Executive Benefits Insurance Agency v. Arkison

When hearing a Stern claim — certain "core" bankruptcy claims over which bankruptcy courts lack the power to grant final adjudications — bankruptcy courts may issue proposed findings of fact and conclusions of law for district courts to review de novo.

A bankruptcy trustee, Respondent, sued Petitioner in bankruptcy court, claiming Petitioner attempted a fraudulent conveyance. The court granted summary judgment for Respondent. Petitioner appealed to the district court, which reviewed the findings of fact and conclusions of law de novo, and affirmed summary judgment. Respondent appealed to the Ninth Circuit, which held that under Stern v. Marshall the bankruptcy court did not have final adjudicatory jurisdiction over certain “core” claims such as fraudulent conveyance, but affirmed the district court judgment because it reviewed the bankruptcy court judgment de novo. The Supreme Court granted certiorari, and affirms.

The Federal Judgeship Act of 1984 granted bankruptcy courts the power to grant final judgments, but in Stern v. Marshall, 564 U.S. ___, 131 S. Ct. 2594, 180 L. Ed. 2d 475 (2011), the Supreme Court held that Article III limits final adjudicatory power of certain “core” bankruptcy claims exclusively to district courts. Respondent raised Stern as a defense, which the Ninth Circuit rejected, both for failing to prove the district court erred. The Supreme Court affirmed the Ninth Circuit interpretation of Stern, clarifying that in cases such as this, bankruptcy courts may issue proposed findings of fact and conclusions of law over these “Stern claims” that the district court may use in reviewing the judgment de novo.