Kirschner v. Agoglia
2012 U.S. Dist. LEXIS 65148
S.D.N.Y.2012Background
- Movants moved to withdraw the reference of the adversary proceeding to the Bankruptcy Court.
- Trustee filed fraudulent conveyance and unjust enrichment claims against Movants.
- The court partially withdrew the reference to address Stern v. Marshall-related questions.
- Stern held that only an Article III court may finally resolve state-law private rights claims arising in bankruptcy proceedings.
- The court held that the Bankruptcy Court cannot final-judge the Trustee’s claims but can issue a report and recommendation subject to de novo review.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Stern prohibits final judgments by the Bankruptcy Court on the Trustee’s claims. | Trustee argues Stern limits final judgments to Article III courts. | Movants contend Stern permits related core proceedings to be decided by the Bankruptcy Court. | Bankruptcy Court cannot enter final judgment; must be Article III court resolution. |
| Whether the Bankruptcy Court may issue a report and recommendation on core claims after Stern. | Trustee seeks findings by Bankruptcy Court with de novo review on appeal. | Movants challenge the extent of non-final relief the court may provide. | Bankruptcy Court may issue a report and recommendation, subject to de novo review. |
| Whether permissive withdrawal under § 157(d) is appropriate. | Retaining reference aids efficiency given familiarity with the case. | Withdrawal is needed due to constitutional limits on final judgments. | Return to Bankruptcy Court for further proceedings consistent with the Opinion. |
Key Cases Cited
- Stern v. Marshall, 131 S. Ct. 2594 (2011) (final adjudication of private rights lies in Article III courts; public rights exception discussed)
- Granfinanciera, S.A. v. Nordberg, 492 U.S. 33 (1989) (fraudulent conveyance actions are private rights; jury trial right applies; not public rights)
- Northern Pipeline Constr. Co. v. Marathon Pipe Line Co., 458 U.S. 50 (1982) (public rights exception to bankruptcy jurisdiction origin in constitutional context)
- Kontrick v. Ryan, 540 U.S. 443 (2004) (subject-matter jurisdiction may be raised sua sponte; bankruptcy jurisdiction impact on appeals)
- Tel-tronics Servs. v. L M Ericsson Tele-comms., Inc., 642 F.2d 31 (2d Cir. 1981) (judgment entry and res judicata considerations in 12(b)(6) contexts; jurisdictional issues)
- In re Ortiz, 665 F.3d 906 (2011) (whether bankruptcy appellate jurisdiction affects finality and review)