484 B.R. 598
Bankr. S.D.N.Y.2012Background
- Trustee filed an adversary proceeding against Oldeo M Distribution Trust to recover under §547 and §550.
- Defendant was properly served but did not respond to the summons and complaint.
- Clerk entered a default; Trustee moved for entry of a default judgment for $7,311.64 plus costs.
- Proofs of service for the summons, second summons, and default certificate were filed.
- Trustee filed a motion for judgment supported by a declaration; no response from defendant.
- Court held a hearing on the default judgment and considered Stem v. Marshall implications.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| May a bankruptcy court enter a final default judgment against a non-responsive defendant | Defendant implicitly consents via failure to respond | Consent argument challenged under Stem and related cases | Yes; implied consent exists and allows final default judgment by a bankruptcy judge |
| Does Stem limit the bankruptcy court’s authority to enter default judgments | Stem does not bar consent-based entry of default judgments | Stem narrows Article III authority for certain core matters | No; Stem does not bar default judgments where there is proper service and consent |
| Is implied consent to final adjudication supported by the summons language | Summons explicitly warns that failure to respond constitutes consent to entry of judgment | Implied consent must be carefully established and not presumed | Yes; explicit summons language supports implied consent for default judgment |
| Whether the Clerk may enter a final default judgment without a judge's intervention | Rule 7055/55(b) allows Clerk to enter a sum-certain judgment | Judicial oversight may be required in other contexts | Yes; Clerk may enter final default judgment when damages are sum certain |
Key Cases Cited
- Murray's Lessee v. Hoboken Land & Improvement Co., 59 U.S. 272 (U.S. 1856) (constitutional limits on Congress and Article III})
- Northern Pipeline Construction Co. v. Marathon Pipe Line Co., 458 U.S. 50 (U.S. 1982) (public rights vs. private rights; Article III limits)
- Schor v. Commodity Futures Trading Comm., 478 U.S. 833 (U.S. 1986) (consent and waivers of Article III rights; structural concerns)
- Stern v. Marshall, 131 S. Ct. 2594 (U.S. 2011) (article III final adjudication limits; consent vs. jurisdiction)
- Men’s Sportswear, Inc. v. Sasson Jeans, Inc. (In re Men’s Sportswear, Inc.), 834 F.2d 1134 (2d Cir. 1987) (implied consent can sustain bankruptcy court final adjudication)
- Bellingham Ins. Agency, Inc. v. Arkison, 702 F.3d 553 (9th Cir. 2012) (consent and authority to enter final judgments in non-core matters)
- Waldman v. Stone, 698 F.3d 910 (6th Cir. 2012) (structural vs. personal rights; implied consent limitations)
- Granfinanciera, S.A. v. Nordberg, 492 U.S. 33 (U.S. 1989) (Seventh Amendment and creditors; private rights vs. public rights)