Commercial Litigation and Arbitration

Can a Party Consent to the Bankruptcy Court Entering a Final Order in a Core Matter Otherwise Barred by Stern v. Marshall? — Circuit Split

In re Morris (Silagy v. Morris), 2013 Bankr. LEXIS 4369 (Bankr. N.D. Ohio Oct. 18, 2013):

The last jurisdictional issue is whether a party can consent, either expressly or impliedly, to the bankruptcy court entering a final order in a core matter that would normally be prohibited by Stern. There is currently a circuit split on this issue. The Ninth Circuit decided that a party can waive a constitutional Stern problem, because if a bankruptcy judge can decide a non-core proceeding with the necessary consent, "then it surely permits the same judge to decide a core proceeding" with the same consent. In re Bellingham, 702 F.3d at 567. The Sixth and Seventh Circuits have also reached the issue and determined that a party cannot consent to a constitutional Stern limitation because of the structural role of separation of powers in the United States government. Waldman, 698 F.3d 910; Wellness Int'l Network, Ltd. v. Sharif, 2013 WL 4441926 (7th Cir. 2013). As the Sixth Circuit is binding on this court, a party may not consent to allow a bankruptcy court to enter a final order in a core action where the bankruptcy court would otherwise be prohibited by Stern. Waldman, 695 F.3d 910.


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