A Bunny’s Tale: Hopping Toward the End of Bankruptcy Jurisdiction?

By Intro by Prof. Ralph U. Whitten

On June 23, 2011, the United States Supreme Court decided Stern v. Marshall, previously discussed at ConsiderChapter13.org in A Bunny’s Tale:  The Impact of a Playboy Playmate on Federal Jurisdiction on February 11, 2011.   Readers will recall that the general question in the case concerned the power of a non-Article III bankruptcy judge to enter judgment on a state counterclaim, although there were many other interesting peripheral questions, such as the preclusive effect of a Texas state probate court judgment on the issues being determined in the bankruptcy court.  In a nutshell, the Supreme Court held that the bankruptcy judge had statutory power to decide the counterclaim, but lacked power under Article III of the Constitution to do so.  On the statutory point, the Court held that the counterclaim was a “core proceeding” under 28 U.S.C. § 157(b) (2006) that the bankruptcy judge was authorized to enter final judgment on.  On the constitutional issue, the Court held that the bankruptcy court was exercising the judicial power of the United States when it purported to resolve and enter final judgment on the state-law counterclaim.  The Court further rejected the arguments (1) that the counterclaim could be considered a matter of “public right” that could be decided outside the judicial branch and (2) that the bankruptcy court was not authorized by the Court’s precedents to hear the counterclaim because it was in response to a proof of claim filed by the creditor (the party defending against the counterclaim), (3) that the bankruptcy court could not be considered as acting as an “adjunct” to the district court, as opposed to itself exercising the essential attributes of judicial power, when it entered judgment on the counterclaim and (4) that any practical difficulties that would be caused by forbidding the bankruptcy courts from entering judgment on counterclaims like the one involved in the case did not justify departing from the important separation of powers policies embodied in Article III of the Constitution.  Thus, the Court affirmed the judgment of the court of appeals, with the ultimate result that the Texas probate court’s decision on the issues governing the counterclaim is preclusive and the counterclaim fails as a consequence.


Ralph U. Whitten Ralph U. Whitten is the Senator Allen A. Sekt Professor of Law at Creighton
University Law School. Professor Whitten has taught Civil Procedure, Conflict of
Laws, and Federal Courts for over thirty years. He is the author of numerous
articles in those subjects and has co-authored multiple editions of casebooks
and treatises in Civil Procedure and Conflict of Laws. He knows little or
nothing about bankruptcy and is, after a long career, pretty much uninterested
in learning more about the subject.
No Author Biography has been linked to this Article.

Related Articles

moran_cathy
December 10, 2023
“The bankruptcy petition came to my desk for review with no entry for “clothing and wearing apparel”. Funny, I think I’d remember if I’d interviewed any naked people lately.” Although filled with Attorney Moran’s wit, there is an important lesson here! Feel free to add your own ‘naked client’ story in the comments section below the article.
Members
moran_cathy
March 12, 2023
Lien perfection follows state law The secret tax lien attaches to all of a taxpayer’s property of any kind, wherever located. However, a tax lien is perfected against other creditors only by compliance with state laws on perfection of liens. AND during the pendency of a bankruptcy case, counsel only has to deal with the properly perfected tax lien. State...
Members
July 19, 2020
By Cathy Moran, Esq. (Redwood City, CA) Like so much in life, it’s all about timing. I revisited an older post here about delaying the filing of a bankruptcy til the New Year when the debtor expects to owe taxes in April. A Chapter 13 filed in January can include and pay the taxes associated with the tax year ending...
Members
December 8, 2019
By Lawrence R. Ahern, III, Brown & Ahern (Nashville, TN) Part VI Two Things Debtors Should Know About the Small Business Reorganization Act of 2019 (SBRA), Including a Primer on Chapter 11 Confirmation Introduction This series focuses on four bankruptcy-related bills that were enacted during the 116th Congress and signed into law on August 23, 2019.1 One bill, the Small...
Members
Academy Circle Logo Final
December 10, 2023
As a professional in an occupation that may often interface with people handling life disruptions (e.g., divorce/separation, unemployment, mortgage foreclosure) you are being asked to participate in a study being conducted by the University of Southern California.
May 17, 2020
By Lawrence R. Ahern, III, Brown & Ahern (Nashville, TN) Introduction As of April 16, 2020, more than 22,000,000 people in the United States were reported to have filed for unemployment aid, "a staggering loss of jobs that has wiped out a decade of employment gains and pushed families to line up at food banks as they await government help."1...
Members
June 9, 2019
By Jan Hamilton, Chapter 13 Trustee (Topeka, KS) Introduction Preliminarily, I recognize that many of those reading this do not need to. There are many fine trial attorneys in the bankruptcy bar. Those folks could well be writing this article. By way of defending myself in advance, this little piece does not consist of a series of war stories or...
Members
moran_cathy
February 13, 2022
When there’s a joint bank account and a bankruptcy filing, good intentions can quickly go sour. The bankruptcy trustee sees a pile of money in the bank to which the debtor has access, even though the account also bears the name of someone not in bankruptcy. If the debtor can get the money, the trustee contends, so can a bankruptcy...
Members
McCormick2
August 13, 2023
In the fall of 2021, Michael McCormick provided subscribers with an EXCELLENT, expository, seven-part outline on mortgage escrow.   This information is just as relevant today as when we first published it with one important update . . . When the next escrow analysis is performed and the servicer has received less than 12 payments of escrow (and often zero, as is often the case after the borrower received a forbearance during the COVID pandemic), the escrow balance will be far less than anticipated!!
Members
September 8, 2019
By Lawrence R. Ahern, III, Brown & Ahern (Nashville, TN) Introduction Four bankruptcy-related bills were enacted during the 116th Congress and signed into law on August 23, 2019.1 The legislation affected both business and consumer cases. One bill, the Small Business Reorganization Act of 2019 (SBRA),2 deals on its face with a non-consumer topic. However, it will be of great...
Members

Looking to Become a Member?

ConsiderChapter13.org offers a forum to advance continuing education of consumer bankruptcy via access to insightful articles, informative webinars, and the latest industry news. Join now to benefit from expert resources and stay informed.

Webinars

These informative sessions are led by industry experts and cover a range of consumer bankruptcy topics.

Member Articles

Written by industry experts, these articles provide in-depth analysis and practical guidance on consumer bankruptcy topics.

Industry News

The Academy is the go-to source for the latest news and analysis in the Chapter 13 bankruptcy industry.

To get started, please let us know which of these best fits your current position: