Executive Benefits Insurance Agency v. Arkison, 702 F.3d 553

Background

Bellingham Insurance Agency (BIA) and ARIS operated closely related entities; Paleveda owned ARIS and directed BIA, with Ewing later taking control of BIA.
BIA became insolvent and ceased operations in early 2006; it assigned insurance commissions to Peter Pearce, who then became an EBIA employee.
After dissolution, EBIA received substantial commissions via intercompany transfers from BIA through ARIS; the trustee sought to recover these as fraudulent transfers.
Bankruptcy court granted summary judgment for the trustee, finding a constructively fraudulent transfer and that EBIA was a successor to BIA liable for its debts.
EBIA challenged the final judgment, arguing non-Article III bankruptcy judges cannot decide fraud claims; EBIA also argued about proper forum and consent.
The Ninth Circuit held that a non-Article III judge may not render final judgments in fraudulent-conveyance claims against nonclaimants, but EBIA consented to such adjudication by failing to object until the appeal.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Can a non-Article III bankruptcy judge render final judgment in a fraudulent conveyance action against a nonclaimant?	EBIA contends such judgments exceed constitutional authority.	Arkison argues statutory core proceedings may be decided by bankruptcy judges as final judgments.	No final judgment by non-Article III judge allowed.
Does the public-rights doctrine encompass federal-law fraudulent conveyance claims after Granfinanciera and Stern?	Granfinanciera and Stern foreclose treating fraud claims as public rights	Public-rights rationale could justify bankruptcy adjudication of related matters	Fraudulent conveyance claims are not public rights; require Article III adjudication.
May bankruptcy courts hear such claims and submit findings of fact and conclusions of law for de novo review by district court?	Bankruptcy courts should be able to hear and decide core matters, including fraud, with final judgments later by district court	If final judgment cannot be entered, courts may still hear and issue findings for de novo review	Bankruptcy courts may hear and submit proposed findings of fact and conclusions of law in core fraudulent-conveyance proceedings.
Did EBIA consent to the bankruptcy court’s jurisdiction, thereby waiving Article III rights?	No consent to non-Article III adjudication impliedly or explicitly	EBIA implicitly consented by not timely objecting and by actions during proceedings	EBIA impliedly consented to the bankruptcy court’s jurisdiction.
Is EBIA liable as a successor to BIA for fraudulent transfers to EBIA itself under applicable law (federal and Washington UTC)?	Trustee established constructive fraud and successor liability	Argues differences between entities negate liability	EBIA is BIA’s successor and liable for BIA’s debts; transfers were constructively fraudulent.

Key Cases Cited

Granfinanciera, S.A. v. Nordberg, 492 U.S. 33 (U.S. 1989) (fraudulent conveyance not a public-rights matter; Seventh Amendment jury right)
Stern v. Marshall, 131 S. Ct. 2594 (Supreme Court 2011) (bankruptcy courts cannot enter final judgments on certain core proceedings without Article III)
Northern Pipeline Construction Co. v. Marathon Pipe Line Co., 458 U.S. 50 (U.S. 1982) (public rights doctrine and limits of bankruptcy adjudication)
In re Mankin, 823 F.2d 1296 (9th Cir. 1987) (public rights framework aligned with core proceedings in bankruptcy)
Celotex Corp. v. Edwards, 514 U.S. 300 (U.S. 1995) (statutory limits on bankruptcy jurisdiction)
Commodity Futures Trading Comm’n v. Schor, 478 U.S. 833 (U.S. 1986) (multi-factor approach to Article III assignment; practical constitutional concerns)
Langenkamp v. Culp, 498 U.S. 42 (U.S. 1990) (link between Article III rights and Seventh Amendment rights)
Roell v. Winthrow, 538 U.S. 580 (U.S. 2003) (consent to refer or transfer of jurisdiction can validate non-Article III adjudication)