MEMORANDUM AND ORDER
Plаintiff Lehman Brothers Holding Inc. (“LBHI”; collectively with all of LBHI’s subsidiaries, “Lehman”) and Plaintiff In-tervenor Official Committee of Unsecured Creditors of Lehman Brothers Holdings Inc. (the “Committee”; collectively with LBHI, “Plaintiffs”) bring this adversary proceeding, pursuant to and under Rule 7001 of the Federal Rules of Bankruptcy
I. BACKGROUND
A. Facts
1. The Clearance Agreement
Prior to its bankruptcy, “Lehman was the fourth largest investment bank in the United States” (FAC ¶ 15), and at all times relevant to this action, JPMC served as Lehman’s primary bank, the principal clearing bаnk for Lehman Brothers Inc. (“LBI”), and the agent for LBI’s triparty repurchase agreements that LBI used to obtain short-term financing. (Id. ¶¶ 3, 16, 18). As the agent for those agreements, JPMC would “act[ ] as custodian over the securities and cash subject to [triparty repurchases] until the counterparties had each delivered their matching part of the [repurchases].” (Id. ¶3.) On June 15, 2000, LBI and JPMC’s predecessor-in-interest, the Chase Manhattan Bank (“Chase”), entered into a clearance agreement (the “Clearance Agreement”), which had both a “lending provision” and “lien provisions.” (Id. ¶¶ 19-20; see Deck of Alexander B. Lees, dated Sept. 26, 2011, Doc. No. 3 (“Lees Deck”), Ex. C.) The lending provision, inter alia, preserved JPMC’s right, via Chase, to decline a request by LBI for an extension of credit and provided that “[a]ll loans, whether of money or securities, shall be payable on demand.” (Lees Deck Ex. C § 5.) The provision also provided that Chase, and thereby JPMC, “may, solely at [its] discretion, permit [LBI] to use funds credited to the Account prior tо final payment.” (Id.)
The lien provisions granted JPMC, via Chase, a lien over certain assets held in LBI’s accounts at JPMC as security for its exposure on advances made by JPMC to LBI. (FAC ¶¶ 20, 22; see Lees Deck Ex. C § 11(a).) “Because [JPMC] was the primary clearing bank for LBI” during the relevant period, “virtually all [of] LBI’s securities and cash used in its trading activities were on deposit with [JPMC] or in [JPMC] accounts at depositories.” (FAC 122.) However, JPMC’s security rights to LBI’s collateral were limited “to the assets in LBI’s accounts subject to [JPMC’s] lien arid did not extend to the accounts of any other Lehman entity.” (Id. ¶ 23.)
While JPMC had wide discretion under the Clearance Agreement as to whether to advance funds or extend credit, the agreement required JPMC to give notice before refusing to extend credit. (Id. ¶ 24; see Lees Deck Ex. C § 5.) The Clearance Agreement also required notice prior to termination of the agreement itself. Section 17 of the agreement provided that:
either party could terminate the agreement by written notice if[, inter alia,]: (i) the other party entered into a proceеding for bankruptcy; (ii) the other party failed to comply with any material provision of the agreement, which failure was not cured within 30 days after notice of such failure; or (iii) any representation or warrant made in the agreement by the other party shall have proven to have been, at the time made, false or misleading in any material respect.
(FAC ¶ 26; see Lees Deck Ex. C § 17.) Although the “initial term” of the Clearance Agreement commenced on June 15, 2000 and ended on October 7, 2002, the parties continued to engage in transactions under the terms of the agreement from 2000 until they amended it in 2008. (FAC ¶ 27.)
2. The August Agreements
“After operating under the original ... Clearance Agreement for eight years,” on or about August 18, 2008, JPMC and LBHI conferred regarding a series of new agreements (collectively, the “August Agreements”) that, once effective, would “alter[] the terms of the clearance relationship between the parties.” (Id. ¶ 28.) The August Agreements, executed on or about August 29, 2008, included an amendment to the Clearance Agreement, a guaranty agreement (the “August Guaranty”), and a security agreement in favor of JPMC (the “August Security Agreement”). (Id.)
Pursuant to the August Agreements, LBHI agreed to post collateral to guarantee the intra-day trading obligations of LBI and other Lehman subsidiaries as defined in the amended Clearance Agreement. (Id. ¶ 30.) The parties also agreed that “LBHI’s maximum liability under the August Guaranty would be limited to the value of LBHI collateral held by [JPMC] in two specified accounts subject to [JPMC’s] lien.” (Id.) Moreover, pursuant to the August Security Agreement, LBHI could transfer the collateral pledged under the agreement — provided that LBHI first determined that it had no outstanding clearance obligations to JPMC — to a lien-free account at JPMC, known as an “Overnight Account.” (Lees Decl. Ex. E at 3.) Plaintiffs allege that, because the intra-day clearance exposures between JPMC and Lehman subsidiaries typically were reduced to zero at the close of business of each trading day, this Overnight Account provision essentially entitled LBHI “to have access to all — or at least a substantial majority — of its collateral overnight.” (FAC ¶¶ 31-32.) Nonetheless, according to Plaintiffs, the August Agreements gave Plaintiffs neither actual nor reasonably equivalent value in exchange for giving JPMC “significant new rights against LBHI.” (Id. ¶ 33.)
3. JPMC’s Access to Lehman-Specific Information in September 2008
Plaintiffs allege that in the immediate lead-up to LBHI’s collapse, JPMC gained “unparalleled access to and knowledge of Lehman’s financial condition and prospects.” (Id. ¶ 35.) For example, on September 4, 2008, senior management of LBHI met with senior officers of JPMC to discuss Lehman’s upcoming third-quarter results, Lehman’s expected significant asset write-downs, and Lehman’s plans going forward. (Id. ¶ 36.) Moreover, according to Plaintiffs, JPMC had “first-hand knowledge” of Lehman’s intentions regarding its potential acquisition by Korea Development Bank, Lehman’s primary bidder, and had “advance opportunity to review and comment on Lehman’s prеsentation to the rating agencies.” (Id. ¶ 4.)
Also in September 2008, JPMC’s senior executives attended Lehman’s strategic planning meetings as well as meetings with the “United States government’s inner circle as it planned its efforts to address the issues relating to Lehman’s fi
4. The September Agreements
According to Plaintiffs, in September 2008, JPMC exploited its access to this nonpublic information about Lehman’s dire financial condition by “maneuvering to gain a preferred position over LBHI’s other creditors.” (Id. ¶ 44.) Although JPMC allegedly believed it was over-collateralized for intra-day clearing risk as of September 4, 2008, on the night of September 9, 2008, JPMC “required LBHI to enter into a new series of agreements,” which included a guaranty (the “September Guaranty”), a security agreement (the “September Security Agreement”), an amendment to the Clearance Agreement (the “September Amendment”), and an account control agreement (the “Account Control Agreement”; collectively, the “September Agreements”). (Id. ¶¶ 45^46.) To pressure JPMC into signing the agreements, JPMC allegedly told LBHI executives that, if they did not execute the proposed agreements before LBHI’s earnings call the next day, it would “immediately stop extending intra-day credit to, and clearing trades for, Lehman.” (Id. ¶ 48.)
Executed on September 10, 2008, the September Agreements “altered the relationship between [JPMC] and LBHI” by, inter alia, (1) requiring LBHI to “guarantee and secure all exposures of all [JPMC] entities to all Lehman entities,” (2) changing the cap on LBHI’s liability set forth in the August Guaranty, and (3) changing the provision in the August Security Agreement “that expressly gave LBHI the right to transfer its collateral from the pledged accounts to the lien-free overnight account.”
5. JPMC’s Demands for Collateral Under the September Agreements
According to Plaintiffs, during the week leading up to LBHI’s September 15, 2008 bankruptcy petition, JPMC made demands for additional collateral despite knowing that it had “sufficient collateral to cover its intraday clearing risk.” (Id. ¶ 62). Such demands allegedly “contributed significantly to LBHI’s inability to meet the liquidity needs of its business” and were backed by a threat that if LBHI failed to comply, JPMC would immediately cease providing intraday clearing services. (Id. ¶ 66.) According to Plaintiffs, LBHI had little choice but to post the collateral because if JPMC followed up on its threat, LBHI would immediately “fail.” (Id. ¶ 68 (internal quotation marks omitted).)
6. JPMC’s Post-Petition Advances and LBHI’s Comfort Order Motion
Following LBHI’s bankruptcy petition on Monday, September 15, 2008, JPMC continued to provide large amounts of credit to LBI. On September 15, JPMC provided approximately $87 billion of credit to LBI to unwind the previous Friday’s triparty repurchase agreements and other financings. (Am. CounterclsA 29.)
On September 16, 2008, Lehman filed a motion in bankruptcy court to induce JPMC to continue making intra-day clearance advances to LBI (the “Comfort Order Motion”). (Id. ¶ 34.) The motion asked the bankruptcy court to clarify in the order that Lehman was authorized during bankruptcy proceedings to continue incurring debt to JPMC under the August and September Agreements. (Id.) The bankruptcy court granted the Comfort Order Motion the same day. (Id. ¶ 35.)
On September 17, 2008, Lehman moved the bankruptcy court to approve the sale of LBI’s business and assets to Barclays. (Id. 1136-37.) According to the Amended Counterclaims of JPMC (“Amended Counterclaims”), JPMC relied on Lehman’s representations that Barclays had agreed to purchase all of the LBI-owned securities that JPMC was financing intra-day; thereafter, JPMC advanced approximately $70 billion to LBI to unwind triparty repurchase agreements and other financings. (Id. ¶¶ 37-40, 69.) JPMC subsequently learned that Barclays had not agreed to purchase all of the securities that JPMC was financing. (Id. ¶¶ 62-65.) Accordingly, when the Securities Investor Protection Corporation initiated liquidation proceedings against LBI on September 19, 2008, JPMC still had more than $25 billion of unpaid loans to LBI. (Id. ¶¶ 6, 12, 89-90.) To satisfy the loans, JPMC sold $8.6 billion in cash collateral that it had previously received from Lehman. (Id. ¶¶ 12, 101.) Ultimately, JPMC filed proofs of claim against the LBHI estate in the amount of approximately $30 billion, including secured claims under the August and September Guarantees for approximately $25 billion in connection with extensions of credit under the Clearance Agreement. (See Decl. of Cindi M. Giglio, dated Oct. 26, 2011, Doc. No. 28 (“Giglio Decl.”), Ex. I.)
B. Procedural History
The Lehman bankruptcy is the largest and, arguably, the most complex in United States history. Since LBHI filed its petition for bankruptcy in September 2008, Judge Peck has overseen the claims administration process for tens of thousands of claims against the LBHI estate and presided over a number of adversary proceedings stemming from the bankruptcy.
LBHI initiated this particular adversary proceeding on May 26, 2010 by filing the Complaint in the bankruptcy court. That same day, Plaintiffs filed a joint motion to authorize the Committee to intervene in this litigation. By Order dated June 24, 2010, the bankruptcy court granted Plaintiffs’ motion.
The Court heard oral argument on JPMC’s motion on December 30, 2011. At the argument, the Court indicated that it would — with the parties’ consent — reserve decision on JPMC’s motion until after the bankruptcy court had ruled on the pending motion to dismiss then before it. (Doc. No. 36 (“Tr.”) at 76-77.) On February 17, 2012, the bankruptcy court received supplemental briefing on the motion to dismiss.
On April 19, 2012, the bankruptcy court granted JPMC’s motion to dismiss to the extent that the motion related to all claims based on preference liability or constructively fraudulent transfers — under §§ 544, 547, and 548 of the Bankruptcy Code — but denied the motion to the extent that it related to claims to which the relevant safe harbor provisions of the Bankruptcy Code do not apply. Lehman Bros. Holdings Inc. v. JPMorgan Chase Bank, N.A. (In re Lehman Bros. Holdings Inc.),
II. Disoussion
A. Authority of the Bankruptcy Court to Enter Final Judgment
This Court, rather than the bankruptcy court, has original jurisdiction over “all civil proceedings arising under [T]itle 11, or arising in or related to cases under [T]itle 11,” 28 U.S.C. § 1334(b); however, under 28 U.S.C. § 157, “the § 1334(b) jurisdiction is exercised by both the [djistrict [cjourt and the [bjankruptcy [cjourt,” depending on the nature of the proceedings, Dev. Specialists, Inc. v. Akin Gump Strauss Hauer & Feld LLP,
Pursuant to a recently-amended standing order in this district, all cases arising under or related to a case under Title 11 are automatically referred to the bankruptcy court. In re Standing Order of Reference Re: Title 11,
1. The Orion Factors and the Impact of Stem
The parties do not contend that this case presents a matter of mandatory withdrawal under 28 U.S.C. § 157(d). (See Mem. at 14; Opp’n at 2.) Rather, it presents a matter of permissive withdrawal under the same provision, which provides that a “district court may withdraw, in whole or in part, any case or proceeding referred [to the bankruptcy court] on its own motion or on a timely motion of any party, for cause shown.” 28 U.S.C. § 157(d). “To determine whether a party has shown ‘cause’ for permissive withdrawal ..., the Second Circuit, prior to Stem, directed that the district court weigh several factors [ (the “Orion factors”) ], including:
(1) whether the claim [or proceeding] is core or non-core, (2) what is the most efficient use of judicial resources, (3) what is the delay and what are the costs to the parties, (4) what will promote uniformity of bankruptcy administration, (5) what will prevent forum shopping, and (6) other related factors.
Kirschner v. Agoglia,
Chief among these factors pre-Stem was the first factor — whether the claim or proceeding is core or non-core. See Orion,
Thus, in evaluating a motion to withdraw post-Siem, the principal question is no longer whether the claim in question is “core” or “non-core” pursuant to the Bankruptcy Code but whether the bankruptcy court has constitutional authority to enter final judgment on the claims at issue. See In re Arbco Capital Mgmt., LLP,
2. Understanding Stem — The Public Rights Exception
To understand Stem and the question of whether the bankruptcy court has the constitutional authority to enter final judgment on the claims in this action, it is first necessary to explore a pair of older cases upon which the Supreme Court relied in Stem. In the first of these cases — Northern Pipeline Constmction Co. v. Marathon Pipe Line Co. — the Supreme Court held that the Bankruptcy Act of 1978 unconstitutionally vested final adjudicative authority on the bankruptcy courts, thereby violating Article III of the Constitution.
As explained in Stem, following Northern Pipeline, the Supreme Court:
has continued ... to limit the [public rights] exception to cases in which the claim at issue derives from a federal regulatory scheme, or in which resolution of the claim by an expert government agency is deemed essential to a limited regulatory objective within the agency’s authority. In other words, it is still the case that what makes a right ‘public’ rather than private is that the right is integrally related to particular federal government action.
Stern,
3. Application to the Claims at Issue a. Common Law Claims
As noted above, Plaintiffs bring a myriad of different common law causes of action. Among these are traditional damages claims under New York law for breach of contract, fraud, and duress (Counts XLI through XLIX). Plaintiffs also bring common law damages causes of action for conversion, unjust enrichment, and constructive trust (Counts XXXII, XXXVI-XXXVII, and XXXIX-XL). The Court proceeds to determine whether these are “the types of common-law claims to augment the estate that were clearly held to require Article III adjudication in Northern Pipeline.” (Mem. at 23 (citing N. Pipeline,
Following Stem, a key question for the Court to consider is “whether the action at issue stems from the bankruptcy itself or would necessarily be resolved in the claims allowance process.” Stern,
Furthermore, Plaintiffs argue that the “potential to recover ... damages [on state law causes of action] does not preclude the [bankruptcy [e]ourt from entering a final order resolving those counts” because, inter alia, the underlying liability elements of their damages claims “must be resolved in order to rule” on JPMC’s proof of claim. (Opp’n at 22-23.) However, to trigger the “public rights” exception, partial overlap of the action is insufficient; rather a plaintiff must demonstrate that each factual and legal element of its claim will be decided in the claims allowance process such that after the process, “nothing remains for adjudication in a plenary suit.” Stern, 131 at 2616 (quoting Katchen v. Landy,
Here, the Court is unconvinced that “each factual and legal element” of Plaintiffs’ various claims will be so resolved. For example, Plaintiffs have brought a fraud claim (Count XLIX), alleging that on September 11, 2008, JPMC’s CEO fraudulently represented to Lehman’s CEO that if Lehman delivered $5 billion in collateral, JPMC would return it the next day. (FAC ¶¶ 364-69.) However, as JPMC rightly argues, “[t]o succeed on this claim, [Plaintiffs will have to prove, among other things, that the alleged statement in fact was made, that [JPMC’s] CEO had the intent to deceive, and that Lehman ... reasonably relied on this oral promise.”
Likewise, Plaintiffs’ claims for (1) breaches of the Clearance Agreement and the August Agreements (Counts XLI, XLII, XLIII, XLIV) and (2) breaches of the implied covenant of good faith and fair dealing with respect to those agreements (Counts XLV, and XLVII) will necessarily involve questions of whether the agreements indeed contained the alleged obligations that were violated and whether JPMC actually violated them. (See Mem. at 24-25.) Once again, these common law damages claims are unlikely to be resolved in the process of ruling on JPMC’s proof of claim, and rather, are merely claims “made of ‘the stuff of the traditional actions at common law.’ ” See Stern,
Thus, as JPMC rightly notes, “[e]ven assuming that there is some overlap between plaintiffs’ liability theories and [JPMC’s] right to recover from the estate, [P]laintiffs’ damages claims will not ‘be completely resolved in the bankruptcy process of allowing or disallowing [JPMC’s] claims.’ ” (Reply at 7-8) (quoting Stern,
b. Claims Seeking to Avoid and Recover Transfers under the Bankruptcy Code
Similarly, the Court finds that the bankruptcy court lacks authority to constitutionally adjudicate Plaintiffs’ claims seeking to avoid and recover transfers to JPMC.
As noted above, the Supreme Court in Stem:
analogized the state law tortious interference counterclaim before it to the fraudulent conveyance claim before the Court in Granfinanciera to hold that the counterclaim was a “private rights” claim that had to be adjudicated by an Article III Court. To now conclude that what is essentially the very claim presented in Granfinanciera — a fraudulent conveyance claim — is a “public rights” claim would be totally at odds with the [Stem ] Court’s analogy to Granfinanci-era.
Kirschner,
Plaintiffs nonetheless argue in opposition that such claims are part of the bankruptcy res because “all of the securities and $8.6 billion of cash and money market funds at issue ... is property of the [Lehman] estate.” (Opp’n at 22.) However, it is well settled that property transferred by the debtor is not “property of the estate” until the debtor succeeds in compelling the property’s return. FDIC v. Hirsch (In re Colonial Realty Co.),
Plaintiffs’ claims also will not be necessarily resolved in the process of deciding JPMC’s proof of claim because, contrary to Plaintiffs’ argument, 11 U.S.C. § 502(d) is not applicable to this particular adversary proceeding. That section provides that a creditor’s claim should be disallowed until it turns over any fraudulently or preferentially transferred property. 11 U.S.C. § 502(d). Accordingly, if § 502(d) were applicable to this action, the bankruptcy court would necessarily need to resolve Plaintiffs’ avoidance action prior to ruling on JPMC’s proof of claim.
However, § 502(d) is not applicable because the parties executed a Collateral Disposition Agreemеnt (“CDA”) so providing. Pursuant to the CDA, which the bankruptcy court approved, the parties agreed that resolution of JPMC’s payment of any avoidance claims to Lehman would be deferred until all claims in the First Amended Complaint are resolved. (Lees Decl. Ex. M at ¶ 6(b).) Although Plaintiffs are correct that the CDA affected the “timing by which [§ ] 502(d) may be invoked” (Opp’n at 26 (emphasis in original)), such timing is crucial to the question of whether that section can save Plaintiffs’ avoidance claims from a problem under Stem. Indeed, because § 502(d) would not provide a possible basis to disallow JPMC’s claims until after the claims in the First Amended Complaint are fully resolved, “by definition^ Plaintiffs’ avoidance claims will not be resolved within the process of allowing or disallowing [JPMC’s] proof of claim.” (Reply at 11.) Thus, because Plaintiffs’ claims to avoid and recover transfers are intended to “augment the estate” rather than to obtain a pro rata share of the bankruptcy res, see Stern,
c. Claims Seeking Relief Under Other Sections of the Bankruptcy Code
Because the Court conсludes that the bankruptcy court lacks constitutional au
B. Authority of the Bankruptcy Court to Issue a Report and Recommendation
Having concluded that the bankruptcy court lacks constitutional authority to finally decide the majority of Plaintiffs’ claims, the Court must next determine whether the bankruptcy сourt has the statutory. authority to issue proposed findings of fact and conclusions of law in this matter. The Court has little trouble concluding, contrary to JPMC’s argument, that the bankruptcy court has the authority to issue a report and recommendation in those core proceedings despite lacking constitutional authority to issue final judgment.
Under the Bankruptcy Code, the bankruptcy court “shall submit proposed findings of fact and conclusions of law to the district court” for non-core claims “related to” a bankruptcy proceeding. 28 U.S.C. § 157(c)(1). Notably, there is “no express authority [in the Code] that authorizes a bankruptcy court to issue reports and recommendations in those core proceedings where the bankruptcy court lacks constitutional authority to issue final judgment.” Kirschner,
Such a conclusion is consistent with this District’s Standing Order, which, as amended, provides:
If a bankruptcy judge or district judge determines that entry of a final ordеr or judgment by a bankruptcy judge would not be consistent with Article III of the United States Constitution in a particular proceeding referred under this order and determined to be a core matter, the bankruptcy judge shall, unless otherwise ordered by the district court, hear the proceeding and submit proposed findings of fact and conclusions of law to the district court. The district court may treat any order of the bankruptcy court as proposed findings of fact and conclusions of law in the event the district court concludes that the bankruptcy judge could not have entered a final order or judgment consistent with Article III of the United States Constitution.
In re Standing Order,
C. Whether to Withdraw the Reference at this Stage
Given that the bankruptcy court has the authority to issue proposed findings of fact and conclusions of law, the Court next considers the remaining Orion factors to determine whether they weigh in favor of withdrawing the reference at the present time.
1. The Right to a Jury Trial
As an initial matter, JPMC argues that the Court should withdraw the reference of the entire lawsuit because, inter alia, JPMC requested a jury trial and at least some of the claims at issue in the litigation are encompassed by the Seventh Amendment jury-trial right. (JPMC’s July 16, 2012 Ltr. at 2-4.) However, although a party’s right to a jury, when coupled with “the court’s finding that the claim is not subject to final adjudication in [bankruptcy [cjourt,” might provide “sufficient cause to withdraw the reference,” Dev. Specialists,
Indeed, it is possible that Plaintiffs’ claims “may be resolved before the matter is ripe for a trial before a jury.” In re Arbco Capital Mgmt.,
2. Core/Non-Core Claims
The Court next turns to the first Oñon factor — whether the claims at issue are “core” or “non-core.” “Although there is an intra-Cireuit split as to whether the bankruptcy court must make the initial determination of whether claims are core or non-core, the majority position, supported by the language of Oñon, supports the ability of this Court to make such a determination at this time.” Walker, Truesdell, Roth & Assocs.,
The remaining claims may present closer questiоns because they are not among the claims specifically enumerated as “core” in § 157; however, the Court need not decide whether they are core because the determination of whether claims are core or non-core is not dispositive of the instant withdrawal motion. See Walker, Truesdell, Roth & Assocs.,
3. Judicial Economy/Efficiency
The Court finds that considerations of judicial economy and efficiency weigh strongly against withdrawal. The bankruptcy court has been overseeing and administering the Lehman bankruptcy proceedings since their inception three years ago and has been deeply involved in this adversary proceeding, which has been pending since May 26, 2010. As such, the bankruptcy court is already fully immersed in the issues central to this litigation, having already ruled on JPMC’s motion to dismiss as well as a motion to reconsider that ruling. (See Lehman Bros. Holdings Inc.,
Particularly given the bankruptcy court’s involvement thus far in the litigation, the Court finds that judicial economy weighs against withdrawing the reference at this time. See In re Madison Bentley Assocs., LLC,
4. Uniformity of Bankruptcy Administration
For largely similar reasons, the Court finds that the policy of promoting the uniformity of bankruptcy administration also weighs against withdrawal. The bankruptcy court has “a wealth of knowledge and experience with fraudulent transfer claims,” Adelphia Recovery Trust,
Perhaps even more importantly, the bankruptcy court’s involvement with not only this proceeding but also with the administration of the entire Lehman bankruptcy (including the related claims objections) has been — as noted above— extensive. See Walker, Truesdell, Roth & Assocs.,
Therefore, the Court finds that having this action proceed before the bankruptcy court, at least at this time, will help promote the uniform application of the bankruptcy laws.
5. Preventing Forum Shopping and Delay
As to the Court’s interests in preventing forum shopping and delay, JPMC asserted before the bankruptcy court that its only motivаtion for making the instant motion was its concern, following Stem, about “litigating the case through trial, only to discover that a constitutional or procedural defect, which the parties could not waive, renders the judgment ineffectual.” (Giglio Decl. Ex. A at 5.) However, as Plaintiffs rightly note in their opposition brief, were that JPMC’s sole concern, JPMC could have simply consented to the final adjudicatory authority of the bankruptcy court. (Opp’n at 32 (quoting Stern,
It is difficult to speculate as to JPMC’s motives, particularly given that Judge Peck granted its motion to dismiss as to many of Plaintiffs’ claims. See Lehman Bros. Holdings Inc.,
Because each of the Orion factors weighs against withdrawing the bankruptcy reference, the Court declines to withdraw the reference at this time. However, given the Court’s conclusion that the bankruptcy court lacks constitutional authority to finally adjudicate the majority of the remaining claims in the First Amended Complaint, the Court is aware that, should this matter proceed to trial, it will likely need to withdraw the entire reference at that time.
III. Conolusion
For the aforementioned reasons, the Court denies JPMC’s motion to withdraw
Q tti Sf H Q pi o , CO
Notes
. The following facts are taken from the First Amended Complaint ("FAC”), JPMC's Amended Counterclaims (“Am. Countercls.”), and declarations submitted in connection with the instant motion and the exhibits attached thereto. In consideration of that motion, the Court also considers JPMC’s opening brief ("Mem.”), Plaintiffs' opposition brief ("Opp’n”), and JPMC’s reply brief ("Reply”).
. Plaintiffs allege that as of the night of September 9, 2008, neither LBHI Chief Financial Officer Ian Lowitt, nor Treasurer Paolo To-nucci, nor any other LBHI executive with authority to bind LBHI to the September Guaranty "reviewed or approved” the September Guaranty or the other September Agreements. (FAC ¶ 57.) Moreover, although Tonucci executed the September Agreements on September 10, 2008, Plaintiffs allege that he was not authorized to sign the September Guaranty. (Id. ¶¶ 59, 61.)
. On December 1, 2010, JPMC filed Counterclaims, alleging that, if it is required to return thе collateral it received from Lehman, LBHI is responsible for any loss that JPMC would suffer because LBHI fraudulently induced JPMC's continuing extensions of credit to LBI after LBHI’s bankruptcy filing. JPMC subsequently filed Amended Counterclaims on February 17, 2011, which include claims for (1) fraudulent misrepresentation (Count I); (2) fraudulent concealment (Count II); (3) fraudulent inducement to lend (Count III); (4) aiding and abetting LBI’s fraud (Count IV); (5) aiding and abetting Barclays’s fraud (Count V); (6) unjust enrichment (Count VI); (7) indemnification under the Clearance Agreement (Count VII); and (8) indemnification under the custodial undertaking (Count VIII).
. Claims in this first category include: (1) a fraud claim (Count XLIX); (2) claims for imposition of a constructive trust and turnover, unjust enrichment, and conversion (Counts XXXII, XXXVI, XXXVII, XXXIX, and XL); (3) a claim seeking a declaratory judgment that JPMC has no lien over a certain $6.9 billion in funds pursuant to either the August or the September Agreements (Count XXXVIII); (4) a claim seeking a declaratory judgment invalidating the September Agreements based on
. Claims in this second category include claims seeking: (1) avoidance of the September Agreements as actually fraudulent under § 548 of the Bankruptcy Code (Count I); (2) avoidance of the August Guaranty and the August Security Agreement as actually fraudulent under § 548 of the Bankruptcy Code (Count II); (3) avoidance of collateral transfers as actually fraudulent under § 548 of the Bankruptcy Code (count III); and (4) recovery of avoided fraudulent transfers under § 550 of the Bankruptcy Code (Count IV).
. Claims in this third category include: (1) a claim for turnover of excess collateral under § 542 of the Bankruptcy Code (Count XXV); (2) setoff claims under § 553(a) of the Bankruptcy Code (Count XXVI); (3) claims alleging violation of an automatic stay (Counts XXXIII and XXXIV); and (4) claims for disal-lowance under § 502(d) of the Bankruptcy Code and avoidance of liens securing such claims under § 506(c) (Count XXXI).