Wellness International Network, Ltd. v. Sharif
617 F. App'x 589
7th Cir.2015Background
- Sharif filed for Chapter 7 bankruptcy; creditors Wellness International Network and owners filed an adversary proceeding seeking, among other things, a declaration that Sharif’s trust is his alter ego and assets belong to the estate (Count V).
- The bankruptcy court entered a default judgment against Sharif on all counts; he appealed to the district court.
- Prior to briefs in the district court, Stern v. Marshall held bankruptcy courts cannot enter final judgments on claims that exist apart from the bankruptcy proceeding.
- Sharif did not raise Stern in his opening brief; he sought to raise it in a supplemental brief months later, which the district court denied as untimely.
- In the initial appeal, this court and the Supreme Court addressed whether Stern objections can be waived/forfeited and whether Sharif consented to bankruptcy-court adjudication.
- The court now holds Sharif forfeited his Stern objection by not raising it at the proper time, affirming the district court on Count V and reinstating bankruptcy court fee awards.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Stern objection was forfeited/waived. | Sharif argued the issue was preserved. | Bankruptcy adjudication allowed by consent and not barred. | Yes, forfeited; not addressed on the merits. |
| Whether the bankruptcy court lacked authority to decide the alter-ego claim. | Alter-ego claims fall under core proceedings. | Article III adjudication required; Stern applies. | Bankruptcy court authority affirmed? (implied: not addressed; outcome affirms district court) |
| Effect of Supreme Court decision on forfeiture/consent requirement. | Personal right to Article III adjudicator could be preserved | Consent/forfeiture governs; Stern issue waived | Personal right can be waived or forfeited; issue not entertained |
Key Cases Cited
- Stern v. Marshall, 131 S. Ct. 2594 (2011) (bankruptcy courts cannot enter final judgment on claims that would exist apart from bankruptcy)
- Wellness Int’l Network, Ltd. v. Sharif, 135 S. Ct. 1932 (2015) (Article III adjudicator is a personal right that can be waived by consent)
- Bou-Matic, LLC v. Idento Operations, BV, 759 F.3d 790 (2014) (jurisdictional rights may be forfeited when not properly raised)
- Yakus v. United States, 321 U.S. 414 (1944) (constitutional rights may be forfeited by failure to timely assert)
- Bracey v. Grondin, 712 F.3d 1012 (2013) (court will not address assertions first raised in reply brief)
- Alam v. Miller Brewing Co., 709 F.3d 662 (2013) (same)
- Dye v. United States, 360 F.3d 744 (2004) (same)