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final judgment on its state common-law claims against prospective purchaser of its real property, which were non-core claims, and, thus, the court's entry of final judgment was appropriate under the Bankruptcy Code. Although debtor withdrew its consent before final judgment, there was no doubt that it chose to file the claims in the bankruptcy court, expressly consented to the entry of a final judgment there, and sought to revoke the consent only after it was denied a jury trial. Following denial of debtor's requests for jury trial and for withdrawal of the reference, bench trial was held. The United States Bankruptcy Court for the Western District of Texas, John C. Akard, J., 2010 WL 3270497, entered final judgment denying all of debtor's claims. Debtor appealed. The District Court affirmed.
Holding: Remanded to the District Court. Where a bankruptcy court lacks Article III authority to enter final judgment on a non-core claim, a party cannot cure the constitutional deficiency by consenting to having its claim heard in bankruptcy court. Accord Waldman v. Stone, 698 F.3d 910, 919 (6th Cir.2012), cert. denied, --- U.S. ----, 133 S.Ct. 1604, 185 L.Ed.2d 581 (2013):
ii. In re Talsma, 2014 WL 1455882 (Bankr. N.D. Tex. 2014)
Issue: Whether court had jurisdiction over claims.
Holdings: (1) Bankruptcy court could exercise non-core "related to jurisdiction" over claims asserted by Chapter 11 debtors against lender that had allegedly used manufactured postconfirmation defaults in order to force debtors into agreeing to pay higher rate of interest than that called for in their confirmed Chapter 11 plan, to extent that debtors sought to recover for lender's alleged misconduct upon unjust enrichment, tortious interference, breach of fiduciary duty, fraud, or other state law theories, and had "core jurisdiction" over debtors' claims to extent based on lender's alleged breach of terms of confirmed plan. All claims had at least a conceivable effect on estate, and breach of contract and declaratory judgment claims, while pled as common law causes of action, implicated bankruptcy court's statutory powers, as well as its inherent power to interpret and implement its own orders.
(2) Bankruptcy court, even as non-Article-III court, had constitutional authority to finally decide claims asserted by Chapter 11 debtors against lender which had allegedly used manufactured postconfirmation defaults in order to force debtors into agreeing to pay higher rate of interest than that called for in their confirmed Chapter 11 plan, to extent that debtors asserted breach of contract or declaratory judgment claims, on theory that lender's conduct violated terms of their confirmed plan, as well as to extent that factual findings or legal conclusions specific to debtors' unjust enrichment and other state law claims were necessary to allow court to finally determine these "core" breach of contract and declaratory judgment claims.(3) =court could exercise continuing, postconfirmation jurisdiction over claims.
©2014 William L. Norton III
