Can a party consent to bankruptcy court jurisdiction?

Transcription

1 Can a party consent to bankruptcy court jurisdiction? I. Constitutional Framework A. Article 3, Section 1 The judicial,power of the United States shall be vested in one supreme Court, and in such inferior Courts as the Congress may from time to time ordain and establish. The Judges, both of the supreme and inferior Courts, shall hold their Offices during good Behaviour, and shall, at stated Times, receive for their Services a Compensation, which shall not be diminished during their Continuance in Office. ~~ - ~ B. Article 1, Section 8 The Congress shall have power: Clause Q: To establish an uniform Rule of Naturalization, and uniform Laws on the subject of Bankruptcies throughout the United States; Clause 9: To constitute Tribunals inferior to the Supreme Court; Clause I8: To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any. Department or Officer. thereof. II. A Brief History A. Bankruptcy Act of 1978 The Act eliminated the referee system and established "in each judicial district, as an adjunct to the district court for such district, a bankruptcy court which shall be a court of record knov~m as the United States Bankruptcy~ourt for the district." 28 U. S. C. 151(a) (1976 ed., Supp. IV). The judges of the new bankruptcy court were appointed for 14-year terms, and subject to removal by the judicial council of the circuit on account of "incompetency, misconduct, neglect of duty or physical or mental disability." 153(b) (1976 ed.; Supp. IV). The salaries of the bankruptcy judges are set by statute and are subject to adjustment under the Federal Salary Act, 2 U. S, C (1976 ed. and Supp. IV). 28 U. S. C. 154 (1976 ed., Supp. IV). The Act granted the new bankruptcy court jurisdiction over all "civil proceedings arising under title 11 or arising in or related to cases under title 11." 28 U. S. C. 1471(b) (1976 ed., Supp. IV). This empowered the bankruptcy court to entertain a wide variety of claims which may affect property of the estate, including suits to recover accounts, controversies involving exempt property, actions to avoid transfers and payments as

2 preferences or fraudulent conveyances, and causes of action owned by the debtor at the time of the petition for bai~lcruptcy. S. Northern Pipeline Constn Co. a Marathon Pipe Line Co., 458 U.S. 50 (1982) This involved a Chapter 11 debtor who filed suit in the bankruptcy court against Marathon Pipe Line Co. seeking damages for prepetition breaches of contract and warranty. Marathon, which had not filed a proof of claim or otheitivise participated in the bankruptcy case, sought dismissal of the suit on the ground that the 1978 Act unconstitutionally conferred Article III judicial power upon judges who lacked life tenure and protection against salary diminution. The Supreme Court held that the statutory grant of bankruptcy jurisdiction under the 1978 Act was unconstitutional to the extent that it authorized bankruptcy judges, who lacked the attributes of Article III judges; to hear and decide state law contract claims, subject to traditional appellate review by an Article III court. The Northern Pipeline court recognized three situations that are not subject to the constitutional command that judicial power be vested in Article III courts: territorial courts, military courts, and legislative and administrative courts created to adjudicate cases involving public rights. The Court identified public rights as those that arise `between the government and others." While the liability of one individual to another is a matter of private right. The Court stated, "the restructuring of debtor-creditor relations, which is at the core of the federal bankruptcy power, must be distinguished from the adjudication of state-created private rights, such as the right to.recover contract damages that ~s at issue in this case. The former may well be a "public right," bud the latter obviously is not. 458 U.S. at C. Bankruptcy Amendments and Federal Judgeship Act of 1984 In response to the Northern Pzpeline Court's recommendations that Congress restructure the bankruptcy courts, the 1984 Act conferred bankruptcy jurisdiction on the district courts and authorized the district courts to refer any or all matters falling within that jurisdiction to the bankruptcy judges fox the district. 28 U.S.C. 157(a). Under the 1984 Act, bankruptcy court judges became authorized to render final decisions in "core" matters under, the Bankruptcy Code. 28 U.S.C. 157(b). Parties may appeal final judgments of a bankruptcy court in core proceedings to the district court, which reviews them under traditional appellate standards. 28 U.S.C. 158(a). When a bankruptcy judge determines that a referred "proceeding... is not a core proceeding bt~t... is otherwise related to a case under title 1 l," the judge may only "submit proposed findings of fact and conclusions of law to the district court." 28 U.S.C. 157(c)(1). It is the district court that enters final judgment in such cases after reviewing de novo any matter to which a party objects. Id. 2

3 D. Commodity Future Tr~cding Commission v. Sclzo~, 478 U.S. 833 (1986) The Commodity Futures Trading Commission (CFTC) issued a regulation authorizing itself-.xo adjudicate counterclaims brought by brokers in reparations proceedings. Schor brought suit against his broker, who then filed a counterclaim against him. Schor then challenged the CFTC's authority to adjudicate the counterclaim as violating Article III of the United States Constitution. The Supreme Court held that the limited jurisdiction that CFTC asserts over state law claims as a necessary incident to the adjudication of federal claims willingly submitted by the parties. fox initial agency adjudication does not contravene separation of powers principles or Article III. The CFTC's powers departed from the traditional agency model only in respect to its ability to adjudicate counterclaims arising from the same transaction. This did not impermissibly intrude on the providence of the judiciary. E. Granfinanciera, S.A. v Nordberg, 492 U.S. 33 (1989) A Chapter 11 trustee filed suit against Granfinanciera, S.A., which had not filed a proof of claim, to avoid fraudulent transfers. The issue was whether there is a right to a jury trial when sued by a trustee in bankruptcy to recover an allegedly fraudulent transfer when a claim has not been submitted against the bankruptcy estate. The Supreme Court held that there is a right to a jury trial. In reaching this conclusion, the Court addressed whether the claim involves public rights because "[u]nless a legal cause of action involves `public rights,' Congress may not deprive parties litigating over such a right of the Seventh Amendment's guarantee of a jury trial." 492 U.S. at 53. The Court concluded that "a bankruptcy trustee's rights to recover a fraudulent conveyance under 11 U.S.C. 548(a)(2) were "quintessentially suits at common law that.. ~. resembled] state-law contract claims brought by a bankrupt corporation to augment the bankruptcy estate", zd., at 56, and as such "seems to us more accurately described as a private rather than a public right as we have used those terms in our Article III decisions." Id. at 55. Therefore, although a fraudulent transfer action is classified as a core proceeding, anon-article III bankruptcy judges could not adjudicate the claims. F. Langenkamp v Culp, 498 U.S. 42 (1990) Debtors were uninsured, nonbank financial institutions doing business in Oklahoma and filed Chapter 11 bankruptcy petitions in At the time of the bankruptcy filings, the defendants held thrift and passbook savings certificates issued by debtors, which represented debtors' promise to repay moneys the respondents had invested. Within the 90-day period immediately preceding debtors' Chapter 11 filing, the defendants redeemed some of the debtors' certificates which they held. The defendants filed proofs of claim against the bankruptcy estates. The trustee filed an adversary proceeding to recover the redemption payments as avoidable preferences.

4 The bankruptcy court found that the money received by the defendants did constitute avoidable preferences and the district court affirmed. On appeal, the 10th Circuit upheld the District Court's judgment on three grounds, but reversed on the issue of the defendants' entitlement to a jury trial. The Supreme Court affirmed, stating that "those appellants that did not have or file claims against the debtors' estates undoubtedly [were] entitled to a jury trial on the issue whether the payments they received from the debtors within ninety days of the Tatter's bankruptcy constituted] avoidable preferences." However, by filing claims against the banlc~uptcy estate, the defendants triggered the process of "allowance and disallowance of clairris," thereby subjecting themselves to the Bankruptcy Court's equitable power. The trustee's preference action became an integral part of the claims-allowance process, which is triable only in equity, and there was no right to a jury trzal. III. Stern v. Marshall, 131 S. Ct (2011) A. Facts Anna Nicole Smith ("Vickie") was J. Howard Marshall's ("Marshall") third wife and married him about a year before his death. Although Marshall bestowed on Vickie many monetary and other gifts during their courtship and marriage, he did not include her in his will. Before Marshall passed away, Vickie filed suit in Texas state probate court, asserting that Marshall's son, Pierce, fraudulently induced Marshall to sign a living trust that did not include her, even though Marshall meant to give her half his property. Pierce denied any fraudulent activity and defended the validity of Marshall J. Howard's trust and, eventually, his wi1l After Marshall's death, Vickie filed a Chapter 11 petition in the Central District of California. Pierce filed a complaint in the bankruptcy contending that Vickie had defamed him by inducing her lawyers to tell members of the press that he had engaged in fraud to -gain control of his father's assets. The complaint sought a declaration that Pierce's defamation claim was riot dischargeable: Pierce also filed a proof of claim for the defamation action. Vickie responded to Pierce's initial complaint by asserting truth as a defense to the alleged defamation and by filing a counterclaim for tortious interference with the gift she expected from Marshall. Vicl~ie alleged that Pierce had wrongfully prevented Marshall from taking the legal steps necessary to provide her with half his property. The bankruptcy court resolved both Pierce's original claim against Vickie and her counterclaim against him. Vickie won a suimnary judgment motion on the defamation claim and was awarded $400 million in compensatory damages and $25 million in punitive damages on her tortious interference claim.

5 B. Issues The issues before the Supreme Court were (1) whether the Bankruptcy Count had the statutory authority under 28 U.S.C. 157(b) to issue a final judgment on a counterclaim of tortious interference, and (2) if so, whether the conferring authority on the Bankruptcy Court is constitutional. C. Decision The Supreme Cou1~t ruled that while the Bankruptcy Court had the statutory authority to resolve the counterclaim, this grant of authority was unconstitutional. After discussing Northern Pipeline, Grand~nanceria and= other cases regarding the scope of the concept of public rights, the Court concluded that Vickie's counterclaim for tortious interference did not fall within the public rights doctrine. The action was a traditional; common law claim between two private parties: "What is plain here is that this case involves the most prototypical exercise of judicial power: the entry of a final, binding judgment by a court with broad substantive jurisdiction, on a common law cause of action, when the action neither derives from nor depends upon any agency regulatory regime. If such an exercise of judicial power may nonetheless betaken from the Article III Judiciary simply by deeming it part of some amorphous `public right,' then Article III would be transformed from the guardian of individual liberty and separation of powers we have long recognized into mere wishful thinking." 131 S. Ct. at The Court determied that Vickie's counterclaim should be treated the same as the fraudulent conveyance action in Granfznanciera. "GNanfinanciera 's distinction between actions that seek "to augment the bankruptcy estate" and those that seek "a pro rata share of the bankruptcy res," reaffirms that Congress may not bypass Article III simply because a proceeding may have some bearing on a bankruptcy case; the question is whether the action at issue stems from the bankruptcy itself or would necessarily be resolved in the claims allowance process." Id. at D. What about consent? The Supreme Court addressed consent and concluded that Pierce consented to the determination of his own claim by the bankruptcy court. However, "Pierce did not truly consent to resolution of Vickie's [counter claim in the bankruptcy court proceedings." Id. at at The Supreme Court determined that Pierce only waived the issue of statutory authority~and did not reach the constitutional issue as to waiver. As a result, consent was not an issue in. the Court's determination of whether Vickie's counterclaim complied with Article ITL 5

6 IV. Consent Post-Stern Since Stun was decided in 2011, bankruptcy courts across the country have struggled with the extent of their jurisdiction to enter final judgments on claims that are based on state law and would not necessarily be resolved in the claims allowance process. One interesting development is the current circuit split on whether a litigant can consent to b~nlcruptcy couxt jurisdiction over statutorily defined "core" claims. This issue is currently before the Supreme Court in Executive Benefits Insurance Agency v. Peter Arkison, Trustee (In re Bellingham Insurance Agency), Case No A. Waldman v. Stone, 698 F.3d 910 (6th Cir. 2012) The United States Court of Appeals for the Sixth Circuit addressed the waiver issue in Waldman v. Stone, two months prior to the decision of the Ninth Circuit in Bellingham that is currently before the Supreme Court. Thus, Waldman was the first appellate decision post-stern to address consent a~ it relates to the bankruptcy court's constitutional authority to adjudicate private rights designated by the parties as "core" claims. The Sixth Circuit held that Article III precludes parties from consenting to final judgments on those claims in the bankruptcy court..stone was a Chapter 11 debtor-in~passession and brought an adversary proceeding against his principal creditor, Randall Waldman, seeking to have his debts to Waldman discharged and seeking affirmative relief to enforce Waldman's promises to Stone. Waldman appeared in bankruptcy court and counterclaimed against Stone seeking a judgment on certain debts and relief from the automatic stay in order to enforce liens and mortgages on Stone's residence. After a trial, the banl~ uptcy court found that Waldman had obtained nearly all of Stone's business assets by means of fraud. As a result, the court discharged the debts that Stone owed to Waldman and awarded Stone more than $3 million in compensatory and punitive damages on his affirmative claims. Waldman challenged the bankruptcy court's judgment on several grounds, including that the court lacked constitutional authority to enter it. The district court affirmed the bankruptcy court's judgment in all respects. On appeal, the Sixth Circuit held that the bankruptcy court was constitutionally permitted to enter final judgment as to the discharge of the debts Stone owed Waldman. However, the banlcritptcy court's judgment on Stone's affirmative claims was entered in violation of Article III. The Sixth Circuit ordered the case back to the bai~lcruptcy court to recast its judgment as to the affirmative claims as proposed findings of fact and conclusions of law: With regard to whether Waldman forfeited his Article III objection by not raising it below, the Sixth Circuit held that "Waldman's objection thus implicates not only his 6

7 personal rights, but also the structural principle advanced by Article III. And that principle is not Waldman's to waive." 698 F.3d at 918. The Bellingham court did not address the Waldman decision as to the waiver issue. It did, however, mention it in a footnote regarding its conclusion that the bankruptcy court can enter proposed findings. of fact and conclusions of law in non-core matters. In re Bellingham, 702 F.3d at FN 8 (9th Cir. 2012) (Waldman court observing in dicta that " 157(b)(1) authorizes the bankruptcy court to `enter appropriate orders and judgments,' not to propose them," but acknowledging that "one might argue that... Congress's grant of the greater power to enter final judgments implies a lesser authority to propose them."). B. Executive Benefits Insurance Agency v. Peter Arkison, Trustee (In re Bellingham Insurance Agency), 702 F.3d 553 (9th Cir. 2012) Bellingham Insurance Agency, Inc. ("BIA") sold insurance and annuity products that funded defined-benefit pension plans. By early 2006, BIA was insolvent. And though the company ceased operations on January 31, 2006, it did not stop acting entirely. Two weeks ai~er closing its doors, the company irrevocably assigned the insurance commissions from one of its largest clients, the American National Insurance Company, to Peter Pearce, a longtime employee who had often acted as a conduit for insurance commissions between BIA and its clients. The day after BIA stopped operating, BIA funds were used to incorporate the Executive Benefits Insurance Agency; Inc. ("EBIA"). In 2006, $373, of commission income earned between January 1 and June 1 was deposited into an account held by EBIA and a related company. Pearce deposited $123, and EBIA deposited the remainder. At the end of the year, all of the deposits were credited to EBIA via an "intercompany transfer." In the meantime, BIA had filed a voluntary Chapter 7 bankruptcy petition in the United States Bankruptcy Court fog the Western District of Washington. The Trustee, Peter Arkison the Appellee filed a complaint to recover commissions deposited into the account, which the Trustee alleged to be property of the estate. The complaint alleged eighteen causes of action, including federal- and state-law preferential and fraudulent transfer claims and a claim that EBIA was a successor corporation of BIA and therefore liable for its debts. The bankruptcy court granted sununary judgment in favor of the Trustee, concluding that the. deposits into the account were fraudulent conveyances of BIA assets and that EBIA was a "mere successor" of BIA. The bankruptcy court entered a final judgment. 7

8 EBIA appealed to federal district court. The district court affirmed, holding that the commissions paid into the ARIS/EBIA account were fraudulent transfers under both the Bankruptcy Code, 11 U.S.C. ~ 548, and Washington's Uniform. Fraudulent Transfer Act, Wash. Rev.Code The district court also affirmed the bankruptcy court's judgment that EBIA was liable for BIA's debts as a corporate successor. EBIA appealed. In a motion to dismiss submitted prior to oral argument, EBIA objected for the first time to the bankruptcy judge's entry of final judgment on the Trustee's fraudulent conveyance claims. Styled as a motion to vacate the judgment for lack of subject-matter jurisdiction, and relying on Stern, the motion argued that the bankruptcy judge was constitutionally proscribed from entering final judgment on the Trustee's claims. The Ninth Circuit held that, based on Granfinance~iera and Stern, fraudulent conveyance claims do not fall within the.public rights exception and cannot be adjudicated by non- Article III judges. The Ninth Circuit also held that although the Constitution bars the bankruptcy judge from entering final judgment on certain core proceedings, the banlcriiptcy couxts may constitutionally hear these core claims and prepare recommendations for de novo review by the district court. Finally, the Ninth Circuit held that the right to have an Article III court hear a fraudulent conveyance claim can be waived. After discussing pre- and post- Bankitiiptcy Act of 1978 practice and rules, Stern, and other cases related to waiver, the Ninth Circuit concluded that if consent permits anon-article III judge to decide finally anon-core proceeding, then it surely permits the same judge to decide a core proceeding in which he would, absent consent, be disentitled to enter final judgment. The Ninth Circuit then analyzed whether EBIA impliedly consented to bankruptcy court's jurisdiction when it failed to timely object. In finding that it did consent, the Ninth Circuit laid out the following factors: EBIA initially demanded a jury trial, invoking its rights under Granfinanciera, which the district court treated as a motion to withdraw the reference, but EBIA petitioned the district court to stay its consideration of the motion to withdraw the reference to give the bankruptcy court time to adjudicate the Trustee's motion for summary judgment; after summary judgment was entered by the bankruptcy court in Arkison's favor, EBIA abandoned its motion to withdraw the reference, and the district court dismissed the action; EBIA, on appeal to the Western District of Washington, did not argue at any point during that appeal that the bankruptcy court lacked authority to issue a final judgment in the fraudulent conveyance action; EBIA did not raise a constitutional objection to the bankruptcy court's entry of final judgment in favor of the Trustee until after the briefing in the current appeal was complete. "Because

9 EBIA waited so long to object, and in light of its litigation tactics, we have little difficulty concluding that EBIA impliedly consented to the bankruptcy court's jurisdiction." 702 F.3d Bellingham in the Supreme Court The issues before the Supreme Court in Bellingham are: (1) whether Article III permits the exercise of the judicial power of the United States by bankruptcy courts on the basis of litigant consent, and, if so, whether "implied consent" based on a litigant's conduct is sufficient to satisfy Article III; and (2) whether a bankruptcy judge may submit proposed findings of fact and conclusions of law for de novo review by a district court in a "core" proceeding under 28 U.S.C. 157(b). C. Wellness,Int'l Network, Ltd. v. Sltarif, 727 F.3d 751 (7th Cir. 2013) Next to enter the fray was the Seventh Circuit in Wellness Int'Z Network, Ltd. v. Sharif in August 2013 which held that Article III does not allow for bankruptcy court jurisdiction based on waiver. After having judgment entered against him in excess of $650,000 in the Northern District of Texas as a sanction for failure to engage in discovery, Sharif filed for Chapter 7 bankruptcy in the Northern District of Illinois. A creditor filed an adversary complaint in the bankruptcy court to prevent discharge of Sharifs debts under 11 U.S.C. 727, and a declaratory judgment that a trust was in fact Sharifs alter ego. Sharif continued his evasive tactics, failing to respond to the creditor's discovery requests. The bankruptcy court ordered Sharif to comply with the discovery requests and warned him that failure to do so would result in a default judgment. Sharif tendered some discovery but his responses fell short of full compliance. After a hearing, the bankruptcy judge issued an opinion and order entering default judgment in the creditor's favor and subsequently awarded attorney's fees to the creditor. Sharif appealed to the district court. After the bankruptcy judge's entry of judgment but before'~riefing on the appeal in the district court, the Supreme Court decided Stern v. Marshall. A few months after Stern was decided, Sharif filed his opening brief in the district court, but did not challenge the bankruptcy judge's authority to enter final judgment on the adversary complaint. In December 2011, Sharifs sister filed a motion in the district court to withdraw the reference on the basis of Stern. Later that month, the Seventh Circuit decided Ortiz v. Aurora Health Care, Inc. (In re Ortiz ), 665 F.3d' 906 (7th Cir.2011), in which it dismissed a direct appeal from a bankruptcy court on the ground that there was no final judgment because the bankruptcy judge had lacked constitutional authority to enter one under Stern. Shortly thereafter, Sharif filed a motion for supplemental briefing in the district court so that he could advance a Stern argument. The district judge denied both ~~

10 motions as untimely, holding that a Stern objection to a bankruptcy judge's authority to enter final judgment is waivable and that Sharifs failure to raise it earlier constituted waiver, and affirmed the bankruptcy court's entry of default judgment. Sharifs sister did not appeal the denial of her motion to withdraw the reference, but Sharif appealed the balance of the district court's decision to this court. The Seventh Circuit held that a constitutional objection based on Stern is not waivable because it implicates separation-of-powers principles. The Seventh Circuit also held that the bankruptcy judge lacked constitutional authority to enter a final judgment on the alter-ego claim. Finally, the Seventh Circuit held that the bankruptcy court had constitutional authority to enter final judgment on the counts of the adversary complaint which were objections to the discharge of Sharifs debts. D. Peterson v. Somers Dublin Ltd., 729 F.3d 741 (7th Cir. 2013) The Seventh Circuit followed up it Wellness decision with PeteNSOn in September In Peterson, a Chapter 7 trustee was seeking to recover redemption of shares from investors in the debtor's hedge funds as preferential transfers or fraudulent conveyances under the bankrixptcy code, and fraudulent conveyances under state law. The bankruptcy court granted stunmary judgment in favor of the investors relying on 11 U.S.C. 546(e). On appeal, the Seventh Circuit sua sponte addressed the Stern jurisdiction issue. Citing Granfznanciera and' other decisions, the court held that the defendants consented to the bankruptcy court's jurisdiction because they submitted proofs of claim as creditors and subjected themselves to the preference and fraudulent conveyance claims by the Trustee. The Peterson court noted that the Wellness panel had recently found that Article III forbids decision by a bankruptcy judge on the basis of a party's waiver. The Peterson court characterized the issue in Wellness as one of "forfeiture" rather than "waiver" because none of the parties objected to the bankruptcy court's handling of the case until it reached the district count. Given this, the Seventh Circuit held that the issue of an express waiver is still an open issue in the Seventh Circuit. E. Frazin v. Haynes and Boone, L.L.P., 732 F.3d 313 (5th Cir. 2013) The Fifth Circuit weighed in on the issue in Frazin in October The bankruptcy court had entered final judgment on certain state-law counterclaims for malpractice, feeforfeiture based on breach of fiduciary duty, and violations of the Deceptive Trade Practices Act that the debtor had filed against attorneys who were authorized by the bankruptcy court to represent the debtor in a separate lawsuit. Frazin argued that the bankruptcy court lacked the authority to enter final judgment on the based on Stern. 10

11 The Fifth Circuit analyzed each of the debtor's state law counterclaims in light of Stern, stating that they should be treated no differently that Vickie's counterclaims. The Fifth Circuit held that the bankruptcy court did have the authority to enter final judgment rejecting the debtor's malpractice and fee-forfeiture claims on the merits. The court held that these claims were necessarily decided by the bankruptcy court in the process of ruling on the attorneys' fee applications and thus fell constitutionally within the bankruptcy court's jurisdiction. The debtor had objected to the fee applications, but the bankruptcy court awarded the fees in full. The Fifth Circuit held bankruptcy court's award of fees to the attorneys carried an implicit finding of quality and value in the services provided, and that these claims were not independent of federal bankruptcy law but was necessarily resolved by a ruling on the fee applications, which proceedings had "some bearing" on these claims. As for the Deceptive Trade Practices Act claim, the Fifth Circuit held that the bankruptcy court did not have the authority to enter final judgment on this claim. The court reasoned that in order to rule on the merits of this claim, the bankruptcy court was required to make legal determinations that were not resolved in the objections to the attorney's fee applications, the precise problem that Stern found when the bankruptcy court ruled on' Vickie's counterclaim. Regarding consent, the Fifth Circuit stated that consent or waiver cannot cure a jurisdictional defect. "Structural concerns cannot be ameliorated by Frazin's consent or waiver." 732 F.3d at FN3. "Stern makes clear that the practice of bankruptcy courts entering final judgments in certain state-law counterclaims `compromise[s] the integrity of the system of separated powers and the role of the Judiciary in that system. "' Id. F. BP RE, L.P. a RML Waxalzacltie Dodge, L.L.C., 735 F.3d 27 (5th Cir. 2013) The Fifth Circuit followed up with BP RE in November of 2013 confirming its holding in Frazin and specifically adopting the Waldman decision that this constitutional issue cannot be waived. G. Other Courts Executive Sounding Board Associates Inc., as Ti^ustee v. Advanced Machining & EngineeNing Co. (In re Oldco M. Corp.), 484 B.R. 598 (Bankr. S.D. N.Y. 2012) Waldman is inconsistent with controlling Second Circuit doctrine and that Bellingham reflects existing Second Circuit law. 2. Bank of Nebraska v. Rose (In re Rose), 483 B.R. 540 (B.A.P. 8th Cir. 2012) 11

12 Relying in part on Bellingham, a defendant may impliedly consent to a final judgment from the bankruptcy court on a matter for which the court would otherwise lack constitutional authority to enter such a judgment. 12