruptcy judge to rule on objections to a creditor’s proof of claim where necessary to determine the valid amount of the claim was clearly recognized by the Supreme Court opinion in Stern v. Marshall . . . . This adversary proceeding was filed to state all objections to LaSalle’s claim as counterclaims as required by F.R. Bankr. P. 3007(b) and 7001(2). The pending Motion for summary judgment concerns only Count XV of the Counterclaim, which disputes the extent, if any, to which the ‘Yield Maintenance Premium’ can be part of LaSalle’s claim. This contested proceeding is therefore necessary to determine the valid amount of LaSalle’s claim, and therefore a bankruptcy judge has constitutional authority to adjudicate Count XV.”). In re Settlers’ Hous. Serv., Inc., 505 B.R. 483 (Bankr. N.D. Ill. 2014) (Schmetterer, J.) (“Here, Debtor’s adversary proceeding related to this case presents an objection to the proof of claim itself. Code Section 502(b) provides that the court ‘shall determine the amount of such claim . . . except to the extent that (1) such claim is unenforceable against the debtor and property of the debtor, under any agreement or applicable law for any reason . . . .’ If, as a Seventh Circuit opinion has explained, a bankruptcy judge has constitutional authority to enter final judgment on ‘preference-recovery and fraudulent-conveyance claims by the Trustee’ when that is necessary under § 502(d), Peterson v. 16

Sowers Dublin Ltd., 729 F.3d 741, 747 (2013), then the bankruptcy judge also has authority to enter final judgment on an objection to the proof of claim itself under § 502(b)(1). And of course that is ‘necessary’ here under the Stern rationale.”). Paloian v. LaSalle Bank Nat’l Ass’n (In re Doctors Hosp. of Hyde Park, Inc.), 504 B.R. 900 (Bankr. N.D. Ill. 2014) (Schmetterer, J.) (“The authority of a bankruptcy judge to rule on objections to a creditor’s proof of claim where necessary to determine the valid amount of the claim was clearly affirmed. See Stern v. Marshall, 131 S. Ct. 2594, 2616 (2011). Here, the adversary proceeding was filed in response to a court order directing that all objections to LaSalle’s claim consisting of counterclaims as defined in F.R. Bankr. P. 3007(b) and 700l(2) were to be re-pleaded as separate counts in an adversary proceeding. The Trustee complied with that Order and filed the above-captioned twenty-nine count adversary counterclaim Complaint challenging LaSalle’s Claim. This Motion to Alter or Amend concerns only Counts II, III and IV, and seeks [a] ruling that LaSalle’s lien does not extend to certain assets, and therefore it must necessarily be resolved in order to reach a ruling as to what if anything is actually due on LaSalle’s filed and pending proof of secured claim.”). In re Batista-Sanechez, 502 B.R. 227 (Bankr. N.D. Ill. 2013); In re Batista-Sanechez, 501 B.R. 850 (Bankr. N.D. Ill. 2013) (Schmetterer, J.) (“An objection to proof of claim ‘stems from the bankruptcy itself,’ and may constitutionally be decided by a bankruptcy judge. Stern v. Marshall, ––– U.S. ––––, 131 S. Ct. 2594, 2618, 180 L. Ed. 2d 475 (2011).”). Glassman, Edwards, Wyatt, Tuttle & Cos, P.C. v. Wade (In re Wade), 500 B.R. 896 (Bankr. W.D. Tenn. 2013) (Kennedy, J.) (“Here, the Law Firm’s removed Chancery Court lawsuit in [the] adversary proceeding is a claim against [the debtor] and the 11 U.S.C. § 541 property of the bankruptcy estate because, to the extent that assets become available, the property of the estate will be distributed towards that claim, if allowed, and any other creditors’ allowed claims. Property of the § 541(a) estate, wherever located and by whomever held, is within the exclusive derivative jurisdiction of the bankruptcy court. 28 U.S.C. § 1334(e). The claims allowance process, 11 U.S.C. §§ 501–511, is a fundamental, statutory process involving bankruptcy proceedings. Bankruptcy courts have both core subject matter jurisdiction under 28 U.S.C. § 157(b)(2)(B) and final authority under the U.S. Constitution to decide proceedings arising in the claims allowance process. See Stern v. Marshall . . . .”). In re Gordian Med., Inc., 499 B.R. 793 (Bankr. C.D. Cal. 2013) (Wallace, J.) (“Because the allowance of claims in a bankruptcy case was a matter relegated by English law in 1789 to bankruptcy commissioners (the 18th century equivalent of today’s federal bankruptcy judges) and not to the common law courts or the courts of equity (except perhaps upon appeal), this Court may issue a final order in the matter under Stern v. Marshall . . . . 2 William Blackstone, Commentaries *480–81, *487.”). In re Cmty. Mem’l Hosp., 494 B.R. 906 (Bankr. E.D. Mich. 2013) (Opperman, J.) (“The Michigan Unemployment Insurance Agency (“MUIA”) filed two Proofs of Claim in this case for reimbursement of monies paid by the MUIA to former employees of the Debtor. The Debtor does 17

not object to the amount of these claims, but objects to the priority status and administrative claim status of each. . . . This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(B) (allowance or disallowance of claims against the estate). The issues in this case arise from Title 11 of the United States Code and do not involve any matter which limits this Court’s jurisdiction as detailed by the United States Supreme Court in Stern v. Marshall, ––– U.S. ––––, 131 S. Ct. 2594, 180 L. Ed. 2d 475 (2011) and by the Sixth Circuit Court of Appeals in Waldman v. Stone, 698 F.3d 910 (6th Cir. 2012).”). Schmid v. Bank of Am. (In re Schmid), 494 B.R. 737 (Bankr. W.D. Wis. 2013) (Furay, J.) (“The Debtor and Plaintiff, Suzannah Meta Schmid (“Debtor”), filed an objection to Claim No. 2 filed by BAC Home Loans Servicing, LP (“BAC”), now known as Bank of America as a successor by merger (“BANA”), contending that BAC ‘is not the real party in interest’ and that it ‘owns neither the promissory note nor the mortgage.’ The Debtor then filed this adversary proceeding contending that BANA is neither a real party in interest nor the owner of the note and mortgage supporting Claim No. 2 (the “Adversary Proceeding”). . . . The Debtor’s Amended Complaint (and the proposed Second Amended Complaint) seeks a determination of the validity and enforceability of the claims of BANA. The Debtor seeks a determination that the assignments of the Note and Mortgage are void and unenforceable as a result of fraud; that no amounts are owed to BANA; that BANA is not the real owner or holder of the Note and Mortgage; that the assignments, allonges and endorsements are a forgery or unenforceable because the assignments were to nonexistent entities, or in blank; and that the claims of [Associated Bank, N.A. (“ABNA”)] be disallowed as unsecured if the claim of BANA is allowed. Further, the Debtor asks the Court to determine that the proof of claim is false or fraudulent. She argues that BANA does not have standing, or is not a real party in interest, to maintain a claim. Debtor also requests an award of costs and attorneys’ fees and ‘reserves her rights to bring claims at law for damages. . . .’ In the present matter, the nub of the dispute was originally brought before the Court in the form of an objection to BANA’s proof of claim. There is no question that the allowance of a creditor’s proof of claim is a core matter under 28 U.S.C. § 157(b)(2)(B) that this Court may hear and finally determine. Likewise, ‘Stern reaffirmed that bankruptcy courts have the authority to restructure the debtor-creditor relationship and determine “creditors’ hierarchically ordered claims to a pro rata share of the bankruptcy res.”’ Rinaldi v. HSBC Bank USA, N.A. (In re Rinaldi), 487 B.R. 516, 523 (Bankr. E.D. Wis.2013) (quoting Stern, 131 S. Ct. at 2614). As such, this Court has both the power under the Bankruptcy Code and the Constitutional authority to decide this matter and enter a final judgment. This Court may also determine the validity of the BANA mortgage lien on the Debtor’s residence as property of the bankruptcy estate and as part of the process of claim allowance. See Pulaski v. Dakota Fin., LLC (In re Pulaski), 475 B.R. 681, 687 (Bankr. W.D. Wis. 2012).”). In re Archdiocese of Milwaukee, 490 B.R. 575 (Bankr. E.D. Wis. 2013); In re Archdiocese of Milwaukee, 2013 WL 414203 (Bankr. E.D. Wis. Feb. 1, 2013); In re Archdiocese of Milwaukee, 2013 WL 414205 (Bankr. E.D. Wis. Feb. 1, 2013); In re Archdiocese of Milwaukee, 2013 WL 427934 (Bankr. E.D. Wis. Feb. 4, 2013) (Kelley, J.) (“Ruling on objections to proofs of claim falls within the core jurisdiction of the bankruptcy court under 28 U.S.C. §§ 1334 and 157(b)(2)(B). Unlike the entry of a final order on a State law counterclaim, allowance of claims was not deemed unconstitutional in Stern v. Marshall . . . . In Stern, the Supreme Court reaffirmed that bankruptcy 18

courts have the authority to restructure the debtor-creditor relationship and determine ‘creditors’ hierarchically ordered claims to a pro rata share of the bankruptcy res.’ Id.”). Rinaldi v. HSBC Bank USA, N.A. (In re Rinaldi), 487 B.R. 516 (Bankr. E.D. Wis. 2013) (Kelley, J.) (“[T]he Debtors ask the Court to determine the validity and enforceability of HSBC’s proof of claim. The Debtors’ objections to the claim include that the Note lacks consideration; two mortgage assignments are null and void; another mortgage assignment is a forgery or unenforceable because it was not recorded or perfected prior to bankruptcy; HSBC is not the owner or holder of the Note; and the Note image attached to the claim was fabricated to deceive the Court. . . . Allowance of proofs of claim falls within the core matters that the bankruptcy court may hear and determine under 28 U.S.C. § 157(b)(2)(B). Unlike the entry of a final order on a state law counterclaim, allowance of claims was not deemed unconstitutional in Stern. Stern reaffirmed that bankruptcy courts have the authority to restructure the debtor-creditor relationship and determine ‘creditors’ hierarchically ordered claims to a pro rata share of the bankruptcy res.’ 131 S. Ct. at 2614. Thus, the Court has authority to finally determine the validity of HSBC’s claim.”). In re Moncree, 2014 WL 2916444 (Bankr. E.D. Wis. June 27, 2014) (Kelley, J.) (“The issue is whether Debria Moncree (the “Debtor”) can change the valuation of her real estate located at 3001–3003 North 8th Street in Milwaukee (the “property”) to reduce the amount payable to a secured creditor in her second amended Chapter 13 plan. The Debtor valued the property at $75,600 in a first amended plan . . . . Bank of America, successor by merger to BAC Home Loans Servicing, LP, f/k/a Countrywide Home Loans Servicing LP (the “Creditor”) holds a mortgage on the property. The first amended plan proposed to pay the Creditor the principal amount of $75,600 plus interest of 4.5%. The Creditor did not object to this treatment, and the Court confirmed the first amended plan on September 19, 2013. . . . The Creditor filed a claim in the amount of $246,618.02. On August 1, 2013, the Debtor filed an objection to the claim, contending that the amount should be limited to $75,600, consistent with the plan. The Court ordered the Creditor to file a response to the claim objection and offered the opportunity for a hearing. The Creditor did not respond or request a hearing, and the Court entered an order on September 16, 2013, allowing the Creditor’s secured claim in the amount of $75,600. . . . On March 18, 2014, the Debtor filed a second amended plan. The plan proposes to decrease the amount of the payments to the Creditor to reflect a secured claim in the amount of $48,500, consistent with a new appraisal the Debtor obtained. According to the Debtor, the original appraisal did not take into account repairs that are necessary to convert the property to a day care center. The Creditor and the Chapter 13 Trustee objected to the modified plan. . . . The Court has the authority to enter a final order as this proceeding involves the allowance of a claim . . . . See 28 U.S.C. § 157(b)(2)(B) . . . . These core proceedings are not constitutionally suspect under Stern v. Marshall, 131 S. Ct. 2594 (2011).”). Paloian v. LaSalle Bank Nat’l Ass’n (In re Doctors Hosp. of Hyde Park, Inc), 2014 WL 2860296 (Bankr. N.D. Ill. June 19, 2014) (Schmetterer, J.) (“The Motion seeks judgment on the pleadings in favor of LaSalle on Count XXX of the Amended Complaint . . . filed by Paloian [the trustee] in the instant adversary proceeding Paloian alleges in Count XXX of the Amended Complaint that LaSalle’s release of a third party in a settlement agreement with that third party also released the Debtor from any obligation to pay any amounts of LaSalle’s claim. . . . [T]his court has 19

constitutional authority to rule on Count XXX of the Amended Complaint because Count XXX seeks to deny the entirety of LaSalle’s Claim . . . and is therefore part of the claims allowance process. See Stern v. Marshall, 131 S. Ct. 2594, 2616 (2011).”). In re 1701 Commerce, LLC, 2014 WL 2615016 (Bankr. N.D. Tex. June 11, 2014) (Lynn, J.) (“In Executive Benefits [Insurance Agency v. Arkison, 573 U.S. ––––, No. 12–1200, 2014 WL 2560461 (U.S. June 9, 2014)], the Supreme Court assumed without deciding that Stern infected the fraudulent transfer claim at issue, but concluded that a de novo review of the bankruptcy court’s proposed findings of fact and conclusions of law cured any such deficiency. Id. at *8. . . . Nonetheless, the procedural posture of this matter insulates the court’s competency from the disposition in Executive Benefits. This matter involves the unusual situation where the bankrupt received, rather than the made, the transfer. Thus, although requiring the court to determine a fraudulent transfer, the [claim] Objection is necessarily resolved in the claims allowance process. Moreover, the estate here would be the defendant asserting a jury demand, thus the private-rights analysis of the Seventh Amendment in Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 109 S. Ct. 2782, 106 L. Ed. 2d 26 (1982), is inapposite. See Exec. Benefits, 2014 WL 2560461, at *4 n.3 (citing Granfinanciera, 492 U.S. at 55, 64). As a result, the court may enter a final order on the Objection. To the extent that the Objection may implicate Stern, the court holds that the factual findings and legal conclusions specific to the alleged fraudulent transfer are necessary to finally determine the Objection.”). In re Suppies, Inc., 2014 WL 2522186 (Bankr. S.D. Tex. June 4, 2014) (Jones, J.) (“Before the Court is the Debtor’s Objection to Proof of Claim . . . of the Texas Comptroller of Public Accounts . . . . The Court has constitutional authority to enter a final order in this matter under the Supreme Court’s holding in Stern v. Marshall . . . . ”). Walgreen Co. v. NXXI, Inc. (In re NXXI, Inc.), 2014 WL 2219169 (Bankr. S.D.N.Y. May 28, 2014) (Drain, J.) (“In this adversary proceeding, plaintiff Walgreen Co. (“Walgreen”) asserts chargeback claims against two of its former vendors, defendants NXXI, Inc., f/k/a Nutrition 21, Inc., the debtor herein (“NXXI”) and Nature’s Products, Inc. (“NPI”) for outdated, defective and otherwise unsalable products, as well as for merchandise it claims an absolute right to return, and based on specific deals, such as discounts, coupons and promotional allowances. In turn, NXXI and NPI seek to collect invoices owed them by Walgreen, the amount of which, Walgreen contends, is exceeded by its claimed chargebacks. In addition, NXXI seeks to enforce NPI’s assumption, under an asset purchase agreement between NXXI and NPI, dated December 29, 2009 (the “APA”), of NXXI’s obligations, if any, to Walgreen for chargebacks, and NPI asserts a claim against NXXI for breach of the APA. . . . Given that this adversary proceeding was necessary to decide the claims of Walgreen and NPI asserted against the chapter 11 estate of NXXI, the debtor herein, which on their face exceed the amount of NXXI’s claims against them, the Court has the power to enter a final order resolving this adversary proceeding. Stern v. Marshall, 131 S. Ct. 2594, 2617 (2011); Langenkamp v. Culp, 498 U.S. 42, 44 (1990).”). Sears v. Sears (In re Sears), 2014 WL 689883 (Bankr. D. Neb. Feb. 21, 2014) (Saladino, J.) (“The issue in the bankruptcy case is the validity and amount of a claim against the estate. Such [an] issue[] [is] vital to the bankruptcy process and the adjustment of the debtor-creditor relationship. 20

Clearly, th[is] [is] [an] issue[] that arise[s] under Title 11 and [is] within the bankruptcy court’s constitutional authority under even a strained reading of Stern v. Marshall . . . .”). In re Ingram, 2014 WL 644501 (Bankr. W.D. Tex. Feb. 19, 2014) (Gargotta, J.) (“The Court also finds that it has the requisite authority to issue a final order [on the debtor’s objection to the claim filed by the IRS]. See Stern v. Marshall, 131 S. Ct. 2594 (2011) (finding that a bankruptcy court may issue final orders in claims objections).”). In re Batista-Sanechez, 2014 WL 308970 (Bankr. N.D. Ill. Jan. 27, 2014) (Schmetterer, J.) (“An objection to proof of claim ‘stems from the bankruptcy itself,’ and may constitutionally be decided by a bankruptcy judge. Stern v. Marshall, 131 S. Ct. 2594, 2618 (2011).”). Richer v. Morehead (In re Richer), 2014 WL 105393 (Bankr. N.D. Ill. Jan. 9, 2014) (Lynch, J.) (“Although the resolution of the debtors’ objection to Claim [N]o. 7 in part implicates state law, the matter does not seek any relief beyond disallowing such claim against the estate or property of the estate. This court, therefore, also has constitutional authority to enter final judgments on the matter. See Stern v. Marshall, 131 S. Ct. 2594, 2617 (2011) (stating that “he who invokes the aid of the bankruptcy court by offering a proof of claim and demanding its allowance” has “no basis . . . to insist that the issue be resolved in an Article III court”) (citing Katchen v. Landy, 382 U.S. 323, 333–34 (1966)).”). Ball Four, Inc. v. 2011-SIP-1 CRE/CADC Venture, LLC (In re Ball Four, Inc.), 2013 WL 5716889 (Bankr. D. Colo. Oct. 18, 2013) (Brown, J.) (“Plaintiff is the reorganized Debtor, whose plan was confirmed on August 29, 2011. [Defendant] SIP is the successor in interest to FirsTier Bank and stands in the bank’s shoes as the purchaser of the Debtor’s loan from the FDIC in its capacity as receiver for FirsTier Bank (the “Bank”). The Bank filed a proof of claim in the main bankruptcy case based on a loan in the original amount of $1,950,000, which was made to enable Ball Four to finance the construction of a sports complex (“Construction Loan”). In this adversary proceeding, Ball Four alleges that the Bank mishandled the Construction Loan, beginning when the Bank made payments to certain contractors in ‘direct contravention’ of Ball Four’s explicit instructions, causing Ball Four to lose all ability to negotiate with its contractors, with resulting damage to its business. Ball Four also alleges that the Bank failed to honor its written commitment to provide permanent financing, and that it was unable to obtain alternative financing due to the project being over-budget because of the payments made by the Bank over Ball Four’s objections. Ball Four asserts five claims for relief against SIP based on this conduct: 1) damages for breach of contract on the Construction Loan; 2) damages for breach of contract for failure to honor a Permanent Loan Commitment; 3) actual damages, costs of suit and interest for breach of the implied covenant of good faith and fair dealing; 4) equitable subordination of SIP’s entire claim pursuant to 11 U.S.C. § 510; and 5) disallowance of SIP’s entire claim pursuant to 11 U.S.C. § 502(b)(1). . . . Early in this case, the Court sua sponte raised concerns regarding its jurisdiction to hear Plaintiff’s claims based on the Supreme Court’s ruling in Stern v. Marshall . . . . Ball Four’s ‘claim disallowance’ claim for relief is clearly a ‘core matter,’ just as it was in Waldman [v. Stone, 698 F.3d 910 (6th Cir. 2012)]. . . . It also fits within the historical concept of summary or in rem jurisdiction,

21

which has always allowed the bankruptcy tribunal to adjudicate claims against the res. . . . Thus, the Court has the authority to enter final orders as to Ball Four’s claims for . . . claim disallowance.”). In re Smith, 2013 WL 665991 (Bankr. D. Vt. Feb. 22, 2013) (Brown, J.) (“Since this is an objection to claim proceeding, this Court has constitutional authority to enter a final order on the merits, Stern v. Marshall, 131 S. Ct. 2594, 2616–2617, 180 L. Ed. 2d 475 (2011) . . . . ”).

2.

OBJECTIONS TO EXEMPTIONS

In re Reeves, 509 B.R. 35 (Bankr. S.D. Tex. 2014) (Bohm, J.) (“At issue is how this Court should rule on the Trustee’s Objection to Exemptions . . . . Having concluded that this Court has jurisdiction over this contested matter, the Court nevertheless notes that Stern v. Marshall . . . sets forth certain limitations on the constitutional authority of bankruptcy courts to enter final orders. This Court must therefore determine whether it has constitutional authority to sign final orders in the dispute at bar—[an] order relating to the Trustee’s objections to the Debtors’ claimed exemptions . . . . The facts in the case at bar are easily distinguishable from those in Stern. In Stern, the debtor filed a counterclaim against a creditor who had filed a proof of claim. The debtor’s counterclaim was based solely on state law; there was no Code provision providing a basis for the counterclaim. Moreover, the resolution of the counterclaim was not necessary to adjudicating the validity of the claim of the creditor. Under these circumstances, the Supreme Court held that the bankruptcy court lacked constitutional authority to enter a final judgment on the debtor’s counterclaim. . . . In the case at bar, on the other hand, there is no state law involved. The Objection . . . is based upon [an] express provision[] of the Code—11 U.S.C. [§ 522] . . . . Thus, this dispute is easily distinguishable from the suit in Stern, and the Court concludes that Stern v. Marshall is inapplicable in this dispute. The Court therefore has the constitutional authority to enter final orders in this dispute. . . . In the alternative, even if Stern somehow applies, this Court concludes that the one exception articulated in Stern by the Supreme Court applies—specifically, that this Court may enter a final order over essential bankruptcy matters under the ‘public rights’ exception. . . . Disputes that are integrally bound up in the claims adjudication process—and thus involve the exercise of the Bankruptcy Court’s in rem jurisdiction over the estate—are part of the ‘public rights’ exception. See Stern, 131 S. Ct. at 2618 (noting that when determining whether Congress may bypass Article III, “the question is whether the action at issue stems from the bankruptcy itself or would necessarily be resolved in the claims adjudication process”). Disputes over rights created by the Bankruptcy Code itself as part of the public bankruptcy scheme also fall within the ‘public rights’ exception. In the case at bar, the key issues before this Court arise from a dispute over whether . . . certain property is exempt . . . . These issues are central to the public bankruptcy scheme, as they relate to both the exercise of exclusive jurisdiction over the property of the Debtors’ estate (because before property can become exempt, it is property of the estate), and the equitable distribution of that property among the Debtors’ creditors. . . . For all of these reasons, this Court has the constitutional authority to enter final orders on the Objection . . . . ”). In re Cowin, 2014 WL 1168714 (Bankr. S.D. Tex. Mar. 21, 2014) (Bohm, J.) (“In the case at bar, the Objection is based upon an express provision of the Code—11 U.S.C. § 522(o). This provision 22

is solely a creature of the Code, having become law in 2005 when Congress passed BAPCPA. Thus, this dispute is easily distinguishable from the suit in Stern, and the Court concludes that Stern is inapplicable in the case at bar. The Court therefore has the constitutional authority to enter a final order on the Objection. . . . In the alternative, even if Stern somehow applies, this Court concludes that the one exception articulated in Stern by the Supreme Court is applicable here—specifically, that this Court may enter a final order over essential bankruptcy matters under the ‘public rights’ exception. . . . Disputes over rights created by the Code itself as part of the public bankruptcy scheme also fall within the ‘public rights’ exception. . . . [T]he Code contains provisions expressly allowing debtors to claim exemptions on property of the estate, and the Code also contains provisions—such as § 522(o)—expressly limiting the extent of exemptions that the debtor may claim. These are rights that fall within the ‘public rights’ exception. Bankruptcy courts may enter final orders on disputes over such rights.”). In re Myers, 2014 WL 585431 (Bankr. D. Kan. Feb. 13, 2014) (Nugent, J.) (“Only in the most unusual event would the District Court consider withdrawal of the reference to determine whether an exemption applies in a particular case. The fact that the bankruptcy court is determining application of a state law exemption statute is alone insufficient by itself to warrant withdrawal of the reference, because allowing exemptions is intrinsically connected to a debtor’s bankruptcy case. Cf. Stern v. Marshall, 131 S. Ct. 2594, 2611–15 (2011) (state law tortious interference counterclaim that existed independent of any bankruptcy proceeding required adjudication by an Article III court that could enter a final judgment).”). Weaver v. Piwonski (In re Piwonski), 2014 WL 210552 (Bankr. D. Colo. Jan. 17, 2014) (Romero, J.) (Plaintiff filed two separate adversary proceedings in which he asserted a variety of state-law claims against the debtor and also sought “a finding of nondischargeability for conversion, misappropriation and civil theft under . . . 523(a)(4) . . . a finding of nondischargeability for breach of fiduciary duty under § 523(a)(4) . . . and . . . a finding of nondischargeability under § 523(a)(6).” In addition, “[b]oth [the plaintiff] and the Chapter 7 Trustee objected to [the debtor’s] claimed exemptions.” The bankruptcy court abstained from hearing the state-law claims. The court concluded that it had the constitutional authority to finally adjudicate . . . the objections to the debtor’s claimed objections, stating that . . . “whether [the alleged nondischargeable] debt may be ameliorated by exemptions claimed by [the debtor] . . . [is a] matter[] fall[ing] within a claims allowance process. . . . [A]lthough the parties may need resolution of the state law issues of ownership from which this Court has abstained before entitlement to exemptions may be examined, the allowance or disallowance of exemptions of the property of [the debtor] is ultimately for this Court to determine.”). In re Egorov, 2013 WL 6185401 (Bankr. S.D. Cal. Nov. 22, 2013) (Mann, J.) (“This Court has authority to enter a final judgment on the Trustee’s exemption objection as the objection resolves claims to property of the estate, and is therefore central to the public bankruptcy scheme.”). Orcutt v. GMAC Mortg., LLC (In re Orcutt), 2013 WL 1342741 (Bankr. D. Vt. Apr. 2, 2013) (Brown, J.) (GMAC Mortgage, LLC (“GMAC”) challenged the bankruptcy court’s constitutional authority to enter a final judgment declaring the mortgage it held on the Chapter 13 debtors’ 23

residential real estate inoperative as a matter of Vermont law. Concluding that GMAC’s argument was not well taken, the court reasoned: “This Court is adjudicating the validity of the mortgage—a question of state law—because it is the necessary first step in, and tantamount to, a ruling on: 1) the secured status of Defendant’s claim in this case under § 506(a) of the Bankruptcy Code; 2) treatment of the Defendant’s claim in the plan and objection to the plan under § 1325 of the Bankruptcy Code; and 3) the Defendant’s objection to the Plaintiffs’ claim of homestead exemption under § 522(b) of the Bankruptcy Code. The fact that the ruling on the validity of the Defendant’s mortgage disposes of the confirmation, claim objection, and exemption allowance issues in the main case is sufficient to satisfy the criteria established by Stern and afford this Court constitutional authority to adjudicate the instant adversary proceeding.”).

C.

COUNTERCLAIMS BY THE ESTATE AGAINST PERSONS FILING CLAIMS AGAINST THE ESTATE: 28 U.S.C. § 157(b)(2)(C) 1.

BANKRUPTCY COURTS HAVE THE CONSTITUTIONAL AUTHORITY TO FINALLY ADJUDICATE THE COUNTERCLAIM(S)

Frazin v. Haynes & Boone, L.L.P. (In re Frazin), 732 F.3d 313 (5th Cir. 2013) (Reavley, J.; Prado, J.; Owen, J.) (“Timothy Frazin appeals the judgment of the district court affirming the final judgment entered by the bankruptcy court on certain state-law counterclaims that Frazin filed against the Appellees, attorneys who were authorized by the bankruptcy court to represent Frazin in a separate lawsuit. Frazin argues that the bankruptcy court lacked the authority to enter a final judgment on these claims in light of the Supreme Court’s decision in Stern v. Marshall . . . Frazin filed a voluntary petition under Chapter 13 of the Bankruptcy Code. While the bankruptcy proceedings were pending, Frazin filed suit in state court against Lamajak, Inc. for breach of contract, promissory estoppel, and quantum meruit. Frazin filed an application with the bankruptcy court to employ Appellee Griffith & Nixon, P.C. as special counsel to represent him in his action against Lamajak. The bankruptcy court authorized Frazin to employ Griffith & Nixon on a contingency fee basis and provided that the firm would be paid following a fee application to the court. . . . On April 18, 2005, the bankruptcy court entered an order discharging Frazin, but the case remained open pending the outcome of Frazin’s state-court suit, as the Chapter 13 plan provided that a portion of any potential recovery would be used to satisfy unsecured claims against the bankruptcy estate. . . . After a two-week trial on Frazin’s state-law claims against Lamajak, the jury awarded Frazin three alternative recoveries: (1) $4,000,000 for breach of contract; (2) $1,400,000 for promissory estoppel; and (3) $1,125,000 in quantum meruit. The court entered judgment on the $4,000,000 award for breach of contract, as well as attorneys’ fees and interest, for a total award of $7,158,383.10 (which was later reduced to $6,360,132.40 because of an error in the interest calculation). Lamajak appealed. . . . Frazin filed an application with the bankruptcy court to employ Appellee Haynes & Boone, LLP as special counsel to represent him in the appeal. The bankruptcy court authorized Frazin to employ Haynes & Boone and again provided that the firm’s fees would be paid upon application to and approval by the bankruptcy court. The bankruptcy court ordered 24

that any litigation proceeds awarded to Frazin would be paid to and held in trust by Haynes & Boone to allow the Chapter 13 trustee to determine the amount necessary to satisfy the remaining claims against the estate. . . . On appeal, Lamajak argued that Frazin was not entitled to recovery on any of his theories. Haynes & Boone responded to Lamajak’s arguments with briefs on the merits and argued the appeal orally before the Fifth Court of Appeals of Texas. The court reversed the award for breach of contract, holding that Frazin had not presented sufficient evidence to find that a contract with definite terms had been entered into. The court awarded Frazin recovery on his quantum meruit claim, that, along with attorneys’ fees and interest, resulted in an award of approximately $3.4 million. Lamajak sought an extension of time to file a petition for review in the Texas Supreme Court, around which time the parties settled for $3.2 million. . . . Pursuant to the procedure ordered by the bankruptcy court, Lamajak wired $3.2 million to a Haynes & Boone trust account. Haynes & Boone filed a motion seeking guidance from the bankruptcy court on disbursement of the proceeds; it also filed a request for an expedited hearing on this motion. Both Haynes & Boone and Griffith & Nixon (collectively, the “Attorneys”) filed applications with the bankruptcy court requesting approval of their fees. Frazin filed objections to the fee applications filed by each firm. . . . In response to the Attorneys’ request for fees, Frazin filed state-law counterclaims against them for negligence, violations of the Texas Deceptive Trade Practices Act (“DTPA”), and breach of fiduciary duty. The case was tried over six days before the bankruptcy court. The bankruptcy court ruled against Frazin on the merits of his negligence and DTPA claims. The bankruptcy court determined that Frazin had shown a breach of fiduciary duty, but since he failed to prove damages as a result of the breach, the court ruled against him on this claim as well. The bankruptcy court also concluded that the Attorneys’ breaches of duty were not clear and serious enough to warrant fee forfeiture. Finally, the bankruptcy court overruled Frazin’s objections to the Attorneys’ fee applications and awarded the Attorneys the amount requested in their original fee applications. . . . [W]e need to decide . . . whether the claims brought by Frazin fall within the scope of the Stern opinion. Despite the narrowing language at the end of the Court’s opinion, Stern clearly grounded its reasoning in principles that are broad in scope. The Court’s concern for separation of powers and the independence of the judiciary is equally as sharp with respect to the state-law counterclaims brought by Frazin as it was with the counterclaim brought by Vickie in Stern. Based on the reasoning in the opinion, we see no basis for treating Frazin’s state-law counterclaims for malpractice, breach of fiduciary duty, and violations of the DTPA any differently than the Court treated Vickie’s counterclaim for tortious interference with a gift. Thus, we must apply the test from Stern to determine whether any of these counterclaims would necessarily have been resolved in the claims-allowance process. . . . We turn first to Frazin’s claim for malpractice. In his complaint in the bankruptcy court, Frazin alleged that the Attorneys were negligent in the prosecution of the underlying Lamajak trial and appeal. Frazin alleged the same acts of negligence in the objections that he filed to the Attorneys’ fee applications. Notwithstanding Frazin’s objections and his counterclaim, the bankruptcy court awarded the Attorneys’ fees as requested. . . . Bankruptcy courts are permitted to award fees to professionals by 11 U.S.C. § 330. That section also contains guidelines to direct a bankruptcy court’s discretion in making such fee awards. It states that a bankruptcy court may award ‘reasonable compensation’ to a Chapter 13 debtor’s attorney ‘based on a consideration of the benefit and necessity’ of the services rendered to the debtor, as well as the ‘nature, the extent, and the value of such services.’ 11 U.S.C. § 330(a)(3), (a)(4)(B). Thus, in awarding fees, the bankruptcy court determined that the benefit and value of the Attorneys’ services 25

was sufficient to warrant payment in the amount requested. Accordingly, the bankruptcy court necessarily rejected the claims of malpractice contained within Frazin’s fee objections, objections on which it had to rule as part of the claims-allowance process. The separate action for malpractice alleged the exact same conduct as the objections that were rejected. The bankruptcy court made this clear in its opinion, stating that Frazin’s objections to the fee applications were overruled for the ‘same reasons’ that the bankruptcy court ruled against Frazin on the merits of his malpractice claim. . . . [W]e [have] held that the award of professional fees and the malpractice claims arose from a common nucleus of operative fact and that the malpractice claims were barred by res judicata [based on the bankruptcy court’s fee award]. . . . [W]e conclude that Frazin’s claim for malpractice was necessarily decided by the bankruptcy court in the process of ruling on the Attorneys’ fee applications and thus fell constitutionally within the bankruptcy court’s jurisdiction. [T]he bankruptcy court’s award of fees to the Attorneys carried with it an implicit finding of quality and value in the services provided by the Attorneys. . . . [T]his award of fees was inseparably related to enforcement of the appropriate standards of conduct, and so Frazin’s malpractice claim for those services cannot stand alone from the determination of quality the bankruptcy court made in awarding fees. . . . [T]he bankruptcy court, in awarding the Attorneys’ fees, necessarily considered and rejected Frazin’s malpractice claim as well as his objections grounded in the same allegations. . . . Likewise Frazin’s claim that all of the Attorneys’ fees be forfeited under Texas fiduciary duty law is a claim that the bankruptcy court must have and did resolve in deciding whether to grant the Attorneys’ fee applications [and] the appropriate amount of any fee award. . . . Frazin brought a fee-forfeiture action based on breach of fiduciary duty. As the Memorandum Opinion correctly observed in its discussion of Frazin’s breach of fiduciary duty claim, Frazin’s complaint does not allege that the Defendants’ breaches of fiduciary duty were a proximate cause of any damage to him. Rather, Frazin seeks to impose a complete fee forfeiture because, according to Frazin, of the seriousness of the Defendants’ breaches of fiduciary duty. Throughout these proceedings, Frazin has consistently maintained that his breach of fiduciary duty claim was a fee-forfeiture claim, not an affirmative claim for damages . . . federal bankruptcy law’ but was ‘necessarily resolvable’ by a ruling on the Attorneys’ fee applications. Stern, 131 S. Ct. at 2611. The fee application proceedings had more than ‘some bearing’ on these claims. Id. at 2618. Rather, the resolution of the fee application proceedings necessarily resolved the malpractice counterclaim. Therefore, under Stern, the bankruptcy court had the authority to enter a final judgment rejecting Frazin’s malpractice claim on its merits. . . . Because the sole purpose of Frazin’s breach of fiduciary duty action was to defeat the Attorneys’ fee applications in bankruptcy court, the bankruptcy court necessarily had to resolve every aspect of his breach of fiduciary duty claim to rule on the Attorneys’ fee applications. . . . This present claim is precisely the type of claim that the Supreme Court in Stern envisioned that a bankruptcy court has jurisdiction to hear and upon which the bankruptcy court is empowered to render a final judgment, Article III of the Constitution notwithstanding. While in Stern there was ‘there was never any reason to believe that the process of adjudicating [the stepson’s] proof of claim would necessarily resolve [the widow/debtor’s] counterclaim,’ in this case, the bankruptcy court could not adjudicate the Attorneys’ fee application without resolving Frazin’s fee-forfeiture cause of action. See Stern, 131 S. Ct. at 2617. The instant case is also analogous to Katchen v. Landy, 382 U.S. 323, 86 S. Ct. 467, 15 L. Ed. 2d 391 (1966), which the Supreme Court cited in Stern as an example of a case where the bankruptcy court could reach the creditor’s proof of claim without violating the Constitution. In Katchen, the ‘plenary proceeding [in an Article III 26

court that] the creditor sought [as to whether this creditor had been preferred] could be brought into the bankruptcy court because “the same issue [arose] as part of the process of allowance and disallowance of claims.”’ Id. (third alteration in original) (quoting Katchen, 382 U.S. at 336, 86 S. Ct. 467). The same is true in the present case. Frazin’s fee-forfeiture action arose as part of the Attorneys’ fee application, and the bankruptcy court could not rule on the Attorneys’ fee applications without resolving Frazin’s fee-forfeiture claim. Thus, the bankruptcy court had jurisdiction to resolve Frazin’s fiduciary duty claim. . . . The other counterclaim on which the bankruptcy court entered a final judgment was for violations of the DTPA. There are three elements to a DTPA claim: (1) the plaintiff is a consumer; (2) the defendant engaged in false, misleading, or deceptive acts; and (3) these acts constituted a producing cause of the consumer’s damages. To rule on the merits of this claim, the bankruptcy court ‘was required to and did make several . . . legal determinations that were not “disposed of in passing on objections”’ to the Attorneys’ fee applications, which is the precise problem that the Stern Court found when the bankruptcy court there ruled on Vickie’s counterclaim. 131 S. Ct. at 2617 (quoting Katchen, 382 U.S. at 323, 332 n.9, 86 S. Ct. 467). In the present case, although the bankruptcy court necessarily had to resolve most, if not all, of Frazin’s factual allegations that supported his DTPA claims in the course of addressing claims that were otherwise within the court’s jurisdiction, the bankruptcy court was not required to resolve the legal effect flowing from those factual allegations in the context of a DTPA claim. . . . For example, the bankruptcy court observed that under Texas law, ‘a plaintiff may not fracture what is essentially a negligence claim into claims for DTPA violations, breach of fiduciary duty or other claims.’ Similarly, the bankruptcy court recognized that ‘[w]here the gravamen of a plaintiff’s complaint is that the lawyer inadequately represented the plaintiff in some fashion, the DTPA will not apply.’ The bankruptcy court then ‘conclude[d] that the DTPA claims, to the extent premised upon the conduct alleged in paragraphs 7, 8, 11, 12 and 13 of the Complaint[,] are simply re-stated negligence claims which violate Texas’s common law rule against the “fracturing” of claims, and are thus not cognizable under the DTPA.’ The bankruptcy court was not required to decide whether a state court or an Article III court would find that the allegations were ‘simply re-stated negligence claims’ under Texas law in order to rule on the fee applications. . . . By contrast, it was necessary for the bankruptcy court to decide whether the factual allegations were true and if so, the impact on the fee applications, regardless of whether the factual allegations could form an element of one or more state-law causes of action outside of the court’s jurisdiction. The bankruptcy court carefully scrutinized each of Frazin’s factual allegations and the evidence, made factual determinations, and resolved the impact on the fee applications. The analysis of the claims that Frazin alleged were DTPA violations consumes twenty-six pages of the bankruptcy court’s Memorandum Opinion. The testimony and other evidence are examined in minute detail. In sum, the factual resolutions were part and parcel of the adjudication of the fee applications, so they must survive reversal. . . . Because it was not necessary to decide the DTPA claim to rule on the Attorneys’ fee applications, we conclude that the bankruptcy court lacked the authority to enter a final judgment as to that claim. Nevertheless, we hold that all factual determinations made in the course of analyzing Frazin’s DTPA claim were within the court’s constitutional authority because they were necessarily resolved in the process of adjudicating the fee applications.”). Schmid v. Bank of Am., N.A., 498 B.R. 221 (W.D. Wis. 2013) (Crabb, J.) (“This case arises out of a bankruptcy petition filed by plaintiff Suzannah Meta Schmid under chapter 13 of the bankruptcy 27

code. After defendants Bank of America, N.A. and Associated Bank, N.A. filed claims against the estate for approximately $40,000 and $30,000 respectively, plaintiff objected to the claims and filed an adversary proceeding in the bankruptcy court. Plaintiff did not identify distinct claims in her complaint; rather, the complaint consists of 38 conclusory and argumentative paragraphs without headings, along with several requests for relief. The bankruptcy court construed the complaint and amended complaint as an objection to the allowance of defendant Bank of America’s claim that it was the owner of a $40,000 mortgage on plaintiff’s home, a challenge to the validity of a lien held by Bank of America and a fraud claim against Bank of America accompanied by a request for costs and attorney fees. . . . Defendant Bank of America filed a motion to dismiss the adversary proceeding and plaintiff filed a motion for leave to file a second amended complaint. The bankruptcy court denied plaintiff’s motion because it was untimely and plaintiff had not identified any substantive changes in the second amended complaint. The court granted defendant Bank of America’s motion, concluding that the complaint should be dismissed on various grounds: (1) it was barred by the Rooker–Feldman doctrine; (2) it was barred under the doctrine of claim preclusion; (3) plaintiff did not have standing to bring her fraud claim; and (4) plaintiff did not state a claim upon which relief may be granted. . . . The court declined to enter judgment on plaintiff’s fraud claim and corresponding request for fees and costs after concluding that the fraud claim was not a ‘core proceeding’ in the bankruptcy case within the meaning of 28 U.S.C. § 157, which meant that it had to be resolved by the district court. Accordingly, the court stated that its opinion on the fraud claim should be viewed as proposed findings of fact and conclusions of law and referred the matter to this court for entry of judgment. 28 U.S.C. § 157(c)(1). Both sides have had an opportunity to file responses to the bankruptcy court’s opinion. . . . The first question is whether the bankruptcy court correctly determined the scope of its own authority. . . . [B]ankruptcy courts may not decide claims that are reserved to federal courts created under Article III of the Constitution. Stern v. Marshall, –––U.S. ––––, 131 S. Ct. 2594, 2609, 180 L. Ed. 2d 475 (2011). In particular, ‘Article III prohibit[s] Congress from giving bankruptcy courts authority to adjudicate claims that [go] beyond the claims allowance process.’ In re Ortiz, 665 F.3d 906, 911 (7th Cir. 2011). . . . I agree with the bankruptcy court regarding the issues it determined it had authority to decide. With respect to plaintiff’s objection to defendant Bank of America’s claim, that is obviously a core proceeding because determining the validity of a creditor’s claim is one of the primary and necessary functions of a bankruptcy court. There is no problem under the Constitution either because ‘[n]on-Article III judges may hear cases when the claim arises as part of the process of allowance and disallowance of claims.’ Ortiz, 665 F.3d at 914 (internal quotations omitted). See also Katchen v. Landy, 382 U.S. 323, 333 n.9, 86 S. Ct. 467, 15 L. Ed. 2d 391 (1966) (“[He who invokes the aid of the bankruptcy court by offering a proof of claim and demanding its allowance must abide by the consequences of that procedure.”). . . . With respect to plaintiff’s challenge to the lien, the bankruptcy court relied on In re Pulaski, 475 B.R. 681, 687 (Bankr. W.D. Wis. 2012), to conclude that it had authority to decide that issue as well ‘as part of the process of claim allowance.’ However, with respect to fraud, the bankruptcy court relied on In re Rinaldi, 487 B.R. 516, 524 (Bankr. E.D. Wis. 2013), to conclude that it could not decide that issue because it was ‘purely [a] matte[r] of state law.’ The court stated that the claim was similar to the one at issue in Stern because it ‘could be (or could have been) brought outside bankruptcy court.’ . . . In my view, it is difficult to see a distinction between the fraud claim and the claim regarding the lien. Both of these issues are ‘purely matters of state law’ that could have been addressed outside the bankruptcy court, but 28

that is not the test. Rather, the question is whether ‘the claim arises as part of the process of allowance and disallowance of claims’ or whether the claim is ‘integral to the restructuring of the debtor-creditor relationship.’ Ortiz, 665 F.3d at 914. Stated another way, the bankruptcy court may decide a debtor’s claim when ‘the process of adjudicating [the creditor’s] proof of claim would necessarily resolve’ the debtor’s claim. Stern, 131 S. Ct. at 2617. Plaintiff’s fraud claim seems to meet that standard because her theory is that the mortgage assignment to defendant Bank of America is invalid as a result of the fraud. If the assignment is invalid, then Bank of America does not have a claim against the estate.”). 13 Holdings, LLC v. Gorilla Cos. (In re Gorilla Cos.), 2014 WL 1246358 (D. Ariz. Mar. 26, 2014) (McNamee, J.) (“[Plaintiff] 13 Holdings argues that the Bankruptcy Court lacked constitutional authority to enter final judgment on [Defendant/Debtor-in Possession] Gorilla’s unjust enrichment claim because it is merely a state law claim that seeks to augment the bankruptcy estate, and, according to Stern, such a claim requires final adjudication by an Article III court. 13 Holdings concedes that Stern recognized an exception stating that a state law claim to augment the bankruptcy estate may be litigated in the context of claims allowance when such a claim would be necessarily resolved in the claims allowance process. However, 13 Holdings contends that its proof of claim against Gorilla alleging breach of contract—asserting that Gorilla owed it additional monies under the [asset-purchase agreement (“APA”)] would not also necessarily and completely resolve Gorilla’s claim against 13 Holdings for unjust enrichment because Gorilla’s unjust enrichment claim would require the consideration of additional evidence, the issuance of factual findings and the reaching of legal conclusions. Thus, Gorilla’s unjust enrichment claim is akin to the counterclaim in Stern that the Supreme Court said could not constitutionally be decided and final judgment entered by a Bankruptcy Court. 13 Holdings also maintains that the Bankruptcy Court failed to properly distinguish Katchen v. Landy, 382 U.S. 323 (1966), because Katchen was based on (1) consent, and (2) the fact that the bankruptcy trustee was asserting a right of recovery created under federal bankruptcy law. . . . Gorilla contends that this case is distinguished from Stern because 13 Holdings’ breach of contract claim and Gorilla’s claim for unjust enrichment were simultaneously adjudicated as necessary components of the Bankruptcy Court’s claims allowance process. Gorilla argues that when the Bankruptcy Court determined whether 13 Holdings was owed any amounts under the seller note, the court also had to resolve whether 13 Holdings had been overpaid (and thus unjustly enriched) on the seller note. Although Gorilla acknowledges that its overpayment (which gave rise to its unjust enrichment claim) rests on some additional and different facts than what were included in 13 Holdings’ proof of claim, Gorilla argues that those different facts are part and parcel of the same proof of claim determination. Gorilla contends that once the proof of claim was resolved, unlike Vickie Marshall’s claims in Stern, there was nothing further for the court to determine with regard to the merits of the unjust enrichment claim in the adversary proceeding. Gorilla further contends that Stern’s discussion of Katchen and Langenkamp v. Culp, 498 U.S. 42 (1990), support its position that the Bankruptcy Court had authority to issue a final judgment on Gorilla’s unjust enrichment counterclaim. . . . [T]he Bankruptcy Court[] . . . concluded that Gorilla’s counterclaim is exactly the kind of counterclaim that Stern held to be within the power of the bankruptcy courts to resolve. The Bankruptcy Court found that Gorilla’s counterclaim was necessarily resolved as part and parcel of the same determination undertaken to resolve 13 Holdings’ proof of claim because it arose out of the same transaction. The Bankruptcy Court found that the necessary resolution of 29

Gorilla’s counterclaim was much simpler than handling a trustee preference claim under Katchen, which is also under the core power of the bankruptcy courts. In finding that resolution of the counterclaim was part and parcel of the same determination, the court reasoned: ‘the same must be said for Gorilla’s counterclaim here which arises from the very same APA contract on which the [p]roofs of claims rested.’. . . The Court agrees with the reasons previously set forth by both Judge Campbell in the first appeal and the Bankruptcy Court on remand. In addition, the contrast between the facts at issue in Stern and the facts here compel the result. In Stern, the creditor’s proof of claim for defamation and debtor Vicki Marshall’s counterclaim for tortious interference with contract and punitive damages were not part and parcel factually. Resolution of the defamation claim would not necessarily even come close to resolving the counterclaim. As Stern stated: ‘the counterclaim raises issues of law entirely different from those raised on the defamation claim.’ 131 S. Ct. at 2617. Here, the underlying APA contract controlled whether or not 13 Holdings was entitled to additional monies as claimed or whether it had received monies it was not entitled to, encompassing an unjust enrichment in favor of Gorilla. . . . The Bankruptcy Court was then required to apply legal principles in accordance with the facts established during bankruptcy proceedings. Although it is acknowledged that the Bankruptcy Court had to finalize its finding of unjust enrichment, the underlying factual basis of 13 Holdings claim provided the substance necessary for the Bankruptcy Court to issue that ruling. Thus, it is appropriate in this factual context to find that the Bankruptcy Court had jurisdiction to complete the proof of claims process and issue final judgment over Gorilla’s counterclaim. . . . The Court rejects 13 Holdings’ argument that the Bankruptcy Court misunderstood the dissimilarity between a Katchen claim and the claim at issue in Stern. Certainly it is undisputed that for a Katchen claim, there is additional jurisdictional authority for the Bankruptcy Court to resolve a voidable preference claim. See Stern, 131 S. Ct. at 2616–17. However, in this case, the basic process utilized by the Bankruptcy Court is similar to the manner in which a Katchen voidable preference claim is resolved. In a Katchen claim, once the bankruptcy judge decides whether there is a voidable preference, the judge then determines whether and to what extent to allow the creditor’s claim. It is in this context that the Stern Court remarked: once the judge decides whether there has been a voidable preference, ‘nothing remains for adjudication in [the district court]; such a suit would be a meaningless gesture.’ Stern, 131 S. Ct. at 2616. In the same vein, here, once the Bankruptcy Court litigated the factual basis of whether Gorilla owed additional monies to 13 Holdings under the terms and provisions of the APA, it had also litigated the factual basis of whether 13 Holdings had been unjustly enriched at Gorilla’s expense. Thus, nothing truly remained for adjudication in the district court; litigating the final aspects by finding an unjust enrichment would be a meaningless gesture. . . . Therefore, the Court finds that under the facts of this case the Bankruptcy Court had authority to issue a final judgment on Gorilla’s counterclaim under the new standard set forth in Stern.”). Ctr. Operating Co. v. Base Holdings, LLC (In re Base Holdings, LLC), 2013 WL 357607 (N.D. Tex. Jan. 30, 2013) (Fitzwater, J.) (“[T]he trustee for chapter 7 debtor Base Holdings, LLC (“Base”), who is the defendant-counterplaintiff in the adversary proceeding at issue, moves to withdraw the reference, contending that the bankruptcy court lacks Article III power to adjudicate Base’s state-law counterclaims. The bankruptcy judge recommends that the court deny the motion on the grounds that Base’s counterclaims will necessarily be resolved in allowing or disallowing the proof of claim of Center Operating Company, L.P. (“Center”), the plaintiff-counterdefendant in the adversary 30

proceeding . . . . The bankruptcy judge concludes in her report and recommendation that ‘it seems necessary to resolve the counterclaims as part of the proof of claim allowance or disallowance process (i.e., here, unlike in Stern v. Marshall, the plaintiff against whom the counterclaims are asserted still has a live, unresolved proof of claim that will not survive if the counterclaims are sustained).’ . . . The Trustee’s sole basis for arguing that his tort counterclaims for damages will not necessarily be resolved in the process of ruling on Center’s proof of claim is that he seeks damages in excess of the amount of the proof of claim. . . . The court disagrees with this reasoning. The question under Stern is whether the state law counterclaims will be resolved in the process of ruling on Center’s proof of claim, not whether the amount of the counterclaim exceeds the amount of the proof of claim. Although the fact that the amount of a counterclaim exceeds the amount of a proof of claim may, in tandem with other factors, support the conclusion that the state law counterclaim will not be resolved in the process of ruling on a creditor’s proof of claim, the difference in amounts is not alone determinative. For example, in In re Global Technovations, Inc., 694 F.3d 705, 709 (6th Cir. 2012), the creditor’s proof of claim was in the amount of $12 million, and the debtor’s counterclaim exceeded that sum. Id. at 709, 711–12. Yet this fact alone did not preclude the Sixth Circuit from concluding that the bankruptcy court had constitutional jurisdiction under Stern to adjudicate the debtor’s fraudulent transfer claim because ‘it was not possible . . . to rule on [the creditor’s] proof of claim without first resolving the fraudulent-transfer issue.’ Id. at 722 (quoting Stern, 131 S. Ct. at 2616). . . . Accordingly, . . . there is no Stern impediment [to the bankruptcy court’s final adjudication of the Trustee’s counterclaims], [and] the court declines to withdraw the reference.”). Beskin v. Bank of N.Y. Mellon (In re Perrow), 498 B.R. 560 (Bankr. W.D. Va. 2013) (Connelly, J.) (“Herbert L. Beskin, Chapter 13 Trustee (the “Trustee”), and Michael and Brandy Perrow (the “Debtors”) (collectively, the “Plaintiffs”) filed a complaint against BAC Home Loan Servicing LP (the “Defendant”) and CTC Real Estate Services, Inc. (the “Third–Party Defendant”) (collectively, the “Defendants”). The Plaintiffs seek avoidance under 11 U.S.C. § 544(a)(3) of Defendant’s alleged interest in Debtors’ real property and disallowance of Defendant’s proof of claim under 11 U.S.C. 502. . . . The Complaint seeks to avoid Defendant’s unrecorded deed of trust under 11 U.S.C. § 544(a)(3) and asks that the Court [] disallow Defendant’s proof of claim as untimely. . . . The Defendants’ assert a counterclaim and a third party claim seeking six grounds of equitable relief, namely: declaratory judgment, equitable subrogation, specific performance, constructive trust, equitable lien, and relief under 11 U.S.C. § 105 (the “Counterclaim”). . . . Defendants’ Counterclaim asserts the equitable remedies alleged prevent the Plaintiffs from succeeding under 11 U.S.C. § 544(a). . . . The Defendants have requested summary judgment on multiple state law counterclaims. Some of these counterclaims do not stem from the bankruptcy itself, but ultimately impact the claim allowance process. The Counterclaim lists several equitable remedies, all of which allegedly allow the Defendant to claim an interest or lien in the Debtors’ real property superior to that of the Trustee’s interest under section 544(a)(3). If, however, the Defendant does not have a valid interest or lien, or the Trustee is able to avoid Defendant’s interest, then the Defendant may not have an allowed secured claim. 11 U.S.C. § 506(a). As a consequence, Defendant may have an unsecured claim. As an unsecured creditor, Defendant’s proof of claim would be susceptible to disallowance as untimely because Defendant’s proof of claim was filed thirty-eight days after the bar date. 11 U.S.C. §§ 501 and 502. Plaintiffs’ Complaint specifically requests such relief. The 31

equitable remedies put forth by Defendants in the Counterclaim are, therefore, necessary to the claims allowance process because they will ultimately determine whether Defendants’ claim is secured and allowed or unsecured and, potentially, disallowed. Stern, 131 S. Ct. at 2618. Furthermore, to the extent the Counterclaim asserts affirmative defenses to the Trustee’s ability to exercise his strong-arm power, they stem from the bankruptcy itself. The Court concludes that it has authority to issue a final ruling on all matters currently before it.”). Kerr v. Supermarket Parts Warehouse, Inc. (In re Cont’l Case Co.), 2014 WL 2986628 (Bankr. N.D. Ga. June 19, 2014) (Hagenau, J.) (“Plaintiff, Jeffrey Kerr (“Plaintiff”), in his capacity as Chapter 7 Trustee, filed a Complaint on Open Account and for Turnover (“Complaint”) against Defendant, Supermarket Parts Warehouse, Inc. (“Defendant”) . . . . In this adversary proceeding, Plaintiff seeks to recover $441,682.68, plus prejudgment interest and costs, for amounts owed for goods and services provided by Debtor to the Defendant prepetition. . . . A matter is constitutionally core if ‘the action at issue stems from the bankruptcy itself or would necessarily be resolved in the claims allowance process.’ Stern v. Marshall, 131 S. Ct. 2594, 2618 (2011). Bankruptcy courts may enter final orders only in those matters that are ‘core.’ The Court finds that this matter is a core proceeding. Defendant has filed a proof of claim based upon the same debt at issue in this adversary proceeding and even labeled it a set off. Thus, under both the statute and the test in Stern this matter is core because this matter ‘would necessarily be resolved in the claims resolution process.’”). Moses v. Cashcall, Inc. (In re Moses), 2013 WL 53873 (Bankr. E.D.N.C. Jan. 3, 2013) (Doub, J.) (“Pending before the Court is the Motion to Dismiss or to Stay and Compel Arbitration . . . filed by [the Defendant,] CashCall, Inc. . . . The Plaintiff filed a voluntary petition under Chapter 13 of the United States Bankruptcy Code on August 1, 2012. The Defendant filed proof of claim number three, in the amount of $1,929.02 on August 8, 2012. In response to the Defendant’s proof of claim, the Plaintiff filed this adversary proceeding objecting to the proof of claim on August 17, 2012. The Plaintiff seeks a declaratory judgment that the debt owed to the Defendant is void based on the Defendant’s violation of the North Carolina Consumer Finance Act, N.C. Gen. Stat. §§ 53–164 to –191 (2012). The complaint also alleges the Defendant engaged in acts that qualify as Prohibited Acts by Debt Collectors under N.C. Gen. Stat. § 75–50 to –56 (2012) in attempts to collect on the debt and seeks actual and statutory damages. . . . Within the Fourth Circuit, arbitration provisions ‘generally are favored in federal courts. In bankruptcy proceedings, however, whether a proceeding is a “core proceeding” as defined by 28 U.S.C. § 157(b) generally determines whether an arbitration clause can be enforced.’ TP, Inc. v. Bank of Am., N.A., 479 B.R. 373, 382 (Bankr. E.D.N.C. 2012) (quoting D & B Swine Farms, Inc. v. Murphy Brown, L.L.C., 430 B.R. 737, 741 (Bankr. E.D.N.C. 2010) (citation omitted)). Fourth Circuit precedent indicates ‘[a]rbitration is inconsistent with centralized decision-making because permitting an arbitrator to decide a core issue would make debtor-creditor rights “contingent upon an arbitrator’s ruling” rather than the ruling of the bankruptcy judge assigned to hear the debtor’s case.’ Id. (quoting White Mountain Mining Co., L.L.C. v. Congelton, L.L.C., 403 F.3d 164, 169 (4th Cir. 2005)). Based on the test established in Shearson/Am. Express, Inc. v. McMahon, 482 U.S. 220, 226 (1987), ‘the burden is on the party opposing arbitration to show that Congress intended to “limit or prohibit waiver of a judicial forum for a particular claim” under the Federal Arbitration Act.’ D & B Swine, 430 B.R. at 741 (quoting In re Blanchard Transp. Serv., Inc., No. 07–01830–8–JRL, 2008 WL 619379 (Bankr. E.D.N.C. 32

Feb. 29, 2008)). Thus, generally non-core matters are ‘referred to arbitration consistent with the policy in favor of arbitration; however if a core proceeding is at issue, the policy in favor of centralized determination in the bankruptcy court generally prevails.’ TP, Inc., 479 B.R. at 382. . . . As explained in TP, Inc. v. Bank of America, ‘the court must evaluate each cause of action in the present adversary proceeding to determine whether it is a core proceeding.’ Id. The bankruptcy court may hear ‘all cases under title 11 and all core proceedings arising under title 11, or arising in a case under title 11 . . . and may enter appropriate orders and judgments.’ 28 U.S.C. § 157(b)(1); TP, Inc., 479 B.R. at 382; Stern v. Marshall . . . . Section 157(b)(2) provides a non-exclusive list of example core proceedings, including, ‘the allowance or disallowance of claims against the estate’ as well as ‘counterclaims by the estate against persons filing claims against the estate.’ 28 U.S.C. § 157(b)(2); TP, Inc., 479 B.R. at 382; Stern, 131 S. Ct. at 2604. In TP, Inc. v. Bank of America, the bankruptcy court determined that ‘although an action was initiated by a complaint rather than a traditional counterclaim, “such actions are in the nature of a counterclaim when asserted against parties who have filed proofs of claim in the bankruptcy case.”’ TP, Inc., 479 B.R. at 383 (explaining state law claims were core proceedings because the claims were essentially counterclaims brought against creditors who filed proofs of claim in the bankruptcy case) (citation omitted). The Court agrees with the findings in TP, Inc. v. Bank of America, and finds that the Plaintiff’s claims against the Defendant are statutorily core, as they ‘function as counterclaims to the claims filed [] against the estate.’ Id. . . . TP, Inc. v. Bank of America further instructs that once a proceeding is determined to be statutorily core, it must also be determined to be constitutionally core in light of the Supreme Court decision in Stern v. Marshall. . . . The first cause of action for a declaratory judgment, requests that the Court determine that the Loan is void and unenforceable as the activities of the Defendant and its predecessors in originating, acquiring, and servicing the Loan failed to comply with the requirements of the North Carolina Consumer Finance Act. . . . Undertaking the analysis of whether the cause of action is constitutionally core, the Court finds the cause of action does not stem from the bankruptcy itself, as it arose ‘in state court and is based on state law.’ TP, Inc., 479 B.R. at 384. However, a determination of whether the violations of the North Carolina consumer protection statutes render the loan agreement void or legally ineffective is necessarily intertwined in the claims allowance process. ‘For a counterclaim to be necessarily resolved in ruling on the proof of claim, the relationship must be such that resolution of the counterclaim would alter the amount sought by the claimant.’ TP, Inc., 479 B.R. at 384 (citing In re Olde Prairie Block Owner, 457 B.R. 692, 698–99 (Bankr. N.D. Ill. 2011)). Should the Court determine the underlying loan agreement is void, such resolution would undoubtedly alter the claim amount. Therefore, the Court finds the first cause of action to be constitutionally core. Accordingly the Court shall hear and enter final determination on the first cause of action.”).

2.

BANKRUPTCY COURTS DO NOT HAVE THE CONSTITUTIONAL AUTHORITY TO FINALLY ADJUDICATE THE COUNTERCLAIM(S)

Dietz v. Spangenberg, 2013 WL 883464 (D. Minn. Mar. 8, 2013) (Montgomery, J.) (“[T]he Court finds the Bankruptcy Court has the judicial authority to issue final orders and judgments as to some of the claims, but lacks the authority to finally adjudicate others. . . . For example, the conversion 33

claim is a non-core claim as to all Defendants with the possible exception of FP Tech, because the conversion claim is a purely state-law claim against entities that have not filed proofs of claim in the bankruptcy case. As such, the conversion claim is not a proceeding that ‘stems from the bankruptcy itself or would necessarily be resolved in the claims allowance process.’ Stern, 131 S. Ct. at 2618. The Trustee’s breach of fiduciary duty claims are also non-core . . . . ”). Heller Small Bus. Lending Corp. v. Smead (In re O’Hanneson), 2013 WL 655158 (N.D. Cal. Feb. 21, 2013) (Davila, J.) (“In this action related to a pending bankruptcy proceeding, Michael Smead, Susan Smead (“the Smeads”) and South Valley Auto Repair (“SVAP”) move to withdraw the automatic bankruptcy reference as it was applied to a removed state-court action. David Gary O’Hanneson (“O’Hanneson”), the debtor in the underlying bankruptcy case, has filed written opposition to the motion. . . . The Smeads and O’Hanneson own real property located on Angela Street in San Jose, California, as tenants in common. The primary tenant on the property is SVAP, which is also owned by the Smeads. . . . On or about October 25, 2000, Heller Small Business Lending Corporation (“Heller”) agreed to make a loan to the Smeads and O’Hanneson pursuant to a written agreement. In exchange, the Smeads and O’Hanneson provided Heller with a Promissory Note in favor of Heller in the amount of $3,224,000, which was secured by a first-position Deed of Trust recorded against the Angela Street property. SVAP also guaranteed the loan. Thereafter, the Smeads and O’Hanneson obtained another loan secured by a second-position Deed of Trust on the Angela Street property for $1,000,000. . . . Under the terms of a partnership agreement between himself and the Smeads, O’Hanneson was responsible for collecting rent payments from SVAP and the ten other tenants of the Angela Street property as well as for making payments on both loans. According to the Smeads, however, they discovered in or about February, 2011, that O’Hanneson had not made payments on the Heller loan for the prior twelve-month period, although he had been collecting rents from the tenants. Heller recorded a Notice of Default due to the non-payment on August 2, 2011. . . . These circumstances led to a web of litigation between the parties. On August 10, 2011, Heller filed a complaint in state court against the Smeads, O’Hanneson, and SVAP for judicial foreclosure, appointment of receiver, specific performance and breach of guaranty. The Smeads and SVAP then filed a cross-complaint against O’Hanneson for breach of contract, breach of fiduciary duty, breach of the duty of good faith and fair dealing, fraud and deceit, fraudulent misrepresentation, conversion, professional negligence, unjust enrichment, and dissolution of partnership and accounting. For his part, O’Hanneson cross-complained against the Smeads and SVAP for similar causes of action: breach of contract, breach of fiduciary duty, breach of the duty of good faith and fair dealing, fraudulent misrepresentation, promissory estoppel, negligence, conversion, unjust enrichment, and quantum meruit. He also filed a bankruptcy petition under Chapter 11 on May 1, 2012, and removed the entirety of the state court action, including all cross-claims, to the Bankruptcy Court on July 16, 2012. This motion followed. . . . [T]he state court action was automatically referred to the Bankruptcy Court once it was removed by O’Hanneson. For this motion, at issue is whether the court should withdraw this automatic reference. Relying primarily on Stern v. Marshall . . . the Smeads argue that the Bankruptcy Court is without jurisdiction to adjudicate the removed action, even if some the claims are determined to be ‘core’ claims. O’Hanneson, unsurprisingly, disagrees. . . . Stern is instructive, and indeed controlling, of the issue presented by this motion. Here, the removed action is actually three actions in one, comprised of (1) the original complaint filed by Heller against the Smeads, O’Hanneson and SVAP, (2) the cross-complaint filed by the Smeads and SVAP against O’Hanneson, and (3) the 34

cross-complaint filed by O’Hanneson against the Smeads and SVAP. Two of these three categories of claims qualify for ‘core’ treatment under § 157(b). Much like the debtor’s counterclaim in Stern, O’Hanneson’s cross-complaint is, literally, a ‘counterclaim[] by the estate against persons filing claims against the estate.’ 28 U.S.C. § 157(b)(2)(C). In addition, now that the Smeads have filed a proof of claim in O’Hanneson’s bankruptcy case, their cross-complaint falls within § 157(b)(2)(B) which allows the bankruptcy court to determine the allowance o[r] disallowance of claims against the estate. . . . The first category of claims—those contained in the original complaint filed by Heller—cannot be similarly categorized under § 157(b), and aside from being removed from state court along with the cross-complaints, do not arise under Title 11 or arise in a Title 11 case. As the Stern court would put it, Heller’s claims are ‘in no way derived from or dependent upon bankruptcy law.’ Stern, 131 S. Ct. at 2618. Instead, the claims are part of a ‘state court action that exists without regard to any bankruptcy proceeding.’ Id. That being the case, the court must classify the Heller claims as ‘non-core.’ Thus, under § 157(c)(1), the bankruptcy court cannot enter a final judgment on Heller’s claims, even assuming, arguendo, that it can enter a final judgment on the other claims. . . . The Bankruptcy Court’s ability to enter a final judgment on the other claims is not entirely clear. Here, this court has not been presented with an objection to the Smeads’ proof of claim. Without an objection, the claim is deemed allowed without a need for the bankruptcy court to undergo an adjudicative process. 11 U.S.C. § 502(a). And without that process, none of O’Hanneson’s cross-claims can possibly be resolved as a result. These procedural circumstances, then, appear to push this action further into Stern territory, where O’Hanneson’s ‘core’ cross-claims are not ‘necessarily resolvable by a ruling on the creditor’s proof of claim in bankruptcy.’ Stern, 131 S. Ct. at 2611. For this reason, it is entirely possible that some tribunal other than the Bankruptcy Court will need to enter judgment on Heller’s claims and on O’Hanneson’s cross-claims. . . . It is under these circumstances that the request to withdraw the reference must be considered. Here, as described above, there are ‘core’ claims intertwined with ‘non-core’ claims, some of which are subject to a jury trial. And a portion of these claims, if not a majority of them, cannot be finally resolved by the Bankruptcy Court. It is therefore inevitable that, at some point, the reference will need to be withdrawn.”). Schmid v. Bank of Am. (In re Schmid), 494 B.R. 737 (Bankr. W.D. Wis. 2013) (Furay, J.) (“The Debtor and Plaintiff, Suzannah Meta Schmid (“Debtor”), filed an objection to Claim No. 2 filed by BAC Home Loans Servicing, LP (“BAC”), now known as Bank of America as a successor by merger (“BANA”), contending that BAC ‘is not the real party in interest’ and that it ‘owns neither the promissory note nor the mortgage.’ The Debtor then filed this adversary proceeding contending that BANA is neither a real party in interest nor the owner of the note and mortgage supporting Claim No. 2 (the “Adversary Proceeding”). . . . The Debtor’s Amended Complaint (and the proposed Second Amended Complaint) seeks a determination of the validity and enforceability of the claims of BANA. The Debtor seeks a determination that the assignments of the Note and Mortgage are void and unenforceable as a result of fraud; that no amounts are owed to BANA; that BANA is not the real owner or holder of the Note and Mortgage; that the assignments, allonges and endorsements are a forgery or unenforceable because the assignments were to nonexistent entities, or in blank; and that the claims of [Associated Bank, N.A. (“ABNA”)] ABNA be disallowed as unsecured if the claim of BANA is allowed. Further, the Debtor asks the Court to determine that the proof of claim is false or fraudulent. She argues that BANA does not have standing, or is not a real party in interest, to maintain a claim. Debtor also requests an award of costs and attorneys’ fees and ‘reserves 35

her rights to bring claims at law for damages. . . .’ Although not couched as a counterclaim to BANA’s proof of claim, the Debtor’s Amended Complaint alleges that the assignments and endorsements are a ‘forgery’ and are ‘false or fraudulent.’ The Debtor requests an award of costs and fees in connection with challenging the BANA Claim. Further, the Amended Complaint purports to ‘reserve [Debtor’s] rights to bring claims at law for damages . . . on the facts alleged. . . .’ These kinds of assertions are analogous to the state-law counterclaims made in Stern. They are not claims arising under the Bankruptcy Code and could be (or could have been) brought outside of the bankruptcy court.”). Rinaldi v. HSBC Bank USA, N.A. (In re Rinaldi), 487 B.R. 516 (Bankr. E.D. Wis. 2013) (Kelley, J.) (“[T]he Debtors ask the Court to determine the validity and enforceability of HSBC’s proof of claim. The Debtors’ objections to the claim include that the Note lacks consideration; two mortgage assignments are null and void; another mortgage assignment is a forgery or unenforceable because it was not recorded or perfected prior to bankruptcy; HSBC is not the owner or holder of the Note; and the Note image attached to the claim was fabricated to deceive the Court. . . . The Debtors also accuse the Gray Defendants of common law fraud, abuse of legal process and violations of the Fair Debt Collections Practices Act (“FDCPA”). The Debtors accuse the Wells Defendants of the same, and the amended complaint added a claim for damages for violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”). Specifically against Wells Fargo Bank, N. A., the Debtors assert claims for breach of contract and tortious interference with prospective economic opportunity. . . . The remaining claims do not fall within the core authority of this Court to hear and determine. Although not couched as counterclaims to HSBC’s proof of claim, the Debtors’ common law fraud and federal FDCPA and RICO claims are analogous to the claims made in Stern. They are not claims arising under the Bankruptcy Code and could be brought (and in fact some were brought) outside the bankruptcy court.”). Settlers’ Housing Serv., Inc. v. Schaumburg Bank & Trust Co., N.A. (In re Settlers’ Housing Serv., Inc.), 2014 WL 2986107 (Bankr. N.D. Ill. June 30, 2014) (Schmetterer, J.) (“This Adversary proceeding arises out of and relates to the Chapter 11 case of Settlers’ Housing Service Inc. (“Settlers’”). Debtor–Plaintiff Settlers’ is an Illinois nonprofit dedicated to fulfilling the housing needs of recently arrived legal immigrants. Settlers’ ran into financial trouble as a result of an allegedly fraudulent transaction wherein it acquired some distressed properties through the Bank of Commerce. Schaumburg Bank and Trust, (“Schaumburg Bank” or the “Bank”), the successor in interest to The Bank of Commerce, foreclosed. Settlers’ filed for bankruptcy relief under chapter 11 of the Bankruptcy Code. The Bank moved for relief from the automatic stay under § 362(d), asserting (1) lack of adequate protection of its interest in certain property of Settlers,’ and (2) that Debtor has no equity in the property and it is not necessary to an effective reorganization because debtor does not have sufficient cashflow to propose a feasible plan. After taking evidence as to the financial viability of Debtor’s plan, it was determined that Debtor will not have sufficient cashflow to support a feasible plan unless it can prevail on its objection and counterclaim to Bank’s proof of claim. Settlers’ has separately filed its objection and counterclaim to the Bank’s claim as this adversary proceeding. . . . The Second Amended Complaint is pleaded in seventeen Counts: (1) Equitable Subordination; (2) Breach of Fiduciary Duty; (3) Aiding and Abetting Breach of Fiduciary Duty; (4) Fraudulent Misrepresentation; (5) Fraudulent Concealment; (6) Breach of Illinois Consumer Credit Act; (7) Fraud in the Inducement; (8) Fraud, Illegality and 36

Unenforceability Regarding Washington–Taylor Mortgage; (9) Constructive Fraud; (10) Conspiracy to Defraud and Civil Conspiracy; (11) Violation of Anti–Tying Provisions of the Bank Holding Company Act; (12) Unconscionability; (13) Tortious Interference With Contract; (14) Conversion and Accounting; (15) Setoff; (16) Unjust Enrichment; and (17) Improper Post–Petition Interest and Receiver’s Fees. Relief requested in the complaint seeks disallowance or equitable subordination of the Bank’s claim, avoidance or recision of the mortgage on the Washington–Taylor Property, compensatory, statutory, and punitive damages, attorney’s fees, and any other relief that may be warranted. . . . Count 2 for breach of fiduciary duty, Count 3 for aiding and abetting breach of fiduciary duty, Count 10 for civil conspiracy to defraud, Count 13 for tortious interference with contract, Count 14 for conversion and accounting, Count 15 for setoff, and Count 16 for unjust enrichment are counterclaims stating state-law causes of action. Stern itself involved a compulsory counterclaim under state law, concerning [] some of the same common nucleus of operative facts as the proof of claim, but different issues of law—including a prayer for punitive damages. 131 S. Ct. at 2617. Here, the Bank’s claims involve a series of notes and mortgages, and the counterclaims in the foregoing counts arise from conduct leading up to executing those notes and mortgages, and the damages allegedly involve state law questions separate from whether the notes and mortgages are valid and how much may be due thereon. . . . Since some Adversary Proceeding counts are counterclaims by the estate, the statute provides that they are core, § 157(b)(2)(C), but Article III of the Constitution may not allow entry of final judgment by a bankruptcy judge. Stern, [131 S. Ct.] at 2618. Recently, a Seventh Circuit panel ruled that the bankruptcy has no statutory authority to do anything in those cases. Wellness Intern. Network, Ltd. v. Sharif, 727 F.3d 751, 772 (7th Cir. 2013). In Executive Benefits Insurance Agency v. Arkison, the Supreme Court abrogated that result in Wellness when holding that when a matter is core, but there is no authority for a bankruptcy judge to enter final judgment (calling such matters “Stern claims”), that matter may be treated as non-core within the meaning of § 157(c). Executive Benefits Ins. Agency v. Arkison, 12–1200 at *9 (June 9, 2014). Here, the counts asserting counterclaims are ‘related to’ the bankruptcy case because they seek to bring property into the estate for distribution to creditors. Id. at *11. Therefore, even though a bankruptcy may not enter a final judgment or order, a bankruptcy judge may ‘hear’ such a proceeding. § 157(c)(1).”). Kerr v. H.E. Butt Grocery Co. (In re Cont’l Case Co.), 2014 WL 2986609 (Bankr. N.D. Ga. June 19, 2014) (Hagenau, J.) (“This is an action to recover amounts owed the Debtor on a prepetition accounts receivable which does not stem from the bankruptcy itself. Since the Defendant has not filed a proof of claim, Debtor’s claim for payment would not necessarily be resolved in the claims allowance process. . . . Absent consent of the parties, this Court is confined to entering proposed findings of facts and conclusions of law.”). Shelton v. Aguirre & Patterson, Inc. (In re Shelton), 2014 WL 1576864 (Bankr. S.D. Tex. Apr. 18, 2014) (Isgur, J.) (“Plaintiffs, Billy Shelton and Hilda Shelton, filed this civil suit on August 1, 2013 in the 389th Judicial Court of Hidalgo County, Texas. The defendants are Elsa State Bank, Frank Arevalo, a loan officer with the Bank, and Aguirre & Patterson, Inc., the company hired to appraise the Plaintiffs’ property in connection with the loan agreement between Elsa State Bank and the Plaintiffs. The Plaintiffs assert the following claims against each of the defendants: breach of contract, breach of fiduciary duty, common law fraud, fraudulent inducement, constructive fraud, negligent misrepresentation, promissory estoppel, and declaratory relief. . . . On November 4, 2013, 37

the Sheltons filed a Chapter 13 bankruptcy petition. On November 14, 2013, the Sheltons initiated this adversary proceeding on the same issues that they raised in state court. On January 16, 2014, Defendants Frank Arevalo and Elsa State Bank filed its notice of removal of Plaintiffs’ original complaint filed in state court. On April 3, 2014, the Court issued an Order consolidating these two adversary proceedings. . . . Plaintiffs’ claims do not fall within a bankruptcy court’s constitutional authority. Defendant Elsa State Bank has filed two proofs of claim in the Sheltons’ bankruptcy case. The only proof of claim that has any bearing on Plaintiffs’ state law claims is Elsa State Bank’s $697,887.86 claim, $515,000.00 of which is secured by the real property at issue, and the remaining $182,887.86 is unsecured. Defendants Aguirre & Patterson and Frank Arevalo have not filed any proofs of claim in the Sheltons’ bankruptcy case. . . . The public rights exception is inapplicable because the debtors’ state law claims are not ‘integrally related to a particular federal government action.’ Stern, 131 S. Ct. 2594 at 2613. Nor is this proceeding integrally bound up in the bankruptcy. In Stern v. Marshall, the Supreme Court stated that ‘Congress may not bypass Article III simply because a proceeding may have some bearing on a bankruptcy case; the question is whether the action at issue stems from the bankruptcy itself or would necessarily be resolved in the claims allowance process.’ To determine whether a state law claim can be ruled upon by a bankruptcy court, the Court must employ ‘the test from Stern to determine whether any of these counterclaims would necessarily have been resolved in the claims-allowance process.’ In re BP RE, L.P., 735 F.3d 279, 290 (5th Cir. 2013) (quoting Stern v. Marshall). . . . Plaintiffs’ claims against each of the three defendants are based entirely on state law, and the state-law character of those claims is in no way altered by bankruptcy law. The only claims that are even remotely related to the bankruptcy process are Plaintiffs’ claim against Elsa State Bank, the only defendant that has filed a proof of claim in the Debtors’ Chapter 13 case. . . . In In re Frazin, [732 F.3d 313 (5th Cir. 2013)][,] the Fifth Circuit held that it was not necessary to decide the Debtor’s [Texas Deceptive Trade Practices Act] claim in ruling on the Defendant Attorneys’ fee applications. Although it may be necessary to adjudicate the claims against Elsa State Bank to the extent that the claims would result in an offset, the Plaintiffs seek recovery in excess of the amount of a potential offset. Accordingly, none of Plaintiffs’ claims stem from the bankruptcy itself or would necessarily be resolved in the claims allowance process. The Court finds that Plaintiffs’ claims fall outside the Bankruptcy Court’s constitutional authority. . . . A dismissal with prejudice is treated as an adjudication on the merits. Accordingly, this Court may not issue a final order or judgment dismissing Plaintiffs’ suit. The Court may, however, issue interlocutory orders in proceedings in which the Court does not have authority to issue a final judgment. An order granting Plaintiffs leave to amend their complaint is an interlocutory order.”). Ball Four, Inc. v. 2011-SIP-1 CRE/CADC Venture, LLC (In re Ball Four, Inc.), 2013 WL 5716889 (Bankr. D. Colo. Oct. 18, 2013) (Brown, J.) (“Plaintiff is the reorganized Debtor, whose plan was confirmed on August 29, 2011. [Defendant] SIP is the successor in interest to FirsTier Bank and stands in the bank’s shoes as the purchaser of the Debtor’s loan from the FDIC in its capacity as receiver for FirsTier Bank (the “Bank”). The Bank filed a proof of claim in the main bankruptcy case based on a loan in the original amount of $1,950,000, which was made to enable Ball Four to finance the construction of a sports complex (“Construction Loan”). In this adversary proceeding, Ball Four alleges that the Bank mishandled the Construction Loan, beginning when the Bank made payments to certain contractors in ‘direct contravention’ of Ball Four’s explicit instructions, causing Ball Four to lose all ability to negotiate with its contractors, with resulting 38

damage to its business. Ball Four also alleges that the Bank failed to honor its written commitment to provide permanent financing, and that it was unable to obtain alternative financing due to the project being over-budget because of the payments made by the Bank over Ball Four’s objections. Ball Four asserts five claims for relief against SIP based on this conduct: 1) damages for breach of contract on the Construction Loan; 2) damages for breach of contract for failure to honor a Permanent Loan Commitment; 3) actual damages, costs of suit and interest for breach of the implied covenant of good faith and fair dealing; 4) equitable subordination of SIP’s entire claim pursuant to 11 U.S.C. § 510; and 5) disallowance of SIP’s entire claim pursuant to 11 U.S.C. § 502(b)(1). . . . Early in this case, the Court sua sponte raised concerns regarding its jurisdiction to hear Plaintiff’s claims based on the Supreme Court’s ruling in Stern v. Marshall . . . Ball Four’s ‘claim disallowance’ claim for relief is clearly a ‘core matter,’ just as it was in Waldman [v. Stone, 698 F.3d 910 (6th Cir. 2012)]. . . . It also fits within the historical concept of summary or in rem jurisdiction, which has always allowed the bankruptcy tribunal to adjudicate claims against the res. . . . The fact that the Court has jurisdiction to hear . . . the claims [for claim disallowance and equitable subordination] does not necessarily confer jurisdiction on it to hear the remaining claims. The other claims, like the counterclaim in Stern, do not have to be heard in order to determine the allowance of SIP’s proof of claim. As previously stated, Ball Four has not challenged SIP’s claim in any way. It has merely set forth its own claims that it asserts will offset SIP’s claim. Thus, it is necessary to separately analyze the Court’s jurisdiction over the remaining three claims. Just as the Waldman court concluded that the bankruptcy court could not enter final orders on the related fraud claim, so this Court concludes that it does not have jurisdiction to enter final orders on the breach of contract claims and breach of the implied duty of good faith and fair dealing claim (the “implied duty claim”). . . . The breach of contract and implied duty claims are ‘related to,’ non-core matters. They do not arise in or under Title 11. They are ‘related to’ the bankruptcy in the sense that they may augment the estate if Ball Four were to succeed on these claims, but these claims could exist outside of a bankruptcy proceeding. As non-core matters, the Court may hear the claims but it may not enter a final determination as to them. It may only enter [proposed findings and conclusions]. De novo review in the district court should satisfy the constitutional requirement that these plenary matters be heard by an Article III court.”). Tex. Capital Bank, N.A. v. Dallas Roadster, Ltd. (In re Dallas Roadster, Ltd.), 2013 WL 5758632 (Bankr. E.D. Tex. Sept. 27, 2013) (Rhoades, J.) (“Texas Capital Bank, N.A. (“TCB”) . . . filed a state court action . . . (the “State Court Action”) [against the debtors and certain guarantors] . . . to collect amounts owed under a promissory note, related loan and security agreements, and guaranty agreements . . . . The State Court Action asserts only state law theories of recovery. . . . [The debtor and the guarantors] each filed answers and variously-labeled counterclaims in the Adversary Proceeding (collectively, the “Counterclaims”) based on state law . . . . [T]his Court cannot fully adjudicate all of the issues raised in this adversary proceeding. In Stern v. Marshall, the Supreme Court held that bankruptcy courts lack the constitutional authority to enter final orders regarding state law counterclaims against non-debtors. See Stern v. Marshall . . . . The counterclaims of [the debtors] against TCB fall squarely within the limitations of Stern. As a result, this Court is unable to enter final orders regarding such claims.”). Moses v. Cashcall, Inc. (In re Moses), 2013 WL 53873 (Bankr. E.D.N.C. Jan. 3, 2013) (Doub, J.) (“In the second cause of action, the Plaintiff alleges the Defendant committed several violations of 39

N.C. Gen. Stat. §§ 75–50 to –56 by attempting to collect on a debt rendered unenforceable by North Carolina’s consumer protection statutes and seeks alternative relief in the way of damages. The second claim is statutorily core as it qualifies as a ‘counterclaim[] by the estate against persons filing claims against the estate.’ 28 U.S.C. § 157(b)(2)(C). However, in light of Stern, the Court must undertake a constitutionally core analysis. The cause of action does not stem from the bankruptcy itself because the cause of action is based in state statutory law. See TP, Inc., 479 B.R. at 384. Whether the second cause of action is necessarily resolved in the claims allowance process is a more difficult question. The cause of action relates to actions that occurred after the origination of the Loan and does not attack the validity of the Defendant’s claim or assert the Defendant should recover a lesser amount. Instead, the second cause of action seeks actual damages for emotional distress and anxiety caused by the Defendant’s actions as well as statutory damages provided by N.C. Gen. Stat. § 75–56(b) (2012). These damages are unrelated to the Defendant’s proof of claim and are only related to the bankruptcy case in that if successful, the bankruptcy estate will recover any non-exempt funds and disburse them to claims in accordance with the bankruptcy code. . . . In TP, Inc. v. Bank of America, as in this case, the debtor filed a complaint alleging causes of action based in North Carolina law that were viewed as counterclaims to a creditor’s proof of claim. One of the causes of actions considered was for unfair and deceptive trade practices under North Carolina state law. The bankruptcy court found the unfair and deceptive trade practice claims would not ‘affect the calculation of the amount of [the creditor’s] proof of claim, such that each [claim] fail[ed] to satisfy the second prong of Stern.’ TP, Inc., 479 B.R. at 387. Therefore, the Court cannot find the Plaintiff’s cause of action for violation of N.C. Gen. Stat. §§ 75–50 to –56 is a constitutionally core counterclaim. . . . The Court also finds that the claims brought under N.C. Gen. Stat. §§ 75–50 to –56 will not affect the calculation of the amount of the Defendant’s claim in the bankruptcy case in accordance with the guidance provided by Stern. Therefore, because the Court lacks constitutional authority to enter final judgment on the second cause of action, findings of fact and conclusions of law on the cause of action will be submitted to the district court.”).

3.

COURTS IDENTIFYING BUT NOT DECIDING THE ISSUE

Ctr. Operating Co. v. Base Holdings, LLC (In re Base Holdings, LLC), 2014 WL 895403 (N.D. Tex. Mar. 5, 2014) (Fitzwater, J.) (“[Neither] Stern nor [In re] Frazin[, 732 F.3d 313 (5th Cir. 2013)] curtails the bankruptcy court’s constitutional authority to fully adjudicate [the claimant’s] proof of claim. . . . Both before and after Stern and Frazin, the bankruptcy court should ‘examine and resolve all challenges’ made to [the] . . . proof of claim [filed by the plaintiff/claimant (“Center”)], ‘even if the challenges could or do constitute one or more elements of state-law or other causes of action that must be finally resolved by an Article III or state court.’ Id. at 325 (Owen, J., concurring). . . . [In this case, however, because the debtor/defendant (“Base”) had not objected to Center’s proof of claim,] the bankruptcy court is left to adjudicate Base’s objections, if any, based on the state-law counterclaims, [a process made difficult by the fact that] some of Base’s counterclaims provide multiple, varied remedies that could impact how Center’s proof of claim is adjudicated by the bankruptcy court, and, in turn, affect its authority under Stern. . . . If the bankruptcy court determines that Base is objecting to Center’s proof of claim on a rescission theory, the bankruptcy court would apparently have to consider the merits of the fraudulent inducement counterclaim to adjudicate the 40

proof of claim. If the bankruptcy court then determines that the objection fails because Base has not established one of the elements of fraud, it would have constitutional authority under Stern and Frazin to enter a final judgment on Base’s state-law fraud counterclaims as well. This is so because, assuming arguendo that the bankruptcy court would reach each of these conclusions, Base’s state-law fraud counterclaims ‘would necessarily have been resolved in the claims-allowance process.’ Frazin, 732 F.3d at 320. . . . But if the bankruptcy court determines that Base is objecting to Center’s proof of claim on a damages theory—such as setoff or recoupment—the scope of the bankruptcy court’s statutory and constitutional authority is uncertain. This is so because, by seeking damages, Base would be affirming the validity of the Lease, and it would appear that the bankruptcy court could fully adjudicate Center’s contract-based proof of claim without considering Base’s tort-based fraudulent inducement counterclaim. [Thus, given the] unsettled issues in the record that are material to a Stern analysis, . . . the court concludes that the bankruptcy court’s final judgment must be vacated and this adversary proceeding remanded for further proceedings.”). Dang v. Bank of Am., 2013 WL 1683820 (D. Md. Apr. 17, 2013) (Bennett, J.) (“[B]efore the Appellant’s Chapter 13 plan was confirmed, the Appellant filed a complaint with ten causes of action against Bank of America, BAC, CIG HIF 1st Lien Mortgage (“CIG”), and Northwest (collectively, “Appellees”) . . . thereby initiating the adversary proceeding (the “Adversary Proceeding”) at issue in this appeal. [T]he Appellant filed an Amended Complaint with eight causes of action: (1) fraudulent misrepresentation; (2) fraud; (3) wrongful foreclosure; (4) bad faith and tortious breach of contract; (5) unlawful entry; (6) intentional infliction of emotional distress; (7) violation of Real Estate Settlement and Procedures Act (“RESPA”); and (8) violation of the Truth in Lending Act (“TILA”). In both the original Complaint and the Amended Complaint, the Appellant included, as required under Bankruptcy Rule 7008, the following statement: ‘This proceeding is a core proceeding as it affects the administration of the estate of the bankruptcy case that is before this court pursuant to 28 U.S.C. 157(b)(2)(f).’ [Approximately 10 months before the Supreme Court decided Stern], the Bankruptcy Court entered a Memorandum Order granting the Appellees’ motions to dismiss [the adversary proceeding]. . . . In her Statement of Appeal, [appellant] . . . claim[ed] that ‘[t]he [Bankruptcy] Court lacks Article [III] powers to rule on the matters at hand, and the Plaintiff did not waive jurisdiction.’ . . . The Appellant maintains that the Bankruptcy Court was without authority to order the dismissal of the Appellant’s adversary proceeding. She primarily relies on Stern v. Marshall, 131 S. Ct. 2594 (2011), in which the Supreme Court recently held that Article III of the United States Constitution limits the scope of claims that a bankruptcy court may hear and decide. . . . Even where a Bankruptcy Court possesses jurisdiction and the statutorily granted power to hear and determine a proceeding, Article III presents an independent bar to the court’s adjudication of at least some cases. In particular, the Supreme Court in Stern addressed a bankruptcy court’s final judgment on a common law counterclaim, which the debtor asserted against a creditor who had filed a proof of claim in her bankruptcy case. 131 S. Ct. [at] 2594. Though the counterclaim qualified as a core proceeding and the Bankruptcy Court otherwise possessed jurisdiction, the Supreme Court found that the Bankruptcy Court’s decision constituted an unconstitutional exercise of the judicial power of the United States. Id. Unless an action ‘stems from the bankruptcy itself or would necessarily be resolved in the claims allowance process,’ the Supreme Court asserted, then a bankruptcy court may not decide the matter. Id. at 2618. . . . Because the Court of Appeals for the Fourth Circuit has not ruled on this issue, this Court will assume, without deciding, that the Appellant could not waive the separation of powers principle 41

inherent in Article III. Accordingly, this Court finds that the Bankruptcy Court’s entry of final judgment in the Adversary Proceeding ran afoul of Article III, because the court resolved claims that did not stem ‘from the bankruptcy itself or would necessarily be resolved in the claims allowance process.’ Stern, 131 S. Ct. at 2618.”). Highsteppin’ Prods., LLC v. Porter (In re Porter), 2014 WL 2875527 (Bankr. E.D. La. June 24, 2014) (Magner, J.) (The bankruptcy court entered a judgment on certain counterclaims asserted by the Debtors to a proof of claim filed by the creditor, Highsteppin’ Productions, LLC (“HSP”). After the entry of judgment, HSP moved for a stay pending appeal, asserting that the bankruptcy court lacked the constitutional authority to enter a final judgment on the the debtors’ counterclaims. The bankrupty court granted the motion, stating: “[HSP] filed suit against Porter, Batiste, Stoltz, L.L.C. (“PBS”) and its individual members, George Porter, Jr. (“Porter”), Brian Stoltz (“Stoltz”), and David Russell Batiste (“Batiste”) . . . . Porter, Stoltz, and their wives [then] filed voluntary petitions for relief under chapter 7 of the Bankruptcy Code . . . . They both scheduled HSP as an unsecured creditor with a disputed debt of $504,040.06. Batiste filed a chapter 7 bankruptcy petition . . . also scheduling HSP as an unsecured creditor holding a disputed claim of $504,040.06. (Collectively Porter, Stoltz, and Batiste are referred to as “Debtors” and with PBS as “Artists.”). . . . HSP and Stepanian [against whom the Debtors filed a third-party complaint and asserted counterclaims] [(collectively, “Movants”)] have raised a challenge to this Court’s constitutional authority to hear and render judgment on the claims asserted by Debtors against each of them. An analysis of the likelihood of success of Movants’ appeal begins with an analysis of the claims filed against them and to which they complain. . . . HSP’s Complaint sought repayment of personal advances allegedly made to Debtors; deferred commissions earned on Artists’ earnings; and reimbursement for expenses incurred and paid by HSP on behalf of Artists. HSP’s claims arose out of a Personal Management Agreement (“PMA”) between HSP and Artists dated May 8, 2006. HSP requested a joint and several money judgment on its demands and a declaration that the judgment was nondischargeable. . . . HSP also filed proofs of claim in the Porter and Stoltz bankruptcy proceedings claiming $608,878.28 in each case. No proof of claim was filed in the Batiste case, but the Court notes that HSP’s adversary complaint against Batiste sought recognition of its claim against him. . . . Many of Debtors’ counterclaims are actually defenses to HSP’s claims. For example, Debtors’ breach of contract and breach of fiduciary duties claims are both independent counterclaims and defenses to payment on the PMA. While Debtors’ MUTPA [Massachusetts Unfair Trade Practices Act] claim was an independent cause of action, it also arose out of HSP’s conduct and duties under the PMA. Finally, Debtors’ copyright infringement claim was a separate and distinct cause of action based on conduct unrelated to the PMA but which could have offset any potential award under the PMA. In addition, Debtors alleged various claims against Stepanian, individually. . . . First, it is incontrovertible that a bankruptcy court has exclusive constitutional and jurisdictional authority over the res that comprises the debtor’s estate. That jurisdiction allows the bankruptcy court to administer not only the property of the estate, but the claims against it with the primary goal to distribute to claimants the estate’s assets in accordance with the priorities for payment set forth by the bankruptcy code. . . . A right to distribution is dependent on a right to payment from the debtor. Although a right to payment may be reduced by defense, it can also be decreased based on counterclaims or offsetting claims. To separate an offsetting claim from the demand might allow a claimant to receive distributions from the estate even as the estate independently pursues claims against the creditor in another court. This Court submits that it does not offend the separation of 42

powers doctrine if ruling on an independent cause of action is limited to a determination of the amount subject to offset against the creditor’s claim. Allowance of a claim cannot be conducted in the dark, blind to those claims that might otherwise limit the creditor’s ability to receive a distribution. . . . Second, assuming that Stern increases the limitations on a bankruptcy court’s jurisdiction over counterclaims asserted in the claims allowance process, this Court does not think the claims in question are similar to those implicated by Stern. The various causes of action asserted by and against HSP involved both findings of fact and law that were interrelated and common. . . . HSP incurred expenses on behalf of PBS and Debtors individually. In addition, commissions on PBS’ income were also due. HSP advanced to Porter, Stoltz and Batiste the costs of producing separate artistic works. HSP also advanced funds to Debtors for living expenses. Conversely, HSP owed Artists for revenues received from sales of merchandise and music. Revenues from touring were also collected by HSP and exceeded allowed expenditures. The PMA provided that Porter, Stoltz, Batiste, and PBS were jointly and severally responsible for the repayment of these amounts. The PMA also created fiduciary duties, and HSP assumed fiduciary duties as the Artists’ business manager. In conjunction with the consideration of HSP’s claims, the Court was compelled to consider Debtors’ defenses and counterclaims because each arose from HSP’s conduct during its relationship with Debtors. Ultimately, each was so closely intertwined with the claims asserted by HSP that severance from a determination on HSP’s claims would have been impossible. . . . The entire analysis required the Court to calculate the income PBS, Porter, Stoltz, and Batiste earned from music or merchandise sales and touring. Then each expense incurred by HSP had to be separately examined both as to proof of debt and defense to payment. Because of the defenses raised by Debtors, including HSP’s negligence, breach of duty, loyalty, and care, as well as breach of specific contract terms, the amounts owed were completely offset to zero. Thus, it was necessary in the claims allowance process for this Court to determine the amounts owed to Porter, Stoltz, and Batiste in order to determine what was owed to HSP. The MUTPA claim flowed from HSP’s conduct in discharging its duties under the PMA and as business manager. Finally, the damages awarded Debtors were entered in tandem with those awarded under MUTPA so as to avoid double recovery. . . . The findings regarding the MUTPA claim were the same ones governing the PMA. Unlike Stern, it could be expected that the trial on this matter would resolve the issues concerning the MUTPA claim. The very conduct that limited HSP’s claim against the estate also established the MUTPA claim. Thus, the MUTPA claim was both interrelated and fell within the identical facts of the HSP claim. Unlike Stern, the law regarding MUTPA is both known and well settled and the relief available well defined. . . . At the end of the initial trial on the merits, Porter, Stoltz, and Batiste successfully defended HSP’s claims. In addition, HSP was successful in defending itself against claims by Porter, Stoltz, and Batiste for copyright infringement. This left phase two (2), or the severed claims for attorneys’ fees and costs. . . . Although unsuccessful on its other claims, in phase two (2), HSP asserted an additional claim against the estate for the costs of defending the copyright action brought against it. This again raised the specter of a claim against the estate. In response, Debtors pressed their counterclaim for costs and attorneys’ fees in successfully bringing the MUTPA claim against HSP. Thus, the second phase of the trial involved both the merits of HSP’s claim for attorneys’ fees and costs associated with defending the copyright infringement claims and Debtors’ claim for attorneys’ fees and costs incurred in successfully asserting the MUTPA claims. . . . At trial, HSP failed to provide or even introduce proof of fees or costs incurred in connection with its defense of the copyright action. However, HSP did thoroughly challenge Debtors’ claim and was successful in reducing many categories of fees or costs. In contrast, Debtors 43

introduced extensive accountings of their claim and argued against any award in favor of HSP for fees or costs incurred in connection with defending the copyright action. In the end, fees and costs were awarded to Debtors. Because HSP offered no evidence, it did not receive an award and is currently appealing that decision. . . . Under these facts, HSP remained a potential creditor of Debtors until the final resolution of the counterclaims for attorneys’ fees and costs. The determination of these actions was in conjunction with Debtors’ objection to allowance of the creditor’s claims. Thus in this Court’s view, neither Granfinanciera nor Stern is implicated. . . . On the other hand, if Stern stands for the proposition that the bankruptcy court can never have constitutional authority over a debtor’s counterclaims if unrelated to the issues involving a claim’s allowance, i.e., the resolution of only the main demand, then [the] decision involving the copyright or MUTPA claims may be beyond this Court’s authority. This would also include the later determination of fees and costs recoverable under either. The fact that the Supreme Court did not take options less disruptive to the bankruptcy system in reversing gives credence to the claim that Stern is a purposeful break with prior precedent. But such an interpretation would not be in keeping with Justice Roberts’ opinion defining Stern as ‘narrow’ and of little effect. . . . As a result, this Court does not believe this is the holding of Stern or a proper interpretation of its effect at least while the claims allowance process is still at issue. The existence of both claims against and by the estate during the claims allowance process as well as the interrelationship of the facts and law surrounding those claims distinguishes this case from the Stern decision. . . . In summary, the issues presented by Debtors’ causes of action under MUTPA or copyright had to be resolved in order to determine if offsetting claims existed against any judgment in HSP’s favor. The remaining claims for attorneys’ fees and costs were also offsetting claims to HSP’s demands for attorneys’ fees and costs in connection with the successful copyright defense. This Court firmly maintains that significant Supreme Court precedent supports its constitutional authority to decide all the issues presented in this adversary even in the face of Stern. However, if Stern is read to limit authority over ‘only the counterclaims that are likely to be resolved in the claims allowance process’ all claims decided by this Court (with the exception of the copyright action which is not on appeal) fall within this cautionary warning. . . . Although this Court has rendered Judgment against HSP on all issues presented in its appeal and has concluded that they do not present a ‘Stern’ question, it must concede that the law on this question is in a serious state of flux and is subject to varying interpretation. Nevertheless, Executive Benefits confirms the propriety of this Court’s initial consideration of any claim even against a noncreditor. . . . However, as to the ‘Stern’ issue included within the Judgment already rendered, those portions may be merely proposed rulings subject to de novo review by the District Court. This Court does not find that HSP or Stepanian’s consent to trial on the merits changes this conclusion. Given the state of uncertainty as to the Judgment’s effect, this factor supports appellants’ request for a stay.”).

44

D.

ORDERS IN RESPECT TO OBTAINING CREDIT: 28 U.S.C. § 157(b)(2)(D)

E.

ORDERS TO TURN OVER PROPERTY OF THE ESTATE: 28 U.S.C. § 157(b)(2)(E)

Springel v. Prosser (In re Prosser), 2013 WL 996367 (D.V.I. Mar. 14, 2013) (Gomez, J.) (“The instant case does not involve a claim, counterclaim, or cross-claim based entirely on state law, as in Stern. Instead, it involves requests by the Trustees for the turnover of property that allegedly belongs to the bankruptcy estate under Title 11, Sections 541 and 542 of the United States Code. The right to prosecute such a claim stems exclusively from federal law. Indeed, it has no existence separate and apart from the bankruptcy statutory scheme, since it presupposes the existence of a bankruptcy estate to which property may be turned over. . . . For this reason, turnover actions necessarily involve a relatively ‘particularized area of the law’ in which ‘Congress devised an “expert and inexpensive method for dealing with a class of questions of fact. . . .”’ Stern, 131 S. Ct. at 2614 (quoting Crowell v. Benson, 285 U.S. 22, 46 (1932)). Although the questions presented in turnover actions do raise ancillary issues of state law, the ultimate inquiry is whether certain property ought to be in the possession of the bankruptcy estate. This is a specialized inquiry that is not presented to state courts in the ordinary course. The Court thus finds no reason to say that bankruptcy judges cannot constitutionally render final judgments in turnover actions. . . . This is not to say that all turnover actions are immediately within a bankruptcy court’s jurisdiction. Where the property sought is subject to a bona fide claim by a third party, that claim, inasmuch as it is based in state law, must be adjudicated by an Article III tribunal. However, for the reasons discussed above, the Prossers have not raised any such claim with respect to the property that was the subject of the adversary proceeding below.”). In re Reeves, 509 B.R. 35 (Bankr. S.D. Tex. 2014) (Bohm, J.) (“At issue is how this Court should rule on the Trustee’s Motion to Compel Turnover . . . . Having concluded that this Court has jurisdiction over this contested matter, the Court nevertheless notes that Stern v. Marshall . . . sets forth certain limitations on the constitutional authority of bankruptcy courts to enter final orders. This Court must therefore determine whether it has constitutional authority to sign final orders in the dispute at bar—[an] order relating to . . . the Trustee’s request for turn over of nonexempt property . . . . The facts in the case at bar are easily distinguishable from those in Stern. In Stern, the debtor filed a counterclaim against a creditor who had filed a proof of claim. The debtor’s counterclaim was based solely on state law; there was no Code provision providing a basis for the counterclaim. Moreover, the resolution of the counterclaim was not necessary to adjudicating the validity of the claim of the creditor. Under these circumstances, the Supreme Court held that the bankruptcy court lacked constitutional authority to enter a final judgment on the debtor’s counterclaim. . . . In the case at bar, on the other hand, there is no state law involved. The . . . Motion is based upon express provisions of the Code . . . —11 U.S.C. §§ . . . 541 [and] 542 . . . . Thus, this dispute is easily distinguishable from the suit in Stern, and the Court concludes that Stern v. Marshall is inapplicable in this dispute. The Court therefore has the constitutional authority to enter final orders in this dispute. . . . In the alternative, even if Stern somehow applies, this Court 45

concludes that the one exception articulated in Stern by the Supreme Court applies—specifically, that this Court may enter a final order over essential bankruptcy matters under the ‘public rights’ exception. . . . Disputes that are integrally bound up in the claims adjudication process—and thus involve the exercise of the Bankruptcy Court’s in rem jurisdiction over the estate—are part of the ‘public rights’ exception. See Stern, 131 S. Ct. at 2618 (noting that when determining whether Congress may bypass Article III, “the question is whether the action at issue stems from the bankruptcy itself or would necessarily be resolved in the claims adjudication process”). Disputes over rights created by the Bankruptcy Code itself as part of the public bankruptcy scheme also fall within the ‘public rights’ exception. In the case at bar, the key issues before this Court arise from a dispute over whether . . . certain property is property of the Debtors’ estate, which the Debtors must turn over to the Trustee . . . . These issues are central to the public bankruptcy scheme, as they relate to both the exercise of exclusive jurisdiction over the property of the Debtors’ estate . . . and the equitable distribution of that property among the Debtors’ creditors. . . . For all of these reasons, this Court has the constitutional authority to enter final orders on the . . . Motion.”). Olsen v. Reuter (In re Reuter), 499 B.R. 655 (Bankr. W.D. Mo. 2013) (Dow, J.) (“Debtor and his wife (the “Defendants”) are co-trustees of the Kathleen S. Reuter Revocable Trust (the “Kathleen Trust”) and the Nathan P. Reuter Revocable Trust (the “Nathan Trust”) which were created on September 16, 2005 (the “Trusts”). . . . [Previously], this Court issued an Opinion in which it held, in the context of denying confirmation of Debtor’s proposed plan, that Debtor has interests in property of the Trusts and that such interests are property of the estate. The Court left it to the bankruptcy Trustee, in the event of conversion, to determine what action was necessary to realize on the Debtor’s interest in the Trusts. . . . The case [later] was converted to Chapter 7 . . . . The Trustee (or the “Plaintiff”) was appointed and challenged Debtor’s rights in the Trusts. Thereafter, the Trustee filed this adversary proceeding claiming the following regarding Debtor’s rights in the Trusts: (a) Debtor’s rights as trustee to manage and control the trust res, and to make distributions to the estate to pay Debtor’s debts, are property of the estate to be exercised at the Trustee’s discretion; (b) Debtor’s beneficial interest in the Trusts are property of the estate and any purported spendthrift provision is invalid; and (c) Debtor’s rights to revoke the Trusts are the Trustee’s to exercise. In order to realize the claimed rights in the estate property, the Trustee has sought a declaratory judgment (1) that Debtor has an interest in, and power over, the property of the Kathleen S. Reuter Revocable Trust, declaring the extent of such interest and power, and declaring that such interest and power are property of the bankruptcy estate; (2) that Debtor has an interest in, and power over, the property of the Nathan Trust, declaring the extent of such interest and power, and declaring that such interest and power are property of the bankruptcy estate; (3) ordering Defendants to turnover to the Trustee all interests and powers declared by the Court to be property of the estate; and (4) ordering Debtor to make an accounting of all property of the estate or the value thereof. . . . Defendants have filed Motions to Dismiss the Trustee’s Complaint for a variety of reasons . . . . The Court disagrees with Debtor’s contention that a bankruptcy judge lacks the constitutional power to enter a final judgment in this adversary proceeding. The Supreme Court held in the Stern case that the bankruptcy court lacked constitutional authority to enter a final judgment on a state law counterclaim based on tortious interference, but that it had the statutory authority to do so under § 157(b)(2)(C). Further, a turnover proceeding like this one is a paradigmatic exercise of the Court’s in rem jurisdiction, very different from the scenarios considered in Stern. . . . After Stern, it is now clear that whether a matter is ‘core’ as a statutory matter is not dispositive of the bankruptcy judge’s 46

power, as a constitutional matter, to issue a final judgment. But the reported post Stern decisions have overwhelmingly held that bankruptcy judges can constitutionally enter final judgments in turnover actions. See In re Pali Holdings, Inc., 488 B.R. 841 (Bankr. S.D.N.Y. 2013) (citing Badami v. Sears (In re AFY, Inc.), 461 B.R. 541 (8th Cir. BAP 2012)) (concluding that bankruptcy judge could issue a final judgment in a turnover proceeding; noting that “the Supreme Court itself has cautioned that its holding is a narrow one, affecting only . . . one small part of the bankruptcy judges’ authority. Unless and until the Supreme Court visits other provisions of Section 157(b)(2), we take the Supreme Court at its word and hold that the balance of the authority granted to bankruptcy judges by Congress in 28 U.S.C. § 157(b)(2) is constitutional”). . . . Accordingly, this Court will follow the well-reasoned precedent set forth by the . . . Eighth Circuit BAP in In re AFY and finds that a bankruptcy court . . . has power to enter a final order.”). Geron v. Peebler (In re Pali Holdings, Inc.), 488 B.R. 841 (Bankr. S.D.N.Y. 2013) (Gerber, J.) (“In this adversary proceeding under the umbrella of the chapter 7 case of Debtor Pali Holdings, Inc., plaintiff Yann Geron, the chapter 7 Trustee (the “Trustee”), seeks turnover, under section 542 of the Bankruptcy Code, of the proceeds of a promissory note (the “Note”) defendant David Peebler executed in favor of Pali Holdings. Peebler’s defenses to payment on the Note are frivolous. Peebler’s only contention that even warrants a written opinion is his contention that a bankruptcy judge lacks the constitutional power to issue a final judgment for the requested relief. . . . [W]hen, as here, a trustee’s turnover rights under section 542 of the Code are appropriately invoked (e.g. to secure the return of property of the estate, or to monetize it), bankruptcy judges plainly have the constitutional power to issue final judgments for turnover. . . . A turnover proceeding like this one is a paradigmatic exercise of the Court’s in rem jurisdiction, very different from the scenarios considered in [Northern Pipeline Const. Co. v.] Marathon [Pipe Line Co., 458 U.S. 50, 87, 102 S. Ct. 2858, 73 L. Ed. 2d 598 (1982)] and Stern. . . . A turnover action is expressly listed in 28 U.S.C. § 157(a)(2) as one of several kinds of ‘core proceedings’—matters that, even after Marathon, Congress perceived to be ‘core’ bankruptcy functions within the traditional purview of bankruptcy judges—and with respect to which, accordingly, bankruptcy judges could still enter final orders. After Stern, it now is clear that whether a matter is ‘core’ as a statutory matter is not dispositive of the bankruptcy judge’s power, as a constitutional matter, to issue a final judgment in it. But the reported post-Stern decisions have overwhelmingly held that bankruptcy judges can constitutionally enter final judgments in turnover actions. And Peebler cites no case to the contrary. . . . The many cases recognizing the power of bankruptcy judges constitutionally to enter final judgments in turnover actions—repeatedly observing that turnover actions ‘stem[] from the bankruptcy itself’—are easy to understand when one considers the conceptual underpinnings of a turnover action. It has long been established, and confirmed by the United States Supreme Court in two decisions in the last decade, that ‘[b]ankruptcy jurisdiction, at its core, is in rem.’ Central Virginia Community College v. Katz, 546 U.S. 356, 362, 126 S. Ct. 990, 163 L. Ed. 2d 945 (2006); accord Tennessee Student Assistance Corp. v. Hood, 541 U.S. 440, 448, 124 S. Ct. 1905, 158 L. Ed. 2d 764 (2004) (“Hood”). . . . ‘A bankruptcy court’s in rem jurisdiction permits it to “determin[e] all claims that anyone . . . has to the property or thing in question.”’ Hood, 541 U.S. at 448, 124 S. Ct. 1905 (quoting 16 Moore’s Federal Practice § 108.70[1] (3d ed. 2004)). . . . When the turnover power is properly invoked, it is simply an effort to recover property—or on property—that is already property of the estate. That, in turn, invokes the court’s in rem jurisdiction over the bankruptcy res. . . . Of course, the turnover power can be improperly invoked, especially when it is used as a 47

Trojan Horse for bringing garden variety contract claims; when the property in question is not already property of the estate; or when the turnover statute is used to recover assets with disputed title when the estate’s claim of ownership is legitimately debatable. It is well established that the turnover power may not be used for such purposes. See, e.g., [In re] Fairfield Sentry [Ltd.], 458 B.R. [665,] 683 [(S.D.N.Y.2011)] (“Numerous courts have therefore held that an action is non-core when property which is the subject of a significant dispute between the parties is sought to be recovered through a turnover action. . . . These actions are subject to significant dispute, resolution of which will determine whether the funds redeemed are in fact property of the Funds’ estates.”) (citations and internal quotations omitted; emphasis added); Savage v. Mandl (In re Teligent), 325 B.R. 134, 137–38 (Bankr. S.D.N.Y. 2005) (Bernstein, C.J.) (“Teligent ”) (citing “settled law that the debtor cannot use the turnover provisions to liquidate contract disputes or otherwise demand assets whose title is in dispute”; other law holding that an action to determine the amount of a claimed debt to the estate that is, as yet, wholly disputed and unliquidated cannot properly be styled an action to turn over estate “property”; and other law holding that an action should be regarded as a turnover “only when there is no legitimate dispute over what is owed to the debtor”) (citations omitted); Shea & Gould v. Red Apple Companies, Inc. (In re Shea & Gould), 198 B.R. 861, 867 (Bankr. S.D.N.Y. 1996) (Garrity, J.) (issuing report and recommendation, instead of final judgment, in debtor’s action to recover fees for legal services rendered to the debtor, where court was doubtful that claim was sufficiently “specific in its terms as to amount due and date payable,” and observing that “[a] turnover action may be inappropriate where the debtor’s claim lacks such certainty”). . . . Judge Bernstein recognized in Teligent that exercising jurisdiction over an improperly brought turnover action could eviscerate the Supreme Court’s holding in Marathon by allowing the bankruptcy court to exercise judicial power reserved for Article III courts. 325 B.R. at 138. Thus, that the turnover power be properly invoked is integral to the bankruptcy court’s ability to constitutionally exercise its in rem jurisdiction in entering a final judgment. . . . Though the summary jurisdiction that bankruptcy courts had under the 1898 Bankruptcy Act may not be dispositive of modern bankruptcy courts’ in rem jurisdiction, it is instructive. If a matter was within the summary jurisdiction of a referee under the former Bankruptcy Act, which was quintessentially an in rem statute, that is a strong indication that it is within the power of a bankruptcy judge to enter a final order under the present Bankruptcy and Judicial Codes. As Kenneth Klee observes (in the first edition of a work written before Stern, when ‘core’ matters and matters within the constitutional power of bankruptcy judges to enter final orders were generally perceived to be substantially congruent): ‘Although the core/noncore distinction is not identical with the jurisdictional scheme under the Bankruptcy Act of 1898, the older jurisdictional decisions retain some vitality in shaping the contours of jurisdiction under the 1978 Bankruptcy Code. To be sure, the list of core proceedings in section 157(b)(2) of the Judicial Code is broader than summary jurisdiction conferred under the Act. It is doubtful, however, that the [Supreme] Court would find a matter that it formerly included within summary jurisdiction to be outside the scope of core proceedings. Thus, knowledge of the Act precedents may prove persuasive in resolving future jurisdictional disputes, even though not binding under the jurisdictional scheme of the Bankruptcy Code.’ Kenneth N. Klee, Bankruptcy and the Supreme Court 215 (LexisNexis 2008) (“Klee”) However, that is not to say that the opposite is necessarily true. If a matter was not then within the summary jurisdiction, it may still be within the power of a bankruptcy judge to issue a final judgment, at least in instances where the bankruptcy judge is enforcing a right arising under title 11. The matter here, however, is simply an unusually easy one. Under the 1898 Act, as Klee explains: ‘If the debtor had actual or constructive 48

possession of an asset that was property of the bankruptcy estate, the bankruptcy court could exercise summary jurisdiction because the res was in custodia legis; that is, based on the court’s custody over the asset in the possession of the estate, the court could exercise pervasive in rem jurisdiction.’ Klee at 210. . . . Thus, under the 1898 Act, bankruptcy referees could exercise summary jurisdiction over turnover actions in instances where any adverse claim to that property was not bona fide. And they had the power in the first instance to determine whether they had jurisdiction to proceed, and to examine (as this Court has examined here) whether the defense was bona fide. . . . As Judge Chapman observed in [In re] Ambac [Financial Group, Inc., 457 B.R. 299, 308 (Bankr. S.D.N.Y. 2011)], Stern ‘has nothing to do with the Court’s in rem jurisdiction to administer property of the estate.’ Where, as here, there are no serious defenses to the estate’s section 542 turnover rights, a bankruptcy judge can exercise the bankruptcy court’s in rem jurisdiction to issue a final judgment for the turnover of the estate’s property, or to monetize it. Just as bankruptcy courts under the 1898 Act could exercise summary jurisdiction over turnover claims when the defenses to such claims were not ‘real and substantial,’ they can do the equivalent of that now. Whatever constitutional limits might exist with respect to bringing new property into the estate (such as in actions at common law on contracts), those limits cannot be said to exist with respect to recovering property—or on property—that is already there.”). King v. Ark Woodworks, Inc. (In re Willis), 2014 WL 2890429 (Bankr. D. Colo. June 25, 2014) (Tallman, J.) (“On September 9, 2013, Dennis W. King, the chapter 7 trustee, (the “Trustee”) filed the above-captioned adversary proceeding (the “Complaint”) against ARK Woodworks, Inc. and Nasser Haji–Sarvestani (jointly, the “Defendants”) pursuant to section 542(b) of title 11 of the United States Code (the “Bankruptcy Code”) seeking turnover of amounts allegedly owed to Eugene and Deborah Willis (jointly, the “Debtors”). . . . The basis for the relief requested in the Complaint is a number of invoices (the “Invoices”) provided by the Debtors to the Trustee at their section 341(a) Meeting. The Invoices were billed to ARK Woodworks, Inc., of which Mr. Haji–Sarvestani is the principal, for services provided to the Defendants in the cumulative amount of $18,356.49. The Invoices were issued from ‘Olde Time Cabinets & Furniture LLC’ (“Olde Time LLC”). The Trustee alleges in the Complaint that Mr. Willis used Olde Time LLC as a trade name for his business, not a separate entity. . . . The Trustee alleges that the amount owed to the Debtors by the Defendants is property of the estate pursuant to section 541 of the Bankruptcy Code and, therefore, should be turned over to the estate pursuant to section 542. . . . The Defendants assert that the amount due per the Invoices is not property of the estate; that amount is due to Olde Time LLC which is not merely a trade name but a separate legal entity. According to the Defendants, Olde Time LLC is a registered Colorado limited liability company which renders it a distinct entity from the Debtors. A copy of Olde Time LLC’s records from the Colorado Secretary of State’s office, though unauthenticated, indicates that this is a colorable defense. . . . The distinction between a pure turnover action and a significantly disputed one is subtle but essential to determining whether the Court has jurisdiction. This distinction actually predates Stern . . . . Essentially, this issue was settled more than thirty years ago by the Supreme Court in Marathon where the court held that bankruptcy courts do not have blanket jurisdiction over all civil proceedings either arising under Title 11 or related thereto. More recent decisions like Stern and Executive Benefits Ins. Agency v. Arkison (In re Bellingham Insurance Agency, Inc.), ––– S. Ct.––––, 2014 WL 2560461 (2014), have served to clarify the scope of bankruptcy courts’ jurisdiction but have not altered the fundamental precept of Marathon. . . . In this case, the Complaint is an improperly invoked turnover action. It 49

seeks the ‘turnover’ of an asset when that asset may not be property of the bankruptcy estate. The fact that the Invoices were issued by Olde Time LLC, a putatively registered Colorado limited liability company, tips the focal point of the Complaint from recovery of estate assets to determination of whether the Invoices are estate assets. In other words, the Complaint is not a section 542 turnover action but a section 541 dispute over whether an asset is estate property. Since this is outside the scope of the Court’s in rem jurisdiction, the Court finds in accordance with [In re] Pali Holdings[, 488 B.R. 841, 852 (Bankr. S.D.N.Y. 2013)] that this dispute is a non-core matter.”). Cage v. Smith (In re Smith), 2014 WL 2601980 (Bankr. S.D. Tex. June 10, 2014) (Bohm, J.) (“Lowell T. Cage, the Chapter 7 trustee in this case (the Trustee), has filed suit against Cody W. Smith (the Debtor) and his wife seeking a determination that certain proceeds in their possession are property of the estate under 11 U.S.C. § 541 and to recover these proceeds under § 542. Not surprisingly, the Debtor and his wife vigorously oppose the relief sought by the Trustee. . . . In Stern, the debtor, pursuant to 28 U.S.C. § 157(b)(2)(C), filed a counterclaim based solely on state law, and the resolution of this counterclaim did not necessarily resolve the validity or invalidity of the defendant’s claim. Under these circumstances, the Supreme Court held that the bankruptcy court lacked constitutional authority to enter a final order on the debtor’s counterclaim. . . . In the dispute at bar, on the other hand, there is ample bankruptcy law involved. . . . There is certainly some state law involved in the underlying dispute—namely, the homestead exemption laws of the State of Texas—but the ultimate relief sought by the Trustee (i.e., turnover) is based upon exclusive provisions of the Code: §§ 541 and 542. Thus, this dispute is easily distinguishable from the suit in Stern, and the Court concludes that there is no Stern concern here. The Court therefore has the constitutional authority to enter a final order in this dispute.”). Donahue v. Smith (In re Pinewood Buffet & Grill Inc.), 2013 WL 6899079 (Bankr. N.D. Ill. Dec. 31, 2013) (Lynch, J.) (“The trustee’s adversary complaint seeks a determination that the insurance proceeds held in escrow by attorney Fishburn are property of the estate and asks the court to order Fishburn to turn the proceeds over to the estate. In doing so, the trustee necessarily also requests a declaration that there is no valid claim to the insurance proceeds outside of the bankruptcy estate. These requests fall squarely within several categories expressly described by the jurisdictional statute as ‘core,’ including ‘orders to turn over property of the estate,’ 28 U.S.C. § 157(b)(2)(E), ‘determinations of the validity, extent, or priority of liens,’ 28 U.S.C. § 157(b)(2)(K), ‘allowance or disallowance of claims against the estate or exemptions from property of the estate,’ 28 U.S.C. § 157(b)(2)(B), ‘matters concerning the administration of the estate,’ 28 U.S.C. § 157(b)(2)(A), and ‘other proceedings affecting the liquidation of the assets of the estate or the adjustment of the debtor-creditor or the equity security holder relationship.’ 28 U.S.C. § 157(b)(2)(O). . . . [The trustee] is not pursuing money damages against [the defendants]. Nor is he suing the insurance company for breach of the insurance agreement; indeed, the insurance company has already issued a check payable at least in part to the Debtor. Instead, the Chapter 7 trustee seeks the turnover of specific property that he asserts to belong to the bankruptcy estate. As recently noted by the Eighth Circuit, ‘Bankruptcy courts applying Stern have so far held that bona fide turnover actions are permissible core proceedings because “the exercise of exclusive jurisdiction over all the debtor’s property” is one of the [c]ritical features of every bankruptcy proceeding.’ Lovald v. Falzerano (In re Falzerano), 686 F.3d 885, 887 n.2 (8th Cir. 2012) (distinguishing turnover proceedings, which were within a bankruptcy court’s constitutional authority, from proceedings “to liquidate disputed 50

contract claims.”). . . .The Chapter 7 trustee asserts that the insurance proceeds held in escrow are property of the estate for which he is authorized, indeed required, to seek a determination of interest and a turn over order. As such, the adversary brought by the Chapter 7 trustee is properly within this court’s authority. Indeed, this action to recover specific property of the estate is also an in rem proceeding over which the bankruptcy court has exclusive jurisdiction under 28 U.S.C. § 1334(e).”). DeGirolamo v. Devonshire Fund, LLC (In re Myers), 2013 WL 6080270 (Bankr. N.D. Ohio Nov. 18, 2013) (Kendig, J.) (“The vast majority of cases filed within the Sixth Circuit after Stern have held that turnover actions are core and can be decided by a bankruptcy judge. See, e.g., French v. Butler (In re Brady), 2013 WL 4453039 (Bankr. N.D. Ohio 2013) (holding that a turnover action seeking recovery of a liquidated debt that is property of the bankruptcy estate is a core proceeding); Barbacci v. Marshall Buck Financial Grp. (In re Olson), 2013 WL 1222599 (Bankr. N.D. Ohio 2013) (finding core jurisdiction for a turnover claim where disputed issues of law existed, but without disputed issues of material fact); Shapiro v. Harajli (In re Harajli), 469 B.R. 274 (Bankr. E.D. Mich. 2012) (same). Before Stern, many courts in the Sixth Circuit, as well as in other circuits, held that turnover actions are noncore when a bona fide dispute exists as to the debt. . . . While most cases after Stern have determined that turnover actions are core, factual disputes regarding the existence or amount of a liability did not exist in those cases. Therefore, when a genuine issue of material fact exists as to the existence or amount of a debt, the claim is not a traditional turnover action and is noncore. . . . [A]t the current stage in this proceeding, this court cannot determine whether or not Defendants owe money to Trustee. Therefore, the current action does not fall within the traditional bankruptcy definition of a turnover action. Additionally, Defendants have not filed a claim in the bankruptcy case, meaning that the disputed debt will not be determined during the normal bankruptcy claims allowance process.”). Rainsdon v. Visser (In re Visser), 2013 WL 1337327 (Bankr. D. Idaho Apr. 1, 2013) (Pappas, J.) (“If every bankruptcy proceeding requires the exercise of exclusive jurisdiction over all the debtor’s property [and] the equitable distribution of that property among the debtor’s creditors a bankruptcy court must surely have the constitutional authority to determine what is, and what is not, property of the bankruptcy estate . . . [and] to order turnover of the estate property . . . .”).

F.

PROCEEDINGS TO DETERMINE, AVOID OR RECOVER PREFERENCES: 28 U.S.C. § 157(b)(2)(F) 1.

BANKRUPTCY COURTS HAVE THE CONSTITUTIONAL AUTHORITY TO FINALLY ADJUDICATE THE PREFERENCE ACTION

Dietz v. Spangenberg, 2013 WL 883464 (D. Minn. Mar. 8, 2013) (Montgomery, J.) (“[T]he Court finds the Bankruptcy Court has the judicial authority to issue final orders and judgments as to some of the claims, but lacks the authority to finally adjudicate others. For example, the Bankruptcy Court clearly has authority to enter a final order or judgment in the Trustee’s preference and fraudulent transfer claims against [defendant] FP Tech. Those claims, sounding under §§ 547 and 548 of the 51

Bankruptcy Code, respectively, are listed as core claims under 28 U.S.C. §§ 157(b)(2)(F) and (H). Moreover, FP Tech has filed a proof of claim in [the debtor’s] bankruptcy case, and so the Trustee’s claims for preferential and fraudulent transfers against FP Tech will necessarily be resolved in the claims allowance process.”). Henderson v. Bank of Am. (In re Simmons), 510 B.R. 76 (Bankr. S.D. Miss. 2014) (Ellington, J.) (“On March 15, 2012, the Debtors filed a petition for relief under Chapter 7 of the United States Bankruptcy Code. . . . [T]he Debtors filed their Complaint to Determine Extent and Validity of Liens (Complaint) in this Court against Bank of America, N.A. (BOA). In their Complaint, the Debtors allege that because the Legal Description contained in the 2003 Deed of Trust is incorrect, BOA does not have a perfected security interest in the Property, and the 2003 Deed of Trust is avoidable pursuant to 11 U.S.C. §§ 544 and 545. . . . In [an] Amended Complaint, [filed by] the [Chapter 7] Trustee and Trustmark[,] [the recipient of a subsequent deed of trust,] [plaintiffs] allege [that] BOA does not have a perfected lien in the Property and that the 2003 Deed of Trust may be avoided pursuant to § 544 and § 545. Trustmark alleges that BOA’s 2003 Deed of Trust is unperfected, and therefore, the Trustmark Deed of Trust is the first lienholder on the Property. . . . Further, the Trustee and Trustmark allege that BOA’s attempt to perfect its security interest in the Property by filing the Lis Pendens constituted an avoidable preference pursuant to § 547(b). . . . While BOA has not raised a Stern challenge to this Court’s constitutional authority to enter a final judgment in the above-styled adversary proceeding, the Court will address the effect, if any, of Stern. . . . [I]n the case at bar, BOA has filed a proof of claim in the Debtors’ bankruptcy case alleging it holds a secured claim in the amount of $745,414.79. And while BOA’s state law claim for reformation of the 2003 Deed of Trust was filed in state court, BOA’s claims will ‘be resolved in the claims allowance process.’ [E]ven though BOA’s claim is based on state law, once the Debtors filed bankruptcy, the Bankruptcy Code governs the avoidance action under § 544 (strong-arm powers of trustee), § 545 (lien avoidance) or § 547 (avoidance of a preference). Accordingly, the Court has the constitutional authority to enter a final judgment.”). Willson v. McPhersons P’ship (In re Cent. La. Grain Coop., Inc.), 497 B.R. 229 (Bankr. W.D. La. 2013) (Summerhays, J.) (“The Trustee moves for summary judgment with respect to his avoidance claim[] under 11 U.S.C. § 547(b). . . . [T]he court may enter final orders on the claims and defenses asserted in this case under Stern v. Marshall . . . .”). Compton v. Mustang Eng’g Ltd. (In re MPF Holding U.S. LLC), 495 B.R. 303 (Bankr. S.D. Tex. 2013) (Bohm, J.) (“Jeff Compton, Litigation Trustee (the Litigation Trustee) of the MPF Litigation Trust, brought the instant adversary proceeding to recover alleged preferential payments made to the Defendant, Mustang Engineering Ltd. (Mustang). Pending before the Court is Mustang’s renewed motion to dismiss, which alleges that (1) the debtor assumed and assigned its contract with Mustang pursuant to section 365 of the Bankruptcy Code, and thus is barred as a matter of law from now pursuing a preference action against Mustang; and (2) even if the debtor did not assume and assign its contract with Mustang, the instant preference action was, nevertheless, released pursuant to the debtors’ confirmed plan of reorganization. Thus, the ultimate issue which this Court now decides is whether the Litigation Trustee has standing to pursue the instant preference avoidance action against Mustang. . . . [T]his Court has a duty to question its constitutional authority to enter a final order for any matter brought before it. The Court concludes that the facts in the pending suit 52

are distinguishable from those in Stern, and that this Court has the authority to enter a final order in this adversary proceeding. In Stern, the debtor filed a counterclaim based solely on state law, and the resolution of this counterclaim did not resolve the validity, or invalidity, of the claim held by the defendant. . . . [T]he instant adversary proceeding is distinguishable from the suit in Stern because here, the Litigation Trustee seeks relief pursuant to 11 U.S.C. §§ 547 and 550. Thus, the cause of action and the requested relief are based on express provisions of the Code rather than on state law, which formed the basis for the counterclaim in Stern. For these reasons, this Court is constitutionally authorized to enter a final order in this adversary proceeding.”). Davis v. R.A. Brooks Trucking, Co. (In re Quebecor World (USA), Inc.), 491 B.R. 379 (Bankr. S.D.N.Y. 2013) (Lane, J.) (“Plaintiff [litigation trustee] seeks to avoid and recover ten alleged preferential transfers . . . . Because this Court is adjudicating [plaintiff’s] motion for summary judgment, it must consider whether it has the constitutional authority to issue a final decision consistent with Stern v. Marshall . . . . In Stern, the Supreme Court held that a bankruptcy court ‘lacked the constitutional authority to enter a final judgment on a state law counterclaim that is not resolved in the process of ruling on a creditor’s proof of claim.’ Id. at 2620. The decision in Stern is understood in this district to mean that a bankruptcy court lacks final adjudicative authority over a core claim where all of the following three conditions are met: ‘1) the claim at issue did not fall within the public rights exception; 2) the claim would not necessarily be resolved in ruling on a creditor’s proof of claim; and 3) the parties did not unanimously consent to final adjudication by a non-Article III tribunal.’ Weisfelner v. Blavatnik (In re Lyondell Chem. Co.), 467 B.R. 712, 719–720 (S.D.N.Y. 2012) (internal citations and quotations omitted). . . . In this case, the Defendant has filed a proof of claim. . . . The Plaintiff’s claims would necessarily be resolved in ruling on the Defendant’s proof of claim as a result of Section 502(d) of the Bankruptcy Code . . . . Accordingly, the Court has the constitutional authority to issue a final judgment in this action.”). Goodman v. Triple “C” Marine Salvage, Inc. (In re Gulf Fleet Holdings, Inc.), 485 B.R. 329 (Bankr. W.D. La. 2013) (Summerhays, J.) (“This adversary proceeding involves preference claims by . . . [the liquidating trustee] against [the defendant]. . . . [T]he court may enter final orders on the claims and defenses asserted in this case under Stern v. Marshall . . . . See First Choice Drywall, Inc. v. Presbitero (In re First Choice Drywall, Inc.), 2012 WL 4471570 (Bankr. N.D. Ill. Sept. 25, 2012) (bankruptcy court has the power to determine preference actions after Stern); Olsen v. PG Design/Build, Inc. (In re Smeltzer Plumbing Sys., Inc.), 2011 WL 6176213 (Bankr. N.D. Ill. Dec. 12, 2011) (same); Nanodynamics, Inc. v. Rothstein (In re Nanodynamics, Inc.), 474 B.R. 422, 429 (Bankr. W.D.N.Y. 2012) (same); Appalachian Fuels, LLC v. Energy Coal Resources, Inc. (In re Appalachian Fuels, LLC), 472 B.R. 731, 744 (E.D. Ky. 2012) (same); In re Am. Hous. Found., 469 B.R. 257, 265 (Bankr. N.D. Tex. 2012) (same); In re DBSI, Inc., 467 B.R. 767, 773 (Bankr. D. Del. 2012) (same); West v. Freedom Medical, Inc. (In re Apex Long Term Acute Care–Katy, L.P.), 465 B.R. 452, 463(Bankr. S.D. Tex. 2011) (same); Burtch v. Huston (In re USDigital, Inc.), 461 B.R. 276, 285 (Bankr. D. Del. 2011) (same).”). Shurn v. Gilbert (In re Gulf Coast Glass & Erection Co., Inc.), 484 B.R. 685 (Bankr. S.D. Tex. 2013) (Bohm, J.) (“The Liquidating Trustee alleges that under 11 U.S.C. § 547, $26,700 transferred to [defendant] . . . before . . . [the debtor] filed for bankruptcy is an avoidable preferential transfer. . . . The matter at bar is not a counterclaim of the Debtor’s estate based solely on state law. 53

Rather, this matter arises from an express bankruptcy provision: 11 U.S.C. § 547. The issues and the related requested relief (i.e., avoidance of pre-petition preferential transfers) are available only under bankruptcy law. There is no state law involved in the matter before this Court. This suit is therefore easily distinguishable from the matter at issue in Stern. Moreover, courts have held that because preference actions are ‘so closely integrated into the public bankruptcy scheme,’ the Supreme Court’s holding in Stern v. Marshall is not applicable to these types of claims. West v. Freedom Med., Inc. (In re Apex Long Term Acute Care–Katy, L.P.), 465 B.R. 452, 468 (Bankr. S.D. Tex. 2011); see also Penson Fin. Servs. v. O’Connell (In re Arbco Capital Mgmt., LLP), 479 B.R. 254, 265 (S.D.N.Y. 2012); Murphy v. Felice (In re Felice), 480 B.R. 401, 428 (Bankr. D. Mass. 2012). Stated differently, preference actions may be finally adjudicated by non-Article III bankruptcy courts even without a Stern analysis. In re Apex Long Term Acute Care–Katy, L.P., 465 B.R. at 468; In re GarrettBeck Corp., No. 09–37774, 2012 WL 3727318, at *1, 2012 Bankr. LEXIS 3911, at *2 (Bankr. S.D. Tex. Aug. 27, 2012). Accordingly, for these separate and distinct reasons, this Court concludes that it has the constitutional authority to enter a final order.”). Goodman v. Adriatic Marine, LLC (In re Gulf Fleet Holdings, Inc.), 2014 WL 1170926 (Bankr. W.D. La. Mar. 21, 2014); Goodman v. Candy Fleet, LLC (In re Gulf Fleet Holdings, Inc.), 2014 WL 1168885 (Bankr. W.D. La. Mar. 21, 2014); Goodman v. Reama, Inc. (In re Gulf Fleet Holdings, Inc.), 2014 WL 1168791 (Bankr. W.D. La. Mar. 21, 2014) (Summerhays, J.) (“The present matter before the court is an adversary proceeding brought by Alan Goodman, Trustee of the Gulf Fleet Liquidating Trust . . . against [the defendant]. The Trustee asserts preference claims under 11 U.S.C. § 547(b) and seeks avoidance of . . . payments made by Gulf Fleet to [the defendant] . . . during the ninety-day preference period. . . . [T]he court may enter final orders on the claims and defenses asserted in this case under Stern v. Marshall . . . . ”). Williams v. McKesson Corp. (In re Quality Infusion Care, Inc.), 2013 WL 6189948 (Bankr. S.D. Tex. Nov. 25, 2013) (Bohm, J.) (“[C]ourts have held that because preference actions are ‘so closely integrated into the public bankruptcy scheme,’ Stern is not applicable to these types of claims. W. v. Freedom Med., Inc. (In re Apex Long Term Acute Care—Katy, L.P.), 465 B.R. 452, 468 (Bankr. S.D. Tex. 2011). Because preference actions ‘stem from the bankruptcy itself and are decided primarily pursuant to [a bankruptcy court’s] in rem jurisdiction,’ bankruptcy courts have constitutional authority to enter a final judgment in an adversary proceeding involving preferential transfer claims. Post–Confirmation Comm. v. Tomball Forest, Ltd. (In re Bison Bldg. Holdings, Inc.), 473 B.R. 168, 172 (Bankr. S.D. Tex. 2012). Accordingly, for these reasons, the Court’s issuance of an order granting in part and denying in part the Trustee’s Motion and denying [defendant’s] Motion does not implicate Stern.”). Goodman v. Ferro Mgmt., Inc. (In re Gulf Fleet Holdings, Inc.), 2013 WL 3230433 (Bankr W.D. La. June 25, 2013) (Summerhays, J.) (Addressing its constitutional authority to rule on crossmotions for summary judgment on the trustee’s preference claims, the court stated: “[T]he court may enter final orders on the claims and defenses asserted in this case under Stern v. Marshall . . . . See First Choice Drywall, Inc. v. Presbitero (In re First Choice Drywall, Inc.), 2012 WL 4471570 (Bankr. N.D. Ill. Sept. 25, 2012) (bankruptcy court has the power to determine preference actions after Stern); Olsen v. PG Design/Build, Inc. (In re Smeltzer Plumbing Sys., Inc.), 2011 WL 6176213 (Bankr. N.D. Ill. Dec. 12, 2011) (same); Nanodynamics, Inc. v. Rothstein (In re Nanodynamics, 54

Inc.), 474 B.R. 422, 429 (Bankr. W.D.N.Y. 2012) (same); Appalachian Fuels, LLC v. Energy Coal Resources, Inc. (In re Appalachian Fuels, LLC), 472 B.R. 731, 744 (E.D. Ky. 2012) (same); In re Am. Hous. Found., 469 B.R. 257, 265 (Bankr. N.D. Tex. 2012) (same); In re DBSI, Inc., 467 B.R. 767, 773 (Bankr. D. Del. 2012) (same); West v. Freedom Medical, Inc. (In re Apex Long Term Acute Care–Katy, LP.), 465 B.R. 452, 463 (Bankr. S.D. Tex. 2011) (same); Burtch v. Huston (In re USDigital, Inc.), 461 B.R. 276, 285 (Bankr. D. Del. 2011) (same).”). Goodman v. S. Crane & Hydraulics, LLC (In re Gulf Fleet Holdings, Inc.), 2013 WL 1755490 (Bankr. W.D. La. Apr. 23, 2013) (Summerhays, J.) (Addressing its constitutional authority to rule on cross-motions for summary judgment on the trustee’s preference claims, the court stated: “[T]he court may enter final orders on the claims and defenses asserted in this case under Stern v. Marshall . . . . See First Choice Drywall, Inc. v. Presbitero (In re First Choice Drywall, Inc.), 2012 WL 4471570 (Bankr. N.D. Ill. Sept. 25, 2012) (bankruptcy court has the power to determine preference actions after Stern); Olsen v. PG Design/Build, Inc. (In re Smeltzer Plumbing Sys., Inc.), 2011 WL 6176213 (Bankr. N.D. Ill. Dec. 12, 2011) (same); Nanodynamics, Inc. v. Rothstein (In re Nanodynamics, Inc.), 474 B.R. 422, 429 (Bankr. W.D.N.Y. 2012) (same); Appalachian Fuels, LLC v. Energy Coal Resources, Inc. (In re Appalachian Fuels, LLC), 472 B.R. 731, 744 (E.D. Ky. 2012) (same); In re Am. Hous. Found., 469 B.R. 257, 265 (Bankr. N.D. Tex. 2012) (same); In re DBSI, Inc., 467 B.R. 767, 773 (Bankr. D. Del. 2012) (same); West v. Freedom Medical, Inc. (In re Apex Long Term Acute Care–Katy, LP.), 465 B.R. 452, 463 (Bankr. S.D. Tex. 2011) (same); Burtch v. Huston (In re USDigital, Inc.), 461 B.R. 276, 285 (Bankr. D. Del. 2011) (same).”). Goodman v. Triple “C” Marine Salvage, Inc. (In re Gulf Fleet Holdings, Inc.), 2013 WL 968146 (Bankr. W.D. La. Mar. 12, 2013) (Summerhays, J.) (Addressing its constitutional authority to rule on cross-motions for summary judgment on the trustee’s preference claims, the court stated: “[T]he court may enter final orders on the claims and defenses asserted in this case under Stern v. Marshall . . . . See First Choice Drywall, Inc. v. Presbitero (In re First Choice Drywall, Inc.), 2012 WL 4471570 (Bankr. N.D. Ill. Sept. 25, 2012) (bankruptcy court has the power to determine preference actions after Stern); Olsen v. PG Design/Build, Inc. (In re Smeltzer Plumbing Sys., Inc.), 2011 WL 6176213 (Bankr. N.D. Ill. Dec. 12, 2011) (same); Nanodynamics, Inc. v. Rothstein (In re Nanodynamics, Inc.), 474 B.R. 422, 429 (Bankr. W.D.N.Y. 2012) (same); Appalachian Fuels, LLC v. Energy Coal Resources, Inc. (In re Appalachian Fuels, LLC), 472 B.R. 731, 744 (E.D. Ky. 2012) (same); In re Am. Hous. Found., 469 B.R. 257, 265 (Bankr. N.D. Tex. 2012) (same); In re DBSI, Inc., 467 B.R. 767, 773 (Bankr. D. Del. 2012) (same); West v. Freedom Medical, Inc. (In re Apex Long Term Acute Care–Katy, LP.), 465 B.R. 452, 463 (Bankr. S.D. Tex. 2011) (same); Burtch v. Huston (In re USDigital, Inc.), 461 B.R. 276, 285 (Bankr. D. Del. 2011) (same).”).

2.

BANKRUPTCY COURTS DO NOT HAVE THE CONSTITUTIONAL AUTHORITY TO FINALLY ADJUDICATE THE PREFERENCE ACTION

Sec. Investor Prot. Corp. v. Bernard L. Madoff Inv. Sec. LLC, 490 B.R. 46 (S.D.N.Y. 2013) (Rakoff, J.) (“The Court has no difficulty concluding that avoidance actions under SIPA, like those 55

under the Bankruptcy Code, assert private rights. See Granfinanciera, 492 U.S. at 56, 109 S. Ct. 2782 (“There can be little doubt that fraudulent conveyance actions by bankruptcy trustees . . . are quintessentially suits at common law.”). This conclusion applies equally to actions that seek to avoid transfers as fraudulent and actions that seek to avoid transfers as preferential. See Schoenthal v. Irving Trust Co., 287 U.S. 92, 94, 53 S. Ct. 50, 77 L. Ed. 185 (1932) (“In England, long prior to the enactment of our first Judiciary Act, common-law actions of trover and money had and received were resorted to for the recovery of preferential payments by bankrupts.”). Since the Supreme Court looks at the historical nature of a claim to determine whether it asserts a private or a public right, it would appear that whether an avoidance action arises under the Bankruptcy Code or under SIPA matters little. As in Stern, an avoidance action—whether brought under SIPA or under the Bankruptcy Code—‘is not a matter that can be pursued only by grace of the other branches, . . . or one that historically could have been determined exclusively by those branches.’ 131 S. Ct. at 2614 (citations and internal quotation marks omitted). Resolution of an avoidance action brought under SIPA would thus require an exercise of the judicial power reserved for Article III courts.”). Carroll v. Benta (In re Innovative Commc’n Corp.), 2014 WL 2442173 (D.V.I. May 30, 2014) (Gomez, J.) (“In the adversary proceedings, [the Chapter 11 trustee] seeks to undo transactions entered into between [defendant] and [the debtor][,] . . . claim[ing] that these transactions were either fraudulent conveyances or preferential transfers, and thus disallowed under the Bankruptcy Code. . . . [The defendant] filed a motion to withdraw the reference in this Court[,] . . . argu[ing] that fraudulent and preferential conveyance actions may not be considered in the Bankruptcy Court. . . . [T]he complaint in the adversary proceeding seeks to recover pre-petition fraudulent and preferential transfers. Such claims are governed by the rule laid out in Granfinanciera and clarified in Bellingham. They may be finally adjudicated only by the district court, absent waiver or consent of the parties.”). Pryor v. Tromba, 2014 WL 1355623 (E.D.N.Y. Apr. 7, 2014) (Bianco, J.) (“Claims based on preferential transfers . . . are classified as core by 28 U.S.C. § 157(b)(2)(F) . . . but they do not fall under the public rights exception to Stern. . . . ‘A voidable preference claim asserts that a debtor made a payment to a particular [party] in anticipation of bankruptcy, to in effect increase that [party]’s proportionate share of the estate.’ Stern, 131 S. Ct. at 2616. In In re Arbco Capital Management, [LLP, 479 B.R. 254 (S.D.N.Y. 2012)], Judge Oetken recognized that ‘the Supreme Court has not expressly held that actions to avoid preferential transfers are matters of private right,’ but it has ‘determined that preference defendants are entitled to trial by jury.’ 479 B.R. at 265. This Court concurs with Judge Oetken’s conclusion that, because ‘a preference defendant is entitled to a jury trial before an Article III court where it has not filed a proof of claim against the bankruptcy estate, it follows that the preference defendant is entitled to have its claim finally adjudicated by an Article III judge,’ and, therefore, in that situation, the preferential transfer claim is a matter of private right. Id. at 265–66. . . . A creditor may subject itself to the binding authority of the bankruptcy court by filing a proof of claim against the bankrupt estate. . . . This exception is not applicable here as defendant has not filed a proof of claim against the estate to be resolved in connection with this adversary proceeding.”). Carroll v. AMJ, Inc. (In re Innovative Commc’n Corp.), 2014 WL 128204 (D.V.I. Jan. 14, 2014) (Gomez, J.) (“Here, the complaint in the Adversary Proceeding seeks to recover pre-petition . . . 56

preferential transfers. Such claims are governed by the rule laid out in Granfinanciera and clarified in Bellingham. They may be finally adjudicated only by the district court, absent waiver or consent of the parties. There has been no such waiver here.”). Carroll v. Raynor (In re Innovative Commc’n Corp.), 2013 WL 2631344 (D.V.I. June 12, 2013) (Gomez, J.) (“Here, the complaint in the Adversary Proceeding seeks to recover pre-petition . . . preferential transfers. Such claims are governed by the rule laid out in Granfinanciera and clarified in Bellingham. They may be finally decided only by the district court, absent waiver or consent of the parties. There has been no such waiver here.”). Nisselson v. Salim, 2013 WL 1245548 (S.D.N.Y. Mar. 25, 2013) (Gardephe, J.) (“This is an adversary proceeding originally brought in the United States Bankruptcy Court for the Southern District of New York by Plaintiff Alan Nisselson, Trustee of Debtor Big Apple Volkswagon, LLC, who seeks to avoid and recover allegedly fraudulent and preferential pre-petition transfers of debtor funds to Defendants Ratiba Salim and Wahid Saleem. . . . [C]onsistent with the ‘emerging consensus’ in this District, this Court concludes that the Bankruptcy Court does not ordinarily have constitutional authority to enter a final decision on avoidance claims because, although they may be core bankruptcy matters, they concern private rights. . . . Defendants have not filed any claim against the estate, and therefore no proof of claim will be resolved in connection with this adversary proceeding. . . . Finally, Defendants have not consented to final adjudication by the Bankruptcy Court. . . . [T]he Bankruptcy Court lacks constitutional authority to enter a final judgment on Plaintiff’s avoidance claims.”).

3.

COURTS IDENTIFYING BUT NOT DECIDING THE ISSUE

Ciesla v. Harney Mgmt. Partners (In re KLN Steel Prods. Co.), 506 B.R. 461 (Bankr. W.D. Tex. 2014) (Davis, J.) (“The Court has jurisdiction over this [preference] action pursuant to 28 U.S.C. § 1334. This is a core proceeding under 28 U.S.C. § 157(b)(2)(F). . . . But while jurisdiction is certain, the Court’s authority under the Constitution to determine the dispute is less so. This uncertainty arises in the wake of Stern v. Marshall, in which the Supreme Court ruled that at least some matters within the statutory jurisdiction of non-Article III bankruptcy courts nonetheless cannot be constitutionally decided by those courts. . . . If a creditor has filed a proof of claim in the bankruptcy case, courts are generally confident that an avoidance action (such as this one) targeting that creditor is within the Court’s constitutional power, because the ‘process of allowing or disallowing claims’ will usually require deciding the avoidance issue. Stern, 131 S. Ct. at 2616 . . . . But Harney has not filed a proof of claim, so that avenue to a final judgment appears foreclosed. . . . Some courts allow bankruptcy courts to enter final judgments upon consent of the parties. See Exec. Benefits Ins. Agency v. Arkison (In re Bellingham Ins. Agency), 702 F.3d 553, 566–70 (9th Cir. 2012), cert. granted sub nom. Exec. Benefits Ins. Agency v. Arkison, ––– U.S. ––––, 133 S. Ct. 2880, 186 L. Ed. 2d 908 (2013) (No. 12–1200). Here, the parties have consented. But the Fifth Circuit has ruled squarely that such consent is ineffective to empower this Court to enter a final judgment under the Constitution. See Frazin v. Haynes & Boone, L.L.P. (In re Frazin), 732 F.3d 313, 320 n.3 (5th Cir. 2013); BP RE L.P. v. RML Waxahachie Dodge, L.L.C. (In re BP RE, L.P.), 735 F.3d 279, 57

286–91 (5th Cir. 2013). (This issue is currently before the Supreme Court, as Executive Benefits Insurance Agency v. Arkison, No. 12–1200.) . . . . So then: The creditor not having filed a proof of claim, and the parties’ consent being unavailing, can the Court issue a final judgment in this avoidance action? Since Stern, courts have been divided on whether bankruptcy courts can enter final decisions in preference actions under such conditions. . . . The arguments for and against are sound. . . . The issue appears finely balanced. It is not decisively resolvable without further guidance from the Fifth Circuit or the Supreme Court. Because there is no clear precedent altering the status quo in this respect, the Court will adhere to the pre-Stern practice of issuing its ruling on this core matter as a final judgment, as Congress permitted under 28 U.S.C. § 157(b)(2)(F). . . . If the District Court concludes that this course of action was in error, and that this Court lacks constitutional authority, the ‘final judgment’ can be construed as ‘proposed findings of fact and conclusions of law,’ with a final judgment to be entered by the district court.”).

G.

MOTIONS FOR RELIEF FROM THE AUTOMATIC STAY: 28 U.S.C. § 157(b)(2)(G)

In re Settlers’ Hous. Serv., Inc., 505 B.R. 483 (Bankr. N.D. Ill. 2014) (Schmetterer, J.) (“A motion to modify the automatic stay ‘stems from the bankruptcy itself,’ and may constitutionally be decided by a bankruptcy judge.”). In re Jefferson Cnty., Ala., 491 B.R. 277 (Bankr. N.D. Ala. 2013) (Bennett, J.) (“As this Court recently noted . . . Stern does not limit a bankruptcy court’s ability to enter final orders regarding modification of the automatic stay.”). Rinaldi v. HSBC Bank USA, N.A. (In re Rinaldi), 487 B.R. 516 (Bankr. E.D. Wis. 2013) (Kelley, J.) (“[T]he Debtors ask the Court to determine the validity and enforceability of HSBC’s proof of claim. The Debtors’ objections to the claim include that the Note lacks consideration; two mortgage assignments are null and void; another mortgage assignment is a forgery or unenforceable because it was not recorded or perfected prior to bankruptcy; HSBC is not the owner or holder of the Note; and the Note image attached to the claim was fabricated to deceive the Court. Along with disallowance of the claim and the security represented by the Mortgage, the Debtors seek a determination that the proof of claim is false, fraudulent and unlawful. The Debtors ask the Court to determine that none of the Wells Defendants has standing or the status of real party in interest to maintain a claim for relief from stay. . . . [T]he Court can hear and determine whether HSBC has standing to seek relief from the automatic stay, a creature of the Bankruptcy Code and fundamental pillar of bankruptcy law. Stern, 131 S. Ct. at 2618 (bankruptcy court has constitutional authority over claims when ‘the action at issue stems from the bankruptcy itself’).”). Monteleone v. A-K Valley Fed. Credit Union (In re Monteleone), 2013 WL 6531903 (Bankr. W.D. Pa. Dec. 12, 2013) (Deller, J.) (“Through its Motion, the Movant argues that the Court lacked jurisdiction to enter certain verbiage contained in an order dated May 3, 2013 (the “Order”), which granted the respondent, A–K Valley Federal Credit Union (the “Movant”) relief from stay. The verbiage at issue reads: ‘upon entry of this Order of Court, the Movant shall be permitted to take 58

those steps necessary to enforce the current Judgment in Mortgage Foreclosure entered with the Court of Common Pleas of Westmoreland County, Pennsylvania.’ . . . [T]he Court finds that the Movant’s argument that the Court lacked jurisdiction to enter said verbiage is without merit. . . . The Court had jurisdiction to enter the Order, as the Order did not finally adjudicate an Article III ‘case or controversy.’ For example, it did not finally adjudicate a private right of action, N. Pipeline Const. Co. v. Marathon Pipe Line Co., 458 U.S. 50, 102 S. Ct. 2858, 73 L. Ed. 2d 598 (1982) (breach of contract action was a private right of action that the bankruptcy courts could not finally adjudicate without litigants’ consent), nor did it finally adjudicate a tort claim, Stern v. Marshall, 131 S. Ct. 2594, 180 L. Ed. 2d 475 (2011) reh’g denied, 132 S. Ct. 56, 180 L .Ed. 2d 924 (2011) (court lacked authority to finally adjudicate a claim for tortious interference of an inter vivos gift absent the parties’ consent). . . . All that the Order did was grant the creditor relief from stay to enforce a judgment entered in the [state court]. If the Movant has defenses to that judgment, the Movant can present such defenses in the [state] [c]ourt.”).

H.

PROCEEDINGS TO DETERMINE, AVOID OR RECOVER FRAUDULENT TRANSFERS: 28 U.S.C. § 157(b)(2)(H) 1.

BANKRUPTCY COURTS HAVE THE CONSTITUTIONAL AUTHORITY TO FINALLY ADJUDICATE THE FRAUDULENT TRANSFER ACTION

Marshall v. Picard (In re Madoff Inv. Sec. LLC), 740 F.3d 81 (2d Cir. 2014) (Cabranes, J.; Raggi, J.; Carney, J.) (“We consider two questions: (1) whether the Bankruptcy Court had the authority under the Bankruptcy Code to enjoin appellants’ actions as ‘derivative’ of adversary proceedings brought by the trustee for the [Bernard L. Madoff Investment Securities LLC (“BLMIS”)] estate, Irving Picard (“Picard” or the “Trustee”), against the Picower defendants; and, if indeed authorized by the Bankruptcy Code, (2) whether the Bankruptcy Court transgressed the limitations on its authority imposed by Article III of the United States Constitution. . . . [A]ccording to Marshall, the Bankruptcy Court did not have authority to enter final judgment on the Trustee’s fraudulent transfer claims against the Picower defendants, much less to issue the accompanying order enjoining all duplicative and derivative actions. . . . Yet Granfinanciera held that a fraudulent conveyance claim is a matter of private right when asserted against ‘a person who has not submitted a claim against a bankruptcy estate.’ . . . In this case, unlike in Granfinanciera, the Picower defendants filed a proof of claim against the BLMIS estate. In order to rule on that claim, the Bankruptcy Court was required to first resolve the fraudulent transfer issue. . . . Accordingly, the Bankruptcy Court’s authority under the Bankruptcy Code to approve the settlement between the Trustee and the Picower defendants and to permanently enjoin appellants’ disguised fraudulent transfer claims does not run afoul of Article III of the United States Constitution.”). Cadle Co. v. Moore (In re Moore), 739 F.3d 724 (5th Cir. 2014) (Davis, J.; Garza, J.; Dennis, J.) (“Cadle contends that under Stern, the bankruptcy court lacked constitutional authority to enter final judgment because the avoidance action originated from and is based entirely upon state law and is 59

thus wholly independent of the bankruptcy proceeding. We disagree. The bankruptcy court had authority to enter final judgment because Cadle’s state-law claims ‘would necessarily be resolved in the claims allowance process.’ Id. at 2618. In Stern, the trustee asserted counterclaims to augment the estate apart from the bankruptcy proceeding. Here, Cadle is a creditor who has filed a proof of claim for debts owed by the debtor, and resolving the state-law claims is necessary to adjudicating its proof of claim. Such claims by creditors against debtors are the very reason the claims allowance process exists. . . . Contrary to Cadle’s submission, the state-law basis of the claims is not dispositive. Here, while Cadle’s claims rest on state-law theories and were originally brought in state court, after Moore’s filing for bankruptcy, the Bankruptcy Code governed the avoidance action. See, e.g., 11 U.S.C. §§ 544 (strong-arm powers), 548 (fraudulent transfers by debtor). Accordingly, the bankruptcy court had constitutional authority to enter final judgment in this adversary proceeding.”). Mason v. Ivey, 498 B.R. 540 (M.D.N.C. 2013) (Schroeder, J.) (“Because Defendants have filed proofs of claim, the Trustee’s fraudulent conveyance claims are constitutionally core and the Bankruptcy Court may resolve them.”). Miller v. Enviro Care, Inc. (In re Rock Structures Excavating, Inc.), 2013 WL 1284969 (D. Utah Mar. 27, 2013) (Stewart, J.) (“[R]econciling Stern’s plain language that its holding is ‘narrow’ with its discussion of Granfinanciera can be troublesome. Nevertheless, the Court is persuaded that Stern is a ‘narrow’ holding confined to its unique facts. As such, the Court finds that the Stern did not remove out of the purview of the bankruptcy court claims of a type that routinely fall before it. Indeed, the Court finds it best to cause the least amount of disturbance and preserve the division of labor that has existed between Article III courts and bankruptcy courts for decades. This Court concludes, based on the clear language of Stern, that Stern and the Constitution do not preclude the bankruptcy court from entering final judgment in a fraudulent conveyance action. Therefore, since the instant Adversary Proceeding contains no counterclaims based on state law, by the narrow reading this Court adopts today, Stern is not applicable to this matter. Based on this conclusion, it follows that the bankruptcy court has jurisdiction to enter final orders on all determined core claims—including fraudulent transfer claims under § 157(b)(2)(H)—and proposed findings of fact and conclusions of law for all determined non-core claims.”). Dietz v. Spangenberg, 2013 WL 883464 (D. Minn. Mar. 8, 2013) (Montgomery, J.) (“[T]he Court finds the Bankruptcy Court has the judicial authority to issue final orders and judgments as to some of the claims, but lacks the authority to finally adjudicate others. For example, the Bankruptcy Court clearly has authority to enter a final order or judgment in the Trustee’s preference and fraudulent transfer claims against [defendant] FP Tech. Those claims, sounding under §§ 547 and 548 of the Bankruptcy Code, respectively, are listed as core claims under 28 U.S.C. §§ 157(b)(2)(F) and (H). Moreover, FP Tech has filed a proof of claim in [the debtor’s] bankruptcy case, and so the Trustee’s claims for preferential and fraudulent transfers against FP Tech will necessarily be resolved in the claims allowance process.”). Henderson v. Bank of Am. (In re Simmons), 510 B.R. 76 (Bankr. S.D. Miss. 2014) (Ellington, J.) (“On March 15, 2012, the Debtors filed a petition for relief under Chapter 7 of the United States Bankruptcy Code. . . . [T]he Debtors filed their Complaint to Determine Extent and Validity of Liens 60

(Complaint) in this Court against Bank of America, N.A. (BOA). In their Complaint, the Debtors allege that because the Legal Description contained in the 2003 Deed of Trust is incorrect, BOA does not have a perfected security interest in the Property, and the 2003 Deed of Trust is avoidable pursuant to 11 U.S.C. §§ 544 and 545. . . . In [an] Amended Complaint, [filed by] the [Chapter 7] Trustee and Trustmark[,] [the recipient of a subsequent deed of trust,] [plaintiffs] allege [that] BOA does not have a perfected lien in the Property and that the 2003 Deed of Trust may be avoided pursuant to § 544 and § 545. Trustmark alleges that BOA’s 2003 Deed of Trust is unperfected, and therefore, the Trustmark Deed of Trust is the first lienholder on the Property. . . . Further, the Trustee and Trustmark allege that BOA’s attempt to perfect its security interest in the Property by filing the Lis Pendens constituted an avoidable preference pursuant to § 547(b). . . . While BOA has not raised a Stern challenge to this Court’s constitutional authority to enter a final judgment in the above-styled adversary proceeding, the Court will address the effect, if any, of Stern. . . . [I]n the case at bar, BOA has filed a proof of claim in the Debtors’ bankruptcy case alleging it holds a secured claim in the amount of $745,414.79. And while BOA’s state law claim for reformation of the 2003 Deed of Trust was filed in state court, BOA’s claims will ‘be resolved in the claims allowance process.’ [E]ven though BOA’s claim is based on state law, once the Debtors filed bankruptcy, the Bankruptcy Code governs the avoidance action under § 544 (strong-arm powers of trustee), § 545 (lien avoidance) or § 547 (avoidance of a preference). Accordingly, the Court has the constitutional authority to enter a final judgment.”). Mason v. RJK Investors (In re Klarchek), 509 B.R. 175 (Bankr. N.D. Ill. 2014) (Barnes, J.) (“Counts III and IV of the amended complaint (the “Amended Complaint”) seek to avoid fraudulent transfers under 11 U.S.C. §§ 544 and 548. Claims to avoid fraudulent transfers are core proceedings under 28 U.S.C. § 157(b)(2)(H) and proceedings in which this court has constitutional authority to enter final orders. In re Kimball Hill, Inc., 480 B.R. 894, 907 (Bankr. N.D. Ill. 2012) (Barnes, J.). Accordingly, final judgment is within the scope of the court’s authority as to Counts III and IV. . . . The court recognizes that its position with respect to its constitutional authority in this regard is at odds with other courts that have applied Stern v. Marshall . . . in this context and that the case cited was not tested on appeal. For that reason, the court respectfully requests that its judgment with respect to Count IV of the Amended Complaint brought under . . . the Illinois Uniform Fraudulent Transfer Act, be accepted as proposed findings and conclusions should this matter be appealed and the District Court disagree with this court’s position on this court’s constitutional authority.”). Paloian v. LaSalle Bank Nat’l Ass’n (In re Doctors Hosp. of Hyde Park, Inc.), 507 B.R. 558 (Bankr. N.D. Ill. 2013) (Schmetterer, J.) (“Although there are opinions going both ways on the issue, the Seventh Circuit has unequivocally found authority for a bankruptcy court to enter final judgment in an action for fraudulent transfer against a creditor who has filed a proof of claim. Peterson v. Somers Dublin Ltd., 729 F.3d 741, 747 (7th Cir. 2013) (“The current dispute comes within a bankruptcy judge’s authority, notwithstanding Stern, because all of the defendants submitted proofs of claim as the Funds’ creditors and thus subjected themselves to preference-recovery and fraudulent-conveyance claims by the Trustee.”). . . . The Ninth Circuit’s decision in [Executive Benefits Ins. Agency v. Arkison (]In re Bellingham [Ins. Agency, Inc.), 702 F.3d 553, 560 (9th Cir. 2012)] does not compel a contrary result. In Bellingham, it was held that bankruptcy judges do not have constitutional authority to enter final judgments on fraudulent conveyance actions asserted against non-creditors to the bankruptcy estate. However, Bellingham involved facts that were 61

similar to facts in Granfinanciera, whereas here, LaSalle has filed a proof of claim against the Hospital’s bankruptcy estate and the present case is a counter-claim to the LaSalle claim.”). Tronox Inc. v. Kerr McGee Corp. (In re Tronox Inc.), 503 B.R. 239 (Bankr. S.D.N.Y. 2013) (Gropper, J.) (Chapter 11 debtors brought adversary proceeding in which it asserted actual and constructive fraudulent transfer claims —under § 548 of the Bankruptcy Code and the Oklahoma UFTA—seeking to unwind a series of transactions through which holding company ultimately succeeded in spinning off its profitable oil and gas assets free of hundreds of millions of dollars in legacy costs. Addressing its constitutional authority to finally adjudicate the fraudulent transfer claims, the court stated: “Plaintiffs’ principal claim is that the transactions that ‘liberated’ what Defendants had represented were ‘substantially all’ of Old Kerr–McGee’s assets from 85 years of legacy liabilities constituted a fraudulent conveyance—either ‘actual’ (made with intent to hinder, delay or defraud creditors) or constructive (made for less than reasonably equivalent value at a time the transferor was or was rendered insolvent or undercapitalized) . . . . In their answer, Defendants had stated explicitly and without qualification that they ‘consent to the entry of final orders or judgment by this Court pursuant to Rule 7012(b).’ . . . Defendants first attempted to withdraw their consent by a pleading filed . . . eight months after filing their answer to the Second Amended Complaint, long after the date for amending pleadings under the pre-trial order, and only about two months before trial was scheduled to begin . . . . In their pleading Defendants stated that they ‘(1) provide notification that they do not consent to the Court issuing final orders and judgments on the fraudulent transfer claims asserted by [Plaintiffs].’ . . . The Court took Defendants’ ‘Notification’ under advisement for decision in connection with a decision on the merits. . . . Defendants’ Notification and Motion was predicated on the assertion that prior to the Supreme Court’s decision in Stern v. Marshall . . . ‘it was assumed that bankruptcy courts had statutory and constitutional authority to finally adjudicate all “core” claims irrespective of consent.’ . . . Defendants claimed that since Plaintiffs’ fraudulent conveyance claims were statutorily core, under 28 U.S.C. § 157(b)(2)(H), they had no occasion to contemplate ‘a new class of claims that, although statutorily “core,” were deemed to be outside the constitutional authority of a bankruptcy court to adjudicate to a final determination—absent the consent of the parties.’ . . . Therefore, the argument continued, their consent was not ‘informed consent, and any presumed consent pre-Stern is unavailing.’ . . . At the outset, it should be stressed that the issue of consent with regard to this Court’s resolution of the fraudulent conveyance claims is not a real issue in this case. There is authority that a fraudulent conveyance action against a party who did not file a claim against the estate is a non-core proceeding that the bankruptcy court cannot decide by final judgment . . . . However, Defendants are hardly ‘third party non-creditors of the estate.’ The Supreme Court stated in Stern that the counterclaim filed by the estate there was non-core because it was unrelated to the proof of claim that the creditor, Marshall, had filed. By contrast, where it is ‘not possible . . . to rule on [the creditor’s] proof of claim without first resolving the fraudulent-transfer issue,’ the estate’s claim against the creditor is a core matter. Stern v. Marshall, 131 S. Ct. at 2616 . . . . In the instant case Defendants filed proofs of claim against the Debtors for damages they now value in the billions of dollars. . . . Defendants also asserted in their proofs of claim a right of recovery against the Debtors under § 502(h) of the Bankruptcy Code for the entirety of any judgment against them and reserved the right to file a § 502(h) claim in the event of an adverse decision. . . . [T]here was no question that ‘the process of adjudicating’ Defendants’ proofs of claim required resolution of Plaintiffs’ fraudulent

62

conveyance and other claims against the Defendants. . . . The Court thus concludes that it has authority to enter a final judgment in this adversary proceeding.”). Tyler v. Banks (In re Tyler), 493 B.R. 905 (Bankr. N.D. Ga. 2013) (Sacca, J.) (“[T]he Court turns to the Defendants’ argument that this Court lacks subject matter jurisdiction to decide this adversary proceeding pursuant to Stern v. Marshall . . . . Reasonable minds can and do differ regarding whether fraudulent transfer actions are properly characterized as core proceedings arising under the Bankruptcy Code because—although Congress created the right for trustees and debtors-in-possession to avoid these transfers—similar rights already existed under state law. Before Stern, ‘by far the majority of courts’ held that bankruptcy courts could enter final orders in fraudulent transfer cases. In re Refco Inc., 461 B.R. 181, 190 (Bankr. S.D.N.Y. 2011) (citations omitted). But after Stern, some courts have held to the contrary, leading to a split of authority. . . . In Stern, one of the rationales the majority employed was that the public rights exception did not apply to the debtor’s state-law counterclaim any more than it applied to the similar claim in Northern Pipeline. Stern, 131 S. Ct. at 2611. The Stern Court also analogized to Granfinanciera, in which the Court had held that parties who had not submitted claims were entitled to a jury trial under the Seventh Amendment because the fraudulent conveyance action against them was ‘more accurately characterized as a private rather than a public right as we have used those terms in our Article III decisions.’ Stern, 131 S. Ct. at 2614 (quoting Granfinanciera, 492 U.S. at 55, 109 S. Ct. 2782). The Stern Court pointed to the reasoning in Granfinanciera, which explained that ‘fraudulent conveyance suits were “quintessentially suits at common law that more nearly resemble state law contract claims brought by a bankrupt corporation to augment the bankruptcy estate than they do creditors’ hierarchically ordered claims to a pro rata share of the bankruptcy res.”’ Stern, 131 S. Ct. at 2614 (quoting Granfinanciera, 492 U.S. at 56, 109 S. Ct. 2782). The Stern Court stated that the state-law counterclaim it dealt with—‘like the fraudulent conveyance claim at issue in Granfinanciera—does not fall within any of the varied formulations of the public rights exception in this Court’s cases.’ Stern, 131 S. Ct. at 2614. Thus the Stern majority linked the public rights exception analysis under the Seventh Amendment in Granfinanciera to the question of authority to enter a final order in Stern. . . . According to courts taking the broad view of Stern, the effect of this analogy to Granfinanciera is that bankruptcy courts do not have constitutional authority to enter a final order on a fraudulent transfer claim (at least where the defendant has not submitted a claim) because such claims involve private rights that do not fall within the public rights exception. E.g., Exec. Benefits Ins. Agency, Inc. v. Arkison (In re Bellingham Ins. Agency, Inc.), 702 F.3d 553, 561 (9th Cir. 2012). . . . Courts taking the narrow view of Stern point out that the holding in Granfinanciera was explicitly limited to the issue of a right to a jury trial under the Seventh Amendment. In re Appalachian Fuels, LLC, 472 B.R. 731, 740–41 (E.D. Ky. 2012) (“[D]espite the reliance on Granfinanciera in Stern . . . the sole issue in Granfinanciera was whether defendants who had not filed a proof of claim against the bankruptcy estate had a Seventh Amendment jury trial right . . . .”). . . . Aside from the limited nature of the holding in Granfinanciera, courts taking the narrow view also point out the Stern majority’s repeated emphasis on the limited nature of its holding. In his majority opinion, Chief Justice Roberts explained that the question presented there was a ‘narrow’ one; that Congress had violated Article III of the Constitution ‘in one isolated respect;’ and that removal of state law counterclaims that are not resolved in the process of ruling on a creditor’s proof of claim from the definition of core does not ‘meaningfully’ change ‘the division of labor in the current statute.’ Stern, 131 S. Ct. at 2620. . . . The Eleventh Circuit has 63

recognized that the Stern Court ‘made clear that it did not intend its decision in Stern to have broad implications.’ In re Sundale, Ltd., 499 Fed. Appx. 887, 891 (11th Cir. 2012). According to the Eleventh Circuit, the Stern Court’s limited holding was that ‘bankruptcy courts lack “the constitutional authority to enter a final judgment on a state law counterclaim that is not resolved in the process of ruling on a creditor’s proof of claim.’” In re Sundale, Ltd., 499 Fed. Appx. at 892–93 (emphasis removed) (citing Stern, 131 S. Ct. at 2620). . . . After considering the merits of both the broad view and the narrow view, this Court concludes that the narrow view is the correct view and that this Court thus has authority to enter final orders in fraudulent transfer proceedings, including this one. Had the Stern majority intended to make a sweeping proclamation striking down a broad swath of bankruptcy court authority, it would have done so explicitly. Instead, the majority repeatedly emphasized the limited effect of its holding. . . . In reality, the practical consequence of removing fraudulent transfers from core jurisdiction is that our already overburdened district courts would be forced to review every single fraudulent transfer case de novo, and resolution of all of these cases will be delayed. Aside from the extra work that would be required of our district courts, due to the ‘staggering’ volume of bankruptcy cases, such a ‘constitutionally required game of jurisdictional ping-pong between courts would lead to inefficiency, increased cost, delay, and needless additional suffering among those faced with bankruptcy.’ Stern, 131 S. Ct. at 2630 (Breyer, J., dissenting). For all of these reasons, the Court concludes that the fraudulent transfer action here is within this Court’s core jurisdiction and authority to enter a final order.”). Shearer v. Oberdick (In re Oberdick), 490 B.R. 687 (Bankr. W.D. Pa. 2013) (Agresti, J.) (In an adversary proceeding brought by Chapter 7 trustee against the debtor—a former partner of a defunct law firm—and his wife, the trustee asserted claims under § 544(b) and the Pennsylvania UFTA, seeking avoidance and recovery of alleged fraudulent transfers. Addressing its constitutional authority to adjudicate the action, the bankruptcy court stated: “The Court’s jurisdiction to hear and decide these matters under 28 U.S.C. § 1334 was not disputed, nor did any party challenge the Court’s power to render this decision on the basis of the holding in Stern v. Marshall . . . . The Court concludes that it has the constitutional authority to enter a final judgment in these matters, or that in the alternative the parties have consented to the entry of a final judgment.”). Sikirica v. Wettach (In re Wettach), 489 B.R. 496 (Bankr. W.D. Pa. 2013) (Agresti, J.) (In an adversary proceeding brought by Chapter 7 trustee against the debtor—a former partner of a defunct law firm—and his wife, the trustee asserted claims under § 544(b) and the Pennsylvania UFTA, seeking avoidance and recovery of alleged fraudulent transfers. Addressing its constitutional authority to adjudicate the action, the bankruptcy court stated: “The Defendants initially challenged the Court’s power to render this decision on the basis of the holding in Stern v. Marshall . . . however, they have since withdrawn that position. The Court concludes that it has the constitutional authority to enter a final judgment in these matters, or that in the alternative the parties have consented to the entry of a final judgment.”). Cage v. GDH Int’l, Inc. (In re Great Gulfcan Energy Tex., Inc.), 488 B.R. 898 (Bankr. S.D. Tex. 2013) (Bohm, J.) (The Chapter 7 trustee filed an adversary proceeding in which he sought to avoid and recover alleged fraudulent or unauthorized postpetition transfers. Addressing its constitutional authority to adjudicate the trustee’s claims, the court stated: “[T]his Court has a duty to question its constitutional authority to enter a final order for any matter brought before it. The Court 64

concludes that the facts in the pending suit are distinguishable from those in Stern, and that this Court has the authority to enter a final judgment. In Stern, the debtor filed a counterclaim based solely on state law, and the resolution of this counterclaim did not resolve the validity, or invalidity, of the claim held by the defendant. The dispute at bar, on the other hand, despite requiring the application of state law, arises from express bankruptcy provisions: 11 U.S.C. §§ 550(b), 549, [and] 548 . . . . Moreover, unlike Stern, application of the state law to this provision will resolve the validity or invalidity of any claims that the defendant has against the bankruptcy estate. This suit is therefore easily distinguishable from the dispute in Stern, and this Court is constitutionally authorized to enter a final judgment.”). Kramer v. Mahia (In re Khan), 488 B.R. 515 (Bankr. E.D.N.Y. 2013) (Stong, J.) (“Here, the Trustee initiated this adversary proceeding to avoid and recover an allegedly fraudulent transfer for the benefit of the bankruptcy estate. As courts have concluded, a bankruptcy court may enter a final judgment with respect to this type of claim. As this Court recently held: ‘[A trustee’s claims for the avoidance of fraudulent transfers are] plainly outside the scope of [actions in which a bankruptcy court may not enter a final judgment], because they are neither counterclaims, nor based solely on state common law. Rather, they are claims that apply state law in a manner contemplated by Bankruptcy Code Section 544(b).’ Silverman v. A–Z RX LLC (In re Allou Distribs.), 2012 WL 6012149, at *11 (Bankr. E.D.N.Y. Dec. 3, 2012). See, e.g., Kirschner v. Agoglia (In re Refco Inc.), 461 B.R. 181, 187 (Bankr. S.D.N.Y. 2011) (noting that a fraudulent transfer claim under Bankruptcy Code Section 544(b)(1) “‘flows from a federal statutory scheme,’ and is ‘completely dependent upon adjudication of a claim created by federal law,’” and thus several of the bases in Stern for preventing a court from entering a final judgment do not apply (quoting Stern v. Marshall, ––– U.S. ––––, 131 S. Ct. 2594, 2614, 180 L. Ed. 2d 475 (2011)).”). Lim v. Champion Prods. (In re Dabaja), 2014 WL 2894453 (Bankr. E.D. Mich. June 25, 2014) (Randon, J.) (“The Court enters a final order on the Trustee’s motion. The parties expressly consented to this exercise of authority in their Report of Parties Rule 26(f) Conference, and the United States Supreme Court’s decision in Exec. Benefits Ins. Agency v. Arkison, 134 S. Ct. 2165, 2014 WL 2560461 (June 9, 2014) did not address the issue of whether a party is nevertheless constitutionally entitled to an Article III court’s review of its fraudulent conveyance claim. Further, this matter is distinguishable from Waldman v. Stone, 698 F.3d 910 (6th Cir. 2012): the claims presented do not arise under state law, nor would they be actionable outside of the Bankruptcy Code. However, should any reviewing court disagree, this final order may be treated as findings of fact and conclusions of law, subject to de novo review.”). In re 1701 Commerce, LLC, 2014 WL 2615016 (Bankr. N.D. Tex. June 11, 2014) (Lynn, J.) (“In Executive Benefits [Insurance Agency v. Arkison, 573 U.S. ––––, No. 12–1200, 2014 WL 2560461 (U.S. June 9, 2014)], the Supreme Court assumed without deciding that Stern infected the fraudulent transfer claim at issue, but concluded that a de novo review of the bankruptcy court’s proposed findings of fact and conclusions of law cured any such deficiency. Id. at *8. . . . Nonetheless, the procedural posture of this matter insulates the court’s competency from the disposition in Executive Benefits. This matter involves the unusual situation where the bankrupt received, rather than the made, the transfer. Thus, although requiring the court to determine a fraudulent transfer, the [claim] Objection is necessarily resolved in the claims allowance process. Moreover, the estate here would 65

be the defendant asserting a jury demand, thus the private-rights analysis of the Seventh Amendment in Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 109 S. Ct. 2782, 106 L. Ed. 2d 26 (1982), is inapposite. See Exec. Benefits, 2014 WL 2560461, at *4 n. 3 (citing Granfinanciera, 492 U.S. at 55, 64). As a result, the court may enter a final order on the Objection. To the extent that the Objection may implicate Stern, the court holds that the factual findings and legal conclusions specific to the alleged fraudulent transfer are necessary to finally determine the Objection.”). Bakst v. United States (In re Kane & Kane), 2013 WL 1197609 (Bankr. S.D. Fla. Mar. 25, 2013) (Kimball, J.) (“Numerous courts have considered whether the Supreme Court’s analysis in Stern should be applied in the context of fraudulent transfer actions pursued in bankruptcy cases. This Court believes that it has the power to enter final judgment in any action brought by a trustee, debtor-in-possession or other authorized party in interest under 11 U.S.C. §§ 548 and/or 544.”).

2.

BANKRUPTCY COURTS DO NOT HAVE THE CONSTITUTIONAL AUTHORITY TO FINALLY ADJUDICATE THE FRAUDULENT TRANSFER ACTION

Sec. Investor Prot. Corp. v. Bernard L. Madoff Inv. Sec. LLC, 490 B.R. 46 (S.D.N.Y. 2013) (Rakoff, J.) (“Irving Picard (the “Trustee”), the trustee appointed under the Securities Investor Protection Act . . . to administer the estate of Bernard L. Madoff Investment Securities LLC (“Madoff Securities”), has filed hundreds of actions that seek to avoid transfers made by Madoff Securities on the ground that the transfers were fraudulent or preferential. Defendants in more than three hundred actions have moved based on Stern v. Marshall . . . to withdraw the reference of their cases to the Bankruptcy Court. They argue that the Bankruptcy Court lacks both constitutional and statutory authority to adjudicate the Trustee’s claims. . . . [T]he Court consolidated the motions to withdraw that relied on Stern for the purpose of resolving three issues: (1) whether the Bankruptcy Court may exercise the judicial power necessary to finally decide the Trustee’s avoidance actions; (2) whether, even if the Bankruptcy Court may not enter final judgment, it has authority to recommend proposed findings of fact and conclusions of law; and (3) whether the Court, in light of Stern, should withdraw the reference ‘for cause shown.’ . . . The Court turns first to the question of whether the Bankruptcy Court may exercise the judicial power necessary to resolve avoidance claims. . . . In Granfinanciera, the Supreme Court, considering whether a defendant had a Seventh Amendment right to a jury trial, held that a Trustee’s right to recover a fraudulent transfer is ‘more accurately characterized as a private rather than a public right’ because suits to avoid transfers ‘are quintessentially suits at common law that more nearly resemble state-law contract claims brought by a bankrupt corporation to augment the bankruptcy estate than they do creditors’ hierarchically ordered claims to a pro rata share of the bankruptcy res.’ 492 U.S. at 55–56, 109 S. Ct. 2782. In Stern, the Court applied the same analysis to the determination of whether Congress could empower a non-Article III tribunal to finally decide a claim. 131 S. Ct. at 2614. Specifically, the Court held that the state-law counterclaim at issue, ‘like the fraudulent conveyance claim at issue in Granfinanciera [, did] not fall within any of the varied formulations of the public rights exception in this Court’s cases.’ Id. Thus, the Court concluded that Congress had improperly vested judicial 66

power in a non-Article III judge when it allowed bankruptcy courts ‘to enter a final judgment on a state law counterclaim that is not resolved in the process of ruling on a creditor’s proof of claim.’ Id. at 2620. It reached this conclusion even though the counterclaim was a ‘core’ bankruptcy proceeding. . . . It is true, as the Court in Stern noted, that in certain circumstances, the Supreme Court has permitted bankruptcy courts to finally resolve avoidance actions. In Katchen v. Landy, the Supreme Court held that, when a creditor had filed a claim to the bankruptcy estate, and the bankruptcy trustee had sought both to disallow that claim and to avoid a preference, the Bankruptcy Court could decide the avoidance action. . . . In so doing, the Court first noted that the Bankruptcy Court had jurisdiction over whether to disallow the creditor’s claim to the estate. . . . It also observed that, under the statute that then governed the disallowance of claims, ‘a bankruptcy court must necessarily determine the amount of preference, if any, so as to ascertain whether the claimant, should he return the preference, has satisfied the condition imposed by [the statute] on allowance of the claim.’ Id. at 334, 86 S. Ct. 467. Because the Bankruptcy Court had jurisdiction to decide issues that would completely resolve the trustee’s preference claim, the Supreme Court reasoned that the Bankruptcy Court necessarily also had the power to decide that preference claim. Id. at 336–37, 86 S. Ct. 467. Langenkamp v. Culp, decided after Granfinanciera, reached an identical result. See 498 U.S. 42, 44, 111 S. Ct. 330, 112 L. Ed. 2d 343 (1990) (“[T]he creditor’s claim and the ensuing preference action by the trustee become integral to the restructuring of the debtor-creditor relationship through the bankruptcy court’s equity jurisdiction.”). In Stern, however, the Court distinguished Katchen and Langenkamp on the ground that the Bankruptcy Court did not need to resolve the debtor’s counterclaim for defamation in order to decide the creditor’s claim to the estate. . . . Here, the Trustee brings his avoidance actions under SIPA, rather than the Bankruptcy Code. See 15 U.S.C. § 78fff–2(c)(3) (“[T]he trustee may recover any property transferred by the debtor which, except for such transfer, would have been customer property if and to the extent that such transfer is voidable or void under the provisions of Title 11.”). The Court has no difficulty concluding that avoidance actions under SIPA, like those under the Bankruptcy Code, assert private rights. . . . Since the Supreme Court looks at the historical nature of a claim to determine whether it asserts a private or a public right, it would appear that whether an avoidance action arises under the Bankruptcy Code or under SIPA matters little. As in Stern, an avoidance action—whether brought under SIPA or under the Bankruptcy Code—‘is not a matter that can be pursued only by grace of the other branches, . . . or one that historically could have been determined exclusively by those branches.’ 131 S. Ct. at 2614 (citations and internal quotation marks omitted). Resolution of an avoidance action brought under SIPA would thus require an exercise of the judicial power reserved for Article III courts.”). McCord v. Jonsilver Auto Sales, LLC (In re USA United Fleet, Inc.), 2014 WL 2960038 (E.D.N.Y. June 27, 2014) (Cogan, J.) (“[Defendant’s] legal point is correct—the bankruptcy court may not enter final judgment against him. Although it is a fraudulent transfer claim, which Congress has defined as a ‘core proceeding’ within the Bankruptcy Court’s jurisdiction, 28 U.S.C. § 157(b)(2)(H), the Supreme Court’s decisions in Stern v. Marshall, ––– U.S. ––––, 131 S. Ct. 2594, 180 L. Ed. 2d 475 (2011), Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 109 S. Ct. 2782, 106 L. Ed. 2d 26 (1989), and, most recently, Exec. Benefits Ins. Agency v. Arkison, 134 S. Ct. 2165 (2014), make it clear that classification as a core proceeding in the statute does not affect a non-creditor’s right in a private rights action to have fraudulent transfer cases against him finally determined by an Article III judge.”). 67

Emerson v. Treinish, 2014 WL 2807481 (N.D. Ohio June 20, 2014) (Lioi, J.) (“As trustee of debtor Edward Emerson’s (“Edward”) bankruptcy estate, Alan Treinish (“Treinish” or “respondent”) filed an adversary proceeding against Edward’s wife, petitioner Suzanne Emerson (“Suzanne” or “petitioner”). Treinish contends that Edward made a series of wire transfers into Suzanne’s bank accounts while insolvent or that rendered him insolvent and did not receive a reasonably equivalent value in exchange. According to Treinish, these transfers constitute fraudulent conveyances under 11 U.S.C. § 544 and Ohio law. . . . Suzanne seeks to withdraw the reference of this adversary proceeding, contending that the bankruptcy court lacks constitutional authority to decide the case, or in the alternative, that the Court should withdraw the reference for ‘cause’ and adjudicate the adversary proceeding as a civil case. The Court shall address each argument in turn. . . . As in Executive Benefits [Insurance. Agency v. Arkison, 134 S. Ct. 2165 (2014)] this case involves fraudulent conveyance claims against a noncreditor who has not consented to bankruptcy court jurisdiction. The Supreme Court ‘assume[d] without deciding, that the fraudulent conveyance claims in [Executive Benefits were] Stern claims.’ As Suzanne suggests, this Court finds that the claims herein are Stern claims.”). Carroll v. Benta (In re Innovative Commc’n Corp.), 2014 WL 2442173 (D.V.I. May 30, 2014) (Gomez, J.) (“In the adversary proceedings, [the Chapter 11 trustee] seeks to undo transactions entered into between [defendant] and [the debtor][,] . . . claim[ing] that these transactions were either fraudulent conveyances or preferential transfers, and thus disallowed under the Bankruptcy Code. . . . [The defendant] filed a motion to withdraw the reference in this Court[,] . . . argu[ing] that fraudulent and preferential conveyance actions may not be considered in the Bankruptcy Court. . . . [T]he complaint in the adversary proceeding seeks to recover pre-petition fraudulent and preferential transfers. Such claims are governed by the rule laid out in Granfinanciera and clarified in Bellingham. They may be finally adjudicated only by the district court, absent waiver or consent of the parties.”). Pereira v. Garritano (In re Connie’s Trading Corp.), 2014 WL 1813751 (S.D.N.Y. May 8, 2014) (Gorenstein, J.) (“The fraudulent conveyance action in this case names NYRE Ninth and Garritano as defendants, and no party has suggested that they have filed proofs of claim against the estate. In light of Granfinanciera and Stern, ‘there is an emerging consensus in this District that the Bankruptcy Court may not ordinarily enter final judgment on avoidance claims.’ [Nisselson v. Salim (]In re Big Apple Volkswagon, LLC), 2013 WL 1245548, at *4 [(S.D.N.Y. March 25, 2013)] (citations and quotation marks omitted). . . . The . . . Stern exception appears to be inapplicable here as well, as it appears neither NYRE Ninth nor Garritano have filed proofs of claim against the Connie’s estate.”). Pryor v. Tromba, 2014 WL 1355623 (E.D.N.Y. Apr. 7, 2014) (Bianco, J.) (“Claims based on . . . alleged fraudulent conveyances are classified as core by 28 U.S.C. § 158(b)(2)(H) . . . but they do not fall under the public rights exception to Stern. . . . A creditor may subject itself to the binding authority of the bankruptcy court by filing a proof of claim against the bankrupt estate. . . . This exception is not applicable here as defendant has not filed a proof of claim against the estate to be resolved in connection with this adversary proceeding.”).

68

Carroll v. AMJ, Inc. (In re Innovative Commc’n Corp.), 2014 WL 128204 (D.V.I. Jan. 14, 2014) (Gomez, J.) (“Here, the complaint in the Adversary Proceeding seeks to recover pre-petition fraudulent . . . transfers. Such claims are governed by the rule laid out in Granfinanciera and clarified in Bellingham. They may be finally adjudicated only by the district court, absent waiver or consent of the parties. There has been no such waiver here.”). Sharp v. Segal & Kirby, LLP (In re SK Foods, L.P.), 2013 WL 5494071 (E.D. Cal. Oct. 1, 2013) (Karlton, J.) (“The adversary proceeding at issue here is brought by the bankruptcy Trustee, who seeks to recover $450,000 from Segal & Kirby LLP (“Segal”). The adversary complaint asserts that debtor SK Foods, while insolvent, paid that money to Segal ‘on account of legal services performed by Segal for the personal benefit of Scott Salyer, including, but not limited to, Scott Salyer’s criminal defense.’ Segal asserts that Salyer was the CEO of the debtor, SK Foods, and that SK Foods properly authorized the alleged payments, having concluded that it would be in its own best interests. . . . Segal moves to withdraw the reference of the case to the Bankruptcy Court, asserting that it has demanded a jury trial, it has a right to a jury trial, the Bankruptcy Court cannot conduct a jury trial without the consent of all parties, and Segal does not consent to proceed in the Bankruptcy Court. . . . [N]otwithstanding the Congressional grant of [statutory] authority, as a constitutional matter, the Bankruptcy Court cannot adjudicate a fraudulent conveyance claim against a non-claimant to the bankruptcy estate . . . . Executive Benefits Ins. Agency v. Arkison (In re Bellingham Ins. Agency, Inc.), 702 F.3d 553, 556 (9th Cir. 2012), cert. granted, 570 U.S. ––––, 133 S. Ct. 2880, ––– L. Ed. 2d –––– (2013). That is because such a claim does not involve ‘public rights,’ which are the only claims the Bankruptcy Court can adjudicate. . . . [I]t is undisputed that Segal is a non-claimant to the SK Foods bankruptcy estate. Accordingly, the Trustee’s fraudulent conveyance claims do not involve ‘public rights,’ and thus they may not be adjudicated in the Bankruptcy Court, notwithstanding their statutory designation as ‘core proceedings,’ and notwithstanding the express Congressional authorization empowering the Bankruptcy Court to adjudicate such a case. Bellingham, 702 F.3d at 561 (“fraudulent conveyance claims, because they do not fall within the public rights exception, cannot be adjudicated by non-Article III judges”) (citing Granfinanciera and Stern v. Marshall). Indeed, both parties agree that the trial of this matter can only be conducted by an Article III court, and the final entry can only be entered by an Article III court, not the Bankruptcy Court.”). Prosser v. Springel (In re Innovative Commc’n Corp.), 2013 WL 5432316 (D.V.I. Sept. 27, 2013) (Gomez, J.) (“Post-Stern, the Court of Appeals for the Ninth Circuit, in In re Bellingham Ins. Agency, Inc., 702 F.3d 553 (9th Cir. 2012), relied on the Granfinanciera and Stern decisions in holding that the bankruptcy courts are without constitutional authority to enter final judgment in fraudulent conveyance actions. . . . On review, the court explained that ‘Granfinanciera clarified that fraudulent conveyance actions are not matters of public right, and that a noncreditor retains a Seventh Amendment right to a jury trial on a bankruptcy trustee’s fraudulent conveyance claim.’ Bellingham, 702 F.3d at 562. The Ninth Circuit concluded that, ‘[t]aken together, Granfinanciera and Stern settle the question of whether bankruptcy courts have the general authority to enter final judgments on fraudulent conveyance claims asserted against noncreditors to the bankruptcy estate. They do not.’ Bellingham, 702 F.3d at 565. The Court further articulated that ‘Fraudulent conveyance claims are “quintessentially suits at common law” designed to “augment the bankruptcy estate.” Granfinanciera, 492 U.S. at 56, 109 S. Ct. 2782. Thus, Article III bars bankruptcy courts 69

from entering final judgments in such actions brought by a noncreditor absent the parties’ consent.’ . . . In light of clear authority, this Court is persuaded that bankruptcy courts may only enter final judgments in fraudulent conveyance actions with the consent of the parties.”). Carroll v. Raynor (In re Innovative Commc’n Corp.), 2013 WL 2631344 (D.V.I. June 12, 2013) (Gomez, J.) (“Here, the complaint in the Adversary Proceeding seeks to recover pre-petition fraudulent . . . transfers. Such claims are governed by the rule laid out in Granfinanciera and clarified in Bellingham. They may be finally decided only by the district court, absent waiver or consent of the parties. There has been no such waiver here.”). Kramer v. Mahia, 2013 WL 1629254 (E.D.N.Y. Apr. 15, 2013) (Hrhzarry, J.) (“[Chapter 7] trustee of the bankruptcy estate of Shahara Khan (the “Debtor”), filed an adversary proceeding in Bankruptcy Court to recover alleged fraudulent conveyances from Defendant, the Debtor’s son. . . . Defendant and [his counsel] moved to withdraw the reference to the Bankruptcy Court of a motion for sanctions brought against [Defendant’s counsel] and his firm, . . . Defendant filed a separate motion to withdraw the reference to the Bankruptcy Court of the adversary proceeding itself. . . . A bankruptcy court has final adjudicative authority over a core claim, if the claim falls under one of the three exceptions pursuant to Stern: (1) the public rights exception; (2) the claim is resolved in ruling on a creditor’s proof of claim; or (3) the parties unanimously consent to bankruptcy court jurisdiction. . . . Here, the adversary proceeding is based on a fraudulent conveyance action. Therefore, the adversary proceeding is a core proceeding, but it does not fall under the ‘public rights’ exception to Stern. Stern, 131 S. Ct. at 2614 (discussing Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 55–56, 109 S. Ct. 2782, 106 L. Ed. 2d 26 (1989), where the Court held a bankruptcy trustee’s right to recover a fraudulent conveyance is ‘more accurately characterized as a private rather than a public right’) . . . . There is an emerging consensus in this circuit post-Stern that the Bankruptcy Court does not ordinarily have constitutional authority to enter a final decision on avoidance claims because, although they may be core bankruptcy matters, they concern private rights. . . . The second Stern exception is not applicable here as Defendant has not filed a proof of claim against the estate to be resolved in connection with this adversary proceeding.”). Nisselson v. Salim, 2013 WL 1245548 (S.D.N.Y. Mar. 25, 2013) (Gardephe, J.) (“This is an adversary proceeding originally brought in the United States Bankruptcy Court for the Southern District of New York by Plaintiff Alan Nisselson, Trustee of Debtor Big Apple Volkswagon, LLC, who seeks to avoid and recover allegedly fraudulent and preferential pre-petition transfers of debtor funds to Defendants Ratiba Salim and Wahid Saleem. . . . [C]onsistent with the ‘emerging consensus’ in this District, this Court concludes that the Bankruptcy Court does not ordinarily have constitutional authority to enter a final decision on avoidance claims because, although they may be core bankruptcy matters, they concern private rights. . . . Defendants have not filed any claim against the estate, and therefore no proof of claim will be resolved in connection with this adversary proceeding. . . . Finally, Defendants have not consented to final adjudication by the Bankruptcy Court. . . . [T]he Bankruptcy Court lacks constitutional authority to enter a final judgment on Plaintiff’s avoidance claims.”).

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Kriegman v. 377897 B.C., Ltd. (In re LLS Am., LLC), 2013 WL 209027 (E.D. Wash. Jan. 16, 2013); Kriegman v. Janvary (In re LLS Am., LLC), 2013 WL 209030 (E.D. Wash. Jan. 16, 2013); Kriegman v. Yarbrough (In re LLS Am., LLC), 2013 WL 209200 (E.D. Wash. Jan. 16, 2013); Kriegman v. Pacifica Ventures, Inc. (In re LLS Am., LLC), 2013 WL 209472 (E.D. Wash. Jan. 16, 2013); Kriegman v. Stack (In re LLS Am., LLC), 2013 WL 209474 (E.D. Wash. Jan. 16, 2013); Kriegman v. Gyenizse (In re LLS Am., LLC), 2013 WL 209475 (E.D. Wash. Jan. 16, 2013); Kriegman v. Stack (In re LLS Am., LLC), 2013 WL 209477 (E.D. Wash. Jan. 16, 2013); Kriegman v. Walton (In re LLS Am., LLC), 2013 WL 209507 (E.D. Wash. Jan. 16, 2013); Kriegman v. Wetmore (In re LLS Am., LLC), 2013 WL 209508 (E.D. Wash. Jan. 16, 2013); Kriegman v. Falk (In re LLS Am., LLC), 2013 WL 209510 (E.D. Wash. Jan. 16, 2013) (Peterson, J.) (“This motion [to withdraw the reference] arises from adversarial proceedings that began in the Chapter 11 bankruptcy of LLS America, LLC (“LLS”). According to the adversary complaint, LLS allegedly engaged in a ‘Ponzi’ scheme by accepting loans from various parties and using later loans to repay with interest the earlier lenders. The defendants named in the complaint are all alleged to have lent money to LLS and received a return with interest of their funds. The complaint asserts that the payments made by LLS to the lender-defendants constituted fraudulent transfers and that such transfers should be avoided and returned to the bankruptcy estate to be distributed through the bankruptcy process. The court appointed trustee seeks the withdrawal of this Court’s automatic referral of this case to the bankruptcy court of this district. The basis for withdrawal is born out of the Court’s granting of withdrawal motions filed by defendants in other adversary actions. In light of the uncertainty surrounding the bankruptcy court’s jurisdiction, the trustee asserts that this Court should withdraw reference as to the trial and allow the bankruptcy court to proceed on pretrial matters. The Defendants filed no opposition. . . . The Ninth Circuit recently issued its opinion in In re Bellingham Insurance Agency, Inc. . . . In that opinion the court clarified two questions that were left unanswered after the Supreme Court’s decision in Stern v. Marshal . . . . First, the circuit court held that bankruptcy courts lack jurisdiction to enter final judgment in fraudulent conveyance actions where the fraudulent conveyance claim will not be fully resolved by the claim allowance process. Bellingham, 702 F.3d 553, 2012 WL 6013836, at *8–*9. Second, the court approved of the procedure under which the bankruptcy court produces proposed findings of fact and conclusions of law with regard to any dispositive motion and those proposals are subject to de novo review in the district court. Id. at *9–*10. The above-captioned case includes claims for fraudulent conveyance. Accordingly, final judgment on those claims must be entered by this Court absent the consent of the parties or absent those claims being subject to resolution as part of the claims allowance procedure.”). Transcon. Refrigerated Lines, Inc. v. New Prime, Inc. (In re Transcon. Refrigerated Lines, Inc.), 494 B.R. 816 (Bankr. M.D. Pa. 2013) (Thomas, J.) (“The § 548 counts alleging fraudulent transfers clearly arise in the bankruptcy. Actions of that nature invoke substantive rights created by Title 11 and are core bankruptcy matters. The bankruptcy court is statutorily empowered to make findings of fact and conclusions of law and to issue an order of final adjudication. 28 U.S.C. § 157(b)(1). Nevertheless, in the absence of the consent of the [defendants,] [who have not filed proofs of claim,] a final decision in matters where the parties have a seventh amendment right to a trial by jury, must be adjudicated by an Article III court and not an Article I court.”).

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Carr v. Loeser (In re Int’l Auction & Appraisal Servs. LLC), 493 B.R. 460 (Bankr. M.D. Pa. 2013) (France, J.) (“The Trustee is seeking to avoid certain [alleged fraudulent] transfers made to Defendants before Debtor filed its bankruptcy petition. . . . Neither Defendant has filed a proof of claim in Debtor’s bankruptcy case. . . . In Exec. Benefits Ins. Agency v. Arkison (In re Bellingham Ins. Agency, Inc.), 702 F.3d 553, 561 (9th Cir. 2012), the Court of Appeals for the Ninth Circuit recently became the first circuit court to hold that the Supreme Court’s reliance on the logic of Granfinanciera in Stern leads to the conclusion that fraudulent transfer actions may not be decided by an Article I court. . . . Because Granfinanciera addressed Seventh Amendment rights and not the constitutional authority of an Article I court, some courts have concluded that a bankruptcy court may continue to enter final judgment in a fraudulent transfer action. See In re Bellingham, 702 F.3d at 562 (collecting cases). These cases observe that Stern addressed state law counterclaims, not claims explicitly provided for in the Code. They cite to Chief Justice Roberts’s statement that the holding in Stern is narrow and his observation that the decision is unlikely to have significant practical consequences beyond [the] context of state law counterclaims. Stern, 131 S. Ct. at 2620. . . . Several bankruptcy courts in the Third Circuit have addressed the issue of whether a bankruptcy court has the constitutional authority to issue a final order in fraudulent transfer action. Bankruptcy courts in Delaware and the Western District of Pennsylvania have concluded that because Stern did not address the ability of an Article I court to finally decide fraudulent transfer actions, bankruptcy courts continue to possess the constitutional authority to enter final orders in these core matters. See Zazzali v. 1031 Exchange Group (In re DBSI, Inc.), 467 B.R. 767, 772 (Bankr. D. Del. 2012); Bohm v. Titus (In re Titus), 467 B.R. 592, 633 (Bankr. W.D. Pa. 2012); Burtch v. Seaport Capital, LLC (In re Direct Response Media, Inc.), 466 B.R. 626, 644 (Bankr. D. Del. 2012); Cardiello v. Arbogast (In re Arbogast), 466 B.R. 287, 326 (Bankr. W.D. Pa. 2012). In a case I decided last year, I agreed with courts adopting a narrow interpretation of Stern. See Black, Davis and Shue Agency, Inc. v. Frontier Insurance Co. in Rehabilitation (In re Black, Davis and Shue Agency, Inc.), 471 B.R. 381, 401 (Bankr. M.D. Pa. 2012) (“In deciding the matter before me, I am inclined to follow those courts which have concluded that Stern was decided narrowly and should have a limited impact on a bankruptcy court’s authority to enter a final judgment on a matter.”) Upon further consideration, while a narrow construction may be appropriate in some circumstances, I find persuasive the Ninth Circuit’s conclusion that together Stern and Granfinanciera hold that a bankruptcy court may not decide a fraudulent transfer action. Accordingly, this Court may not enter a final order in this matter.”). Ogle v. JT Miller, Inc. (In re HDD Rotary Sales, LLC), 2014 WL 2930745 (Bankr. S.D. Tex. June 27, 2014) (Isgur, J.) (“[T]he Plan Agent for HDD Rotary Sales, LLC, filed a complaint to avoid alleged fraudulent conveyances made to [Defendants] during the 2009–2010 time period. . . . [I]n Granfinanciera, S.A. v. Nordberg, the Supreme Court held that the adjudication of a fraudulent transfer claim against a creditor who had not filed a proof of claim did not fall within the public rights exception. 492 U.S. 33, 54–55, 109 S. Ct. 2782, 106 L. Ed. 2d 26 (1989). Following Stern, it is unclear whether the adjudication of a fraudulent transfer claim against a creditor who has filed a proof of claim falls within the public rights exception. . . . In this case, the Court need not answer that question because neither of the defendants in this fraudulent transfer lawsuit have filed a proof of claim in HDD Rotary’s bankruptcy case. Accordingly, the Court does not have the authority to enter a final judgment in this case.”).

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Brandt v. Charter Airlines, LLC (In re Equip. Acquisition Res., Inc.), 2014 WL 2746708 (Bankr. N.D. Ill. June 18, 2014) (Cassling, J.) (“This matter is brought by the Plan Administrator under 11 U.S.C. § 548 to avoid an alleged fraudulent conveyance made to Charter Airlines. Charter Airlines filed an answer and jury demand . . . . Charter Airlines has not filed a proof of claim in the bankruptcy case or otherwise consented to the jurisdiction of the bankruptcy court to issue a final judgment against it. . . . Because this is a fraudulent conveyance action, the Court will proceed as though it is a noncore matter within the meaning of 28 U.S.C. § 157(c)(1). Accordingly, the Court will enter proposed findings of fact and conclusions of law.”). Goodwin v. Custom Am. Auto Parts, LLC (In re Pigg), 2014 WL 2608862 (Bankr. D.S.C. June 10, 2014) (Duncan, J.) (“This Court . . . has concluded that its entering a final order or judgment on a fraudulent conveyance claim against a noncreditor would be inconsistent with Article III of the United States Constitution without the express consent of the parties. [I]n the absence of consent or some contrary authority establishing otherwise, this Court will not enter a final order or judgment but rather submit proposed findings of fact and conclusions of law to the United States District Court for the District of South Carolina for review.”). McCarthy v. Giron (In re C & C Gen. Builders, Inc.), 2013 WL 8632105 (Bankr. E.D. Va. Nov. 18, 2013) (Mayer, J.) (“This case was before the court on September 19, 2013 for a trial on the chapter 7 trustee’s complaint. Count I [of the complaint] seeks to avoid a fraudulent transfer under 11 U.S.C. § 548. . . . This is a core proceeding under 28 U.S.C. § 157(b)(2)(H) but subject to Stern v. Marshall . . . . The defendants do not consent to the bankruptcy court entering a final judgment. In accordance with McCarthy v. Wells Fargo Bank, N.A. (In re El–Atari), 2011 WL 5828013 (E.D. Va. Nov. 18, 2011), the bankruptcy court submits its proposed findings of fact and conclusions of law.”). Silagy v. Morris (In re Morris), 2013 WL 5705630 (Bankr. N.D. Ohio Oct. 18, 2013) (Kendig, J.) (“Trustee has moved for summary judgment against Defendant on the theory that the transfer of the Real Estate in the Divorce Agreement was a fraudulent transfer as recognized by § 544 of the United States Bankruptcy Code or § 1336.04 of the Ohio Revised Code. However, before reaching the merits of the fraudulent conveyance claim, this court must first determine whether it has the jurisdictional power to enter a final order, propose findings of fact and conclusion[s] of law to the district court, or neither. While neither party has objected to the bankruptcy court’s jurisdiction in the current case, federal courts have the duty to determine their own jurisdiction. . . . [A] fraudulent conveyance action can be either a public or private right. . . . If the defendant in the fraudulent conveyance action has not filed a claim against the estate, then an action to recover property does not arise from the bankruptcy itself, is instead primarily to augment the estate, and must be determined by an Article III judge. However, if the defendant has filed a claim against the bankruptcy estate, then determining the validity of the fraudulent conveyance would be resolved in the claims allowance process and the claim can be determined by a bankruptcy judge. . . . Because Defendant has not filed a claim in the current case, the bankruptcy court is unable to enter final judgment on the fraudulent conveyance action.”).

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Slobodian v. United States (In re Net Pay Solutions, Inc.), 2013 WL 5550207 (Bankr. M.D. Pa. Oct. 7, 2013) (France, J.) (“[A] fraudulent transfer claim is a private and not a public right. Therefore, unless the Trustee’s claim against the IRS will be resolved as part of the claims allowance process, this Court lacks constitutional authority to adjudicate Counts II and III of the complaint. . . . The proof of claim filed by the IRS in the case asserts a claim for unpaid corporate income and withholding taxes incurred by Debtor. The Trustee’s fraudulent transfer claim against the IRS arises from prepetition tax payments made by Debtor as an agent for Debtor’s clients. The claims of each party against the other are unrelated. Therefore, it is not necessary to resolve the Trustee’s fraudulent transfer allegations to determine the merits of the IRS claim against Debtor. The Trustee’s claim is not a public right and is not part of the claims resolution process. Under these circumstances, the Court lacks the constitutional authority to enter final judgment on the fraudulent transfer counts under state law and the Bankruptcy Code.”).

3.

COURTS IDENTIFYING BUT NOT DECIDING THE ISSUE

Mukamal v. Stillwater Mkt. Neutral Fund II, L.P. (In re Palm Beach Fin. Partners, L.P.), 2013 WL 3490652 (S.D. Fla. July 8, 2013) (Marra, J.) (“The Court acknowledges that there is a decisional split with regard to whether fraudulent conveyance claims may be adjudicated by bankruptcy courts, but even those courts that have held bankruptcy courts lack jurisdiction over fraudulent conveyance claims have held that bankruptcy courts are still permitted to issue reports and recommendations on such claims. . . . The bankruptcy court can, and should, initially determine whether it has the constitutional authority to render a final judgment on a particular issue. The Court will review the specific legal question of constitutional authority de novo, and if the Court determines that the bankruptcy court erred in rendering a final judgment, it will simply treat the Court’s ‘decision’ as a report and recommendation.”). Atradius Trade Credit Ins., Inc. v. Mukamal (In re Palm Beach Fin. Partners, L.P.), 2013 WL 2158430 (S.D. Fla. May 17, 2013); Mukamal v. ABN AMRO Fund Servs. Bank (In re Palm Beach Fin. Partners, L.P.), 2013 WL 2036161 (S.D. Fla. May 14, 2013); Mukamal v. Newman Family Revocable Trust (In re Palm Beach Fin. Partners, L.P.), 2013 WL 2035453 (S.D. Fla. May 14, 2013) (Marra, J.) (“The Court acknowledges that there is a decisional split with regard to whether fraudulent conveyance claims may be adjudicated by bankruptcy courts, but even those courts that have held bankruptcy courts lack jurisdiction over fraudulent conveyance claims have held that bankruptcy courts are still permitted to issue reports and recommendations on such claims. . . . The bankruptcy court can, and should, initially determine whether it has the constitutional authority to render a final judgment on a particular issue. The Court will review the specific legal question of constitutional authority de novo, and if the Court determines that the bankruptcy court erred in rendering a final judgment, it will simply treat the Court’s ‘decision’ as a report and recommendation.”). In re McDowell, 510 B.R. 660 (Bankr. N.D. Ga. 2014) (Drake, J.) (The court concluded that uncertainty created by the Stern case was a factor that weighed in favor of approving the Chapter 7 trustee’s motion to compromise: “[T]he Trustee displayed unease with the Court’s authority to 74

issue a final judgment in this case, in light of Stern v. Marshall . . . and its uncertain ramifications. In Stern, the Supreme Court held that when a claim is ‘a state law action independent of the federal bankruptcy law and not necessarily resolvable by a ruling on [a] creditor’s proof of claim in bankruptcy,’ a bankruptcy court lacks constitutional authority to enter a final judgment. Stern, 131 S. Ct. at 2611. Additionally, the Supreme Court held in Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 109 S. Ct. 2782, 106 L. Ed. 2d 26 (1989) that when an entity, which had taken no part in the bankruptcy process, is sued on behalf of the bankruptcy estate seeking to recover a fraudulent transfer, the entity is entitled to a jury trial as a private right that Congress cannot divest by relabeling it and assigning it to a specialized non-article III court. Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 36–50, 109 S. Ct. 2782, 106 L. Ed. 2d 26 (1989). Extrapolating from the Supreme Court’s decisions, the Sixth Circuit suggested that Stern and Granfinanciera combined to stand for the proposition that where a bankruptcy estate reaches out to file a fraudulent transfer claim against a party who makes no claim on the estate, the Bankruptcy Court has no authority to issue a final ruling. In re Global Technovations, Inc., 694 F.3d 705, 722 (6th Cir. 2012). Although there is debate about the Court’s authority and whether defendants can waive the jurisdictional issue deriving from Stern, compare, In re Bellingham Ins. Agency, Inc., 702 F.3d 553 (9th Cir. 2012), cert. granted, ––– U.S. ––––, 133 S. Ct. 2880, 186 L. Ed. 2d 908 (U.S. 2013) with Waldman v. Stone, 698 (U.S. 2013), its existence causes uncertainty to any ruling by this Court. Moreover, assuming that none of the Settlement Parties filed proofs of claim against the estate, as it appears that none have, Granfinanciera seemingly entitles the Defendants to a jury trial, subjecting the Trustee’s case to all the elevated risk associated with such proceedings. See Granfinanciera, 492 U.S. at 36–50.”). David Cutler Indus., Ltd. v. Bank of Am. (In re David Cutler Indus., Ltd.), 502 B.R. 58 (Bankr. E.D. Pa. 2013) (Frank, J.) (“This court unquestionably has subject matter jurisdiction pursuant to 28 U.S.C. § 1334(b), 28 U.S.C. § 157(a) and the Standing Orders of the District Court . . . . However, since the United States Supreme Court’s decision in Stern v. Marshall . . . courts in this Circuit are divided on the question whether a bankruptcy court may enter a final order in an adversary proceeding brought pursuant to 11 U.S.C. §§ 544 and 548. Compare In re Int’l Auction & Appraisal Services, LLC, 493 B.R. 460, 463–65 (Bankr. M.D. Pa. 2013), with In re DBSI, Inc., 467 B.R. 767, 772–73 (Bankr. D. Del. 2012). If the bankruptcy court lacks the authority to enter a final judgment, it is also unclear whether the parties may consent to the entry of a final judgment by the bankruptcy court or waive the right to an Article III tribunal. Compare In re Bellingham Ins. Agency, Inc., 702 F.3d 553 (9th Cir. 2012), cert. granted sub nom., Exec. Benefits Ins. Agency v. Arkison, ––– U.S. ––––, 133 S. Ct. 2880, 186 L. Ed. 2d 908 (2013), with Wellness Int’l Network, Ltd. v. Sharif, 727 F.3d 751, 771–73 (7th Cir. 2013); Waldman v. Stone, 698 F.3d 910, 917–18 (6th Cir. 2012). . . . [T]he parties have agreed that the fraudulent transfer claims in the Amended Complaint are core proceedings pursuant to 28 U.S.C. § 157(b)(2)(H). [Defendant’s] agreement on that point may constitute consent to the entry of a final order. . . . However, in the event that it is determined that the bankruptcy court lacks the authority to enter a final judgment in this proceeding, this Opinion should be treated as proposed findings of fact and conclusions of law.”).

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Still v. Hopkins (In re Hopkins), 494 B.R. 306 (Bankr. E.D. Tenn. 2013) (Rucker, J.) (“[T]he Chapter 7 trustee filed the complaint in this adversary proceeding against the Defendant and her three siblings. The Complaint does not assert any claims against the Debtor herself, only her four children. It seeks to avoid the transfer that divided the Debtor’s fee interest in the real property into a life estate and a remainder interest pursuant to 11 U.S.C. § 544 and [the Tennessee UFTA] . . . . The Defendant raises several arguments regarding why this court should dismiss this adversary proceeding. The first issue raised is this court’s jurisdiction over the Plaintiff’s claims. The Defendant relies on Stern v. Marshall and Granfinanciera, S.A. v. Nordberg in support of her argument that this court does not have jurisdiction to decide this preference and/or fraudulent transfer matter. . . . Many courts have addressed whether bankruptcy courts have jurisdiction over preference actions and fraudulent transfer actions following the Supreme Court’s ruling in Stern. Some courts find jurisdiction, some do not, and some address the issue, but decline to rule one way or the other. See, e.g., Burtch v. Seaport Capital, LLC (In re Direct Response Media), 466 B.R. 626 (Bankr. D. Del. 2012) (discussing the broad range of views taken by various courts interpreting Stern). . . . Both parties agreed that based on the Waldman [v. Stone, 698 F.3d 910 (6th Cir. 2012)] decision, even if the court does not have constitutional authority to issue a final judgment regarding the Trustee’s fraudulent transfer claim, this court can issue proposed findings of fact and conclusions of law as the decision in Waldman made clear . . . . Therefore, this court concludes that even if it does not have jurisdiction over the Trustee’s fraudulent transfer action, the court can recast its decision as proposed findings of fact and conclusions of law, if necessary. The court will thus proceed to issue a ruling on the merits of the Defendant’s motion to dismiss.”). Burdick v. Shanahan (In re Shanahan), 2013 WL 6528812 (Bankr. D. Mass. Dec. 12, 2013) (Hoffman, J.) (Addressing whether it had the constitutional authority to hear and determine the Chapter 7 trustee’s fraudulent transfer claim, the court stated: “Whether the bankruptcy court has subject matter jurisdiction to hear and determine a fraudulent transfer claim is hardly a controversial issue. . . . The same cannot be said about the bankruptcy court’s constitutional authority to decide fraudulent transfer claims. Stern v. Marshall, 131 S. Ct. 2594, 2620 (2011) (“The Bankruptcy Court below lacked the constitutional authority to enter a final judgment on a state law [claim] that is not resolved in the process of ruling on a creditor’s proof of claim”), and In re Bellingham Ins. Agency, Inc., 702 F.3d 553, 565–66 (9th Cir. 2012) cert. granted, 133 S. Ct. 2880 (U.S. 2013) (“§ 157(b)(1) provides bankruptcy courts the power to hear fraudulent conveyance cases and to submit reports and recommendations to the district courts. Such cases remain in the core, and the § 157(b)(1) power to ‘hear and determine’ them authorizes the bankruptcy courts to issue proposed findings of fact and conclusions of law. Only the power to enter final judgment is abrogated [unless the parties impliedly consent]”). Fortunately, in our corner of the country, any uncertainty about constitutional authority is presently alleviated by the ruling of the U.S. Court of Appeals for the First Circuit in In re Di Vittorio, 670 F.3d 273, 282 n.4 (1st Cir. 2012) that the holding in Stern is to be narrowly construed, and by Rule 206 of the Local Rules of the United States District Court for the District of Massachusetts, which provides: ‘If a bankruptcy judge determines that entry of a final order or judgment by a bankruptcy judge would not be consistent with Article III of the United States Constitution in a particular proceeding referred under L. R. 201 and determined to be a core matter under 28 U.S.C. § 157, the bankruptcy judge shall hear the proceeding and submit proposed findings of fact and conclusions of law to the district court made in compliance with Fed. R. Civ. P. 52(a)(1)

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in the form of findings and conclusions stated on the record or in an opinion or memorandum of decision.’”).

I.

DISCHARGEABILITY OF PARTICULAR DEBTS: 28 U.S.C. § 157(b)(2)(I) 1.

POWER TO ENTER FINAL JUDGMENT ON ISSUE OF THE DISCHARGEABILITY OF THE DEBT

Carpenters Pension Trust Fund v. Moxley, 734 F.3d 864 (9th Cir. 2013) (Schroeder, J.; Callahan, J.; Vance, J.) (“[Debtor/Appellant] asserts a threshold objection to the bankruptcy court’s jurisdiction to decide dischargeability in this case because he claims it has no connection to any federal function. The contention is without substance, because the dischargeability determination is central to federal bankruptcy proceedings. Cent. Va. Cmty. Coll. v. Katz, 546 U.S. 356, 363–64, 126 S. Ct. 990, 163 L. Ed. 2d 945 (2006). The dischargeability determination is necessarily resolved during the process of allowing or disallowing claims against the estate, and therefore constitutes a public rights dispute that the bankruptcy court may decide. See In re Bellingham Ins. Agency, Inc., 702 F.3d 553, 564–65 (9th Cir. 2012) (concluding that public rights disputes in bankruptcy are those that “necessarily ha[ve] to be resolved in the course of the claims-allowance process”); see also In re Global Technovations Inc., 694 F.3d 705, 721–22 (6th Cir. 2012) (bankruptcy court has jurisdiction over disputes that must be resolved before ruling on proof of claim).”). Lee v. Christenson, 558 F. App’x 674 (7th Cir. 2014) (Bauer, J.; Manion, J.; Rovner, J.) (“After Nikki Lee filed for bankruptcy, Leland Christenson (one of his creditors) initiated an adversary proceeding against him based on a state-law claim of fraud. The bankruptcy judge determined the size of the debt, ruled that it was nondischargeable, and entered a money judgment against Lee. More than two years later, Lee moved under Federal Rule of Civil Procedure 60(b)(4) to reopen the case, arguing that the Supreme Court’s decision in Stern v. Marshall rendered the judgment void. The bankruptcy court denied the motion, and the district court affirmed. . . . Stern limits a bankruptcy court’s power to decide a debtor’s state-law counterclaim against a creditor when resolving the creditor’s proof of claim. But it is unclear whether Stern also restricts a bankruptcy court’s power to resolve a creditor’s state-law claim when the court decides whether that claim is nondischargeable. Without clarity on that issue, the bankruptcy court had at least arguable jurisdiction to decide Christenson’s state-law claim, and the district court correctly ruled that the judgment is not void.”). Carroll v. Farooqi, 486 B.R. 718 (N.D. Tex. 2013) (Lindsay, J.) (“Whereas the bankruptcy court in Stern attempted to enter judgment on a state law counterclaim asserted by a debtor, the bankruptcy court here made a final determination as to the dischargeability of a creditor’s claim against a debtor, which remain[s] under the bankruptcy judge’s core proceedings jurisdiction following Stern v. Marshall.”).

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Trost v. Trost (In re Trost), 510 B.R. 140 (Bankr. W.D. Mich. 2014) (Gregg, J.) (“This adversary proceeding is a statutory core proceeding. 28 U.S.C. § 157(b)(2)(I) (determinations regarding dischargeability of a debt). Notwithstanding the holding in Stern v. Marshall . . . this court is constitutionally authorized to enter a final order in this adversary proceeding. . . . Very recently, the Sixth Circuit issued an opinion, albeit unpublished, that reached the same conclusion. Hart v. Southern Heritage Bank (In re Hart), ––– F. App’x ––––, 2014 WL 1663029 (6th Cir. Apr. 28, 2014). Hart buttresses this court’s conclusion determining it is empowered to enter a final judgment.”). Chen v. Huang (In re Huang), 509 B.R. 742 (Bankr. D. Mass. 2014) (Boroff, J.) (“Following the Supreme Court’s decision in Stern v. Marshall . . . some bankruptcy courts have questioned their jurisdiction to liquidate damages in dischargeability actions based on the holding in that case. See, e.g., Condon Oil v. Wood (In re Wood), 503 B.R. 705, 709–11 (Bankr. W.D. Wis. 2013) (holding that the bankruptcy court lacked the constitutional authority to enter a money judgment on a nondischargeable debt where the underlying debt was based on a claim arising under state law). . . . First, at least with regard to the Wood case, the Court disagrees with that court’s underlying premise that the ‘amount of the debt is patently unnecessary to a determination that it is nondischargeable.’ More importantly, however, Stern involved a counterclaim by the debtor which, in its view, was not necessary to resolution of the core matter before the bankruptcy court (the validity of a proof of claim). . . . Here, because the determination of the validity and amount of a nondischargeable debt are not only prescribed by the Bankruptcy Code and relevant jurisdictional statute, but are also directly intertwined with the dischargeability determination, Stern’s holding regarding the constitutional limitations of the bankruptcy courts’ jurisdiction is inapplicable.”). Condon Oil Co. v. Wood (In re Wood), 503 B.R. 705 (Bankr. W.D. Wis. 2013) (Martin, J.) (“By dint of the United States Supreme Court in Stern v. Marshall, this court recognizes its lack of constitutional jurisdiction to enter a money judgment for a debt that is determined to be nondischargeable. Prior to Stern, it was a common practice for bankruptcy courts in the Seventh Circuit to adjudicate the issues of liability and damages along with dischargeability. See In re Hallahan, 936 F.2d 1496, 1508 (7th Cir. 1991). Under the reasoning in Stern, this practice must be discontinued. . . . The Supreme Court in Stern reasoned that where a claim is founded on a ‘state law action independent of the federal bankruptcy law,’ based on private rather than public rights, and ‘not necessarily resolvable by a ruling on the creditor’s proof of claim in bankruptcy,’ it cannot be finally determined by an Article I bankruptcy judge. . . . Some bankruptcy courts have concluded that Stern does not affect a bankruptcy court’s authority to enter a final judgment on liability and damages in a dischargeability proceeding. See, e.g., In re Boricich, 464 B.R. 335 (Bankr. N.D. Ill. 2011) (in which Judge Schmetterer held that it is necessary to determine the amount of debt in order to determine the debt that is nondischargeable). But the amount of the debt is patently unnecessary to a determination that it is nondischargeable. As Douglas Baird explains in Blue Collar Constitutional Law, the Supreme Court in Stern ‘distinguishes between administering the bankruptcy estate on the one hand and engaging in actions that are the province of a common law judge on the other.’ Douglas G. Baird, Blue Collar Constitutional Law, 86 Am. Bankr. L.J. 3, 4–5 (2012). A debt need not be reduced to judgment in order for the court to determine whether that debt is nondischargeable. Johnson v. Weihert (In re Weihert), 489 B.R. 558, 564 (Bankr. W.D. Wis. 2013). Once a debt is rendered nondischargeable, it becomes an ordinary debt, and entering 78

judgment on such a debt is an exercise of federal judicial power: ‘Obtaining a judgment is the way that one private citizen can call upon the state to use force against another citizen to vindicate her rights. Authorizing the forcible seizure of property is a serious business. It is the essence of the judicial power. Because the bankruptcy judge is not an Article III judge, she lacks the power to authorize one citizen to take property away from another. It is just as if a janitor at the courthouse entered the judgment. He does not possess the judicial power either. If you want authorization to take someone else’s property in the federal judicial system on account of an ordinary debt, you need to get it from an Article III judge. Baird, 86 Am. Bankr. L.J. at 5–6 (footnote omitted). Therefore, since liquidating a nondischargeable debt is not necessary to administer the bankruptcy estate, and entering judgment is an exercise of judicial power, a bankruptcy judge lacks the constitutional authority to reduce a nondischargeable debt to judgment.”). Sullivan v. Glenn (In re Glenn), 502 B.R. 516 (Bankr. N.D. Ill. 2013) (Barnes, J.) (“The matter before the court arises out of two complaints filed by [plaintiff], each seeking a determination of dischargeability of debt under 11 U.S.C. § 523(a)(2)(A) . . . . None of the parties have raised the issue of whether this court has constitutional authority to enter a final judgment on all counts of the Complaints in light of the United States Supreme Court’s decision in Stern v. Marshall . . . . This court has an independent duty to determine whether it has such authority. . . . All of the counts in the Complaints are based on section 523(a)(2)(A) of the Bankruptcy Code. Section 523 is unequivocally a bankruptcy cause of action. While such actions may turn on state law, determining the scope of the debtor’s discharge is a fundamental part of the bankruptcy process. . . . As observed by one bankruptcy court, ‘there can be little doubt that [a bankruptcy court], as an Article I tribunal, has the constitutional authority to hear and finally determine what claims are non-dischargeable in a bankruptcy case.’ Farooqi v. Carroll (In re Carroll), 464 B.R. 293, 312 (Bankr. N.D. Tex. 2011) . . . . Thus, even in light of the Seventh Circuit’s later opinions regarding Stern, see Wellness Int’l Network, Ltd. v. Sharif, 727 F.3d 751 (7th Cir. 2013) and Ortiz v. Aurora Health Care, Inc. (In re Ortiz), 665 F.3d 906 (7th Cir. 2011), the court concludes that it has constitutional authority to enter a final judgment in the Adversary Proceedings.”). Dudley v. S. Va. Univ. (In re Dudley), 502 B.R. 259 (Bankr. W.D. Va. 2013) (Connelly, J.) (“On May 18, 2010, Cynthia Riley Dudley (the “Debtor”) filed a bankruptcy petition under Chapter 13 of the Bankruptcy Code. Her case was converted on May 25, 2010 to a case under Chapter 7 of the Bankruptcy Code. Southern Virginia University (“SVU”) did not file a claim in her case, but the University and its counsel appeared on the creditor mailing matrix. On September 21, 2010, the Court issued a discharge order for Ms. Dudley and, shortly thereafter, closed her case. Seven months later, on May 6, 2011, the Debtor filed a motion to re-open her case. She urged the court to reopen the case so that she could file a motion for contempt against SVU for continuing collection action after the issuance of the bankruptcy discharge order. The Court re-opened the case, and the Debtor filed her motion for contempt. SVU answered the motion by asserting that the debt it was trying to collect upon was a ‘qualified education loan’ that is non-dischargeable under 11 U.S.C. § 523(a)(8). . . . On the morning of the trial, SVU filed a motion to dismiss this adversary proceeding for lack of jurisdiction. SVU cited as its grounds Stern v. Marshall. A according to SVU’s motion filed on the day of the trial, SVU does not consent to the jurisdiction of this Court; the question of dischargeability is not before the Court; therefore, the Court has no jurisdiction to decide the matter. These facts, according to SVU, compel dismissal. . . . This Court has subject matter jurisdiction over 79

the bankruptcy case, as well as the proceeding seeking a declaration of the dischargeability of the SVU debt. SVU has participated, actively, in this adversary proceeding and only on the morning following a lengthy hearing in which the admissibility of some of SVU’s exhibits had been questioned did SVU announce that it did not consent to the jurisdiction of the Court. The Court disagrees with SVU’s statement that dischargeability is not before the Court. The Court finds that the crux of the dispute in this proceeding is the dischargeability of SVU’s claim. The Court concludes, therefore, that this Court may enter a final ruling.”). Hyundai-Wai Mach. Am. Corp. v. Rouette (In re Rouette), 500 B.R. 670 (Bankr. D. Conn. 2013) (Dabrowski, J.) (“Before the Court is a Motion to Dismiss this adversary proceeding filed pursuant to Fed. R. Civ. P. 12(b)(6), by . . . the Debtor–Defendants. . . . Plaintiff seeks a determination that the Debtors have personal liability to it on the grounds of veil piercing related to a $1,650,000 debt of Quality Machine Solutions, Inc. (hereinafter, “QMSI”), alleged to be a wholly-owned business of the Debtors (Count One). Assuming that the Plaintiff prevails on the veil piercing issue in the adversary proceeding, the Plaintiff then seeks to have the debt determined to be non-dischargeable under Bankruptcy Code §§ 523(a)(2)(A) (“money . . . obtained by—false pretenses, a false representation, or actual fraud”); 523(a)(4) (“fraud or defalcation while acting in a fiduciary capacity, embezzlement, or larceny”); and/or 523(a)(6) (“willful and malicious injury”) (Counts Two–Four). . . . While not made with clarity, the Debtors appear to suggest that Stern v. Marshall . . . bars the Court’s consideration in a dischargeability proceeding of a cause of action that arises under state law. Of course, in Stern v. Marshall, the Supreme Court held, in relevant part, that the bankruptcy court lacked the constitutional authority to determine a counterclaim for tortious interference that arose in connection with a response to a creditor’s filed proof of claim (otherwise a “core proceeding”), ‘which if successful, would not merely wipe out the claim but also provide affirmative relief.’ [131 S. Ct.] at 2616–2617. But the Supreme Court also held that the counterclaim did not constitute a ‘public rights’ dispute. Id. at 2611–2616. Although public rights disputes may be decided by non-Article III tribunals, public rights disputes must involve rights ‘integrally related to a particular federal government action.’ Id. at 2613. In summary, the Stern decision concluded that for the bankruptcy court to enter a final judgment on the counterclaim would be an impermissible exercise of the judicial power of the United States. . . . Here, however, we are presented with a dischargeability proceeding that is at the heart of a bankruptcy court’s power to issue discharges of debt. . . . This Count . . . determines that it has authority under the ‘public rights’ exception to consider and decide the issue of veil-piercing in the context of this dischargeability proceeding. . . . The determination in Stern v. Marshall that a bankruptcy court may enter a final judgment when a state court action is fully resolvable by ruling on a creditor’s proof of claim, neatly parallels the factual situation presented in this case. Here the Court is faced with determining dischargeability, a determination central to federal bankruptcy proceedings, and a public rights dispute that it may decide. This Court’s determination as to whether the Plaintiff may ‘pierce the corporate veil,’ so as to make the Debtors personally liability to it on QMSI’s debt, will permit the Court to resolve in total the issue of nondischargeability.”). Maas v. Northstar Educ. Fin., Inc. (In re Maas), 497 B.R. 863 (Bankr. W.D. Mich. 2013) (Gregg, J.) (“In this adversary proceeding, [the debtor] seeks a determination that four loans he received while enrolled at Thomas M. Cooley Law School are not educational benefit loans under § 523(a)(8) of the Bankruptcy Code, and that the resulting debts alleged by the lender, Northstar 80

Education Finance, Inc . . . are dischargeable in his chapter 7 case. . . . Notwithstanding the holding in Stern v. Marshall . . . this court is constitutionally authorized to enter a final order.”). Bankers Healthcare Grp., Inc. v. Bilfield (In re Bilfield), 493 B.R. 748 (Bankr. N.D. Ohio 2013) (Morgenstern-Clarren, J.) (“The complaint states five claims for relief including requests to deny the debtors discharges under 11 U.S.C. § 727(a)(2), (a)(4)(A) and (a)(5) and claims to determine nondischargeability of debt under 11 U.S.C. § 523(a)(2)(B) and (a)(6). . . . This is a . . . proceeding . . . within the court’s constitutional authority as analyzed by the United States Supreme Court in Stern v. Marshall . . . .”). S&S Food Corp. v. Sherali (In re Sherali), 490 B.R. 104 (Bankr. N.D. Tex. 2013) (Houser, J.) (“Before the Court is the Complaint to Determine Debt Owed to Plaintiff and to Determine Dischargeability of Debts Owed to Plaintiff filed by the Plaintiff . . . against the [D]ebtor . . . . [T]here can be little doubt that this Court, as an Article I tribunal, has the Constitutional authority to hear and finally determine what claims are non-dischargeable in a bankruptcy case. Determining the scope of the debtor’s discharge is a fundamental part of the bankruptcy process. . . . The Supreme Court has never held that bankruptcy courts are without Constitutional authority to hear and finally determine whether a debt is dischargeable in bankruptcy. In fact, the Supreme Court’s decision in Stern clearly implied that bankruptcy courts have such authority when it concluded that bankruptcy courts have the Constitutional authority to decide even state law counterclaims to filed proofs of claim if the counterclaim would necessarily be decided through the claims allowance process.”). Johnson v. Weihert (In re Weihert), 489 B.R. 558 (Bankr. W.D. Wis. 2013) (Martin, J.) (“This unusual case asks a bankruptcy court to determine whether an assault (possibly a sexual assault or rape) and a wrongful death (possibly a murder) were the willful and intentional acts of the debtor, and, whether claims arising from the injuries are dischargeable in the debtor’s bankruptcy. Because no liability for the alleged acts has yet been determined and no damages assessed, this opinion and the decision it explains is to some degree advisory. This court lacks the jurisdiction, or at least the power and authority, to quantify any obligation arising from the debtor’s acts. Those claims are determinations of state law alone. . . . This Court does have both the authority and the jurisdiction to determine dischargeability of any debt owed by the debtor to the plaintiffs. Bankruptcy courts have jurisdiction to make ‘determinations as to the dischargeability of particular debts,’ 28 U.S.C. § 157(b)(2)(I), and ‘[d]etermining the scope of the debtor’s discharge is a fundamental part of the bankruptcy process.’ In re Deitz, 469 B.R. 11, 20 (B.A.P. 9th Cir. 2012). Under the logic of Stern, since determining dischargeability is necessary to administer the bankruptcy estate, the bankruptcy court has the constitutional authority to enter final judgments on dischargeability.”). Rutkowski v. Adas (In re Adas), 488 B.R. 358 (Bankr. N.D. Ill. 2013) (Hollis, J.) (“There is no question, however, of the court’s . . . constitutional authority to enter a judgment on the question of dischargeability.”). Drexel Highlander Ltd. P’ship v. Edelman (In re Edelman), 2014 WL 1796217 (Bankr. N.D. Tex. May 6, 2014) (Houser, J.) (“The Plaintiffs ask this Court to liquidate their claims against the Edelman bankruptcy estate, as reflected in the Plaintiffs’ Amended Petition, and then determine 81

whether any resulting judgment is dischargeable in bankruptcy. . . . Here, the Plaintiffs are each a creditor of the [debtor’s] estate who timely filed a Proof of Claim . . . . Although the Plaintiffs’ claims (other than those related to dischargeability) are all based upon state law, resolving these state-law claims is necessary to adjudicate both this adversary and the allowability of the claims asserted in the Proofs of Claim. . . . [A]s recently explained by the Seventh Circuit in Wellness International Network, Ltd. v. Sharif, 727 F.3d 751 (7th Cir. 2013): ‘[W]hether to grant or deny discharge is central to the restructuring of the debtor-creditor relationship. Although it is debatable whether such restructuring falls under the rubric of public rights, see Stern, 131 S. Ct. at 2614 n.7; Granfinanciera, 492 U.S. at 56 n.11, 109 S. Ct. 2782; but cf. N. Pipeline, 458 U.S. at 71, 102 S. Ct. 2858 (plurality opinion) (“[T]he restructuring of debtor-creditor relations, which is at the core of the federal bankruptcy power, must be distinguished from the adjudication of state-created private rights, such as the right to recover contract damages. . . . The former may well be a ‘public right,’ but the latter obviously is not.”), it is clear that [the creditor’s] objections to discharge differ markedly from the state-law claims at issue in Stern, Granfinanciera, Northern Pipeline, and Ortiz. The Supreme Court has not come close to holding that an Article III judge must decide claims for which the Bankruptcy Code itself provides the rule of decision, and we will not do so here, where the parties concede that the bankruptcy judge had authority.’ Id. at 773. Thus, this Court concludes that it has the constitutional authority to both liquidate the Plaintiffs’ state-law claims and to determine whether any resulting judgment is dischargeable in the debtor’s bankruptcy case.”). Plitt Int’l, LCC v. Heckler (In re Heckler), 2014 WL 1491325 (Bankr. W.D. Tex. Apr. 15, 2014) (Davis, J.) (“In this case, the Court must determine whether the debtors must be denied a discharge of prebankruptcy debts because less than a year before filing for bankruptcy they transferred some of their assets in order to ‘hinder, delay, or defraud’ their creditors. . . . In their complaint, the plaintiffs sought relief under §§ 727(a)(2)(A), 523(a)(4), and 523(a)(6) of the Bankruptcy Code. In their post-trial brief, they added a claim for non-dischargeability under § 727(a)(4)(A). . . . The Court has constitutional authority to enter a final judgment because this non-dischargeability action was not ‘the stuff of traditional actions at common law tried by the courts at Westminster in 1789,’ Stern v. Marshall, 131 S. Ct. 2594, 2609 (2011) (quoting Northern Pipeline Constr. Co. v. Marathon Pipe Line Co., 458 U.S. 50, 90, 102 S. Ct. 2858, 73 L. Ed. 2d 598 (1982)), and the causes of action under dispute ‘flow from a federal statutory scheme,’ Stern, 131 S. Ct. at 2614.”). Robert J. Siragusa M.D. Emp. Trust v. Collazo (In re Collazo), 2014 WL 866075 (Bankr. N.D. Ill. Mar. 5, 2014) (Wedoff, J.) (“As a threshold matter, [the defendant] asserts that he cannot be held personally liable for debts actually incurred by the borrower-LLCs. [The defendant] argues, therefore, that there is no underlying debt owed for any of the loans unless the Siragusas and the Employee Trust can prove the necessity of piercing the LLC veil. Moreover, Collazo argues that veil piercing is the sort of state law claim that bankruptcy courts lack the authority to adjudicate. Stern v. Marshall, 131 S. Ct. 2594 (2011). . . . [D]ischargeability determinations are core proceedings. Even [the defendant] concedes that the bankruptcy courts have the constitutional authority to adjudicate dischargeability. This adversary proceeding is limited to the determination of dischargeability. It does not implicate Stern v. Marshall.”).

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Weaver v. Piwonski (In re Piwonski), 2014 WL 210552 (Bankr. D. Colo. Jan. 17, 2014) (Romero, J.) (Plaintiff filed two separate adversary proceedings in which he asserted a variety of state-law claims against the debtor and also sought “a finding of nondischargeability for conversion, misappropriation and civil theft under . . . 523(a)(4) . . . a finding of nondischargeability for breach of fiduciary duty under § 523(a)(4) . . . and . . . a finding of nondischargeability under § 523(a)(6).” In addition, “[b]oth [the plaintiff] and the Chapter 7 Trustee objected to [the debtor’s] claimed exemptions.” The bankruptcy court abstained from hearing the state-law claims. The court concluded that it had the constitutional authority to finally adjudicate the plaintiff’s claims under § 523(a)(4) and (6), stating that “[d]ischargeability of a debt stems from the bankruptcy proceeding and does not involve augmentation of the bankruptcy estate. Moreover, the dischargeability claims in this case involve the amount of the debt, if any, owed by [the debtor] to the [plaintiff], [and] whether such debt may be discharged, and whether such debt may be ameliorated by exemptions claimed by [the debtor]. Thus, these matters fall within a claims allowance process.”). Silver v. Edelson (In re Edelson), 2013 WL 5145714 (Bankr. N.D. Ga. July 3, 2013) (EllisMonro, J.) (“The Court’s ability to enter a final order on a dischargeability complaint is not altered by Stern v. Marshall . . . . ”). Patout v. Smith (In re Smith), 2013 WL 1309426 (Bankr. W.D. La. Mar. 28, 2013) (Summerhays, J.) (“This adversary proceeding involves the complaint filed by [the plaintiff] seeking a determination of dischargeability of the debt owed to [the plaintiff by the debtor]. . . . [T]he court may enter final orders on the claims and defenses asserted in this case under Stern v. Marshall . . . since this case involves the determination of dischargeability under the Bankruptcy Code.”). Gilley v. Sec. & Exch. Comm’n (In re Gilley), 2013 WL 690818 (Bankr. M.D.N.C. Feb. 26, 2013) (Waldrep, J.) (“[T]he Debtor filed a complaint seeking a determination that a debt owed to the SEC based on a settlement did not fall under the nondischargeability exception provided by Section 523(a)(19) of the Bankruptcy Code and that a civil penalty owed to the SEC did not constitute a debt under Section 101(12). . . . Pursuant to the analysis in Stern v. Marshall . . . the Court may enter a final order in this matter.”).

2.

POWER TO DETERMINE THE ISSUE OF THE DISCHARGEABILITY OF THE DEBT AND ENTER FINAL JUDGMENT ON THE UNDERLYING CLAIM FOR RELIEF IN AMOUNT CERTAIN

Lee v. Christenson, 558 F. App’x 674 (7th Cir. 2014) (Bauer, J.; Manion, J.; Rovner, J.) (“After Nikki Lee filed for bankruptcy, Leland Christenson (one of his creditors) initiated an adversary proceeding against him based on a state-law claim of fraud. The bankruptcy judge determined the size of the debt, ruled that it was nondischargeable, and entered a money judgment against Lee. More than two years later, Lee moved under Federal Rule of Civil Procedure 60(b)(4) to reopen the case, arguing that the Supreme Court’s decision in Stern v. Marshall rendered the judgment void. . . . Lee . . . moved under Federal Rule of Civil Procedure 60(b)(4)—made applicable to bankruptcy 83

proceedings by Bankruptcy Rule 9024—to vacate the bankruptcy court’s judgment on Christenson’s state-law claim. He contended that the judgment was void under Stern. . . . The district court observed that the judgment against Lee would be void only if there were no arguable basis for the bankruptcy court’s authority to enter its judgment. But, the court pointed out, this circuit’s pre-Stern precedent permitted a bankruptcy court to enter judgment on a creditor’s state-law claim when determining the dischargeability of a debt, see In re Hallahan, 936 F.2d 1496, 1508 (7th Cir. 1991), and Stern did not expressly overrule this precedent. Therefore, the court concluded, the bankruptcy court had arguable jurisdiction. . . . [I]t is unclear whether Stern also restricts a bankruptcy court’s power to resolve a creditor’s state-law claim when the court decides whether that claim is nondischargeable. Without clarity on that issue, the bankruptcy court had at least arguable jurisdiction to decide Christenson’s state-law claim, and the district court correctly ruled that the judgment is not void.”). Hart v. Southern Heritage Bank (In re Hart), 2014 WL 1663029 (6th Cir. Apr. 28, 2014) (Daughtrey, J.; McKeague, J.; Donald, J.) (“This appeal requires us to determine whether the decision of the United States Supreme Court in Stern v. Marshall . . . deprives a bankruptcy court of constitutional authority to enter a final monetary judgment in a dischargeability action under 11 U.S.C. § 523(a)(2)(B). . . . Loretta J. Hart (“Hart”) filed a Chapter 11 bankruptcy proceeding in the United States Bankruptcy Court for the Eastern District of Tennessee on October 22, 2009. On November 5, 2009, the bankruptcy court converted Hart’s petition to one under Chapter 7. Southern Heritage Bank (“Bank”) then initiated an adversary proceeding against Hart in the bankruptcy court under 11 U.S.C. § 523 on February 17, 2010. The Bank objected to the discharge of four loans that it had extended to Hart. . . . The bankruptcy court found all four loans non-dischargeable under 11 U.S.C. § 523(a)(2)(B) and determined the amounts of the non-dischargeable debts in an order entered on May 20, 2011 (“May 20 order”). The court, however, did not enter a final monetary judgment on those amounts. On May 3, 2012, the Bank filed a motion under Federal Rule of Bankruptcy Procedure 9024 to amend the bankruptcy court’s May 20 order on the ground of mistake. Specifically, the Bank requested that the court amend the order to include an entry of judgment on the amount of each non-dischargeable loan. The bankruptcy court granted the motion over Hart’s objections, including her assertion that the bankruptcy court lacked constitutional authority to take such action following the Supreme Court’s decision in Stern v. Marshall. . . . Hart argues that the Supreme Court’s holding in Stern deprives the bankruptcy court of its constitutional authority to enter a final monetary judgment in this dischargeability action under § 523(a)(2)(B). Hart’s argument would extend Stern too far because her case is both factually and legally distinguishable. . . . Hart’s case is factually distinguishable from Stern because she did not assert a counterclaim based on state law against the Bank in the adversary proceeding under § 523. The only claim at issue in the bankruptcy court was the Bank’s complaint objecting to the discharge of the four loans it had extended to Hart. . . . Hart’s case is legally distinguishable from Stern for two important reasons. First, in contrast to Stern, where ‘Vickie’s claim [was] in no way derived from or dependent upon bankruptcy law,’ 131 S. Ct. at 2618, the Bank’s claim against Hart arises specifically in bankruptcy. 28 U.S.C. § 157(b)(2)(I)-(J) (including “determinations as to the dischargeability of particular debts” and “objections to discharges” in the list of core proceedings arising under title 11). Second, under this Court’s pre- and post-Stern precedents, the Bank’s non-dischargeability claim was ‘resolvable by a ruling on the creditor’s proof of claim in bankruptcy.’ Stern, 131 S. Ct. at 2611; see Waldman v. Stone, 698 F.3d 910, 919–20 (6th Cir. 84

2013); Longo v. McLaren (In re McLaren), 3 F.3d 958, 965–66 (6th Cir. 1993). In Longo v. McLaren, we held pre-Stern that the bankruptcy court may ‘adjudge the validity and amount of a claim together with its dischargeability’ and enter a money judgment on such a claim. 3 F.3d at 965. Similarly, in Waldman v. Stone, we held post-Stern that the bankruptcy court had authority to enter final judgment on dischargeability claims that arose under federal law and ‘were part and parcel of the claims-allowance process in bankruptcy.’ 698 F.3d at 920. Because ‘the action at issue stems from the bankruptcy itself [and] would necessarily be resolved in the claims allowance process,’ Stern, 131 S. Ct. at 2618, Stern does not strip the bankruptcy court of its constitutional authority to enter a final monetary judgment in this dischargeability action under § 523(a)(2)(B).”). Cai v. Shenzhen Smart-In Industry Co., Ltd. (In re Cai), 2014 WL 1647730 (9th Cir. Apr. 25, 2014) (Smith, J.; Murguia, J.; McNamee, J.) (“[T]he bankruptcy court had authority to enter a ‘dollar amount’ judgment of nondischargeability. Stern v. Marshall . . . does not raise any constitutional concerns about the bankruptcy court’s adjudication in this case, because Stern implicitly recognized that bankruptcy courts do have authority to adjudicate a state law counterclaim if the counterclaim would necessarily be decided through the claims allowance process. Determining the scope of the debtor’s discharge is a fundamental part of the bankruptcy process, and determining whether a claim against a creditor is discharged under § 523(a)(2)(A) does not raise any issues of state law.”). Galindo v. Whited (In re Galindo), 2013 WL 3389556 (B.A.P. 9th Cir. July 8, 2013) (Bason, J.; Pappas, J.; Jury, J.) (“Chapter 7 debtor Antonio Galindo . . . appeals from the bankruptcy court’s judgment awarding $78,075.07 in attorney fees and costs against him on a nondischargeability judgment of $1,648.29. . . . The bankruptcy court had both the jurisdiction and authority to hear [the creditor’s] claims, including any award of attorney fees. Deitz v. Ford (In re Deitz), 469 B.R. 11 (9th Cir. BAP 2012) (interpreting Stern v. Marshall, ––– U.S. ––––, 131 S. Ct. 2594, 180 L. Ed. 2d 475 (2011)).”). Carroll v. Farooqi, 486 B.R. 718 (N.D. Tex. 2013) (Lindsay, J.) (“Whereas the bankruptcy court in Stern attempted to enter judgment on a state law counterclaim asserted by a debtor, the bankruptcy court here made a final determination as to the dischargeability of a creditor’s claim against a debtor, which remain[s] under the bankruptcy judge’s core proceedings jurisdiction following Stern v. Marshall. In the process of deciding whether that claim was dischargeable, the bankruptcy court liquidated the state law claim, which the bankruptcy court has the authority to do under existing Fifth Circuit precedent. See In re Morrison, 555 F.3d 473, 478 (5th Cir. 2009) (holding that bankruptcy courts, in addition to declaring a debt nondischargeable, ha[ve] jurisdiction to liquidate the debt and enter a monetary judgment against the debtor). Because the Fifth Circuit has not overruled Morrison, and noted Stern’s limited application, it remains binding circuit precedent. Therefore, the court determines that the bankruptcy court did not unconstitutionally exercise the judicial power of the United States by finally adjudicating Farooqi’s state law claims.”). Cohen v. Third Coast Bank, SSB, 2014 WL 2729608 (E.D. Tex. June 16, 2014) (Crone, J.) (“For the first time on appeal, Cohen argues that the bankruptcy court’s final adjudication of Third Coast’s false misrepresentation claim in the underlying case was unconstitutional in light of the United States Supreme Court’s decision in Stern v. Marshall . . . . In Cohen’s view, Stern prohibits bankruptcy courts from issuing final judgments and liquidating restitution amounts for claims 85

asserted under § 523(a)(2)(A). Cohen, however, fails to recognize key differences between Stern and the instant case. Unlike Stern, this case involves a claim brought by a creditor, not a debtor. Also, Third Coast’s § 523(a)(2)(A) claim is a creature of federal law, not of state or common law. Furthermore, determining the dischargeability of a debt, unlike adjudicating a state law counterclaim, is a ‘fundamental part of the bankruptcy process.’ Farooqi v. Carroll (In re Carroll), 464 B.R. 293, 312 (Bankr. N.D. Tex. 2011), aff’d sub nom. Carroll v. Farooqi, 486 B.R. 718 (N.D. Tex. 2013). ‘The Supreme Court has never held that bankruptcy courts are without Constitutional authority to hear and finally determine whether a debt is dischargeable in bankruptcy. In fact, the Supreme Court’s decision in Stern clearly implied that bankruptcy courts have such authority when it concluded that bankruptcy courts had the Constitutional authority to decide even state law counterclaims to filed proofs of claim if the counterclaim would necessarily be decided through the claims allowance process.’ Id. Stern is therefore inapposite because, unlike the state law counterclaim at issue in that case, the dischargeability of a debt under § 523(a)(2) is a necessary component of the claims allowance process. . . . Moreover, the Fifth Circuit has held that bankruptcy courts have the authority to enter a final money judgment when determining the dischargeability of creditors’ claims in bankruptcy. Morrison v. W. Builders of Amarillo, Inc. (In re Morrison), 555 F.3d 473, 479–80 (5th Cir. 2009). At this time, Morrison remains binding precedent that has not been overruled by Stern. . . . In any event, the Supreme Court has clarified that if a bankruptcy court adjudicates a ‘Stern claim,’ i.e., a core matter that cannot, per the Constitution, be finally determined by a bankruptcy court, a bankruptcy court can issue findings of fact and conclusions of law for de novo review by the district court. Executive Benefits Ins. Agency v. Arkison, No. 12–1200, –––S. Ct. ––––, 2014 WL 2560461, at *3 (June 9, 2014). In Arkison, even though the bankruptcy court did not submit findings of fact or conclusions of law, the district court conducted a de novo review of the claims that were appealed and issued a separate final judgment. Id. at *9. Here, Cohen’s appeal addresses only legal questions and mixed questions of law and fact, both of which are reviewed de novo. Thus, any possible constitutional issues presented by this appeal could be cured by issuing a separate final judgment.”). Adas v. Rutkowski, 2013 WL 6865417 (N.D. Ill. Dec. 30, 2013) (Kendall, J.) (“In his counterclaim, [plaintiff] argues that the bankruptcy court erred in [declining] to award damages in addition to holding that [debtor’s] debt was not dischargeable. The bankruptcy court declined to award damages based on its view that the Supreme Court’s ruling in Stern v. Marshall . . . and a circuit split made doing so questionable from a jurisdictional perspective. . . . In In re Hallahan, 936 F.2d 1496, 1508 (7th Cir. 1991), the Seventh Circuit held that it is ‘preferable to allow bankruptcy courts ruling on the dischargeability of a debt to adjudicate the issues of liability and damages also.’ . . . This Court agrees with the analysis in In re Boricich[,464 B.R. 335, 336 (Bankr. N.D. Ill. 2011)] that Stern does not preclude bankruptcy courts from determining liability in the context of adjudicating the rights of debtors and creditors in the nondischargeability context: ‘In contrast [with Stern, an adversary] proceeding to bar dischargeability of debt due to Plaintiff under 11 U.S.C. § 523(a)(4), claimed to be a core proceeding under 28 U.S.C. § 157(b)(2)(I) but is one in which no party has a right to jury trial. Moreover, this action contrasts with Stern in being an action directly under and defined by the Bankruptcy Code to determine nondischargeability rather than being independent of bankruptcy law. That characteristic of the action is not changed because the theory of recovery arose under nonbankruptcy law. Indeed, most claims in the bankruptcy system that require application of [Bankruptcy] Code provisions arise under nonbankruptcy law. The bankruptcy judge 86

often must look to state law and rights as they stood pre-bankruptcy to adjudicate disputes. In Stern itself the holding was limited to the debtor’s counterclaim and similar actions, namely state law counterclaims that are not resolved in the process of ruling on a creditor’s proof of claim. . . . Stern left intact the authority of a bankruptcy judge to fully adjudge a creditor’s claim. In this case, the claim was an adversary proceeding against debtor to bar dischargeability of a debt due to Plaintiff. Therefore, the authority to enter a final dollar judgment as part of the adjudication of nondischargeability, as recognized in Hallahan, was not impaired by Stern. . . . Quite clearly it [is] necessary here to determine the amount of debt in order to determine the debt that is nondischargeable. Therefore, under the clear exception recognized by Stern, final judgment is authorized because such resolution is required to resolve the creditor’s claim.’ 464 B.R. at 336–37. In re Boricich was not appealed or overturned. Although liability under nondischargeability arises from the concepts of trust and fiduciary duty that have their roots in state law, determining whether a trust or fiduciary duty exists under § 523(a)(4) is a question of federal—and not state—law. . . . Determining whether a debt is dischargeable before (or in lieu of) determining what exactly is owed puts the cart before the horse. The Court therefore remands the issue of damages to the bankruptcy court to determine the final dollar amount of [the debtor’s] nondischargeable debt to [the plaintiff].”). Lee v. Christenson, 2013 WL 5491946 (E.D. Wis. Oct. 1, 2013) (Adelman, J.) (“Pro se appellant Nikki Lee appeals from a bankruptcy court order denying his motion to vacate the judgment in an adversary proceeding related to his Chapter 7 bankruptcy. . . . In his Chapter 7 petition, Lee listed appellee Leland Christenson as a potential creditor because Christenson had filed a lawsuit against Lee in state court claiming that Lee had acquired money from Christenson by fraud. Christenson filed an adversary proceeding asking the bankruptcy court to enter a money judgment on his fraud claim and determine that Lee’s liability for the debt was nondischargeable under 11 U.S.C. § 523(a)(2)(A). . . . The bankruptcy court held a trial, found that Lee had defrauded Christenson, and entered a judgment stating that Lee owed Christenson $44,500 and that Lee’s liability for the debt was nondischargeable. . . . Lee moved to vacate the judgment under Fed. R. Civ. P. 60(b)(4). The bankruptcy court denied the motion and Lee appeals from that order. . . . Lee argues that the bankruptcy court lacked constitutional authority to grant Christenson’s request for a money judgment because the request did not involve the exercise of a public right. He admits that a bankruptcy court might have the authority to enter a money judgment in a case where there are assets to distribute to creditors but points out that this was a no-asset case. Thus, he argues that the entry of the money judgment had no impact on the bankruptcy proceedings. The fact that Lee failed to raise this argument prior to the entry of judgment is not dispositive because an objection to a bankruptcy court’s entry of final judgment in a core proceeding under Article III, § 1, is not waivable. . . . Rule 60(b)(4) . . . allows a court to grant a party relief from a judgment if it is ‘void.’ ‘[A] void judgment is one so affected by a fundamental infirmity that the infirmity may be raised even after the judgment becomes final. The list of such infirmities is exceedingly short; otherwise Rule 60(b)(4)’s exception to finality would swallow the rule.’ United Student Aid Funds, Inc. v. Espinosa, 559 U.S. 260, 270 (2010). The error committed by the court must be egregious and involve a clear usurpation of judicial power. . . . Therefore, I must decide whether the bankruptcy court committed an egregious error when it entered judgment on Christenson’s fraud claim such that the judgment should be vacated under Rule 60(b)(4). . . . Lee[] . . . [argues] that the bankruptcy court lacked constitutional authority to enter judgment on Christenson’s claim. . . . As support for this 87

argument, he relies on Stern v. Marshall, 131 S. Ct. 2594 (2011), which was decided after the conclusion of the adversary proceeding. . . . Prior to Stern, the Seventh Circuit held that it was appropriate for a bankruptcy court to enter judgment on a creditor’s state law claim when determining the dischargeability of a debt . . . and Stern did not clearly overrule this precedent. Its holding was a ‘narrow one’ that only addressed a bankruptcy court’s authority to rule on certain counterclaims. It did not consider whether a bankruptcy court has the authority to review a creditor’s claim for a money judgment in a dischargeability proceeding—a claim which is more closely related to a bankruptcy proceeding than the counterclaim was in Stern. Thus, I conclude that there was an arguable basis for the bankruptcy court’s assertion of authority over Christenson’s claim. Even if the bankruptcy court committed an error, it was not so egregious that it justifies vacating the judgment.”). Jacobsen v. Sramek, 2013 WL 694045 (E.D. Tex. Feb. 26, 2013) (Clark, J,) (“A bankruptcy court has jurisdiction [in a nondischargeability action] to liquidate a debt and enter a monetary judgment against the debtor. [In re] Morrison, 555 F.3d [473,] 479 [(5th Cir. 2009)]. The United State Supreme Court’s holding in Stern v. Marshall, does not affect that holding.”). Van-Voegler v. Myrtle (In re Myrtle), 500 B.R. 441 (Bankr. W.D. Va. 2013) (Connelly, J.) (“In addition to the issue of dischargeability, Plaintiffs’ complaint asks this Court to resolve the underlying question of liability, liquidate damages, and award punitive damages and attorney’s fees. At the hearing on Defendants’ motion for summary judgment, the Court requested that the parties submit case law on the issue of whether the Court has the authority to determine liability, liquidate Plaintiffs’ claim, and award punitive damages, in light of the United States Supreme Court’s ruling in Stern v. Marshall . . . . After review of the materials submitted by the parties and the case law of our sister courts, this Court concludes that it has authority to adjudicate these integral and necessary issues associated with the Plaintiffs’ nondischargeability action. The Court concludes it has constitutional authority to issue a final ruling in this matter, even though liability on the non-bankruptcy law cause of action has not been determined.”). Countrywide Home Loans, Inc. v. Cowin (In re Cowin), 492 B.R. 858 (Bankr. S.D. Tex. 2013) (Bohm, J.) (“In Stern, the Debtor filed a counterclaim based solely on state law, and the resolution of this counterclaim did not resolve the validity, or invalidity, of the claim held by the defendant. Here, the matters before the Court are not counterclaims by the Debtor or the estate brought pursuant to state law, but rather are three adversary proceedings brought to determine the nondischargeability of debts pursuant to 11 U.S.C. § 523(a)—an express provision of the Bankruptcy Code. ‘Determining the scope of the debtor’s discharge is a fundamental part of the bankruptcy process[,]’ and was unchanged by the decision in Stern. Farooqi v. Carroll (In re Carroll), 464 B.R. 293, 312 (Bankr. N.D. Tex. 2011). . . . The instant disputes also require the Court to determine the existence of debts under state law in order to assess whether these debts are dischargeable. However, whereas Stern dealt with issues of solely state law where the determination of the debtor’s counterclaim was not necessary to decide whether the defendant had a valid claim, here, the determination of the Plaintiffs’ claims is necessary in order for this Court to determine whether those claims are dischargeable. As the Supreme Court discussed in Stern, a right closely integrated into a public regulatory scheme falls within the ‘public rights exception,’ and may be adjudicated by a non-Article III tribunal. Stern, 131 S. Ct. 2594; Thomas v. Union Carbide Agricultural Products Co., 473 U.S. 88

568, 593–94, 105 S. Ct. 3325, 87 L. Ed. 2d 409 (1985). Here, liquidating the Plaintiffs’ state law claims against the Debtor is ‘closely integrated’ into the Bankruptcy Code because it must first be established that the Plaintiffs have claims against the Debtor in order for this Court to determine whether those claims are dischargeable in the Debtor’s bankruptcy case. In re Carroll, 464 B.R. at 312.”). S&S Food Corp. v. Sherali (In re Sherali), 490 B.R. 104 (Bankr. N.D. Tex. 2013) (Houser, J.) (“Before the Court is the Complaint to Determine Debt Owed to Plaintiff and to Determine Dischargeability of Debts Owed to Plaintiff filed by the Plaintiff . . . against the [D]ebtor . . . . [T]here can be little doubt that this Court, as an Article I tribunal, has the Constitutional authority to hear and finally determine what claims are non-dischargeable in a bankruptcy case. . . . So, the question becomes, does the analysis of Constitutional authority change if the bankruptcy court must first liquidate the claim? For the reasons explained below, this Court concludes it does not . . . . [A] right closely integrated into a public regulatory scheme may be resolved by a non-Article III tribunal. This is the so-called ‘public rights exception’ discussed by the Supreme Court in Stern. There is no question that liquidating [Plaintiff’s] state law claims against [the Debtor] is ‘closely integrated’ into the Bankruptcy Code. . . . [T]he Fifth Circuit has already determined that this Court has the authority to enter a judgment on an unliquidated claim when determining the dischargeability of that debt in a bankruptcy case. In re Morrison, 555 F.3d 473, 478–79 (5th Cir. 2009), the Fifth Circuit held that a bankruptcy court has the authority to liquidate a state law claim and enter a monetary judgment against a debtor when deciding if that claim or judgment is nondischargeable in a debtor’s bankruptcy case. In deciding this question, the Fifth Circuit followed several other circuit courts that had concluded that bankruptcy courts had the power to enter a judgment in exactly this manner. . . . [T]he court [is] . . . compelled to follow existing Fifth Circuit precedent as set out in Morrison . . . as this court cannot ignore (much less “overrule”) existing binding circuit precedent, even if that precedent is thought to be inconsistent with a later decision by the Supreme Court. Only the circuit itself can overrule its own precedents. . . . [U]ntil the Fifth Circuit overrules Morrison, this Court will rely upon Morrison for its authority to liquidate [Plaintiff’s] state law claims against [the Debtor] and enter a judgment on such claims. . . . Finally, other courts have come to the same conclusion, i.e., that Stern does not hold, directly or indirectly, that an Article I tribunal is without the Constitutional authority to liquidate a creditor’s claim against a debtor through entry of a final dollar judgment and then determine whether that judgment is dischargeable in the debtor’s bankruptcy case. . . . For all of these reasons, this Court concludes that it has the Constitutional authority to (i) liquidate [Plaintiff’s] state law claims against [the Debtor] through the entry of a money judgment following trial, and (ii) determine whether that judgment is nondischargeable in [Debtor’s] chapter 7 bankruptcy case.”). Johnson v. Weihert (In re Weihert), 489 B.R. 558 (Bankr. W.D. Wis. 2013) (Martin, J.) (“This unusual case asks a bankruptcy court to determine whether an assault (possibly a sexual assault or rape) and a wrongful death (possibly a murder) were the willful and intentional acts of the debtor, and, whether claims arising from the injuries are dischargeable in the debtor’s bankruptcy. Because no liability for the alleged acts has yet been determined and no damages assessed, this opinion and the decision it explains is to some degree advisory. This court lacks the jurisdiction, or at least the power and authority, to quantify any obligation arising from the debtor’s acts. Those claims are determinations of state law alone. However, a determination that those claims are dischargeable 89

would render any further pursuit of the claims a violation of the injunction under 11 U.S.C. § 524. . . . Even if the debt had been held non-dischargeable, this Court still would not have been able to enter a money judgment. Determination of liability and damages would no longer have been for purposes of distribution in the bankruptcy case, but under the reasoning of Stern v. Marshall, this Court lacks the constitutional authority to enter a money judgment for non-dischargeable debt. . . . As bankruptcy scholar Douglas Baird explains in his article, Blue Collar Constitutional Law, the Supreme Court in Stern ‘distinguishes between administering the bankruptcy estate on the one hand and engaging in actions that are the province of a common law judge on the other.’ Douglas G. Baird, Blue Collar Constitutional Law, 86 Am. Bankr. L.J. 3, 4–5 (2012). Liquidating a non-dischargeable debt is not necessary to administer the bankruptcy estate, and dischargeability can be determined independent of liquidation.”). Rutkowski v. Adas (In re Adas), 488 B.R. 358 (Bankr. N.D. Ill. 2013) (Hollis, J.) (“The court need not determine the exact amount of Rutkowski’s money judgment against Adas. . . . In our Circuit, the Matter of Hallahan panel wrote that ‘we think it preferable to allow bankruptcy courts ruling on the dischargeability of a debt to adjudicate the issues of liability and damages also.’ 936 F.2d 1496, 1508 (7th Cir. 1991). This ‘accords with the rule generally followed by courts of equity that having jurisdiction of the parties to controversies brought before them, they will decide all matters in dispute and decree complete relief.’ Id. (quotation omitted). . . . Although Hallahan tells us that bankruptcy courts may enter a money judgment in dischargeability suits, it was written long before the Supreme Court issued Stern v. Marshall . . . . Pursuant to Stern, even ‘where subject-matter jurisdiction indisputably exists, [we must ask] whether the bankruptcy court possesses the constitutional authority to enter final judgment.’ Nate Hull and Nicholas M. McGrath, Liquidating Nondischargeable Claims after Stern v. Marshall, 31 Am. Bankr. Inst. J. 38 (November 2012). . . .While this court is bound by the Seventh Circuit’s holding in Hallahan, that decision does not compel entry of a money judgment by the bankruptcy court—it only acknowledges that subject matter jurisdiction to do so exists. And although at least one of the bankruptcy judges in this district determined that ‘the authority to enter a final dollar judgment as part of the adjudication of nondischargeability, as recognized in Hallahan, was not impaired by Stern,’ In re Boricich, 464 B.R. 335, 337 (Bankr. N.D. Ill. 2011) (Schmetterer, J.), this court finds it more appropriate to refrain from entry of a money judgment and to restrict its final judgment in this proceeding to a finding of nondischargeability. Since this is a no asset case, the amount of any money judgment would have no effect on the estate or on a distribution to creditors. . . . In light of the constitutional questions that might arise—and which were not addressed by the parties although their briefs were written post-Stern—the court will not enter a money judgment in a fixed amount. Instead, the court finds that the debt owed by Adas to Rutkowski, in whatever amount may be determined in another forum, is a nondischargeable debt.”). Doyle v. Howie–Cox (In re Howie–Cox), 2014 WL 2957133 (Bankr. E.D. Mich. June 30, 2014) (Tucker, J.) (“Because this case involves the dischargeability of alleged and disputed debts under § 523(a), this Court has constitutional authority to enter a final judgment determining the ‘validity and amount’ of such disputed debts, notwithstanding Stern v. Marshall, 564 U.S. ––––, 131 S. Ct. 2594 (2011). See Hart v. Southern Heritage Bank (In re Hart), –––– F. App’x ––––, 2014 WL 1663029 (6th Cir. Apr. 28, 2014) at *2 (citing Longo v. McClaren (In re McLaren), 3 F.3d 958, 965 (6th Cir. 1993)).”). 90

Boyle v. Berkenbile (In re Berkenbile), 2014 WL 797743 (Bankr. E.D. Tex. Feb. 27, 2014) (Parker, J.) (“The recognized authority of a bankruptcy court to enter a final judgment on an unliquidated claim when determining the dischargeability of that debt in a bankruptcy case was not impaired by the decision in Stern v. Marshall. . . . Farooqi v. Carroll (In re Carroll), 464 B.R. 293, 312–313 (Bankr. N.D. Tex. 2011); Dragisic v. Boricich (In re Boricich), 464 B.R. 335, 337 (Bankr. N.D. Ill. 2011). . . . Even if Stern had arguably impacted that authority [which it did not], ‘the court would be compelled to follow existing Fifth Circuit precedent as set out in Morrison . . . as this court cannot ignore (much less “overrule”) existing binding circuit precedent, even if that precedent is thought to be inconsistent with a later decision by the Supreme Court. Only the circuit itself can overrule its own precedents.’ Christian v. Kim (In re Soo Bin Kim), 2011 WL 2708985, at *2 n.2 (Bankr. W.D. Tex. July 11, 2011), as cited in Carroll, 464 B.R. at 313 and Dietz v. Ford (In re Deitz), 469 B.R. 11, 21 (B.A.P. 9th Cir. 2012).”). Pac. Addax Co. v. Lau (In re Lau), 2013 WL 5935616 (Bankr. E.D. Tex. Nov. 4, 2013) (Parker, J.) (“This Court has the authority to enter a final judgment on an unliquidated claim when determining the dischargeability of that debt in a bankruptcy case. Morrison v. Western Builders (In re Morrison), 555 F.3d 473, 478–79 (5th Cir. 2009). . . . Such authority recognized in the Fifth Circuit is consistent with decisions of sister courts of appeal. See, e.g., Cowen v. Kennedy (In re Kennedy), 108 F.3d 1015, 1017–18 (9th Cir. 1997); Longo v. McLaren (In re McLaren), 3 F.3d 958, 965–66 (6th Cir. 1993); Abramowitz v. Palmer, 999 F.2d 1274 (8th Cir. 1993); N.I.S. Corp. v. Hallahan (In re Hallahan), 936 F.2d 1496, 1508 (7th Cir. 1991). . . . The recognized authority of a bankruptcy court to enter a final judgment on an unliquidated claim when determining the dischargeability of that debt in a bankruptcy case was not impaired by the decision in Stern v. Marshall. Farooqi v. Carroll (In re Carroll), 464 B.R. 293, 312–313 (Bankr .N.D. Tex. 2011); Dragisic v. Boricich (In re Boricich), 464 B.R. 335, 337 (Bankr. N.D. Ill. 2011). . . . Even if Stern had arguably impacted that authority (which it did not), ‘the court would be compelled to follow existing Fifth Circuit precedent as set out in Morrison . . . as this court cannot ignore (much less “overrule”) existing binding circuit precedent, even if that precedent is thought to be inconsistent with a later decision by the Supreme Court. Only the circuit itself can overrule its own precedents.’ Christian v. Kim (In re Soo Bin Kim), 2011 WL 2708985, at *2 n.2 (Bankr. W.D. Tex. July 11, 2011), as cited in Carroll, 464 B.R. at 313 and Dietz v. Ford (In re Deitz), 469 B.R. 11, 21 (B.A.P. 9th Cir. 2012).”). Stuart C. Irby Co. v. Brown (In re Brown), 2013 WL 3353829 (Bankr. N.D. Okla. July 3, 2013) (Rasure, J.) (“[Relying on Stern v. Marshall, the Defendant/Debtor] contends that the Court lacks jurisdiction to enter a money judgment in favor of [Plaintiff] in the event the Court concludes that the debt is not discharged. The Tenth Circuit Court of Appeals has specifically held that bankruptcy courts possess jurisdiction to enter money judgments against debtors in adjudicating creditors’ nondischargeability claims. See Johnson v. Riebesell (In re Riebesell), 586 F.3d 782, 792–95 (10th Cir. 2009). Stern, which addressed jurisdiction over a debtor’s common law action against a creditor that was unrelated to the creditor’s claim, did not overtly or covertly overrule Riebesell. Following Riebesell, the Court concludes that it has jurisdiction to determine and enter judgment on all issues related to Irby’s § 523(a)(2) and (a)(4) claims, including the validity and amount of the debt, as well as dischargeability.”).

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Panos & Assocs., LLC v. Mitchell (In re Mitchell), 2013 WL 2422694 (Bankr. N.D. Ill. June 4, 2013) (Hollis, J.) (“While the court holds that [the debtor’s] debt to Panos is nondischargeable pursuant to § 523(a)(15), the court will not enter a money judgment. See Rutkowski v. Adas (In re Adas), 488 B.R. 358, 380 (Bankr. N.D. Ill. 2013). Whether this court has subject matter jurisdiction to liquidate a nondischargeable claim and enter a final money judgment is a question that splits the Circuits. See In re Cambio, 353 B.R. 30, 32–34 (B.A.P. 1st Cir. 2004) (discussing the split in authority). The court acknowledges that in 1991, the Seventh Circuit determined that bankruptcy courts may enter a money judgment in dischargeability suits. Matter of Hallahan, 936 F.2d 1496 (7th Cir. 1991). But Hallahan was written prior to the Supreme Court’s decision in Stern v. Marshall, which found that under certain circumstances, a bankruptcy court lacks constitutional authority to enter a final judgment even where subject matter jurisdiction exists. . . . Although this is an asset case and thus Panos’ claim may affect the distribution to creditors, it is appropriate to refrain from entry of a money judgment in a fixed amount in light of the uncertainty surrounding Stern’s effect. Rather, the court will restrict its final judgment in this proceeding to a finding of nondischargeability.”). Smyrna Childcare Ctrs., LLC v. Melton (In re Melton), 2013 WL 2383657 (Bankr. N.D. Ga. May 20, 2013) (Hagenau, J.) (“[Defendant/Debtor] argued at the pre-trial conference that, in light of the Supreme Court decision of Stern v. Marshall, this Court lacks constitutional authority to enter a final judgment [in this nondischargeability action] on the underlying claim of [the Plaintiff/Creditor]. . . . Since Stern was decided, multiple courts have addressed the extent of a Bankruptcy Court’s constitutional authority to enter a final judgment on a non-dischargeability complaint. Not surprisingly, the opinions have varied. Compare Pearson Educ., Inc. v. Almgren, 685 F.3d 691 (8th Cir. 2012) (authority when liquidation necessary part of claims allowance process); Deitz v. Ford (In re Deitz), 469 B.R. 11 (B.A.P. 9th Cir. 2012) (authority in light of binding pre-Stern Ninth Circuit precedent holding a bankruptcy court may liquidate claim in dischargeability proceeding); with In re Aslansan, 2013 WL 1458855 (Bankr. E.D. Pa. [Apr. 10, 2013]) (court has authority to determine dischargeability of claim but no authority to issue judgment on claim). . . . This action is a dispute over the scope of the Debtor’s discharge, a right established by the Bankruptcy Code. Section 727(b) discharges a debtor from ‘all debts that arose before the date of the order for relief” subject to the provisions of Section 523. Receiving a discharge is integral to the bankruptcy scheme, is unique to bankruptcy law, and is a core matter under 28 U.S.C. § 157(b)(2)(I). No court has held that the Bankruptcy Court has no constitutional authority to make final determinations of dischargeability. ‘When a bankruptcy court determines the extent of a creditor’s non-dischargeable claim, the court simply decides that a particular creditor is entitled to something more than the creditor would otherwise get out of the bankruptcy bargain.’ In re Laughlin, 2012 WL 1014754, at *8 (Bankr. S.D. Tex. Mar. 23, 2012). But in order for this Court to decide whether Plaintiff’s claims are non-dischargeable, the Court must first ascertain the claim. Plaintiff alleges the claim is non-dischargeable under Section 523(a)(2), (4) and/or (6). . . . Before the Court can determine if a debt is non-dischargeable, it must determine the debt because only then can it determine if it was ‘for’ fraud, willful and malicious injury and the like. Dischargeability and validity and amount of the claim are intertwined.”).

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Kelly v. Young-Soo Che (In re Young-Soo Che), 2013 WL 2109438 (Bankr. N.D. Ill. May 15, 2013) (Hollis, J.) (“Subject matter jurisdiction to decide a dischargeability dispute lies unquestionably with this court. Whether this court has subject matter jurisdiction to liquidate a nondischargeable claim and enter a final money judgment, however, is a question that splits the Circuits. See In re Cambio, 353 B.R. 30, 33–34 (B.A.P. 1st Cir. 2004) (“[T]he only effect of the money judgment against this [no-asset] debtor would be to enhance Mattera’s future ability to collect the debt from Cambio’s post-bankruptcy income and assets, with no effect at all on property of the bankruptcy estate or creditors’ claims against the estate”). Compare Cowen v. Kennedy, 108 F.3d 1015 (9th Cir. 1997). . . . In our Circuit, the Matter of Hallahan panel wrote that ‘we think it preferable to allow bankruptcy courts ruling on the dischargeability of a debt to adjudicate the issues of liability and damages also.’ 936 F.2d 1496, 1508 (7th Cir. 1991) (citations omitted). This ‘accords with the rule generally followed by courts of equity that having jurisdiction of the parties to controversies brought before them, they will decide all matters in dispute and decree complete relief.’ Id. (quotation omitted). . . . Although Hallahan tells us that bankruptcy courts may enter a money judgment in dischargeability suits, it was written long before the Supreme Court issued Stern v. Marshall . . . . Pursuant to Stern, even ‘where subject matter jurisdiction indisputably exists, [we must ask] whether the bankruptcy court possesses the constitutional authority to enter final judgment.’ Nate Hull and Nicholas M. McGrath, Liquidating Nondischargeable Claims after Stern v. Marshall, 31 Am. Bankr. Inst. J. 38 (November 2012). . . . While the court’s language in Hallahan certainly was a reasonable statement in . . . 1991, recent Supreme Court treatment of this subject has cast a much dimmer light on the power of non-Article III courts to render money judgments in dischargeability litigation. . . . In re Antonelli, 2011 WL 5509494, *1 (Bankr. D.R.I. Nov.10, 2011) (footnote omitted). The Antonelli court followed the relevant precedent in its Circuit (Cambio) in determining that it did not have the power to issue a writ of execution in a dispute where the outcome would have no effect on the bankruptcy estate. . . . While this court is bound by the Seventh Circuit’s holding in Hallahan, that decision does not compel entry of a money judgment by the bankruptcy court—it only acknowledges that subject matter jurisdiction to do so exists. And although at least one of the bankruptcy judges in this district determined that ‘the authority to enter a final dollar judgment as part of the adjudication of nondischargeability, as recognized in Hallahan, was not impaired by Stern,’ In re Boricich, 464 B.R. 335, 337 (Bankr. N.D. Ill. 2011) (Schmetterer, J.), this court finds it more appropriate to refrain from entry of a money judgment and to restrict its final judgment in this proceeding to a finding of nondischargeability. Since the underlying bankruptcy is a no asset case, the amount of any money judgment would have no effect on the estate or on a distribution to creditors. See also In re Deitz, 469 B.R. 11 (B.A.P. 9th Cir. 2012) (Markell, J., concurring) (raising multiple concerns about the subject matter jurisdiction and constitutional power of a bankruptcy court to enter an enforceable money judgment, but acknowledging that binding precedent in the Ninth Circuit can only be reconsidered by the Circuit itself). . . . Moreover, Hallahan reasoned that bankruptcy courts may rely on their genesis as courts of equity when deciding questions of law. Subsequently, however, a recent Seventh Circuit panel discouraged such reliance. Sunbeam Products, Inc. v. Chicago American Mfg., LLC, 686 F.3d 372, 375–76 (7th Cir.) (“There are hundreds of bankruptcy judges, who have many different ideas about what is equitable in any given situation. . . . Rights depend, however, on what the Code provides rather than on notions of equity.”), cert. denied, ––– U.S. ––––, 133 S. Ct. 790, 184 L. Ed. 2d 596 (2012). In light of the constitutional questions that might arise, the court will not enter a money judgment in a fixed amount. Instead, the court finds that the debt owed by Che to Denielle, in 93

whatever amount may be determined in another forum, is a nondischargeable debt. See Rutkowski v. Adas, 488 B.R. 358, 379–80 (Bankr. N.D. Ill.2013).”). Patout v. Smith (In re Smith), 2013 WL 1309426 (Bankr. W.D. La. Mar. 28, 2013) (Summerhays, J.) (“This adversary proceeding involves the complaint filed by [the plaintiff] seeking a determination of dischargeability of the debt owed to [the plaintiff by the debtor]. . . . [T]he court may enter final orders on the claims and defenses asserted in this case under Stern v. Marshall . . . since this case involves the determination of dischargeability under the Bankruptcy Code. . . . [T]he court finds that [the debtor] should have paid a total of $189,228.13 to [the plaintiff]. The court will therefore enter judgment in favor of [plaintiff] in that amount, with said debt being found to be non-dischargeable.”). Prime Alliance Bank, Inc. v. Berg (In re Berg), 2013 WL 1316685 (Bankr. D. Utah Mar. 26, 2013) (Mosier, J.) (Concluding that it had the constitutional authority to enter a final judgment in a § 523(a)(2)(A) nondischargeability action, the court stated: “Stern v. Marshall does not prohibit a bankruptcy court from entering a final judgment resolving issues under the bankruptcy code which would be completely resolved in the bankruptcy process . . . .” In addition to determining the dischargeability of the debt in question, the court also found that it had the constitutional authority to liquidate the plaintiff’s state law claim and enter a money judgment in favor of the plaintiff.).

J.

OBJECTIONS TO DISCHARGES: 28 U.S.C. § 157(b)(2)(J)

Wellness Int’l Network, Ltd. v. Sharif, 727 F.3d 751 (7th Cir. 2013) (Flaum, J.; Sykes, J.; Tinder, J.) (“The first four counts of the complaint sought to prevent discharge of Sharif’s debts. These claims stem from federal law, not state law, as the provisions of 11 U.S.C. § 727 provide the relevant rules of decision. Moreover, whether to grant or deny discharge is central to the restructuring of the debtor-creditor relationship. Although it is debatable whether such restructuring falls under the rubric of public rights, see Stern, 131 S. Ct. at 2614 n.7; Granfinanciera, 492 U.S. at 56 n.11, 109 S. Ct. 2782; but cf. N. Pipeline, 458 U.S. at 71, 102 S. Ct. 2858 (plurality opinion) (“[T]he restructuring of debtor-creditor relations, which is at the core of the federal bankruptcy power, must be distinguished from the adjudication of state-created private rights, such as the right to recover contract damages. . . . The former may well be a ‘public right,’ but the latter obviously is not.”), it is clear that WIN’s objections to discharge differ markedly from the state-law claims at issue in Stern, Granfinanciera, Northern Pipeline, and Ortiz. The Supreme Court has not come close to holding that an Article III judge must decide claims for which the Bankruptcy Code itself provides the rule of decision, and we will not do so here, where the parties concede that the bankruptcy judge had authority.”). Jenkins v. Ward (In re Jenkins), 507 B.R. 856 (W.D.N.C. 2014) (Conrad, J.) (“This matter relates to an objection to discharge and is a core proceeding under 28 U.S.C. § 157(b)(2)(J). Additionally, the action both stems from the bankruptcy itself and would be necessarily resolved in the claims allowance process. Accordingly, the Bankruptcy Court possessed the constitutional authority to

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enter a final judgment, and this matter is properly regarded as an appeal of the bankruptcy court’s decision. See Stern v. Marshall, 131 S. Ct. 2594 (2011).”). Sears v. Sears, 2014 WL 905656 (D. Neb. Mar. 7, 2014) (Gerrard, J.) (“The plaintiffs, who are creditors of the defendant in his Chapter 11 bankruptcy proceeding, allege that he failed to disclose his interest in certain property that he had supposedly transferred but actually had retained. According to the plaintiffs, the defendant’s actions warrant denial of a discharge pursuant to several subsections of 11 U.S.C. § 727(a). The defendant claims that this Court should withdraw the reference of the adversary proceeding to [the] bankruptcy court pursuant to 28 U.S.C. § 157(d). . . . The defendant primarily argues, relying on Stern v. Marshall, 131 S. Ct. 2594 (2011) and Granfinanciera, S.A. v. Nordberg, 492 U.S. 33 (1989), that the bankruptcy court lacks jurisdiction to determine whether the defendant fraudulently transferred property. In a related argument, the defendant contends that he has a right to a jury trial on such a claim. . . . But as the bankruptcy court has repeatedly tried to explain to the defendant, this is not a fraudulent transfer claim. The defendant filed for bankruptcy, seeking to have his debts discharged, and the plaintiffs filed a complaint with the bankruptcy court alleging that the defendant’s debts should not be discharged. In other words, it was the defendant who filed a bankruptcy petition seeking relief from the bankruptcy court under the Bankruptcy Code, and the bankruptcy court obviously has jurisdiction to decide whether or not to grant such relief. See In re Anthony, 481 B.R. 602, 614 (D. Neb. 2012). ‘The bankruptcy court exists to decide issues arising under the Bankruptcy Code, and because the existence of the remedy depends upon Congress’ exercise of authority, Congress can limit the extent to which a judicial forum is available.’ Id. (citing Stern, 131 S. Ct. at 2612). . . . It is, simply put, absurd to contend that the bankruptcy court lacks jurisdiction to decide whether a debt may be discharged in bankruptcy. The defendant contends that the plaintiffs’ nondischargeability argument is ‘inextricably intertwined with’ and ‘virtually the same as fraudulent transfer claims.’ But ‘virtually the same’ is not the same, and the bottom line is that it is the defendant who has asked for relief from the bankruptcy court. He cannot do that and then deny the bankruptcy court’s jurisdiction to decide whether he is entitled to it.”). Dilbay v. Demir (In re Demir), 500 B.R. 913 (Bankr. N.D. Ill. 2013) (Schmetterer, J.) (“An objection to discharge ‘stems from the bankruptcy itself,’ and may constitutionally be decided by a bankruptcy judge.”). Bankers Healthcare Grp., Inc. v. Bilfield (In re Bilfield), 493 B.R. 748 (Bankr. N.D. Ohio 2013) (Morgenstern-Clarren, J.) (“The complaint states five claims for relief including requests to deny the debtors discharges under 11 U.S.C. § 727(a)(2), (a)(4)(A) and (a)(5) and claims to determine nondischargeability of debt under 11 U.S.C. § 523(a)(2)(B) and (a)(6). . . . This is a . . . proceeding . . . within the court’s constitutional authority as analyzed by the United States Supreme Court in Stern v. Marshall . . . .”). Plitt Int’l, LCC v. Heckler (In re Heckler), 2014 WL 1491325 (Bankr. W.D. Tex. Apr. 15, 2014) (Davis, J.) (“In this case, the Court must determine whether the debtors must be denied a discharge of prebankruptcy debts because less than a year before filing for bankruptcy they transferred some of their assets in order to ‘hinder, delay, or defraud’ their creditors. . . . In their complaint, the plaintiffs sought relief under §§ 727(a)(2)(A), 523(a)(4), and 523(a)(6) of the Bankruptcy Code. In 95

their post-trial brief, they added a claim for non-dischargeability under § 727(a)(4)(A). . . . The Court has constitutional authority to enter a final judgment because this non-dischargeability action was not ‘the stuff of traditional actions at common law tried by the courts at Westminster in 1789,’ Stern v. Marshall, 131 S. Ct. 2594, 2609 (2011) (quoting Northern Pipeline Constr. Co. v. Marathon Pipe Line Co., 458 U.S. 50, 90, 102 S. Ct. 2858, 73 L. Ed. 2d 598 (1982)), and the causes of action under dispute ‘flow from a federal statutory scheme,’ Stern, 131 S. Ct. at 2614.”). Sears v. Sears (In re Sears), 2014 WL 689883 (Bankr. D. Neb. Feb. 21, 2014) (Saladino, J.) (“The issue in the underlying adversary proceeding is simply whether Defendant is entitled to a discharge under the United States Bankruptcy Code. Such [an] issue[] [is] vital to the bankruptcy process and the adjustment of the debtor-creditor relationship. Clearly, th[is] [is] [an] issue[] that arise[s] under Title 11 and [is] within the bankruptcy court’s constitutional authority under even a strained reading of Stern v. Marshall . . . .”).

K.

DETERMINATIONS OF THE VALIDITY, EXTENT OR PRIORITY OF LIENS: 28 U.S.C. § 157(b)(2)(K)

First Nat’l Bank v. Crescent Elec. Supply Co. (In re Renaissance Hosp. Grand Prairie Inc.), 713 F.3d 285 (5th Cir. 2013) (Stewart, J.; Davis, J.; Clement, J.) (“In light of the U.S. Supreme Court’s decision in Stern v. Marshall . . . the parties dispute whether the district court should have applied de novo or clear error review to the bankruptcy court’s lien inception date findings. The Lenders correctly note that Stern invalidated 28 U.S.C. § 157(b)(2)(C) (“Core proceedings include, but are not limited to . . . counterclaims by the estate against persons filing claims against the estate”), at least with respect to ‘state law counterclaim[s] that [are] not resolved in the process of ruling on a creditor’s proof of claim.’ 131 S. Ct. at 2620. Despite Stern’s express instruction that its holding applied only ‘in one isolated respect,’ the Lenders argue that the logic of Stern would apply equally to Section 157(b)(2)(K) (. . . determinations of the validity, extent, or priority of liens). . . . Were we to adopt the Lenders’ reading of Stern, the appropriate standard of review for the bankruptcy court’s factual findings, as to the respective dates IPS and MPES first supplied materials or labor, would be de novo rather than clear error. The Lenders’ reading, however, is highly implausible. While Stern’s ‘in one isolated respect’ language may understate the totality of the encroachment upon the Judicial Branch posed by Section 157(b)(2), which enumerates a list of ‘core proceedings,’ the determination of the priority of liens is not likely such an encroachment.”). GMAC Mortg., LLC v. Orcutt, 506 B.R. 52 (D. Vt. 2014) (Reiss, J.) (“GMAC Mortgage, LLC (“GMAC”) [appeals] from two Orders of the United States Bankruptcy Court for the District of Vermont. GMAC appeals the Bankruptcy Court’s [order] overruling GMAC’s objections to, and confirming, the Chapter 13 Plan submitted by David Orcutt and Hollie Stevens (“Debtors”), which treated GMAC as an unsecured creditor. GMAC also appeals the Bankruptcy Court’s [order] granting Debtors’ motion for summary judgment, denying GMAC’s cross-motion for summary judgment, and ruling that the mortgage Ms. Stevens executed and delivered to GMAC in 2007 (the “2007 Mortgage”) is inoperative under Vermont law. . . . GMAC challenges whether . . . the Bankruptcy Court has the statutory and constitutional authority to enter a final judgment declaring 96

the 2007 Mortgage inoperative as a matter of state law. . . . In initially ruling on the validity of the 2007 Mortgage, the Bankruptcy Court rendered a declaratory judgment under Vermont law. It did not cite any provision of the Bankruptcy Code which authorized the declaratory judgment and did not address the implications of Stern v. Marshall in its decision. . . . The court concluded that ‘the Bankruptcy Court lacked the constitutional authority to adjudicate Debtors’ [A]dversary [P]roceeding solely as a matter of state law,’ but observed that the Bankruptcy Court may possess the statutory and constitutional authority to determine the validity of the 2007 Mortgage as part of its claims allowance process, or as an integral part of another proceeding under the Bankruptcy Code. The court therefore remanded the proceeding so that the Bankruptcy Court could ‘clarify the statutory and constitutional basis under which it is proceeding and adjudicate the issues raised by the parties consistent with that statutory and constitutional authority.’ . . . [On remand], [t]he Bankruptcy Court concluded that it had the statutory and constitutional authority to adjudicate the validity of the 2007 Mortgage: ‘In order to clarify this Court’s previous ruling and more clearly tether the determination of the validity of the [2007 Mortgage] to provisions of the Bankruptcy Code, the Court points to the necessary connection between the declaration that the [2007 Mortgage] is inoperative under state law and the determination of the bankruptcy issues pending in [Debtors’] Chapter 13 case. Under Stern and its progeny—and consistent with the District Court’s remand order—the relationship between this Court’s determination of the [2007 Mortgage] validity and the pending rulings on [GMAC’s] objection to [Plan] confirmation under § 1325, allowance of [GMAC’s] claim under § 506(a), and the propriety of [Debtors’] homestead exemption under § 522(b)(1) and 27 V.S.A. § 101 confer constitutional and statutory authority upon this Court to enter a final judgment in this [A]dversary [P]roceeding.’. . . This Court is adjudicating the validity of the [2007 Mortgage]—a question of state law—because it is the necessary first step in, and tantamount to, a ruling on: 1) the secured status of [GMAC’s] claim in this case under § 506(a) of the Bankruptcy Code; 2) treatment of [GMAC’s] claim in the [Plan] and objection to the [Plan] under § 1325 of the Bankruptcy Code; and 3) [GMAC’s] objection to [Debtors’] claim of homestead exemption under § 522(b) of the Bankruptcy Code. . . . GMAC argues that the Bankruptcy Court violated this court’s mandate because it did not actually re-open any bankruptcy court proceedings; it merely identified provisions of the Bankruptcy Code under which it could have proceeded and then once again adjudicated the validity of the 2007 Mortgage as an issue governed exclusively by state law. Although at first blush GMAC’s characterization of the Bankruptcy Court’s decision on remand has some credence, the Bankruptcy Court’s determination that it was required to determine the validity of the 2007 Mortgage in allowing or disallowing GMAC’s proof of claim, in ruling on GMAC’s objection to Debtors’ homestead exemption, and in confirming Debtors’ plan remains correct. Accordingly, this court must determine whether the manner in which the Bankruptcy Court proceeded on remand comported with Stern v. Marshall or whether the Bankruptcy Court’s decisions exceed its jurisdiction. . . . Post-Stern, in order to determine the limits of a bankruptcy court’s constitutional authority to adjudicate state law issues, the circuit courts have focused on whether the state law issue is necessarily resolved during the bankruptcy proceedings. . . . Under Stern, the Bankruptcy Court’s constitutional authority includes the confirmation of Debtors’ Plan as that Plan ‘stems from the bankruptcy itself’ and does not exist outside of it. Stern, 131 S. Ct. at 2618. Moreover, ‘[n]on-Article III judges may hear cases . . . when the claim becomes “integral to the restructuring of the debtor-creditor relationship,”’ as was the case here given GMAC’s insistence upon secured creditor status under the Plan. In re Ortiz, 665 F.3d at 914 (quoting Stern, 131 S. Ct. at 2617); see also Wellness Int’l Network, Ltd. v. Sharif, 727 F.3d 751, 773 (7th Cir. 2013) 97

(examining whether the state law issue raised in determining whether to grant or deny discharge was “central to the restructuring of the debtor-creditor relationship”). The Bankruptcy Court’s decision to decide that issue under state law does not undercut its constitutional authority because ‘in Stern the state-law basis of [the] counterclaim was not the dispositive factor; instead, the [Supreme] Court focused on whether the claim was central to the bankruptcy process.’ In re BP RE, L.P., 735 F.3d 279, 286 (5th Cir. 2013). . . . Moreover, post-Stern, several courts have concluded that a bankruptcy court possesses statutory and constitutional authority when a particular state law issue necessarily would have been resolved in a bankruptcy proceeding. . . . Consistent with Stern, the issue of whether the 2007 Mortgage was a valid lien and provided GMAC with secured creditor status would have been resolved in the claims allowance process. It was also an integral part of the Bankruptcy Court’s ruling on GMAC’s objections to Debtors’ homestead exemption and determining whether Debtors’ Plan properly treated GMAC as unsecured. Under Stern v. Marshall, the Bankruptcy Court thus had the statutory and constitutional authority to adjudicate the validity of the 2007 Mortgage as a necessary, integral, and indivisible part of the bankruptcy proceedings. The Bankruptcy Court’s determination of its statutory and constitutional authority to adjudicate the validity of the 2007 Mortgage is therefore [affirmed].”). Scotiabank de P.R. v. Perimetro Props., Inc. (In re Plaza Resort at Palmas, Inc.), 488 B.R. 50 (D.P.R. 2013) (Besosa, J.) (“Defendant Perimetro further argues that a recent Supreme Court decision, Stern v. Marshall, requires this Court to withdraw the reference from the bankruptcy court because there is an unanswered question of state law. . . . Unlike in Stern, where the cause of action for tortious interference could, and did, survive on its own outside of the bankruptcy process, the determination of priority of liens in this case is integral to the bankruptcy process. See Stern, 131 S. Ct. at 2617. Also unlike Stern, deciding this case will not result in the bankruptcy court determining issues that are related to, but not essential to resolving the bankruptcy. Thus, the Stern decision does not impact the Court’s decision on this withdrawal of reference.”). Lomberg & Del Vescovo, LLC v. Sash, 2014 WL 1292670 (D.N.J. Mar. 31, 2014) (Hayden, J.) (“Lomberg argues first, as it did below, that the bankruptcy court lacked jurisdiction to rule on ‘the applicability of’ the New Jersey attorney’s charging lien statute . . . pursuant to the Supreme Court’s decision in Stern v. Marshall. . . . In Stern, the Court held that a bankruptcy court exceeded its permissible jurisdiction under Article III when it entered a final judgment on a state law counterclaim that was not resolved in the process of ruling on a creditor’s proof of claim,’ despite Congress’s statutory grant of authority to do so. Pointing to the . . . language of [the New Jersey charging lien statute] and state-court decisions about the procedures for establishing an attorney’s charging lien, Lomberg contends that the bankruptcy court effectively usurped what was the exclusive domain of the state courts when it determined the viability of the lien. . . . The reliance on Stern is misplaced. Lomberg assumes that the bankruptcy court inserted itself into the process envisioned by [the statute], which requires (as discussed further below) an attorney to petition for a lien in the New Jersey state court and on the docket where the relevant action is pending. But the record clearly shows that Judge Winfield was determining the validity of the lien based on Lomberg’s statutory compliance prebankruptcy filing. Although the Superior Court may have been ‘uniquely qualified’ to determine the boundaries of the lien, it is not, as Lomberg claims, the ‘only legally authorized forum[] to determine the applicability of the attorney’s lien for services.’ To the contrary, federal courts often determine the status of a lien or other obligation, looking to state law 98

in making their decisions. Stern did not change this state of affairs, and it is otherwise inapplicable to the case at bar.”). Henderson v. Bank of Am. (In re Simmons), 510 B.R. 76 (Bankr. S.D. Miss. 2014) (Ellington, J.) (“On March 15, 2012, the Debtors filed a petition for relief under Chapter 7 of the United States Bankruptcy Code. . . . [T]he Debtors filed their Complaint to Determine Extent and Validity of Liens (Complaint) in this Court against Bank of America, N.A. (BOA). In their Complaint, the Debtors allege that because the Legal Description contained in the 2003 Deed of Trust is incorrect, BOA does not have a perfected security interest in the Property, and the 2003 Deed of Trust is avoidable pursuant to 11 U.S.C. §§ 544 and 545. . . . In [an] Amended Complaint, [filed by] the [Chapter 7] Trustee and Trustmark[,] [the recipient of a subsequent deed of trust,] [plaintiffs] allege [that] BOA does not have a perfected lien in the Property and that the 2003 Deed of Trust may be avoided pursuant to § 544 and § 545. Trustmark alleges that BOA’s 2003 Deed of Trust is unperfected, and therefore, the Trustmark Deed of Trust is the first lienholder on the Property. . . . Further, the Trustee and Trustmark allege that BOA’s attempt to perfect its security interest in the Property by filing the Lis Pendens constituted an avoidable preference pursuant to § 547(b). . . . While BOA has not raised a Stern challenge to this Court’s constitutional authority to enter a final judgment in the above-styled adversary proceeding, the Court will address the effect, if any, of Stern. . . . [I]n the case at bar, BOA has filed a proof of claim in the Debtors’ bankruptcy case alleging it holds a secured claim in the amount of $745,414.79. And while BOA’s state law claim for reformation of the 2003 Deed of Trust was filed in state court, BOA’s claims will ‘be resolved in the claims allowance process.’ [E]ven though BOA’s claim is based on state law, once the Debtors filed bankruptcy, the Bankruptcy Code governs the avoidance action under § 544 (strong-arm powers of trustee), § 545 (lien avoidance) or § 547 (avoidance of a preference). Accordingly, the Court has the constitutional authority to enter a final judgment.”). Johnson v. Woodlands Dev., LLC (In re Johnson), 506 B.R. 233 (Bankr. M.D. La. 2014) (Dodd, J.) (“Defendants Woodlands Development, L.L.C., Anthony Reginelli, Shawna Reginelli, Peter Steur and Lee Steur (collectively “Woodlands”) moved the court to dismiss or to abstain from considering the amended complaint filed by plaintiffs Soundra Temple Johnson (“Johnson”) and Johnson Property Group, L.L.C. (“JPG”), debtors in jointly-administered cases. Woodlands seeks the same result as to defendant Regions Bank’s (“Regions”) cross claim. . . . Plaintiffs sued Woodlands and Regions for a declaration that insurance proceeds now in the registry of the 24th Judicial District Court for Jefferson Parish, Louisiana, belong solely to JPG. . . . Regions counterclaimed against the plaintiffs and cross claimed against Woodlands demanding a ranking of competing [liens on] the insurance proceeds, and in a third party demand sought an order directing the clerk of the 24th Judicial District Court to pay Regions the insurance proceeds. . . . Because some of the claims of the amended complaint and the cross claim are based on state law, this dispute implicates issues framed by the United States Supreme Court’s decision in Stern v. Marshall concerning a bankruptcy court’s power to adjudicate state law claims. The Fifth Circuit recently explained that despite Stern’s insistence that its decision was narrow, the ruling was in fact ‘“grounded in principles that are broad in scope.’” In re BP RE, L.P., 735 F.3d 279, 289 (5th Cir. 2013), quoting Frazin v. Haynes & Boone, L.L.P., 732 F.3d 313, 319 (5th Cir. 2013). The BP RE court reasoned that if a bankruptcy court lacked constitutional authority to render a final judgment on a state law counterclaim not involved in ruling on a creditor’s claim (the issue in Stern), ‘it would also not have constitutional 99

authority over a state law claim . . .’ under similar circumstances. Id. at 290 (emphasis added). . . . In light of the record and the history of the parties’ disputes, to guard against the possibility that this court’s power to render a final judgment adjudicating any state law claims in the amended complaint or cross claim may be subject to later challenge, and to avoid the possibility of inefficient use of judicial time and the parties’ resources, the parties shall formally consent to the court’s rendering of a final judgment over all matters in this adversary proceeding or else move to withdraw the reference to this court from the United States District Court.”). Albracht v. Hamilton State Bank (In re Albracht), 505 B.R. 347 (Bankr. N.D. Ga. 2013) (Drake, J.) (The Chapter 11 debtor filed an adversary proceeding seeking a “seeking a determination by the Court as to the validity and extent of an allegedly secured lien attached to [an Individual Retirement Annuity purchased from MetLife Investors USA Insurance Company].” Citing Stern, the court determined that it “has the statutory and constitutional authority for hearing and determining this matter.”). Paloian v. LaSalle Bank Nat’l Ass’n (In re Doctors Hosp. of Hyde Park, Inc.), 504 B.R. 900 (Bankr. N.D. Ill. 2014) (Schmetterer, J.) (“The authority of a bankruptcy judge to rule on objections to a creditor’s proof of claim where necessary to determine the valid amount of the claim was clearly affirmed. See Stern v. Marshall, 131 S. Ct. 2594, 2616 (2011). Here, the adversary proceeding was filed in response to a court order directing that all objections to LaSalle’s claim consisting of counterclaims as defined in F.R. Bankr. P. 3007(b) and 700l(2) were to be re-pleaded as separate counts in an adversary proceeding. The Trustee complied with that Order and filed the above-captioned twenty-nine count adversary counterclaim Complaint challenging LaSalle’s Claim. This Motion to Alter or Amend concerns only Counts II, III and IV, and seeks [a] ruling that LaSalle’s lien does not extend to certain assets, and therefore it must necessarily be resolved in order to reach a ruling as to what if anything is actually due on LaSalle’s filed and pending proof of secured claim.”). Beskin v. Bank of N.Y. Mellon (In re Perrow), 498 B.R. 560 (Bankr. W.D. Va. 2013) (Connelly, J.) (“Herbert L. Beskin, Chapter 13 Trustee (the “Trustee”), and Michael and Brandy Perrow (the “Debtors”) (collectively, the “Plaintiffs”) filed a complaint against BAC Home Loan Servicing LP (the “Defendant”) and CTC Real Estate Services, Inc. (the “Third–Party Defendant”) (collectively, the “Defendants”). The Plaintiffs seek avoidance under 11 U.S.C. § 544(a)(3) of Defendant’s alleged interest in Debtors’ real property and disallowance of Defendant’s proof of claim under 11 U.S.C. 502. . . . The Complaint seeks to avoid Defendant’s unrecorded deed of trust under 11 U.S.C. § 544(a)(3) and asks that the Court [] disallow Defendant’s proof of claim as untimely. . . . The Defendants’ assert a counterclaim and a third party claim seeking six grounds of equitable relief, namely: declaratory judgment, equitable subrogation, specific performance, constructive trust, equitable lien, and relief under 11 U.S.C. § 105 (the “Counterclaim”). . . . Defendants’ Counterclaim asserts the equitable remedies alleged prevent the Plaintiffs from succeeding under 11 U.S.C. § 544(a). . . . The Defendants have requested summary judgment on multiple state law counterclaims. Some of these counterclaims do not stem from the bankruptcy itself, but ultimately impact the claim allowance process. The Counterclaim lists several equitable remedies, all of which allegedly allow the Defendant to claim an interest or lien in the Debtors’ real property superior to that of the Trustee’s interest under section 544(a)(3). If, however, the Defendant does not have a 100

valid interest or lien, or the Trustee is able to avoid Defendant’s interest, then the Defendant may not have an allowed secured claim. 11 U.S.C. § 506(a). As a consequence, Defendant may have an unsecured claim. As an unsecured creditor, Defendant’s proof of claim would be susceptible to disallowance as untimely because Defendant’s proof of claim was filed thirty-eight days after the bar date. 11 U.S.C. §§ 501 and 502. Plaintiffs’ Complaint specifically requests such relief. The equitable remedies put forth by Defendants in the Counterclaim are, therefore, necessary to the claims allowance process because they will ultimately determine whether Defendants’ claim is secured and allowed or unsecured and, potentially, disallowed. Stern, 131 S. Ct. at 2618. Furthermore, to the extent the Counterclaim asserts affirmative defenses to the Trustee’s ability to exercise his strong-arm power, they stem from the bankruptcy itself. The Court concludes that it has authority to issue a final ruling on all matters currently before it.”). Rinaldi v. HSBC Bank USA, N.A. (In re Rinaldi), 487 B.R. 516 (Bankr. E.D. Wis. 2013) (Kelley, J.) (“[T]he Debtors ask the Court to determine the validity and enforceability of HSBC’s proof of claim. The Debtors’ objections to the claim include that the Note lacks consideration; two mortgage assignments are null and void; another mortgage assignment is a forgery or unenforceable because it was not recorded or perfected prior to bankruptcy; HSBC is not the owner or holder of the Note; and the Note image attached to the claim was fabricated to deceive the Court. Along with disallowance of the claim and the security represented by the Mortgage, the Debtors seek a determination that the proof of claim is false, fraudulent and unlawful. . . . [T]he Court can determine the validity of HSBC’s mortgage lien on the Debtors’ residence as property of the bankruptcy estate and as part of the claims allowance process.”). Settlers’ Housing Serv., Inc. v. Schaumburg Bank & Trust Co., N.A. (In re Settlers’ Housing Serv., Inc.), 2014 WL 2986107 (Bankr. N.D. Ill. June 30, 2014) (Schmetterer, J.) (“Counts 4–9, 11 & 12 [of the complaint], in so far as they challenge the legal validity of a mortgage asserted by the Bank, must necessarily be decided in order to rule on validity of the Bank’s Proofs of Claim because they challenge the extent and validity of the Bank’s lien on the Washington–Taylor Property.”). Paloian v. LaSalle Bank Nat’l Ass’n (In re Doctors Hosp. of Hyde Park, Inc), 2014 WL 2860296 (Bankr. N.D. Ill. June 19, 2014) (Schmetterer, J.) (“The Count implicated by this Motion (Count XIX) comprises a counterclaim to the claim of LaSalle against the estate. Specifically, Count XIX seeks to deny that LaSalle has a lien on certain proceeds of equipment sold at auction by the Debtor. . . . [T]his court has constitutional authority to rule on Count XIX of the Amended Complaint because Count XIX seeks to determine the extent by which LaSalle’s claim is secured by assets of the bankruptcy estate, which is part of the claims allowance process.”). Lopez v. Credit Union One (In re Lopez), 2014 WL 2767397 (Bankr. N.D. Ill. June 16, 2014) (Schmetterer, J.) (“[Debtors] filed a joint petition seeking bankruptcy relief under Chapter 13. Subsequently, they filed this adversary proceeding seeking to strip down the first mortgage on their home . . . held by defendant Credit Union One (the “Lender”), thus bifurcating the mortgage into secured and unsecured portions under § 506(a)(1) of the Bankruptcy Code. . . . This adversary proceeding arises under §§ 506(a)(1) and 1322(b)(2) of the bankruptcy code, and is therefore core under 28 U.S.C. § 157(b)(2)(K). It seeks to determine the extent of a lien and therefore ‘stems from 101

the bankruptcy itself,’ and may constitutionally be decided by a bankruptcy judge. Stern v. Marshall, 131 S. Ct. 2594, 2618 (2011).”). Green Tree Servicing LLC, v. Fleishhauer (In re Staggs), 2014 WL 1796664 (Bankr. D. Mont. May 6, 2014) (Kirscher, J.) (“The instant adversary proceeding does not involve a state law counterclaim by the estate under § 157(b)(2)(C), but rather is a core proceeding between creditors to determine the validity, extent, or priority of the parties’ respective liens under § 157(b)(2)(K). This determination is necessary to determine whether the Debtor’s confirmed Chapter 13 Plan must be modified. The Debtor and the estate are not parties in this adversary proceeding, although its result will have an effect on the claims allowance process. See, e .g., Stern, 131 S. Ct. at 2618. As a result, this Court concludes that it has the constitutional authority under § 157(b)(2)(K) to determine the validity, extent, or priority of Defendant’s lien with respect to Green Tree’s deed of trust under State law.”). Donahue v. Smith (In re Pinewood Buffet & Grill Inc.), 2013 WL 6899079 (Bankr. N.D. Ill. Dec. 31, 2013) (Lynch, J.) (“The Chapter 7 trustee asserts that the insurance proceeds are property of the estate, contests the validity of any purported interest of either Reff or Ms. Smith, and seeks to collect and liquidate those proceeds. In order to do so, he must obtain a determination of the validity and respective priority of both Reff’s and Ms. Smith’s purported liens or interests in order to determine the validity of their claims and to distribute the proceeds. Reff also has standing to assert its rights in property of the estate and claims against the estate and to object to rights and claims asserted by other creditors. A creditor is a ‘party in interest’ and has standing to object to the claim of another creditor. . . . A proceeding by one secured creditor contesting the priority of other secured creditors in collateral constituting property of the estate is a core proceeding over which bankruptcy courts have authority to enter final judgment.”). Sommers v. Comerica Bank, N.A. (In re Terrabon, Inc.), 2013 WL 6157980 (Bankr. S.D. Tex. Nov. 22, 2013) (Bohm, J.) (“On May 24, 2013, the Trustee filed an Amended Complaint seeking relief pursuant to 11 U.S .C. §§ 506(d) and 551 from Comerica Bank (Comerica), a creditor, for the purpose of declaring Comerica’s security interest void and to preserve Comerica’s alleged void security interest for the benefit of the Debtor’s bankruptcy estate (the Trustee’s Claim). . . . The Supreme Court’s decision in Stern v. Marshall . . . recognized certain limitations on bankruptcy courts’ authority to enter final orders. In Stern, the Supreme Court held that 28 U.S.C. § 157(b)(2)(C)—which authorizes bankruptcy judges to issue final judgments in counterclaims by a debtor’s estate against entities filing claims against the estate—is an unconstitutional delegation of Article III authority to bankruptcy judges. The matter at bar is not a counterclaim of the Debtor’s estate based solely on state law. On the contrary, this matter arises from Sections 506(d) and 551 of the Code, which are both express provisions of federal bankruptcy law. This dispute is therefore distinguishable from the dispute in Stern, and this Court is constitutionally authorized to enter a final order.”). Homeward Residential, Inc. v. First Bank (In re Cooper), 2013 WL 3880218 (Bankr. E.D.N.C. July 25, 2013) (Humrickhouse, J.) (“Thomas Scott Cooper and Rebecca J. Cooper filed a petition for relief under chapter 13 of the Bankruptcy Code on April 9, 2011. Several years before, on February 14, 2006, the debtors had executed an equity line of credit note and corresponding Equity 102

Line Deed of Trust in favor of First Bank, reflecting a security interest in property located at 804 Pamlico Drive in Cary, North Carolina (the “Property”). Later that year, on December 1, 2006, the debtors executed a promissory note for $150,000 in favor of American Brokers Conduit, secured by a deed of trust on the same property. The note was subsequently assigned to American Home Mortgage Servicing, Inc., which has changed its name to Homeward Residential, Inc. . . . Homeward initiated the present adversary proceeding on December 3, 2012, seeking a determination that it has a valid security interest in the Property which is superior to that of First Bank or that First Bank has no security interest in the Property at all. Additionally, Homeward seeks an order requiring the cancellation of record of the First Bank deed of trust. Homeward alleges that when it loaned the debtors $150,000 in the December 1, 2006 transaction, funds were collected by the closing attorneys and transmitted to First Bank in an amount sufficient to pay the balance of the line of credit in full, and that attorneys acting for the debtors and Homeward requested that First Bank terminate the line of credit and cancel the deed of trust. First Bank did not, however, terminate the line of credit or cancel the deed of trust, and the debtors subsequently began drawing from the line again such that a balance of approximately $87,598 existed as of the petition date. . . . Because of the asserted value of the Property, the priority of liens takes on added importance: the deed of trust which is determined to be of second priority will be deemed unsecured and treated as such in the debtors’ chapter 13 plan. . . . [T]his is essentially a dispute among non-debtor parties. However, this court has jurisdiction over the dispute because its outcome would be determinative of the status of claims in the case and ultimate distribution to creditors. . . . This is a core proceeding in which this court may enter final orders because the matter is one which would necessarily be resolved in the claims allowance process. See Stern v. Marshall, 131 S. Ct. 2594, 2618 (2011) . . . . The adversary proceeding is intended to be the vehicle that determines which of the parties, Homeward or First Bank, has a first priority deed of trust in the Property. If the valuation of the Property asserted by the debtors holds, the party determined to have a second priority deed of trust will be deemed unsecured.”). Orcutt v. GMAC Mortg., LLC (In re Orcutt), 2013 WL 1342741 (Bankr. D. Vt. Apr. 2, 2013) (Brown, J.) (GMAC Mortgage, LLC (“GMAC”) challenged the bankruptcy court’s constitutional authority to enter a final judgment declaring the mortgage it held on the Chapter 13 debtors’ residential real estate inoperative as a matter of Vermont law. Concluding that GMAC’s argument was not well taken, the court reasoned: “This Court is adjudicating the validity of the mortgage—a question of state law—because it is the necessary first step in, and tantamount to, a ruling on: 1) the secured status of Defendant’s claim in this case under § 506(a) of the Bankruptcy Code; 2) treatment of the Defendant’s claim in the plan and objection to the plan under § 1325 of the Bankruptcy Code; and 3) the Defendant’s objection to the Plaintiffs’ claim of homestead exemption under § 522(b) of the Bankruptcy Code. The fact that the ruling on the validity of the Defendant’s mortgage disposes of the confirmation, claim objection, and exemption allowance issues in the main case is sufficient to satisfy the criteria established by Stern and afford this Court constitutional authority to adjudicate the instant adversary proceeding.”).

103

L.

CONFIRMATION OF PLANS: 28 U.S.C. § 157(b)(2)(L)

GMAC Mortg., LLC v. Orcutt, 506 B.R. 52 (D. Vt. 2014) (Reiss, J.) (The district court stated . . . that “[u]nder Stern, the Bankruptcy Court’s constitutional authority includes the confirmation of Debtors’ Plan as that Plan ‘stems from the bankruptcy itself’ and does not exist outside of it. Stern, 131 S, Ct. at 2618.”). In re Batista-Sanechez, 505 B.R. 222 (Bankr. N.D. Ill. 2014) (Schmetterer, J.) (“The issue at hand . . . concerns an objection to a plan of reorganization, and is therefore a core proceeding under 28 U.S.C. § 157(b)(2)(L). An objection to a plan of reorganization ‘stems from the bankruptcy itself,’ Stern v. Marshall, 131 S. Ct. 2594, 2618 (2011), and may constitutionally be decided by a bankruptcy judge.”). In re Charles St. African Methodist Episcopal Church of Boston, 499 B.R. 66 (Bankr. D. Mass. 2013) (Bailey, J.) (“The matters before the court are the proposed confirmation of the Seventh Modified First Amended Plan of Reorganization of debtor Charles Street African Methodist Episcopal Church of Boston (“CSAME”) and the Motion of OneUnited Bank (“OneUnited”) to Dismiss Chapter 11 Case for Cause. OneUnited objects to confirmation and CSAME to dismissal. For the reasons set forth below, including principally that the Plan would release a third-party guaranty without justification, the Court will deny confirmation; the court will also deny dismissal but order the appointment of an examiner. . . . OneUnited filed a proof of claim, asserting secured claims based on two loans made by OneUnited to CSAME on October 3, 2006: the ‘Church Loan,’ through which CSAME refinanced an earlier mortgage, under which CSAME borrowed $1,115,000, with principal and unpaid interest due in full on December 1, 2011; and the ‘Construction Loan’ (together with the Church Loan, “the Loans”), an 18-month non-revolving line of credit of up to $3,652,000 for the purpose of constructing a community center . . . In order to help CSAME obtain the Construction Loan, the First Episcopal District of the African Methodist Episcopal Church (“FEDAME”), of which CSAME is a member church, guaranteed CSAME’s obligation to OneUnited on the Construction Loan (but not the Church Loan). Facing potential liability on the guaranty, FEDAME filed a proof of claim against CSAME in this case for rights of subrogation and contribution arising from the guaranty. . . . In opposition to the Plan’s release of FEDAME’s liability to OneUnited on the Guaranty of the Construction Loan, One United contends that the release is an impermissible means of implementation, arguing that . . . the bankruptcy court, a non-Article III tribunal, lacks constitutional authority to adjudicate a plan containing a third-party release . . . . Citing Stern v. Marshall, OneUnited argues that approval of the release is tantamount to adjudication of the guaranty, which, as a two-party dispute that arises under state law between non-debtor parties, cannot constitutionally be adjudicated by a non-Article III judge, even if that controversy is part of a statutorily defined ‘core proceeding’ in 28 U.S.C. § 157(b). Again, the Court disagrees. The matter before the Court is not a suit on the Guaranty; the merits of the Guaranty are not in controversy. To reiterate, the matter before the Court is the confirmation of a plan, a unitary omnibus civil proceeding for the reorganization of all obligations of the debtor and disposition of all its assets. Confirmation of a plan is not an adjudication of the various disputes it touches upon—the Guaranty being here but one of many; it is a total reorganization of the debtor’s affairs 104

in a manner available only in bankruptcy. The release may be proposed and approved only as part of a plan and only (if at all) pursuant to powers of adjustment afforded by the Bankruptcy Code, such as in sections 1123(a)(5) and 105(a). Accordingly, the confirmation of a plan—including any third-party release it may propose—is a matter of ‘public rights’ that, under Stern, Congress may constitutionally assign to a non-Article III adjudicator. Stern, 131 S. Ct. at 2618 (the question is “whether the action at issue stems from the bankruptcy itself” and thus falls within one of the limited circumstances covered by the public rights exception). There is no constitutional infirmity in Congress’s having provided, in 28 U.S.C. § 157(b)(1) and (b)(2)(L), that confirmation of a plan, including one of the variety here presented, is a proceeding that a bankruptcy judge may hear, determine, and enter appropriate orders and judgment on.”). Compton v. Mustang Eng’g Ltd. (In re MPF Holding U.S. LLC), 495 B.R. 303 (Bankr. S.D. Tex. 2013) (Bohm, J.) (“Jeff Compton, Litigation Trustee (the Litigation Trustee) of the MPF Litigation Trust, brought the instant adversary proceeding to recover alleged preferential payments made to the Defendant, Mustang Engineering Ltd. (Mustang). Pending before the Court is Mustang’s renewed motion to dismiss, which alleges that (1) the debtor assumed and assigned its contract with Mustang pursuant to section 365 of the Bankruptcy Code, and thus is barred as a matter of law from now pursuing a preference action against Mustang; and (2) even if the debtor did not assume and assign its contract with Mustang, the instant preference action was, nevertheless, released pursuant to the debtors’ confirmed plan of reorganization. Thus, the ultimate issue which this Court now decides is whether the Litigation Trustee has standing to pursue the instant preference avoidance action against Mustang. . . . [T]his Court has a duty to question its constitutional authority to enter a final order for any matter brought before it. The Court concludes that the facts in the pending suit are distinguishable from those in Stern, and that this Court has the authority to enter a final order in this adversary proceeding. In Stern, the debtor filed a counterclaim based solely on state law, and the resolution of this counterclaim did not resolve the validity, or invalidity, of the claim held by the defendant. . . . [T]he dispute at bar is distinguishable from Stern because it requires this Court to interpret language in the Plan. . . . For these reasons, this Court is constitutionally authorized to enter a final order in this adversary proceeding.”). In re Moncree, 2014 WL 2916444 (Bankr. E.D. Wis. June 27, 2014) (Kelley, J.) (“The issue is whether Debria Moncree (the “Debtor”) can change the valuation of her real estate located at 3001–3003 North 8th Street in Milwaukee (the “property”) to reduce the amount payable to a secured creditor in her second amended Chapter 13 plan. The Debtor valued the property at $75,600 in a first amended plan . . . . Bank of America, successor by merger to BAC Home Loans Servicing, LP, f/k/a Countrywide Home Loans Servicing LP (the “Creditor”) holds a mortgage on the property. The first amended plan proposed to pay the Creditor the principal amount of $75,600 plus interest of 4.5%. The Creditor did not object to this treatment, and the Court confirmed the first amended plan on September 19, 2013. . . . The Creditor filed a claim in the amount of $246,618.02. On August 1, 2013, the Debtor filed an objection to the claim, contending that the amount should be limited to $75,600, consistent with the plan. The Court ordered the Creditor to file a response to the claim objection and offered the opportunity for a hearing. The Creditor did not respond or request a hearing, and the Court entered an order on September 16, 2013, allowing the Creditor’s secured claim in the amount of $75,600. . . . On March 18, 2014, the Debtor filed a second amended plan. The plan proposes to decrease the amount of the payments to the Creditor to reflect a secured claim 105

in the amount of $48,500, consistent with a new appraisal the Debtor obtained. According to the Debtor, the original appraisal did not take into account repairs that are necessary to convert the property to a day care center. The Creditor and the Chapter 13 Trustee objected to the modified plan. . . . The Court has the authority to enter a final order as this proceeding involves . . . the confirmation of a plan. See 28 U.S.C. § 157(b)(2). (L). These core proceedings are not constitutionally suspect under Stern v. Marshall, 131 S. Ct. 2594 (2011).”). In re Digerati Techs., Inc., 2014 WL 2203895 (Bankr. S.D. Tex. May 27, 2014) (Bohm, J.) (“The Court writes this opinion because it has decided to deny confirmation of a proposed Chapter 11 plan based solely upon a provision about which there is little case law: 11 U.S.C. § 1129(a)(5)(A)(ii). This provision sets forth that a proposed plan can be confirmed only if the appointment of those individuals designated to be officers and directors of the reorganized debtor ‘is consistent with the interests of creditors and equity security holders and with public policy.’ (emphasis added). In this opinion, this Court reviews what scant case law exists concerning the meaning of ‘is consistent . . . with public policy’ in an effort to develop guidelines for applying this particular provision of the Code. . . . In the wake of the Supreme Court’s decision in Stern v. Marshall, 131 S. Ct. 2594 (2011), this Court, in every dispute brought before it, must inquire as to whether it has the constitutional authority to enter a final order. The threshold question therefore is whether entering an order denying confirmation of a Chapter 11 plan is a final order. Case law is clear that an order denying confirmation of a proposed Chapter 11 plan is not a final order. . . . Assuming that this Court is incorrect and entering an order denying confirmation of a Chapter 11 plan is a final order, this Court nevertheless concludes that it has the authority to enter an order denying confirmation of the Plan. The facts in the case at bar are easily distinguishable from those in Stern. In Stern, the debtor, pursuant to 28 U.S.C. § 157(b)(2)(C), filed a counterclaim based solely on state law, and the resolution of this counterclaim did not necessarily resolve the validity or invalidity of the defendant’s claim. Under these circumstances, the Supreme Court held that the bankruptcy court lacked constitutional authority to enter a final order on the debtor’s counterclaim. . . . In the case at bar, there is no state law involved. The objection is based upon an express provision of the Code—§ 1129(a)(5)(A)(ii). Thus, this dispute is easily distinguishable from the dispute in Stern, and the Court concludes that there is no Stern concern here. This Court therefore has the constitutional authority to enter a final order in this matter.”). In re Neal, 2014 WL 1424941 (Bankr. N.D. Ill. Apr. 8, 2014) (Schmetterer, J.) (“Creditor . . . objects to confirmation of the pending modified Chapter 13 Plan asserting that its filing was in bad faith under 11 U.S.C. § 1325(a)(3). . . . An objection to a plan of reorganization ‘stems from the bankruptcy itself,’ and may constitutionally be decided by a bankruptcy judge. Stern v. Marshall, 131 S. Ct. 2594, 2618 (2011).”). In re Manchester Oaks Homeowners Ass’n, 2014 WL 961167 (Bankr. E.D. Va. Mar. 12, 2014) (Kenney, J.) (“Confirmation of the Debtor’s Plan is a core proceeding, over which the Court has jurisdiction and for which the Court can enter a final order. . . . The Debtor is seeking confirmation of its Chapter 11 Plan, historically a core competency of the bankruptcy court. . . . In Stern, the Court held that the judicial power resides with Article III Courts. Stern, though, involved the entry of a final, money judgment against a party. This case does not involve the entry of a money judgment, and does not raise the kind of systemic concerns at issue in Stern.”). 106

In re Tres Hermanos Dairy, LLC, 2013 WL 6198219 (Bankr. D.N.M. Nov. 27, 2013) (Thuma, J.) (“The Court confirmed a plan of reorganization in this case on October 19, 2011 (“Confirmation Order”). The Confirmation Order contained extensive language agreed to by the Debtor and its main secured creditor, Bank of America (“Bank”), resolving the Bank’s objection to the plan. The Debtor now takes the position that the agreed-upon language did not modify the plan. . . . Taken aback by Debtor’s stance, the Bank reopened the case and . . . filed a Motion for Order Interpreting Chapter 11 Plan and Confirming Debtor Default (the “Interpretation Motion”). . . . [T]he Debtor asserts that the reference should be withdrawn because under Stern v. Marshall . . . this Court ‘lacks constitutional authority to adjudicate the types of claims asserted against Debtor and others.’ . . . The argument is meritless. Stern v. Marshall held that non-Article III courts may not be able to enter final judgment in cases that existed at common law in 1789. This is not such a case. However narrowly the Supreme Court may eventually construe the jurisdiction of this Court, it is unlikely to hold that the Court may not confirm a Chapter 11 plan of reorganization, nor to construe its own Confirmation Order. . . . The Interpretation Motion falls directly within the Court’s jurisdiction to specifically interpret or enforce its Confirmation Order in order to carry out the provisions of the Plan. Accordingly, this Court has jurisdiction over this matter. . . . As Judge Chapman observed in In re Ambac Fin. Grp., Inc., 457 B.R. 299, 308 (Bankr. S.D.N.Y. 2011), aff’d, 2011 WL 6844533 (S.D.N.Y. 2011), aff’d, 487 F. App’x 663 (2d Cir. 2012), ‘Unfortunately, Stern v. Marshall has become the mantra of every litigant who, for strategic or tactical reasons, would rather litigate somewhere other than the bankruptcy court.’ The observation applies here. The Debtor chose the bankruptcy court forum to reorganize and obtained substantial relief through confirmation of a consensual plan of reorganization. Regardless of the nature of the dispute about the meaning of the Confirmation Order, this Court is an appropriate forum to resolve the dispute, and clearly has the jurisdiction to do so. The Debtor’s resort to Stern v. Marshall is a red herring.”). Orcutt v. GMAC Mortg., LLC (In re Orcutt), 2013 WL 1342741 (Bankr. D. Vt. Apr. 2, 2013) (Brown, J.) (GMAC Mortgage, LLC (“GMAC”) challenged the bankruptcy court’s constitutional authority to enter a final judgment declaring the mortgage it held on the Chapter 13 debtors’ residential real estate inoperative as a matter of Vermont law. Concluding that GMAC’s argument was not well taken, the court reasoned: “This Court is adjudicating the validity of the mortgage—a question of state law—because it is the necessary first step in, and tantamount to, a ruling on: 1) the secured status of Defendant’s claim in this case under § 506(a) of the Bankruptcy Code; 2) treatment of the Defendant’s claim in the plan and objection to the plan under § 1325 of the Bankruptcy Code; and 3) the Defendant’s objection to the Plaintiffs’ claim of homestead exemption under § 522(b) of the Bankruptcy Code. The fact that the ruling on the validity of the Defendant’s mortgage disposes of the confirmation, claim objection, and exemption allowance issues in the main case is sufficient to satisfy the criteria established by Stern and afford this Court constitutional authority to adjudicate the instant adversary proceeding.”).

107

M.

ORDERS APPROVING THE USE OR LEASE OF PROPERTY: 28 U.S.C. § 157(b)(2)(M)

N.

ORDERS APPROVING THE SALE OF PROPERTY: 28 U.S.C. § 157(b)(2)(N)

O.

MATTERS SPECIFICALLY IDENTIFIED BY COURTS AS CORE UNDER THE CATCHALL PROVISION OF 28 U.S.C. § 157(b)(2)(O)

Frisia Hartley, LLC v. Wells Fargo Bank, N.A. (In re Talsma), 509 B.R. 535 (Bankr. N.D. Tex. 2014) (Lynn, J.) (The debtors, Klass Talsma and three affiliated corporations, were engaged in a dairy farming operation. Several years after confirmation of the debtors’ Chapter 11 plan (“Plan”), a dispute arose between the debtors and their secured lender, Wells Fargo Bankr, N.A. (“Wells Fargo”) about the debtors’ payment obligations “on Wells Fargo’s claim under the Plan.” The debtors sought and obtained an order reopening their jointly administered cases and commenced an adversary proceeding against Wells Fargo, asserting “seven causes of action, including: (1) Breach of Contract; (2) Unjust Enrichment; (3A) Tortious Interference with Existing Contract—Two Sisters Dairy, LLC Contract; (3B) Tortious Interference with Existing Contracts—Contracts/Notes with Lone Star FLCA and Lone Star PCA; (4) Negligence, Gross Negligence, Negligent Misrepresentation, and Fraud; (5) Breach of Fiduciary Duties; (6) Declaratory Judgment; and (7) Application and Request for Injunctive Relief.” Wells Fargo “raise[d] questions about th[e] court’s subject-matter jurisdiction under 28 U.S.C. §§ 1334 and 157. . . . [as well as] questions of constitutional authority requir[ing] attention in light of the Supreme Court’s decision in Stern v. Marshall, 131 S. Ct. 2594 (2011), and the Fifth Circuit’s decisions in Frazin v. Haynes & Boone, L.L.P. (In re Frazin), 732 F.3d 313 (5th Cir. 2013), and BP RE, L.P. v. RML Waxahachie Dodge, L.L.C. (In re BP RE, L.P.), 735 F.3d 279 (5th Cir. 2013). . . .” Concluding that it had the constitutional authority to finally adjudicate at least several of the claims for relief asserted in the adversary proceeding, the court reasoned: “All of the[] causes of action [asserted in the adversary proceeding] could have conceivable effects on distributions to Debtors’ creditors, thus invoking, at a minimum, ‘related to’ jurisdiction. Counts 1 and 6, although pled as the common law causes of action of breach of contract and declaratory judgment, both implicate the bankruptcy court’s statutory powers under 11 U.S.C. § 1142(b) and 28 U.S.C. § 157(b)(2)(O), as well as the court’s inherent power to interpret and implement its own orders. Fed. R. Bankr. P. 3020(d) (“Notwithstanding the entry of the order of confirmation, the court may issue any other order necessary to administer the estate.”); Travelers Indem. Co. v. Bailey, 557 U.S. 137, 138, 129 S. Ct. 2195, 174 L. Ed. 2d 99 (2009) (“The Bankruptcy Court plainly had jurisdiction to interpret and enforce its own prior orders. . . .”); U.S. Brass [Corp. v. Travelers Ins. Grp., Inc. (In re U.S. Brass Corp.)], 301 F.3d [296,] 306 [(5th Cir. 2002)] (“Proceedings invoking the bankruptcy court’s statutory authority to enter orders necessary for the consummation of a confirmed plan [are ‘arising 108

in’ proceedings] because the authority can be exercised only in the context of a bankruptcy case.”); cf. Law v. Siegel, 134 S. Ct. 1188, 1198, (2014) (discussing bankruptcy court’s inherent powers under 11 U.S.C. § 105(a)) (citing Chambers v. NASCO, Inc., 501 U.S. 32, 47, 111 S. Ct. 2123, 115 L. Ed. 2d 27 (1991)); see also Nat’l Benevolent Ass’n of the Christian Church (Disciples of Christ) v. Weil, Gotshal & Manges, LLP (In re Nat’l Benevolent Ass’n of the Christian Church (Disciples of Christ)), 333 F. App’x 822, 826 (5th Cir. 2009) (“A final decree closing the case after the estate is fully administered does not deprive the court of jurisdiction to enforce or interpret its own orders.”). As a result, Counts 1 and 6 are core claims as to which the bankruptcy court may issue a final order. . . . Based on the decisions in Stern, BP RE, and Frazin, the issue of this court’s constitutional authority to determine the Adversary requires discussion. . . . Without salary protection and life tenure, a bankruptcy judge’s ability to exercise ‘th[e] [judicial] [P]ower [of the United States]’ is limited to those matters that lie ‘at the core of federal bankruptcy power. . . .’ N. Pipeline Constr. Co. v. Marathon Pipe Line Co., 458 U.S. 50, 71, 102 S. Ct. 2858, 73 L. Ed. 2d 598 (1982). Put another way, ‘Congress may not bypass Article III simply because a proceeding may have some bearing on a bankruptcy case; the question is whether the action at issue stems from the bankruptcy case itself or would necessarily be resolved in the claims allowance process.’ Stern, 131 S. Ct. at 2618 (emphasis in original). . . . Applying this test from Stern, paired with the court’s conclusion below that the alleged breach of the Plan Documents is tantamount to an alleged breach of the Plan itself, it is apparent that the court has authority to determine at least some of the counts in the Complaint. The question is: In what counts may the court issue a final determination and in what counts will that authority be limited to making proposed findings of fact and conclusions of law? The Fifth Circuit’s opinion in Frazin sheds some light on this question. . . . In Frazin, the Fifth Circuit held that a debtor’s claim against his former attorneys under the Texas Deceptive Trade Practices Act (“DTPA”) did not need to be determined in order to determine the attorneys’ fee application. 732 F.3d at 323–34. Because deciding the DTPA claim in Frazin was unnecessary as part of the claims allowance process, the bankruptcy court was without constitutional authority to issue a final judgment, even with the parties’ consent. Id. at 320 n.3, 323–34. But the Fifth Circuit affirmed the bankruptcy court’s authority to determine the other claims that were closely related to the debtor’s objections to the attorneys’ fee applications because those claims were necessarily resolved in settling the attorneys’ requests for administrative expenses. Id. at 324–25. . . . Here, although asserted by an adversary complaint, Counts 1 and 6 hinge on whether Wells Fargo breached the Plan and Plan Documents. This determination is styled in a different procedural posture than the counterclaim in Stern, which was asserted by the estate in response to a tortious interference claim. See Stern, 131 S. Ct. at 2617–18. Moreover, the Adversary differs substantively as well. The counterclaim at issue in Stern was core only by way of the inclusion of counterclaims filed by the estate in section 157(b)(2)(C) of title 28. Id. at 2612. Here, the construction of the Plan and Plan Documents stems directly from the bankruptcy plan itself. So the court concludes constitutional authority exists for a final determination, at a minimum, over Counts 1 and 6. . . . The court need not address specific authority over Counts 2, 3, 4, 5, and 7 except to say that, under Frazin, authority exists over these individual counts to the extent factual findings or legal conclusions specific to those counts are necessary to finally determine Counts 1 or 6. See Frazin, 732 F.3d at 323–24. But such determinations are best made on a complete record. Moreover, the Supreme Court may clarify the bounds of bankruptcy court authority with its decision in Executive Benefits Insurance Agency v. Arkison, No. 12–1200 (U.S. filed Sept. 13, 2013). As a result, the court need only conclude that authority exists for Counts 1 and 6.”). 109

In re Brier Creek Corporate Ctr. Assocs. Ltd., 486 B.R. 681 (Bankr. E.D.N.C. 2013) (Humrickhouse, J.) (“The matter before the court is Bank of America’s emergency motion for the court to stay its order entered on January 14, 2013 (the “Stay Order”). The Stay Order stayed arbitration initiated by Bank of America against the [Chapter 11] debtors’ guarantors (the “Guarantor Arbitration”). . . . [T]he debtors requested an order confirming that the automatic stay applies to the Guarantor Arbitration and granting an injunction pursuant to the court’s powers under § 105. . . . Because of this court’s ‘arising under’ jurisdiction over the § 362 request, and to the extent that the debtors’ request for § 105 relief falls under this court’s ‘arising in’ jurisdiction, it also had authority to enter a final judgment because the proceeding before the court was a ‘core’ proceeding. . . . Not only is it statutorily ‘core,’ it is constitutionally ‘core’ as well. See TP, Inc. v. Bank of America, N.A. (In re TP, Inc.), 479 B.R. 373, 384 (Bankr. E.D.N.C. 2012) (providing that a matter is constitutionally core if the “action at issue stems from the bankruptcy itself”).”). In re Digerati Techs., Inc., 2014 WL 2123124 (Bankr. S.D. Tex. May 21, 2014) (Bohm, J.) (“The Movants request that this Court grant them standing to prosecute claims on behalf of the Chapter 11 estate against the Debtor’s president. There is no provision in the Bankruptcy Code expressly allowing this Court to grant such relief. Furthermore, what scant case law exists suggests that such standing should be granted only in ‘particularly extraordinary circumstances.’ This opinion addresses whether ‘particularly extraordinary circumstances’ exist in the case at bar. . . . Stern v. Marshall, 131 S. Ct. 2594 (2011), sets forth certain limitations on the constitutional authority of bankruptcy courts to enter final orders. This Court must therefore determine whether it has constitutional authority to enter a final order in the dispute at bar. This Court concludes that it does for the following reasons. . . . In Stern, the debtor, pursuant to 28 U.S.C. § 157(b)(2)(C), filed a claim based solely on state law, and the resolution of this counterclaim did not resolve the question of validity of the defendant’s claim. 131 S. Ct. 2594, 2601 (2011). Under those circumstances, the Supreme Court held that the bankruptcy court lacked constitutional authority to enter a final order on the debtor’s counterclaim. Id. at 2606. In the case at bar, the dispute involves no state law whatsoever, but rather involves judicially-created bankruptcy law. Therefore, this dispute is easily distinguishable from the suit in Stern, and this Court concludes that there is no Stern concern here. Thus, this Court has the constitutional authority to enter a final order on the Motion.”). Solomons One, LLC v. Donnelly (In re Solomons One, LLC), 2014 WL 846084 (Bankr. D. Md. Mar. 4, 2014) (Catliota, J.) (“Plaintiff Solomons One, LLC (“Plaintiff”) is a Maryland limited liability company that filed for relief under chapter 11 on August 23, 2013. It brings this seven count complaint against defendants V. Charles Donnelly (“Donnelly”) and Deborah Steffen (“Steffen” and collectively with Donnelly referred as “Defendants”) who, along with four other individuals, are members of Plaintiff. . . . The primary dispute centers on an Assignment of Contract Rights dated December 4, 2012, (the “Assignment”) executed by Defendants. The Assignment purports to assign from Plaintiff to Donnelly, in trust for the benefit of the members of Plaintiff, certain rights to construct a pier on the Patuxent River adjacent to real property partially owned by Plaintiff. The pier rights are the subject of state court litigation against the State of Maryland and Calvert County, Maryland that seeks to establish the scope and value of those rights. The litigation has been stayed by the bankruptcy case. The litigation can continue once the dispute over who holds those rights, and in turn, who can pursue the litigation, is resolved here. . . . Plaintiff disputes that the Assignment is valid or was properly authorized by its members. In four counts of the complaint, 110

Plaintiff seeks an order avoiding the Assignment. Specifically, Count 1 seeks an order declaring that the Assignment was not authorized in accordance with the terms of Plaintiff’s operating agreement. Count 2 seeks to avoid the Assignment as a preference, while Counts 3 and 4 seek to avoid the Assignment as a constructive or actual fraudulent transfer, respectively. . . . The court has the statutory authority to hear and determine Count 1 under 28 U.S.C. § 157(b)(2)(A) (“matters concerning the administration of the estate”) and § 157(b)(2)(O) (“other proceedings affecting the liquidation of the assets of the estate”). However, in Stern v. Marshall the Supreme Court held that, even though a bankruptcy court may have subject matter jurisdiction over a proceeding under 28 U.S.C. § 1334(b), and statutory authority to resolve it under 28 U.S.C. § 157(b), the court may nevertheless lack the constitutional authority under Article III to finally adjudicate the matter. . . . The parameters of Stern have not been established. But even under a broad reading of Stern, claims brought to augment the estate based on pre-petition actions and which are not intimately tied to the bankruptcy proceeding exceed the constitutional authority of a bankruptcy court. . . . Here, the Plaintiff and Donnelly consent to the court deciding Count 1. See 28 U.S.C. § 157)(c)(2). Steffen does not consent, although she does not cite any authority or offer any argument in support of her position. Count 1 raises the question of whether a pre-petition transfer by the Plaintiff was not properly authorized by the terms of its operating agreement and should be avoided. It is a state law claim independent of bankruptcy law, and has no connection to the case other than to augment the estate. The court concludes it lacks constitutional authority under Stern to decide Count 1, and therefore submits its proposed findings and conclusions for the District Court’s consideration under Fed. R. Bankr. P. 9033. . . . In so holding, the court does not suggest that Stern would prevent a bankruptcy court from rendering a final adjudication any time it is called upon to interpret corporate governance documents under state law. For example, early in this case, the court was required to determine whether the bankruptcy petition was properly authorized under the Plaintiff’s operating agreement, and no one contended the court lacked the constitutional authority to do so. The determining factors here are that the Plaintiff seeks to avoid a pre-petition transfer based on state law rights, and the only connection to the bankruptcy case is that Plaintiff seeks control of the transferred asset to administer it as part of the estate.”). In re Nolan, 2013 WL 3153849 (Bankr. W.D.N.C. June 19, 2013) (Beyer, J.) (“This matter came before the Court . . . upon the Motion for Order Surcharging Exemptions (the “Motion”) of Edward P. Bowers, the chapter 11 trustee for William Joseph Nolan, III, and Martha Louise Hemphill–Nolan (the “Debtors”) and the trustee of the Marvin–Waxhaw Associates/Nolan Liquidating Trust established by agreement dated January 25, 2011 . . . . The relief requested in the Motion would be dispensable but for this Bankruptcy Case; therefore, this matter necessarily stems from the Bankruptcy Case itself. See Stern v. Marshall, 131 S. Ct. 2594, 2618 (2011).”). In re Ritchey, 2013 WL 3089047 (Bankr. S.D. Tex. June 18, 2013) (Bohm, J.) (After receiving their discharge, the debtors filed a motion to reopen their Chapter 7 case in order to (1) remove a state court action in which a creditor sought to collect an unscheduled debt and (2) obtain an order from the bankruptcy court imposing sanctions for the creditor’s alleged violation of the discharge injunction. Addressing its constitutional authority to adjudicate the motion, the court stated: “For the purposes of ruling on the Motion to Reopen, this Court concludes that the issue of the constitutional authority of a bankruptcy court to enter a final order, as articulated in Stern v. Marshall, is not yet a concern. The Motion to Reopen does not entail a final order, so Stern does 111

not apply. Here, all that is being requested is for this Court to reopen this Chapter 7 case. The litigation between the Debtors and the Creditor will certainly not be over. Indeed, it will just be beginning in this Court. . . . In the alternative, even if ruling on the Motion to Reopen does entail a final order, this Court concludes that it has the constitutional authority to enter a final order. The facts in the case at bar are entirely distinguishable from the facts in Stern. In Stern, the debtor filed a counter-claim based solely on state law, and the resolution of this counter-claim would not necessarily lead to a determination of the validity or invalidity of the claim filed by the defendant against the debtor’s estate. Here, there are express Code provisions involved: § 350(b), § 524(a), and § 727(b). There is no state law involved. Accordingly, this Court concludes that it does have the constitutional authority to enter a final order on the Motion to Reopen.”).

P. IV.

MATTERS UNDER CHAPTER 15: 28 U.S.C. § 157(b)(2)(P)

BANKRUPTCY COURTS’ CONSTITUTIONAL AUTHORITY TO FINALLY ADJUDICATE MATTERS THAT ARE CORE PROCEEDINGS NOT ENUMERATED IN § 157(b)(2) A.

LIEN AVOIDANCE UNDER § 544(a)/ LIEN PRESERVATION UNDER § 551

DeGiacomo v. Traverse (In re Traverse), 485 B.R. 815 (B.A.P. 1st Cir. 2013) (Haines, J.; Deasy, J.; Tester, J.) (Bankruptcy court granted summary judgment on Chapter 7 trustee’s § 544 lien-avoidance claim asserted against defendant-assignee of unrecorded mortgage. On appeal, the defendantassignee argued that the bankruptcy court lacked the constitutional authority to enter a final judgment on the trustee’s lien-avoidance claim. The BAP affirmed, concluding that the bankruptcy had the constitutional authority to enter final judgment: “The trustee’s exercise of strong-arm powers of lien avoidance and preservation for the estate are an exercise of Code-created rights. Without question, that exercise is statutorily ‘core’ under 28 U.S.C. § 157(b)(2)(K). And there is absolutely nothing in Stern that impugns the bankruptcy court’s ability to constitutionally decide such questions with finality. . . . These powers are creatures of §§ 544 and 551, and may only be prosecuted by bankruptcy trustees (or debtors in possession) on behalf of bankruptcy estates.”). DeGiacomo v. Traverse (In re Traverse), 2014 WL 2142521 (1st Cir. May 23, 2014) (Torruella, J.; Howard, J.; Kayatta, J.) (“[B]ecause Traverse’s bank failed to record the mortgage with the appropriate registry, the bankruptcy trustee contends that his power to avoid and preserve the mortgage justifies him in selling Traverse’s home as property of the bankruptcy estate. . . . Where a creditor has an unperfected lien on a debtor’s property, the Bankruptcy Code empowers a trustee to avoid and preserve the lien for the benefit of the estate. The trustee exercises this power through two strong-arm provisions. First, the trustee’s right of avoidance under 11 U.S.C. § 544 vests the trustee with the powers of a bona fide purchaser of real property for value, and allows the trustee to invalidate unperfected security interests. Second, his right of preservation under 11 U.S.C. § 551 automatically preserves the benefit of the avoided interest for the estate . . . . Traverse . . . challenges 112

the bankruptcy court’s jurisdiction to enter a final order approving the trustee’s avoidance and preservation in light of the Supreme Court’s decision in Stern v. Marshall, 131 S. Ct. 2594 (2011). Traverse suggests that Stern strips the bankruptcy court of jurisdiction because the trustee’s complaint seeks to augment the bankruptcy estate and depends on Massachusetts state law. . . . Under Stern, a bankruptcy court’s jurisdiction to enter final judgments is limited by Article III to issues in bankruptcy that ‘stem[] from the bankruptcy itself or would necessarily be resolved in the claims allowance process.’ Id. at 2618. Both the trustee’s complaint in this case, arising out of his § 544 and § 551 powers, and Traverse’s counterclaim, disputing the bankruptcy estate’s rights to her real property, stem directly from Traverse’s bankruptcy filing. The bankruptcy court correctly exercised jurisdiction in entering a final order on all claims.”). Henderson v. Bank of Am. (In re Simmons), 510 B.R. 76 (Bankr. S.D. Miss. 2014) (Ellington, J.) (“On March 15, 2012, the Debtors filed a petition for relief under Chapter 7 of the United States Bankruptcy Code. . . . [T]he Debtors filed their Complaint to Determine Extent and Validity of Liens (Complaint) in this Court against Bank of America, N.A. (BOA). In their Complaint, the Debtors allege that because the Legal Description contained in the 2003 Deed of Trust is incorrect, BOA does not have a perfected security interest in the Property, and the 2003 Deed of Trust is avoidable pursuant to 11 U.S.C. §§ 544 and 545. . . . In [an] Amended Complaint, [filed by] the [Chapter 7] Trustee and Trustmark[,] [the recipient of a subsequent deed of trust,] [plaintiffs] allege [that] BOA does not have a perfected lien in the Property and that the 2003 Deed of Trust may be avoided pursuant to § 544 and § 545. Trustmark alleges that BOA’s 2003 Deed of Trust is unperfected, and therefore, the Trustmark Deed of Trust is the first lienholder on the Property. . . . Further, the Trustee and Trustmark allege that BOA’s attempt to perfect its security interest in the Property by filing the Lis Pendens constituted an avoidable preference pursuant to § 547(b). . . . While BOA has not raised a Stern challenge to this Court’s constitutional authority to enter a final judgment in the above-styled adversary proceeding, the Court will address the effect, if any, of Stern. . . . [I]n the case at bar, BOA has filed a proof of claim in the Debtors’ bankruptcy case alleging it holds a secured claim in the amount of $745,414.79. And while BOA’s state law claim for reformation of the 2003 Deed of Trust was filed in state court, BOA’s claims will ‘be resolved in the claims allowance process.’ [E]ven though BOA’s claim is based on state law, once the Debtors filed bankruptcy, the Bankruptcy Code governs the avoidance action under § 544 (strong-arm powers of trustee), § 545 (lien avoidance) or § 547 (avoidance of a preference). Accordingly, the Court has the constitutional authority to enter a final judgment.”). Beskin v. Bank of N.Y. Mellon (In re Perrow), 498 B.R. 560 (Bankr. W.D. Va. 2013) (Connelly, J.) (“The Complaint seeks to avoid Defendant’s unrecorded deed of trust under 11 U.S.C. § 544(a)(3) . . . The Court concludes that it has authority to issue a final ruling on all matters currently before it.”). Gause v. Citifinancial Servs., Inc. (In re Gause), 2014 WL 24147 (Bankr. M.D.N.C. Jan. 2, 2014) (Aron, J.) (The court granted defendant’s motion to dismiss Chapter 13 debtor’s complaint seeking to avoid deed of trust based on alleged noncompliance with North Carolina document indexing requirements, concluding that “[p]ursuant to the analysis in Stern v. Marshall . . . this Court may enter a final order in this matter.”).

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Rainsdon v. Visser (In re Visser), 2013 WL 1337327 (Bankr. D. Idaho Apr. 1, 2013) (Pappas, J.) (“[A] trustee’s exercise of its avoidance power under § 544(a) have been found to be an action to preserve property of the bankruptcy estate and thus the bankruptcy court had the constitutional authority to enter final judgments and orders in adversary proceedings invoking that provision of the Bankruptcy Code. See DeGiacomo v. Traverse (In re Traverse), 485 B.R. 815, 819 (1st Cir. BAP 2013); In re Salander O’Reilly Galleries, 453 B.R. 106,123–24 (Bankr. S.D.N.Y. 2011).”). Tobacco Square LLC v. Putnam Cnty. Bank (In re Tobacco Square LLC), 2013 WL 1246794 (Bankr. M.D.N.C. Mar. 26, 2013) (Waldrep, J.) (“[T]he Debtor filed a complaint seeking to avoid the liens held by [Putnam County Bank (“PCB”)] in real and personal property and to recover these interests for the benefit of the estate. The Debtor’s [m]otion [for summary judgment] contends that PCB’s deed of trust fails to identify the underlying debt and that PCB has not perfected its security interest in personal property. . . . The first cause of action seeks to avoid the Deed of Trust pursuant to Section 544(a)(1) [of the Bankruptcy Code] . . . . Pursuant to the analysis in Stern v. Marshall . . . the Court may enter a final order in this matter.”).

B.

PROCEEDINGS TO AVOID OR RECOVER UNAUTHORIZED POSTPETITION TRANSFERS UNDER § 549

Cage v. GDH Int’l, Inc. (In re Great Gulfcan Energy Tex., Inc.), 488 B.R. 898 (Bankr. S.D. Tex. 2013) (Bohm, J.) (The Chapter 7 trustee filed an adversary proceeding in which he sought to avoid and recover alleged fraudulent or unauthorized postpetition transfers. Addressing its constitutional authority to adjudicate the trustee’s claims, the court stated: “[T]his Court has a duty to question its constitutional authority to enter a final order for any matter brought before it. The Court concludes that the facts in the pending suit are distinguishable from those in Stern, and that this Court has the authority to enter a final judgment. In Stern, the debtor filed a counterclaim based solely on state law, and the resolution of this counterclaim did not resolve the validity, or invalidity, of the claim held by the defendant. The dispute at bar, on the other hand, despite requiring the application of state law, arises from express bankruptcy provisions: 11 U.S.C. §§ 550(b), 549, [and] 548 . . . . Moreover, unlike Stern, application of the state law to this provision will resolve the validity or invalidity of any claims that the defendant has against the bankruptcy estate. This suit is therefore easily distinguishable from the dispute in Stern, and this Court is constitutionally authorized to enter a final judgment.”). Bauer v. Gen. Elec. Capital Corp. (In re Oncology Assocs. of Ocean Cnty. LLC), 2014 WL 2598747 (Bankr. D.N.J. June 10, 2014) (Kaplan, J.) (“Given the procedural posture of a Rule 12(b)(6) motion to dismiss [the Trustee’s 549 claim], whereby the Court must accept the Trustee’s factual allegations as true, the Court notes that its ruling is based upon substantive law, as opposed to factual determinations, and therefore views dismissal of the Trustee’s claim as a final judgment, subject to de novo review. See . . . Exec. Benefits Ins. Agency v. Arkison, Chapter 7 Tr. of Estate of Bellingham Ins. Agency, 2014 WL 2560461, *4–5 (2014) (Noting that, in its prior decision in Stern v. Marshall . . . the Supreme Court “did not address how courts should proceed when they encounter one of these ‘Stern claims’—a claim designated for final adjudication in the bankruptcy 114

court as a statutory matter, but prohibited from proceeding in that way as a constitutional matter,” and holding that “when a bankruptcy court is presented with such a claim, the proper course is to issue proposed findings of fact and conclusions of law,” whereby “[t]he district court will then review the claim de novo and enter judgment”). Either way, review of this decision will be undertaken by the District Court de novo. See id. at ––––, –––S. Ct. ––––, 2014 WL 2560461 at *9 (“In short, even if [Plaintiff] is correct that the Bankruptcy Court’s entry of judgment was invalid, the District Court’s de novo review and entry of its own final judgment cured any error”).”). DeGirolamo v. Devonshire Fund, LLC (In re Myers), 2013 WL 6080270 (Bankr. N.D. Ohio Nov. 18, 2013) (Kendig, J.) (“Trustee’s claim for the recovery of unauthorized postpetition transactions is a core claim and the bankruptcy judge may enter final judgment because it does not have Stern implications.”).

C.

DETERMINING WHETHER PROPERTY IS PROPERTY OF THE ESTATE

Medlin v. Johnson (In re Meabon), 2014 WL 1309093 (W.D.N.C. Mar. 28, 2014) (Conrad, J.) (“Appellee [the Chapter 7 trustee] filed a Complaint seeking to have [debtor’s sister] declared not to be the rightful trustee [of an irrevocable trust of which the debtor was the sole beneficiary] and to avoid the March 2012 transfer [of the trust corpus back to the settlor and then ultimately to a North Carolina limited liability corporation]. On February 22, 2013, the Bankruptcy Judge granted summary judgment for Appellee, which this Court now reviews. . . . Following the Supreme Court’s decision in Stern v. Marshall, the Court must not only determine whether a claim is statutorily core, but whether the bankruptcy court possesses the Constitutional authority to enter a final order in the matter. Following Stern, courts in this circuit have considered additional factors, including: (1) whether the action stems from the bankruptcy itself; and, (2) whether the issue would be ‘necessarily resolved’ in the claims allowance process. . . . This case satisfies the Stern factors. The action stems from the bankruptcy insofar as the case involves an attempt by a trustee to ascertain the extent of the debtor’s property that must be turned over to the trustee under Title 11. Second, the ownership interest in the vested remainder of the . . . [t]rust is an issue that would be necessarily resolved in the claims allowance process. For these reasons, the matter is core and the bankruptcy judge possesses the constitutional authority to enter a final judgment in the matter.”). Sexton v. Dep’t of Treasury (In re Sexton), 508 B.R. 646 (Bankr. W.D. Va. 2014) (Connelly, J.) (“The question this court must answer is whether the government’s post-petition setoff of the debtor’s tax refund to satisfy a non-tax debt is a violation of the automatic stay. . . . In Stern v. Marshall, the Supreme Court found that a bankruptcy court may have statutory authority to hear a ‘core proceeding’ under 28 U.S.C. § 157 yet not Constitutional authority to issue a final judgment in that proceeding. In Stern, the Supreme Court determined that a bankruptcy court could not issue a final ruling on a state law counterclaim against a non-creditor third party even if the counterclaim was a core proceeding. The test for whether a bankruptcy court has Constitutional authority to enter a final judgment is ‘whether the action at issue stems from the bankruptcy itself or would necessarily be resolved in the claims allowance process.’ [Stern, 131 S. Ct.] at 2618. In this case, the debtor 115

plaintiff seeks recovery of her tax overpayment, because according to the debtor, when the government seized the tax overpayment and applied it to outstanding indebtedness, it had not obtained relief from the automatic stay. To determine if the automatic stay imposed under bankruptcy law applied to this action, the Court will need to determine if the property at issue was property of the bankruptcy estate.”). Johnson v. Woodlands Dev., LLC (In re Johnson), 506 B.R. 233 (Bankr. M.D. La. 2014) (Dodd, J.) (“Defendants Woodlands Development, L.L.C., Anthony Reginelli, Shawna Reginelli, Peter Steur and Lee Steur (collectively “Woodlands”) moved the court to dismiss or to abstain from considering the amended complaint filed by plaintiffs Soundra Temple Johnson (“Johnson”) and Johnson Property Group, L.L.C. (“JPG”), debtors in jointly-administered cases. Woodlands seeks the same result as to defendant Regions Bank’s (“Regions”) cross claim. . . . Plaintiffs sued Woodlands and Regions for a declaration that insurance proceeds now in the registry of the 24th Judicial District Court for Jefferson Parish, Louisiana, belong solely to JPG. . . . Regions counterclaimed against the plaintiffs and cross claimed against Woodlands demanding a ranking of competing claims to the insurance proceeds, and in a third party demand sought an order directing the clerk of the 24th Judicial District Court to pay Regions the insurance proceeds. . . . Because some of the claims of the amended complaint and the cross claim are based on state law, this dispute implicates issues framed by the United States Supreme Court’s decision in Stern v. Marshall concerning a bankruptcy court’s power to adjudicate state law claims. The Fifth Circuit recently explained that despite Stern’s insistence that its decision was narrow, the ruling was in fact ‘“grounded in principles that are broad in scope.’” In re BP RE, L.P., 735 F.3d 279, 289 (5th Cir. 2013), quoting Frazin v. Haynes & Boone, L.L.P., 732 F.3d 313, 319 (5th Cir. 2013). The BP RE court reasoned that if a bankruptcy court lacked constitutional authority to render a final judgment on a state law counterclaim not involved in ruling on a creditor’s claim (the issue in Stern), ‘it would also not have constitutional authority over a state law claim . . .’ under similar circumstances. Id. at 290 (emphasis added). . . . In light of the record and the history of the parties’ disputes, to guard against the possibility that this court’s power to render a final judgment adjudicating any state law claims in the amended complaint or cross claim may be subject to later challenge, and to avoid the possibility of inefficient use of judicial time and the parties’ resources, the parties shall formally consent to the court’s rendering of a final judgment over all matters in this adversary proceeding or else move to withdraw the reference to this court from the United States District Court.”). Clean Burn Fuels, LLC v. Purdue Bioenergy, LLC (In re Clean Burn Fuels, LLC), 492 B.R. 445 (Bankr. M.D.N.C. 2013) (Waldrep J.) (“[T]he Debtor filed a Chapter 11 bankruptcy petition and initiated this adversary proceeding, which seeks a declaratory judgment that the corn being housed in the bins at the Debtor’s plant (the “Corn”) was property of the estate. The case was converted to Chapter 7 . . . , and [the] Chapter 7 trustee was substituted for the Debtor in this adversary proceeding. . . . Pursuant to the analysis in Stern v. Marshall, the Court may enter a final order in this matter. ‘There can be no dispute that this Court has the authority to determine what is and is not property of the Debtor’s bankruptcy estate and enter final orders regarding the same.’ Burns v. Dennis (In re Southeastern Materials, Inc.), 467 B.R. 337, 352–52 (Bankr. M.D.N.C. 2012) (citing In re BankUnited Fin. Corp., 462 B.R. 885, 893–94 (Bankr. S.D. Fla. 2011); In re Washington Mutual, Inc., 461 B.R. 200, 217 (Bankr. D. Del. 2011)).”).

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Quinlan v. AFI Servs., LLC (In re AFI Servs., LLC), 486 B.R. 827 (Bankr. S.D. Tex. 2013) (Bohm, J.) (“In the instant adversary proceeding, Plaintiff John Quinlan (Quinlan) seeks the return of $1.0 million, which he placed into an escrow account (the Escrow Account) ‘on behalf of” Debtor AFI Services, LLC (the Debtor) after entering into a contractual agreement with the Debtor. Quinlan has filed a motion for partial summary judgment seeking: (1) a declaration that the bankruptcy estate has no interest in the $1.0 million; and (2) a return of these funds to him. The Chapter 7 Trustee . . . opposes this motion and has, in turn, filed a counter-motion for summary judgment arguing that the $1.0 million is property of the Debtor’s estate . . . . [T]his Court has a duty to question its constitutional authority to enter a final order for any matter brought before it. The Court concludes that the facts in the pending suit are distinguishable from those in Stern, and that this Court has the authority to enter a final judgment. In Stern, the debtor filed a counterclaim based solely on state law, and the resolution of this counterclaim did not resolve the validity, or invalidity, of the claim held by the defendant. The dispute at bar, on the other hand, despite requiring the application of state law[,] arises from an express bankruptcy provision: 11 U.S.C. § 541. Moreover, unlike Stern, application of state law to this provision will necessarily determine whether Quinlan has a claim against the bankruptcy estate. This suit is therefore easily distinguishable from the dispute in Stern, which leads this Court to conclude that it is constitutionally authorized to enter a final judgment in this suit.”). Cage v. Smith (In re Smith), 2014 WL 2601980 (Bankr. S.D. Tex. June 10, 2014) (Bohm, J.) (“Lowell T. Cage, the Chapter 7 trustee in this case (the Trustee), has filed suit against Cody W. Smith (the Debtor) and his wife seeking a determination that certain proceeds in their possession are property of the estate under 11 U.S.C. § 541 and to recover these proceeds under § 542. Not surprisingly, the Debtor and his wife vigorously oppose the relief sought by the Trustee. . . . In Stern, the debtor, pursuant to 28 U.S.C. § 157(b)(2)(C), filed a counterclaim based solely on state law, and the resolution of this counterclaim did not necessarily resolve the validity or invalidity of the defendant’s claim. Under these circumstances, the Supreme Court held that the bankruptcy court lacked constitutional authority to enter a final order on the debtor’s counterclaim. . . . In the dispute at bar, on the other hand, there is ample bankruptcy law involved. . . . There is certainly some state law involved in the underlying dispute—namely, the homestead exemption laws of the State of Texas—but the ultimate relief sought by the Trustee (i.e., turnover) is based upon exclusive provisions of the Code: §§ 541 and 542. Thus, this dispute is easily distinguishable from the suit in Stern, and the Court concludes that there is no Stern concern here. The Court therefore has the constitutional authority to enter a final order in this dispute.”). Rainsdon v. Visser (In re Visser), 2013 WL 1337327 (Bankr. D. Idaho Apr. 1, 2013) (Pappas, J.) (“At the pre-trial conference . . . the Court, acting sua sponte, asked the parties to consider and take a position concerning the Court’s constitutional authority to enter a final judgment and orders in this adversary proceeding in the light of the Ninth Circuit’s decision in Exec. Benefits Ins. Agency v. Arkison (In re Bellingham Ins. Agency, Inc.), 702 F.3d 553 (9th Cir. 2012). The Court also asked the parties to address an issue raised in the answer to the complaint filed by Defendant Derrick Hope (“Hope”) questioning this Court’s subject matter jurisdiction over the adversary proceeding. . . . [C]hapter 7 trustee Gary L. Rainsdon (“Trustee”), filed an adversary complaint against Defendants, debtors Joseph S. Visser and April M. Visser (“Debtors”) and Hope. As to Hope, the complaint alleges that Debtors sold Hope five snowmobiles, a motorcycle, and an all-terrain vehicle between 117

April and December 2010. However, the complaint alleges, that as of August 12, 2011, the date Debtors filed their bankruptcy petition, the certificates of title to these vehicles were still in the Debtors’ names, according to the title information Trustee obtained from the Idaho Transportation Department. Based on these facts, Trustee’s complaint states three claims for relief: (1) Count 1, against Debtors and Hope, prays for a declaratory judgment that the vehicles sold to Hope, together with another vehicle not listed in Debtors’ schedules, are property of the bankruptcy estate; (2) Count 2, against Hope, invokes § 544(a), and seeks to avoid Hope’s interest in the vehicles transferred to him prepetition; and (3) Count 3, against Debtors and Hope, requests that this Court order, pursuant to § 542, that the Defendants turn over [] the vehicles to Trustee. . . . [P]rior to Stern, the Supreme Court has instructed that ‘[b]ankruptcy jurisdiction, at its core, is in rem.’ Cent. Virginia Comm. Coll. v. Katz, 546 U.S. 356, 362 (2006). The ‘[c]ritical features of every bankruptcy proceeding are the exercise of exclusive jurisdiction over all the debtor’s property, the equitable distribution of that property among the debtor’s creditors, and the ultimate discharge that gives the debtor a “fresh start” by releasing him, her, or it from further liability for old debts.’ Id. at 364 (quoting Local Loan Co. v. Hunt, 292 U.S. 234, 244 (1934)). . . . Bankruptcy courts outside this circuit have determined that they have the constitutional authority to enter a final judgment in adversary proceedings where the issue to be decided was whether certain property was property of the bankruptcy estate subject to a turnover. . . . In this case, although a non-creditor third party is one of the targets of Trustee’s claims, and is purportedly in possession of property of the estate, the involvement of that party does not alone limit this Court’s constitutional authority to determine what is property of the bankruptcy estate. Therefore, the Court finds it has the constitutional authority to render final judgments and orders in this adversary proceeding because this is not an action to ‘augment the estate’ as pointed out in Stern and in Granfinanceria; rather, this is an action to determine the extent of the bankruptcy res,’ to eventually be distributed to creditors. See [Murphy v. Felice] [(]In re Felice[)], 480 B.R. [401,] 418 [Bankr. D. Mass. 2012)] (stating “[i]f the Trustee successfully establishes that [the property in question] is property of the estate, his action will not have augmented the estate with an asset belonging to a third party. Rather, it will merely have established that [the debtor’s] interest in [the property] is not excluded from the estate by § 541(c)(2) . . . .”). This conclusion is consistent with the authority cited above, and the broad language of the Supreme Court in Katz. If every bankruptcy proceeding requires the exercise of exclusive jurisdiction over all the debtor’s property [and] the equitable distribution of that property among the debtor’s creditors a bankruptcy court must surely have the constitutional authority to determine what is, and what is not, property of the bankruptcy estate, to order turnover of the estate property, and to determine whether another’s interest in that property should be invalidated.”).

D.

APPROVAL OF SETTLEMENTS UNDER BANKRUPTCY RULE 9019

Marshall v. Picard (In re Madoff Inv. Sec. LLC), 740 F.3d 81 (2d Cir. 2014) (Cabranes, J.; Raggi, J.; Carney, J.) (The Second Circuit suggested—albeit in dicta—that the bankruptcy court’s constitutional authority to approve a settlement under § 105(a) and Federal Rule of Bankruptcy Procedure 9019 turned on whether the court had the authority to enter final judgment on the underlying claims, stating: “We consider two questions: (1) whether the Bankruptcy Court had the authority under the Bankruptcy Code to enjoin appellants’ actions as ‘derivative’ of adversary 118

proceedings brought by the trustee for the [Bernard L. Madoff Investment Securities LLC (“BLMIS”)] estate, Irving Picard (“Picard” or the “Trustee”), against the Picower defendants; and, if indeed authorized by the Bankruptcy Code, (2) whether the Bankruptcy Court transgressed the limitations on its authority imposed by Article III of the United States Constitution. . . . [A]ccording to Marshall, the Bankruptcy Court did not have authority to enter final judgment on the Trustee’s fraudulent transfer claims against the Picower defendants, much less to issue the accompanying order enjoining all duplicative and derivative actions. . . . Yet Granfinanciera held that a fraudulent conveyance claim is a matter of private right when asserted against ‘a person who has not submitted a claim against a bankruptcy estate.’ . . . In this case, unlike in Granfinanciera, the Picower defendants filed a proof of claim against the BLMIS estate. In order to rule on that claim, the Bankruptcy Court was required to first resolve the fraudulent transfer issue. . . . Accordingly, the Bankruptcy Court’s authority under the Bankruptcy Code to approve the settlement between the Trustee and the Picower defendants and to permanently enjoin appellants’ disguised fraudulent transfer claims does not run afoul of Article III of the United States Constitution.”). Carr v. New Century TRS Holdings, Inc. (In re New Century TRS Holdings, Inc.), 544 F. App’x. 70 (3d Cir. 2013) (Fuentes, J.; Greenberg, J.; Van Antwerpen, J.) (“Appellant Anita B. Carr appeals pro se from orders of the United States District Court for the District of Delaware, which dismissed her appeal from the Bankruptcy Court and denied her motion for reconsideration and petition for a writ of mandamus. . . . In October 2010 Carr and the Debtors entered into a settlement agreement where the Debtors paid a sum of $60,000 ‘in full and final satisfaction of the causes of action and any other claim(s) that [Carr] may have against the Debtors.’ [These causes of action included] claims for (1) fraudulent conveyance; (2) violation of chapter 11 of the Bankruptcy Code; (3) fraudulent misrepresentation and negligence; (4) violation of the Truth-in-Lending Act, 15 U.S.C. § 1601 et seq. . . , (5) violation of Cal. Bus. & Prof. Code § 17200, et seq.; (6) violation of the Real Estate Settlement Procedures Act, 12 U.S.C. 2605; and (7) quiet title to real property [asserted in the complaint filed in the adversary proceeding she commenced against the Debtors.] The settlement agreement provided that Carr released the Debtors from ‘any and all claims, damages, actions, suits, causes of action, rights, liens, demands, obligations and/or liabilities.’ It further provided that, should a dispute arise between the parties after the execution of the settlement agreement, the ‘Parties consent and subject themselves to the jurisdiction of this United States Bankruptcy Court, District of Delaware . . . to resolve such dispute(s).’ In November 2010 Carr filed a notice of dismissal with prejudice, and the Bankruptcy Court closed the adversary proceeding. Subsequently, though, Carr sought to stay the dismissal and to schedule an evidentiary hearing, asserting that she was fraudulently induced to enter into the settlement agreement. The Bankruptcy Court rejected Carr’s fraud claim, and Carr timely appealed to the District Court. . . . Regarding the statutory and constitutional jurisdictional issues, Carr did not dispute that the Bankruptcy Court had authority to adjudicate the underlying adversary proceeding and to approve the settlement of her claims. Instead, Carr asserted only that her later raised claim of fraudulent inducement to settle was not a ‘core proceeding’ and that, pursuant to the Supreme Court’s decision in Stern v. Marshall . . . , only an Article III court had constitutional jurisdiction to adjudicate the claim. . . . Regarding the statutory assertion, federal bankruptcy courts have statutory authority to enter final decisions in all ‘core proceedings.’ See 28 U.S.C. § 157(b). In this matter, Carr filed both a proof of claim and an adversary proceeding against the Debtors’ estate. The settlement of these claims clearly constitutes a core proceeding, and the Bankruptcy Court’s resolution of any 119

disputes over the settlement are also clearly core proceedings related to the underlying settlement. See id. at § 157(b)(2)(B) (“Core proceedings include . . . allowance or disallowance of claims against the estate. . . .”). In addition, the Supreme Court has noted that a creditor could consent to the bankruptcy court’s exercise of statutory authority to resolve a claim, and it is clear that Carr, in the settlement agreement, did give such consent. . . . As to constitutional jurisdiction, Stern does not support Carr’s contention. Stern involved a state-law counterclaim asserted by the debtor that was not related to the creditor’s claims against the estate or the underlying bankruptcy in any way. In that case, the Supreme Court held that the judicial power of the United States may only be invested in Article III courts and that, in that ‘one isolated respect,’ the authority granted by Congress to the bankruptcy courts exceeded the limitations of Article III. Id. at 2620. In this matter, Carr’s claims were not unrelated counterclaims asserted by a debtor, but were, rather, direct claims by a creditor that the Debtors fraudulently induced her to enter into a settlement agreement concerning indisputably core proceedings within the jurisdiction of the Bankruptcy Court. See 28 U.S.C. § 157(b)(2)(B). Thus, Carr’s claim of fraud is not independent of the bankruptcy but rather irreversibly intertwined with the Bankruptcy Court-approved resolution of Carr’s underlying claims against the bankruptcy estate, rendering Stern inapposite. Neither the Supreme Court nor we have held that a claim such as Carr’s is outside the jurisdiction of the bankruptcy courts to adjudicate. Cf. Travelers Indem. Co. v. Bailey, 557 U.S. 137, 151, 129 S. Ct. 2195, 174 L. Ed. 2d 99 (2009) (bankruptcy courts have jurisdiction to interpret and enforce their own orders); In re Lazy Days’ RV Ctr. Inc., 724 F.3d 418, 423–24 (3d Cir. 2013) (holding that the bankruptcy court had jurisdiction to resolve a dispute over whether, in light of 11 U.S.C. § 365(f)(3), an anti-assignment clause survived a settlement agreement it had confirmed as part of the bankruptcy). We conclude that the Bankruptcy Court had the constitutional authority to adjudicate Carr’s fraudulent inducement to settle claim.”). Realan Inv. Partners, LLLP v. Meininger (In re Land Res., LLC), 505 B.R. 571 (M.D. Fla. 2014) (Honeywell, J.) (“Appellants offer several arguments for why this Court should overturn the bankruptcy court’s approval of the Ward Settlement Agreement. First, they assert that the bankruptcy court lacked the constitutional authority to enter a bar order prohibiting third parties from bringing state law claims against the Ward Parties, citing to the Supreme Court’s recent decision in Stern v. Marshall . . . . Courts considering Stern’s reach have uniformly concluded that Stern had little impact on bankruptcy courts’ authority to enter final orders and judgments on motions to approve a settlement pursuant to Bankruptcy Rule 9019, including those containing bar orders. . . . This Court agrees with these precedents and concludes that Stern should not be extended beyond its narrow holding. The Stern Court merely held that bankruptcy courts lack the constitutional authority to enter a final judgment on a state law counterclaim that is not resolved in the process of ruling on a creditor’s proof of claim. Stern, 131 S. Ct. at 2620. The Supreme Court emphasized that it was only addressing the ‘narrow’ question before it, that Congress had exceeded the limitations of Article III ‘in one isolated respect,’ and that the Court’s holding did not ‘meaningfully change[] the division of labor’ between bankruptcy courts and Article III courts. Id. Thus, there is no reason to believe that Stern intended to limit bankruptcy courts’ authority to approve settlements of claims that are property of the debtor’s estate. Moreover, in this case, the bankruptcy court did not enter a judgment on the merits of any of Appellants’ potential state law claims against the Ward Defendants. Rather, the action taken by the bankruptcy court was approval of a settlement agreement pursuant to Bankruptcy Rule 9019. In contrast to the state law 120

counterclaim at issue in Stern, the approval of a settlement agreement is governed by the Federal Rules of Bankruptcy Procedure and federal case law interpreting those Rules. Accordingly, Stern is inapposite. Appellants are therefore incorrect in asserting that the bankruptcy court exceeded its constitutional authority in approving the Ward Settlement Agreement and the Bar Order.”). Pereira v. Garritano (In re Connie’s Trading Corp.), 2014 WL 1813751 (S.D.N.Y. May 8, 2014) (Gorenstein, J.) (“Finally, we note that Stern does not affect the bankruptcy court’s constitutional authority to resolve the adversary proceeding pursuant to Bankruptcy Rule 9019. . . . [W]hile we have assumed that the bankruptcy court lacks constitutional authority to resolve the trustee’s fraudulent conveyance action on the merits, this factor would not weigh in favor of permissive withdrawal [of the reference] of the Rule 9019 motion.”). Carr v. Jacobs (In re New Century TRS Holdings, Inc.), 2013 WL 1196605 (D. Del. Mar. 25, 2013) (Robinson, J.) (“This matter falls within the ambit of § 157(b)(2)(B), and the parties do not dispute that this is a core proceeding. Appellant, however, relies upon Stern, supra, to argue that the bankruptcy court had no authority to adjudicate her claim of fraudulent inducement of settlement. . . . Having considered Stern and its progeny, the court adopts the narrow construction of Stern and its holding, that is, that Stern is restricted to the case of a ‘state-law counterclaim that is not resolved in the process of ruling on a creditor’s proof of claim’ as set forth in 28 U.S.C. § 157(b)(2)(C). . . . Approval of a settlement is ‘core’ to the bankruptcy code. See In re WorldCom, Inc., 347 B.R. 123, 138 (Bankr. S.D.N.Y. 2006) (finding jurisdiction to approve settlement agreement); In re Harris, 590 F.3d 730 (9th Cir. 2009) (explaining that matters involving the implementation of the parties’ settlement agreement was within bankruptcy court’s core jurisdiction). Stern, 131 S. Ct. 2594, and its narrow limit on bankruptcy court jurisdiction does not extend to the compromise and settlement of a claim which is ‘indisputably property of a debtor’s estate.’ In re Ambac Fin. Group, Inc., 457 B.R. 299, 308 (Bankr. S.D.N.Y. 2011) (overruling Stern v. Marshall-based objections and approving settlement and release of claims under Fed. R. Bankr. P. 9019); see also In re Madoff, 848 F. Supp. 2d 469, 484 (S.D.N.Y. 2012) (finding that Stern did not impact the bankruptcy court’s authority to approve a settlement agreement).”).

E.

SUBSTANTIVE CONSOLIDATION

In re Petters Co., 506 B.R. 784 (Bankr. D. Minn. 2013) (Kishel, J.) (“The remedy of substantive consolidation has been variously described as ‘a construct of federal common law, emanat[ing] from equity,’ In re Owens Corning, 419 F.3d 195, 205 (3d Cir. 2005); as available ‘by virtue of [the] general equitable powers’ of the federal courts, In re Auto-Train Corp., Inc., 810 F.2d 270, 276 (D.C. Cir. 1987); and as having ‘no express statutory basis, but [being] a product of judicial gloss,’ In re Augie/Restivo Baking Co., Ltd., 860 F.2d 515, 518 (2d Cir. 1988). . . . The remedy had its antecedents in other principles of general equity jurisprudence—piercing of the corporate veil, ‘alter ego’ liability, and the like. In re Owens Corning, 419 F.3d at 205–206. However, in its specific construct, directed to the administration of an estate in a bankruptcy case under federal law, substantive consolidation had its origin in a 1941 decision of the United States Supreme Court, Sampsell v. Imperial Paper & Color Corp., 313 U.S. 215, 61 S. Ct. 904, 85 L. Ed. 1293. Id. Under 121

this framing, substantive consolidation is uniquely a matter of bankruptcy law, and its application is limited to bankruptcy cases. . . . As a result, the motion at bar is a core proceeding in the cases of the subject Debtors. For the purposes of jurisdiction and the division of judicial labor within the exercise of federal bankruptcy jurisdiction, this motion is unquestionably a ‘matter concerning the administration of the estate,’ 28 U.S.C. § 157(b)(2)(A). . . . [B]ecause the rule of decision is furnished exclusively by federal bankruptcy law as the federal courts have developed it, there is no constitutional issue over the exercise of that authority. In re LLS America, LLC, 2011 WL 4005447 (Bankr. E.D. Wash.2011). Cf. Stern v. Marshall . . . .”).

F.

EQUITABLE SUBORDINATION UNDER § 510(c)

Settlers’ Housing Serv., Inc. v. Schaumburg Bank & Trust Co., N.A. (In re Settlers’ Housing Serv., Inc.), 2014 WL 2986107 (Bankr. N.D. Ill. June 30, 2014) (Schmetterer, J.) (“Count 1 of the Complaint seeks equitable subordination. A request for equitable subordination under § 510(c) ‘stems from the bankruptcy itself,’ and may constitutionally be decided by a bankruptcy judge. Stern, 131 S. Ct. at 2618. In addition, the authority of a bankruptcy judge to rule on objections to a creditor’s proof of claim where necessary to determine the valid amount of the claim was clearly affirmed in Stern. [131 S. Ct.] at 2616. A recent Seventh Circuit panel opinion affirmed the power of a bankruptcy judge to enter final judgment when a creditor submits a proof of claim and the trustee seeks to recover preferences and fraudulent transfers. Peterson v. Somers Dublin Ltd., 729 F.3d 741 (7th Cir. 2013). If [] creditors subject themselves to preference-recovery and fraudulent-conveyance claims when they file proof of claim, then creditors certainly subject themselves to adjudication of the extent and validity of their claims.”). Ball Four, Inc. v. 2011-SIP-1 CRE/CADC Venture, LLC (In re Ball Four, Inc.), 2013 WL 5716889 (Bankr. D. Colo. Oct. 18, 2013) (Brown, J.) (“Even if equitable subordination does not fit squarely in the enumerated examples set forth in the statute, it fits within the traditional understanding of summary jurisdiction, which includes the adjudication of claims to the res. If a bankruptcy court can disallow a claim, it should be able to take the less drastic action of subordinating the claim. Moreover, subordination of a claim does not involve reaching outside the estate to bring assets back to the estate, which would implicate plenary jurisdiction. Thus, the Court has the authority to enter final orders as to [the debtor’s] claims for equitable subordination . . . .”).

G.

MODIFYING CHAPTER 13 PLANS

In re Moncree, 2014 WL 2916444 (Bankr. E.D. Wis. June 27, 2014) (Kelley, J.) (“The issue is whether Debria Moncree (the “Debtor”) can change the valuation of her real estate located at 3001–3003 North 8th Street in Milwaukee (the “property”) to reduce the amount payable to a secured creditor in her second amended Chapter 13 plan. The Debtor valued the property at $75,600 in a first amended plan . . . . Bank of America, successor by merger to BAC Home Loans Servicing, LP, f/k/a Countrywide Home Loans Servicing LP (the “Creditor”) holds a mortgage on the property. The first amended plan proposed to pay the Creditor the principal amount of $75,600 plus interest 122

of 4.5%. The Creditor did not object to this treatment, and the Court confirmed the first amended plan on September 19, 2013. . . . The Creditor filed a claim in the amount of $246,618.02. On August 1, 2013, the Debtor filed an objection to the claim, contending that the amount should be limited to $75,600, consistent with the plan. The Court ordered the Creditor to file a response to the claim objection and offered the opportunity for a hearing. The Creditor did not respond or request a hearing, and the Court entered an order on September 16, 2013, allowing the Creditor’s secured claim in the amount of $75,600. . . . On March 18, 2014, the Debtor filed a second amended plan. The plan proposes to decrease the amount of the payments to the Creditor to reflect a secured claim in the amount of $48,500, consistent with a new appraisal the Debtor obtained. According to the Debtor, the original appraisal did not take into account repairs that are necessary to convert the property to a day care center. The Creditor and the Chapter 13 Trustee objected to the modified plan. . . . The Court has the authority to enter a final order as this proceeding involves the allowance of a claim and the confirmation of a [proposed modified] plan. See 28 U.S.C. § 157(b)(2)(B) and (L). These core proceedings are not constitutionally suspect under Stern v. Marshall, 131 S. Ct. 2594 (2011).”).

H.

CONTRACT ASSUMPTION OR REJECTION UNDER § 365

In re Lazy Days’ RV Center, Inc., 724 F.3d 418 (3d Cir. 2013) (Scirica, J.; Hardiman, J.; Aldisert, J.) (“[T]he Bankruptcy Court in this case did not decide a question of state common law, but rather determined whether, in light of 11 U.S.C. § 365(f)(3), an anti-assignment clause survived the Settlement Agreement it had confirmed as part of a Chapter 11 bankruptcy. Here, the Reorganized Debtors’ claim for relief was based on a federal bankruptcy law provision with no common law analogue, so the Stern line of cases is plainly inapposite.”).

I.

DISMISSING AND CONVERTING BANKRUPTCY CASES

In re Terzo , 502 B.R. 553 (Bankr. N.D. Ill. 2013) (Schmetterer, J.) (“The United States Trustee . . . and FirstMerit Bank, N.A. (“FirstMerit”) filed motions to dismiss the case as an abuse of chapter 7 under § 707(b). Movants assert both that Debtors had primarily consumer debt, and that a presumption of abuse arises under § 707(b)(2). Debtor argues that Debtors do not have primarily consumer debt, and that § 707(b) does not apply. . . . A motion to dismiss a case ‘stems from the bankruptcy itself,’ and may constitutionally be decided by a bankruptcy judge. Stern v. Marshall, ––– U.S. ––––, 131 S. Ct. 2594, 2618, 180 L. Ed. 2d 475 (2011).”). In re Triumph Christian Ctr., Inc., 493 B.R. 479 (Bankr. S.D. Tex. 2013) (Bohm, J.) (“[The movant] seeks dismissal of the Second Case ‘for cause’ pursuant to Federal Bankruptcy Rule 1017(f)(2) and 11 U.S.C. § 1112(b)(1). Specifically, [the movant] alleges that the Debtor has filed this second Chapter 11 case in bad faith, and therefore ‘cause’ for dismissal exists under section 1112(b). The Debtor contends that its serial filing of this second Chapter 11 case was necessitated by unanticipated changed circumstances, and therefore is not in bad faith. . . . Here, [the movant] seeks relief pursuant to Federal Bankruptcy Rule 1017(f)(2) and 11 U.S.C. § 1112(b). As the 123

Motion and the requested relief are based on an express provision of the Code and an express Bankruptcy Rule, rather than on state law, this matter is distinguishable from the suit in Stern. This Court is, therefore, constitutionally authorized to enter a final order on the Motion.”). In re Heinzle, 2014 WL 2442261 (Bankr. W.D. Tex. May 30, 2014) (Gargotta, J.) (“Came on to be considered the . . . Chapter 13 Trustee’s Motion to Deny Discharge and Dismiss Case . . . . The Trustee argues that: (1) The confirmed plan implies that Debtors are assuming the duties of the Trustee to make direct payments to creditors. As such, the Trustee asserts that direct payments to the mortgage lender constitute payments under the plan. (2) Debtors’ failure to make the payments due under the plan (including mortgage payments) is a default under the plan. As such, Debtors are not entitled to a discharge under § 1328(a). (3) Because Debtors have made all payments under the plan for a term of 60 months, the plan cannot be modified. § 1329(c). As such, because the plan term is completed and Debtors may not now modify the plan to cure a plan default, the Trustee maintains that dismissal of the case is appropriate. . . . The Court notes that the Supreme Court’s decision in Stern v. Marshall . . . does not suggest or hold that this Court lacks authority to hear and enter final orders regarding a debtor’s discharge [and the Trustee’s request for dismissal].”). In re NNN 123 North Wacker, LLC, 2014 WL 2212015 (Bankr. N.D. Ill. May 27, 2014) (Schmetterer, J.) (“A motion to dismiss under § 1112(b) ‘stems from the bankruptcy itself,’ and may constitutionally be decided by a bankruptcy judge. Stern v. Marshall, 131 S. Ct. 2594, 2618 (2011).”). In re Cyncynatus, 2013 WL 3864310 (Bankr. N.D. Ohio July 24, 2013) (Morgenstern-Clarren, J.) (“The debtors . . . filed a chapter 13 bankruptcy case. After the Chapter 13 trustee moved to convert the case to chapter 7 under Bankruptcy Code § 1307(c), and the court had set that motion for trial, the debtors moved instead to have their case dismissed under Bankruptcy Code § 1307(b). The issue is whether § 1307(b) gives the debtors an absolute right to dismiss, regardless of whether they acted in bad faith in their bankruptcy case. . . . This is a core proceeding under 28 U.S.C. § 157(b)(2)(A) and (O), and it is within the court’s constitutional authority as analyzed by the United States Supreme Court in Stern v. Marshall, 131 S. Ct. 2594 (2011).”).

J.

ATTORNEY COMPENSATION/SANCTIONS

Dahiya v. Kramer, 2014 WL 1278131 (E.D.N.Y. Mar. 27, 2014) (Hrhzarry, J.) (“[Appellants (attorney and law firm)] . . . appeal from [bankruptcy court] . . . [o]rder . . . in . . . adversary proceeding . . . grant[ing] a motion for sanctions brought by . . . [the Chapter 7 trustee] against the appellants. . . . The Bankruptcy Court found that it could impose sanctions under both its inherent authority and 28 U.S.C. § 1927 (“Section 1927”). Appellants claim[] that . . . the Bankruptcy Court does not possess ‘inherent authority’ to issue sanctions because it is not an Article III court. . . . The Bankruptcy Court found that it could impose sanctions under both its inherent authority and 28 U.S.C. § 1927 (“Section 1927”). . . . Appellant[s] appear[] to argue that the Bankruptcy Court did not have jurisdiction over the Sanctions Motion, because the ‘inherent authority’ to impose sanctions is a judicial power that may only be exercised by Article III judges. This argument is 124

without merit. Although the category of cases that can constitutionally be assigned to bankruptcy judges to issue final judgment is limited, see Stern v. Marshal, 131 S. Ct. 2594 (2011)[,] bankruptcy courts ‘possess inherent authority to impose sanctions against attorneys and their clients.’ In re Plumeri, 434 B.R. 315, 327–28 (S.D.N.Y. 2010) (quoting In re Evergreen Sec., Ltd., 570 F.3d 1257, 1263 (11th Cir. 2009)). The inherent power to sanction is not governed by a specific rule or statute, but instead ‘derives from the fact that courts are vested, by their very creation, with power to impose silence, respect, and decorum in their presence, and submission to their lawful mandates.’ Id. at 328 (quoting Schlaifer Nance & Co., Inc. v. Estate of Warhol, 194 F.3d 323, 336 (2d Cir. 1999)); see also Chambers v. NASCO, Inc., 501 U.S. 32, 43 (1991). Despite Appellant[s’] argument to the contrary, there is no support for the contention that the ‘inherent powers’ of courts to issue sanctions ‘belong[] exclusively to the Article III courts.’”). In re Lupo, 2013 WL 1282423 (D. Mass. Mar. 26, 2013) (Tauro, J.) (“L & G moved to withdraw as counsel [for the Chapter 11 debtor] . . . . L & G [later] filed its Application for Final Allowance of Compensation and Reimbursement of Expenses by the Law Firm of Looney & Grossman, LLP as Counsel to the Debtor (“Fee Application”). L & G sought $65,343.75 in compensation and $225.84 in expense reimbursements for the period from June 23, 2010, to August 18, 2010, the date the court appointed the Chapter 11 Trustee. The Debtor filed an Objection to the Fee Application on October 10, 2011, claiming that L & G’s fees were excessive and that its failure to file the disclosure statement resulted in conversion of the case to a Chapter 7 liquidation. The court conducted an evidentiary hearing on December 6, 2011, and deemed the Fee Application and objection a contested matter to which adversary rules applied. The court allowed affidavits as direct examination and cross examination at the hearing. . . . After the hearing, . . . the Debtor filed an Emergency Motion Requesting that the Court Refrain from Ruling on the Application for Final Allowance of Compensation. He asked the court to refrain from ruling on the Fee Application until his attorneys filed a motion to compel the Trustee to abandon the legal malpractice claim against L& G. In the alternative, he asked that the court not make any findings on the quality of L & G’s representation and specifically preserve his right to pursue a legal malpractice claim. On February 6, 2012, the Debtor filed a Motion to Compel the Trustee to either pursue or abandon the malpractice claim. The Trustee objected to both motions. . . . In light of the evidence presented at the December 6, 2011 hearing, the court 1) allowed the Fee Application, 2) overruled the Debtor’s objection to it, 3) sustained the Trustee’s objections to the Debtor’s motions, and 4) denied the Debtor’s motions to refrain and to compel. In reaching these conclusions, the court considered testimony regarding L & G’s representation of the Debtor and concluded that the Debtor had no basis for asserting a malpractice claim against L & G. The court found that the absence of the Trustee’s support, rather than L & G’s failure to file a disclosure statement, triggered conversion of the case from Chapter 11 to Chapter 7. . . . The Debtor’s reliance on the ‘narrow’ holding in Stern is misplaced. Neither the Debtor nor the Trustee brought a legal malpractice counterclaim to L & G’s Fee Application. Rather, the bankruptcy court considered the Debtor’s allegations of malpractice, raised in his objection, in determining whether to allow the Fee Application. Such consideration was necessary in light of the bankruptcy court’s obligation to determine the ‘amount of reasonable compensation to be awarded.’ 11 U.S.C. § 330(a)(3). Had the court determined that the Debtor’s estate possessed a viable claim, it may have reduced or denied the application. In light of this court’s duty to review fee determinations under a quite deferential abuse of discretion

125

standard, the court sees no reason to set aside the bankruptcy court’s allowance of the fee application or denial of the motion to refrain.”). In re Bradley, 495 B.R. 747 (Bankr. S.D. Tex. 2013) (Bohm, J.) (After the debtors’ case was converted from Chapter 13, the Chapter 7 trustee filed a motion seeking an order requiring the attorney who was representing the debtors (“Aduwa”) and law firm employing him (the “Firm”) to appear and show cause (1) why they should not be required to disgorge fees paid by debtors and (2) why sanctions should not be imposed. Show cause order was issued to attorney, his legal assistant (“Gutierrez”) and firm’s name partners (“Macey” and “Aleman”). Following the show cause hearing, the court found that the attorney and his legal assistant had committed multiple violations of the Bankruptcy Code and the national and local bankruptcy rules. The court imposed monetary sanctions against the attorney and his legal assistant as well as monetary sanctions against the firm. Concluding that it had the constitutional authority to adjudicate the matter, the court reasoned: “The matter before the Court is not a counterclaim of the Debtors’ estate based solely on state law. Rather, this matter arises from this Court’s issuance of a show cause order to maintain the integrity of the bankruptcy process. This matter arises out of violations of various Code provisions, Bankruptcy Rules, and local Rules—specifically 11 U.S.C. § 329(a), Bankruptcy Rules 9011(b), 5005(a)(2), and 2016, and Local Bankruptcy Rules 1001–1 and 5005–1—by Aduwa, an officer of this Court, his employer (i.e., the Firm) and Gutierrez, an employee of the Firm. This Court has authority under Bankruptcy Rule 9011(c) to impose sanctions for violations of Rule 9011(b); and also under 11 U.S.C. § 105(a) and applicable case law to police the conduct of attorneys who appear in this Court and to impose sanctions on those attorneys who misbehave. In sum, the facts in the case at bar are wholly different from the facts in Stern. . . . For all of these reasons, the Court concludes that it has the constitutional authority to enter a final order imposing sanctions on Aduwa, Macey, Aleman, the Firm, and Gutierrez.”). In re Stomberg, 487 B.R. 775 (Bankr. S.D. Tex. 2013) (Bohm, J.) (The bankruptcy court entered an order to show cause to former counsel for the Chapter 11 debtor. The order required the attorney to appear and show cause why he should not be sanctioned for alleged misconduct in the handling of the debtor’s Chapter 11 case, including knowingly filing certain documents in the case without obtaining the debtor’s original signatures. Addressing its constitutional authority to enter the final order imposing sanctions on the debtor’s former counsel, the court stated: “In the wake of the Supreme Court’s ruling in Stern v. Marshall, this Court must also evaluate whether it has the constitutional authority to sign a final order regarding the show cause hearing. . . . In Stern, the Supreme Court held that 28 U.S.C. § 157(b)(2)(C)—which authorizes bankruptcy judges to issue final judgments in counterclaims by a debtor’s estate against entities filing claims against the estate—is an unconstitutional delegation of Article III authority to bankruptcy judges, at least when the counterclaim being adjudicated is based solely on state common law and does not affect the claims adjudication process. . . . The matter at bar is not a counterclaim of the Debtor’s estate based solely on state law. Rather, this matter arises from this Court’s issuance of the Second Show Cause Order in order to maintain the integrity of the bankruptcy process. This matter arises out of violations by [debtor’s former counsel], an officer of this Court, of various Federal and Local Bankruptcy Rules—specifically Federal Bankruptcy Rules 9011(b) and 5005(a)(2), and Bankruptcy Local Rules 1001–1 and 5005–1. This Court has authority under Federal Bankruptcy Rule 9011(c) to issue sanctions for violations of Rule 9011(b), as well as under 11 U.S.C. § 105(a) and applicable 126

case law to police the conduct of the attorneys who appear in this Court and to impose sanctions on those attorneys who misbehave. . . . There is no state law involved in the matter before this Court. Rather, the matter before the Court solely involves bankruptcy law. For all of these reasons, the Court concludes that it has the constitutional authority to enter a final order imposing sanctions on [debtor’s former counsel].”). In re Royal Manor Mgmt., Inc., 2013 WL 1310881 (N.D. Ohio Mar. 28, 2013) (Shea-Stonum, J.) (“This matter is before the Court on the renewed motion of the Liquidation Trustee requesting sanctions against Dennis Grossman, Esq. pursuant to this Court’s inherent power under 11 U.S.C. § 105(a) and separately under 28 U.S.C. § 1927. . . . Grossman argues the bankruptcy court has no authority to impose sanctions under 28 U.S.C. § 1927, and relies upon Stern v. Marshall, 131 S. Ct. 2594 (2011). Post-Stern, Courts have held that the bankruptcy court is bound by the law of its jurisdiction with respect to issuing sanctions pursuant to 28 U.S.C. § 1927. . . . Grossman has not presented law indicating a change in that posture. Therefore, the Court finds that the Bankruptcy Court has authority to award sanctions pursuant to 28 U.S.C. § 1927.”).

K.

ENFORCING ASSET-PURCHASE AGREEMENTS, SETTLEMENT AGREEMENTS AND OTHER POSTPETITION CONTRACTS

Tanguy v. West (In re Davis), 538 F. App’x 440 (5th Cir. 2013) (Stewart, J.; Davis, J.; Wiener, J.) (“[Defendant-Appellant Phillippe] Tanguy executed a promissory note in the amount of $1,237,500 payable to the debtor, Richard Davis (“Davis”), for the purchase of a DeHavilland Twin Otter N186AL aircraft (“the aircraft”) in accordance with a purchase agreement between Tanguy and Davis signed the same day. The note was to be repaid in 124 monthly installments. Tanguy began making monthly payments on the note in January 2007 in accordance with its terms. . . . Six months later, in June 2007, Davis filed a voluntary Chapter 7 bankruptcy and the Trustee was appointed. The bankruptcy estate, through the Trustee, then became the owner of the note. A few months later, Davis assigned the note to JLE Investors, Inc. (“JLE”) as collateral for a loan. Upon learning of Davis’s assignment of the note to JLE, the Trustee filed a claim to recover the note. In February 2008, the bankruptcy court approved a settlement wherein the note was re-assigned from JLE to the Trustee. Then in April 2008, Tanguy signed a stipulation indicating that the Trustee was the lawful holder of the note and that the note was in full force and effect. Tanguy continued to make payments on the note ultimately totaling approximately $190,000. . . . Tanguy [later] stopped making payments on the note, leaving an unpaid principal balance of $1,047,500. A few months later, in January 2009, Tanguy repudiated all obligations under the note entirely. . . . In response, the Trustee sent a default demand to Tanguy accelerating the terms of the note and demanding full payment of the unpaid principal balance. Shortly thereafter, in March 2009, the Trustee filed a formal adversary proceeding in the bankruptcy court against Tanguy seeking the full unpaid balance on the note, plus interest and attorney’s fees. . . . In April 2009, Tanguy filed an answer and counterclaim against the Trustee for breach of contract or warranty under the purchase agreement, for tortious interference, and for conspiracy to interfere. Tanguy asserted as affirmative defenses the absence of an indispensable party, equivalent value, unclean hands and bad faith, fraud, ordinary course of 127

business, non est factum, failure of consideration, offset, and reformation and/or rescission. Tanguy’s answer also included a jury demand. . . . In response to Tanguy’s counterclaims, the Trustee asserted affirmative defenses of failure to state a claim upon which relief can be granted, contributory negligence, estoppel, failure of consideration and fraud, and absolute immunity. The Trustee also filed a motion to strike the jury demand. . . . In a pretrial hearing, the bankruptcy court granted the Trustee’s motion to strike Tanguy’s jury demand. Then in December 2009, the bankruptcy court conducted a trial on the merits and ultimately entered judgment in favor of the Trustee for the amount of $1,183,090.80 (the unpaid balance plus interest), plus $31,180.75 in attorney’s fees. In 2010, Tanguy filed a notice of appeal, . . . . As a preliminary matter, the district court ordered the parties to brief the issue of whether the bankruptcy and district courts lacked subject matter jurisdiction over the proceedings on account of Stern. After reviewing the parties’ briefs and the applicable law, the district court found that Stern did not apply and continued with the proceedings. Then, for the reasons set forth in the bankruptcy court’s memorandum opinion, in addition to those set forth in its own detailed opinion, the district court affirmed the bankruptcy court judgment in full, including its rulings on the motions to strike jury demand, . . . . Tanguy now appeals to this court. . . . As an initial matter, we are unpersuaded by Tanguy’s argument that neither the bankruptcy court, the district court, nor this court, have subject matter jurisdiction over these proceedings in light of the Supreme Court’s opinion in Stern . . . . As pointed out by the Trustee in his argument on appeal, the current proceedings are distinguishable from Stern because they involve a bankruptcy proceeding party’s (Tanguy’s) counterclaim against the bankruptcy estate itself, for acts which were allegedly committed during the pendency of the bankruptcy proceedings. While it is true that Tanguy names the Trustee in the counterclaims against the estate, he does so explicitly in the Trustee’s representative capacity of the estate, not in his private or personal capacity. This posture is contrary to that of Stern, which involved a state law counterclaim by the bankruptcy estate against a creditor for acts the creditor allegedly committed in his private capacity prior to the institution of the bankruptcy proceedings. Moreover, as this court has previously noted, while it is true that Stern invalidated 28 U.S.C. § 157(b)(2)(C) with respect to ‘counterclaims by the estate against persons filing claims against the estate,’ Stern expressly provides that its limited holding applies only in that ‘one isolated respect.’ See In re Renaissance Hosp. Grand Prairie Inc., 713 F.3d 285, 294 n.12 (5th Cir. 2013) (quoting Stern, 131 S. Ct. at 2620). We decline to extend Stern’s limited holding herein. . . . We therefore conclude that the district court and the bankruptcy court properly exercised subject matter jurisdiction over these proceedings and consequently, this court also has subject matter jurisdiction over the proceedings on appeal.”). In re Christ Hosp., 502 B.R. 158 (Bankr. D.N.J. 2013) (Stern, J.) (Hudson Hospital Propco, LLC and related entities (collectively, “Hudson”) purchased the assets of the Chapter 11 debtor, Christ Hospital (“Hospital”), in a § 363 sale, which preceded the bankruptcy court’s confirmation of the Hospital’s plan of liquidation. Thereafter, Hudson moved to enjoin its competitor, Prime Healthcare Services, Inc. (“Prime”), from pursuing its postpetition state-court action against Hudson, in which Prime asserted economic tort claims relating to Hudson’s acquisition of the Hospital’s assets. Prime opposed the motion and filed a cross-motion to have the reference withdrawn by the district court pursuant to 28 U.S.C. § 157(d), thus allowing that court to hear the current disputes. Addressing the cross-motions, the court stated: “Prime argues that none of the following gives the bankruptcy court subject matter jurisdiction over Prime’s state law claims: any order entered in the bankruptcy case; 28 U.S.C. § 1334(b); United States Supreme Court cases which otherwise restrict bankruptcy court 128

jurisdiction or the ability of this court to enter final judgments; or, 11 U.S.C. § 105(a) (bankruptcy court power to issue orders “necessary or appropriate” to carry out provisions of Title 11 or enforce its orders). . . . Discounting the precepts of in rem jurisdiction, Prime argues that it did not participate in the hospital’s Chapter 11 case and thus cannot be bound by the organic orders issued in that case. Similarly, it would argue that Hudson, a nondebtor, cannot avail itself of enforcement rights against Prime (again, a nonparticipant in the case) through the good offices of the bankruptcy court. These contentions ignore an essential point in this dispute: once Hudson became the successful auction bidder, the asset transfer, the assets and their use by Hudson garnered protections under the Sale Approval Order which are within the jurisdiction of this court to provide and which are enforceable in bankruptcy against Prime. . . . It should be clear, contrary to Prime’s argument, that the in rem bar here is not a resolution of state law claims, nor is such a resolution necessary to decide the pending motion. That bar is an estoppel; it is based upon bankruptcy sale/marketplace necessities and, in this case Prime’s conduct as well. Similarly, Prime’s contentions that its economic tort claims do not ‘arise under title 11’ or ‘arise in a case under title 11,’ and are thus not derived from the debtor or the bankruptcy case or law, misses the point that those claims are § 363(f) interests. It is the bankruptcy sale (including order enforcement) which is ‘core’ here, not resolution of the economic tort claims alleged by Prime. . . . Prime invokes Stern v. Marshall . . . but fails to relate it specifically to § 363 sales, in rem bankruptcy jurisdiction, or anything factually analogous to the matter at bar. . . . In the final analysis of jurisdictional matters here, Prime is in the position of an ‘interest’ holder for § 363(f) purposes. Prime had complete notice and knowledge of the bankruptcy case and the § 363 sale. It took no steps to protect its interests in the Chapter 11 case (notwithstanding multiple opportunities). Further, Prime chose to collaterally attack the Sale Approval Order and, ultimately, the Confirmation Order while this case was ongoing. The State litigation pleading was filed in March 2013, seeking bankruptcy-sale affecting damages at a preconfirmation stage of the Chapter 11 case. Stern v. Marshall, restricting under certain circumstances bankruptcy courts from adjudicating state law-based counterclaims as part of bankruptcy adversary proceedings, does not unsettle the scope of traditional bankruptcy processes. There is absolutely no reason to believe that ‘free and clear’ sales are suddenly outside the ambit of the bankruptcy court. If in particular cases due process issues arise based upon notice and fundamental fairness concepts (put at risk in sanctifying and enforcing the terms of bankruptcy sales), those concerns can be addressed where raised. However, in the case at bar there is no such notice or fairness impediment to the enforcement of the Sale Approval Order and the Confirmation Order.”). Kramer v. Mahia (In re Khan), 488 B.R. 515 (Bankr. E.D.N.Y. 2013) (Stong, J.) (Imposing sanctions under 28 U.S.C. § 1927 against counsel for the defendant in a fraudulent transfer action brought by the Chapter 7 trustee, the court stated: “It is axiomatic that where this Court has the authority finally to determine the underlying adversary proceeding, then it may also consider a motion for sanctions arising in the same matter. It is similarly plain that where this Court has subject matter jurisdiction to hear a matter, it also has the ability to protect the integrity of the bankruptcy process by an award of sanctions under Section 1927 and the Court’s inherent authority.”). Allied Indus. v. Hayes Lemmerz Int’l, Inc. (In re Hayes Lemmerz Int’l, Inc.), 2013 WL 1910312 (Bankr. D. Del. Apr. 25, 2013) (Walrath, J.) (“Before the Court are Cross Motions for Summary Judgment filed by the Defendants Hayes Lemmerz International, Inc., and certain of its affiliates 129

(collectively, “Hayes”) and by the Plaintiffs United Steel, Paper and Forestry, Rubber, Manufacturing, and Energy Allied Industrial and Service Workers International Union (collectively, the “Unions”). . . . Hayes filed voluntary petitions for relief under chapter 11 of the Bankruptcy Code. At that time, Hayes was obligated under collective bargaining agreements with the Unions to provide vested health benefits to certain retirees of Hayes (the “Retirees”). . . . Beginning in July, 2009, Hayes and the Unions entered into negotiations to modify the retiree benefits covered by the collective bargaining agreements pursuant to section 1114 of the Bankruptcy Code. On November 18, 2009, Hayes and the Unions executed a Settlement Agreement providing for the modification of retiree benefits, which was approved by the Court by Order dated November 23, 2009. . . . Under section 2 of the Settlement Agreement, Hayes agreed to sponsor and administer at least one healthcare plan for the Retirees and to establish and fund a voluntary employees’ beneficiary association (the “VEBA”). In compliance with section 2, Hayes established the Hayes Lemmerz International, Inc., Employee Benefit Plan for Eligible Collectively Bargained Retirees (the “Plan”). . . . On May 23, 2011, the Unions requested that premium payments to the VEBA be adjusted for the benefit of Plan participants who had dropped coverage but now sought to re-enroll. Hayes informed the Unions that the Plan did not allow for re-enrollment. . . . [T]he Unions commenced the instant adversary proceeding against Hayes in which they assert, inter alia, that Hayes breached the Settlement Agreement by precluding re-enrollment in the Plan. . . . [B]oth parties filed Motions for Summary Judgment. . . . In Stern v. Marshall . . . the Supreme Court ruled that notwithstanding title 28, bankruptcy courts lack the constitutional authority to enter a final order on state law counterclaims. 131 S. Ct. 2594, 2620 (2011). The Supreme Court held that the bankruptcy court’s power depends on ‘whether the action at issue stems from the bankruptcy itself.’ Id. at 2618. In this case, the Adversary Proceeding relates to the conduct of the parties during this bankruptcy case. In addition, pursuant to the Order approving the Settlement Agreement, this Court retained jurisdiction over all matters arising from and related to the implementation of the Settlement Agreement. Therefore, the Court concludes that it has jurisdiction and the authority to enter a final order in this Adversary Proceeding because it ‘relate[s] entirely to matters integral to the bankruptcy case.’ In re Am. Bus. Fin. Servs., Inc., 457 B.R. 314, 319 (Bankr. D. Del. 2011). See also In re Salander O’Reilly Galleries, 453 B.R. 106, 117 (Bankr .S.D.N.Y. 2011) (“Nowhere in . . . Stern does the Supreme Court rule that the bankruptcy court may not rule . . . when deciding a matter directly and conclusively related to the bankruptcy.”).”).

L.

DAMAGES FOR VIOLATION OF THE DISCHARGE INJUNCTION

Baker v. Charles Hamill Jeffrey Trust (In re Baker), 2014 WL 1373471 (N.D. Tex. Apr. 8, 2014) (O’Connor, J.) (“This is an appeal from the bankruptcy court’s denial of a motion to compel and a motion to reconsider filed by John W. Baker, a creditor and successful bidder for a tract of land [(known as “Poppies”), which was] sold at a bankruptcy court-ordered auction of Debtor Joe Gayle Baker’s farm and ranch real estate [under the Debtor’s confirmed Chapter 12 plan]. In the motion to compel, John W. Baker, Debtor’s brother, contested the deed by which Debtor conveyed the tract of land to him, asserting the reservation of mineral interests in the deed violated the bankruptcy court’s order of sale. Following briefing and a hearing, the bankruptcy court denied the motion to compel, finding that the challenged deed conveyed all of Debtor’s interest in the tract of land at the 130

time of the sale, and that, alternatively, John W. Baker waived any objections by closing on the sale. . . . In his first point of error, John W. Baker challenges the bankruptcy court’s jurisdiction to enter final orders denying his motions to compel and reconsider. John W. Baker acknowledges the bankruptcy court’s jurisdiction ‘to rule on John W’s request to compel Debtor to conform his warranty deed with that court’s Orders regarding the sale, and clarifying any differences between those orders and the warranty deed given by Debtor to him, as such are “core” matters.’ John W. Baker argues, however, that the bankruptcy court lacked jurisdiction to determine the effect upon his title and deed to mineral interests on Poppies due to the failure of [Debtor’s former spouse] Joan Baker’s Special Warranty Deed to convey mineral interests to Joe Baker in compliance with the divorce decree. Appellant, contends that ‘[a]lthough John W improvidently invited the bankruptcy court’s ruling, it simply did not have jurisdiction to determine non-core title issues arising from a pending state court action in the Hardeman County District Court.’ . . . The Court rejects Appellant’s jurisdictional challenge. . . . Under Stern, it is clear that because a bankruptcy court is not an Article III court, it cannot enter final judgment on state common law counterclaims ‘raised independent of federal bankruptcy law.’ [Stern, 131 S. Ct.] at 2611. . . . [T]he Court does not read the bankruptcy judge’s decisions below as indicating that he made a final determination that Joan Baker’s Special Warranty Deed was, in fact, consistent with the divorce decree. Instead, looking at the plain and unambiguous language of the Deed and at its prior order approving the division of property in the Final Divorce Decree, to which no party objected below, the bankruptcy judge found that, at the time of the sale of Poppies by Debtor to John W. Baker, Debtor’s Estate did not own the mineral interests of Poppies. Therefore, according to the bankruptcy judge, the Debtor Estate’s Deed conveyed its entire interest in Poppies and did not violate the Amended Order of Sale. Simply put, Appellant’s expansive reading of the bankruptcy judge’s orders is unsupported by the text of the orders. . . . As to jurisdiction, John W. Baker’s claim that the Deed violated the bankruptcy court’s Amended Order of Sale, and therefore needed to be altered to provide Appellant mineral rights, is a claim ‘arising in’ a case under title 11. 28 U.S.C. § 157(b)(1). Otherwise stated, John Wayne Baker’s filing of this contested matter, which required the bankruptcy judge to interpret and enforce its Amended Order of Sale and the Deed in order to carry out the Chapter 12 Plan, is a proceeding that, by its nature, could arise only in the context of a bankruptcy case. Further, although the parties have not raised the issue, the Court sua sponte concludes that the Supreme Court’s decision in Stern does not alter the analysis, as the bankruptcy court did not enter a final order or judgment on a state common law counterclaim or claim ‘raised independent of federal bankruptcy law.’ Stern, 131 S. Ct. at 2611. . . . In addition, the bankruptcy court ‘plainly had jurisdiction to interpret and enforce its own prior orders.’ Travelers Indemnity Co. v. Bailey, 557 U.S. 137, 151, 129 S. Ct. 2195, 174 L. Ed. 2d 99 (2009) (citing Local Loan Co. v. Hunt, 292 U.S. 234, 239, 54 S. Ct. 695, 78 L. Ed. 1230 (1934)) (“That a federal court of equity has jurisdiction of a bill ancillary to an original case or proceeding in the same court, whether at law or in equity, to secure or preserve the fruits or advantages of a judgment or decree rendered therein, is well settled. . . . These principles apply to proceedings in bankruptcy.”) The resolution of Appellant’s motion to compel is based on the interpretation and enforcement of the bankruptcy court’s . . . Amended Order Approving Sale.”). In re Ritchey, 2014 WL 2881181 (Bankr. S.D. Tex. June 24, 2014) (Bohm, J.) (“On October 3, 2013, William C. Ritchey and Donna M. Ritchey (the Debtors) filed their Motion for Contempt and Sanctions Against Ductworks, Inc. and Patrick Dozark for Violation of the Discharge Injunction for 131

Collection of Debt (the Sanctions Motion). . . . [T]he facts in the dispute at bar are easily distinguishable from those in Stern. In Stern, the debtor filed a counterclaim against a creditor who had filed a proof of claim. The debtor’s counterclaim was based solely on state law; there was no Code provision expressly providing a basis for the counterclaim. Moreover, the resolution of the counterclaim was not necessary to adjudicate the validity of the claim of the creditor. Under these circumstances, the Supreme Court held that the bankruptcy court lacked constitutional authority to enter a final judgment on the debtor’s counterclaim. In the dispute at bar, on the other hand, there is no state law involved. The Sanctions Motion is based upon an express provision of the Code: § 524(a). Thus, this dispute is easily distinguishable from the suit in Stern, and the Court concludes that there is no Stern concern here.”).

M.

DISTRIBUTION OF PROPERTY OF THE ESTATE

N.

CLAIMS BROUGHT TO AUGMENT THE ESTATE

Slone v. Anderson (In re Anderson), 2013 WL 8539539 (Bankr. S.D. Ohio Sept. 10, 2013) (Walter, J.) (“The Trustee also contends that Defendants . . . converted estate property when they exerted control over the foreclosure proceeds in a manner inconsistent with the bankruptcy estate’s interest in the funds. Although never raised by the parties, the court questions its Constitutional authority under Article III to make a final determination on the Trustee’s state law conversion claim against non-creditor defendants. See Stern v. Marshall, 131 S. Ct. 2594, 2614–18 (2011).”).

O.

ENFORCEMENT OF THE AUTOMATIC STAY

Loveridge v. Hall (In re Renewable Energy Dev. Corp.), 500 B.R. 77 (D. Utah 2013) (Dowdell, J.) (“There is no question that the bankruptcy court continues to have the authority to enter judgment on the Trustee’s claim for violation of the automatic stay. As the court discussed above, the automatic stay is fundamental to the bankruptcy system enacted by Congress. A bankruptcy court may not only enter final judgment on a claim for violation of the automatic stay, but it may do so without a jury.”). Sexton v. Dep’t of Treasury (In re Sexton), 508 B.R. 646 (Bankr. W.D. Va. 2014) (Connelly, J.) (“The question this court must answer is whether the government’s post-petition setoff of the debtor’s tax refund to satisfy a non-tax debt is a violation of the automatic stay. . . . In Stern v. Marshall, the Supreme Court found that a bankruptcy court may have statutory authority to hear a ‘core proceeding’ under 28 U.S.C. § 157 yet not Constitutional authority to issue a final judgment in that proceeding. In Stern, the Supreme Court determined that a bankruptcy court could not issue a final ruling on a state law counterclaim against a non-creditor third party even if the counterclaim was a core proceeding. The test for whether a bankruptcy court has Constitutional authority to enter a final judgment is ‘whether the action at issue stems from the bankruptcy itself or would necessarily be resolved in the claims allowance process.’ [Stern, 131 S. Ct.] at 2618. In this case, the debtor plaintiff seeks recovery of her tax overpayment, because according to the debtor, when the 132

government seized the tax overpayment and applied it to outstanding indebtedness, it had not obtained relief from the automatic stay. To determine if the automatic stay imposed under bankruptcy law applied to this action, the Court will need to determine if the property at issue was property of the bankruptcy estate.”). Calderon v. Bank of Am. Corp. (In re Calderon), 497 B.R. 558 (Bankr. E.D. Ark. 2013) (Evans, J.) (“The Plaintiff, Stephanie A. Calderon, filed a voluntary Chapter 13 bankruptcy petition . . . . She then filed an adversary complaint against various entities, alleging that they had willfully violated the automatic stay. . . . She seeks actual damages, punitive damages, and attorney’s fees under 11 U.S.C. § 362(k)(1). . . . Applying the Supreme Court’s varied public rights formulations, the Court joins those courts which have held that the rights created and vindicated by § 362(k)(1) ‘are so fundamental to our bankruptcy system . . . that they should, therefore, be viewed as “public rights”. . . .’ Miranda v. Gonzalez (In re Gonzalez), No. 02–05485 BKT, 2010 WL 3395677, *3 (Bankr. D.P.R. Aug. 23, 2010) (quoting In re Glenn, 359 B.R. at 204); see also Turner v. First Cmty. Credit Union (In re Turner), 462 B.R. 214, 221 (Bankr. S.D. Tex. 2011) . . . . A § 362(k)(1) action is created by the bankruptcy code to ensure that those who violate the stay are held accountable so that the debtor and its creditors are protected by the bankruptcy system. Stay violation actions are simply unlike the fraudulent transfer actions in Granfinanciera that the Supreme Court deemed ‘quintessentially suits at common law that more nearly resemble state-law contract claims brought by a bankrupt corporation to augment the bankruptcy estate.’ 492 U.S. at 34–35, 109 S. Ct. at 2786. The Court finds that a § 362(k)(1) action asserts a ‘public right.’”). Ramirez v. Mr. Transmission (In re Ramirez), 2014 WL 2522148 (Bankr. S D. Tex. June 4, 2014) (Isgur, J.) (“Jimmy Ramirez’s 2001 Ford F–250 was wrongfully repossessed post-petition pursuant to a valid mechanic’s lien held by Mr. Transmission. The Truck was retained by Mr. Transmission’s agent, Texas Mechanical Collection Service, for approximately four months after repossession. Mr. Ramirez filed suit against both Mr. Transmission and Texas Mechanical for violations of the automatic stay and the Federal and Texas Fair Debt Collection Acts. Texas Mechanical filed a cross-claim against Mr. Transmission to collect the fees it incurred in repossessing the Truck and for fraud by non-disclosure. . . . Whether a bankruptcy court can enter a final judgment in a case depends on whether the action at issue stems from the bankruptcy itself or would necessarily be resolved in the claims allowance process. Stern v. Marshall, 131 S. Ct. 2594, 2618, 180 L. Ed. 2d 475 (2011). If the action does not stem from the bankruptcy itself, or need not be resolved in the claims allowance process, the claim belongs in an Article III court. Id. Under this test, state common-law claims are private rights which must be heard by an Article III court. Id. at 2611. In the recent In re BP RE, LP opinion, the Fifth Circuit held that even with the consent of all parties, bankruptcy judges cannot enter final judgments in cases that belong in an Article III court. In re BP RE, L.P., 735 F.3d 279, 281 (5th Cir. 2013) (reh’g en banc denied by In re BP RE, L.P., 744 F.3d 1371 (5th Cir. 2014)). . . . The Court has the authority to enter a final judgment on Mr. Ramirez’s claims. Mr. Ramirez’s claims deal with the violation of the automatic stay. His claims stem from the bankruptcy itself and are squarely within this Court’s statutory and constitutional authority. See Stern v. Marshall, 131 S. Ct. at 2605.”). In re Treasures, Inc., 2013 WL 4874344 (Bankr. S.D. Cal. Sept. 10, 2013) (Mann. J.) (“The Court has . . . constitutional authority to enter final findings of fact and conclusions of law in this 133

dispute. . . . Bankruptcy courts have authority to enter final orders to address violations of the automatic stay.”).

P.

INTERPRETATION/ENFORCEMENT OF COURT ORDERS

Baker v. Charles Hamill Jeffrey Trust (In re Baker), 2014 WL 1373471 (N.D. Tex. Apr. 8, 2014) (O’Connor, J.) (“This is an appeal from the bankruptcy court’s denial of a motion to compel and a motion to reconsider filed by John W. Baker, a creditor and successful bidder for a tract of land [(known as “Poppies”), which was] sold at a bankruptcy court-ordered auction of Debtor Joe Gayle Baker’s farm and ranch real estate [under the Debtor’s confirmed Chapter 12 plan]. In the motion to compel, John W. Baker, Debtor’s brother, contested the deed by which Debtor conveyed the tract of land to him, asserting the reservation of mineral interests in the deed violated the bankruptcy court’s order of sale. Following briefing and a hearing, the bankruptcy court denied the motion to compel, finding that the challenged deed conveyed all of Debtor’s interest in the tract of land at the time of the sale, and that, alternatively, John W. Baker waived any objections by closing on the sale. . . . In his first point of error, John W. Baker challenges the bankruptcy court’s jurisdiction to enter final orders denying his motions to compel and reconsider. John W. Baker acknowledges the bankruptcy court’s jurisdiction ‘to rule on John W’s request to compel Debtor to conform his warranty deed with that court’s Orders regarding the sale, and clarifying any differences between those orders and the warranty deed given by Debtor to him, as such are “core” matters.’ John W. Baker argues, however, that the bankruptcy court lacked jurisdiction to determine the effect upon his title and deed to mineral interests on Poppies due to the failure of [Debtor’s former spouse] Joan Baker’s Special Warranty Deed to convey mineral interests to Joe Baker in compliance with the divorce decree. Appellant, contends that ‘[a]lthough John W improvidently invited the bankruptcy court’s ruling, it simply did not have jurisdiction to determine non-core title issues arising from a pending state court action in the Hardeman County District Court.’ . . . The Court rejects Appellant’s jurisdictional challenge. . . . Under Stern, it is clear that because a bankruptcy court is not an Article III court, it cannot enter final judgment on state common law counterclaims ‘raised independent of federal bankruptcy law.’ [Stern, 131 S. Ct.] at 2611. . . . [T]he Court does not read the bankruptcy judge’s decisions below as indicating that he made a final determination that Joan Baker’s Special Warranty Deed was, in fact, consistent with the divorce decree. Instead, looking at the plain and unambiguous language of the Deed and at its prior order approving the division of property in the Final Divorce Decree, to which no party objected below, the bankruptcy judge found that, at the time of the sale of Poppies by Debtor to John W. Baker, Debtor’s Estate did not own the mineral interests of Poppies. Therefore, according to the bankruptcy judge, the Debtor Estate’s Deed conveyed its entire interest in Poppies and did not violate the Amended Order of Sale. Simply put, Appellant’s expansive reading of the bankruptcy judge’s orders is unsupported by the text of the orders. . . . As to jurisdiction, John W. Baker’s claim that the Deed violated the bankruptcy court’s Amended Order of Sale, and therefore needed to be altered to provide Appellant mineral rights, is a claim ‘arising in’ a case under title 11. 28 U.S.C. § 157(b)(1). Otherwise stated, John Wayne Baker’s filing of this contested matter, which required the bankruptcy judge to interpret and enforce its Amended Order of Sale and the Deed in order to carry out the Chapter 12 Plan, is a proceeding that, by its nature, could arise only in the context of a bankruptcy case. Further, although the parties have not raised 134

the issue, the Court sua sponte concludes that the Supreme Court’s decision in Stern does not alter the analysis, as the bankruptcy court did not enter a final order or judgment on a state common law counterclaim or claim ‘raised independent of federal bankruptcy law.’ Stern, 131 S. Ct. at 2611. . . . In addition, the bankruptcy court ‘plainly had jurisdiction to interpret and enforce its own prior orders.’ Travelers Indemnity Co. v. Bailey, 557 U.S. 137, 151, 129 S. Ct. 2195, 174 L. Ed. 2d 99 (2009) (citing Local Loan Co. v. Hunt, 292 U.S. 234, 239, 54 S. Ct. 695, 78 L. Ed. 1230 (1934)) (“That a federal court of equity has jurisdiction of a bill ancillary to an original case or proceeding in the same court, whether at law or in equity, to secure or preserve the fruits or advantages of a judgment or decree rendered therein, is well settled . . . These principles apply to proceedings in bankruptcy.”) The resolution of Appellant’s motion to compel is based on the interpretation and enforcement of the bankruptcy court’s . . . Amended Order Approving Sale.”). In re Ritchey, 2014 WL 2881181 (Bankr. S.D. Tex. June 24, 2014) (Bohm, J.) (“On October 3, 2013, William C. Ritchey and Donna M. Ritchey (the Debtors) filed their Motion for Contempt and Sanctions Against Ductworks, Inc. and Patrick Dozark for Violation of the Discharge Injunction for Collection of Debt (the Sanctions Motion). . . . [T]he Court has the power to issue an order holding a party in contempt of its prior order. The Court’s authority to do so comes from § 105(a) and applicable case law on policing the conduct of those who appear in this Court and imposing sanctions on those who misbehave. See Chambers v. NASCO, 501 U.S. 32, 111 S. Ct. 2123, 115 L. Ed. 2d 27 (1991); Knight v. Luedtke (In re Yorkshire, LLC), 540 F.3d 328, 332 (5th Cir. 2008). Section 105(a) provides that ‘[t]he court may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title.’ 11 U.S.C. § 105(a). Stern does not limit this Court’s constitutional authority to enter a final order enforcing the Court’s own prior order—including the Discharge Order. See, e.g., In re CD Liquidation Co., LLC, 462 B.R. 124, 136 (Bankr. D. Del. 2011) (finding that Stern did not prevent a bankruptcy court from enforcing its own order). Because the Sanctions Motion arose as a direct result of a violation of an order issued by this Court—i.e., the Discharge Order—the Court is constitutionally permitted to issue a final order on this matter. . . . For all of these reasons, this Court has the constitutional authority to enter a final order on the Sanctions Motion.”). In re Green, 2014 WL 1089843 (Bankr. N.D. Ohio Mar. 19, 2014) (Morgenstern-Clarren, J.) (“On March 4, 2014, this court entered an order requiring Ocwen Loan Servicing, LLC . . . to appear on March 18, 2014 and show cause why it should not be found to be in contempt of the order confirming the debtor’s plan. . . . This is a core proceeding under 28 U.S.C. § 157(b)(2), and it is within the court’s constitutional authority as analyzed by the United States Supreme Court in Stern v. Marshall . . . .”). File v. Boersen Farms, Inc. (In re Stamp Farms, L.L.C.), 2014 WL 1017041 (Bankr. W.D. Mich. Mar. 13, 2014) (Dales, J.) (“This adversary proceeding arises out of the chapter 11 bankruptcy proceedings of Stamp Farms, LLC, Stamp Farms Trucking, LLC, Stamp Farms Custom AG, LLC, and Royal Star Farms, LLC (collectively, “Stamp Farms” or the “Debtor”). The cases were . . . later converted to chapter 7 on May 23, 2013. Before conversion, most of the Stamp Farms assets were sold in a bulk sale to Boersen Farms, Inc., and assigned to Boersen Farms AG, LLC (collectively “Boersen Farms”). As part of the court-approved transaction, Boersen Farms succeeded to the Debtor’s interest in various farm leases. At issue is whether Boersen Farms is liable to plaintiff 135

Todd File (“Mr. File”) with respect to a document entitled ‘Land Lease for Farming Purposes,’ covering a 70 acre parcel, a roughly 42 acre parcel, a grain bin, and a dryer (the “Todd File Lease”). . . . Both parties have filed motions for summary judgment. Mr. File asks the court to determine, as a matter of law, that the Todd File Lease was included in the sale to Boersen Farms, and that he may recover damages for breach of the lease. Boersen Farms, in contrast, seeks dismissal on jurisdictional grounds, and (alternatively) argues that the companies never assumed the Todd File Lease. . . . For the reasons stated below, the court has determined that it has jurisdiction to interpret its Sale Order and related sale documents, but not to determine whether a specific lease has been breached, or the damages, if any, flowing from the breach. The court also concludes that Stamp Farms assumed the Todd File Lease, and that Boersen Farms became obligated to perform under the Todd File Lease pursuant to § 365 and the court’s order approving the transaction. . . . It is well-established that a bankruptcy court has jurisdiction to interpret and enforce its own prior orders, particularly where, as here, it expressly retained jurisdiction to do so. By signing an order that included a provision retaining jurisdiction, the court did not purport to ‘write its own jurisdictional ticket,’ but only endeavored to express its unwillingness to cede its jurisdiction over the subject matter that Congress has conferred. . . . [A]s became clear during oral argument on the parties’ motions, the outcome of this dispute turns largely on the court’s interpretation of the Sale Order in part because, without it, the Debtor had no authority to effectuate the transfers contemplated in the Purchase Agreement, including the assumption and assignment of farm leases such as Mr. File’s lease of the 70 and roughly 42 acre parcels mentioned in Exhibit 4 to Plaintiff’s moving brief. . . . Boersen Farms, for example, asks the court to construe the Sale Order and Purchase Agreement as, in effect, assigning to Boersen Farms the Debtor’s right to assume leases under § 365, and conclude that Boersen Farms never elected to assume the Todd File Lease. Mr. File, in contrast, asks the court to construe the Sale Order as authorizing the Debtor to: (1) assume the leases identified on Exhibit A (albeit with the purchaser funding the cure payments); and (2) assign the assumed leases to Boersen Farms. Either way, the court’s task depends initially on its interpretation of the Sale Order and the Purchase Agreement. . . . To this extent, the court clearly has subject matter jurisdiction because controversies involving the efficacy of assumption and assignment under § 365 could arise only in a proceeding under title 11 and because, as noted above, the court has ample authority to interpret its Sale Order, and expressly preserved its power to do so. . . . Moreover, because § 365 is closely-linked to the claims allowance process (at least for claims arising from executory contracts and unexpired leases), the proceeding to this extent is a continuation of the ‘core’ claims proceeding related to the Stamp Farms case, a proceeding in which the court’s authority is at its ‘constitutional maximum.’ Waldman v. Stone, 698 F.3d 910, 919 (6th Cir. 2012) (citing Stern v. Marshall, 131 S. Ct. 2594, 2614 (2011)). If the court were to conclude, as Boersen Farm argues, that the Todd File Lease was deemed rejected despite the Sale Order, Mr. File would likely assert a claim against the estate. Such a claim ‘may be filed within such time as the court may direct.’ Fed. R. Bankr. P. 3002(c)(4) (deadline for rejection damages claims). . . . Although the court has determined that it has authority to interpret the Sale Order and Purchase Agreement, its jurisdiction to decide what now amounts to a breach of contract action between non-debtor third parties is more problematic. Bankruptcy courts, mindful of the limits on their authority, must carefully scrutinize their jurisdiction to resolve third-party disputes to ensure that the exercise of power does not exceed Congressional limits or encroach on state authority. . . . Before oral argument, the court assumed that this adversary proceeding might be ‘related to’ the Stamp Farms bankruptcy case in the jurisdictional sense because Mr. File timely filed a Proof of 136

Claim. . . . In response to the court’s inquiry at oral argument, however, Mr. File’s counsel indicated that the Proof of Claim and this adversary proceeding were not connected. . . . [B]y disclaiming any reliance on the Proof of Claim as a jurisdictional hook at oral argument, his counsel brought this line of inquiry to an end. The court is unable on the present record to conclude that the lease damage claim is ‘related to’ the Stamp Farms case within the meaning of 28 U.S.C. § 1334(b). . . . To summarize, although the court has no qualms about deciding whether the Debtor assigned the Todd File Lease to Boersen Farms under § 365, the court will refrain from deciding the parties’ respective rights under the lease.”). In re Lockard, 2014 WL 1724774 (Bankr. E.D. Mich. Feb. 3, 2014) (Opperman, J.) (“[T]he Debtors and the IRS agreed in the June 8, 2011, Order that this Court would maintain jurisdiction over the enforcement of the Order. While the Court recognizes that the parties cannot consent to jurisdiction that does not exist, the Court also notes that when jurisdiction exists, as it does in this case, the parties may confirm and restate that existence. Here, the Court is being asked in part to enforce the terms of the June 8, 2011, Order, which is clearly within the Bankruptcy Code, and the holding of Stern v. Marshall . . . as well as a core proceeding as set forth by 28 U.S.C. § 157(b)(2).”). In re Tres Hermanos Dairy, LLC, 2013 WL 6198219 (Bankr. D.N.M. Nov. 27, 2013) (Thuma, J.) (“The Court confirmed a plan of reorganization in this case on October 19, 2011 (“Confirmation Order”). The Confirmation Order contained extensive language agreed to by the Debtor and its main secured creditor, Bank of America (“Bank”), resolving the Bank’s objection to the plan. The Debtor now takes the position that the agreed-upon language did not modify the plan. . . . Taken aback by Debtor’s stance, the Bank reopened the case and . . . filed a Motion for Order Interpreting Chapter 11 Plan and Confirming Debtor Default (the “Interpretation Motion”). . . . [T]he Debtor asserts that the reference should be withdrawn because under Stern v. Marshall . . . this Court ‘lacks constitutional authority to adjudicate the types of claims asserted against Debtor and others.’ . . . The argument is meritless. Stern v. Marshall held that non-Article III courts may not be able to enter final judgment in cases that existed at common law in 1789. This is not such a case. However narrowly the Supreme Court may eventually construe the jurisdiction of this Court, it is unlikely to hold that the Court may not confirm a Chapter 11 plan of reorganization, nor to construe its own Confirmation Order. . . . The Interpretation Motion falls directly within the Court’s jurisdiction to specifically interpret or enforce its Confirmation Order in order to carry out the provisions of the Plan. Accordingly, this Court has jurisdiction over this matter. . . . As Judge Chapman observed in In re Ambac Fin. Grp., Inc., 457 B.R. 299, 308 (Bankr. S.D.N.Y. 2011), aff’d, 2011 WL 6844533 (S.D.N.Y. 2011), aff’d, 487 F. App’x 663 (2d Cir. 2012), ‘Unfortunately, Stern v. Marshall has become the mantra of every litigant who, for strategic or tactical reasons, would rather litigate somewhere other than the bankruptcy court.’ The observation applies here. The Debtor chose the bankruptcy court forum to reorganize and obtained substantial relief through confirmation of a consensual plan of reorganization. Regardless of the nature of the dispute about the meaning of the Confirmation Order, this Court is an appropriate forum to resolve the dispute, and clearly has the jurisdiction to do so. The Debtor’s resort to Stern v. Marshall is a red herring.”). Schermerhorn v. Centurytel, Inc. (In re Skyport Global Commc’ns), 2013 WL 4046397 (Bankr. S.D. Tex. Aug. 7, 2013) (Bohm, J.) (“[T]his Court issued a written injunction order under Rule 65 of the Federal Rules of Civil Procedure. The Court issued this injunction in order to prevent 137

irreparable harm to the reorganized debtor, . . . . Subsequent to its issuance, however, the Court learned that two individuals . . . conspired to thwart this order. . . . [O]nce this Court issued the Preliminary Injunction Order, this Court thereafter has the power to issue an order holding a party, or agent, or aider and abettor in contempt of that order, particularly an officer of this Court . . . . The Court’s authority to do so comes from 11 U.S.C. § 105(a) and applicable case law on policing the conduct of those who appear in this Court and imposing sanctions on those who misbehave. . . . The matter at bar is not a counterclaim based solely on state law. Rather, in the first instance, this dispute arises over the interpretation and enforcement of the Plan and the Confirmation Order. Unlike Stern, this dispute is not based solely on state law where the resolution thereof would still not affect the claims. Here, the resolution of the dispute concerns the interpretation and enforcement of the Plan . . . . Stern does not limit this Court’s constitutional authority to enter a final order enforcing the Court’s own prior orders—including the Confirmation Order and the Preliminary Injunction Order.”). In re Landamerica Fin. Grp., Inc., 2013 WL 1819984 (Bankr. E.D. Va. Apr. 30, 2013) (Huennekens, J.) (“Before the Court is the motion of Bruce Matson (“Matson”) in his capacity as Trustee of the LandAmerica Credit Services Inc. Liquidation Trust (“LACS”) for entry of an order enforcing the injunction set forth in the Joint Chapter 11 Plan of LandAmerica Financial Group, Inc. and its Affiliated Debtors (the “Plan”) in accordance with 11 U.S.C. §§ 1141(a), 1142(b), and 105(a), and Federal Rules of Bankruptcy Procedure 9014 and 9020. The Motion seeks to enjoin Experian Information Solutions, Inc. (“Experian”) from pursuing an action (the “Illinois Action”) it filed against Matson in the United States District Court for the Northern District of Illinois in violation of both the terms of the Plan and the common law doctrine arising from Barton v. Barbour, 104 U.S. 126 (1881). . . . This Court has core jurisdiction to interpret its Confirmation Order at issue here, and to enforce the terms of the confirmed Plan. . . . The Court rejects Experian’s argument that it lacks the ability to hear and resolve this Motion under Stern v. Marshall, 131 S. Ct. 2594 (2011). The Motion does not require the Court to resolve any state law actions; rather the Motion requests the Court interpret and enforce the terms of the Plan and the procedural requirements entailed by the Barton doctrine. As such, Stern is not implicated.”). Trusky v. Gen. Motors Co. (In re Motors Liquidation Co.), 2013 WL 620281 (Bankr. S.D.N.Y. Feb. 19, 2013) (Gerber, J.) (“I plainly have the constitutional power, even after Stern v. Marshall . . . to interpret and enforce my [§ 363] Sale Order, and the underlying agreements which I authorized in connection with that order . . . . ”).

Q.

REDEMPTION

R.

INVOLUNTARY CASES

Mitchell v. Weinman (In re Mitchell), 554 F. App’x 756 (10th Cir. 2014) (Lucero, J.; Baldock, J.; Brorby, J.) (“Elizabeth Mitchell, proceeding pro se, appeals from a decision of the Bankruptcy Appellate Panel (“BAP”) that affirmed the bankruptcy court’s orders denying her motion to reopen her dismissed involuntary case and denying reconsideration of that order. . . . Mitchell appeals from 138

the BAP’s affirmance of the bankruptcy court’s order denying a motion to reopen the closed involuntary case of Chameleon Entertainment Systems, Inc. (“Chameleon”), as well as an order denying reconsideration. . . . [W]e affirm in appeal number 13–1013. We dismiss appeal number 13–1014. . . . Mitchell . . . argues for the first time on appeal that Stern v. Marshall . . . rendered 28 U.S.C. § 1334, which provides for federal-court jurisdiction over bankruptcy cases and proceedings, unconstitutional when applied to an involuntary petition. . . . As our sibling circuits have recognized, however, Stern was a limited holding regarding a counterclaim by an estate against a person filing a claim against the estate. See First Nat’l Bank v. Crescent Elec. Supply Co. (In re Renaissance Hosp. Grand Prairie Inc.), 713 F.3d 285, 294 n.12 (5th Cir. 2013); Quigley Co. v. Law Offices of Peter G. Angelos (In re Quigley Co.), 676 F.3d 45, 52 (2d Cir. 2012); see also Stern, 131 S. Ct. at 2620 (stating that the question presented in the case “is a ‘narrow’ one”). In Stern, the Court held that Congress could not remove the common law counterclaim at issue from the Article III courts, 131 S. Ct. at 2611–15, but the Supreme Court has stated that an involuntary proceeding in bankruptcy is not ‘in the nature of a common-law action,’ Meek v. Centre Cnty. Banking Co., 268 U.S. 426, 429, 45 S. Ct. 560, 69 L. Ed. 1028 (1925). Thus, Stern does not create jurisdictional concerns for the bankruptcy court in this matter.”). In re 35th & Morgan Dev. Corp., 510 B.R. 832 (Bankr. N.D. Ill. 2014) (Schmetterer, J.) (“A contested involuntary petition ‘stems from the bankruptcy itself,’ and may constitutionally be decided by a bankruptcy judge. Stern v. Marshall, 131 S. Ct. 2594, 2618 (2011).”).

S.

RECOVERY OF FEES AND COSTS UNDER § 506(b)

In re Fuentes, 509 B.R. 832 (Bankr. S.D. Tex. 2014) (Jones, J.) (Addressing the interplay between §§ 506(b), 1322(b)(2) and 1322(e) of the Code, the court found that it “has constitutional authority . . . under the Supreme Court’s holding in Stern v. Marshall . . . [to finally adjudicate the issue of whether] . . . the holder of a claim secured by a debtor’s principal residence may recover its attorney fees incurred during the post-petition, pre-confirmation period when the value of the residence is less than the outstanding debt.”).

T.

EXERCISE OF COURT’S GENERAL EQUITABLE/INHERENT POWERS UNDER § 105(a)

NSJS Ltd. P’Ship v. Waco Town Square Partners, L.P. (In re Waco Town Square Partners, L.P.), 2014 WL 991824 (S.D. Tex. Mar. 13, 2014) (Atlas, J.) (“In light of the United States Supreme Court’s decision in Stern v. Marshall it is questionable whether a bankruptcy court’s power under § 105(a) extends to requiring the dismissal with prejudice of state law causes of action by non-debtors against non-debtors. . . . Because it is unclear on what sources of authority the Bankruptcy Court may have relied in ordering [the appellant] to dismiss with prejudice its Second Amended Complaint in the State Court Lawsuit, the Court remands this issue to the Bankruptcy Court for clarification.”).

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In re David, 487 B.R. 843 (Bankr. S.D. Tex. 2013) (Bohm, J.) (“The show cause orders at issue in the case at bar arise from a Chapter 13 bankruptcy petition filed by the debtor (the Debtor) in 2008. This bankruptcy petition, as well the Debtor’s Schedules and Statement of Financial Affairs (SOFA), list the name of the Debtor as Yousif Ayesh David. The bankruptcy petition, Schedules, and SOFA also list the social security number of the Debtor as xxxx-xxx-xxxx. Further, in his Schedules, the Debtor lists three tracts of real property with a total aggregate value of $180,000.00. . . . In 2010, the Debtor’s bankruptcy case was dismissed. Yet, when the Debtor later initiated a separate lawsuit in state court, this Court learned of material discrepancies between the values of the real property tracts listed in the Debtor’s Schedules and the values of these same tracts listed in the Debtor’s state court suit. This Court therefore issued a show cause order against the Debtor and his attorney in the state court suit . . . regarding these inconsistent values (the First Show Cause Order). . . . At the resulting hearing, the Debtor testified before the Court that his name is Josef Daud and that his social security number is xxxx-xxx-xxxx; the Debtor also testified that his brother’s name is Yousif A. David, and that his brother’s social security number is xxxx-xxx-xxxx. Following this revelation, the Court issued a second show cause order (the Second Show Cause Order) requiring the Debtor to appear and show cause why he should not be sanctioned for: (1) using his brother’s name and social security number in filing his Chapter 13 petition; and (2) using two different social security numbers in filing his tax returns. . . . In the wake of the Supreme Court’s ruling in Stern v. Marshall, this Court must also evaluate whether it has the constitutional authority to sign a final order regarding the show cause hearings. . . . The matter at bar is not a counterclaim of the Debtor’s estate based solely on state law. Rather, this matter arises out of violations by a party appearing before this Court (i.e., the Debtor) of federal law, state law, and various Federal and Local Bankruptcy Rules. In particular, this matter arises from this Court’s issuance of the First Show Cause Order and the Second Show Cause Order, both of which were issued in order to maintain the integrity of the bankruptcy system. This Court has the authority to sanction under its inherent authority, as well as 11 U.S.C. § 105(a) and applicable case law; according to this authority, the Court may police the conduct of parties appearing before it and impose sanctions on those who misbehave. Thus, this matter is easily distinguishable from Stern. For all of these reasons, the Court concludes that it has the constitutional authority to enter a final order imposing sanctions.”). In re Brier Creek Corporate Ctr. Assocs. Ltd., 486 B.R. 681 (Bankr. E.D.N.C. 2013) (Humrickhouse, J.) (“The matter before the court is Bank of America’s emergency motion for the court to stay its order entered on January 14, 2013 (the “Stay Order”). The Stay Order stayed arbitration initiated by Bank of America against the [Chapter 11] debtors’ guarantors (the “Guarantor Arbitration”). . . . [T]he debtors requested an order confirming that the automatic stay applies to the Guarantor Arbitration and granting an injunction pursuant to the court’s powers under § 105. . . . Because of this court’s ‘arising under’ jurisdiction over the § 362 request, and to the extent that the debtors’ request for § 105 relief falls under this court’s ‘arising in’ jurisdiction, it also had authority to enter a final judgment because the proceeding before the court was a ‘core’ proceeding. . . . Not only is it statutorily ‘core,’ it is constitutionally ‘core’ as well. See TP, Inc. v. Bank of America, N.A. (In re TP, Inc.), 479 B.R. 373, 384 (Bankr. E.D.N.C. 2012) (providing that a matter is constitutionally core if the “action at issue stems from the bankruptcy itself”).”). In re Brown, 2014 WL 2770057 (Bankr. S.D. Tex. June 18, 2014) (Jones, J.) (“Before the Court for consideration is the Emergency Motion for Order Setting Hearing and Compelling Carol Paredes 140

and her Counsel to Appear and Show Cause Why They Should not be Sanctioned for Contempt and Spoliation of Evidence . . . . The authority to impose sanctions for contempt of an order is an inherent and well-settled power of all federal courts—including bankruptcy courts. . . . This contested matter is a core proceeding arising under title 11 pursuant to 28 U.S.C. § 157(b)(2)(A), (E) and (O). The Court has constitutional authority to enter a final order in this matter. See Stern v. Marshall, 131 S. Ct. 2594 (2011).”).

U.

MOTIONS TO EXTEND/IMPOSE THE AUTOMATIC STAY UNDER § 362(c)

In re Skoglund, 2014 WL 1089865 (Bankr. W.D. Mich. Mar. 19, 2014) (Dales, J.) (“[The debtor], with the assistance of counsel, filed three bankruptcy cases within the last year, with varying results. In the Third Case, at the time she filed her voluntary chapter 13 petition, she also filed a Motion to Continue Automatic Stay . . . which drew an objection from the lender on two car loans . . . . The court finds that it has ample authority to resolve the Motion, despite possible arguments to the contrary based on Stern v. Marshall . . . .”).

V.

LIEN AVOIDANCE UNDER § 522(f)

In re Carile, 2013 WL 6253768 (Bankr. N.D. Ohio Dec. 4, 2013) (Morgenstern-Clarren, J.) (“The debtors Donato and Anita Carile move under 11 U.S.C. § 522(f)(1)(A) to avoid a judgment lien filed by RBS Citizens against their residence on the ground that it impairs Anita’s homestead exemption. . . . This is a core proceeding under 28 U.S.C. § 157(b)(2)(B) and (K), and it is within the court’s constitutional authority as analyzed by the United States Supreme Court in Stern v. Marshall . . . . ”).

W.

CREDITOR’S RIGHT OF SETOFF UNDER § 553

Clean Burn Fuels, LLC v. Purdue Bioenergy, LLC (In re Clean Burn Fuels, LLC), 2013 WL 3305549 (Bankr. M.D.N.C. June 28, 2013) (Waldrep, J.) (“Before the Court is a claim for breach of contract asserted by Clean Burn Fuels, LLC (the “Debtor”) in the Amended Complaint . . . The breach of contract claim set forth in the Amended Complaint asserted that, pursuant to Section 553(a)(3) of the Bankruptcy Code, Perdue had no right to set off a portion of its claim because that portion was based on a debt incurred with the intent to increase the setoff right. . . . Pursuant to the analysis in Stern v. Marshall . . . the Court may enter a final order in this matter.”).

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V.

SUPPLEMENTAL JURISDICTION

VI.

PROCEDURAL ISSUES A.

CONSENT AND WAIVER 1.

CONSENT AND WAIVER GENERALLY

Brown v. United States, 748 F.3d 1045 (11th Cir. 2014) (Tjoflat, J.; Pryor, J.; Rothstein, J.) (“The Federal Magistrate Act of 1979 . . . authorizes a magistrate judge, with the consent of the parties, to ‘conduct any or all proceedings in a jury or nonjury civil matter and order the entry of judgment in the case.’ . . . 28 U.S.C. § 636(c) (2006) . . . . [T]he question presented is whether the consensual delegation of a motion to vacate sentence under 28 U.S.C. § 2255 to a magistrate judge for final disposition pursuant to 28 U.S.C. § 636(c) violates Article III of the Constitution. However, we need not decide whether that delegation would violate Article III because we hold that [] a § 2255 proceeding is not a ‘civil matter’ for purposes of § 636(c), and therefore the Magistrate Judge lacked the statutory authority to enter final judgment on Brown’s § 2255 motion. . . . In light of Stern, our holding in Sinclair [v. Wainwright, 814 F.2d 1516, 1519 (11th Cir. 1987)]—that § 636(c) is facially constitutional—has certainly been called into question. Like bankruptcy judges, magistrate judges acting pursuant to § 636(c) exercise the essential attributes of judicial power by ‘resolving “[a]ll matters of fact and law in whatever domains of the law to which”’ the parties’ civil claims might lead. Stern, 131 S. Ct. at 2619 (alteration in original) (quoting N. Pipeline Const. Co., 458 U.S at 92, 102 S. Ct. at 2852 (Rehnquist, J., concurring in the judgment)); see also 131 S. Ct. at 2615 (“[T]his case involves the most prototypical exercise of judicial power: the entry of a final, binding judgment by a court with broad substantive jurisdiction, on a common law cause of action, when the action neither derives from nor depends upon any agency regulatory regime.” (emphasis in original)). Similarly, like the bankruptcy judge, the magistrate judge enters final judgment subject only to appellate review, which Stern deemed to be insufficient Article III control. Therefore, Congress’s conclusion that magistrate judges are adjuncts of the district courts cannot be deemed correct. Instead, magistrate judges exercise the ‘judicial Power of the United States,’ despite the fact that they lack Article III protections. Cf. 131 S. Ct. at 2601 (“The Bankruptcy Court in this case exercised the judicial power of the United States by entering final judgment on a common law tort claim, even though the judges of such courts enjoy neither tenure during good behavior nor salary protection. We conclude that, although the Bankruptcy Court had the statutory authority to enter judgment on Vickie’s counterclaim, it lacked the constitutional authority to do so.”). . . . The fact that the parties consent to a magistrate judge entering final judgment does not (notwithstanding Congress’s statement in the 1979 congressional reports to the contrary) obviate the Article III concerns. As the Supreme Court has indicated, ‘Article III, § 1, serves both to protect the role of the independent judiciary within the constitutional scheme of tripartite government, and to safeguard litigants’ right to have claims decided before judges who are free from potential domination by other branches of government.’ Commodity Futures Trading Comm’n v. Schor, 478 U.S. 833, 848, 106 S. Ct. 3245, 3255, 92 L. Ed. 2d 675 (1986) (citations and internal quotation marks omitted). And 142

while the parties’ consent to the magistrate judge’s jurisdiction may mitigate the concern regarding litigants’ rights, ‘[t]o the extent that this structural principle is implicated in a given case, the parties cannot by consent cure the constitutional difficulty for the same reason that the parties by consent cannot confer on federal courts subject-matter jurisdiction beyond the limitations imposed by Article III, § 2.’ Id. at 850–51, 106 S. Ct. at 3256–57. . . . To summarize, the Supreme Court’s decision in Stern undermines some of our reasons for upholding the facial constitutionality of § 636(c). Additionally, allowing a magistrate judge to enter final judgment on a federal prisoner’s § 2255 motion raises serious constitutional concerns. However, we need not we decide whether § 636(c) is unconstitutional in light of Stern. Nor must we resolve whether allowing a magistrate judge to enter final judgment on a § 2255 motion is unconstitutional. Principles of constitutional avoidance counsel that ‘when deciding which of two plausible statutory constructions to adopt, a court must consider the necessary consequences of its choice. If one of them would raise a multitude of constitutional problems, the other should prevail.’ Clark [v. Martinez,] 543 U.S. [371,] 380–81, 125 S. Ct. [716,] 724 [(2005)]. Therefore, although § 636(c) could plausibly be read to authorize a magistrate judge to enter final judgment in a § 2255 proceeding, to avoid Article III concerns we hold that it does not because such a reading is equally plausible.”). BP RE, L.P. v. RML Waxahachie Dodge, L.L.C. (In re BP RE, L.P.), 744 F.3d 1371 (5th Cir. 2014) (Higginson, J., dissenting from denial of rehearing en banc) (“ I write in dissent of denial of full court rehearing to note that this case presents an enbancworthy issue—whether a bankruptcy court, consistent with its statutory authority under 28 U.S.C. § 157(c)(2), may enter final judgment in a non-core proceeding with the parties’ consent. The panel opinion holds that it cannot do so consistent with Article III of the United States Constitution. The Supreme Court has granted certiorari and heard argument in Executive Benefits Insurance Agency v. Arkison (In re Bellingham Ins. Agency, Inc.), 702 F.3d 553 (9th Cir. 2012), cert. granted, 133 S. Ct. 2880 (2013), a case that presents the question of whether a bankruptcy court can enter judgment in a core proceeding with the parties’ consent. Hence, and speaking to the issue’s significance, the role of consent in delineating the scope of Article III is before the Supreme Court and I would be loath to anticipate its answer. I will not belabor the importance of a case that, in effect, strikes down a federal statute and whose result may disrupt the way our district and bankruptcy courts handle a large volume of routine bankruptcy business. Instead, I especially see significance to examining any rationale that might logically extend to precluding magistrate judges from entering judgment with parties’ consent. . . . In Technical Automation Services Corporation v. Liberty Surplus Insurance Corp., 673 F.3d 399, 407 (5th Cir. 2012), this court upheld a magistrate judge’s capacity to enter final judgment in civil cases with the parties’ consent. In the instant matter, the panel opinion asserts no conflict with Technical Automation, but it is hard to see how there is not tension between this case and Technical Automation. Both cases recognize the similarities between magistrate and bankruptcy judges. Further, the respective statutes providing a basis for entering judgment with parties’ consent are similar. Then, and even assuming BP RE’s correctness, our law after BP RE is that a magistrate judge’s judgment is proper under 28 U.S.C. § 636(c)(1), but a bankruptcy judge’s judgment under 28 U.S.C. § 157(c)(2) is improper. Maybe there are good reasons for incongruity, but they are ones I perceive that our full court should explore. . . . As to BP RE’s merits, the panel opinion acknowledges that Stern announced a limited holding: ‘We conclude today that Congress, in one isolated respect, exceeded that limitation in the Bankruptcy Act of 1984.’ Stern v. Marshall, 131 S. Ct. 2594, 2620 (2011). BP RE concludes that Stern’s reasoning requires the conclusion that 143

Congress exceeded Article III in another respect, even though Stern did not address parties’ consent. Instead, Stern may be less decisive than CFTC v. Schor, 478 U.S. 833, 851 (1986), which noted that when ‘Article III limitations are at issue, notions of consent and waiver cannot be dispositive because the limitations serve institutional interests that the parties cannot be expected to protect.’ But Schor has language supporting both sides of this controversy. Schor proclaims: ‘the parties cannot by consent cure the constitutional difficulty for the same reason that the parties by consent cannot confer on federal courts subject-matter jurisdiction beyond the limitations imposed by Article III, § 2,’ id. at 851, but also that: ‘the decision to invoke this forum is left entirely to the parties and the power of the federal judiciary to take jurisdiction of these matters is unaffected. In such circumstances, separation of powers concerns are diminished, for it seems self-evident that just as Congress may encourage parties to settle a dispute out of court or resort to arbitration without impermissible incursions on the separation of powers, Congress may make available a quasi-judicial mechanism through which willing parties may, at their option, elect to resolve their differences.’ Id. at 855. There is no determinative guidance as to the role consent plays in the Article III analysis of § 157(c)(2). It may be, as BP RE suggests, irrelevant as an impermissible cure attempt, or alternatively, consent may be part of the multifactor balancing test to determine whether there is an Article III problem in the first instance. Fortunately, Executive Benefits likely will shed light on this issue. Our court will benefit from that guidance, and I write separately to note that I would usefully have incorporated such guidance into our own full court assessment of these weighty constitutional boundaries.”). BP RE, L.P. v. RML Waxahachie Dodge, L.L.C. (In re BP RE, L.P.), 735 F.3d 279 (5th Cir. 2013) (Smith, J.; Garza, J.; Southwick, J.) (“BP RE, L.P. (“BPRE”), filed for Chapter 11 bankruptcy relief and, along with BP Automotive, L.P., filed an adversary complaint in the bankruptcy court alleging various state-law tort and contract claims against multiple RML entities (“RML”). The claims related to negotiations between BPRE and RML over the sale and lease of a car dealership and the related property. The bankruptcy court entered a final judgment denying relief, and on appeal the district court, reviewing the findings of fact for clear error and conclusions of law de novo, affirmed. . . . Appealing the judgment of the district court, BPRE argues . . . [that the bankruptcy court] . . . lacked constitutional authority to enter a final, appealable judgment. . . . Because the bankruptcy court lacked Article III authority to enter final judgment on BPRE’s claims, we vacate the district court’s judgment and remand to the district court. . . . BPRE’s adversary complaint stated that the proceedings were ‘non-core.’ BPRE also requested ‘judgment, after trial or final hearing,’ on the claims against RML. BPRE filed, on the same day, a ‘Statement Regarding Consent’ that noted that it sought ‘monetary damages for breach of contract, tortious interference, and trespass claims, among others.’ BPRE again acknowledged that ‘[t]his matter is not a proceeding identified as a core proceeding in 28 U.S.C. § 157(b)(2). Therefore, this matter is a non-core proceeding but is related to the bankruptcy in that any recovery on the claims brought by the debtor will go directly to the estate. . . . Plaintiffs consent to the entry of a final order by this court.’ . . . BPRE requested a pretrial conference and demanded a jury trial. In the request, BPRE noted that it had submitted, as required, in its Statement Regarding Consent, whether it consented to the entry of a final judgment by the bankruptcy court in a non-core proceeding. The Joint Pretrial Order also acknowledged that this was a non-core proceeding and that BPRE consented to the entry of a final judgment. . . . BPRE’s request for a jury trial was denied as untimely. It then moved to withdraw the reference to the bankruptcy court, asking the district court instead to hear the case in the first 144

instance. Not only did BPRE seek to preserve its jury demand, but it stated that it ‘does not consent to the Bankruptcy Court entering a final order or judgment in any non-core proceeding or conducting a jury trial.’ . . . BPRE maintained that the district court should withdraw the reference for reasons of judicial economy, given that BPRE had not consented to final judgment and the district court would have to conduct de novo review. The district court denied the motion, holding that because the matter had already been litigated in the bankruptcy court for over six months, it would not be a waste of resources to continue there. . . . BPRE expressly consented in its adversary complaint but contends that it withdrew that consent and never reinstated it. . . . Whereas BPRE withdrew consent before final judgment—after which many courts seem to agree is too late—there is no doubt that it chose to file the claims in the bankruptcy court, expressly consented to the entry of a final judgment there, and sought to revoke the consent only after it was denied a jury. Considering the judicial concern with gamesmanship, we conclude that BPRE consented to the bankruptcy court’s authority: ‘[T]he consequences of a litigant sandbagging the court—remaining silent about his objection and belatedly raising the error only if the case does not conclude in his favor—can be particularly severe.’ Stern, 131 S. Ct. at 2608 (internal quotations and alterations omitted). With the parties’ consent, the bankruptcy court was statutorily authorized under § 157(c)(2) to issue a final judgment. . . . Turning to whether the bankruptcy court had the constitutional authority to enter final judgment, we are bound to apply Stern, which held that, regardless of statutory authority, the bankruptcy court did not have the constitutional authority to enter a final judgment on claims that are so deeply at the heart of the federal judiciary’s Article III powers and are not necessary to the resolution of the bankruptcy estate. . . . [Having concluded] that the bankruptcy court lacked the constitutional authority to enter final judgment on BPRE’s state-law claims, we must address whether BPRE’s consent to have its claims heard in bankruptcy court cures the constitutional deficiency. We adopt the compelling and thorough reasoning of Waldman [v. Stone, 698 F.3d 910, 919 (6th Cir. 2012), cert. denied, ––– U.S. ––––, 133 S. Ct. 1604, 185 L. Ed. 2d 581 (2013)], which held that parties cannot consent to such circumvention of Article III that impinges on the structural interests of the Judicial Branch. Waldman was the first post-Stern appellate decision to address consent as it relates to the bankruptcy court’s constitutional authority. The Sixth Circuit persuasively rejected the notion that the constitutional issue could be waived. . . . In Waldman, the court looked both to Stern and to Commodity Futures Trading Comm’n v. Schor, 478 U.S. 833, 106 S. Ct. 3245, 92 L. Ed. 2d 675 (1986), concluding that this issue implicates Article III’s structural interests. Article III, Section 1 not only seeks to preserve individual litigants’ right to an independent judiciary but also ‘serves as an inseparable element of the constitutional system of checks and balances.’ Waldman, 698 F.3d at 917 (quoting Schor, 478 U.S. at 850, 106 S. Ct. 3245). The court rejected the theory that, because the bankruptcy courts are part of the Judicial Branch, there was no threat of encroachment but only a waivable personal right. Id. at 917–18. . . . The Waldman court emphasized that the bankruptcy court’s entry of final judgment on these types of claims engaged Article III’s structural interests: ‘The issue here is not so much the aggrandizement of the Legislative or Executive Branches, as it is the diminution of the Judicial one.’ Id. at 918. ‘To the extent that Congress can shift the judicial Power to judges without [the salary and tenure] protections, the Judicial Branch is weaker and less independent than it is supposed to be.’ Id. (citing Schor, 478 U.S. at 850, 106 S. Ct. 3245). ‘Waldman’s objection thus implicates not only his personal rights, but also the structural principle advanced by Article III. And that principle is not Waldman’s to waive.’ Id. . . . We acknowledge that the Ninth Circuit’s opinion in Executive Benefits is in conflict on the issue of consent. We do not dispute that parties may waive 145

constitutional rights, Schor, 478 U.S. at 848–49, 106 S. Ct. 3245, but Executive Benefits disregards the critical structural interests underlying Article III. It does so by reasoning that Stern allowed waiver—that is, that Pierce Marshall waived the jurisdictional argument by filing his defamation claim in the bankruptcy court and never contesting that court’s authority over the claim. That line of reasoning in Executive Benefits misses the mark, however, because Stern determined only that Pierce had waived the issue of statutory authority, see Stern, 131 S. Ct. at 2608, and did not reach the constitutional issue as to waiver. . . . Although Schor observed that previous decisions had ‘intimated’ that Article III, Section 1 is ‘primarily’ concerned with individual litigants, the Court has also acknowledged Article III’s structural interests, especially in this precise context. See id. at 2609. ‘In establishing the system of divided power in the Constitution, the Framers considered it essential that the judiciary remain truly distinct from both the legislature and the executive.’ Id. at 2608 (quoting The Federalist No. 78, p. 466 C. Rossiter ed. 1961) (A. Hamilton); see also N. Pipeline, 458 U.S. at 57–61, 102 S. Ct. 2858. . . . In Schor the Court instructed that in determining whether Article III’s structural interests are implicated, we consider several non-dispositive factors, including ‘the extent to which the “essential attributes of judicial power” are reserved to Article III courts, and, conversely, the extent to which the non-Article III forum exercises the range of jurisdiction and powers normally vested only in Article III courts, the origins and importance of the right to be adjudicated, and the concerns that drove Congress to depart from the requirements of Article III.’ Schor, 478 U.S. at 851, 106 S. Ct. 3245. Allowing bankruptcy courts to enter final judgments on state-law claims that are not necessary to address the bankruptcy issues confers the ‘essential attributes of judicial power’ on non-Article III courts. Nor does § 157(c) affect the authority of the bankruptcy court to decide those claims crucial to bankruptcy cases. In addition, no one disputes here the bankruptcy court’s ability to continue to issue findings of fact and conclusions of law on related issues. The decision ‘does not change all that much.’ Stern, 131 S. Ct. at 2620. . . . Where a structural interest is triggered, ‘the parties cannot by consent cure the constitutional difficulty for the same reason that the parties by consent cannot confer on federal courts subject-matter jurisdiction beyond the limitations imposed by Article III, § 2.’ Schor, 478 U.S. at 851, 106 S. Ct. 3245. ‘When these Article III limitations are at issue, notions of consent and waiver cannot be dispositive because the limitations serve institutional interests that the parties cannot be expected to protect.’ Id. Nothing here is in conflict with Technical Automation Services Corp. v. Liberty Surplus Insurance Corp., 673 F.3d 399 (5th Cir. 2012), which addressed whether Stern affects the authority of magistrate judges, under Article III, to enter final judgments where consent is given under 28 U.S.C. § 636(c). This court relied on Puryear v. Ede’s Ltd., 731 F.2d 1153, 1154 (5th Cir. 1984) (which in turn had relied on Pacemaker Diagnostic Clinic of America, Inc. v. Instromedix, Inc., 725 F.2d 537 (9th Cir. 1984) (en banc)), which held that the Magistrates Act is ‘saved from any constitutional infirmity by its requirement that all parties consent to such transfer and by the power of the district court to vacate the reference to the magistrate on its own motion.’ Technical Automation, 673 F.3d at 405. In Technical Automation, we determined that Stern did not unequivocally overrule Puryear or the authorities cited therein, id. (citing Martin v. Medtronic, Inc., 254 F.3d 573, 577 (5th Cir. 2001)), and that although there are similarities between the magistrate-judge and bankruptcy statutory schemes, they are distinct, and Stern’s was a narrow holding not affecting magistrate judges, id. at 407. The court acknowledged that ‘this constitutional question may be seen in a different light post Stern.’ Id. . . . Based therefore on our adoption of the compelling reasoning in Waldman, we are comfortable in concluding that the bankruptcy court was without constitutional authority to enter a final, appealable judgment on BPRE’s claims.”). 146

Wellness Int’l Network, Ltd. v. Sharif, 727 F.3d 751 (7th Cir. 2013) (Flaum, J.; Sykes, J.; Tinder, J.) (“This appeal is the most recent chapter in a decade-long saga spanning two circuits involving [debtor/appellant] Richard Sharif, and his judgment creditors, Wellness International Network, Ltd., Ralph Oats, and Cathy Oats (collectively, “WIN”). After being slapped with a judgment in excess of $650,000 in the Northern District of Texas as a sanction for his failure to engage in discovery, Sharif filed for Chapter 7 bankruptcy in the Northern District of Illinois. WIN filed a five-count adversary complaint in the bankruptcy court. Counts I through IV sought to prevent discharge of Sharif’s debts under 11 U.S.C. § 727, and Count V sought a declaratory judgment that a trust of which Sharif [was the trustee] was in fact Sharif’s alter ego. Sharif continued his evasive and dilatory tactics, failing to respond to WIN’s and the bankruptcy[] [trustee’s] discovery requests. The bankruptcy court ordered Sharif to comply with the discovery requests and warned him that failure to do so would result in a default judgment. Sharif tendered some discovery but his responses fell far short of full compliance. After a hearing, the bankruptcy judge issued an opinion and order entering default judgment in WIN’s favor and subsequently awarded attorney’s fees to WIN. Sharif appealed to the district court. . . . After the bankruptcy judge’s entry of judgment but before briefing on the appeal in the district court, the Supreme Court decided Stern v. Marshall, in which it held that a bankruptcy court lacked constitutional authority to enter final judgment on [debtor’s] state-law counterclaim against a creditor, even though Congress had granted the bankruptcy court statutory authority to do so. A few months after Stern was decided, Sharif filed his opening brief in the district court, but he did not challenge the bankruptcy judge’s authority to enter final judgment on the adversary complaint. In December 2011, Sharif’s sister filed a motion in the district court to withdraw the reference on the basis of Stern. Later that month, our court decided Ortiz v. Aurora Health Care, Inc. (In re Ortiz), 665 F.3d 906 (7th Cir. 2011), in which we dismissed a direct appeal from a bankruptcy court on the ground that there was no final judgment because the bankruptcy judge had lacked constitutional authority to enter one under Stern. Shortly thereafter, Sharif filed a motion for supplemental briefing in the district court so that he could advance a Stern argument. The district judge denied both motions as untimely, holding that a Stern objection to a bankruptcy judge’s authority to enter final judgment is waivable and that Sharif’s failure to raise it earlier constituted waiver, and affirmed the bankruptcy court’s entry of default judgment. Sharif’s sister did not appeal the denial of her motion to withdraw the reference, but Sharif appealed the balance of the district court’s decision to this court. . . . We hold that a constitutional objection based on Stern is not waivable because it implicates separation-of-powers principles. . . . [W]hether Sharif’s objection to the bankruptcy court’s constitutional authority is waivable is a thorny question. The only two circuits to have addressed the issue head-on since Stern was decided issued their respective decisions after we heard oral argument in this appeal and came to opposite conclusions. In re Bellingham Ins. Agency, Inc., 702 F.3d 553, 566–70 (9th Cir. 2012) (waivable), cert. granted, ––– U.S. ––––, 133 S. Ct. 2880, 186 L. Ed. 2d 908 (2013); Waldman v. Stone, 698 F.3d 910, 917–18 (6th Cir. 2012) (not waivable), cert. denied, ––– U.S. ––––, 133 S. Ct. 1604, 185 L. Ed. 2d 581 (2013). On June 24, 2013, the Supreme Court granted a petition for a writ of certiorari in the case from the Ninth Circuit, which raised the issue of whether a Stern objection is waivable. Exec. Benefits Ins. Agency v. Arkison, ––– U.S. ––––, 133 S. Ct. 2880, 186 L. Ed. 2d 908 (2013). A final answer to that question is likely to be rendered when the Supreme Court decides that case next term. But we think the path to resolution of that issue is sufficiently clear that we should address it now rather than further extending the litigation between Sharif and WIN by waiting for the conclusion of the Executive Benefits case. . . . WIN asserts, and the district court held, that Stern itself indicates 147

that Sharif’s Article III objection is waivable and that, through his litigation conduct and failure to raise the objection sooner, Sharif in fact waived it. Sharif, on the other hand, contends that his Stern objection is not waivable and can be raised at any time because it concerns the bankruptcy court’s subject-matter jurisdiction. Neither view is persuasive. . . . At first blush, then, Stern appears to support WIN’s waiver argument. But there is a significant difference between the waived objection in Stern and Sharif’s objection, namely, the argument in Stern concerned only the bankruptcy court’s statutory authority, whereas Sharif’s argument concerns the bankruptcy court’s constitutional authority. We discern nothing in Stern that supports the proposition that a party may waive an Article III objection to a bankruptcy judge’s entry of final judgment. In point of fact, a different portion of the Stern opinion casts serious doubt on whether notions of waiver and consent have any role in bankruptcy, given that creditors must go to the bankruptcy court to pursue their claims. See 131 S. Ct. at 2614–15 & n.8; see also Granfinanciera, 492 U.S. at 59 n.14, 109 S. Ct. 2782. For these reasons, we do not think Stern supports WIN’s position. . . . As for Sharif’s argument, it is true that questions of subject-matter jurisdiction may be raised at any time, as parties cannot consent to subject-matter jurisdiction; indeed, such questions must be considered by a court sua sponte. But we disagree with Sharif that his Article III, § 1, objection concerns the bankruptcy court’s subject-matter jurisdiction, for several reasons. First, as noted above, Stern held that § 157 constitutes a statutory allocation of authority between the bankruptcy courts and the district courts, and Article III, § 1, can be viewed similarly, that is, as an allocation of authority between Article III courts and non-Article III courts. Second, in resolving the constitutional issue in Stern, the Court never asserted that the bankruptcy court in that case had lacked subject-matter jurisdiction; rather, it held that ‘[t]he Bankruptcy Court . . . lacked the constitutional authority to enter a final judgment on a state law counterclaim that is not resolved in the process of ruling on a creditor’s proof of claim,’ 131 S. Ct. at 2620 (emphasis added). Third, the constitutional bases of federal subject-matter jurisdiction are set forth in Article III, § 2, whereas Sharif’s objection to the bankruptcy court’s entry of final judgment is based on Article III, § 1. Finally, Sharif’s reliance on Ortiz for the proposition that a Stern objection is jurisdictional is misplaced, as the jurisdictional issue in Ortiz concerned whether there was a valid final judgment for purposes of appellate jurisdiction, given the unique procedural posture of that appeal (a direct appeal from the bankruptcy court); Ortiz did not hold that the bankruptcy court had lacked jurisdiction. Consequently, we do not think the waiver issue can be resolved under the well-established principle that questions of subject-matter jurisdiction are not waivable. Nevertheless, we agree with Sharif that under current law his constitutional objection to the bankruptcy court’s entry of final judgment is not waivable. . . . Although consent has no role under Article III, § 2, the Supreme Court has acknowledged a limited role for notions of consent and waiver under Article III, § 1. See Stern, 131 S. Ct. at 2613–14; id. at 2625–26, 2627–28 (Breyer, J., dissenting); Peretz v. United States, 501 U.S. 923, 936–39, 111 S. Ct. 2661, 115 L. Ed. 2d 808 (1991); Granfinanciera, 492 U.S. at 59 n.14, 109 S. Ct. 2782; Commodity Futures Trading Comm’n v. Schor, 478 U.S. 833, 848–57, 106 S. Ct. 3245, 92 L. Ed. 2d 675 (1986); cf. Roell v. Withrow, 538 U.S. 580, 123 S. Ct. 1696, 155 L. Ed. 2d 775 (2003) (holding that under 28 U.S.C. § 636(c)(1) parties may consent to proceedings before a magistrate judge through their litigation conduct). . . . This appears to stem from the fact that § 1 protects two separate interests—it safeguards litigants’ right to have their cases decided by independent and impartial judges, and it also operates as an inseparable element of separation of powers by protecting the judicial branch from encroachment by the political branches. Stern, 131 S. Ct. at 2608–09; Schor, 478 U.S. at 848–50, 106 S. Ct. 3245; N. Pipeline, 458 U.S. at 58, 102 S. Ct. 2858 (plurality opinion). The guarantee of an independent 148

and impartial judiciary serves primarily to protect personal interests, and so it ‘is subject to waiver, just as are other personal constitutional rights that dictate the procedures by which civil and criminal matters must be tried.’ Schor, 478 U.S. at 848–49, 106 S. Ct. 3245 (citations omitted). The role that § 1 plays in our system of checks and balances, however, protects the larger structural interests of our constitutional government, and ‘[t]o the extent that this structural principle is implicated in a given case, the parties cannot by consent cure the constitutional difficulty for the same reason that the parties by consent cannot confer on federal courts subject-matter jurisdiction beyond the limitations imposed by Article III, § 2.’ Id. at 850–51, 106 S. Ct. 3245 (citation omitted). ‘When these Article III limitations are at issue, notions of consent and waiver cannot be dispositive because the limitations serve institutional interests that the parties cannot be expected to protect.’ Id. at 851, 106 S. Ct. 3245; see also Freytag v. C.I.R., 501 U.S. 868, 896–98, 111 S. Ct. 2631, 115 L. Ed. 2d 764 (1991) (Scalia, J., concurring in judgment). But cf. Plaut v. Spendthrift Farm, Inc., 514 U.S. 211, 231, 115 S. Ct. 1447, 131 L. Ed. 2d 328 (1995) (rejecting proposition “that legal defenses based upon doctrines central to the courts’ structural independence can never be waived”); Freytag, 501 U.S. at 893–901, 111 S. Ct. 2631 (same). . . . The dual nature of Article III, § 1, renders notions of waiver and consent more nuanced than they are in other areas. The practical problem, of course, is the difficulty of separating out the waivable personal safeguard from the nonwaivable structural safeguard, for in every case an argument that a party waived the personal protection can be met with the argument that the court must still consider the objection because the structural aspect cannot be waived. The net result would be that an Article III, § 1, argument can never be waived and that parties can never consent to adjudication by a non-Article III tribunal, which would render Schor’s discussion of the waivability of the personal protections meaningless. But a close examination of Schor demonstrates how this difficulty is to be resolved. . . . Schor involved an Article III challenge to an agency’s authority to decide a state-law counterclaim. A customer brought a claim for reparations against his commodity futures broker before the Commodity Futures Trading Commission (CFTC), and the broker filed a state-law counterclaim for the same amount. After the CFTC ruled in favor of the broker on both the claim and the counterclaim, the customer appealed on the ground that the CFTC’s adjudication of the counterclaim ran afoul of Article III, § 1. The Court held that the CFTC’s assumption of jurisdiction over the state-law counterclaim was not unconstitutional. Although the customer had consented to proceed before the CFTC rather than an Article III court, id. at 849–50, 106 S. Ct. 3245, the Court explained that consent could not be dispositive due to the structural interests protected by Article III, § 1, id. at 851, 106 S. Ct. 3245. The Court then examined several factors and held that ‘the congressional scheme [did] not impermissibly intrude on the province of the judiciary.’ Id. at 851–52, 106 S. Ct. 3245. While the counterclaim at issue was a private right (rather than a public right) traditionally decided by courts, the Court found it significant that the CFTC dealt only with a ‘“particularized area of law,’” id. at 852, 106 S. Ct. 3245 (quoting N. Pipeline, 458 U.S. at 85, 102 S. Ct. 2858 (plurality opinion)); the CFTC’s adjudicatory powers departed from the traditional agency model in only one respect, its jurisdiction over state-law counterclaims, id.; like in Crowell, 285 U.S. 22, 52 S. Ct. 285, the CFTC’s orders were enforceable only by a district court, its factual findings were reviewed under a ‘weight of the evidence’ standard, and its legal conclusions were reviewed de novo, Schor, 478 U.S. at 853, 106 S. Ct. 3245; and the CFTC’s counterclaim jurisdiction was ‘limited to that which [was] necessary to make the reparations procedure workable,’ id. at 856, 106 S. Ct. 3245. Therefore, the Court concluded, ‘the magnitude of any intrusion on the Judicial Branch [could] only be termed de minimis.’ Id.; see also Peretz, 501 U.S. at 936–37, 111 S. Ct. 2661 (holding that a 149

criminal defendant in a felony trial may consent to jury selection presided over by a magistrate judge: no structural issues were implicated because magistrates were appointed and subject to removal by Article III judges; the district court made the ultimate decision to invoke the magistrate’s assistance, subject to veto by the parties; and the decision whether to empanel the jury whose selection was overseen by the magistrate remained entirely with the trial judge). . . . As noted earlier, since we heard oral argument, two of our sister circuits have addressed the waiver issue head-on and have come to divergent conclusions; both circuits relied on Schor. . . . We think the Sixth Circuit has the better view under current law. Schor holds that waiver or consent may be a factor in determining whether delegation of judicial business to non-Article III tribunals is unconstitutional, but it cannot be dispositive because of the structural role of Article III, § 1. And Stern unequivocally holds that 28 U.S.C. § 157(b) violates the structural protections of Article III, § 1, in permitting a bankruptcy judge to enter final judgment in certain ‘core proceedings.’ In other words, unlike Schor, where party consent was permissible because the statutory scheme at issue did not implicate structural concerns, the Supreme Court has already held that the statutory scheme granting bankruptcy judges authority to enter final judgment in core proceedings does implicate structural concerns where the core proceeding at issue is “‘the stuff of the traditional actions at common law tried by the courts at Westminster in 1789,’” Stern, 131 S. Ct. at 2609 (quoting N. Pipeline, 458 U.S. at 90, 102 S. Ct. 2858 (Rehnquist, J., concurring in judgment)). Therefore, we cannot agree with our colleagues on the Ninth Circuit that the allocation of authority between bankruptcy courts and district courts with regard to core proceedings does not implicate structural interests. We also observe that in Stern the Court rejected the proposition that the fact that bankruptcy judges are appointed by Article III judges makes a difference; the Court explained that since it was the bankruptcy court itself that ‘exercise[d] “the essential attributes of judicial power [that] are reserved to Article III courts,” it [did] not matter who appointed the bankruptcy judge or authorized the judge to render final judgments in such proceedings. The constitutional bar remain[ed].’ Id. at 2619 (second alteration in original) (quoting Schor, 478 U.S. at 851, 106 S. Ct. 3245). . . . It is true that under 28 U.S.C. § 157(c)(2) parties may consent to final resolution of a noncore proceeding by a bankruptcy judge, but we do not think that this inexorably leads to the conclusion that parties may consent to final adjudication of a core proceeding by a bankruptcy judge or waive a Stern objection. For one thing, the Supreme Court has not passed on the constitutionality of § 157(c). Cf. Stern, 131 S. Ct. at 2615 n.8 (observing that “the notion of ‘consent’ does not apply in bankruptcy proceedings as it might in other contexts”); Granfinanciera, 492 U.S. at 59 n.14, 109 S. Ct. 2782 (“Parallel reasoning [to Schor] is unavailable in the context of bankruptcy proceedings, because creditors lack an alternative forum to the bankruptcy court in which to pursue their claims.”). In any event, the statutory scheme established by Congress for core proceedings differs in significant respects from the scheme for noncore proceedings. Whereas Congress has vested bankruptcy judges with authority to enter final orders and judgments in core proceedings subject only to review by the district court under traditional appellate standards, see §§ 157(b), 158(a), in noncore proceedings Congress has vested bankruptcy judges with authority to hear the matter and submit proposed findings of fact and conclusions of law to the district court, and it is the district court that enters final judgment after de novo review, § 157(c)(1). Section 157(c)(2) permits a bankruptcy judge to enter final judgment in a noncore proceeding, but only if the parties consent and the district court decides to refer the matter to the bankruptcy court. Thus, a strong argument can be made that with respect to noncore proceedings Congress has left the essential attributes of judicial power to Article III courts, and so the structural interests at issue with regard to core proceedings are not present under 150

the current statutory scheme applicable to noncore proceedings, thereby allowing room for notions of waiver and consent. Cf. Peretz, 501 U.S. at 936–37, 111 S. Ct. 2661; United States v. Raddatz, 447 U.S. 667, 681–84, 100 S. Ct. 2406, 65 L. Ed. 2d 424 (1980) (holding that there was no Article III impediment to a magistrate judge’s submission of proposed findings of fact and conclusions of law concerning suppression motion because ultimate suppression decision was made by the district judge). In this case we need not, and do not, express an opinion on the constitutionality of § 157(c)(2), or for that matter § 636(c)(1), which permits litigants to consent to entry of final judgment by a magistrate judge, cf. Technical Automation Servs. Corp. v. Liberty Surplus Ins. Corp., 673 F.3d 399, 404–07 (5th Cir. 2012) (declining to hold that Stern affected a magistrate judge’s authority to enter final judgment on a state-law counterclaim under § 636(c)(1)). Our discussion is intended only to show that, unlike the Ninth Circuit, we do not think that a party’s Stern objection to a bankruptcy court’s entry of final judgment in a core proceeding is waivable simply because Congress has authorized litigants to consent to a bankruptcy judge’s final adjudication of a noncore proceeding. . . . We also disagree with the Ninth Circuit that MacDonald v. Plymouth County Trust Co., 286 U.S. 263, 52 S. Ct. 505, 76 L. Ed. 1093 (1932), supports the notion that the waivability of an Article III, § 1, objection is ‘well established.’ In re Bellingham Ins. Agency, Inc., 702 F.3d at 566–67. Prior to the Bankruptcy Act of 1978, federal district courts served as bankruptcy courts and employed a ‘referee’ system. See N. Pipeline, 458 U.S. at 53, 102 S. Ct. 2858 (plurality opinion). In MacDonald, the Court held that the parties could consent to have an action to set aside voidable preferences summarily tried by a referee—i.e., the parties could agree to waive the benefits of the procedures employed in plenary suits tried to the district courts. 286 U.S. at 265–68, 52 S. Ct. 505. But MacDonald was decided on statutory grounds—the question was whether the referee had statutory jurisdiction, and the Court’s holding was based on its conclusion that the relevant statutory definitions of ‘courts’ and ‘court of bankruptcy’ included the referee. Id. at 268, 52 S. Ct. 505. The MacDonald Court did not mention the Constitution, let alone Article III, § 1. Furthermore, as the plurality in Northern Pipeline observed, the particular adjunct functions exercised by the bankruptcy referees prior to the 1978 Act were ‘never . . . explicitly endorsed by’ the Supreme Court, and the bankruptcy courts created under the 1978 Act, which are very similar to the bankruptcy courts in existence today, differed significantly from the old referee system. 458 U.S. at 79 n.31, 102 S. Ct. 2858. We simply do not see how a decision interpreting an old statute that differs considerably from current law can support the proposition that waiver of an Article III, § 1, objection is ‘well established.’ See Plaut, 514 U.S. at 232 n.6, 115 S. Ct. 1447 (“Of course the unexplained silences of our decisions lack precedential weight.” (citations omitted)); Webster v. Fall, 266 U.S. 507, 511, 45 S. Ct. 148, 69 L. Ed. 411 (1925) (“Questions which merely lurk in the record, neither brought to the attention of the court nor ruled upon, are not to be considered as having been so decided as to constitute precedents.” (citations omitted)). . . . In sum, we hold that under current law a litigant may not waive an Article III, § 1, objection to a bankruptcy court’s entry of final judgment in a core proceeding. We thus turn to consider Sharif’s constitutional objection to the bankruptcy court’s authority, despite the fact that he waited so long to assert it.”). Hasse v. Rainsdon (In re Pringle), 495 B.R. 447 (B.A.P. 9th Cir. 2013) (Markell, J.; Dunn, J.; Jury, J.) (“Before the debtor, Raymond Pringle, filed his chapter 7 bankruptcy, he transferred his house to Jolene Hasse[, his long-time girl friend]. The bankruptcy court found this transaction to be avoidable as a fraudulent transfer under 11 U.S.C. § 548. . . . In December 2012, the Ninth Circuit decided [Executive Benefits Ins. Agency v. Arkison (In re] Bellingham [Ins. Agency, Inc.), 702 F.3d 151

553, 567 (9th Cir. 2012) (quoting Stern, 131 S. Ct. at 2607), cert. granted, ––– U.S. ––––, 133 S. Ct. 2880, 186 L. Ed. 2d 908, 2013 WL 3155257 (2013)]. That case holds that, despite Congress’s designation of fraudulent conveyance actions as core matters, bankruptcy courts do not have authority to unilaterally hear and determine them. 702 F.3d at 565–66. But more importantly to this appeal, the Ninth Circuit also held that, notwithstanding this lack of unilateral authority, a bankruptcy court could still hear and determine—and enter a final judgment—in such a proceeding with the parties’ consent. 702 F.3d at 567. It further held that such consent need not be express, but could be implied. Id. . . . Bellingham’s basic arguments are simple. The congressional allocation of authority in 28 U.S.C. § 157 recognizes that, especially in matters ‘related to’ a bankruptcy case, a non-Article III judge may not unilaterally enter a final judgment. . . . But Congress anticipated that concentrating decisionmaking in one court for bankruptcy matters was desirable. As noted by a leading treatise, the broad scope of section 1334(b) of title 28 ‘evidences the intent of Congress to bring all bankruptcy-related litigation within the purview of the district court, at least as an initial matter, irrespective of congressional statements to the contrary in the context of other specialized litigation.’ 1 COLLIER ON BANKRUPTCY ¶ 3.01[3] (Alan N. Resnick & Henry J. Sommer, eds., 16th ed. 2013). . . . In this spirit, Congress also drafted the applicable bankruptcy jurisdictional statutes to allow bankruptcy courts to hear—but not determine—matters that they may not constitutionally decide. 28 U.S.C. § 157(c)(1). But Congress went further: it allowed the bankruptcy court to determine those disputes—that is, enter a final decision, subject only to appellate and not de novo review—‘with the consent of all the parties to the proceeding.’ Id. § 157(c)(2). Congress thus determined that parties could consent to a non-Article III judge hearing and entering a final judgment in matters in which that non-Article III judge could not unilaterally act. . . . From this, Bellingham reasoned that ‘[i]f consent permits a non-Article III judge to [finally] decide [] a non-core proceeding, then it surely permits the same judge to decide a core proceeding in which he would, absent consent, be disentitled to enter final judgment. The only question, then, is whether [the party objecting to the bankruptcy court’s authority] did in fact consent to the bankruptcy court’s jurisdiction [i.e., authority].’ 702 F.3d at 567 (emphasis supplied). . . . Although Bellingham required consent, consent does not have a unitary meaning. See generally Daniel J. Bussel & Kenneth N. Klee, Recalibrating Consent in Bankruptcy, 83 Am. Bankr. L.J. 663 (2009). Does it include ‘implied’ consent, or must the consent be express? And do there have to be procedural safeguards to ensure that it is informed? . . . Bellingham made short work of the first question; it rejected the argument that consent must be express. This rejection was based on two statutory arguments; one related to the manner in which 28 U.S.C. § 157 deals with jury trials, and one related to analogies to the Federal Magistrates Act. . . . With respect to jury trials, Bellingham looked to 28 U.S.C. § 157(e), which permits bankruptcy judges to conduct jury trials only with ‘express’ consent. The court found meaning in the inclusion of the adjective ‘express,’ finding that the omission of that adjective in 28 U.S.C. § 157(c)(2) was purposeful. Bellingham, 702 F.3d at 569. Accordingly, Bellingham stated that ‘in cases like this one—in which the defendant was aware of its right to seek withdrawal of the reference but opted instead to litigate before the bankruptcy court—consent is established.’ Id. . . . The Ninth Circuit next analogized the bankruptcy consent statute to the consent provision in the Federal Magistrates Act, 28 U.S.C. § 636(c)(1). Bellingham, 702 F.3d at 569. The Magistrate Act provides that a magistrate judge may order final judgment ‘[u]pon the consent of the parties.’ 28 U.S.C. § 636(c)(1). The Supreme Court has held that this language permits implied consent when the allegedly consenting party has ‘be[en] notified of [its] right to refuse and after being told that [the Magistrate Judge] intended to exercise case-dispositive 152

authority.’ Roell v. Withrow, 538 U.S. 580, 586, 123 S. Ct. 1696, 155 L. Ed. 2d 775 (2003). In this calculus, ‘notification of the right to refuse the magistrate judge is a prerequisite to any inference of consent.’ Id. at 587 n.5, 123 S. Ct. 1696. . . . This method of inquiry mirrors congressional thought at the time of 28 U.S.C. § 157’s enactment. This is reflected in the remarks of Rep. Kindness, co-author of the amendment that became 28 U.S.C. § 157(c). 130 Cong. Rec. 6242–43 (1984) (“In Marathon-type suits, the bankruptcy judge will exercise the same powers as the magistrate.”). See also 1 COLLIER ON BANKRUPTCY, supra, at ¶ 3.03[2]: ‘Section 157(c)(1) is drawn from 28 U.S.C. § 636(b)(1), which is part of the United States Magistrate Judges Act and that contains analogous provisions for proposed findings and recommendations to be made by magistrate judges and submitted to district judges. The powers accorded magistrate judges under section 636(b)(1) have passed constitutional muster, and the teachings of the case upholding that section apply directly to the treatment contained in section 157(c)(1).’ . . . Bellingham thus reasoned that ‘[l]ike the provision of the Federal Magistrate Act at issue in Roell, the text of § 157(c) only requires consent simpliciter.’ 702 F.3d at 569. . . . As in Bellingham, Hasse actively participated in the fraudulent transfer proceeding. Her affirmative actions—answering the complaint, participating in discovery, contesting issues at trial—resemble the similar activities of EBIA—the non-creditor defendant—in Bellingham. But much of Bellingham focuses on the ‘sandbagging’ aspects of EBIA’s actions and how those actions stood proxy for consent. Id. at 568; see Stern, 131 S. Ct. at 2608 (“[T]he consequences of a litigant . . . sandbagging the court—remaining silent about his objection and belatedly raising the error only if the case does not conclude in his favor—can be particularly severe.”) (internal quotation marks and citation omitted). . . . This focus requires careful consideration as to whether ‘sandbagging’ is necessary for implied consent, or whether it is merely sufficient. Upon examination of Bellingham and Stern, and their treatment of ‘sandbagging,’ we hold that while a showing of ‘sandbagging’ may be sufficient for consent, it is not necessary. There are other ways in which the parties may convey their consent, including those present here. . . . In Bellingham, EBIA’s consent was found by and through its actions in the bankruptcy court. Bellingham, 702 F.3d at 570. EBIA’s initial action was to move for a jury trial, which the district court treated as a motion to withdraw the reference. Id. at 568. Instead of pursuing a hearing on the withdrawal motion in an Article III court, EBIA petitioned the district court to stay consideration of the motion until the bankruptcy court decided the plaintiff’s motion for summary judgment. Id. When the bankruptcy court granted summary judgment to the plaintiff, EBIA abandoned its motion to withdraw the reference and separately appealed to the district court. Id. At the district court, EBIA again failed to object to the bankruptcy court’s authority. Id. EBIA even failed to raise the issue in its briefing to the Ninth Circuit, only raising it in a motion to dismiss shortly before oral argument. Id. . . . ‘In sum, EBIA had been alerted to the bankruptcy court’s possible lack of authority, had ample opportunity to object, affirmatively participated in litigation at the bankruptcy court and district court, and only objected once it had lost in both those courts. . . . Because EBIA waited so long to object, and in light of its litigation tactics, we have little difficulty concluding that EBIA impliedly consented. . . . “No procedural principle is more familiar to this Court than that a constitutional right, or a right of any other sort, may be forfeited . . . by the failure to make timely assertion of the right before a tribunal having jurisdiction to determine it.”’ Id. (quoting U.S. v. Olano, 507 U.S. 725, 731, 113 S. Ct. 1770, 123 L. Ed. 2d 508 (1993)) (internal quotation marks and citation omitted). . . . Thus, under Bellingham, sandbagging can supply consent through the knowing failure to object while purposefully proceeding through the bankruptcy court system. . . . But, as indicated before, Hasse’s case is different than Bellingham. There, the non-creditor defendant 153

‘sandbagged’ the court and its opponent in a way that belied its knowledge of potential Stern problems. The Ninth Circuit thus found consent from the non-creditor’s conscious and knowing manipulation of the process to its own perceived advantage. This type of volitional calculation squares with the level of consent necessary to confer upon a non-Article III court the power to enter a final judgment, as found in the magistrate cases relied upon by Bellingham. . . . Here, however, Hasse was not calculating; she and her counsel were clueless. It was only after this Panel raised the issue that she even formulated an objection to the authority of the bankruptcy judge to ‘determine’ the matter and enter a final order. These facts thus present a variation on the consent theme: the record here is devoid of facts that indicate any ‘sandbagging’ or manipulation of the litigation process. The record, however, is replete with instances of Hasse’s conscious engagement and use of the bankruptcy court and the services of this Panel to resolve the Trustee’s claim in her favor. More importantly, these actions were undertaken against an almost unavoidable backdrop which called the bankruptcy court’s authority into question. As stated previously, despite the background rumblings of Marshall v. Stern (In re Marshall), 600 F.3d 1037 (9th Cir. 2010) at the Ninth Circuit and Stern v. Marshall at the Supreme Court, Hasse stood mute while the bankruptcy court and this Panel endeavored to resolve the dispute. Under Bellingham, is that level of knowing inaction sufficient? . . . To answer that question is to examine in detail what level of consent is required. Bellingham tells us that implied consent works, but does not address whether that implied consent must be accompanied by at least something akin to unexpressed acquiescence—some acknowledgment of the issue coupled with inaction—or whether simply participating in the court proceeding without raising the issue is sufficient. . . . The issue of the proper basis for consent to a bankruptcy court’s authority to enter a final judgment has a long history. The Supreme Court has long held that simple participation by a creditor in the claims resolution process constitutes consent to the entry of a final order as to that claim. Bryan v. Bernheimer, 181 U.S. 188, 197, 21 S. Ct. 557, 45 L. Ed. 814 (1901) (consent to summary jurisdiction by filing proof of claim); Katchen v. Landy, 382 U.S. 323, 334, 86 S. Ct. 467, 15 L. Ed. 2d 391 (1966) (filing proof of claim confers summary jurisdiction on bankruptcy court over preference actions and actions to recover property filed by the bankruptcy trustee in claim disallowance action); Cline v. Kaplan, 323 U.S. 97, 99, 65 S. Ct. 155, 89 L. Ed. 97 (1944) (dicta). Cf. Alexander v. Hillman, 296 U.S. 222, 238–39, 242–43, 56 S. Ct. 204, 80 L. Ed. 192 (1935) (claim filed in federal equity receivership submits claimant to court’s jurisdiction in respect of all defenses, objections, and counterclaims). . . . It has also held that filing a proof of claim is a waiver of the right to have a jury determine the existence and amount of the claims against the estate, Langenkamp v. Culp, 498 U.S. 42, 44–45, 111 S. Ct. 330, 112 L. Ed. 2d 343 (1990) (per curiam), and is also a waiver of any state sovereign immunity otherwise protected by the Eleventh Amendment. Gardner v. New Jersey, 329 U.S. 565, 573–74, 67 S. Ct. 467, 91 L. Ed. 504 (1947). . . . The main difference here, however, is that Hasse is not a creditor of the estate. Thus, the constitutional ability of Congress to allocate final adjudicatory power over a claim for relief to a non-Article III court is more limited. As a consequence, those cases finding the power to decide exists because of mere participation, regardless of consent, are not particularly persuasive. . . . The issue thus turns to whether Bellingham’s concept of consent requires waiver—the intentional relinquishment of a known right—or whether the required consent can be supplied through forfeiture. Although the two doctrines are similar, the distinction between them is well-known: ‘Waiver is different from forfeiture. Whereas forfeiture is the failure to make the timely assertion of a right, waiver is the intentional relinquishment or abandonment of a known right.’ Olano, 507 U.S. at 733, 113 S. Ct. 1770 (internal quotation marks and citation omitted). 154

That forfeiture might be sufficient is foreshadowed by Bellingham itself, which quotes Olano when describing the actions relevant there. Bellingham, 702 F.3d at 568. . . . But we need not wade into this issue. There is more happening here than simple forfeiture. Throughout, Hasse was represented by counsel, who actively represented her interests and who made all of the discretionary decisions such representation entails. These types of discretionary decisions include the decision to challenge the authority of the court hearing the matter. Hasse’s counsel knew or should have known of Stern. The Ninth Circuit’s opinion in Marshall v. Stern was issued one week before Hasse answered the adversary complaint and nine months before trial. The Supreme Court granted certiorari in Stern v. Marshall two months before trial. Under Bellingham, this is notice of the issue. Bellingham, 702 F.3d at 569 (citing Marshall v. Stern, 600 F.3d at 1037). . . . The moment when such a decision is presented matters, because, to the extent the magistrate analogy relied upon by Bellingham holds, courts both before and after Roell have held that a represented party who participates without objection in proceedings before a magistrate judge has impliedly consented to that judge’s authority to enter a final order or judgment. Stevo v. Frasor, 662 F.3d 880, 883–84 (7th Cir. 2011) (express consent to first magistrate judge deemed implied consent to authority of second magistrate judge where plaintiff had proceeded through discovery and summary judgment without objection); Heft v. Moore, 351 F.3d 278, 281 (7th Cir. 2003) (implied consent found in participation in proceeding without objection); Baker v. Socialist People’s Libyan Arab Jamahirya, 810 F. Supp. 2d 90, 98–99 (D.D.C. 2011) (implied consent found where properly-served defendants, including the Syrian Arab Republic, chose to “sit back and wait” and only moved to vacate a default judgment after eight years of litigation because the judgment was “not to their liking”); Warren v. Thompson, 224 F.R.D. 236, 238–39 (D.D.C. 2004) (plaintiff’s counsel participated in pre-trial and trial proceedings). Cf. U.S. v. Gamba, 541 F.3d 895, 900 (9th Cir. 2008) (consent of client to magistrate judge’s presiding over closing argument to jury could be vested in counsel alone, and not require client’s participation or express consent); 12 Charles Alan Wright, Arthur R. Miller & Richard L. Marcus, FEDERAL PRACTICE & PROCEDURE § 3071.2 & n.19.3 (2d ed. 1997 & Supp. 2013); 14 JAMES WM. MOORE ET AL., MOORE’S FEDERAL PRACTICE ¶ 73.03[6] (3d ed. 2012). . . . Under this authority, passive and unwitting participation is not sufficient for a finding of voluntary consent. The Ninth Circuit, for example, has rejected implied consent where a pro se plaintiff’s initial act was to demand a hearing in the district court; the plaintiff proceeded with the magistrate judge only because she thought it was her only choice to obtain relief. Anderson v. Woodcreek Venture Ltd., 351 F.3d 911, 919 (9th Cir. 2003). Similarly, the Seventh Circuit held that neither the plaintiff nor defendant had consented to bankruptcy court jurisdiction simply because they had filed motions for abstention and withdrawal of the reference, respectively. Ortiz v. Aurora Health Care, Inc. (In re Ortiz), 665 F.3d 906, 915 (7th Cir. 2011). The Fifth Circuit held that a pro se state prisoner plaintiff in a 42 U.S.C. § 1983 action did not impliedly consent where it was not shown that he ‘was notified of his right to withhold consent and retain his right to object to the magistrate judge’s findings before the district court.’ Donaldson v. Ducote, 373 F.3d 622, 624–25 (5th Cir. 2004). . . . These cases distill into a relatively simple principle: once a party is alerted, or is held to be alerted, to the potential risks of failing to raise the issue of the tribunal’s authority, there is a rebuttable presumption that such failure to act was intentional, and that further purposeful proceeding in the forum indicates consent. If applicable, this presumption then shifts the burden to the objecting party to show a lack of consent, a burden that requires more than a simple statement after litigation has been completed that consent had never been fully given. . . . In this case, there was early notice of the possible infirmity. Bellingham established that the Ninth Circuit opinion in Marshall v. Stern, combined with the 155

Supreme Court decision in Granfinanciera, alerted the legal world to bankruptcy courts’ possible lack of authority to decide fraudulent transfer actions. Bellingham, 702 F.3d at 569. In this case, the Ninth Circuit issued its opinion in Marshall v. Stern one week before Hasse answered the Trustee’s complaint. . . . The continued participation in light of the infirmity in authority is also present. Bellingham held that the non-creditor’s failure to object to the bankruptcy court’s authority until the appeal reached the Ninth Circuit—such objection relying on Stern and made more than one year after the Ninth Circuit issued Marshall v. Stern—amounted to a waiver of its right to have an Article III court determine the matter. Id. at 569–70. Bellingham is thus consistent with those magistrate cases that find participation by represented parties involves the type of knowing engagement or purposeful availment that equates with the required consent. . . . Against this background, Hasse’s conduct undoubtedly aligns with those cases that find implied consent. She was and is represented by counsel, and we thus can assume that she was aware of her right to refuse consent and demand an Article III forum. The Ninth Circuit’s publication of Marshall v. Stern made, or should have made, her counsel aware of the bankruptcy court’s possible lack of constitutional authority. Despite this knowledge, Hasse extensively participated in litigation at the bankruptcy court and on appeal without raising any challenge to the bankruptcy court’s constitutional authority. To allow her to now challenge the court’s authority to enter a final order on the basis of lack of consent would be to ignore Bellingham’s equating such participation with the voluntary acceptance of the bankruptcy court’s ability to determine the matter and enter a final judgment. We thus hold that Hasse’s conduct constituted consent to the authority of the bankruptcy court to hear and determine—and enter a final judgment—in this case. As a consequence of this holding, and despite Bellingham’s citation of Olano, we do not reach the issue of whether simple forfeiture—a failure to act without examination of the intent or motivation, if any, of that failure—can suffice for the type of consent Bellingham requires.”). Serra v. Salven (In re Garcia), 2013 WL 1490987 (B.A.P. 9th Cir. Apr. 11, 2013) (Dunn, J.; Jury, J.; Markell, J.) (“Shortly before filing their chapter 7 bankruptcy petition, Francisco Lujan and Liduvina Garcia Garcia (“debtors”) paid appellant, J. Tony Serra (“Serra”), in advance for his representation of their son in a criminal case. The chapter 7 trustee (“Trustee”) initiated an adversary proceeding against Serra seeking to avoid the payment as a fraudulent transfer under § 548(a)(1)(B). The bankruptcy court ruled in the Trustee’s favor, finding that he met his burden of proof under § 548(a)(1)(B). . . . Under Stern v. Marshall . . . a bankruptcy court generally lacks authority to enter a final judgment on an action to avoid a fraudulent transfer under § 548. However, under Executive Benefits Ins. Agency v. Arkison (In re Bellingham Ins. Agency, Inc.), 702 F.3d 553, 566–69 (9th Cir. 2012), a party waives or forfeits his right to a final judgment from an Article III court by failing to object timely to the bankruptcy court’s jurisdiction or by participating in litigation before the bankruptcy court. Within the Ninth Circuit, such actions constitute implied consent. Bellingham Ins. Agency, Inc., 702 F.3d at 567–69. . . . Here, the Trustee asserted in the complaint that the bankruptcy court had jurisdiction under 28 U.S.C. §§ 1334 and 157. Serra filed an answer to the complaint on June 23, 2009. . . . We cannot access his answer to the complaint, however, because it was placed under seal, and neither he nor the Trustee has provided a copy of the answer in the record before us. Notably, Serra has not challenged on appeal the bankruptcy court’s authority to enter the judgment on the Trustee’s fraudulent transfer claim. Because Serra has not raised the issue of the bankruptcy court’s jurisdiction over the Trustee’s fraudulent transfer claim,

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he has waived or forfeited his right to adjudication by an Article III court. See Bellingham Ins. Agency, Inc., 702 F.3d at 568–69. We therefore proceed with our analysis.”). Ariston Props., LLC v. Messer (In re FKF3, LLC), 501 B.R. 491 (S.D.N.Y. 2013) (Ramos, J.) (“Prior to Stern, courts in this Circuit ‘routinely found that parties could and did consent implicitly to the exercise of final jurisdiction by the Bankruptcy Court even with respect to non-core matters.’ See In re Coudert Bros. LLP, 2011 WL 5593147, at *10 [(S.D.N.Y. Sept. 23, 2011)] (citing cases). Although the Supreme Court in Stern confirmed that consent can be a sufficient basis for final adjudication by a bankruptcy court, this Court has held that ‘[f]ollowing Stern, it is doubtful whether mere participation in litigation is enough to imply consent.’ Id. at *12. Accordingly, in light of the directive from the Second Circuit that ‘a court should not lightly infer from a litigant’s conduct consent to have private state-created rights adjudicated by a non-Article III bankruptcy judge,’ In re Men’s Sportswear, Inc., 834 F.2d 1134, 1138 (2d Cir. 1987), the court in In re Lyondell Chem. Co., 467 B.R. 712 (S.D.N.Y. 2012), a post-Stern decision, held that the defendants did not impliedly consent to final adjudication by the bankruptcy court by participating in proceedings before the bankruptcy court without objection for over a year. Similarly, in In re Madison Bentley Assocs., LLC, 474 B.R. 430 (S.D.N.Y. 2012), the court noted that ‘[t]he test for consent is strict’ and, accordingly, held that defendants did not consent to final adjudication by the bankruptcy court by litigating the adversary proceeding for over a year and a half. Id. at 436–37, 439–40 (noting that “a waiver of important rights should only be found where it is fully knowing”) (internal quotations marks and citation omitted); see also In re Arbco Capital Mgmt., LLP, 479 B.R. 254, 266–67 (S.D.N.Y. 2012) (holding that defendant did not consent to the bankruptcy court’s jurisdiction to enter a final order where defendant “participated in two ‘hearings’ before the Bankruptcy Court without raising any objection to its jurisdiction”). . . . In determining implied consent, courts typically consider whether the objection to the bankruptcy court’s authority is raised before or after any trial activities have occurred or a judgment has been entered, with the latter weighing in favor of a finding of implied consent. See, e.g., In re Lyondell Chem. Co., 467 B.R. at 722; In re Madison Bentley Assocs., LLC, 474 B.R. at 439. Although in this case, Appellants first raised the issue of the Bankruptcy Court’s adjudicative authority after the default judgments had been entered against them, the Court nevertheless finds that Appellants did not impliedly consent to the Bankruptcy Court’s final adjudication of the Trustee’s claims. Most litigants who have been found by courts within this Circuit to have impliedly consented to final adjudication by the bankruptcy judge failed to object during any of the ‘extensive proceedings’ before the bankruptcy court or in their appeal of the bankruptcy court’s final order or judgment to the district court. See, e.g., In re Men’s Sportswear, Inc., 834 F.2d at 1137–38 (holding that defendant impliedly consented to the bankruptcy court’s final adjudication of the matter where defendant failed to object to the bankruptcy judge’s assumption of “core jurisdiction” at any point during the “extensive proceedings before the bankruptcy court” and also “fail[ed] to object to any part of the appeal process in the district court”); Dev. Specialists, Inc. v. Akin Gump Strauss Hauer & Feld LLP, 462 B.R. 457, 472 (S.D.N.Y. 2011) (“Where a party participates in extensive litigation without raising an argument of which it was aware, it would be unfair and inefficient to allow that party to escape the consequences of its knowing silence.”) (emphasis added); In re Tyson, 433 B.R. 68, 76–77 (S.D.N.Y. 2010) (holding that defendants impliedly consented to bankruptcy court’s final adjudication of claims where defendants did not object before or during trial or during post-trial motion practice in the bankruptcy court). . . . Here, Appellants did not participate in ‘extensive proceedings’ before raising 157

the issue of the Bankruptcy Court’s authority to issue a final judgment. Rather, Appellants raised the issue in their motion for reconsideration after their first and only appearance before the Bankruptcy Court, as well as before this Court on their appeal. In light of the ‘strict’ test for a finding of consent, the Court finds that Appellants did not impliedly consent to the Bankruptcy Court’s entry of the default judgments at issue. Accordingly, the Default Judgment Order is vacated, and Judge Morris’s findings in the Memorandum Decision are treated as recommendations under § 157(c)(1) and reviewed de novo by this Court.”) New York Skyline, Inc. v. Empire State Bldg. Trust Co. (In re New York Skyline, Inc.), 2014 WL 2725979 (S.D.N.Y. June 16, 2014) (Scheindlin, J.) (The Chapter 11 debtor, New York Skyline, Inc. (“Skyline”), operated a helicopter simulator tourist attraction on the second floor of the Empire State Building in space it leased as a subtenant under a lease (“Lease”) and a license (“License”). The counterparties to the Lease and License were several related entities (collectively, “ESB”). After disputes arose under the agreements, Skyline commenced a prepetition action in state court (“Skyline Action”), seeking declaratory, injunctive, and monetary relief relating to its rights under the Lease. The Skyline Action was later removed to the bankruptcy court by ESB after Skyline commenced its Chapter 11 case, and ESB filed a related adversary proceeding (“ESB Action”), in which ESB also sought declaratory and injunctive relief as well as specific performance in connection with conduct by Skyline alleged to violate provisions of the Lease. ESB also sought attorneys’ fees under the Lease for ESB’s expenses in connection with bringing the ESB Action. Skyline filed a motion seeking either remand of the Skyline Action to state court or abstention, arguing that state law predominated and the proceeding was non-core. The bankruptcy court denied the motion, finding that “the issues were intertwined with the issues raised by Skyline’s anticipated motion to assume some or all of its agreements with ESB.” Specifically, the court determined that the claims asserted in the adversary proceedings were core insofar as they related to the Lease assumption and “arguably” core to the extent they related to the allowability of ESB’s proof of claim. Based on this finding, when it later amended its complaint in the removed Skyline Action Skyline alleged that “[f]or the reasons articulated by the Hon. Stuart M. Bernstein on April 28, 2009 in connection with the denial of Skyline’s motion to remand, the causes of action alleged in this Complaint are ‘core’ matters pursuant to 28 U.S.C. § 157(b)(2).” The bankruptcy court later entered a stipulation and order that fast-tracked claims in the adversary proceedings believed to be relevant to Skyline’s decision to assume or reject the Lease under § 365 and ultimately granted Skyline’s motion to assume the Lease over ESB’s objection. Under the assumption order, Skyline assumed both the Lease and License, paid over $300,000 to ESB in undisputed cure amounts, and was directed to escrow in excess of $765,000 for disputed cure amounts. Among the disputed items were “security charges, access fees, electrical charges, late fees, and attorneys’ fees.” Before the litigation was completed, Skyline’s Chapter 11 plan was confirmed. The plan contained a retention of jurisdiction provision, which stated in relevant part that the court retained jurisdiction “(b) To determine any and all adversary proceedings, applications, and contested matters that are pending on the Effective Date;” “(i) To hear and determine all Claims, controversies, suits and disputes against the Debtor to the full extent permitted under 28 U.S.C. § 1334 and 28 U.S.C. § 157;” and “(j) To hear, determine and enforce all Claims and causes of action which may exist on behalf of the Debtor or the Debtor’s Estate, including, but not limited to, any right of the Debtor or the Debtor’s Estate to recover assets pursuant to the provisions of the Bankruptcy Code.” Post-confirmation the bankruptcy court ruled on several dispositive motions and the parties agreed to voluntarily dismiss 158

a number of claims, leaving five of Skyline’s claims for adjudication. ESB then filed a motion for partial summary judgment on Skyline’s remaining claims, and “[p]rior to its time to file [its] opposition, Skyline raised concerns based on Stern v. Marshall [which had been issued less than a month before ESB filed its motion for partial summary judgment] and asked for an extension of time to brief the issue.” In its memorandum in opposition to ESB’s motion for partial summary judgment, “Skyline questioned the bankruptcy court’s jurisdiction and authority to enter a final judgment and sought remand to the state court. Skyline stated that it never conceded that its claims were core and that its section 157(b)(2) allegation in the Complaint indicated only that the claims were core ‘[f]or the reasons articulated by the Hon. Stuart M. Bernstein on April 28, 2009. . . .’ On the issue of consent, Skyline argued that ‘[a]ny such consent would surely have been by implication, but based on the mandate of the Bankruptcy Court after it had rejected Skyline’s efforts to return these matters to state court.’ Skyline further argued that its consent could not have been ‘unequivocal or free of duress’ because it ‘had no immediate appeal rights once remand and abstention were denied.’” On May 11, 2012, the bankruptcy court issued its “Authority Decision” in which it concluded that at the time the Skyline Action was removed and the ESB Action was commenced “the claims and counterclaims asserted, at a minimum, ‘related to’ or were non-core claims in Skyline’s bankruptcy case.” The court concluded that because jurisdiction is determined at the time an action is commenced, “[n]either the confirmation of Skyline’s plan nor anything else that subsequently occurred deprived this Court of its subject matter jurisdiction over those claims and counterclaims.” The court also found that it had the authority to enter a final judgment on the parties’ claims because both parties had expressly consented to such authority—ESB in a letter it submitted to the court after the Stern decision was issued, and Skyline in the Plan. Although Skyline had also submitted a letter to the court post-Stern in which it stated that it did not consent to the bankruptcy court’s adjudication of the remaining claims in the adversary proceeding, the court nevertheless held in the Authority Decision that Skyline had consented, finding that “nothing compelled Skyline to include these [retention of jurisdiction] provisions in the Plan” and that the provisions, “[s]eparately and in combination, . . . reflect Skyline’s consent to this Court’s authority to hear and determine, and enter final judgments in connection” with the parties’ claims. With respect to ESB’s claim for attorneys’ fees, Judge Bernstein held that it was core, and therefore consent was not required, because Skyline was required to cure defaults when it assumed the Lease pursuant to section 365. The bankruptcy court later disposed of all the remaining claims on the merits—some by way of dispositive motion and others following trial. On appeal, Skyline challenged the bankruptcy court’s determination that it had both the jurisdiction and the constitutional authority to enter final judgment on the remaining claims in the adversary proceedings, and specifically argued that it had not consented to the court’s final adjudication of the claims. The district court held that “Skyline [d]id [n]ot [c]onsent to the Bankruptcy Court’s [e]ntry of a [f]inal [j]udgment.” The court reasoned: “‘before Stern, [Skyline] had little reason to believe’ that it had a viable challenge to the determination that the claims were core or that Judge Bernstein ‘was not constitutionally empowered to enter “judgment”’ on its claims. Development Specialists, Inc. v. Akin Gump Strauss Hauer & Feld LLP, 462 B.R. 457, 471 (S.D.N.Y. 2011). . . . ‘[A] waiver of important rights should only be found where it is fully knowing.’ Development Specialists, Inc., 462 B.R. at 472. Accord [Men’s Sportswear, Inc. v. Sasson Jeans, Inc. (]In re Men’s Sportswear, Inc.[)], 834 F.2d [1134,] 1138 [(2d Cir. 1987)] (“[A] court should not lightly infer from a litigant’s conduct consent to have private state-created rights adjudicated by a non-Article III bankruptcy judge. Indeed, to do so would violate the spirit of Northern Pipeline, which emphasizes that the 159

power to adjudicate private rights, such as the right to recover contract damages, cannot be lodged in a court lacking ‘the essential attributes of the judicial power.’”) (quoting Northern Pipeline, 458 U.S. at 87, 102 S. Ct. 2858). Based on Judge Bernstein’s determination that the claims were core, it would be difficult to find that Skyline had voluntarily and knowingly consented to the entry of judgment on non-core claims absent express language in the Plan indicating such consent. If the claims were core, then Judge Bernstein could enter a final judgment whether or not Skyline consented, and there would be no reason for Skyline’s Plan to either mention non-core claims or indicate consent under section 157(c)(2). However, the Plan makes no mention of consent, non-core claims, section 157(c)(2), or entry of final judgments. . . . Instead, Article 11 of the Plan is a jurisdiction retention provision. However, ‘[j]urisdiction retention language from a Plan, by itself, does not confer upon a bankruptcy court authority to enter final orders.’ [Weisfelner v. Blavatnik (]In re Lyondell Chem. Co.[)], 467 B.R. [712,] 722 [(S.D.N.Y. 2012)] (citing Stern, 131 S. Ct. at 2607 noting that the allocation of authority to enter final judgment between the bankruptcy court and the district court “does not implicate questions of subject matter jurisdiction”). The fact that the Plan contains language authorizing the bankruptcy court to ‘hear and determine’ these claims is [] unavailing. This order confirmed the bankruptcy court’s subject matter jurisdiction; it did not address the bankruptcy court’s authority to enter final judgments under Article I. . . . In addition, Bankruptcy Rules 7008(a) and 7012(b) provide a far more direct means for litigants to indicate their express consent to the entry of final judgment in non-core adversary proceedings. As the language in these rules suggests, express consent implies both an acknowledgment that a proceeding is non-core and assent to the bankruptcy court’s entry of a final judgment notwithstanding the right to have the claim determined by an Article III judge. A general statement that jurisdiction is retained to ‘hear and determine’ an adversary proceeding does not, without more, indicate such consent because section 157(b)(1) uses the same terms to refer to a bankruptcy court’s authority to enter final judgments on core claims—and a bankruptcy judge can exercise that authority without consent. . . . As discussed, the Plan language must be considered in the context of Judge Bernstein’s determination that the proceeding was core and in light of Stern. For example, section 11.1(p) of the Plan states that the court retains jurisdiction to ‘hear and determine,’ inter alia, fraudulent conveyance actions. Fraudulent conveyance actions ‘arise under’ section 548 of the Bankruptcy Code and are listed as core in section 157(b)(2), but following Stern, courts have held that bankruptcy judges may not enter final judgments in such cases absent the consent of the parties. Although ‘hear and determine’ is used in both sections 11.1(j) and 11.1(p), it cannot seriously be argued that section 11.1(p) indicates express consent under section 157(c)(2). Following Stern, and absent express consent, the bankruptcy court would be required to issue proposed findings of fact and conclusions of law on either pre- or post-confirmation fraudulent conveyance actions brought by Skyline. Accordingly, I find that Skyline did not consent to the entry of a final judgment on non-core claims and the Judgment is vacated.”). Rock Airport of Pittsburgh, LLC v. Mgmt. Sci. Assocs., Inc., 2014 WL 1414853 (W.D. Pa. Apr. 11, 2014) (Schwab, J.) (“[The debtor,] Rock Airport[,] and [its affiliate,] RPP[,] appealed the Bankruptcy Court’s December 3, 2013 Order which required Rock Airport to grant an easement to West Penn Power Company (“West Penn”) so that MSA could obtain power through West Penn, as opposed to RPP. . . . Here, Rock Airport and RPP primarily argue that the Bankruptcy Court failed to follow the process set forth by the United States Supreme Court in Stern. . . . This Court finds that the Stern decision was predicated upon a set of facts and a procedural history whereby the 160

Bankruptcy Court attempted to enter a final judgment on a state-law based tort, brought as a counterclaim to a proof of claim. Despite the cogent arguments advanced by Rock Airport and RPP, this Court disagrees that the set of facts [and] history of the instant case is akin to Stern, and therefore, concludes that the Bankruptcy Court was not bound by Stern. Moreover, given the set of facts and procedural history here . . . this Court finds that the Bankruptcy Court did possess the Constitutional authority to issue a final judgment because Rock Airport and RPP consented to same . . . . [P]arties to a ‘non-core’ proceeding can consent to the Bankruptcy Court treating a matter as if it were a core proceeding, thereby enabling the Bankruptcy Court to enter final judgment on the matter. 28 U.S.C. § 157(c)(2). Consent need not be express, but rather, can be implied. . . . [I]t appears to this Court that Rock Airport and RPP are disingenuously attempting to argue the Bankruptcy Court’s lack of jurisdiction (as discussed in Stern), especially after spending nine months zealously advancing their position that West Penn Power should conduct its design study so as to ‘suggest’ where the best placement of the electrical line should lay, and after specifically stating ‘[t]he design study was . . . a possible means by which the controversy in the . . . matter could be finally resolved.’ As noted above, Rock Airport and RPP, both orally and in writing, provided the requisite consent—albeit implied—to the Bankruptcy Court’s authority to enter final judgment on this matter. Accordingly, this Court finds that the Bankruptcy Court did not abuse its discretion in entering the December 3, 2013 Order as a final judgment.”). Blixseth v. Glasser (In re Yellowstone Mountain Club, LLC), 2014 WL 1369363 (D. Mont. Apr. 7, 2014) (Haddon, J.) (“This matter is before the Court on cross appeals taken from the bankruptcy court’s Second Amended Judgment of December 5, 2012, awarding judgment in favor of Marc S. Kirschner, Trustee of the Yellowstone Club Liquidating Trust (“YCLT”), against Timothy L. Blixseth (“Blixseth”) [in the amount] of $40,992,210.81. . . . Blixseth asserts the judgment against him should be vacated. YCLT claims judgment of $286,379,053.00 should have been awarded. . . . A bankruptcy court plainly has authority to enter final orders, including judgments, in matters within its jurisdiction[.] Blixseth became a party to this adversary proceeding by intervention upon his request. He agreed to the bankruptcy court’s jurisdiction and fully participated in the proceedings through entry of final judgment. . . . The Bankruptcy court determined ‘Blixseth appeared quite content litigating matters’ to the Bankruptcy court and ‘Blixseth’s actions up to August 16, 2010, constitute[d] implied or informal consent to this Court’s authority to render a final decision under Stern v. Marshall and Bellingham.’ He has no basis to now assert lack of jurisdiction. Any claim of lack of jurisdiction purportedly grounded [i]n Stern v. Marshall . . . is at odds with the clear doctrine of implied consent to jurisdiction recognized and approved in Stern and subsequently reemphasized by the Ninth Circuit. . . . ‘“[T]he consequences of a litigant sandbagging the court—remaining silent about his objection and belatedly raising the error only if the case does not conclude in his favor-can be . . . severe.” Having lost before the bankruptcy court,[a party] cannot assert a right it never thought to pursue when it still believed it might win,’ In re Bellingham Ins. Agency, Inc., 702 F.3d 553, 570 (9th Cir. 2012) cert. granted, 133 S. Ct. 2880 (2013) (citation omitted) (citing Stern, 131 S. Ct. at 2609 (2011)(internal quotation marks, alterations, and citations omitted) . . . . The bankruptcy court had jurisdiction to hear and decide the case. Blixseth was represented at every stage of the proceedings by an array of counsel. The bankruptcy court, notwithstanding an unwarranted attack by Blixseth upon the Judge personally, accorded him error-free due process.”).

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Pryor v. Tromba, 2014 WL 1355623 (E.D.N.Y. Apr. 7, 2014) (Bianco, J.) (“The Trustee brought the adversary proceeding in October 2011, after Stern was issued. Defendant filed the instant motion [to withdraw the reference], however, in August 2013, almost two years later. She also filed an untimely answer in April 2012. Under those circumstances, the motion is untimely. Nevertheless, given that defendant was pro se when the answer was due, and her subsequent counsel’s failure to move for a withdrawal despite it being in the untimely answer, the Court does not find that defendant expressly consented to the adjudication of these matters by the Bankruptcy Court or knowingly waived her rights to have these claims adjudicated by an Article III court. . . . Accordingly, because (1) the fraudulent conveyance and preferential transfer claims involve private rights, (2) defendant has filed no proof of claim, and (3) she has not consented to final judgment by the Bankruptcy Court, this Court concludes that the Bankruptcy Court lacks final authority to adjudicate these claims and that final judgment must be entered by an Article III court.”). Ctr. Operating Co. v. Base Holdings, LLC (In re Base Holdings, LLC), 2014 WL 895403 (N.D. Tex. Mar. 5, 2014) (Fitzwater, J.) (“Shortly before and after this court heard oral argument on this appeal, the Fifth Circuit decided In re Frazin, 732 F.3d 313 (5th Cir. 2013), petition for cert. filed, U.S.L.W. (U.S. Feb. 12, 2014) (No. 13–1003), and In re BP RE, PP., 735 F.3d 279 (5th Cir. 2013), reh’g en banc denied, F.3d, Nos. 12–51270, 12–51279 (5th Cir. Feb. 28, 2014). In Frazin the Fifth Circuit clarified how courts in this circuit should apply Stern. In both Frazin and BP RE the court held that consent and waiver cannot cure a bankruptcy court’s lack of authority to enter final judgment on state-law counterclaims. See Frazin, 732 F.3d at 320 n.3; BP RE, 735 F.3d at 288.”). Chesapeake Trust v. Chesapeake Bay Enters., Inc., 2014 WL 202028 (E.D. Va. Jan. 17, 2014) (Gibney, J.) (Following conversion of its Chapter 11 case to a Chapter 7 liquidation proceeding, the debtor, Potomac Supply Corporation (“Potomac”), brought an adversary proceeding against Chesapeake Bay Enterprises (“CBE”), alleging CBE’s breach of an asset purchase agreement (“APA”) executed by the parties prior to conversion. In the adversary proceeding, Potomac sought a declaration that it had the right to retain the $500,000 deposit made by CBE under the APA. CBE filed a third-party complaint, seeking to recover the deposit, which was in the possession of Potomac’s bankruptcy counsel. CBE also filed a motion to withdraw the reference. The district court denied the motion. Although the causes of action asserted by CBE arose under the APA—a postpetition contract—the district court nevertheless found that “CBE’s claims do fall within the third Stern category of bankruptcy cases: non-core proceedings that are otherwise related to a case under title 11. . . . ” The court reasoned: “Courts have adopted an expansive definition of what constitutes a ‘related proceeding,’ and this Court has determined that a post-petition contract is clearly ‘related to’ a case under title 11. . . . Ordinarily, the non-core classification would mean that the Bankruptcy Court can only recommend a decision to this Court, which would make the dispositive decision. Unfortunately for CBE, however, consent plays into the picture in this case. . . . The Bankruptcy Court may constitutionally render final judgment in this case if the District Court finds that the parties consented to the Bankruptcy Court’s jurisdiction. That consent may be implied by the parties’ conduct. . . . CBE was formed for the express purpose of purchasing Potomac’s assets in the bankruptcy proceeding; it sought that Court’s approval for the proposed asset sale; and it demanded (and received) extensive discovery under that Court’s authority. CBE’s actions, taken in furtherance of CBE’s founding purpose, indicate its willing consent to the Bankruptcy Court’s jurisdiction. The plain language of the APA provides textual reinforcement for 162

this common sense conclusion, expressly acknowledging CBE’s consent to the Bankruptcy Court’s ‘exclusive jurisdiction’ over all disputes relating to the ‘interpretation and enforcement’ of the APA. . . . Thus, CBE has consented to the jurisdiction of the Bankruptcy Court, which accordingly now has the power to render a final decision on the matters sought to be withdrawn.”). Prosser v. Springel (In re Innovative Commc’n Corp.), 2013 WL 5432316 (D.V.I. Sept. 27, 2013) (Gomez, J.) (“[T]his Court is persuaded that bankruptcy courts may only enter final judgments in fraudulent conveyance actions with the consent of the parties.”). Bank of Montreal v. Collins (In re SK Foods, L.P.), 2013 WL 1365334 (E.D. Cal. Apr. 3, 2013) (Karlton, J.) (“The Ninth Circuit has recently determined however, that two Supreme Court decisions, Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 109 S. Ct. 2782, 106 L. Ed. 2d 26 (1989), and Stern v. Marshall, 564 U.S. ––––, 131 S. Ct. 2594, 180 L. Ed. 2d 475 (2011) make clear that bankruptcy courts do not ‘have the general authority to enter final judgments on fraudulent conveyance claims asserted against noncreditors to the bankruptcy estate.’ Executive Benefits Ins. Agency v. Arkison (In re Bellingham Ins. Agency, Inc.), 702 F.3d 553, 565 (9th Cir. 2012). Accordingly, those claims must normally be determined by the district court. . . . [H]owever . . . [a] defendant can waive its right to have the matter heard and finally determined by the district court, if he fails to ‘timely’ object to the Bankruptcy Court’s authority. Id., at 568 . . . . [A]bout two months before the close of discovery in the Bankruptcy Court, and a little over six months after filing his Answer, Collins moved to withdraw the reference. The court finds that Collins’ conduct in the Bankruptcy Court waived his right to try the case in the district court, and instead, impliedly consented to trial before the Bankruptcy Court.”). Dietz v. Spangenberg, 2013 WL 883464 (D. Minn. Mar. 8, 2013) (Montgomery, J.) (“[T]he Court finds the Bankruptcy Court has the judicial authority to issue final orders and judgments as to some of the claims, but lacks the authority to finally adjudicate others. . . . The Trustee next argues Defendants consented to the Bankruptcy Court’s final adjudication of any non-core claims by failing to object to the Bankruptcy Court’s authority after remand and in their summary judgment briefing. However, at the March 22, 2012 Bankruptcy Court hearing, Defendants’ counsel stated he was prepared to argue his position on the effect of Stern on these proceedings. Judge O’Brien responded: ‘I have my ideas [on] how to handle them. I will get to that too.’ Later in the hearing, Judge O’Brien instructed the parties to file their summary judgment motions in the Bankruptcy Court and informed them he would refer the motions to this Court as a recommendation. Under these circumstances, Defendants’ conduct cannot be inferred as consent to the Bankruptcy Court’s entry of final orders in these proceedings.”). Acord v. Young Again Prods., Inc., 2013 WL 754144 (S.D. Tex. Feb. 7, 2013) (Milloy, J.) (“Plaintiffs claim that the agreed judgment is void, because the judge who entered it, The Honorable Jeff Bohm, is not an Article III judge. In support of this claim, they point out that the United States Supreme Court has held that a party may insist that certain matters in bankruptcy proceedings be resolved by an Article III judge, rather than a bankruptcy judge. In making this argument, Plaintiffs rely on Stern v. Marshall . . . . In Stern, however, the Court emphasized that parties are not required to demand an Article III judge. See 131 S. Ct. at 2614; see also Commodity Futures Trading Comm’n v. Schor, 478 U.S. 833, 848–49, 106 S. Ct. 3245, 92 L. Ed. 2d 675 (1986) (recognizing that, 163

“as a personal right, Article III’s guarantee of an impartial and independent federal adjudication is subject to waiver”). In this case, Plaintiffs approved the ‘agreed judgment’ before Judge Bohm entered it. Plaintiffs do not argue that they were coerced, or that they demanded an Article III judge, and were denied that right. Instead, it appears that Plaintiffs did not avail themselves of their right to an Article III judge. Because they waived their right, the decision in Stern does not call into question the validity of the agreed judgment. As a result, Plaintiffs cannot avoid the impact of that agreed judgment . . . .”). Ctr. Operating Co. v. Base Holdings, LLC (In re Base Holdings, LLC), 2013 WL 357607 (N.D. Tex. Jan. 30, 2013) (Fitzwater, J.) (“[T]he trustee for chapter 7 debtor Base Holdings, LLC (“Base”), who is the defendant-counterplaintiff in the adversary proceeding at issue, moves to withdraw the reference, contending that the bankruptcy court lacks Article III power to adjudicate Base’s state-law counterclaims. The bankruptcy judge recommends that the court deny the motion on the grounds that . . . . Base consented to final adjudication of the adversary proceeding by the bankruptcy court. . . . Even if the court is incorrect in concluding that all of Base’s counterclaims will be resolved in the process of ruling on Center’s proof of claim, the court holds that the Trustee waived Base’s right to an Article III tribunal’s presiding over the adversary proceeding . . . . ‘The waivable nature of the allocation of adjudicative authority between bankruptcy courts and Article III courts is well established.’ In re Bellingham Ins. Agency, Inc., 702 F.3d 553, 566 (9th Cir. 2012). ‘[A] bankruptcy litigant impliedly consents to the bankruptcy court’s jurisdiction when he fails to timely object.’ Id. at 567. . . . The Supreme Court decided Stern on June 23, 2011. The parties filed their cross-motions for summary judgment on July 27, 2011 (Center) and July 28, 2011 (Base). The bankruptcy judge heard oral argument on August 29, 2011 and took the motions under advisement. Almost six months after Stern was decided, and after continuing to litigate the adversary proceeding, filing a motion for partial summary judgment, and participating in oral argument without challenging the bankruptcy court’s constitutional authority under Stern, the Trustee on December 21, 2011 filed the instant motion to withdraw the reference. The court holds that the Trustee waived his Stern challenge by impliedly consenting to the bankruptcy court’s authority to enter a final judgment on the counterclaims. Had it been the Trustee’s intent to raise a challenge under Stern, it was certainly reasonable to expect that he do so before he filed his own summary judgment motion and participated in oral argument before the bankruptcy court. His undertaking these post-Stern actions without objection evinces implied consent and therefore waiver of a final judgment by an Article III judge.”). Paloian v. LaSalle Bank Nat’l Ass’n (In re Doctors Hosp. of Hyde Park, Inc.), 507 B.R. 558 (Bankr. N.D. Ill. 2013) (Schmetterer, J.) (“Wellness Int’l [Network, Ltd. v. Sharif, 727 F.3d 751 (7th Cir. 2013)] and Waldman [v. Stone, 698 F.3d 910 (6th Cir. 2012)] reasoned that the Supreme Court has already ruled that § 157(b) violates structural protections of Article III. Wellness Int’l at 760 (citing Stern). Therefore, the current law of this Circuit is that waiver by the parties is not effective to give a bankruptcy court Article III constitutional authority over § 157(b) core matters. Id. . . . The law regarding consent and waiver is in a state of flux. The issue of whether consent or waiver may give bankruptcy courts authority to enter final judgment is before the Supreme Court in Executive Benefits Insurance Agency v. Arkison, ––– U.S. ––––, 133 S. Ct. 2880, ––– L. Ed. 2d –––– (2013) (granting certiorari). Further, a party in Wellness is seeking a rehearing or rehearing en banc of the panel opinion. . . . This adversary proceeding was originally tried and decided pre-Stern, and 164

remanded to the undersigned Bankruptcy Judge also pre-Stern on designated issues. Plaintiff originally demanded trial by jury. That right was definitively waived in open court at the beginning of the Remand Trial. . . . After remand, the bankruptcy judge invited comment of the parties on possible application of Stern to this case. While Plaintiff expressed concern as to potential application of the decision, his counsel . . . did not express any claim that the remanded proceeding be heard by an Article III judge, nor has either party asserted such right or sought withdrawal of the reference. There was no motion asserting such a right or requesting removal for trial by a District Judge. Trial on remanded issues went forward here long after Granfinanciera was decided and was completed long after Stern was decided. Should it ultimately be decided that waiver by the parties is a viable answer to the issue of bankruptcy authority, this case would qualify.”). Johnson v. Woodlands Dev., LLC (In re Johnson), 506 B.R. 233 (Bankr. M.D. La. 2014) (Dodd, J.) (“Defendants Woodlands Development, L.L.C., Anthony Reginelli, Shawna Reginelli, Peter Steur and Lee Steur (collectively “Woodlands”) moved the court to dismiss or to abstain from considering the amended complaint filed by plaintiffs Soundra Temple Johnson (“Johnson”) and Johnson Property Group, L.L.C. (“JPG”), debtors in jointly-administered cases. Woodlands seeks the same result as to defendant Regions Bank’s (“Regions”) cross claim. . . . Plaintiffs sued Woodlands and Regions for a declaration that insurance proceeds now in the registry of the 24th Judicial District Court for Jefferson Parish, Louisiana, belong solely to JPG. . . . Regions counterclaimed against the plaintiffs and cross claimed against Woodlands demanding a ranking of competing claims to the insurance proceeds, and in a third party demand sought an order directing the clerk of the 24th Judicial District Court to pay Regions the insurance proceeds. . . . Because some of the claims of the amended complaint and the cross claim are based on state law, this dispute implicates issues framed by the United States Supreme Court’s decision in Stern v. Marshall concerning a bankruptcy court’s power to adjudicate state law claims. The Fifth Circuit recently explained that despite Stern’s insistence that its decision was narrow, the ruling was in fact ‘“grounded in principles that are broad in scope.’” In re BP RE, L.P., 735 F.3d 279, 289 (5th Cir. 2013), quoting Frazin v. Haynes & Boone, L.L.P., 732 F.3d 313, 319 (5th Cir. 2013). The BP RE court reasoned that if a bankruptcy court lacked constitutional authority to render a final judgment on a state law counterclaim not involved in ruling on a creditor’s claim (the issue in Stern), ‘it would also not have constitutional authority over a state law claim . . .’ under similar circumstances. Id. at 290 (emphasis added). . . . In light of the record and the history of the parties’ disputes, to guard against the possibility that this court’s power to render a final judgment adjudicating any state law claims in the amended complaint or cross claim may be subject to later challenge, and to avoid the possibility of inefficient use of judicial time and the parties’ resources, the parties shall formally consent to the court’s rendering of a final judgment over all matters in this adversary proceeding or else move to withdraw the reference to this court from the United States District Court. . . . Obtaining explicit consent is a precaution in anticipation of the decision of the United States Supreme Court in Executive Benefits Insurance Agency v. Arkison, 702 F.3d 553, 570 (9th Cir. 2012), cert. granted ––– U.S. ––––, 133 S. Ct. 2880, 186 L. Ed. 2d 908 (June 24, 2013).”). In re Carter, 506 B.R. 83 (Bankr. D. Ariz. 2014) (Haines, J.) (“[Chapter 7] Trustee filed an adversary proceeding against Barclays Bank seeking to recover . . . $10,868.58 [in payments made to Barclays by the debtors in the 90 days prior to the petition date] as an avoidable preference. . . . On cross-motions for summary judgment, the issues are whether the Debtors’ payments on their 165

credit card within the preference period were made in the ordinary course of business, and the extent to which the Trustee’s preference action is subject to a subsequent new value defense. . . . Barclays’ response and cross-motion also stated that ‘Barclays does not consent to the entry of a final order or judgment against it by this Court,’ citing Stern and Bellingham. The cross-motion also concluded, however, with a single sentence: ‘Barclays respectfully requests that the Court enter judgment in favor of Barclays, declaring that the Trustee take nothing on his complaint, and dismissing this adversary with prejudice.’ . . . [Having determined that Barclays is entitled to summary judgment on the Trustee’s preference claims,] [t]his leaves the question of the proper form of the final ruling in this [a]dversary proceeding. As noted, Barclays has both objected to the constitutional authority of this Court to enter a final judgment under Stern, and has, by its motion for summary judgment, specifically asked the Court to enter final judgment in favor of Barclays. Barclays cannot have it both ways, and it is difficult to understand how both the objection to final judgment and the request for entry of final judgment could have been filed in compliance with Rule 9011(b). . . . Under Bellingham, which is currently the governing law in this Circuit, the Court must find and conclude that Barclays has either waived or forfeited its Stern objection by its litigation conduct. One of the underlying reasons for the doctrine of waiver or forfeiture by litigation conduct is to prevent litigation conduct that could be described as sandbagging, ‘heads I win; tails you lose,’ or second bite at the apple strategy. If a Stern objection were not deemed waived by the party making it seeking summary judgment, then the party could seek or permit a substantive ruling by the Bankruptcy Court, and then waive that objection if the ruling is favorable but insist on it if unfavorable, and get a second bite at the apple. To avoid the possibility of that kind of litigation conduct by virtually any defendant in a bankruptcy adversary proceeding or contested matter, this Court must conclude that Bellingham necessarily implies that a Stern objection is waived or forfeited whenever the party making it requests a substantive ruling from the Bankruptcy Court. . . . Indeed, the Stern objection may be waived any time the objector merely acquiesces in the Bankruptcy Court hearing any aspect of a case in a posture that may lead to a substantive ruling. The improper litigation strategy could equally be employed by the objector merely responding to summary judgment being sought by a debtor or trustee. Or, it could [be] employed by a defendant who allows a matter to be tried by the Bankruptcy Court. Obviously if judgment is favorable to the objector he will then waive it, but will insist upon it if judgment is unfavorable. That strategy would be available even if the Stern objector is vociferously making the objection, as loudly as Bre’r Rabbit, even while trying the case to the Bankruptcy Court. Perhaps to avoid such litigation strategy it will be necessary for courts to adopt a rule that the Stern objection is waived or forfeited unless the objector promptly moves for withdrawal of the reference and prosecutes that motion to conclusion in the District Court, as the Bellingham defendant apparently failed to do. But this Court need not make that determination on these facts, because here the Stern objection was waived or forfeited by Barclays Bank affirmatively asking for entry of final judgment by the Bankruptcy Court.”). Tronox Inc. v. Kerr McGee Corp. (In re Tronox Inc.), 503 B.R. 239 (Bankr. S.D.N.Y. 2013) (Gropper, J.) (Chapter 11 debtors brought adversary proceeding in which it asserted actual and constructive fraudulent transfer claims —under § 548 of the Bankruptcy Code and the Oklahoma UFTA—seeking to unwind a series of transactions through which holding company ultimately succeeded in spinning off its profitable oil and gas assets free of hundreds of millions of dollars in legacy costs. Responding to a challenge to its constitutional authority to finally adjudicate the claims asserted in the adversary proceeding, the court addressed the effect of the defendants’ consent 166

to its entry of final judgment, stating: “The Court is well aware of the recent Circuit Court cases that have been broadly construed to hold that consent may be insufficient to empower a bankruptcy judge to enter a final judgment against an entity that has not filed a claim against the estate. See Waldman v. Stone, 698 F.3d 910 (6th Cir. 2012); Wellness Int’l. Network, Ltd. v. Sharif, 727 F.3d 751 (7th Cir. 2013); Frazin v. Haynes & Boone L.L.P. (In re Frazin), 732 F.3d 313 (5th Cir. 2013); In re BP RE, L.P., 735 F.3d 279 (5th Cir. 2013). The Supreme Court has before it on certiorari the Ninth Circuit’s decision in [Executive Benefits Ins. Agency v. Arkison (]In re Bellingham Ins. Agency, Inc.[), 702 F.3d 553 (9th Cir. 2012)], which held to the contrary, and the Supreme Court’s ruling will presumably clarify this issue. However, it is worth noting that none of the above cases involved defendants who had filed proofs of claim, and all involved one form or another of implied consent, based on the defendant’s participation in litigation, default, or other form of action or inaction. In any event, the leading authority on implied consent in this Circuit remains In re Men’s Sportswear, Inc., 834 F.2d 1134, 1138 (2d Cir. 1987), where the Court held that the defendant impliedly consented to the bankruptcy court’s adjudication of allegedly non-core claims. The Supreme Court has also held that parties may consent to adjudication of non-core issues by the bankruptcy court, including in Stern itself, 131 S. Ct. at 2606, 2607, where the Court acknowledged that ‘parties may consent to entry of [a] final judgment by [a] bankruptcy judge in [a] non-core case.’ (citing 28 U.S.C. § 157(c)(2)); see also, Commodity Futures Trading Comm’n. v. Schor, 478 U.S. 833, 849, 106 S. Ct. 3245, 92 L. Ed. 2d 675 (1986) (Schor “effectively agreed to an adjudication by the [Commodity Futures Trading Commission] of the entire controversy”); Roell v. Withrow, 538 U.S. 580, 586–87, 123 S. Ct. 1696, 155 L. Ed. 2d 775 (2003) (implied consent to adjudication by a magistrate judge). . . . Moreover, the law on consent in the other circuits is not as clear as the Defendants would have it. On September 6, 2013, the Seventh Circuit issued its opinion in Peterson v. Somers Dublin Ltd., 729 F.3d 741 (7th Cir. 2013). It held that a waiver of the right to a decision by an Article III court was enforceable, and that the Court’s decision in Wellness Int’l., issued only about two weeks before, had involved the issue of ‘forfeiture’ rather than ‘waiver’ or ‘a belated objection rather than unanimous consent.’ 729 F.3d at 746–47. The Circuit Court also stated the following about the effect of the defendant’s filing of a proof of claim: ‘The current dispute comes within a bankruptcy judge’s authority, notwithstanding Stern, because all of the defendants submitted proofs of claim as the Funds’ creditors and thus subjected themselves to preference-recovery and fraudulent-conveyance claims by the Trustee. See 11 U.S.C. § 502(d). The Supreme Court held in [Katchen v. Landy and Langenkamp v. Culp] that Article III authorizes bankruptcy judges to handle avoidance actions against claimants. Stern stated that its outcome is consistent with those decisions. [Wellness Int’l] likewise observes . . . that there is no constitutional problem when a bankruptcy judge adjudicates a trustee’s avoidance actions against creditors who have submitted claims. The bankruptcy judge thus acted within her authority. . . .’ Peterson, 729 F.3d at 747 (citations omitted). . . . The only claim of the Plaintiffs which might not be fully adjudicated in connection with Defendants’ proof of claim is the claim of breach of fiduciary duty, which the Court has dismissed in any event. However, the fiduciary duty claim was unquestionably non-core before Stern, and it remains non-core today. Defendants’ answer constituted unconditional consent to the entry of a final order by the bankruptcy court on the non-core fiduciary duty claim as well as the fraudulent conveyance claims. Defendants have never adequately explained why they did not knowingly and validly consent to this Court’s adjudication of the non-core fiduciary duty claim, as to which there could be no confusion. . . . The Court thus concludes that it has authority to enter a final judgment in this adversary proceeding. If an appellate court should disagree, it is 167

respectfully requested that this decision be deemed proposed findings of fact and conclusions of law for final entry by the District Court.”). Dudley v. S. Va. Univ. (In re Dudley), 502 B.R. 259 (Bankr. W.D. Va. 2013) (Connelly, J.) (“On May 18, 2010, Cynthia Riley Dudley (the “Debtor”) filed a bankruptcy petition under Chapter 13 of the Bankruptcy Code. Her case was converted on May 25, 2010 to a case under Chapter 7 of the Bankruptcy Code. Southern Virginia University (“SVU”) did not file a claim in her case, but the University and its counsel appeared on the creditor mailing matrix. On September 21, 2010, the Court issued a discharge order for Ms. Dudley and, shortly thereafter, closed her case. Seven months later, on May 6, 2011, the Debtor filed a motion to re-open her case. She urged the court to reopen the case so that she could file a motion for contempt against SVU for continuing collection action after the issuance of the bankruptcy discharge order. The Court re-opened the case, and the Debtor filed her motion for contempt. SVU answered the motion by asserting that the debt it was trying to collect upon was a ‘qualified education loan’ that is non-dischargeable under 11 U.S.C. § 523(a)(8). . . . On the morning of the trial, SVU filed a motion to dismiss this adversary proceeding for lack of jurisdiction. SVU cited as its grounds Stern v. Marshall. According to SVU’s motion filed on the day of the trial, SVU does not consent to the jurisdiction of this Court; the question of dischargeability is not before the Court; therefore, the Court has no jurisdiction to decide the matter. These facts, according to SVU, compel dismissal. . . . This Court has subject matter jurisdiction over the bankruptcy case, as well as the proceeding seeking a declaration of the dischargeability of the SVU debt. SVU has participated, actively, in this adversary proceeding and only on the morning following a lengthy hearing in which the admissibility of some of SVU’s exhibits had been questioned did SVU announce that it did not consent to the jurisdiction of the Court. The Court disagrees with SVU’s statement that dischargeability is not before the Court. The Court finds that the crux of the dispute in this proceeding is the dischargeability of SVU’s claim. The Court concludes, therefore, that this Court may enter a final ruling.”). Logan v. McLean (In re McLean), 498 B.R. 525 (Bankr. D. Md. 2013) (Keir, J.) (“[T]his court holds that the expressed consent of all parties permits the bankruptcy judge to enter final orders and judgments in core matters that otherwise would be found to exceed the constitutional limitations on the judicial powers exercised by an ‘Article I judge’ as enunciated by the United Supreme Court in Stern v. Marshall . . . . ”). Paloian v. LaSalle Bank Nat’l Ass’n (In re Doctors Hosp. of Hyde Park, Inc.), 494 B.R. 344 (Bankr. N.D. Ill. 2013) (Schmetterer, J.) (“This is a core proceeding under 28 U.S.C. § 157(b)(2)(C),(K), and (O). Even if it were not core, or if questions under the Constitution as to authority of a bankruptcy judge to enter final judgment might have been considered under Stern v. Marshall . . . , the parties expressly consented to entry of final judgment by a bankruptcy judge and such consent would, if necessary, moot any such Constitutional issues that might have been raised by Stern.”). Shearer v. Oberdick (In re Oberdick), 490 B.R. 687 (Bankr. W.D. Pa. 2013) (Agresti, J.) (In an adversary proceeding brought by Chapter 7 trustee against the debtor—a former partner of a defunct law firm—and his wife, the trustee asserted claims under § 544(b) and the Pennsylvania UFTA, seeking avoidance and recovery of alleged fraudulent transfers. Addressing its constitutional 168

authority to adjudicate the action, the bankruptcy court stated: “The Court’s jurisdiction to hear and decide these matters under 28 U.S.C. § 1334 was not disputed, nor did any party challenge the Court’s power to render this decision on the basis of the holding in Stern v. Marshall . . . . The Court concludes that it has the constitutional authority to enter a final judgment in these matters, or that in the alternative the parties have consented to the entry of a final judgment.”). Sikirica v. Wettach (In re Wettach), 489 B.R. 496 (Bankr. W.D. Pa. 2013) (Agresti, J.) (In an adversary proceeding brought by Chapter 7 trustee against the debtor—a former partner of a defunct law firm—and his wife, the trustee asserted claims under § 544(b) and the Pennsylvania UFTA, seeking avoidance and recovery of alleged fraudulent transfers. Addressing its constitutional authority to adjudicate the action, the bankruptcy court stated: “The Defendants initially challenged the Court’s power to render this decision on the basis of the holding in Stern v. Marshall . . . however, they have since withdrawn that position. The Court concludes that it has the constitutional authority to enter a final judgment in these matters, or that in the alternative the parties have consented to the entry of a final judgment.”). British Am. Ins. Co. v. Fullerton (In re British Am. Ins. Co.), 488 B.R. 205 (Bankr. S.D. Fla. 2013) (Kimball, J.) (“The parties to a proceeding before the bankruptcy court that is non-core or that is core but nevertheless not subject to final order in the bankruptcy court, may consent to the bankruptcy court entering a final order or judgment. 28 U.S.C. § 157(c)(2). A party may consent to entry of a final order or judgment in the bankruptcy court by failing to object in a timely manner.”). Ogle v. JT Miller, Inc. (In re HDD Rotary Sales, LLC), 2014 WL 2930745 (Bankr. S.D. Tex. June 27, 2014) (Isgur, J.) (“In this case, . . . neither of the defendants in this fraudulent transfer lawsuit have filed a proof of claim in HDD Rotary’s bankruptcy case. Accordingly, the Court does not have the authority to enter a final judgment in this case. Moreover, the Fifth Circuit has held that parties cannot consent to a bankruptcy court’s adjudication of claims that are outside the constitutional scope of a bankruptcy court’s authority. In re BP RE, L.P., 735 F.3d 279, 286–87 (5th Cir. 2013) (“We adopt the compelling and thorough reasoning of Waldman, which held that parties cannot consent to such circumvention of Article III that impinges on the structural interests of the Judicial Branch. Waldman was the first post-Stern appellate decision to address consent as it relates to the bankruptcy court’s constitutional authority.”). Lim v. Champion Prods. (In re Dabaja), 2014 WL 2894453 (Bankr. E.D. Mich. June 25, 2014) (Randon, J.) (“The Court enters a final order on the Trustee’s motion. The parties expressly consented to this exercise of authority in their Report of Parties Rule 26(f) Conference, and the United States Supreme Court’s decision in Exec. Benefits Ins. Agency v. Arkison, 134 S. Ct. 2165, 2014 WL 2560461 (June 9, 2014) did not address the issue of whether a party is nevertheless constitutionally entitled to an Article III court’s review of its fraudulent conveyance claim. Further, this matter is distinguishable from Waldman v. Stone, 698 F.3d 910 (6th Cir. 2012): the claims presented do not arise under state law, nor would they be actionable outside of the Bankruptcy Code. However, should any reviewing court disagree, this final order may be treated as findings of fact and conclusions of law, subject to de novo review.”).

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In re 1701 Commerce, LLC, 2014 WL 2615016 (Bankr. N.D. Tex. June 11, 2014) (Lynn, J.) (“In Executive Benefits [Insurance Agency v. Arkison, 573 U.S. ––––, No. 12–1200, 2014 WL 2560461 (U.S. June 9, 2014)], the Supreme Court assumed without deciding that Stern infected the fraudulent transfer claim at issue, but concluded that a de novo review of the bankruptcy court’s proposed findings of fact and conclusions of law cured any such deficiency. Id. at *8. Notably, the decision in Executive Benefits left unanswered ‘whether Article III permits a bankruptcy court, with the consent of the parties, to enter final judgment on a Stern claim.’ Id. at *4 n. 4. As a result, the decision in Executive Benefits leaves unaltered Fifth Circuit precedent that parties may not confer constitutional competency upon a bankruptcy judge by consenting to a final order on a Stern claim. See BP RE, L.P. v. RML Waxahachie Dodge, L.L.C. (In re BP RE, L.P.), 735 F.3d 279, 286–87 (5th Cir. 2013); Frazin v. Haynes & Boone, L.L.P. (In re Frazin), 732 F.3d 313, 320 n.3 (5th Cir. 2013).”). Goodwin v. Custom Am. Auto Parts, LLC (In re Pigg), 2014 WL 2608862 (Bankr. D.S.C. June 10, 2014) (Duncan, J.) (“This Court . . . has concluded that its entering a final order or judgment on a fraudulent conveyance claim against a noncreditor would be inconsistent with Article III of the United States Constitution without the express consent of the parties. [I]n the absence of consent or some contrary authority establishing otherwise, this Court will not enter a final order or judgment but rather submit proposed findings of fact and conclusions of law to the United States District Court for the District of South Carolina for review.”). Shelton v. Aguirre & Patterson, Inc. (In re Shelton), 2014 WL 1576864 (Bankr. S.D. Tex. Apr. 18, 2014) (Isgur, J.) (“In this case, it appears that the parties may have consented to this Court’s adjudication of the . . . claims [asserted by the plaintiffs/Chapter 13 debtors]. However, in light of In re BP RE, [735 F.3d 279, 286–87 (5th Cir. 2013)] [,] the Court finds that the parties cannot consent to the adjudication of claims that are outside the constitutional scope of a bankruptcy court’s authority.”). British Am. Isle of Venice Ltd. v. Fullerton (In re British Am. Ins. Co.), 2013 WL 211336 (Bankr. S.D. Fla. Jan. 18, 2013) (Kimball, J.) (“The parties to a proceeding pending before the bankruptcy court, whether non-core or whether core but nevertheless not subject to final order there, may consent to the bankruptcy court entering a final order or judgment. 28 U.S.C. § 157(c)(2). A party may consent to entry of a final order or judgment in the bankruptcy court by failing to object in a timely manner.”). Allied Indus. v. Hayes Lemmerz Int’l, Inc. (In re Hayes Lemmerz Int’l, Inc.), 2013 WL 1910312 (Bankr. D. Del. Apr. 25, 2013) (Walrath, J.) (“[T]he parties have consented to the Court’s jurisdiction. Parties can consent to the entry of a final order by the bankruptcy courts. See, e.g., In re Bellingham Ins. Agency, Inc., 702 F.3d 553, 567 (9th Cir. 2012) (holding that because “consent permits a non-Article III judge to decide finally a non-core proceeding,” it “permits the same judge to decide a core proceeding in which he would, absent consent, be disentitled to enter final judgment”). Thus, the Court finds that it has authority to enter a final order in the Adversary Proceeding.”).

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Smyrna Childcare Ctrs., LLC v. Melton (In re Melton), 2013 WL 2383657 (Bankr. N.D. Ga. May 20, 2013) (Hagenau, J.) (“ This case is also distinguishable from Stern because here it is the Debtor who invoked the bankruptcy court jurisdiction by filing the bankruptcy case who now objects to the entry of a final [nondischargeability] judgment. The creditor here has no objection to the Court entering a final judgment, while in Stern, it was the creditor who objected to jurisdiction. This posture makes a difference in the outcome because, in Stern, the creditor found itself involuntarily litigating certain issues in bankruptcy court, while here the Debtor chose this forum and the protection the Bankruptcy Code provides.”). Walgreen Co. v. NXXI, Inc. (In re NXXI, Inc.), 2014 WL 2219169 (Bankr. S.D.N.Y. May 28, 2014) (Drain, J.) (“In this adversary proceeding, plaintiff Walgreen Co. (“Walgreen”) asserts chargeback claims against two of its former vendors, defendants NXXI, Inc., f/k/a Nutrition 21, Inc., the debtor herein (“NXXI”) and Nature’s Products, Inc. (“NPI”) for outdated, defective and otherwise unsalable products, as well as for merchandise it claims an absolute right to return, and based on specific deals, such as discounts, coupons and promotional allowances. In turn, NXXI and NPI seek to collect invoices owed them by Walgreen, the amount of which, Walgreen contends, is exceeded by its claimed chargebacks. In addition, NXXI seeks to enforce NPI’s assumption, under an asset purchase agreement between NXXI and NPI, dated December 29, 2009 (the “APA”), of NXXI’s obligations, if any, to Walgreen for chargebacks, and NPI asserts a claim against NXXI for breach of the APA. . . . Given that this adversary proceeding was necessary to decide the claims of Walgreen and NPI asserted against the chapter 11 estate of NXXI, the debtor herein, which on their face exceed the amount of NXXI’s claims against them, the Court has the power to enter a final order resolving this adversary proceeding. In any event, the parties have consented to this Court’s entry of such an order. Dynegy Danskammer, LLC v. Peabody COALTRADE Int’l Ltd., 905 F. Supp. 2d 526, 530 (S.D.N.Y. 2012); Executive Sounding Bd. Assocs. v. Advanced Mach. & Eng’g Co. (In re Oldco M Corp.), 484 B.R. 598, 606–08, 614 (Bankr. S.D.N.Y. 2012) (Congress has not precluded the Article III, district courts’ determination of any class of cases, proceedings and matters referred by the district courts to the Article I, bankruptcy courts; therefore, the bankruptcy courts’ exercise of jurisdiction on consent does not implicate a non-waivable, structural constitutional right.).”). Silagy v. Morris (In re Morris), 2013 WL 5705630 (Bankr. N.D. Ohio Oct. 18, 2013) (Kendig, J.) (“The last jurisdictional issue is whether a party can consent, either expressly or impliedly, to the bankruptcy court entering a final order in a core matter that would normally be prohibited by Stern. There is currently a circuit split on this issue. The Ninth Circuit decided that a party can waive a constitutional Stern problem, because if a bankruptcy judge can decide a non-core proceeding with the necessary consent, ‘then it surely permits the same judge to decide a core proceeding’ with the same consent. [Exec. Benefits Ins. Agency v. Arkinson (]In re Bellingham [Ins. Agency, Inc.)], 702 F.3d [553,] 567 [(9th Cir. 2012)]. The Sixth and Seventh Circuits have also reached the issue and determined that a party cannot consent to a constitutional Stern limitation because of the structural role of separation of powers in the United States government. Waldman [v. Stone], 698 F.3d 910 [(6th Cir. 2012)]; Wellness Int’l Network, Ltd. v. Sharif, 2013 WL 4441926 (7th Cir. 2013). As the Sixth Circuit is binding on this court, a party may not consent to allow a bankruptcy court to enter a final order in a core action where the bankruptcy court would otherwise be prohibited by Stern.”).

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DeGirolamo v. Devonshire Fund, LLC (In re Myers), 2013 WL 6080270 (Bankr. N.D. Ohio Nov. 18, 2013) (Kendig, J.) (“Trustee’s claim for the recovery of unauthorized postpetition transactions is a core claim and the bankruptcy judge may enter final judgment because it does not have Stern implications. Additionally, Trustee’s other four actions are noncore, but as Trustee and Defendants have consented to bankruptcy jurisdiction, this court will enter final judgment on each claim. . . . This leads to a puzzling result. In core, Stern-type matters, the bankruptcy court cannot enter final judgments and the parties cannot waive the defect, even though these core matters are more central to the case and the bankruptcy code. Waldman [v. Stone], 698 F.3d [910,] 922 [(6th Cir. 2012)]. In noncore matters, which are less central to the bankruptcy process, the parties can waive a jurisdictional objection and the bankruptcy court can enter final judgments. Harmonizing the divergent lines of bankruptcy jurisdiction lies beyond the ken of the court.”). Moyer v. Slotman (In re Slotman), 2013 WL 7823003 (Bankr. W.D. Mich. Dec 5, 2013) (Gregg, J.) (“Both the Plaintiff and the Defendants filed statements indicating their express consent to this court entering a final order in this adversary proceeding. [brought by the Chapter 7 trustee to recover an alleged fraudulent transfer under § 548 of the Bankruptcy Code]. Therefore, notwithstanding the holdings in Stern . . . and Waldman v. Stone, 698 F.3d 910 (6th Cir. 2012), this court strongly believes it is constitutionally authorized to enter a final order.”).

2.

EFFECT OF PRE-STERN CONSENT

Tronox Inc. v. Kerr McGee Corp. (In re Tronox Inc.), 503 B.R. 239 (Bankr. S.D.N.Y. 2013) (Gropper, J.) (Chapter 11 debtors brought adversary proceeding in which it asserted actual and constructive fraudulent transfer claims —under § 548 of the Bankruptcy Code and the Oklahoma UFTA—seeking to unwind a series of transactions through which holding company ultimately succeeded in spinning off its profitable oil and gas assets free of hundreds of millions of dollars in legacy costs. Responding to a challenge to its constitutional authority to finally adjudicate the claims asserted in the adversary proceeding, the court addressed the defendants’ contention that their consent to entry of final judgment was ineffective because it was given shortly before the Stern decision was rendered, stating: “[T]here is no substance to Defendants’ argument that they only consented to bankruptcy court adjudication because they could not contemplate a class of claims that was statutorily core but beyond the bankruptcy judges’ constitutional power to finally resolve. At the time they filed their Answer in June, 2011, the Ninth Circuit had held that a counterclaim to a proof of claim might not be a ‘core’ matter, even though it was defined as core in 28 U.S.C. § 157(b)(2)(C), and that a bankruptcy judge could not enter final judgment on the counterclaim. In re Marshall, 600 F.3d 1037, 1057 (9th Cir. 2010). The Supreme Court had granted certiorari, . . . and a decision was expected imminently, before the end of the term in June, 2011. . . . The decision in Stern v. Marshall was in fact issued on June 23, 2011, only 11 days after Defendants’ answer was filed and within the 21–day period for filing amended answers in Bankruptcy Rule 7015, incorporating Fed. R. Civ. P. 15. Within a day after Stern was decided, one of Defendants’ law firms issued an article on its ‘Bankruptcy Blog’ website discussing the implications of the decision. See Ex. B to Plaintiffs’ 4/2/2012 Opposition to Defendants’ Motion. This Court, in a hearing on an adversary proceeding in the Tronox case unrelated to the instant matter, stated that it would await 172

the decision in Stern v. Marshall before proceeding with that litigation. See Tronox, Inc. v. TRI Hamilton (In re Tronox, Inc.), Adv. Pro. No. 11–1288, Transcript of Hearing at 16, April 14, 2011 (Dkt. No. 27). The issue there was unrelated to the issues in this proceeding; the point is that the pendency of the decision was well-known. If Marshall’s lawyers could have preserved an Article III adjudication issue, Defendants could have preserved the issue, if in fact there ever was an issue. The issue was not new: in 1995 the Fifth Circuit held, based on the Supreme Court’s decision in Granfinanciera S.A. v. Nordberg . . . that, absent the parties’ consent, bankruptcy courts lack authority to enter final judgment in fraudulent conveyance actions against third-parties who have not filed proofs of claim. In re Texas Gen. Petroleum Corp., 52 F.3d 1330, 1337 (5th Cir. 1995). . . . The Court thus concludes that it has authority to enter a final judgment in this adversary proceeding. If an appellate court should disagree, it is respectfully requested that this decision be deemed proposed findings of fact and conclusions of law for final entry by the District Court.”).

B.

WITHDRAWAL OF REFERENCE

Blue Cross & Blue Shield of N.C. v. Jemsek Clinic, P.A., 506 B.R. 694 (W.D.N.C. 2014) (Conrad, J.) (“[C]ourts in this circuit have consistently recognized several factors that govern whether discretionary withdrawal should be granted . . . [including] whether the proceeding is core or non-core . . . . [T]he question of whether a proceeding is core or non-core turns, in large measure, on whether a bankruptcy court possesses the constitutional authority to enter final judgment in the matter. . . . Here, both parties concede that the [debtors’] counterclaims are ‘statutorily core’ under 157(b)(2)(C), and the Bankruptcy Court lacks the Constitutional authority to enter a final judgment in the matter. They differ in their views of how such claims are treated in the wake of Stern. . . . While the core/non-core factor favors withdrawal, the other factors strongly favor retention by the Bankruptcy Court. There exists a standing order in this district, which automatically refers all bankruptcy matters to the bankruptcy court. Additionally, the district court issued a standing order referring to the bankruptcy court all pre-trial proceedings in bankruptcy cases in which the parties have made a demand for jury trial. . . . These orders reflect a consensus within this district that all bankruptcy related claims, including non-core ones, should remain in front of the bankruptcy judge unless cause is shown for withdrawal of reference or they are ready for trial in a district court. The uniformity of administration is a strong consideration and dictates that bankruptcy judges address matters that have legal and factual issues in common with the bankruptcy action and that reference only be withdrawn when such matters are ready for final adjudication in a district court. . . . Likewise, judicial economy and efficiency favor retention in this case. The claims at issue have been pending for several years in the bankruptcy court. The bankruptcy judge is familiar with the parties, the factual makeup of the case, and the legal and factual issues relevant to the remaining claims. The disallowance of Plaintiff’s claims against the bankruptcy estate does not alter the fact that judicial economy dictates that matters such as discovery would be addressed most efficiently in the court in which this action was brought. . . . Based on these considerations, the Court [denies] Plaintiff’s Motion to Withdraw Reference to the District Court.”). Albert v. Site Mgmt., Inc., 506 B.R. 453 (D. Md. 2014) (Chasanow, J.) (“Presently pending and ready for review in this breach of contract case is a motion by Defendants Site Management, Inc. 173

t/a Site Realty Group, and Site Leasing, Inc. to modify, or partially withdraw, the reference. . . . This case traces its lineage to the bankruptcy case Jin Suk Kim Trust d/b/a La Union Mall . . . in the United States Bankruptcy Court for the District of Maryland. In that bankruptcy case, Plaintiff was appointed as the disbursing agent to assist Debtor Jin Suk Kim Trust in carrying out the duties and responsibilities set forth in the Amended Plan of Reorganization (“Plan”) approved by the Bankruptcy Court. . . . Since 2009, Defendant Site Management had managed the Shopping Mall and Defendant Site Leasing leased space in the Shopping Mall. Debtor applied to retain Defendants as its property manager and leasing agents which the Bankruptcy Court approved. Pursuant to this application, ‘the terms and conditions of any lease agreement were to be subject to the Debtor’s final approval, were to be made in the Debtor’s name, and were to be executed by the Debtor.’ . . . Plaintiff alleges that on the eve of . . . Plan confirmation, the Defendants negotiated a long-term lease, took substantial commissions, and disposed of assets, all while being instructed not to do so and without informing the Plaintiff or the Bankruptcy Court. It is further alleged that Defendants did not provide accurate receivables information to the Debtor, the Bankruptcy Court, and creditors. The bankruptcy plan was proposed and then approved by the court based upon this inaccurate information. Plaintiff alleges that Defendants failed to keep complete records; negotiated lease extensions to maximize their returns without full disclosure; failed to close accounts at the direction of Plaintiff; and prepared inaccurate monthly operating reports for submission to the Bankruptcy Court. . . . Plaintiff filed a complaint in this court. Plaintiff claims that Defendants’ actions constituted negligence, breach of contract and fiduciary duty, and fraud. . . . [T]he undersigned referred this case to [the bankruptcy court] pursuant to 28 U.S.C. § 157(a) and [the standing order of reference]. . . . Defendants argue that the reference should be withdrawn because the matter at issue is a ‘non-core’ proceeding, but even if the matter is considered ‘core,’ withdrawal conserves resources because the bankruptcy court may not enter any final orders or judgments on these state common law claims pursuant to the recent decision of the Supreme Court of the United States in Stern v. Marshall . . . . Following the Supreme Court’s decision in Stern, courts have determined that the correct way to examine the first factor of the permissive withdrawal determination is not ‘whether the matter can be classified as “core” under 28 U.S.C. § 157, but rather [] whether, under Stern, the [b]ankruptcy [c]ourt has the final power to adjudicate it.’ ACC Retail Prop. Dev. And Acquisition Fund, LLC v. Bank of Am., N.A., No. 5:12–CV–361–BO, 2012 WL 8667572, at *2 (E.D.N.C. Sept. 28, 2012) (quoting Dev. Specialists, Inc. v. Akin Gump Strauss Hauer & Feld LLP, 462 B.R. 457, 467 (S.D.N.Y. 2011)). Under that rubric, the bankruptcy court must possess both statutory and constitutional authority to issue a final decision.” After determining that the bankruptcy court had the statutory authority to adjudicate the Plaintiff’s claims, which were found to be ‘“core proceedings’ under 28 U.S.C. § 157(b)(2)(A)’s broad inclusion of ‘matters concerning the administration of the estate[,]’” the district court turned to Defendants’ argument “that Article III prohibits the bankruptcy court from deciding this case[,]” stating: “[T]he claims at issue here are of a different nature than those in Stern. The alleged wrongdoing of Defendants in this case concerns actions they took or failed to take in their court-approved roles as property manager and leasing agent for debtor’s property. This alleged wrongdoing occurred post-petition, pre-confirmation. These claims are not brought for alleged wrongdoing that occurred pre-petition or possess only a tangential relationship to the bankruptcy proceeding, but instead are by their nature intimately tied to the bankruptcy proceeding. . . . In sum, the nature of the claim, combined with the limited holding of Stern, lead to the conclusion that the bankruptcy court possesses both statutory

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and constitutional authority to adjudicate the claims at issue. This conclusion counsels against withdrawing the reference.”). Loveridge v. Hall (In re Renewable Energy Dev. Corp.), 500 B.R. 77 (D. Utah 2013) (Dowdell, J.) (“First, the court notes that Stern is not a jurisdictional decision, but one that is focused only on the bankruptcy court’s authority under Article III to enter final judgment on certain claims. . . . In other words, Stern does not require a district court to withdraw the reference to a bankruptcy court immediately whenever a Stern-related issue arises. Instead, a bankruptcy judge can manage pretrial matters and even issue findings of fact and conclusions of law that can be reviewed de novo by the district court.”). Sec. Investor Prot. Corp. v. Bernard L. Madoff Inv. Sec. LLC, 490 B.R. 46 (S.D.N.Y. 2013) (Rakoff, J.) (“Irving Picard (the “Trustee”), the trustee appointed under the Securities Investor Protection Act . . . to administer the estate of Bernard L. Madoff Investment Securities LLC (“Madoff Securities”), has filed hundreds of actions that seek to avoid transfers made by Madoff Securities on the ground that the transfers were fraudulent or preferential. Defendants in more than three hundred actions have moved based on Stern v. Marshall . . . to withdraw the reference of their cases to the Bankruptcy Court. They argue that the Bankruptcy Court lacks both constitutional and statutory authority to adjudicate the Trustee’s claims. . . . [T]he Court consolidated the motions to withdraw that relied on Stern for the purpose of resolving three issues: (1) whether the Bankruptcy Court may exercise the judicial power necessary to finally decide the Trustee’s avoidance actions; (2) whether, even if the Bankruptcy Court may not enter final judgment, it has authority to recommend proposed findings of fact and conclusions of law; and (3) whether the Court, in light of Stern, should withdraw the reference ‘for cause shown.’ . . . [T]he Court turns . . . to the question of whether, in light of Stern, it should withdraw the reference ‘for cause shown’ before the Bankruptcy Court has issued its report and recommendations. Prior to Stern, courts determining whether to withdraw for cause considered several factors: (1) whether the claim is core or non-core, (2) what is the most efficient use of judicial resources, (3) what is the delay and what are the costs to the parties, (4) what will promote uniformity of bankruptcy administration, (5) what will prevent forum shopping, and (6) other related factors. . . . Following Stern, a number of courts applying this test have concluded that, because the classification of a claim as core or non-core no longer definitively determines whether the Bankruptcy Court may enter final judgment, courts should instead look ‘at whether, under Stern, the Bankruptcy Court has the final power to adjudicate [the claim at issue].’ Dev. Specialists, Inc. v. Akin Gump Strauss Hauer & Feld LLP, 462 B.R. 457, 467 (S.D.N.Y.2011). . . . Multiple courts in this District have already concluded that, although Stern prevents the Bankruptcy Court from entering final judgment on avoidance claims, considerations of efficiency and uniformity counsel in favor of permitting the Bankruptcy Court to issue proposed findings of fact and conclusions of law. . . . Indeed, prior to Stern, courts in this District did not withdraw the reference for cause at the outset of proceedings merely because the claim at issue was ‘non-core.’ . . . The Court follows the approach adopted [by the courts in this District]. . . . [E]xperience strongly suggests that having the benefit of the report and recommendation will save the district court and the parties an immense amount of time. . . . In sum, the Court follows other courts in this District, as well as its own prior precedent, in concluding that, although Stern precludes the Bankruptcy Court from finally deciding avoidance actions (unless, possibly, the Trustee has sought to disallow a claim to the estate under § 502(d)), the Bankruptcy Court 175

nonetheless has the power to hear the matter in the first instance and recommend proposed findings of fact and conclusions of law. The Court further declines to withdraw the reference of these cases to the Bankruptcy Court ‘for cause shown’ before the Bankruptcy Court has issued appropriate findings of fact and conclusions of law.”). Scotiabank de P.R. v. Perimetro Props., Inc. (In re Plaza Resort at Palmas, Inc.), 488 B.R. 50 (D.P.R. 2013) (Besosa, J.) (“Defendant Perimetro further argues that a recent Supreme Court decision, Stern v. Marshall, requires this Court to withdraw the reference from the bankruptcy court because there is an unanswered question of state law. . . . Unlike in Stern, where the cause of action for tortious interference could, and did, survive on its own outside of the bankruptcy process, the determination of priority of liens in this case is integral to the bankruptcy process. See Stern, 131 S. Ct. at 2617. Also unlike Stern, deciding this case will not result in the bankruptcy court determining issues that are related to, but not essential to resolving the bankruptcy. Thus, the Stern decision does not impact the Court’s decision on this withdrawal of reference.”). Post Confirmation Bd. of Wadleigh Energy Grp., Inc. v. Wadleigh, 2014 WL 2943796 (E.D. La. June 27, 2014) (Africk, J.) (“Plaintiff initiated the above-captioned adversary matter on November 12, 2010, seeking the return of numerous pre- and post-confirmation payments and transfers made to defendants by the bankruptcy debtors. Plaintiff’s amended complaint lists 23 causes of action, but all of plaintiff’s claims relate to the same underlying facts surrounding the allegedly fraudulent payments and transfers. . . . Before the Court is a motion filed by defendants . . . to withdraw the reference of the above-captioned adversary matter to the U.S. Bankruptcy Court for the Eastern District of Louisiana. Plaintiff has filed an opposition. . . . Although the above-captioned adversary matter potentially involves both core and non-core matters, and defendants assert that plaintiff has also alleged some Stern claims, this Court need not decide at this stage of the litigation exactly which claims are core or non-core. The bankruptcy court has greater familiarity with both this case and bankruptcy law generally. If and when this Court does make a ruling on the issue, it will benefit from the bankruptcy judge’s opinion about the core versus non-core determination. See 28 U.S.C. § 157(b)(3) (“The bankruptcy judge shall determine, on the judge’s own motion or on timely motion of a party, whether a proceeding is a core proceeding under this subsection or is a proceeding that is otherwise related to a case under title 11.”). . . . “[S]ome of these proceedings could be resolved by the Bankruptcy Court on legal issues or on undisputed facts that, even if non-core, this Court can review de novo.” In re OCA, Inc., 2006 WL 4029578, at *4 [(E.D. La. Sept. 19, 2006)]. Accordingly, ‘regardless of whether [this] dispute[] in isolation could be considered non-core, at this stage of the proceeding, it is premature to find that this factor favors withdrawal of the reference.’ Id. . . . [Defendants’] motion focuses on their request for a jury trial and the inability of the bankruptcy court to enter a final judgment on any Stern claims. As discussed above, these considerations alone do not lead the Court to the conclusion that there is good cause to withdraw the reference at this time.”). Emerson v. Treinish, 2014 WL 2807481 (N.D. Ohio June 20, 2014) (Lioi, J.) (“As trustee of debtor Edward Emerson’s (“Edward”) bankruptcy estate, Alan Treinish (“Treinish” or “respondent”) filed an adversary proceeding against Edward’s wife, petitioner Suzanne Emerson (“Suzanne” or “petitioner”). Treinish contends that Edward made a series of wire transfers into Suzanne’s bank accounts while insolvent or that rendered him insolvent and did not receive a reasonably equivalent 176

value in exchange. According to Treinish, these transfers constitute fraudulent conveyances under 11 U.S.C. § 544 and Ohio law. . . . Suzanne seeks to withdraw the reference of this adversary proceeding, contending that the bankruptcy court lacks constitutional authority to decide the case, or in the alternative, that the Court should withdraw the reference for ‘cause’ and adjudicate the adversary proceeding as a civil case. The Court shall address each argument in turn. . . . As in Executive Benefits [Insurance. Agency v. Arkison, 134 S. Ct. 2165 (2014)] this case involves fraudulent conveyance claims against a noncreditor who has not consented to bankruptcy court jurisdiction. The Supreme Court ‘assume[d] without deciding, that the fraudulent conveyance claims in [Executive Benefits were] Stern claims.’ As Suzanne suggests, this Court finds that the claims herein are Stern claims.”). . . . As set forth above, the Supreme Court has treated fraudulent conveyance claims against noncreditors as Stern claims. Executive Benefits, 134 S. Ct. 2165, 2014 WL 2560461, at *8. Accordingly, the procedures of § 157(b)(1) give way to the procedures of § 157(c) (1). Additionally, Suzanne has exercised her right to a jury trial and has not consented to the jurisdiction of the bankruptcy court under § 157(e). Whether through de novo review of a bankruptcy court summary judgment ruling or by conducting a jury trial, this adversary proceeding will likely require a final decision from this Court in the future. Classification of this claim as a non-core proceeding, Suzanne’s jury trial demand, judicial economy, and preserving the parties’ resources thus all point in favor of withdrawing the reference and issuing a final decision in this Court.”). Advanced Telecomm. Network, Inc., v. Flaster/Greenberg, P.C. (In re Advanced Telecomm. Network, Inc.), 2014 WL 2528844 (M.D. Fla. June 4, 2014) (Artoon, J.) (“This cause is before the Court on the Renewed Motion to Withdraw the Reference filed by Advanced Telecommunication Network, Inc. (“ATN”), the Plaintiff in consolidated adversary proceedings in the bankruptcy court. . . . ATN seeks withdrawal of the reference to the bankruptcy court for final adjudication of the adversary proceedings. ATN notes in its motion that it ‘does not object to the Bankruptcy Court’s handling of pre-trial matters[] but is concerned that the Bankruptcy Court cannot finally adjudicate this case or conduct a jury trial.’ ATN suggests that ‘[t]he Bankruptcy Court can prepare the case for trial in the normal course and this Court can handle final disposition of the case, whether by dispositive motions or jury trial.’ . . . Defendants join in ATN’s request to withdraw the reference based on Defendants’ consent to ATN’s request for a jury trial on the legal claims in the Amended Consolidated Complaint. However, Defendants assert that withdrawal of the reference should be made now rather than after the bankruptcy court handles pretrial matters. Thus, the disputed issue regarding the Renewed Motion to Withdraw the Reference is the timing of withdrawal of the reference. . . . The second basis for ATN’s motion is its concern that the bankruptcy court lacks authority to finally adjudicate this case. In this regard, ATN cites the Supreme Court’s decision in Stern v. Marshall . . . in which the Court limited the ability of bankruptcy courts to render final judgments in some matters. However, as other district courts have noted, even after Stern ‘[t]he [b]ankruptcy court can, and should, initially determine whether it has the constitutional authority to render a final judgment on a particular issue.’ Atradius Trade Credit Ins., Inc. v. Mukamal (In re Palm Beach Fin. Partners, L.P.), No. 12–80614–CIV, 2013 WL 2158430, at *3 (S.D. Fla. May 17, 2013) (agreeing with In re Extended Stay, Inc., 466 B.R. 188 (S.D.N.Y. 2011)). ‘Withdrawing the reference simply due to the uncertainty caused by Stern is a drastic remedy that would hamper judicial efficiency . . . .’ In re Extended Stay, 466 B.R. at 203. Even where a bankruptcy court lacks constitutional authority to enter final judgment on a claim, ‘it 177

may submit proposed findings of fact and conclusions of law to this Court.’ Id.; see also Standing Order, Case No. 6:12–mc–26–Orl–22 (M.D.Fla. Feb. 22, 2012) (providing for submission of proposed findings of fact and conclusions of law by bankruptcy court to district court and for treatment by district court of bankruptcy court orders as proposed findings of fact and conclusions of law if district court determines that bankruptcy court exceeded its constitutional authority). . . . The possibility that the bankruptcy court may not be able to enter final judgment on one or more of ATN’s claims does not compel immediate withdrawal of the reference. Indeed, the bankruptcy court may conduct all pretrial proceedings, including addressing dispositive motions either by ruling on them or by submitting proposed findings and conclusions to this Court. . . . In sum, while this case may ultimately require a jury trial or otherwise warrant withdrawal of the reference to the bankruptcy court, withdrawal is not granted at this time.”). Carroll v. Benta (In re Innovative Commc’n Corp.), 2014 WL 2442173 (D.V.I. May 30, 2014) (Gomez, J.) (“In the adversary proceedings, [the Chapter 11 trustee] seeks to undo transactions entered into between [defendant] and [the debtor][,] . . . claim[ing] that these transactions were either fraudulent conveyances or preferential transfers, and thus disallowed under the Bankruptcy Code. . . . [The defendant] filed a motion to withdraw the reference in this Court[,] . . . argu[ing] that fraudulent and preferential conveyance actions may not be considered in the Bankruptcy Court. . . . [T]he complaint in the adversary proceeding seeks to recover pre-petition fraudulent and preferential transfers. Such claims are governed by the rule laid out in Granfinanciera and clarified in Bellingham. They may be finally adjudicated only by the district court, absent waiver or consent of the parties. . . . Although the bankruptcy judge may not finally determine such matters as are presented here, assuming arguendo there was no waiver in this case, a bankruptcy judge may address pre-trial matters until such time as the matter is ready for trial. Accordingly, the reference shall not be withdrawn until such time as the bankruptcy judge has determined that this matter is trial ready.”). Pereira v. Garritano (In re Connie’s Trading Corp.), 2014 WL 1813751 (S.D.N.Y. May 8, 2014) (Gorenstein, J.) (“The mere fact that the bankruptcy court may lack authority to ultimately resolve the adversary proceeding does not mean that there is no value in the bankruptcy court hearing the claim. . . . In this case, judicial efficiency will be promoted by denying the motion to withdraw the reference. The adversary proceeding pending in the bankruptcy court is nearly two years old. That court has supervised discovery, has held numerous hearings, and has pending before it cross-motions for summary judgment. Also pending is the trustee’s motion to approve a settlement of the avoidance action under Bankruptcy Rule 9019, a motion which appears best left to resolution in the bankruptcy court given its familiarity with the Connie’s bankruptcy and with the adversary proceeding. Under these circumstances, withdrawing the reference would serve only to reduce efficiency.”). Kite v. Kite, 2014 WL 688196 (W.D. La. Feb. 13, 2014) (Minaldi, J.) (“This litigation stems from the co-ownership of Kite R.V., L.L.C. (Kite R.V.), by brothers Jeff Kite (Jeff) and Alan Kite (Alan), the latter of which is the debtor herein. . . . Jeff and Kite R.V. filed a lawsuit (the damages action) against Alan and R. Alan Kite, L.L.C, in the Thirty–Sixth Judicial District Court for the Parish of Beauregard, requesting a jury trial and seeking damages for breach of fiduciary duty, waste of company assets, unfair trade practices, misappropriation of assets and opportunities, fraud, 178

conversion, and breach of contract.” Following Alan’s Chapter 11 filing, the state court action was removed to the district court and referred to the bankruptcy court. The plaintiffs then filed a motion to withdraw the reference, which the district court granted, stating: “The plaintiffs request the withdrawal of the instant action pursuant to the Supreme Court’s holding in Stern v. Marshall . . . . The claims herein do not pertain to the administration of the estate, nor do they appear to fall under any other of the listed core proceedings in 28 U.S.C. § 157(b)(2). Applying the Fifth Circuit’s definition, the plaintiffs’ claims for breach of fiduciary duty, waste of company assets, unfair trade practices, misappropriation of assets and opportunities, fraud, conversion, and breach of contract do not invoke a substantive right provided by title 11. These claims are not such that they could only arise in the context of a bankruptcy case, but they rather could arise in the context of any action. As such, the plaintiffs’ claims appear to be predominantly non-core in nature. This factor thus weighs in favor of withdrawal. . . . [In addition, the fact that] these matters are to be tried by jury, . . . [also] weighs in favor of withdrawal.”). Merv Props., LLC v. Fifth Third Bank (In re Merv Props., LLC), 2014 WL 201614 (E.D. Ky. Jan. 17, 2014) (Reeves, J.) (The DIP, Merv Properties, LLC (“Merv”), filed adversary proceeding, asserting state law claims—for breach of contract, fraud and breach of fiduciary duty—against defendants, only some of whom had filed proofs of claim in the underlying Chapter 11 case. The district court denied the motion to withdraw the reference filed by the defendants who had not filed proofs of claim (Tim Yessin and Fifth Third Bank), stating: “As Fifth Third and Yessin concede, Stern did not create a bright line rule regarding when a bankruptcy court may or may not enter a final judgment concerning a claim in an adversary proceeding that would otherwise appear to be a core proceeding. Yet, it observed that when a ‘suit is made of the stuff of the traditional actions at common law’ and ‘is brought within the bounds of federal jurisdiction, the responsibility for deciding that suit rests with Article III judges and Article III courts. The Constitution assigns that job . . . to the Article III Judiciary.’ Stern, 131 S. Ct. at 2609 (internal quotation marks omitted). In In re Global Technovations Inc[], 694 F.3d 705 (6th Cir. 2012), the Sixth Circuit applied Stern, noting that Stern had held that ‘[w]hen a claim is a state law action independent of the federal bankruptcy law and not necessarily resolvable by a ruling on the creditor’s proof of claim in bankruptcy, the bankruptcy court cannot enter final judgment.’ Global Technovations, 694 F.3d at 722. And in Waldman [v. Stone, 698 F.3d 910 (6th Cir. 2012)], the Sixth Circuit extrapolated the recent Supreme Court precedent: ‘[W]hen a debtor pleads an action arising only under state-law, as in Northern Pipeline; or when the debtor pleads an action that would augment the bankrupt estate, but not necessarily be resolved in the claims allowance process, then the bankruptcy court is constitutionally prohibited from entering final judgment.’ Waldman, 698 F.3d at 919 (internal quotation marks and citations omitted). . . . Thus, the issue becomes whether this Court should withdraw some or all of Merv’s claims where the bankruptcy court may not have jurisdiction to enter final judgments against all of the defendants. Although ‘cause’ to withdraw claims from the bankruptcy court under § 157(d) is not defined, courts addressing this issue have considered several factors, such as judicial economy; uniformity in bankruptcy administration; the reduction of forum shopping; economical use of parties’ resources; expediting the bankruptcy process; and the presence of a jury demand. . . . Merv acknowledges that the bankruptcy court may not be able to issue final judgments on all of its claims, but argues that the claims against Fifth Third and Yessin should not be separated and withdrawn from the bankruptcy court because the evidence it will present to establish the claims against all the defendants is the same. . . . In this instance, withdrawing some 179

of the claims against some of the defendants to this Court would unnecessarily separate cases and claims. Merv alleges concerted actions among many of the defendants. . . . If portions of Merv’s claims are withdrawn, the parties will be required to prepare and present similar arguments in each court, witnesses may [be] compelled to testify twice, and both courts would hear related claims. Such a result would undoubtedly delay the proceeding. Despite some differences between the claims against Fifth Third and Yessin, a simple reading of the Complaint shows that the actions of the defendants are inter-related. Judicial economy will be best served by directing that all of the related claims be adjudicated in the bankruptcy court. Fifth Third and Yessin do not dispute that Merv’s claims against the defendants are related to the main bankruptcy case, because a recovery by Merv upon such claims would benefit the bankruptcy estate. And, at least some of the claims in the Complaint, such as the fraudulent conveyance claims, are ‘core’ proceedings. . . . In accordance with 28 U.S.C. § 157(c), the bankruptcy court will submit proposed findings and conclusions of law regarding the resolution of the claims that it cannot finally decide; that is, claims concerning only state law that are not necessarily decided. See 28 U.S.C. § 157(c)(1). The Court disagrees with Yessin and Fifth Third that judicial economy is undercut by allowing the bankruptcy court to adjudicate the matter and issue proposed findings of fact and conclusions of law to this Court on matters where it may not enter a final judgment. Rather, keeping the related claims together serves judicial economy, ensures economical use of the parties’ resources, and is likely to expedite the bankruptcy process.”). Carroll v. AMJ, Inc. (In re Innovative Commc’n Corp.), 2014 WL 128204 (D.V.I. Jan. 14, 2014) (Gomez, J.) (“Here, the complaint in the Adversary Proceeding seeks to recover pre-petition fraudulent and preferential transfers. Such claims are governed by the rule laid out in Granfinanciera and clarified in Bellingham. They may be finally adjudicated only by the district court, absent waiver or consent of the parties. There has been no such waiver here. . . . Although the bankruptcy judge may not finally determine such matters as are presented here, a bankruptcy judge may address pre-trial matters until such time as the matter is ready for trial. . . . Accordingly, the reference will not be withdrawn until such time as the bankruptcy judge determines that this matter is trial ready.”). Guy v. Franklin Am. Mortg. Co., 2013 WL 6628550 (S.D. W. Va. Dec. 10, 2013) (Faber, J.) (“Pending before the court is the motion to withdraw reference to bankruptcy court filed by defendant Franklin American Mortgage Company (“Franklin”). . . . According to the Complaint filed in the Adversary Proceeding . . . this case arises out of the alleged predatory lending practices on the part of certain defendants. Specifically, plaintiff . . . alleges that ‘Solution One Mortgage, LLC, and Decision One Mortgage, LLC, solicited the Plaintiff for an unwise high interest loan with an exploding ARM relying upon an inflated appraisal.’ . . . After discovery in the adversary proceeding was closed and dispositive motions had been filed, Franklin filed the instant motion to withdraw, arguing that withdrawal of the reference was necessary because, according to Stern v. Marshall . . . the bankruptcy court does not have constitutional authority to hear and finally determine the non-core complaint filed against Franklin. . . . Here, plaintiff has asserted state law causes of action for illegal mortgage and unconscionable inducement and those claims arose prepetition. They do not involve the application of bankruptcy law and are therefore non-core. . . . Pursuant to Stern, because plaintiff’s claims must be finally adjudicated by the district court, ‘a referral to bankruptcy court would result in a duplication of judicial resources whereby the 180

bankruptcy court first would submit its proposed findings of fact and conclusions of law to the district court, and the district court then would review de novo the bankruptcy court’s conclusions and enter a final order or judgment.’ Boyd v. GMAC Mortgage, LLC, No. C 11–5018 PSG, 2012 WL 1424992, *2 (N.D. Cal. Apr. 24, 2012). . . . For these reasons, promotion of judicial economy, as well as the efficient use of the parties’ resources weighs in favor of withdrawing the reference to the bankruptcy court.”). Sharp v. Segal & Kirby, LLP (In re SK Foods, L.P.), 2013 WL 5494071 (E.D. Cal. Oct. 1, 2013) (Karlton, J.) (The trustee brought the adversary proceeding to recover an alleged fraudulent transfer from “a non-claimant to the SK Foods bankruptcy estate.” Granting the defendant’s motion to withdraw the reference, the court reasoned: “No appreciable judicial resources have been expended in the Bankruptcy Court on this brand-new, stayed, adversary proceeding. A duplication of judicial resources would likely occur if the Bankruptcy Court must first learn the case sufficiently to make it ready for trial, and then this court also must learn the case so that it can adjudicate the matter de novo. Also, this court will be assisted in pretrial matters by a Magistrate Judge who can be assigned to the case to address any discovery disputes. The court is not convinced by the Trustee’s appeal to the uniform administration of bankruptcy laws. The Supreme Court and the Ninth Circuit have determined that these cases must be decided by the district court. Any consequent effect on the administration of the bankruptcy laws is an unavoidable consequence of that mandate. The court does not believe that delegating pretrial matters to the Bankruptcy Court will mitigate whatever harm the Trustee fears in this area.”). Mukamal v. Stillwater Mkt. Neutral Fund II, L.P. (In re Palm Beach Fin. Partners, L.P.), 2013 WL 3490652 (S.D. Fla. July 8, 2013) (Marra, J.) (“The Court acknowledges that there is a decisional split with regard to whether fraudulent conveyance claims may be adjudicated by bankruptcy courts, but even those courts that have held bankruptcy courts lack jurisdiction over fraudulent conveyance claims have held that bankruptcy courts are still permitted to issue reports and recommendations on such claims. The Court finds the decision of the Southern District of New York in In re Extended Stay, Inc., 466 B.R. 188 (2011), to be persuasive here. That decision provided: ‘In holding that Stern does not mandate withdrawal of these five actions, I do not reach the issue of how Stern applies to each of the 125 claims at issue. The bankruptcy court is capable of making that determination initially, subject to de novo review by this Court. In the event that the bankruptcy court does not have constitutional authority to enter a final judgment on certain claims, it may submit proposed findings of fact and conclusions of law to this Court. Withdrawing the reference simply due to the uncertainty caused by Stern is a drastic remedy that would hamper judicial efficiency on the basis of a narrow defect in the current statutory regime identified by Stern. Neither the Supreme Court nor most of the courts to consider Stern have given it the expansive effect advocated by plaintiffs. Accordingly, Stern does not provide a basis independent of section 157(d) for mandatory withdrawal in these five actions.’ Id. at 203 (footnote omitted). This Court agrees with the sound reasoning of the Southern District of New York. The bankruptcy court can, and should, initially determine whether it has the constitutional authority to render a final judgment on a particular issue. The Court will review the specific legal question of constitutional authority de novo, and if the Court determines that the bankruptcy court erred in rendering a final judgment, it will simply treat the Court’s ‘decision’ as a report and recommendation.”).

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Carroll v. Raynor (In re Innovative Commc’n Corp.), 2013 WL 2631344 (D.V.I. June 12, 2013) (Gomez, J.) (“Here, the complaint in the Adversary Proceeding seeks to recover pre-petition fraudulent and preferential transfers. Such claims are governed by the rule laid out in Granfinanciera and clarified in Bellingham. They may be finally decided only by the district court, absent waiver or consent of the parties. There has been no such waiver here. . . . While the bankruptcy judge may not finally determine such matters as are presented here, a bankruptcy judge may address pre-trial matters until such time as the matter is trial ready. Accordingly, the reference will not be withdrawn until such time as the bankruptcy judge determines that this matter is trial ready.”). Mansmann v. Ocwen Loan Servicing, L.L.C. (In re Mansmann), 2013 WL 2322953 (S.D. Ala. May 28, 2013) (Shulman, J.) (After filing of a motion to withdraw the reference, the district court “[adopted] the [bankruptcy court’s] . . . Report and Recommendation and [granted] the motion to withdraw the reference as to the claims listed [in the report],” which stated: “[T]he Plaintiffs filed this adversary proceeding in the Bankruptcy Court. The complaint includes counts for violation of RESPA, violation of the automatic stay, violation of 11 U.S.C. § 506 [based on the debtor’s allegation that the charges listed in Ocwen’s proof of claim are ‘padded, illegal, improper, unauthorized and [include] unapproved post-petition corporate advances.’], wantonness, negligence, breach of the mortgage agreement, unjust enrichment, wrongful foreclosure, slander and defamation, and violations [of] the Truth in Lending Act. There is no jury demand in the complaint. The Defendant filed a motion to dismiss Counts 1–3 and 8–10 of the complaint for failure to state a claim upon which relief could be granted . . . . [T]he Supreme Court’s ruling in Stern v. Marshall, ––– U.S. ––––, 131 S. Ct. 2594, 180 L. Ed. 2d 475 (2011) may require the District Court to enter a final judgment on the state law claims. Count Two for violation of the automatic stay and Count Three for violation of § 506 can be heard most efficiently by the Bankruptcy Court, and therefore the Court recommends that the parties be allowed to go forward on these claims and allow the Bankruptcy Court to enter a final judgment. This Court’s ruling on the violations of the stay and § 506 could result in res judicata or collateral estoppel on some issues related to the remaining counts. However, this effect could benefit the parties by having some issues decided and lessening the burden of proof for the other counts. . . . Based on these considerations, this Court recommends that the District Court grant permissive withdrawal of the reference as to Count One–RESPA, Count Four–wantonness, Count Five–negligence, Count Six–breach of the mortgage agreement, Count Seven–unjust enrichment, Count Eight–wrongful foreclosure, Count Nine–slander and defamation, and Count Ten–Truth in Lending but allow the Bankruptcy Court [to] handle all pretrial matters, including dispositive motions, related to Count One and Counts Four through Ten. The Bankruptcy Court will prepare a report and recommendation to the District Court for any dispositive motions and for the entire case when it is ready for trial. In addition, the Bankruptcy Court recommends that the parties be allowed to move forward on Counts Two and Three involving bankruptcy law, recognizing that this might subject the parties to limitations based on res judicata and collateral estoppel.”). Atradius Trade Credit Ins., Inc. v. Mukamal (In re Palm Beach Fin. Partners, L.P.), 2013 WL 2158430 (S.D. Fla. May 17, 2013); Osborne v. Kadoch (In re Autora Capital, Inc.), 2013 WL 2156821 (S.D. Fla. May 17, 2013); Mukamal v. ABN AMRO Fund Servs. Bank (In re Palm Beach Fin. Partners, L.P.), 2013 WL 2036161 (S.D. Fla. May 14, 2013); Mukamal v. Newman Family 182

Revocable Trust (In re Palm Beach Fin. Partners, L.P.), 2013 WL 2035453 (S.D. Fla. May 14, 2013) (Marra, J.) (“The Court acknowledges that there is a decisional split with regard to whether fraudulent conveyance claims may be adjudicated by bankruptcy courts, but even those courts that have held bankruptcy courts lack jurisdiction over fraudulent conveyance claims have held that bankruptcy courts are still permitted to issue reports and recommendations on such claims. The Court finds the decision of the Southern District of New York in In re Extended Stay, Inc., 466 B.R. 188 (2011), to be persuasive here. That decision provided: ‘In holding that Stern does not mandate withdrawal of these five actions, I do not reach the issue of how Stern applies to each of the 125 claims at issue. The bankruptcy court is capable of making that determination initially, subject to de novo review by this Court. In the event that the bankruptcy court does not have constitutional authority to enter a final judgment on certain claims, it may submit proposed findings of fact and conclusions of law to this Court. Withdrawing the reference simply due to the uncertainty caused by Stern is a drastic remedy that would hamper judicial efficiency on the basis of a narrow defect in the current statutory regime identified by Stern. Neither the Supreme Court nor most of the courts to consider Stern have given it the expansive effect advocated by plaintiffs. Accordingly, Stern does not provide a basis independent of section 157(d) for mandatory withdrawal in these five actions.’ Id. at 203 (footnote omitted). This Court agrees with the sound reasoning of the Southern District of New York. The bankruptcy court can, and should, initially determine whether it has the constitutional authority to render a final judgment on a particular issue. The Court will review the specific legal question of constitutional authority de novo, and if the Court determines that the bankruptcy court erred in rendering a final judgment, it will simply treat the Court’s ‘decision’ as a report and recommendation.”). Mason v. Klarchek, 2013 WL 1869098 (N.D. Ill. May 2, 2013) (Darrah, J.) (“Richard J. Klarchek (“Richard”) filed a voluntary [Chapter 11] petition . . . [that] . . . was [later] converted to a Chapter 7 liquidation proceeding . . . . Richard J. Mason (“Trustee”) is the appointed trustee. The Trustee filed an adversary complaint in the bankruptcy court, opposing Richard’s transfer of an interest in two Illinois land trusts that held legal title to two condominiums, where Richard and Michelle principally reside. Richard sought to transfer his interest from himself to Richard and Michelle as tenants by the entirety. . . . The complaint filed in the Adversary Proceeding alleges three claims, based upon Illinois statutory or common law claims: (1) the creation of the tenancy by the entirety was established simply to defeat the claims of Richard’s creditors; (2) the transfer to Michelle which created the tenancy by the entirety was a fraudulent transfer; and (3) Michelle’s appointment of Richard with a power of direction over the land trusts ignores a necessary element to establish a tenancy by the entirety. The Trustee also filed an objection to an exemption claimed by Richard. . . . Movants argue this Court should withdraw the reference of the Adversary Proceeding to the bankruptcy court and, instead, designate the Adversary Proceeding on the Northern District Court of Illinois’s docket. . . . The Movants argue the Adversary Proceeding is not a core proceeding and further contend that they have not consented to the entry of final judgment and have demanded a jury trial. On these bases, the Movants reason that the Adversary Proceeding must be heard by a district court. Relying on the United States Supreme Court’s decision in Stern v. Marshall, the Movants argue that the Trustee’s claims of fraudulent transfer must be adjudicated by a district court. . . . [W]ithdrawal of a reference is appropriate only in limited circumstances, and withdrawal is the exception, rather than the rule. Here, the bankruptcy court has the ability to consider the claims made by the Trustee in the Adversary Proceeding, which appear to be, at least in some 183

measure, directly related to the administration of the underlying bankruptcy, though the bankruptcy judge determines whether a proceeding is a core proceeding. 28 U.S.C. § 157(b)(3). Moreover, the considerations of judicial economy, convenience, uniformity of bankruptcy administration, and avoidance of confusion all weigh significantly in favor of denying the Movants’ motion to withdraw the reference. Of the courts that have considered the issue of an early withdrawal of a reference to bankruptcy court, the overwhelming majority have declined, post-Stern, to withdraw the reference, recognizing the value of the bankruptcy judge’s familiarity with relevant law and the facts of the cases before them. . . . Duly recognizing the value of the bankruptcy judge’s familiarity with the pertinent law and facts underlying this case, it is improper to withdraw the reference at this time. If, as the Trustee concedes, the bankruptcy judge determines a jury trial is necessary, or he otherwise lacks the authority to fully adjudicate the Adversary Proceeding, the Movants may renew their motion when all pre-trial matters have been resolved.”). Kramer v. Mahia, 2013 WL 1629254 (E.D.N.Y. Apr. 15, 2013) (Hrhzarry, J.) (The district court denied the defendant’s motion to withdraw the reference, stating: “[T]he adversary proceeding does not fall within any of the Stern exceptions and the Bankruptcy Court may not enter a final decision. . . . However, courts in this circuit have held that the Bankruptcy Court may nonetheless hear the case in the first instance and recommend proposed findings of fact and conclusions of law and, therefore, the district court need not withdraw a case referred to the Bankruptcy Court for cause shown before the Bankruptcy Court makes its report and recommendation. . . . Furthermore, permissive withdrawal of the reference may not be appropriate where considerations of efficiency and uniformity counsel in favor of permitting the Bankruptcy Court to issue proposed findings of fact and conclusions of law. . . . [I]t would be more efficient for the Bankruptcy Court to propose findings of fact and conclusions of law in the first instance than withdraw the reference at this stage.”). Nisselson v. Salim, 2013 WL 1245548 (S.D.N.Y. Mar. 25, 2013) (Gardephe, J.) (The district court denied the defendants’ motion to withdraw the reference, reasoning: “Although the Bankruptcy Court lacks constitutional authority to enter a final decision [on the trustee’s preference and fraudulent transfer claims], it may still hear the case in the first instance and recommend proposed findings of fact and conclusions of law. . . . Considerations of judicial economy are decisive here. . . . [I]n cases where the bankruptcy court is more familiar with the record or already has extensive experience in the matter, it may be most efficient for the bankruptcy court to propose recommendations first, even though the district court ultimately would have to review them de novo. . . . Such is the case here. . . . The Bankruptcy Court is familiar with the bankruptcy estate as a whole, having overseen its administration since March 2011. Indeed, the Bankruptcy Court has already concluded the administration of the bankruptcy estate, aside from this adversarial claim. Moreover, as a general matter, the Bankruptcy Court is more familiar with avoidance claims, which are customarily adjudicated by bankruptcy courts because they are core proceedings. See 28 U.S.C. § 157(b)(2)(F) and (H). Finally, the Bankruptcy Court is familiar with the specific issues here, having already granted and confirmed an order of attachment on Defendants’ residence, the ownership of which is at the heart of this action. Accordingly, it would be more efficient for the Bankruptcy Court to propose findings of fact and conclusions of law in the first instance.”).

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Heller Small Bus. Lending Corp. v. Smead (In re O’Hanneson), 2013 WL 655158 (N.D. Cal. Feb. 21, 2013) (Davila, J.) (“O’Hanneson’s ‘core’ cross-claims are not ‘necessarily resolvable by a ruling on the creditor’s proof of claim in bankruptcy.’ Stern, 131 S. Ct. at 2611. For this reason, it is entirely possible that some tribunal other than the Bankruptcy Court will need to enter judgment on Heller’s claims and on O’Hanneson’s cross-claims. . . . It is under these circumstances that the request to withdraw the reference must be considered. Here, as described above, there are ‘core’ claims intertwined with ‘non-core’ claims, some of which are subject to a jury trial. And a portion of these claims, if not a majority of them, cannot be finally resolved by the Bankruptcy Court. It is therefore inevitable that, at some point, the reference will need to be withdrawn. . . . The question has become one of timing. This is true because ‘[a] valid right to a Seventh Amendment jury trial in the district court does not mean the bankruptcy court must instantly give up jurisdiction and that the action must be transferred to the district court.’ In re Healthcentral.com, 504 F.3d 775, 788 (9th Cir. 2007). ‘Instead . . . the bankruptcy court may retain jurisdiction over the action for pretrial matters.’ Id. But despite this option, the other discretionary factors favor withdrawal at this time. Considering all of the claims brought by all parties are based entirely in state law and originated in state court, the Bankruptcy Court is in no better position to handle this action prior to trial. In addition, allowing pretrial matters to proceed in this court, which is notably one that can finally determine this entire action, prevents delay and saves costs since the parties will have dealt with one court rather than two. Furthermore, withdrawing the reference now alleviates any dilatory tactics or forum shopping that may have either motivated the removal or stemmed from it. . . . In sum, the court finds it appropriate to withdraw the bankruptcy reference pursuant to 28 U.S.C. § 157(d). The motion will therefore be granted.”). Kriegman v. 377897 B.C., Ltd. (In re LLS Am., LLC), 2013 WL 209027 (E.D. Wash. Jan. 16, 2013); Kriegman v. Janvary (In re LLS Am., LLC), 2013 WL 209030 (E.D. Wash. Jan. 16, 2013); Kriegman v. Yarbrough (In re LLS Am., LLC), 2013 WL 209200 (E.D. Wash. Jan. 16, 2013); Kriegman v. Pacifica Ventures, Inc. (In re LLS Am., LLC), 2013 WL 209472 (E.D. Wash. Jan. 16, 2013); Kriegman v. Stack (In re LLS Am., LLC), 2013 WL 209474 (E.D. Wash. Jan. 16, 2013); Kriegman v. Gyenizse (In re LLS Am., LLC), 2013 WL 209475 (E.D. Wash. Jan. 16, 2013); Kriegman v. Stack (In re LLS Am., LLC), 2013 WL 209477 (E.D. Wash. Jan. 16, 2013); Kriegman v. Walton (In re LLS Am., LLC), 2013 WL 209507 (E.D. Wash. Jan. 16, 2013); Kriegman v. Wetmore (In re LLS Am., LLC), 2013 WL 209508 (E.D. Wash. Jan. 16, 2013); Kriegman v. Falk (In re LLS Am., LLC), 2013 WL 209510 (E.D. Wash. Jan. 16, 2013) (Peterson, J.) (“This motion [to withdraw the reference] arises from adversarial proceedings that began in the Chapter 11 bankruptcy of LLS America, LLC (“LLS”). According to the adversary complaint, LLS allegedly engaged in a ‘Ponzi’ scheme by accepting loans from various parties and using later loans to repay with interest the earlier lenders. The defendants named in the complaint are all alleged to have lent money to LLS and received a return with interest of their funds. The complaint asserts that the payments made by LLS to the lender-defendants constituted fraudulent transfers and that such transfers should be avoided and returned to the bankruptcy estate to be distributed through the bankruptcy process. The court appointed trustee seeks the withdrawal of this Court’s automatic referral of this case to the bankruptcy court of this district. The basis for withdrawal is born out of the Court’s granting of withdrawal motions filed by defendants in other adversary actions. In light of the uncertainty surrounding the bankruptcy court’s jurisdiction, the trustee asserts that this Court should withdraw reference as to the trial and allow the bankruptcy court to proceed on pretrial 185

matters. The Defendants filed no opposition. . . . The Ninth Circuit recently issued its opinion in In re Bellingham Insurance Agency, Inc. . . . In that opinion the court clarified two questions that were left unanswered after the Supreme Court’s decision in Stern v. Marshal . . . . First, the circuit court held that bankruptcy courts lack jurisdiction to enter final judgment in fraudulent conveyance actions where the fraudulent conveyance claim will not be fully resolved by the claim allowance process. Bellingham, 702 F.3d 553, 2012 WL 6013836, at *8–*9. Second, the court approved of the procedure under which the bankruptcy court produces proposed findings of fact and conclusions of law with regard to any dispositive motion and those proposals are subject to de novo review in the district court. Id. at *9–*10. The above-captioned case includes claims for fraudulent conveyance. Accordingly, final judgment on those claims must be entered by this Court absent the consent of the parties or absent those claims being subject to resolution as part of the claims allowance procedure. Therefore, there is good cause to grant the trustee’s motion, [to] withdraw[] the reference[,] . . . and then refer the matter to the Bankruptcy Court for that court to manage pretrial matters and enter proposed findings of fact and conclusions of law as to pretrial dispositive motions.”). In re City of Detroit, Mich., 498 B.R. 776 (Bankr. E.D. Mich. 2013) (Rhodes, J.) (The Official Committee of Retirees filed a motion to withdraw the reference on the ground that this bankruptcy court did not have the authority to determine the constitutionality of Chapter 9 of the Bankruptcy Code or a Michigan statute in connection with its determination of the City of Detroit’s eligibility for bankruptcy relief. It also filed a motion for stay of the eligibility proceedings pending the district court’s resolution of that motion. In denying the stay motion, the bankruptcy court concluded that the Committee was unlikely to succeed on its arguments in support of withdrawal that were based on the court’s purported lack of authority under Stern, reasoning: “In Stern v. Marshall, the Supreme Court held that the ‘judicial power of the United States’ can only be exercised by an Article III court and ‘that in general, Congress may not withdraw from judicial cognizance any matter which, from its nature, is the subject of a suit at the common law, or in equity, or admiralty.’ 131 S. Ct. at 2608–12. The Supreme Court held that a bankruptcy court therefore lacks the constitutional authority to enter a final judgment on a debtor’s counterclaim that is based on a private right when resolution of the counterclaim is not necessary to fix the creditor’s claim. 131 S. Ct. at 2611–19. The Court described the issue before it as ‘narrow.’ 131 S. Ct. at 2620. . . . The Sixth Circuit has adhered to a narrow reading of Stern in the two cases that have addressed the issue: Onkyo Europe Elect. GMBH v. Global Technovations Inc. (In re Global Technovations Inc.), 694 F.3d 705 (6th Cir. 2012), and Waldman v. Stone, 698 F.3d 910 (6th Cir. 2012). . . . These cases recognize the crucial difference to which Stern adhered. A bankruptcy court may determine matters that arise directly under the bankruptcy code, such as fixing a creditor’s claim in the claims allowance process. However, a bankruptcy court may not determine more tangential matters, such as a state law claim for relief asserted by a debtor or the estate that arises outside of the bankruptcy process, unless it is necessary to resolve that claim as part of the claims allowance process. See City of Cent. Falls, R.I. v. Central Falls Teachers’ Union (In re City of Cent. Falls), R.I., 468 B.R. 36, 52 (Bankr. D.R.I. 2012) (“[A]lthough the counterclaim at issue in Stern arose under state law, the determinative feature of that counterclaim was that it did not arise under the Bankruptcy Code.”). . . . The issue presently before the Court is the debtor’s eligibility to file this chapter 9 case. A debtor’s eligibility to file bankruptcy stems directly from rights established by the bankruptcy code. As quoted above, Waldman expressly held, ‘When a debtor pleads an action under federal bankruptcy law,’ the 186

bankruptcy court’s authority is constitutional. 698 F.3d at 919. In this case, the debtor has done precisely that. In seeking relief under chapter 9, it has pled ‘an action under federal bankruptcy law.’ . . . The parties’ federal and state constitutional challenges are simply legal arguments in support of their objection to the City’s request for bankruptcy relief. Nothing in Stern, Waldman, or Global Technovations suggests any limitation on the authority of a bankruptcy court to consider and decide any and all of the legal arguments that the parties present concerning an issue that is otherwise properly before it. . . . More specifically, those cases explicitly state that a bankruptcy court can constitutionally determine all of the issues that are raised in the context of resolving an objection to a proof of claim, even those involving state law. For the same reasons, a bankruptcy court can also constitutionally determine all issues that are raised in the context of resolving an objection to eligibility. . . . No cases address Stern in the context of eligibility for bankruptcy. Nevertheless, several cases do address Stern in the context of similar contested matters—conversion and dismissal of a case. Each case readily concludes that Stern’s limitation on the authority of a bankruptcy court is inapplicable. For example, in In re USA Baby, Inc., 674 F.3d 882, 884 (7th Cir. 2012), the Seventh Circuit held that nothing in Stern precludes a bankruptcy court from converting a chapter 11 case to chapter 7, stating, ‘we cannot fathom what bearing that principle might have on the present case.’ In Mahanna v. Bynum, 465 B.R. 436 (W.D. Tex. 2011), the court held that Stern does not prohibit the bankruptcy court from dismissing the debtors’ chapter 11 case. The court concluded, ‘[T]his appeal is entirely frivolous, and constitutes an unjustifiable waste of judicial resources [.]’ Id. at 442. In In re Thalmann, 469 B.R. 677, 680 (Bankr. S.D. Tex. 2012), the court held that Stern does not prohibit a bankruptcy court from determining a motion to dismiss a case on the grounds of bad faith. This line of cases strongly suggests that Stern likewise does not preclude a bankruptcy court from determining eligibility. . . . [S]ince Stern was decided, non-Article III courts have considered constitutional issues, always without objection. . . . Both bankruptcy courts and bankruptcy appellate panels have done so. See, e.g., Williams v. Westby (In re Westby), 486 B.R. 509 (10th Cir. BAP 2013) (upholding the constitutionality of the Kansas bankruptcy-only state law exemptions); Res. Funding, Inc. v. Pacific Continental Bank (In re Washington Coast I, L.L.C.), 485 B.R. 393 (9th Cir. BAP 2012) (upholding the constitutionality of the final order entered by the bankruptcy court); Richardson v. Schafer (In re Schafer), 455 B.R. 590 (6th Cir. BAP 2011), rev’d on other grounds, 689 F.3d 601 (6th Cir. 2012) (addressing the constitutionality of the Michigan bankruptcy-only state law exemptions); Old Cutters, Inc. v. City of Hailey (In re Old Cutters, Inc.), 488 B.R. 130 (Bankr. D. Idaho 2012) (invalidating a city’s annexation fee and community housing requirements); In re Washington Mut., Inc., 485 B.R. 510 (Bankr. D. Del. 2012) (holding Oregon’s corporate excise tax unconstitutional under the Commerce Clause); In re McFarland, 481 B.R. 242 (Bankr. S.D. Ga. 2012) (upholding Georgia’s bankruptcy-specific exemption scheme); In re Fowler, 493 B.R. 148 (Bankr. E.D. Cal. 2012) (upholding the constitutionality of California’s statute fixing the interest rate on tax claims); In re Meyer, 467 B.R. 451 (Bankr. E.D. Wis. 2012) (upholding the constitutionality of 11 U.S.C. § 707(b)); Zazzali v. Swenson (In re DBSI, Inc.), 463 B.R. 709, 717 (Bankr. D. Del. 2012) (upholding the constitutionality of 11 U.S.C. § 106(a)); Proudfoot Consulting Co. v. Gordon (In re Gordon), 465 B.R. 683 (Bankr. N.D. Ga. 2012) (upholding the constitutionality of 11 U.S.C. § 706(a)); South Bay Expressway, L.P. v. County of San Diego (In re South Bay Expressway, L.P.), 455 B.R. 732 (Bankr. S.D. Cal. 2011) (holding unconstitutional California’s public property tax exemption for privately-owned leases of public transportation demonstration facilities). More specifically, and perhaps more on point, in two recent chapter 9 cases, bankruptcy courts addressed constitutional issues without objection. Association of Retired Employees v. City 187

of Stockton, Cal. (In re City of Stockton, Cal.), 478 B.R. 8 (Bankr. E.D. Cal. 2012) (holding that retirees’ contracts could be impaired in the chapter 9 case without offending the constitution); In re City of Harrisburg, PA, 465 B.R. 744 (Bankr. M.D. Pa. 2011) (upholding the constitutionality of a Pennsylvania statute barring financially distressed third class cities from filing bankruptcy). . . . In addition, the Tax Court, a non-Article III court, has also examined constitutional issues, without objection. See, e.g., Field v. C.I.R., 2013 WL 1688028 (Tax Ct. 2013) (holding that the tax classification on the basis of marital status that was imposed by requirement that taxpayer file joint income-tax return in order to be eligible for tax credit for adoption expenses did not violate Equal Protection clause); Begay v. C.I.R., 2013 WL 173362 (Tax Ct. 2013) (holding that the relationship classification for child tax credit did not violate Free Exercise Clause); Byers v. C.I.R., 2012 WL 265883 (Tax Ct. 2012) (rejecting the taxpayer’s challenge to the authority of an IRS office under the Appointments Clause). . . . Likewise, the Court of Federal Claims, also a non-Article III court, has considered constitutional claims, without objection. This was done perhaps most famously in Beer v. United States, 111 Fed. Cl. 592 (Fed. Cl. 2013), which is a suit by Article III judges under the Compensation Clause of the United States Constitution. . . . Stern does not change this status quo, and nothing about the constitutional dimension of the objectors’ eligibility objections warrants the expansion of Stern that they assert. As Stern itself reaffirmed, ‘We do not think the removal of counterclaims such as [the debtor’s] from core bankruptcy jurisdiction meaningfully changes the division of labor in the current statute[.]’ 131 S. Ct. at 2620. Expanding Stern to the point where it would prohibit bankruptcy courts from considering issues of state or federal constitutional law would certainly significantly change the division of labor between the bankruptcy courts and the district courts. . . . Only one case suggests otherwise. Picard v. Flinn Invs., LLC, 463 B.R. 280 (S.D.N.Y. 2011). That case did state in dicta in a footnote, ‘If mandatory withdrawal protects litigants’ constitutional interest in having Article III courts interpret federal statutes that implicate the regulation of interstate commerce, then it should also protect, a fortiori, litigants’ interest in having the Article III courts interpret the Constitution.’ Id. at 288 n.3. . . . This single sentence cannot be given much weight. First, it is only dicta. Second, it is against the manifest weight of the case authorities. Third, the quote assumes, without analysis, that the litigants do have an interest in having Article III courts interpret the Constitution, and thus bootstraps its own conclusion. Fourth, nothing in the Flinn Investments case states or even suggests that Stern itself prohibits a bankruptcy court from ruling on a constitutional issue where it otherwise has the authority to rule on the claim before it. Finally, the district court that issued Flinn Investments has now entered an amended standing order of reference in bankruptcy cases to provide that its bankruptcy court should first consider objections to its authority that parties raise under Stern v. Marshall. Apparently, that district court’s position now is that Stern does not preclude the bankruptcy court from determining constitutional issues, including the constitutional issue of its own authority. . . . Two other cases are cited in support of the position that only an Article III court can determine a constitutional issue: TTOD Liquidation, Inc. v. Lim (In re Dott Acquisition, LLC), 2012 WL 3257882 (E.D. Mich. July 25, 2012), and Picard v. Schneiderman (In re Madoff Secs.), 492 B.R. 133 (S.D.N.Y. 2013). Both are irrelevant to the issue. Dott Acquisition did discuss Stern but only in the unremarkable context of withdrawing the reference on a fraudulent transfer action. Schneiderman did not address a Stern issue at all, or even cite the case. . . . The objectors’ federalism argument is even more perplexing and troubling. Certainly the objectors are correct that a ruling on whether the City was properly authorized to file this bankruptcy case, as required for eligibility under 11 U.S.C. § 109(c)(2), will require the interpretation of state law, including the Michigan Constitution. . . . However, ruling on 188

state law issues is required in addressing many issues in bankruptcy cases. As the Supreme Court has observed, ‘[B]ankruptcy courts [] consult state law in determining the validity of most claims.’ Travelers Cas. & Sur. Co. of Am. v. Pacific Gas & Elec. Co., 549 U.S. 443, 444, 127 S. Ct. 1199, 1201, 167 L. Ed. 2d 178 (2007). Concisely summarizing the reality of the bankruptcy process and the impact of Stern on it, the court in In re Olde Prairie Block Owner, LLC, 457 B.R. 692, 698 (Bankr. N.D. Ill. 2011), concluded: ‘[Stern] certainly did not hold that a Bankruptcy Judge cannot ever decide a state law issue. Indeed, a large portion of the work of a Bankruptcy Judge involves actions in which non-bankruptcy issues must be decided and that “stem from the bankruptcy itself or would necessarily be resolved in the claims allowance process,” [131 S. Ct.] at 2618, for example, claims disputes, actions to bar dischargeability, motions for stay relief, and others. Those issues are likely within the “public rights” exception as defined in Stern.’ Other cases also illustrate the point. See, e.g., Picard v. Estate of Madoff, 464 B.R. 578, 586 (S.D.N.Y. 2011) (quoting In re Salander O’Reilly Galleries, 453 B.R. 106, 118 (Bankr. S.D.N.Y. 2011)) (“It is clear” from Stern v. Marshall and other Supreme Court precedent that “the Bankruptcy Court is empowered to apply state law when doing so would finally resolve a claim.”); Anderson v. Bleckner (In re Batt), 2012 WL 4324930, at *2 (W.D. Ky. Sept. 20, 2012) (“Stern does not bar the exercise of the Bankruptcy Court’s jurisdiction in any and all circumstances where a party to an adversary proceeding has not filed a proof of claim, or where the issue in an adversary proceeding is a matter of state law.”) . . . . The distinction is clear. While in some narrow circumstances Stern prohibits a non-Article III court from adjudicating a state law claim for relief, a non-Article III court may consider and apply state law as necessary to resolve claims over which it does have authority under Stern. The mere fact that state law must be applied does not by itself mean that Stern prohibits a non-Article III court from determining the matter. . . . Moreover, nothing about a chapter 9 case suggests a different result. In City of Cent. Falls, R.I., 468 B.R. at 52, the court stated, ‘Nor did [Stern] address concerns of federalism; although the counterclaim at issue in Stern arose under state law, the determinative feature of that counterclaim was that it did not arise under the Bankruptcy Code. The operative dichotomy was not federal versus state, but bankruptcy versus nonbankruptcy.’ . . . The troubling aspect of the objectors’ federalism argument is that it does not attempt to define, even vaguely, what interest of federalism is at stake here. . . . In Arizona v. United States, ––– U.S. ––––, ––––, 132 S. Ct. 2492, 2500, 183 L. Ed. 2d 351 (2012), the Supreme Court stated, ‘Federalism, central to the constitutional design, adopts the principle that both the National and State Governments have elements of sovereignty the other is bound to respect.’ Accordingly, federalism is about the federal and state governments respecting each other’s sovereignty. It has nothing to do with the requirements of Article III or, to use the phraseology of Stern with the ‘division of labor’ between the district courts and the bankruptcy courts. 131 S. Ct. at 2620.”). In re Myers, 2014 WL 585431 (Bankr. D. Kan. Feb 13, 2014) (Nugent, J.) (“The bankruptcy trustee in the current cases . . . alleges that [the Kansas exemption statute under which the debtors claimed their earned income tax credit exempt] violates the Uniformity Clause found in Article 2, Section 17 of the Kansas Constitution . . . .” In its report and recommendation to the district court on the trustee’s motion to withdraw the reference, the bankruptcy court stated: “Only in the most unusual event would the District Court consider withdrawal of the reference to determine whether an exemption applies in a particular case. The fact that the bankruptcy court is determining application of a state law exemption statute is alone insufficient by itself to warrant withdrawal of the reference, because allowing exemptions is intrinsically connected to a debtor’s bankruptcy case. Cf. Stern v. 189

Marshall, 131 S. Ct. 2594, 2611–15 (2011) (state law tortious interference counterclaim that existed independent of any bankruptcy proceeding required adjudication by an Article III court that could enter a final judgment).”).

C.

ABSTENTION

D.

SUBMISSION OF PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW IN MATTERS THAT ARE STATUTORILY CORE BUT CONSTITUTIONALLY NONCORE

Wellness Int’l Network, Ltd. v. Sharif, 727 F.3d 751 (7th Cir. 2013) (Flaum, J.; Sykes, J.; Tinder, J.) (“So the bankruptcy court lacked constitutional authority to enter final judgment on the alter-ego claim, but what is the proper remedy? Sharif requests the relatively modest remedy of remanding to the district court and allowing him to object to the bankruptcy court’s July 6, 2010, order as a report and recommendation. The district judge could then enter final judgment ‘after considering the bankruptcy judge’s proposed findings [of fact] and conclusions [of law] and after reviewing de novo those matters to which any party has timely and specifically objected.’ 28 U.S.C. § 157(c)(1). While perhaps the most practical and equitable remedy, there are serious questions as to whether it is authorized by statute. . . . Recall that Sharif waived his contention that the alter-ego claim is a noncore proceeding and that, as a result, we proceeded on the assumption that it is a core proceeding. In core proceedings, ‘§ 157(b)(1) authorizes bankruptcy courts to “enter appropriate orders and judgments,” not to propose them.’ Waldman, 698 F.3d at 921. No statutory provision authorizes a bankruptcy court to propose findings of fact and conclusions of law in a core proceeding; such a report and recommendation from the bankruptcy court is statutorily authorized only in noncore proceedings, see § 157(c)(1). So ‘[f]or the bankruptcy judge’s orders to function as proposed findings of fact or conclusions of law . . . , we would have to hold that the [alter ego claim was] “not a core proceeding” but [is] “otherwise related to a case under title 11.”’ In re Ortiz, 665 F.3d at 915 (quoting § 157(c)(1)). But see In re Bellingham Ins. Agency, Inc., 702 F.3d at 566 n.8 (rejecting Ortiz as not “thoroughly reasoned”). . . . Assuming that the alter-ego claim is in fact a core matter, it is difficult to find a statutory basis on which the district court could rely to treat the bankruptcy court’s order as proposed findings and conclusions. . . . Accordingly, on remand the district court shall first determine whether the alter-ego claim is a core or a noncore proceeding. If it concludes that it is a noncore proceeding, then the court may treat the bankruptcy court’s order purporting to enter final judgment on the alter-ego claim as proposed findings of fact and conclusions of law to be reviewed de novo. See Fed. R. Bank. P. 9033(d) (“The district judge shall make a de novo review upon the record or, after additional evidence, of any portion of the bankruptcy judge’s findings of fact or conclusions of law to which specific written objection has been made in accordance with this rule. The district judge may accept, reject, or modify the proposed findings of fact or conclusions of law, receive further evidence, or recommit the matter to the bankruptcy judge with instructions.”). If, on the other hand, the court determines the alter-ego claim to be a core proceeding, then it shall order that the reference of the alter-ego claim to the bankruptcy court be withdrawn and conduct fresh discovery proceedings in the district court . . . .”). 190

Blue Cross & Blue Shield of N.C. v. Jemsek Clinic, P.A., 506 B.R. 694 (W.D.N.C. 2014) (Conrad, J.) (“Having declined to withdraw reference, the final issue is whether the bankruptcy court possesses the authority to issue findings and recommendations subject to de novo review by this Court. 28 U.S.C. § 157(b)(2) provides statutory authority for bankruptcy courts to ‘hear and determine’ all ‘core’ proceedings arising under title 11, or arising in a case under title 11. In cases that are not core proceedings, a bankruptcy court may hear and ‘submit proposed findings of fact and conclusions of law to the district court,’ which reviews them de novo. 28 U.S.C. § 157(c)(1). Whether bankruptcy courts could issue findings of fact and conclusion of law was not an issue prior to Stern. The implications of that decision, however, have led to the curious state in which bankruptcy judges possess the authority under section 157(c) to issue findings and recommendations on non-core matters subject to de novo review by the district court, but possess no such express authority to do so in core matters under section 157(b). . . . The Fourth Circuit has not addressed it and the other circuit courts are split on this issue. . . . [T]he Stern opinion itself offered no indication that it viewed bankruptcy courts as wholly without authority to issue findings and recommendations on core matters. In Stern, the district court, finding that a right to jury trial existed as to the state law counterclaim, treated the bankruptcy court’s determination as findings and recommendations which it reviewed de novo. The Stern majority offered no indication that such procedure was improper by either court. In contrast, the language of the opinion suggests an intent to retain as much continuity within the current framework as is constitutionally permissible. ‘We do not think the removal of counterclaims such as Vickie’s from core bankruptcy jurisdiction meaningfully changes the division of labor in the current statute; we agree . . . that the question presented here is a “narrow” one.’ Stern, 131 S. Ct. at 2620 (internal citation omitted). . . . This is an apt instance of the Holmesian ‘the greater includes the lesser’ principle that specific authorization of a greater power implies the existence of lesser powers consistent with the greater. See Western Union Tel. Co. v. Kansas (ex rel Coleman), 216 U.S. 1, 53, 30 S. Ct. 190, 54 L. Ed. 355 (1910) (Holmes, J. dissenting). The Court agrees with other courts in this district in holding that the authority to issue findings and recommendations obtains regardless of whether the matter is deemed core or non-core under Stern analysis.”). Sec. Investor Prot. Corp. v. Bernard L. Madoff Inv. Sec. LLC, 490 B.R. 46 (S.D.N.Y. 2013) (Rakoff, J.) (“Irving Picard (the “Trustee”), the trustee appointed under the Securities Investor Protection Act . . . to administer the estate of Bernard L. Madoff Investment Securities LLC (“Madoff Securities”), has filed hundreds of actions that seek to avoid transfers made by Madoff Securities on the ground that the transfers were fraudulent or preferential. Defendants in more than three hundred actions have moved based on Stern v. Marshall . . . to withdraw the reference of their cases to the Bankruptcy Court. They argue that the Bankruptcy Court lacks both constitutional and statutory authority to adjudicate the Trustee’s claims. . . . [T]he Court consolidated the motions to withdraw that relied on Stern for the purpose of resolving three issues: (1) whether the Bankruptcy Court may exercise the judicial power necessary to finally decide the Trustee’s avoidance actions; (2) whether, even if the Bankruptcy Court may not enter final judgment, it has authority to recommend proposed findings of fact and conclusions of law; and (3) whether the Court, in light of Stern, should withdraw the reference ‘for cause shown.’ . . . Having concluded that the Bankruptcy Court may not finally decide avoidance actions except conceivably in the process of resolving identical claims under § 502(d), the Court must now consider whether the Bankruptcy Court may 191

nonetheless hear the case in the first instance and recommend proposed findings of fact and conclusions of law, which the district court would then review de novo. . . . Section 157 [of Title 28] classifies matters as either ‘core proceedings,’ which the bankruptcy court may ‘hear and determine’ and on which the court ‘may enter appropriate orders and judgments,’ § 157(b)(1), or ‘non-core proceedings,’ which the bankruptcy court may hear, but for which the bankruptcy court is only empowered to submit proposed findings of fact and conclusions of law to the district court for de novo review, § 157(c)(1). . . . ‘Core proceedings include’ actions to avoid or recover both ‘preferences’ and ‘fraudulent conveyances.’ 28 U.S.C. § 157(b)(2)(F) & (H). The classification of avoidance actions as core raises the following issue: as a result of the subsequent decision in Stern, it is now clear that Article III prohibits the Bankruptcy Court from exercising in many instances the power that § 157 explicitly confers. Thus, the Court must therefore determine whether the Bankruptcy Court may ‘submit proposed findings of fact and conclusions of law’ with respect to avoidance actions even though § 157 does not explicitly empower it to do so. . . . Where a constitutional infirmity disrupts the operation of a statutory scheme, courts must seek to determine what Congress would have intended in light of the Court’s constitutional holding. . . Nonetheless, courts are not ‘free to rewrite the statutory scheme in order to approximate what we think Congress might have wanted had it known that [a particular provision] was beyond its authority.’ Seminole Tribe of Fla. v. Florida, 517 U.S. 44, 76, 116 S. Ct. 1114, 134 L. Ed. 2d 252 (1996). Here, the Court need not attempt to ‘approximate’ Congress’s intent because, as numerous courts have previously noted, the history and structure of § 157 indicate that Congress clearly wanted Bankruptcy Judges to finally adjudicate bankruptcy-related matters whenever Article III permitted them to do so, and to issue recommended findings subject to de novo review in the District Court whenever it did not. . . . Neither does the Court rewrite the statutory scheme by permitting the Bankruptcy Court to recommend proposed findings of fact and conclusions of law. Congress attempted to empower the Bankruptcy Court to ‘hear and determine’ avoidance actions. This grant of broad power necessarily conferred on bankruptcy courts the lesser power of issuing proposed findings of fact and conclusions of law. . . . While the Constitution prohibits Congress from giving the Bankruptcy Court the broad power it intended, that prohibition does not extend to the lesser, included power that Congress also conferred. Accordingly, the Court determines that, had Congress known that it could not empower bankruptcy courts to ‘hear and determine’ avoidance actions, it would have wanted those courts to exercise the lesser power it implicitly conferred on them to propose findings of fact and conclusions of law. . . . Stern in no way conflicts with this Court’s holding that Bankruptcy Courts are still free to issue proposed findings of fact and conclusions of law with respect to the initial avoidance actions. The Court has accepted that Congress categorized all avoidance actions as ‘core’ proceedings, asking instead what Congress would have intended had it known that it could not empower the Bankruptcy Court to finally decide such actions. This approach comports with the Supreme Court’s prior cases. . . . Simply put, the conclusion that Congress unavoidably exceeded its powers under the Constitution does not relieve the Court of its obligation to consider what Congress would have intended had it known of the relevant constitutional limitations. Moreover, as noted above, the Court’s interpretation of § 157 does not ‘rewrite’ the statute. Unlike the defendant’s interpretation of § 157 in Stern, the Court’s interpretation does not create a large class of cases for which ‘the statute provides no guidance,’ but instead only recognizes Congress’s intent to empower the Bankruptcy Court to issue proposed findings of fact and conclusions of law with respect to an avoidance action whenever it cannot enter final judgment.”).

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Rothrock v. PNC Bank, N.A. (In re Parco Merged Media Corp.), 489 B.R. 323 (D. Me. 2013) (Woodcock, J.) (“Concluding that 28 U.S.C. § 157 permits a bankruptcy judge to submit proposed findings of fact and conclusions of law in a core proceeding when the Constitution prohibits the entry of final judgment, the Court denies a motion to withdraw its reference to the Bankruptcy Court. . . . Mr. Rothrock contends that bankruptcy judges have no statutory authority to submit proposed findings of fact and conclusions of law in core proceedings. Accordingly, the argument goes, core proceedings that fall within Stern’s constitutional bar must be heard by a district judge in the first instance. Mr. Rothrock bases this argument on the language of 28 U.S.C. § 157, which expressly authorizes the submission of proposed findings of fact and conclusions of law in non-core proceedings. He argues that core proceedings are ‘statutorily ineligible for the report-and-recommendation procedure of § 157(c)(1),’ and contends that ‘federal law does not permit a solution to this quandary through a court-created ad hoc process that has no foundation in the Code or in Title 28.’ . . . Caselaw weighs heavily against the statutory gap argument. While recognizing that 28 U.S.C. § 157(b) does not explicitly authorize the submission of proposed findings of fact and conclusions of law in a core proceeding, the Ninth Circuit recently concluded that ‘the power to “hear and determine” a proceeding surely encompasses the power to hear the proceeding and submit proposed findings of fact and conclusions of law to the district court.’ Exec. Benefits Ins. Agency v. Arkison (In re Bellingham Insurance Agency, Inc.), 702 F.3d 553, 565 (9th Cir. 2012). . . . Most district and bankruptcy courts that have addressed the issue have reached the same conclusion.”). Advanced Telecomm. Network, Inc., v. Flaster/Greenberg, P.C. (In re Advanced Telecomm. Network, Inc.), 2014 WL 2528844 (M.D. Fla. June 4, 2014) (Artoon, J.) (“Even where a bankruptcy court lacks constitutional authority to enter final judgment on a claim, ‘it may submit proposed findings of fact and conclusions of law to this Court.’ Standing Order, Case No. 6:12–mc–26–Orl–22 (M.D. Fla. Feb. 22, 2012) (providing for submission of proposed findings of fact and conclusions of law by bankruptcy court to district court and for treatment by district court of bankruptcy court orders as proposed findings of fact and conclusions of law if district court determines that bankruptcy court exceeded its constitutional authority).”). Mukamal v. Stillwater Mkt. Neutral Fund II, L.P. (In re Palm Beach Fin. Partners, L.P.), 2013 WL 3490652 (S.D. Fla. July 8, 2013) (Marra, J.) (“[T]he Supreme Court limited, in at least one respect, the ability of bankruptcy courts to render final judgments. Nothing in the Stern decision, or any other decision, has limited the ability of bankruptcy courts to issue reports and recommendations in all matters that have been properly referred to the bankruptcy court.”). Dang v. Bank of Am., 2013 WL 1683820 (D. Md. Apr. 17, 2013) (Bennett, J.) (“A majority of courts considering this issue in Stern’s wake have concluded that a bankruptcy court has the power to submit proposed findings of fact and conclusions of law on claims for which they cannot issue final judgments. . . . This Court agrees with the majority of courts finding that a bankruptcy court can submit findings and conclusions where it otherwise cannot hear and decide a case. . . . [T]his majority practice coheres with the Supreme Court’s assertion that its holding in Stern would not ‘meaningfully change[] the division of labor in the current statute.’ 131 S. Ct. at 2620. For these reasons, this Court finds that while Article III prohibited the Bankruptcy Court’s order of dismissal

193

of the Adversary Proceeding, that order may still be treated as proposed findings of fact and conclusions of law under 28 U.S.C. § 157(c)(1).”). Kramer v. Mahia, 2013 WL 1629254 (E.D.N.Y. Apr. 15, 2013) (Hrhzarry, J.) (“[T]he adversary proceeding does not fall within any of the Stern exceptions and the Bankruptcy Court may not enter a final decision. . . . However, courts in this circuit have held that the Bankruptcy Court may nonetheless hear the case in the first instance and recommend proposed findings of fact and conclusions of law . . . .”). Nisselson v. Salim, 2013 WL 1245548 (S.D.N.Y. Mar. 25, 2013) (Gardephe, J.) (“Although the Bankruptcy Court lacks constitutional authority to enter a final decision [on the trustee’s preference and fraudulent transfer claims], it may still hear the case in the first instance and recommend proposed findings of fact and conclusions of law.”). David Cutler Indus., Ltd. v. Bank of Am. (In re David Cutler Indus., Ltd.), 502 B.R. 58 (Bankr. E.D. Pa. 2013) (Frank, J.) (“[I]n the event that it is determined that the bankruptcy court lacks the authority to enter a final judgment in this proceeding, this Opinion should be treated as proposed findings of fact and conclusions of law. See In re Scheffler, 471 B.R. 464 (Bankr. E.D. Pa. 2012); see also In re Universal Mktg., Inc., 459 B.R. 573, 576–77 (Bankr. E.D. Pa. 2011) (even if bankruptcy court lacks constitutional authority to enter final judgment in matter designated by Congress as “core,” court nonetheless has subject matter jurisdiction and may enter proposed findings of fact and conclusions of law). Contra Wellness Int’l Network, 727 F.3d at 776–77 (if bankruptcy court lacks constitutional authority to enter final judgment in matter designated by Congress as “core,” there is no statutory authority for bankruptcy court to enter proposed findings of fact and conclusions of law).”). Olsen v. Reuter (In re Reuter), 499 B.R. 655 (Bankr. W.D. Mo. 2013) (Dow, J.) (“[T]he [In re Cedar Funding, Inc., 2012 WL 3309683 (N.D. Cal. 2012] court agreed with the majority view on this issue: even if Stern prohibits a bankruptcy court from entering a final judgment in a particular statutorily core proceeding, the bankruptcy court may still hear the proceeding and submit proposed findings to the district court. See In re Bellingham Ins. Agency, Inc., 702 F.3d 553, 565–66 (9th Cir. 2012); see also, In re Mamtek US, Inc., 2013 WL 4602657, at *1 n.1 (Bankr. W.D. Mo. 2013) and cases cited therein. This Court also agrees with that view and does not believe, as Debtor urges, that this would be ‘a singular waste of time and money.’ This Court believes that it can in fact enter final judgment in a declaratory judgment action but even if it could not, the proposed findings of fact it would send to the district court would lessen the time and effort required by that court.”). Still v. Hopkins (In re Hopkins), 494 B.R. 306 (Bankr. E.D. Tenn. 2013) (Rucker, J.) (“[T]he Chapter 7 trustee filed the complaint in this adversary proceeding against the Defendant and her three siblings. The Complaint does not assert any claims against the Debtor herself, only her four children. It seeks to avoid the transfer that divided the Debtor’s fee interest in the real property into a life estate and a remainder interest pursuant to 11 U.S.C. § 544 and [the Tennessee UFTA] . . . . The Defendant raises several arguments regarding why this court should dismiss this adversary proceeding. The first issue raised is this court’s jurisdiction over the Plaintiff’s claims. The Defendant relies on Stern v. Marshall and Granfinanciera, S.A. v. Nordberg in support of her 194

argument that this court does not have jurisdiction to decide this preference and/or fraudulent transfer matter. . . . Many courts have addressed whether bankruptcy courts have jurisdiction over preference actions and fraudulent transfer actions following the Supreme Court’s ruling in Stern. Some courts find jurisdiction, some do not, and some address the issue, but decline to rule one way or the other. See, e.g., Burtch v. Seaport Capital, LLC (In re Direct Response Media), 466 B.R. 626 (Bankr. D. Del. 2012) (discussing the broad range of views taken by various courts interpreting Stern). . . . Both parties agreed that based on the Waldman [v. Stone, 698 F.3d 910 (6th Cir. 2012)] decision, even if the court does not have constitutional authority to issue a final judgment regarding the Trustee’s fraudulent transfer claim, this court can issue proposed findings of fact and conclusions of law as the decision in Waldman made clear . . . . Therefore, this court concludes that even if it does not have jurisdiction over the Trustee’s fraudulent transfer action, the court can recast its decision as proposed findings of fact and conclusions of law, if necessary. The court will thus proceed to issue a ruling on the merits of the Defendant’s motion to dismiss.”). Carr v. Loeser (In re Int’l Auction & Appraisal Servs. LLC), 493 B.R. 460 (Bankr. M.D. Pa. 2013) (France, J.) (“The Trustee is seeking to avoid certain [alleged fraudulent] transfers made to Defendants before Debtor filed its bankruptcy petition. . . . Neither Defendant has filed a proof of claim in Debtor’s bankruptcy case . . . . Having determined that I do not possess the constitutional authority to enter final judgment in this proceeding, I must consider whether I am authorized to issue proposed findings of fact and conclusions of law for consideration by the District Court. . . . There is no explicit authority to submit findings of fact and conclusions of law when the issues to be decided are core. . . . [L]itigants have argued that a bankruptcy court may not render a final decision or issue proposed findings of fact and conclusions of law when it lacks the constitutional authority to decide a core matter. . . . In [Exec. Benefits Ins. Agency v. Arkison (In re] Bellingham [Ins. Agency, Inc.), 702 F.3d 553, 561 (9th Cir. 2012)], the Ninth Circuit observed that 28 U.S.C. § 157(b)(2) was intended to expand the jurisdiction of bankruptcy courts as far as the Constitution would permit. In re Bellingham, 702 F.3d at 565 (citations omitted). Bankruptcy courts may ‘hear and determine all cases under title 11 and all core proceedings arising under title 11, or arising in a case under title 11.’ 28 U.S.C. § 157(b)(1). Bankruptcy courts may ‘hear’ a non-core proceeding and submit proposed findings of fact and conclusions of law to the district court, which will enter final judgment after de novo review. 28 U.S.C. § 157(c)(1). As noted by the Ninth Circuit, ‘the power to “hear and determine” a proceeding surely encompasses the power to hear the proceeding and submit proposed findings of fact and conclusions of law.’ In re Bellingham, 702 F.3d at 565. These provisions suggest that ‘Congress wanted Bankruptcy Judges to finally adjudicate bankruptcy-related matters whenever Article III permitted them to do so, and to issue recommended findings subject to de novo review in the District Court whenever it did not.’ Adelphia Recovery Trust v. FLP Grp., Inc., No. 11 Civ. 6847(PAC), 2012 WL 264180, at *6 (S.D.N.Y. Jan. 30, 2012) (quoting In re Coudert Bros. LLP, App. Case No. 11–2785(CM), 2011 WL 5593147, at *13 (S.D.N.Y. Sept. 23, 2011)). Most district and bankruptcy courts addressing this issue have held that bankruptcy courts have implied authority to issue findings of fact and conclusions of law in core proceedings. See Rothrock v. PNC Bank (In re Parco Merged Media Corp.), 489 B.R. 323, 325–26 (D. Maine 2013) (collecting cases). I join these courts and conclude that I may hear the Trustee’s Amended Complaint and issue findings of fact and conclusions of law.”).

195

British Am. Ins. Co. Ltd. v. Fullerton (In re British Am. Ins. Co. Ltd.), 488 B.R. 205 (Bankr. S.D. Fla. 2013) (Kimball, J.) (“After the Supreme Court issued its opinion in Stern v. Marshall . . . the question arose whether the bankruptcy court was powerless to issue proposed findings of fact and conclusions of law in proceedings that while labeled core are nonetheless beyond the ability of the bankruptcy court to enter final orders. The better reasoned opinions reach the conclusion that the bankruptcy court may submit proposed findings of fact and conclusions of law in such cases.”). Settlers’ Housing Serv., Inc. v. Schaumburg Bank & Trust Co., N.A. (In re Settlers’ Housing Serv., Inc.), 2014 WL 2986107 (Bankr. N.D. Ill. June 30, 2014) (Schmetterer, J.) (“Since some Adversary Proceeding counts are counterclaims by the estate, the statute provides that they are core, § 157(b)(2)(C), but Article III of the Constitution may not allow entry of final judgment by a bankruptcy judge. Stern, [131 S. Ct.] at 2618. Recently, a Seventh Circuit panel ruled that the bankruptcy has no statutory authority to do anything in those cases. Wellness Intern. Network, Ltd. v. Sharif, 727 F.3d 751, 772 (7th Cir. 2013). In Executive Benefits Insurance Agency v. Arkison, the Supreme Court abrogated that result in Wellness when holding that when a matter is core, but there is no authority for a bankruptcy judge to enter final judgment (calling such matters “Stern claims”), that matter may be treated as non-core within the meaning of § 157(c). Executive Benefits Ins. Agency v. Arkison, 12–1200 at *9 (June 9, 2014). Here, the counts asserting counterclaims are ‘related to’ the bankruptcy case because they seek to bring property into the estate for distribution to creditors. Id. at *11. Therefore, even though a bankruptcy may not enter a final judgment or order, a bankruptcy judge may ‘hear’ such a proceeding. § 157(c)(1).”) Brandt v. Charter Airlines, LLC (In re Equip. Acquisition Res., Inc.), 2014 WL 2746708 (Bankr. N.D. Ill. June 18, 2014) (Cassling, J.) (“This matter is brought by the Plan Administrator under 11 U.S.C. § 548 to avoid an alleged fraudulent conveyance made to Charter Airlines. Charter Airlines filed an answer and jury demand . . . . Charter Airlines has not filed a proof of claim in the bankruptcy case or otherwise consented to the jurisdiction of the bankruptcy court to issue a final judgment against it. . . . In Stern v. Marshall, 131 S. Ct. 2594 (2011), the Supreme Court . . . h[eld] that only Article III judges possess the constitutional authority to issue final orders or judgments in proceedings in certain types of lawsuits, including those to recover alleged fraudulent conveyances. Several courts of appeal, . . . [have] rul[ed] that bankruptcy courts also lack the statutory authority to issue recommended findings of fact and conclusions of law in fraudulent conveyance actions. The reasoning behind these opinions is that the statute only gives the bankruptcy courts the authority to issue proposed findings of fact and conclusions of law in ‘noncore’ proceedings, and fraudulent conveyance actions are statutorily defined as ‘core’ proceedings. In circuits adopting this reasoning, therefore, fraudulent conveyance actions fell into a gap in which the bankruptcy court lacked the ability to proceed at all. . . . Recently, the United States Supreme Court addressed this ‘gap’ issue, interpreting 28 U.S.C. § 157 as permitting fraudulent conveyance claims to proceed as noncore claims even though the statute itself lists them as core claims. Exec. Benefits Ins. Agency v. Arkison, No. 12–1200, 2014 WL 2560461 (U.S. June 9, 2014). As a result, the decision in Arkison enables bankruptcy courts to issue proposed findings of fact and conclusions of law in suits to recover alleged fraudulent conveyances. . . . Because this is a fraudulent conveyance action, the Court will proceed as though it is a noncore matter within the meaning of 28 U.S.C. § 157(c)(1). Accordingly, the Court will enter proposed findings of fact and conclusions of law.”).

196

McCarthy v. Giron (In re C & C Gen. Builders, Inc.), 2013 WL 8632105 (Bankr. E.D. Va. Nov. 18, 2013) (Mayer, J.) (“This case was before the court on September 19, 2013 for a trial on the chapter 7 trustee’s complaint. Count I [of the complaint] seeks to avoid a fraudulent transfer under 11 U.S.C. § 548. . . . This is a core proceeding under 28 U.S.C. § 157(b)(2)(H) but subject to Stern v. Marshall . . . . The defendants do not consent to the bankruptcy court entering a final judgment. In accordance with McCarthy v. Wells Fargo Bank, N.A. (In re El–Atari), 2011 WL 5828013 (E.D. Va. Nov. 18, 2011), the bankruptcy court submits its proposed findings of fact and conclusions of law.”). Silagy v. Morris (In re Morris), 2013 WL 5705630 (Bankr. N.D. Ohio Oct. 18, 2013) (Kendig, J.) (“Trustee has moved for summary judgment against Defendant on the theory that the transfer of the Real Estate in the Divorce Agreement was a fraudulent transfer as recognized by § 544 of the United States Bankruptcy Code or § 1336.04 of the Ohio Revised Code. However, before reaching the merits of the fraudulent conveyance claim, this court must first determine whether it has the jurisdictional power to enter a final order, propose findings of fact and conclusion[s] of law to the district court, or neither. . . . If the claim were noncore, the bankruptcy judge may hear the proceeding and ‘submit proposed findings of fact and conclusions of law to the district court, and any final order or judgment shall be entered by the district judge after considering the bankruptcy judge’s proposed findings and conclusions [of law].’ 28 U.S.C. § 157(c)(1). However, for core proceedings, a bankruptcy judge ‘may hear and determine . . . all core proceedings arising under [the bankruptcy code].’ Id. § 157(b)(1). The combination of the statutory language and the Supreme Court’s decision in Stern leaves a ‘gap’ in the bankruptcy code. . . . To resolve this ‘gap,’ this court holds that a bankruptcy court is able to propose findings of fact and conclusions of law to the district court in core matters where the bankruptcy judge is constitutionally prohibited from entering a final judgment. The court so finds for the following reasons. First, when Congress created a non-exhaustive list of core matters within 11 U.S.C. § 157(b)(2), it was done ‘with a view towards expanding the bankruptcy court’s jurisdiction to its constitutional limit.’ Duck v. Munn (In re Mankin), 823 F.2d 1296, 1301 (9th Cir. 1987). Therefore, ‘the bankruptcy courts must be vested with as much adjudicatory power as the Constitution will bear.’ In re Bellingham, 702 F.3d at 565. The statute gives a bankruptcy judge the power to ‘hear and determine’ core matters, and based on the statutory objective of expansive jurisdiction, the greater power to ‘hear and determine’ must include the lesser power to submit information to the district court. Id. Second, according to the Supreme Court, Stern ‘did not change all that much.’ 131 S. Ct. at 2620. The Supreme Court noted that the removal of certain types of claims from a bankruptcy judge will not ‘meaningfully change[] the division of labor’ in federal courts. Id. at 2620. However, removing a bankruptcy judge’s ability to entertain claims outside his constitutional authority, and then submit his findings to the district court, would significantly increase the district court’s work. See In re Bellingham, 702 F.3d at 566. For example, if a bankruptcy judge obtains significant legal and factual information about a state law counterclaim over the course of a bankruptcy proceeding (as in Stern), not allowing that information to be passed to the district court would require additional fact finding and legal research, which would increase the district court’s workload. Therefore, the Stern court was not prohibiting the bankruptcy court from hearing and proposing findings to the district court, but instead only from entering final judgments. . . . Most courts to reach the ‘gap’ issue have ultimately decided that the bankruptcy court is able to submit proposed findings of fact and conclusions of law to the district court. . . . Therefore, on issues that are core to the bankruptcy case but a bankruptcy judge cannot 197

constitutionally enter final judgment, the bankruptcy court may propose findings of fact and conclusions of law to the district court for de novo review and the district court may ‘accept, reject, or modify the proposed findings of fact or conclusions of law, receive further evidence, or recommit the matter to the bankruptcy judge with instructions.’ Fed. R. Bankr. P. 9033(d).”). British Am. Isle of Venice Ltd. v. Fullerton (In re British Am. Ins. Co.), 2013 WL 211336 (Bankr. S.D. Fla. Jan. 18, 2013) (Kimball, J.) (“After the Supreme Court issued its opinion in Stern v. Marshall, there was for a short time some confusion as to how the bankruptcy court should address a proceeding that is statutorily defined as ‘core’ but that involves a matter in which the bankruptcy court may not enter a final order, absent consent of the parties, as such order would exceed the bankruptcy court’s constitutional power. 28 U.S.C. § 157(c)(1) and the related Fed. R. Bankr. P. 9033 address only non-core matters, not matters specifically defined by Congress as core. And so the question arose whether the bankruptcy court was powerless to enter proposed findings of fact and conclusions of law in proceedings that while labeled core are nonetheless beyond the power of the bankruptcy court to enter final orders. The better reasoned opinions reach the conclusion that the bankruptcy court may submit proposed findings of fact and conclusions of law in such cases.”).

E.

DEFAULT JUDGMENTS

Ariston Props., LLC v. Messer (In re FKF3, LLC), 501 B.R. 491 (S.D.N.Y. 2013) (Ramos, J.) (The trustee of liquidating trust (“Trustee” or “Appellee”) established under the debtor’s confirmed plan filed an adversary proceeding against maker (“GMR”) and guarantors (“Ricci” and “Roncati”) of a $1.5 million promissory note (“Note”) issued to the debtor. “Contemporaneously with the execution of the Note, both Ricci and Roncati executed Guarantees of GMR’s obligation under the Note. Pursuant to the Guarantees, Ricci and Roncati ‘jointly and severally, absolutely, irrevocably and unconditionally guarantee[d] to [Debtor] the full, prompt and unconditional payment of the [Loan].’ Additionally, Roncati and Ricci each pledged their membership interests in Ariston [Properties, LLC (“Ariston”)] and GMR, respectively, to the Debtor as additional security for GMR’s obligations under the Note. . . . The Complaint states claims against Appellants [Ariston and Roncati] for breach of contract based upon Appellants’ alleged breach of the Note and the Guarantees and for turnover of property of the estate pursuant to 11 U.S.C. § 542(b) for the amounts due under the Note. . . . [A] summons was issued by the Bankruptcy Court with respect to the Complaint. . . . [N]o answer or response was filed [by the response] date. Accordingly, the Trustee filed a request for entry of default against all defendants, which the Clerk of Court entered on September 6, 2012. . . . On September 5, 2012, the Trustee requested that another summons be issued. The new summons (the “Second Summons”) was issued by the Clerk’s Office, and on September 10, 2012, GMR, Ricci, Ariston and Roncati were re-served at different addresses. Again, none of the defendants timely responded to the Second Summons and Complaint by the October 9, 2012 deadline. Thereafter, the Trustee requested that a second default be entered against GMR, Ricci, Ariston and Roncati. In response, the Clerk’s office advised the Trustee that the defaults previously entered against defendants were valid and that the entry of additional defaults was unnecessary. . . . On November 15, 2012, the Trustee filed a Motion for Default Judgment, which was served upon all defendants at all addresses previously utilized by the Trustee for service. None 198

of the defendants filed a response to the motion by the December 10, 2012 deadline. On December 21, 2012, Ricci filed an objection, and on December 26, 2012, Roncati filed an objection on behalf of himself and Ariston. As the clerk entered defaults against Appellants pursuant to Fed. R. Civ. P. 55(a), the Bankruptcy Court treated Appellants’ objection as a motion to vacate entry of default pursuant to Fed. R. Civ. P. 55(c), which states that ‘[t]he court may set aside an entry of default for good cause.’ . . . After a hearing on January 8, 2013, the Bankruptcy Court issued the Memorandum Decision on March 13, 2013 and an Order Directing the Entry of Default Judgments Against Defendants on March 21, 2013 (“Default Judgment Order”). Thereafter, on April 8, 2013, the Bankruptcy Court issued an Order denying Appellants’ motion for reargument and on April 19, 2013, the Bankruptcy Court issued an Order denying Appellants’ motion for a stay pending appeal . . . . Appellee appears to concede that the claims in the adversary Complaint involve ‘private’ rights. Indeed, Appellee’s entire argument with respect to the adjudicative authority of the Bankruptcy Court centers on whether Appellants ‘impliedly consented’ to entry of the default judgment by the Bankruptcy Court. Accordingly, as the parties agree that the claims at issue are not within the adjudicative authority of the Bankruptcy Court, the preliminary issue before this Court is whether Appellants consented to the Bankruptcy Court’s final adjudication of the claims. If Appellants did consent, the appeal should proceed under 28 U.S.C. § 158(a)(1), which gives the Court power to hear appeals from ‘final’ orders. . . . If Appellants did not consent to final adjudication by the Bankruptcy Court, however, then the Default Judgment Order should be vacated, and Judge Morris’s ‘final’ determinations in the Memorandum Decision treated as recommendations under § 157(c)(1) and reviewed de novo by this Court. . . . Appellee concedes—and a review of the record confirms—that Appellants did not expressly consent to the Bankruptcy Court’s entry of a final order on Appellee’s claims. Rather, Appellee argues that Appellants impliedly consented to entry of a final order by a bankruptcy judge by failing to respond to the properly served summons and complaint. In support of its argument, Appellee cites to In re Oldco M. Corp., 484 B.R. 598 (Bankr. S.D.N.Y. 2012). In that case, the bankruptcy court held that ‘[w]here a summons and complaint have been properly served and the defendant has failed to respond . . . the defendant’s actions, or lack thereof . . . constitute implied consent to the entry of a default judgment by a bankruptcy judge. The answer is the same whether the claims asserted in the adversary complaint are core, non-core, or core but for which only an Article III judge may enter a final order or judgment consistent with the U.S. Constitution absent consent.’ Id. at 614. Here, Appellants failed to respond to the Complaint. However, they filed an opposition to the Trustee’s motion for default judgment and appeared at the hearing on the motion. Moreover, although Appellants did not raise the issue of the Bankruptcy Court’s adjudicative authority in their opposition to the motion for default judgment, they did raise the argument to the Bankruptcy Court in their motion for reargument. The defendant in Oldco M. Corp., on the other hand, did not file a response to the complaint or the Trustee’s motion for default judgment or appear at the hearing on the motion. Oldco M. Corp., 484 B.R. at 600–01. Accordingly, based on the narrow facts of the case, the bankruptcy court in Oldco M. Corp. made clear that it was not deciding ‘whether or when a bankruptcy judge may order entry of a final default judgment other than as a result of a defendant’s failure to respond to the adversary complaint.’ Id. at 601 n.3 (emphasis added). Indeed, in deciding the issue, the bankruptcy court reviewed recent post-Stern decisions of district courts within this Circuit which recognize that implied consent continues to be a ‘proper basis for upholding the exercise of authority of a bankruptcy judge to enter a final order or judgment,’ but that ‘implied consent should not be easily found.’ Id. at 606, 609 (emphasis added). Accordingly, as Appellants appeared in the adversary 199

proceeding and ultimately raised the issue of the Bankruptcy Court’s authority to issue the default judgments during the course of that proceeding, the Court finds that the Oldco M. Corp. decision is distinguishable from the facts at issue here. . . . Most litigants who have been found by courts within this Circuit to have impliedly consented to final adjudication by the bankruptcy judge failed to object during any of the ‘extensive proceedings’ before the bankruptcy court or in their appeal of the bankruptcy court’s final order or judgment to the district court. . . . Here, Appellants did not participate in ‘extensive proceedings’ before raising the issue of the Bankruptcy Court’s authority to issue a final judgment. Rather, Appellants raised the issue in their motion for reconsideration after their first and only appearance before the Bankruptcy Court, as well as before this Court on their appeal. In light of the ‘strict’ test for a finding of consent, the Court finds that Appellants did not impliedly consent to the Bankruptcy Court’s entry of the default judgments at issue. Accordingly, the Default Judgment Order is vacated, and Judge Morris’s findings in the Memorandum Decision are treated as recommendations under § 157(c)(1) and reviewed de novo by this Court.”). Langeland v. Cadwallader (In re Wickard), 2013 WL 1737360 (Bankr. W.D. Mich. Mar. 20, 2013) (Dales, J.) (“T]he Plaintiff [Chapter 7 trustee] filed a Complaint styled as one to recover property of the estate. The Plaintiff alleged that, as of the petition date, the Defendants owed $184,088.40 to the Debtor, Wayne Gayle Wickard (the “Debtor”), under the terms of a Member Interest Purchase Agreement, for the Debtor’s 25% interest in Western Star Transportation, LLC. . . . I determined that the Complaint, although allegedly a core proceeding, actually seeks to liquidate a contract claim based on State-created rights formerly held by the Debtor but now included within the property of the bankruptcy estate under 11 U.S.C. § 541. The Supreme Court in Northern Pipeline Constr. Co. v. Marathon Pipe Line Co., 485 U.S. 50, 102 S. Ct. 2858 (1982), held that the adjudication of such claims, in the absence of consent of the parties, falls within ‘the judicial power’ that may be exercised only by a court with the ‘essential attributes’ of federal judicial power prescribed in Article III of the United States Constitution. Although it is conceivable that a court might treat the Defendants’ default in answering the Complaint as tantamount to consent to entry of judgment by a non-Article III judicial officer, basing a final judgment of the Bankruptcy Court on such implied consent presents a risk of later collateral attack on the judgment. In contrast, if the District Court adopts my recommendation, the District Court’s resulting judgment will be unquestionably final and beyond collateral attack under Stern or Marathon Pipe Line, supra at 3. Given the relatively simple procedure under Fed. R. Bankr. P. 9033, the modest delay associated with that rule, and the benefit of protecting federal judgments against collateral attack, I recommend that the District Court, rather than the Bankruptcy Court, enter final judgment.”). Hackman v. Fountain Grp. Cos. (In re Hackman), 2013 WL 343714 (Bankr. E.D. Va. Jan. 29, 2013) (Kenney, J.) (“This matter comes before the Court on the Plaintiffs’ Motion for Default Judgment against [the] Defendants . . . . This is a non-core, or related proceeding, as it involves the collection of pre-petition debts owed to the Debtor, which is to say, claims that do not depend on the bankruptcy for their existence and that could have been brought in a non-bankruptcy forum absent the bankruptcy filing. . . . The Trustee’s claims in McCarthy [v. Wells Fargo Bank, N.A. (In re El–Atari), . . . 2011 WL 5828013 (E.D. Va. Nov. 18, 2011)] were core proceedings under 28 U.S.C. § 157(b) and 11 U.S.C. § 548, but over which an Article I Bankruptcy Judge lacked the power to enter a final, money judgment. Id. This case, on the other hand, involves exclusively 200

non-core claims. The principle, however, is the same—absent the consent of the parties (which the Court is unwilling to infer in a default situation), the Court is statutorily required to make a report and recommendation to the District Court, as opposed to entering a final judgment against the Defendants. . . . The contours of the consent doctrine in this area of the law are not well defined. It appears to the Court that something more than just not showing up is required. See Commodity Futures Trading Comm’n v. Schor, 478 U.S. 833 (1986) (“Schor indisputably waived any right he may have possessed to the full trial of Conti’s counterclaim before an Article III court. Schor expressly demanded that Conti proceed on its counterclaim in the reparations proceeding rather than before the District Court . . . and was content to have the entire dispute settled in the forum he had selected until the ALJ ruled against him on all counts; it was only after the ALJ rendered a decision to which he objected that Schor raised any challenge to the CFTC’s consideration of Conti’s counterclaim”); Stern v. Marshall, ––– U.S. ––––, 131 S. Ct. 2594 (2011) (“Given Pierce’s course of conduct before the Bankruptcy Court, we conclude that he consented to that court’s resolution of his defamation claim (and forfeited any argument to the contrary)”); In re Bellingham Ins. Agency, Inc., 702 F.3d 553, 2012 WL 6013836 (9th Cir. 2012) (“EBIA did not raise a constitutional objection to the bankruptcy court’s entry of final judgment in favor of the Trustee until after the briefing in this appeal was complete, when it filed a motion to vacate the bankruptcy court’s judgment on the eve of oral argument. Because EBIA waited so long to object, and in light of its litigation tactics, we have little difficulty concluding that EBIA impliedly consented to the bankruptcy court’s jurisdiction.”); Moyer, Trustee v. Koloseik (In re Sutton), 470 B.R. 462 (W.D. Mich. 2012) (“Waiver is in fact synonymous with consent. It ordinarily means ‘an intentional relinquishment or abandonment of a known right or privilege.’” (quoting Johnson v. Zerbst, 304 U.S. 458, 464 (1938))). But see In re Oldco M Corp., 2012 WL 6625324 (Bankr. S.D.N.Y. 2012) (finding implied consent in default judgment situation).”).

F.

DISPOSITIVE MOTIONS

Goodman v. H.I.G. Capital, LLC (In re Gulf Fleet Holdings, Inc.), 491 B.R. 747 (Bankr. W.D. La. 2013) (Summerhays, J.) (“[T]he court concludes that it has authority to enter an order on the Motion to Dismiss under Stern v. Marshall . . . . Courts have held that an order denying a motion to dismiss in part, and granting leave to re-plead is not a final order within the meaning of Stern v. Marshall. See In re Pompa, 2012 WL 2571156, at *1 (Bankr S.D. Tex. June 29, 2012); In re Noram Resources, Inc., 2011 WL 6936361, at *1 (Bankr. S.D. Tex. Dec. 30, 2011); In re TMG Liquidation Co., 2012 WL 4467553, at *2 (Bankr. D.S.C. Sept. 26, 2012).”). British Am. Isle of Venice Ltd. v. Fullerton (In re British Am. Ins. Co.), 2013 WL 211336 (Bankr. S.D. Fla. Jan. 18, 2013) (Kimball, J.) (“An order denying a motion to dismiss or motion for summary judgment is not a final order and likely is not subject to the concerns addressed in Stern v. Marshall. . . . But an order dismissing an action with prejudice or granting summary judgment in full is a final order.”).

201

G.

INTERLOCUTORY ORDERS/HANDLING PRETRIAL MATTERS

Sharp v. Segal & Kirby, LLP (In re SK Foods, L.P.), 2013 WL 5494071 (E.D. Cal. Oct. 1, 2013) (Karlton, J.) (“In [Executive Benefits Ins. Agency v. Arkison (In re] Bellingham [Ins. Agency, Inc.), 702 F.3d 553, 556 (9th Cir. 2012)], the Ninth Circuit, faced with the same situation confronting this court—a fraudulent transfer (or “conveyance”) case brought by the Trustee under Section 548 against a non-claimant of the bankruptcy estate—held that the Bankruptcy Court lacked ‘[o]nly the power to enter final judgment.’ Bellingham, 702 F.3d at 566. Accordingly, in Bellingham, the Ninth Circuit found that the Bankruptcy Court was permitted to ‘hear’ the claim, and to then submit proposed findings and recommendations to the district court for its de novo review. Bellingham, 702 F.3d at 565. It would appear then, that the Bankruptcy Court may conduct pretrial proceedings, even though it may not conduct the trial itself.”). Heller Small Bus. Lending Corp. v. Smead (In re O’Hanneson), 2013 WL 655158 (N.D. Cal. Feb. 21, 2013) (Davila, J.) (“O’Hanneson’s ‘core’ cross-claims are not ‘necessarily resolvable by a ruling on the creditor’s proof of claim in bankruptcy.’ Stern, 131 S. Ct. at 2611. For this reason, it is entirely possible that some tribunal other than the Bankruptcy Court will need to enter judgment on Heller’s claims and on O’Hanneson’s cross-claims. . . . Here, as described above, there are ‘core’ claims intertwined with ‘non-core’ claims, some of which are subject to a jury trial. And a portion of these claims, if not a majority of them, cannot be finally resolved by the Bankruptcy Court. It is therefore inevitable that, at some point, the reference will need to be withdrawn. . . . The question has become one of timing. This is true because ‘[a] valid right to a Seventh Amendment jury trial in the district court does not mean the bankruptcy court must instantly give up jurisdiction and that the action must be transferred to the district court.’ In re Healthcentral.com, 504 F.3d 775, 788 (9th Cir. 2007). ‘Instead . . . the bankruptcy court may retain jurisdiction over the action for pretrial matters.’ Id.”). In re Ritchey, 2013 WL 3089047 (Bankr. S.D. Tex. June 18, 2013) (Bohm, J.) (After receiving their discharge, the debtors filed a motion to reopen their Chapter 7 case in order to (1) remove a state court action in which a creditor sought to collect an unscheduled debt and (2) obtain an order from the bankruptcy court imposing sanctions for the creditor’s alleged violation of the discharge injunction. Addressing its constitutional authority to adjudicate the motion, the court stated: “For the purposes of ruling on the Motion to Reopen, this Court concludes that the issue of the constitutional authority of a bankruptcy court to enter a final order, as articulated in Stern v. Marshall, is not yet a concern. The Motion to Reopen does not entail a final order, so Stern does not apply. Here, all that is being requested is for this Court to reopen this Chapter 7 case. The litigation between the Debtors and the Creditor will certainly not be over. Indeed, it will just be beginning in this Court.” Hernandez v. Hernandez (In re Hernandez), 2013 WL 705351 (Bankr. S.D. Tex. Feb. 25, 2013) (Isgur, J.) (“Stern however did not alter a bankruptcy court’s authority to enter interlocutory orders, or its power to entertain all pretrial proceedings.”).

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VII. JUDGMENTS ENTERED PRE-STERN Lee v. Christenson, 558 F. App’x 674 (7th Cir. 2014) (Bauer, J.; Manion, J.; Rovner, J.) (“After Nikki Lee filed for bankruptcy, Leland Christenson (one of his creditors) initiated an adversary proceeding against him based on a state-law claim of fraud. The bankruptcy judge determined the size of the debt, ruled that it was nondischargeable, and entered a money judgment against Lee. More than two years later, Lee moved under Federal Rule of Civil Procedure 60(b)(4) to reopen the case, arguing that the Supreme Court’s decision in Stern v. Marshall rendered the judgment void. . . . Lee . . . then moved under Federal Rule of Civil Procedure 60(b)(4)—made applicable to bankruptcy proceedings by Bankruptcy Rule 9024—to vacate the bankruptcy court’s judgment on Christenson’s state-law claim. He contended that the judgment was void under Stern. Stern held that a bankruptcy court has no constitutional authority to decide a debtor’s state-law counterclaim against a creditor if ruling on the creditor’s proof of claim does not also resolve the counterclaim. Under Stern, Lee argued, the bankruptcy court should not have resolved Christenson’s fraud claim when it determined the claim’s dischargeability; the fraud claim, he contended, should have been litigated in state court. The bankruptcy court denied the motion, concluding that Stern had no bearing on a bankruptcy court’s authority to decide a state-law claim when also deciding its dischargeability. . . . Lee appealed this decision to the district court, which affirmed the bankruptcy court’s decision. The district court observed that the judgment against Lee would be void only if there were no arguable basis for the bankruptcy court’s authority to enter its judgment. But, the court pointed out, this circuit’s pre-Stern precedent permitted a bankruptcy court to enter judgment on a creditor’s state-law claim when determining the dischargeability of a debt, see In re Hallahan, 936 F.2d 1496, 1508 (7th Cir. 1991), and Stern did not expressly overrule this precedent. Therefore, the court concluded, the bankruptcy court had arguable jurisdiction. . . . On appeal, Lee maintains that, under Stern, the bankruptcy court lacked the authority to enter the money judgment against him, but for two reasons we agree with the district court that the judgment must stand. First, when a party uses Rule 60(b)(4) to collaterally attack a judgment as void because of a jurisdictional defect, relief is available ‘only for the exceptional case in which the court that rendered judgment lacked even an “arguable basis” for jurisdiction.’ United Student Aid Funds, Inc. v. Espinosa, 559 U.S. 260, 271 (2010); see United States v. Tittjung, 235 F.3d 330, 335 (7th Cir. 2000) (“Only when the jurisdictional error is ‘egregious’ will courts treat the judgment as void.”). Stern limits a bankruptcy court’s power to decide a debtor’s state-law counterclaim against a creditor when resolving the creditor’s proof of claim. But it is unclear whether Stern also restricts a bankruptcy court’s power to resolve a creditor’s state-law claim when the court decides whether that claim is nondischargeable. Without clarity on that issue, the bankruptcy court had at least arguable jurisdiction to decide Christenson’s state-law claim, and the district court correctly ruled that the judgment is not void. . . . Second, even if Stern concerned the issue in this case, Lee does not explain how the Court’s decision—rendered a year after the close of Lee’s bankruptcy case and adversary proceeding—could apply retroactively to the judgment here. ‘[R]elief under Rule 60(b) is proper only under extraordinary circumstances,’ and ‘legal developments after a judgment becomes final do not qualify as extraordinary.’ Hill v. Rios, 722 F.3d 937, 938 (7th Cir. 2013); see Shah v. Holder, 736 F.3d 1125, 1127 (7th Cir. 2013) (“District courts cannot use Rule 60(b)(6) to apply new decisions retroactively to closed civil cases.”). As the district court correctly observed and as Lee does not contest, the bankruptcy court’s exercise of jurisdiction was correct at the time of its decision. See In re Hallahan, 936 F.2d at 1508. 203

If Lee disagreed with that exercise of jurisdiction, his remedy was to appeal directly—as the litigants in Stern did. Accordingly, the court properly denied Lee’s motion for this reason as well.”).

VIII. MISCELLANEOUS Marshall v. Picard (In re Madoff Inv. Sec. LLC), 740 F.3d 81 (2d Cir. 2014) (Cabranes, J.; Raggi, J.; Carney, J.) (“We consider two questions: (1) whether the Bankruptcy Court had the authority under the Bankruptcy Code to enjoin appellants’ actions as ‘derivative’ of adversary proceedings brought by the trustee for the [Bernard L. Madoff Investment Securities LLC (“BLMIS”)] estate, Irving Picard (“Picard” or the “Trustee”), against the Picower defendants; and, if indeed authorized by the Bankruptcy Code, (2) whether the Bankruptcy Court transgressed the limitations on its authority imposed by Article III of the United States Constitution. . . . [A]ccording to Marshall, the Bankruptcy Court did not have authority to enter final judgment on the Trustee’s fraudulent transfer claims against the Picower defendants, much less to issue the accompanying order enjoining all duplicative and derivative actions. . . . Yet Granfinanciera held that a fraudulent conveyance claim is a matter of private right when asserted against ‘a person who has not submitted a claim against a bankruptcy estate.’ . . . In this case, unlike in Granfinanciera, the Picower defendants filed a proof of claim against the BLMIS estate. In order to rule on that claim, the Bankruptcy Court was required to first resolve the fraudulent transfer issue. . . . Accordingly, the Bankruptcy Court’s authority under the Bankruptcy Code to approve the settlement between the Trustee and the Picower defendants and to permanently enjoin appellants’ disguised fraudulent transfer claims does not run afoul of Article III of the United States Constitution.”). [Constitutional Authority to Enjoin Derivative Claims in Connection With Settlement-Approval Process] Wellness Int’l Network, Ltd. v. Sharif, 727 F.3d 751 (7th Cir. 2013) (Flaum, J.; Sykes, J.; Tinder, J.) (“In almost all material respects, WIN’s alter-ego claim is indistinguishable from the tortious-interference counterclaim in Stern, the fraudulent-conveyance claim in Granfinanciera, the contract claim in Northern Pipeline, and the disclosure claims in Ortiz. The alter-ego claim is a state-law claim that does not involve ‘public rights.’ The dispute is between private parties and involves no governmental parties. It stems from state law rather than a federal regulatory scheme. And it does not involve a particularized area of law. Instead, it is a common law claim for which state law provides the rule of decision, and it is intended only to augment the bankruptcy estate. . . . WIN argues that the bankruptcy court had authority to enter judgment on the alter-ego claim because WIN had to establish that the Soad Wattar Trust was Sharif’s alter ego in order to establish the grounds for denying discharge under 11 U.S.C. § 727. Though it is not clear, WIN appears to be trying to fit this case within the narrow confines of Katchen, 382 U.S. at 329–36, 86 S. Ct. 467, and Langenkamp, 498 U.S. at 44, 111 S. Ct. 330, but for several reasons we are not persuaded. First, WIN’s alter-ego claim technically was asserted against a nonparty to the bankruptcy proceedings, the Soad Wattar Trust (of which Sharif was trustee). The holdings of Katchen and Langenkamp can come into play only where the party against whom the action is asserted has filed a claim against the bankruptcy estate. See Stern, 131 S. Ct. at 2615–18; In re Ortiz, 665 F.3d at 914. Second, while the alter-ego claim may have some overlap with the objections to discharge, nothing indicates that it has any relation to the claims-allowance process. See Stern, 131 S. Ct. at 2618 (“Congress may 204

not bypass Article III simply because a proceeding may have some bearing on a bankruptcy case; the question is whether the action at issue stems from the bankruptcy itself or would necessarily be resolved in the claims allowance process.”); In re Ortiz, 665 F.3d at 914. Third, the trustees’ rights of recovery in Katchen and Langenkamp were creatures of federal bankruptcy law, whereas the alter-ego claim here, like the counterclaim in Stern, ‘is in no way derived from or dependent upon bankruptcy law; it is a state [claim] that exists without regard to any bankruptcy proceeding.’ Stern, 131 S. Ct. at 2618. Finally, it simply cannot be said that by resolving WIN’s objections to discharge the bankruptcy court necessarily would have needed to resolve the alter-ego claim. To be sure, there is some factual overlap, particularly with respect to Count I, which alleged that Sharif had continuously concealed property in the Soad Wattar Trust with intent to deceive. But in passing on the merits of the alter-ego claim, the bankruptcy court would have had to determine, first, whether Illinois law recognizes an alter-ego theory for piercing a trust and, second, whether the evidence satisfied the applicable standard. Assuming that the standard for trust piercing is similar to that for corporate-veil piercing, that would require not only a showing of concealment of assets in the trust with intent to deceive, but also that there was a unity of ownership (or a merger of the legal and equitable estates, in trust lingo) such that the trust and Sharif ceased to exist as separate entities. Thus, even if we could look past the facts that the Soad Wattar Trust did not file a claim and that the objections to discharge have nothing to do with the claims-allowance process, we cannot say that in resolving WIN’s claims under 11 U.S.C. § 727 the bankruptcy court necessarily would have resolved the alter-ego claim had it reached the merits (as opposed to entering default judgment). See Stern, 131 S. Ct. at 2617–18; In re Ortiz, 665 F.3d at 914. . . . In sum, WIN’s alter-ego claim is a state-law claim between private parties that is wholly independent of federal bankruptcy law and is not resolved in the claims-allowance process. Accord In re Madison Bentley Assocs., 474 B.R. 430, 439 (S.D.N.Y. 2012). Consequently, we hold that although the bankruptcy court had constitutional authority to enter final judgment on WIN’s objections to discharge, it lacked constitutional authority to enter final judgment on WIN’s alter-ego claim.”). [Constitutional Authority to Adjudicate Alter Ego Claim] Wellness Int’l Network, Ltd. v. Sharif, 727 F.3d 751 (7th Cir. 2013) (Flaum, J.; Sykes, J.; Tinder, J.) (“To be sure, the bankruptcy court never reached the merits of the claim because it entered default judgment as a discovery sanction. But there is no statutory provision authorizing a bankruptcy court to preside over discovery, apart from its authority over core and noncore matters. It is true that magistrate judges often preside over pretrial matters such as discovery, even if the district court ultimately decides the claims for which discovery is sought, but 28 U.S.C. § 636(b)(1)(A) expressly authorizes a district judge to ‘designate a magistrate judge to hear and determine any pretrial matter pending before the court,’ with certain exceptions and subject to reconsideration by the district judge if ‘the magistrate judge’s order is clearly erroneous or contrary to law.’ No analogous statutory authorization exists for bankruptcy judges. It appears, therefore, that if the alter-ego claim is in fact a [statutorily] core [but constitutionally noncore] proceeding, the only statutorily authorized remedy would be for the district court to withdraw the reference, see § 157(d), and then set a new discovery schedule. Of course, this would present a windfall to Sharif, but it is difficult to see any other solution under the peculiar circumstances of this case.”). [Authority to Preside Over Discovery Relating to Stern Claims]

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Fire Eagle L.L.C. v. Bischoff (In re Spillman Dev. Grp., Ltd.), 710 F.3d 299 (5th Cir. 2013) (Reavley, J.; Dennis, J.; Clement, J.) (“Beginning in November 2001, [the debtor,] Spillman Development Group, Ltd. (“SDG”)[,] took out a series of loans to finance its construction of the Falconhead Golf Course in Bee Cave, Texas. American Bank of Texas (“the Bank”) loaned SDG an initial $7.2 million and later a further $900,000. Both of these loans (together, “the Senior Indebtedness”) were secured by liens on SDG’s assets and limited guarantees executed by SDG principals. Each of these limited guarantees contained a forum-selection clause requiring that any suit brought by the guarantors be brought in Grayson County, Texas, which is located within the Eastern District of Texas. As further collateral for the Senior Indebtedness, the Spillman Investment Group, Ltd. (“SIG”) assigned its rights in a $1.2 million certificate of deposit to the Bank under the condition that the Bank would return the certificate to SIG upon payment of the Senior Indebtedness. In addition to the Senior Indebtedness, SDG also borrowed $4.1 million from Fire Eagle. Neither the guarantees nor the certificate of deposit secured this junior debt owed to Fire Eagle. . . . On August 1, 2005, SDG filed for bankruptcy in the Western District of Texas, its principal creditors being the Bank and Fire Eagle. After disagreements between these two creditors over competing proposed Chapter 11 reorganization plans, Fire Eagle purchased the Senior Indebtedness from the Bank. At the time of this acquisition, Fire Eagle and the Bank stipulated that the outstanding balance owed on the Senior Indebtedness was approximately $9.1 million. Despite this consolidation amongst the creditors, the bankruptcy court refused to confirm either the reorganization plan proposed by Fire Eagle or that proposed by SDG and instead ordered an 11 U.S.C. § 363(b) sale of SDG’s assets, which included the principal assets securing the Senior Indebtedness. The bidding on these assets progressed until an entity called Falcon Golf Course Partners, L.P. submitted a cash bid of $9.2 million. At this point, Fire Eagle entered a credit bid, pursuant to 11 U.S.C. § 363(k), of $9.3 million. The bankruptcy court accepted Fire Eagle’s bid and later held, on SDG’s motion, that Fire Eagle’s credit bid had paid in full the Senior Indebtedness and that Fire Eagle had no deficiency claim against SDG’s estate for the Senior Indebtedness. . . . SIG and all of the individual guarantors except for one (“the Guarantors”) then filed an adversary action in bankruptcy court in the Western District of Texas (“the Guarantors’ Adversary”), seeking a declaratory judgment that, as a result of the sale, the Guarantors should be released from their obligations under the guaranty agreements and that the certificate of deposit should be returned to SIG. Fire Eagle moved to dismiss the suit on a number of grounds, including that the bankruptcy court lacked subject-matter jurisdiction and that venue was improper because of the forum-selection clauses contained within the guarantees. Fire Eagle also filed its own action against the remaining guarantor, Richard Bischoff, in district court in the Eastern District of Louisiana (“the Bischoff Adversary”). Fire Eagle contended in both suits that its credit bid had not paid in full the Senior Indebtedness and that it could therefore still collect against the guarantees. . . . The bankruptcy court in the Western District of Texas resolved the Guarantors’ Adversary by denying Fire Eagle’s motion to dismiss and granting summary judgment to the Guarantors, holding that, ‘This is not rocket science. The Senior Loan has been PAID!!!!’ Fire Eagle moved the court to reconsider, and Bischoff moved to intervene. The bankruptcy court denied Fire Eagle’s motion to reconsider and granted Bischoff’s motion to intervene. . . . Shortly thereafter, in the Bischoff Adversary, the district court in the Eastern District of Louisiana granted Bischoff’s motion to transfer venue to the Western District of Texas for referral of the case to the bankruptcy court there, noting that Bischoff had become a party to the near-resolved Guarantors’ Adversary. The bankruptcy court then consolidated the Bischoff Adversary and the Guarantors’ Adversary and granted Bischoff summary judgment. 206

On SIG’s motion, it also ordered the release of the certificate of deposit. After the bankruptcy court certified its rulings as final, Fire Eagle appealed. The district court affirmed the bankruptcy court’s rulings, and Fire Eagle now appeals on numerous grounds. . . . Fire Eagle contends that the bankruptcy court lacked jurisdiction because a bankruptcy court cannot entertain collateral disputes between third parties that do not involve the bankrupt or its property or exercise jurisdiction over a private controversy which does not relate to matters pertaining to bankruptcy. . . . We disagree with Fire Eagle’s characterization of this dispute. If Fire Eagle were to succeed on the merits of this suit and proceed to recover against the guarantees and the certificate of deposit, such a recovery would presumably diminish Fire Eagle’s deficiency claim against the bankruptcy estate, conceivably allowing a greater recovery for other unsecured creditors against the estate. . . . Because the basis for this dispute is whether Fire Eagle’s credit bid had the effect of extinguishing the Senior Indebtedness, and because the right to credit bid is purely a creature of the Bankruptcy Code, see 11 U.S.C. § 363(k), we fail to see how this proceeding does not qualify as core under § 157(b)(1) and therefore hold that the bankruptcy court’s entering an order without reference to the district court was within its statutory authority. . . . Fire Eagle contends that its claims in this matter are . . . beyond the constitutional authority of the bankruptcy courts to decide. . . . However, Stern itself stated that its holding was reliant on the fact that the counterclaim at issue was a state law action independent of the federal bankruptcy law and not necessarily resolvable by a ruling on the creditor’s proof of claim in bankruptcy. Fire Eagle’s claim, on the other hand, is inextricably intertwined with the interpretation of a right created by federal bankruptcy law—the interpretation of the effect of Fire Eagle’s credit bid is in fact determinative of Fire Eagle’s claim. We therefore conclude that Stern is inapplicable and that there was no constitutional bar to the bankruptcy court’s exercise of its jurisdiction over this statutorily core matter.”). [Determination of Effect of Credit Bid on Amount of Lienholder’s Deficiency Claim] Carr v. New Century TRS Holdings, Inc. (In re New Century TRS Holdings, Inc.), 544 F. App’x. 70 (3d Cir. 2013) (Fuentes, J.; Greenberg, J.; Van Antwerpen, J.) (“Appellant Anita B. Carr appeals pro se from orders of the United States District Court for the District of Delaware, which dismissed her appeal from the Bankruptcy Court and denied her motion for reconsideration and petition for a writ of mandamus. . . . In October 2010 Carr and the Debtors entered into a settlement agreement where the Debtors paid a sum of $60,000 ‘in full and final satisfaction of the causes of action and any other claim(s) that [Carr] may have against the Debtors.’ [These causes of action included] claims for (1) fraudulent conveyance; (2) violation of chapter 11 of the Bankruptcy Code; (3) fraudulent misrepresentation and negligence; (4) violation of the Truth-in-Lending Act, 15 U.S.C. § 1601 et seq. . . , (5) violation of Cal. Bus. & Prof. Code § 17200, et seq.; (6) violation of the Real Estate Settlement Procedures Act, 12 U.S.C. 2605; and (7) quiet title to real property [asserted in the complaint filed in the adversary proceeding she commenced against the Debtors.] The settlement agreement provided that Carr released the Debtors from ‘any and all claims, damages, actions, suits, causes of action, rights, liens, demands, obligations and/or liabilities.’ It further provided that, should a dispute arise between the parties after the execution of the settlement agreement, the ‘Parties consent and subject themselves to the jurisdiction of this United States Bankruptcy Court, District of Delaware . . . to resolve such dispute(s).’ In November 2010 Carr filed a notice of dismissal with prejudice, and the Bankruptcy Court closed the adversary proceeding. Subsequently, though, Carr sought to stay the dismissal and to schedule an evidentiary hearing, asserting that she was fraudulently induced to enter into the settlement agreement. The 207

Bankruptcy Court rejected Carr’s fraud claim, and Carr timely appealed to the District Court. . . . Regarding the statutory and constitutional jurisdictional issues, Carr did not dispute that the Bankruptcy Court had authority to adjudicate the underlying adversary proceeding and to approve the settlement of her claims. Instead, Carr asserted only that her later raised claim of fraudulent inducement to settle was not a ‘core proceeding’ and that, pursuant to the Supreme Court’s decision in Stern v. Marshall . . . , only an Article III court had constitutional jurisdiction to adjudicate the claim. . . . Regarding the statutory assertion, federal bankruptcy courts have statutory authority to enter final decisions in all ‘core proceedings.’ See 28 U.S.C. § 157(b). In this matter, Carr filed both a proof of claim and an adversary proceeding against the Debtors’ estate. The settlement of these claims clearly constitutes a core proceeding, and the Bankruptcy Court’s resolution of any disputes over the settlement are also clearly core proceedings related to the underlying settlement. See id. at § 157(b)(2)(B) (“Core proceedings include . . . allowance or disallowance of claims against the estate. . . .”). In addition, the Supreme Court has noted that a creditor could consent to the bankruptcy court’s exercise of statutory authority to resolve a claim, and it is clear that Carr, in the settlement agreement, did give such consent. . . . As to constitutional jurisdiction, Stern does not support Carr’s contention. Stern involved a state-law counterclaim asserted by the debtor that was not related to the creditor’s claims against the estate or the underlying bankruptcy in any way. In that case, the Supreme Court held that the judicial power of the United States may only be invested in Article III courts and that, in that ‘one isolated respect,’ the authority granted by Congress to the bankruptcy courts exceeded the limitations of Article III. Id. at 2620. In this matter, Carr’s claims were not unrelated counterclaims asserted by a debtor, but were, rather, direct claims by a creditor that the Debtors fraudulently induced her to enter into a settlement agreement concerning indisputably core proceedings within the jurisdiction of the Bankruptcy Court. See 28 U.S.C. § 157(b)(2)(B). Thus, Carr’s claim of fraud is not independent of the bankruptcy but rather irreversibly intertwined with the Bankruptcy Court-approved resolution of Carr’s underlying claims against the bankruptcy estate, rendering Stern inapposite. Neither the Supreme Court nor we have held that a claim such as Carr’s is outside the jurisdiction of the bankruptcy courts to adjudicate. Cf. Travelers Indem. Co. v. Bailey, 557 U.S. 137, 151, 129 S. Ct. 2195, 174 L. Ed. 2d 99 (2009) (bankruptcy courts have jurisdiction to interpret and enforce their own orders); In re Lazy Days’ RV Ctr. Inc., 724 F.3d 418, 423–24 (3d Cir. 2013) (holding that the bankruptcy court had jurisdiction to resolve a dispute over whether, in light of 11 U.S.C. § 365(f)(3), an anti-assignment clause survived a settlement agreement it had confirmed as part of the bankruptcy). We conclude that the Bankruptcy Court had the constitutional authority to adjudicate Carr’s fraudulent inducement to settle claim.”). [Constitutional Authority to Adjudicate Claim That Debtors Fraudulently Induced Party to Enter Into Settlement Approved by Bankruptcy Court] In re Mut. Benefits Offshore Fund, Ltd., 508 B.R. 762 (S.D. Fla. 2014) (Moore, J.) (“The [p]etitioning [c]reditors (“Petitioning Creditors”) . . . commenced involuntary Chapter 11 bankruptcy proceedings against Appellant, Mutual Benefits Offshore Fund, Ltd. (“MBOF”) . . . [and other entities] alleging that these entities owed in excess of $32.4 million to the Petitioning Creditors pursuant to various Promissory Notes, invoices for licensing services, trade debt, and professional services rendered. . . . [T]he Petitioning Creditors filed an Ex–Parte Motion for Joint Administration and Intra–District Transfer of Chapter 11 Cases, seeking to have the involuntary cases transferred before a single bankruptcy judge to be jointly administered. The Petitioning Creditors also sought the appointment of an interim trustee to take control and possession of the assets of the debtor 208

entities, and to protect and preserve the bankruptcy estates from further loss. . . . On March 21, 2011, the Zeltser Group answered the involuntary petition on behalf of MBOF, admitting the allegations in the petition and consenting to the relief requested therein. On March 22, 2011, the Redmond Group filed an emergency Motion to Strike the Answer on behalf of MBOF. The Motion to Strike stated that the Zeltser Group did not represent MBOF and was not authorized to make an appearance on its behalf. Instead, the Redmond Group claimed to be the authorized representatives of MBOF and disputed the debts listed in the Involuntary Petition. . . . At this point there were two separate firms, answering to different owners, claiming to represent MBOF in its involuntary Chapter 11 proceedings. In order to adjudicate the underlying debt in bankruptcy, the Bankruptcy Court had to decide who owned, and therefore could represent, the Alleged Debtors. If the Redmond Group was the authorized representative, the involuntary petitions would be contested. If the Zeltser Group was the authorized representative, then the petitions would be uncontested. . . . [T]he Bankruptcy Court entered its Findings of Fact and Conclusions of Law on Ownership in favor of the Redmond Group. . . . The instant appeal followed. . . . On appeal . . . the Court will address . . . whether the Bankruptcy Court lacked jurisdiction and/or authority to enter final judgment on the ownership issue . . . . This Court finds that the Bankruptcy Court had jurisdiction and authority to enter final judgment on the ownership issue. . . . Appellant argues in its Initial Brief, that the Supreme Court’s decision Stern v. Marshall, 131 S. Ct. 2594 (2011), which held that the Bankruptcy Court lacked authority to enter final judgment on a state law counterclaim that is not resolved in the process of ruling on a creditor’s proof of claim, impacts the present proceeding and entitled Zeltser to a trial before an Article III judge on the ownership issue. However, the Court once again agrees with Judge Huck’s conclusion that ‘Stern simply has no impact on this case.’”). [Determination of Competing Claims of Ownership/Control of Alleged Debtor in Connection with Adjudication of Involuntary Bankruptcy Proceeding] Mickler v. Trujillo (In re Trujillo), 485 B.R. 797 (M.D. Fla. 2013) (Melton, J.) (After the individual Chapter 11 debtors’ state law legal malpractice action was removed to federal court, the attorney-defendants filed a motion to dismiss. The bankruptcy court denied the defendants’ dismissal motion and entered an order remanding the malpractice action to state court. The attorneydefendants appealed, and the district court affirmed the bankruptcy court, reasoning: “[T]he negligence/legal malpractice issue to be adjudicated in the adversary proceeding plainly does not derive from a federal regulatory scheme, require resolution by an expert government authority, concern a statutory right closely intertwined with a federal regulatory program, derive from nor depend upon any agency regulatory regime, involve a right to relief flowing from a federal statutory scheme, or is completely dependent upon adjudication of a claim created by federal law. It is a state common law negligence/legal malpractice claim related to a purported agreement for representation in a state criminal matter. That the circumstantial background that gave rise to Appellee asking for legal assistance from Appellants occurred while they were representing her estate in a bankruptcy reorganization does not transform the nature of her claim into a bankruptcy matter such that the U.S. Constitution would recognize a non-Article III judge’s authority to finally adjudicate it under the public rights exception discussed in Stern v. Marshall.”). [Authority to Adjudicate Debtor’s Legal Malpractice Claim] Katz v. Cellco P’ship, 2013 WL 6621022 (S.D.N.Y. Dec. 12, 2013) (Briccetti, J.) (“Plaintiff . . . brings this putative class action against defendant Cellco Partnership, doing business as Verizon 209

Wireless (“Verizon”), asserting claims under New York state law for breach of contract and consumer fraud based on an administrative charge assessed by Verizon. Plaintiff also seeks a declaratory judgment that the arbitration agreement included in Verizon’s customer agreement with plaintiff is not enforceable with respect to plaintiff’s claims because, plaintiff argues, compelling plaintiff to arbitrate pursuant to the Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1–16, is an improper delegation of Article III power to a non-Article III forum in violation of the United States Constitution. . . . Plaintiff argues the arbitration agreement should not be enforced because application of the FAA to his state law claims violates Article III of the United States Constitution—both the structural protections of our tripartite system of government (i.e., separation of powers) and his personal right to have his claims adjudicated before an independent Article III judge—by delegating resolution of his claims to a non-Article III forum. See Stern v. Marshall, 131 S. Ct. 2594 (2011). . . . The Court concludes compelling arbitration of plaintiff’s claims does not violate either the structural protections of Article III or plaintiff’s right to have his claim adjudicated by an independent Article III judge. . . . When Congress creates and delegates resolution of disputes to non-Article III forums, that action raises significant concerns regarding the constitutional system of checks and balances. . . . In contrast, when Congress encourages or merely enforces a private agreement to resolve disputes outside Article III courts, no such concerns regarding the separation of powers are implicated because Congress is not withdrawing any matter from judicial cognizance. See Commodity Futures Trading Comm’n v. Schor, 478 U.S. at 854–55. Rather, it is the parties who are choosing to withdraw, by agreement, certain matters from judicial cognizance. . . . Because plaintiff signed Verizon’s customer agreement, which included an agreement to arbitrate, and the Court has concluded the arbitration agreement is enforceable, the Court further finds plaintiff waived his personal rights to an independent Article III judge.”). [Article III Challenge to Enforceability of Arbitration Agreement] Peterson v. Pyramid Trading Ltd. P’ship, 2013 WL 3177825 (N.D. Ill. June 19, 2013) (Darrah, J.) (“The parties have stipulated, and the Bankruptcy Court agrees, that, in light of the Supreme Court’s decision in Stern v. Marshall . . . this Court is the appropriate means by which final judgment on the Trustee’s Count III Unjust Enrichment Claim should be entered.”). [Unjust Enrichment Claim] Barker v. Fox Den Acres, Inc. (In re Barker), 510 B.R. 771 (Bankr. W.D.N.C. 2014) (Beyer, J.) (“In adjudicating whether there is an inherent conflict between arbitration and the underlying purposes of the Bankruptcy Code, courts generally ask first if a cause of action is core or non-core. If the cause of action is not core, it generally must be submitted to arbitration. . . . The inquiry can be somewhat more complex if a cause of action is core. In applying the ‘inherent conflict’ test in the [Phillips v. Congelton, L.L.C. (In re] White Mountain [Mining Co., L.L.C.), 403 F.3d 164, 168 (4th Cir. 2005)] case, the Fourth Circuit Court of Appeals declined to rule that there is a categorical proscription on arbitration of core causes of action. White Mountain, 403 F.3d at 169. The Court of Appeals did, however, determine that it was appropriate for the bankruptcy court to retain jurisdiction over certain claims because there was an ‘inherent conflict between arbitration and the purposes of the Bankruptcy Code . . . in [that] case.’ Id. at 170. . . . The United States Bankruptcy Court for the Eastern District of North Carolina generally retains jurisdiction of claims that are determined to be ‘constitutionally core’ as that concept was discussed in Stern v. Marshall, 564 U.S. ––––, 131 S. Ct. 2594, 2620 (2011). See Moses v. Cashcall, Inc. (In re Moses), 2013 WL 53873, at *4 (Bankr. E.D.N.C. Jan. 3, 2013). . . . If a cause of action is constitutionally core, then 210

a bankruptcy court may deny a motion to compel arbitration so long as the White Mountain criteria for denying such a motion are satisfied, namely that the facts and circumstances of the case before the court reveal that there is ‘an inherent conflict between arbitration and the [Bankruptcy Code]’s underlying purposes’ and that ‘[a]rbitration is inconsistent with centralized decision-making because permitting an arbitrator to decide a core issue would make debtor-creditor rights contingent upon an arbitrator’s ruling rather than the ruling of the bankruptcy judge assigned to hear the debtor’s case.’ White Mountain, 403 F.3d at 169 (internal citations omitted). . . . Even if a matter is constitutionally core, a bankruptcy court possesses broad discretion to grant a motion to compel arbitration if there is a written agreement to arbitrate and if doing so would be helpful to the court and would assist the bankruptcy court in exercising its bankruptcy jurisdiction.”). [Motion to Compel Arbitration] Global Gaming Legends, LLC v. Legends Gaming of La.–1, LLC (In re La. Riverboat Gaming P’ship), 504 B.R. 439 (Bankr. W.D. La. 2014) (Callaway, J.) (Global Gaming Solutions, LLC and various affiliated entities (collectively, “Global”) filed an adversary proceeding against the debtors, seeking a declaratory judgment that the debtors had breached an asset purchase agreement (“APA”) executed by the parties. In response, the debtors filed a separate adversary proceeding asserting various state law claims. “Global’s original complaint was, without question, a core proceeding that could have been presided over by this bankruptcy court. Debtors’ counterclaim seeking damages under state law causes of action then introduced, in this Court’s opinion, a classic Stern situation into these proceedings. . . . The APA is the heart of this litigation, and the claims for breach of the APA are ‘pure bankruptcy’ causes of action––––non state-law, ‘core proceedings.’ Indeed, the APA was such an integral part of Debtors’ bankruptcy cases that it became both the foundation for and the driving force behind the then sought successful reorganization of the Debtor entities. Once the state-law causes of action were introduced into this litigation via Debtors’ subsequent counterclaim, a Stern situation was then triggered prompting Global to move to have the reference withdrawn.” Pending a ruling by the district court on Global’s motion to withdraw the reference, Global filed an emergency motion to stay the proceedings, which the debtors opposed, arguing that the bankruptcy court had the authority to continue to preside over discovery until the district court made its ruling on the withdrawal motion. The bankruptcy court disagreed, stating: “This Court does not agree with Debtors’ interpretation of Stern and [Wellness Int’l Network, Ltd. v.] Sharif[, 727 F.3d 751 (7th Cir. 2013)] with regard to the ability of a bankruptcy court to preside over discovery matters. First, the fact that Stern did not go on to address the role of bankruptcy courts with regard to discovery shouldn’t be interpreted to mean that bankruptcy courts should be allowed to oversee same simply because a bankruptcy discovery order is not a final order. The Seventh Circuit in Sharif was unambiguous in pointing out that a bankruptcy judge does not have the statutory authority to oversee discovery in what would be a Stern-governed core proceeding in a bankruptcy case. As previously stated, the Sharif Court points out that while a magistrate judge has the statutory authority via 28 U.S.C. § 636(b)(1)(A) to oversee discovery if a District Court so designates, subject to reconsideration by the District Court, the bankruptcy court does not have statutory authority to do so.”). [Bankruptcy Court’s Authority to Preside Over Discovery Relating to Stern Claims Pending Ruling on Motion to Withdraw Reference] In re City of Detroit, Mich., 504 B.R. 97 (Bankr. E.D. Mich. 2013) (Rhodes, J.) (“The matter is before the Court on the parties’ objections to the eligibility of the City of Detroit to be a debtor in 211

this chapter 9 case under 11 U.S.C. § 109(c). . . . Several objecting parties challenge the constitutionality of chapter 9 of the bankruptcy code under the United States Constitution. Citing the Supreme Court’s decision in Stern v. Marshall . . . these parties also assert that this Court does not have the authority to determine the constitutionality of chapter 9. . . . The Official Committee of Retirees filed a motion to withdraw the reference on the grounds that this Court does not have the authority to determine the constitutionality of chapter 9 or P.A. 436. It also filed a motion for stay of the eligibility proceedings pending the district court’s resolution of that motion. In this Court’s denial of the stay motion, it concluded that the Committee was unlikely to succeed on its arguments regarding this Court’s lack of authority under Stern. . . . First, since Stern was decided, non-Article III courts have considered constitutional issues, always without objection. . . . Both bankruptcy courts and bankruptcy appellate panels have done so. See, e.g., Williams v. Westby (In re Westby), 486 B.R. 509 (10th Cir. BAP 2013) (upholding the constitutionality of the Kansas bankruptcy-only state law exemptions); Res. Funding, Inc. v. Pacific Continental Bank (In re Washington Coast I, L.L.C.), 485 B.R. 393 (9th Cir. BAP 2012) (upholding the constitutionality of the final order entered by the bankruptcy court); Richardson v. Schafer (In re Schafer), 455 B.R. 590 (6th Cir. BAP 2011), rev’d on other grounds, 689 F.3d 601 (6th Cir. 2012) (addressing the constitutionality of the Michigan bankruptcy-only state law exemptions); Old Cutters, Inc. v. City of Hailey (In re Old Cutters, Inc.), 488 B.R. 130 (Bankr. D. Idaho 2012) (invalidating a city’s annexation fee and community housing requirements); In re Washington Mut., Inc., 485 B.R. 510 (Bankr. D. Del. 2012) (holding Oregon’s corporate excise tax unconstitutional under the Commerce Clause); In re McFarland, 481 B.R. 242 (Bankr. S.D. Ga. 2012) (upholding Georgia’s bankruptcy-specific exemption scheme); In re Fowler, 493 B.R. 148 (Bankr. E.D. Cal. 2012) (upholding the constitutionality of California’s statute fixing the interest rate on tax claims); In re Meyer, 467 B.R. 451 (Bankr. E.D. Wis. 2012) (upholding the constitutionality of 11 U.S.C. § 707(b)); Zazzali v. Swenson (In re DBSI, Inc.), 463 B.R. 709, 717 (Bankr. D. Del. 2012) (upholding the constitutionality of 11 U.S.C. § 106(a)); Proudfoot Consulting Co. v. Gordon (In re Gordon), 465 B.R. 683 (Bankr. N.D. Ga. 2012) (upholding the constitutionality of 11 U.S.C. § 706(a)); South Bay Expressway, L.P. v. County of San Diego (In re South Bay Expressway, L.P.), 455 B.R. 732 (Bankr. S.D. Cal. 2011) (holding unconstitutional California’s public property tax exemption for privately-owned leases of public transportation demonstration facilities). More specifically, and perhaps more on point, in two recent chapter 9 cases, bankruptcy courts addressed constitutional issues without objection. Association of Retired Employees v. City of Stockton, Cal. (In re City of Stockton, Cal.), 478 B.R. 8 (Bankr. E.D. Cal. 2012) (holding that retirees’ contracts could be impaired in the chapter 9 case without offending the constitution); In re City of Harrisburg, PA, 465 B.R. 744 (Bankr. M.D. Pa. 2011) (upholding the constitutionality of a Pennsylvania statute barring financially distressed third class cities from filing bankruptcy). . . . In addition, the Tax Court, a non-Article III court, has also examined constitutional issues, without objection. See, e.g., Field v. C.I.R., 2013 WL 1688028 (Tax Ct. 2013) (holding that the tax classification on the basis of marital status that was imposed by requirement that taxpayer file joint income-tax return in order to be eligible for tax credit for adoption expenses did not violate Equal Protection clause); Begay v. C.I.R., 2013 WL 173362 (Tax Ct. 2013) (holding that the relationship classification for child tax credit did not violate Free Exercise Clause); Byers v. C.I.R., 2012 WL 265883 (Tax Ct. 2012) (rejecting the taxpayer’s challenge to the authority of an IRS office under the Appointments Clause). . . . Likewise, the Court of Federal Claims, also a non-Article III court, has considered constitutional claims, without objection. This was done perhaps most famously in Beer v. United States, 111 Fed. Cl. 592 (Fed. 212

Cl. 2013), which is a suit by Article III judges under the Compensation Clause of the United States Constitution. . . . Stern does not change this status quo, and nothing about the constitutional dimension of the objectors’ eligibility objections warrants the expansion of Stern that they assert. As Stern itself reaffirmed, ‘We do not think the removal of counterclaims such as [the debtor’s] from core bankruptcy jurisdiction meaningfully changes the division of labor in the current statute[.]’ 131 S. Ct. at 2620. Expanding Stern to the point where it would prohibit bankruptcy courts from considering issues of state or federal constitutional law would certainly significantly change the division of labor between the bankruptcy courts and the district courts. . . . Only one case suggests otherwise. Picard v. Flinn Invs., LLC, 463 B.R. 280 (S.D.N.Y. 2011). That case did state in dicta in a footnote, ‘If mandatory withdrawal protects litigants’ constitutional interest in having Article III courts interpret federal statutes that implicate the regulation of interstate commerce, then it should also protect, a fortiori, litigants’ interest in having the Article III courts interpret the Constitution.’ Id. at 288 n.3. . . . This single sentence cannot be given much weight. First, it is only dicta. Second, it is against the manifest weight of the case authorities. Third, the quote assumes, without analysis, that the litigants do have an interest in having Article III courts interpret the Constitution, and thus bootstraps its own conclusion. Fourth, nothing in the Flinn Investments case states or even suggests that Stern itself prohibits a bankruptcy court from ruling on a constitutional issue where it otherwise has the authority to rule on the claim before it. Finally, the district court that issued Flinn Investments has now entered an amended standing order of reference in bankruptcy cases to provide that its bankruptcy court should first consider objections to its authority that parties raise under Stern v. Marshall. Apparently, that district court’s position now is that Stern does not preclude the bankruptcy court from determining constitutional issues, including the constitutional issue of its own authority. . . . Two other cases are cited in support of the position that only an Article III court can determine a constitutional issue: TTOD Liquidation, Inc. v. Lim (In re Dott Acquisition, LLC), 2012 WL 3257882 (E.D. Mich. July 25, 2012), and Picard v. Schneiderman (In re Madoff Secs.), 492 B.R. 133 (S.D.N.Y. 2013). Both are irrelevant to the issue. Dott Acquisition did discuss Stern but only in the unremarkable context of withdrawing the reference on a fraudulent transfer action. Schneiderman did not address a Stern issue at all, or even cite the case.”). [Authority to Determine Constitutionality of State and Federal Laws] In re City of Detroit, Mich., 504 B.R. 97 (Bankr. E.D. Mich. 2013) (Rhodes, J.) (“The matter is before the Court on the parties’ objections to the eligibility of the City of Detroit to be a debtor in this chapter 9 case under 11 U.S.C. § 109(c). . . . Several objecting parties challenge the constitutionality of chapter 9 of the bankruptcy code under the United States Constitution. Citing the Supreme Court’s decision in Stern v. Marshall . . . these parties also assert that this Court does not have the authority to determine the constitutionality of chapter 9. . . . The Official Committee of Retirees filed a motion to withdraw the reference on the grounds that this Court does not have the authority to determine the constitutionality of chapter 9 or P.A. 436. It also filed a motion for stay of the eligibility proceedings pending the district court’s resolution of that motion. In this Court’s denial of the stay motion, it concluded that the Committee was unlikely to succeed on its arguments regarding this Court’s lack of authority under Stern. . . . The objectors’ federalism argument is even more perplexing and troubling. Certainly the objectors are correct that a ruling on whether the City was properly authorized to file this bankruptcy case, as required for eligibility under 11 U.S.C. § 109(c)(2), will require the interpretation of state law, including the Michigan Constitution. . . . However, ruling on state law issues is required in addressing many issues in bankruptcy cases. As 213

the Supreme Court has observed, ‘[B]ankruptcy courts [] consult state law in determining the validity of most claims.’ Travelers Cas. & Sur. Co. of Am. v. Pacific Gas & Elec. Co., 549 U.S. 443, 444, 127 S. Ct. 1199, 1201, 167 L. Ed. 2d 178 (2007). Concisely summarizing the reality of the bankruptcy process and the impact of Stern on it, the court in In re Olde Prairie Block Owner, LLC, 457 B.R. 692, 698 (Bankr. N.D. Ill. 2011), concluded: ‘[Stern] certainly did not hold that a Bankruptcy Judge cannot ever decide a state law issue. Indeed, a large portion of the work of a Bankruptcy Judge involves actions in which non-bankruptcy issues must be decided and that “stem from the bankruptcy itself or would necessarily be resolved in the claims allowance process,” [131 S. Ct.] at 2618, for example, claims disputes, actions to bar dischargeability, motions for stay relief, and others. Those issues are likely within the “public rights” exception as defined in Stern.’ Other cases also illustrate the point. See, e.g., Picard v. Estate of Madoff, 464 B.R. 578, 586 (S.D.N.Y. 2011) (quoting In re Salander O’Reilly Galleries, 453 B.R. 106, 118 (Bankr. S.D.N.Y. 2011)) (“It is clear” from Stern v. Marshall and other Supreme Court precedent that “the Bankruptcy Court is empowered to apply state law when doing so would finally resolve a claim.”); Anderson v. Bleckner (In re Batt), 2012 WL 4324930, at *2 (W.D. Ky. Sept. 20, 2012) (“Stern does not bar the exercise of the Bankruptcy Court’s jurisdiction in any and all circumstances where a party to an adversary proceeding has not filed a proof of claim, or where the issue in an adversary proceeding is a matter of state law.”) . . . . The distinction is clear. While in some narrow circumstances Stern prohibits a non-Article III court from adjudicating a state law claim for relief, a non-Article III court may consider and apply state law as necessary to resolve claims over which it does have authority under Stern. The mere fact that state law must be applied does not by itself mean that Stern prohibits a non-Article III court from determining the matter. . . . Moreover, nothing about a chapter 9 case suggests a different result. In City of Cent. Falls, R.I., 468 B.R. at 52, the court stated, ‘Nor did [Stern] address concerns of federalism; although the counterclaim at issue in Stern arose under state law, the determinative feature of that counterclaim was that it did not arise under the Bankruptcy Code. The operative dichotomy was not federal versus state, but bankruptcy versus nonbankruptcy.’ . . . The troubling aspect of the objectors’ federalism argument is that it does not attempt to define, even vaguely, what interest of federalism is at stake here. . . . In Arizona v. United States, ––– U.S. ––––, ––––, 132 S. Ct. 2492, 2500, 183 L. Ed. 2d 351 (2012), the Supreme Court stated, ‘Federalism, central to the constitutional design, adopts the principle that both the National and State Governments have elements of sovereignty the other is bound to respect.’ Accordingly, federalism is about the federal and state governments respecting each other’s sovereignty. It has nothing to do with the requirements of Article III or, to use the phraseology of Stern with the ‘division of labor’ between the district courts and the bankruptcy courts. 131 S. Ct. at 2620.”). [Stern and Federalism Concerns] In re City of Detroit, Mich., 504 B.R. 97 (Bankr. E.D. Mich. 2013) (Rhodes, J.) (“The matter is before the Court on the parties’ objections to the eligibility of the City of Detroit to be a debtor in this chapter 9 case under 11 U.S.C. § 109(c). . . . Several objecting parties challenge the constitutionality of chapter 9 of the bankruptcy code under the United States Constitution. Citing the Supreme Court’s decision in Stern v. Marshall . . . these parties also assert that this Court does not have the authority to determine the constitutionality of chapter 9. . . . The Official Committee of Retirees filed a motion to withdraw the reference on the grounds that this Court does not have the authority to determine the constitutionality of chapter 9 or P.A. 436. It also filed a motion for stay of the eligibility proceedings pending the district court’s resolution of that motion. In this Court’s 214

denial of the stay motion, it concluded that the Committee was unlikely to succeed on its arguments regarding this Court’s lack of authority under Stern. . . . In Stern v. Marshall, the Supreme Court held that the ‘judicial power of the United States’ can only be exercised by an Article III court and ‘that in general, Congress may not withdraw from judicial cognizance any matter which, from its nature, is the subject of a suit at the common law, or in equity, or admiralty.’ 131 S. Ct. at 2608–12. The Supreme Court held that a bankruptcy court therefore lacks the constitutional authority to enter a final judgment on a debtor’s counterclaim that is based on a private right when resolution of the counterclaim is not necessary to fix the creditor’s claim. 131 S. Ct. at 2611–19. The Court described the issue before it as ‘narrow.’ 131 S. Ct. at 2620. . . . The Sixth Circuit has adhered to a narrow reading of Stern in the two cases that have addressed the issue: Onkyo Europe Elect. GMBH v. Global Technovations Inc. (In re Global Technovations Inc.), 694 F.3d 705 (6th Cir. 2012), and Waldman v. Stone, 698 F.3d 910 (6th Cir. 2012). . . . These cases recognize the crucial difference to which Stern adhered. A bankruptcy court may determine matters that arise directly under the bankruptcy code, such as fixing a creditor’s claim in the claims allowance process. However, a bankruptcy court may not determine more tangential matters, such as a state law claim for relief asserted by a debtor or the estate that arises outside of the bankruptcy process, unless it is necessary to resolve that claim as part of the claims allowance process. See City of Cent. Falls, R.I. v. Central Falls Teachers’ Union (In re City of Cent. Falls, R.I.), 468 B.R. 36, 52 (Bankr. D.R.I. 2012) (“[A]lthough the counterclaim at issue in Stern arose under state law, the determinative feature of that counterclaim was that it did not arise under the Bankruptcy Code.”). . . . The issue presently before the Court is the debtor’s eligibility to file this chapter 9 case. A debtor’s eligibility to file bankruptcy stems directly from rights established by the bankruptcy code. As quoted above, Waldman expressly held, ‘When a debtor pleads an action under federal bankruptcy law,’ the bankruptcy court’s authority is constitutional. 698 F.3d at 919. In this case, the debtor has done precisely that. In seeking relief under chapter 9, it has pled ‘an action under federal bankruptcy law.’ . . . The parties’ federal and state constitutional challenges are simply legal arguments in support of their objection to the City’s request for bankruptcy relief. Nothing in Stern, Waldman, or Global Technovations suggests any limitation on the authority of a bankruptcy court to consider and decide any and all of the legal arguments that the parties present concerning an issue that is otherwise properly before it. . . . More specifically, those cases explicitly state that a bankruptcy court can constitutionally determine all of the issues that are raised in the context of resolving an objection to a proof of claim, even those involving state law. For the same reasons, a bankruptcy court can also constitutionally determine all issues that are raised in the context of resolving an objection to eligibility. . . . No cases address Stern in the context of eligibility for bankruptcy. Nevertheless, several cases do address Stern in the context of similar contested matters—conversion and dismissal of a case. Each case readily concludes that Stern’s limitation on the authority of a bankruptcy court is inapplicable. For example, in In re USA Baby, Inc., 674 F.3d 882, 884 (7th Cir. 2012), the Seventh Circuit held that nothing in Stern precludes a bankruptcy court from converting a chapter 11 case to chapter 7, stating, ‘we cannot fathom what bearing that principle might have on the present case.’ In Mahanna v. Bynum, 465 B.R. 436 (W.D. Tex.2011), the court held that Stern does not prohibit the bankruptcy court from dismissing the debtors’ chapter 11 case. The court concluded, ‘[T]his appeal is entirely frivolous, and constitutes an unjustifiable waste of judicial resources [.]’ Id. at 442. In In re Thalmann, 469 B.R. 677, 680 (Bankr. S.D. Tex. 2012), the court held that Stern does not prohibit a bankruptcy court from determining a motion to dismiss a case on

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the grounds of bad faith. This line of cases strongly suggests that Stern likewise does not preclude a bankruptcy court from determining eligibility.”). [Chapter 9 Eligibility Determination] Ramirez v. Mr. Transmission (In re Ramirez), 2014 WL 2522148 (Bankr. S D. Tex. June 4, 2014) (Isgur, J.) (“Jimmy Ramirez’s 2001 Ford F–250 was wrongfully repossessed post-petition pursuant to a valid mechanic’s lien held by Mr. Transmission. The Truck was retained by Mr. Transmission’s agent, Texas Mechanical Collection Service, for approximately four months after repossession. Mr. Ramirez filed suit against both Mr. Transmission and Texas Mechanical for violations of the automatic stay and the Federal and Texas Fair Debt Collection Acts. Texas Mechanical filed a cross-claim against Mr. Transmission to collect the fees it incurred in repossessing the Truck and for fraud by non-disclosure. . . . Whether a bankruptcy court can enter a final judgment in a case depends on whether the action at issue stems from the bankruptcy itself or would necessarily be resolved in the claims allowance process. Stern v. Marshall, 131 S. Ct. 2594, 2618, 180 L. Ed. 2d 475 (2011). If the action does not stem from the bankruptcy itself, or need not be resolved in the claims allowance process, the claim belongs in an Article III court. Id. Under this test, state common-law claims are private rights which must be heard by an Article III court. Id. at 2611. In the recent In re BP RE, LP opinion, the Fifth Circuit held that even with the consent of all parties, bankruptcy judges cannot enter final judgments in cases that belong in an Article III court. In re BP RE, L.P., 735 F.3d 279, 281 (5th Cir. 2013) (reh’g en banc denied by In re BP RE, L.P., 744 F.3d 1371 (5th Cir. 2014)). . . . Texas Mechanical’s cross-claim against Mr. Transmission is a state law claim between two non-debtor entities that would not be resolved in the claims allowance process. It must be adjudicated by an Article III court, and the parties’ consent cannot cure this deficiency. Accordingly, the Court cannot enter a final judgment on Texas Mechanical’s cross-claim.”). [Adjudication of Claims Between Non-Debtor Parties] City of Bellevue v. Paradise Park, Inc. (In re Paradise Park, Inc.), 2014 WL 2158983 (Bankr. D. Neb. May 22, 2014) (Saladino, J.) (“A threshold issue to be addressed by bankruptcy courts in every case post-Stern is the matter of this court’s authority to enter final judgment. The United States Supreme Court emphasized in Stern v. Marshall . . . that if an action neither stems from the bankruptcy itself nor would necessarily be resolved in the claims allowance process, the bankruptcy court lacks constitutional authority to enter final judgment. . . . The underlying lawsuit here is a basic contract dispute. It does not involve federal law; rather, it is an adjudication of private rights unrelated to any restructuring of debtor-creditor rights. Because this is a non-bankruptcy matter based on common law or state law, the bankruptcy court lacks constitutional authority to enter final judgment. For that reason, these findings and recommendations are being submitted to the district court for entry of judgment as appropriate.”). [Breach of Contract Action] In re Manchester Oaks Homeowners Ass’n, 2014 WL 961167 (Bankr. E.D. Va. Mar. 12, 2014) (Kenney, J.) (Bankruptcy court denied confirmation of homeowners association’s Chapter 11 plan on multiple grounds, one being that “the Plan is not feasible under Section 1129(a)(11) because the foundation of the Plan, the Debtor’s special assessment, was not authorized in accordance with the Debtor’s Declaration of Covenants, Conditions and Restrictions.” Addressing its constitutional authority to determine whether the proposed special assessment was authorized under Virginia law, the court stated: “The Court first must satisfy itself that it has jurisdiction to decide the special assessment issue in the context of plan confirmation. [The objectors] . . . argue that the Court lacks 216

subject matter jurisdiction to decide the special assessment issue. They argue that the special assessment issue is purely one of State law, and rely on Stern v. Marshall for the proposition that the Court cannot decide this issue. . . . Confirmation of the Debtor’s Plan is a core proceeding, over which the Court has jurisdiction and for which the Court can enter a final order. 19 East Greenway, LLC v. Bataa/Kierland LLC (In re Bataa/Kierland LLC), 496 B.R. 183, 188–89 (D. Ariz. 2013) (bankruptcy court had jurisdiction to decide dispute in connection with plan confirmation); In re Charles Street African Methodist Episcopal Church of Boston, 499 B.R. 66, 99 (Bankr. D. Mass. 2013) (confirmation of plan involving third party releases within bankruptcy court’s jurisdiction); In re Lower Bucks Hosp., 471 B.R. 419, fn. 45 (Bankr. E.D. Pa. 2012), aff’d 488 B.R. 303 (E.D. Pa. 2013) (“If a bankruptcy court lacks subject matter jurisdiction over plan confirmation, it is hard to conceive of any matter that would fall within bankruptcy subject matter jurisdiction”); In re Wash. Mut., Inc., 461 B.R. 200, 215 (Bankr. D. Del. 2011) (bankruptcy court has jurisdiction to approve a settlement in connection with plan confirmation, holding: “Confirmation of a plan of reorganization is within the bankruptcy court’s core jurisdiction.”) The Debtor is seeking confirmation of its Chapter 11 Plan, historically a core competency of the bankruptcy court. . . . In Stern, the Court held that the judicial power resides with Article III Courts. Stern, though, involved the entry of a final, money judgment against a party. This case does not involve the entry of a money judgment, and does not raise the kind of systemic concerns at issue in Stern. While the validity of the special assessment may involve issues of purely State law, this is not determinative. See 28 U.S.C. § 157(b)(3) (“A determination that a proceeding is not a core proceeding shall not be made solely on the basis that its resolution may be affected by State law.”) Bankruptcy courts routinely make determinations of core issues that involve questions of State law. The Supreme Court has held that a determination of whether a property interest is property of the estate, a core proceeding under 28 U.S.C. § 157(b)(2)(E), is to be made by reference to State law. See Butner v. United States, 440 U.S. 48, 55 (1979) (“Property interests are created and defined by state law. Unless some federal interest requires a different result, there is no reason why such interests should be analyzed differently simply because an interested party is involved in a bankruptcy proceeding.”) The Court finds that it has jurisdiction to decide this matter.”). [Determination of Issue of State Law in Connection with Plan Confirmation] Orchard v. JPMorgan Chase Bank, N.A. (In re Orchard), 2013 WL 6254037 (Bankr. D. Or. Dec. 4, 2013) (Renn, J.) (Analyzing whether the defendant in adversary proceeding brought by Chapter 13 debtor had right to a jury trial on the claims based on alleged violations of the Fair Debt Collection Practices Act (“FDPA”), the court reasoned: “In Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 109 S. Ct. 2782 (1989), the Supreme Court set out a three-step test for determining when there is a constitutional right to a jury trial in a bankruptcy proceeding . . . . This three-step test is the same one applied to determine whether an Article III judge must enter a final judgment absent the parties’ consent to a non-Article III adjudication. [Exec. Benefits Ins. Agency v.] Arkison [(In re Bellingham Insurance Agency, Inc.)], 702 F.3d [553], 567 (9th Cir. 2012), cert. granted, 133 S. Ct. 2880 (2013) (concluding that under Stern, Seventh Amendment jury trial and Article III rights are co-extensive). Stern slightly re-phrased the salient step-three question on private vs. public rights, as to whether the ‘action at issue stems from the bankruptcy itself or would necessarily be resolved in the claims allowance process.’ If so, a ‘public right’ is implicated. In contrast, Stern emphasized that traditional actions at law that merely augment the bankruptcy estate do not involve public rights. Id. at 2618. Here, the remaining FDCPA counts resemble claims to augment the 217

assets available to creditors, much like the trustees’ fraudulent transfer claims in Bellingham and Granfinanciera and the debtor’s counterclaim in Stern, and not claims ‘integral to the debtor-creditor relationship’ or that ‘stem’ from the bankruptcy itself. Thus, a jury trial right would appear to attach.”). [Constitutional Authority to Enter Final Judgment on FDCPA Claim Dicta] McCarthy v. Giron (In re C & C Gen. Builders, Inc.), 2013 WL 8632105 (Bankr. E.D. Va. Nov. 18, 2013) (Mayer, J.) (“This case was before the court on September 19, 2013 for a trial on the chapter 7 trustee’s complaint. The complaint consists of two counts. Count I seeks to avoid a fraudulent transfer under 11 U.S.C. § 548. Count II seeks to pierce the corporate veil of C & C General Builders, Inc., and impose personal liability on Carlos Innocente Giron and Carlos Alexander Giron, the sole shareholders of C & C. . . . This is a core proceeding under 28 U.S.C. § 157(b)(2)(H) but subject to Stern v. Marshall . . . . The defendants do not consent to the bankruptcy court entering a final judgment. In accordance with McCarthy v. Wells Fargo Bank, N.A. (In re El–Atari), 2011 WL 5828013 (E.D. Va. Nov. 18, 2011), the bankruptcy court submits its proposed findings of fact and conclusions of law.”). [Trustee’s Veil Piercing Claim Against Defendant That Did Not File Proof of Claim]

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