Supreme Court Set To Rule On Waiver Of Article III Rights

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Bankruptcy practitioners are anxiously awaiting a U.S. Supreme Court ruling that will determine whether a party can waive its right to trial before an Article III tribunal.

In Exec. Benefits Ins. Agency, Inc. v. Arkison (In re Bellingham Ins. Agency, Inc.), 702 F.3d 553 (9th Cir. 2012), the Ninth Circuit held that a non-creditor defendant waives its right to an Article III hearing by litigating in a bankruptcy court without challenging the court's jurisdiction. In that case, the chapter 7 trustee filed a fraudulent transfer action against a non-creditor that had received a transfer of substantial assets from the chapter 7 debtor. The bankruptcy judge entered summary judgment on behalf of the trustee and the non-creditor defendant appealed, arguing for the first time on appeal that under Stern v. Marshall, 131 S.Ct. 2594 (2011), the bankruptcy court lacked authority to enter a final judgment.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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