In Re Olde Prairie Block Owner, LLC
457 B.R. 692
Bankr. N.D. Ill.2011Background
- Olde Prairie Block Owner, LLC filed for Chapter 11 after CenterPoint foreclosed on its loan.
- CenterPoint filed a secured claim for ~$48.76 million; Debtor asserted five counterclaims.
- Counts I and III relate to contract and alleged bad faith; Counts II, IV, V are non-contractual state-law claims.
- Post-Stern v. Marshall, the court considered whether a bankruptcy judge may enter final judgments on counterclaims.
- Counts I and III were argued to be core or non-core; Counts II, IV, V were treated as non-core but consented to final adjudication.
- The court ultimately held that a bankruptcy judge may enter final judgments on all Counts due to Stern and express consent by the parties.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Stern prevents final judgments on Counts I and III | Olde Prairie argues Stern limits final adjudication of non-core counterclaims | CenterPoint contends Counts I and III are core or properly final due to consent | Counts I and III may be finally adjudicated by a Bankruptcy Judge |
| Whether Counts II, IV, V can be finally decided with consent | Olde Prairie asserts consent allows final bankruptcy-judge judgments | CenterPoint agrees to final adjudication under §157(c)(2) | Yes; final judgments on Counts II, IV, V permissible with consent |
| Role of consent under §157(c)(2) after Stern | Consent preserves final adjudication power for non-core matters | Consent remains valid despite Stern's limits | Consent to final judgment survives Stern for non-core, related proceedings |
| Whether Counts I and III are core under §157(b)(2)(C) | They are necessary to resolve CenterPoint's claim | Contends Stern limits core authority | Counts I and III are core and may be finally adjudicated by a Bankruptcy Judge |
Key Cases Cited
- Stern v. Marshall, 131 S. Ct. 2594 (2011) (limits bankruptcy judge's final adjudication of certain non-core counterclaims not resolved in claims process)
- In re Xonics, Inc., 813 F.2d 127 (7th Cir. 1987) (related-to bankruptcy proceedings; non-core but related jurisdictional framework)
- Normand v. Orkin Exterminating Co., 193 F.3d 908 (7th Cir. 1999) (definitional on contract theories and defenses in related counterclaims)
- Follett Higher Educ. Grp., Inc. v. Berman, 629 F.3d 761 (7th Cir. 2011) (consent to final adjudication by bankruptcy judge in non-core matters)
- Commodity Futures Trading Comm'n v. Schor, 478 U.S. 833 (1986) (constitutional limits on consent and jurisdiction in non-Article III adjudications)