BP RE, L.P. v. RML Waxahachie Dodge, L.L.C.

No. 12-51270, Consolidated with No. 12-51279
Adopting the Sixth Circuit's reasoning in Waldman v. Stone, 689 F.3d 910, 919 (6th Cir. 2012), cert. denied, 133 S. Ct. 1604 (2013), the Fifth Circuit ruled that bankruptcy courts are constitutionally prohibited from entering final judgment on a Debtor's state-law tort and contract claims, even with the consent of the litigants. This ruling is effectively before the Supreme Court through the Court's consideration of the Ninth Circuit's decision in Executive Benefits Insurance Agency v. Arkison (In re Bellingham Insurance Agency, Inc.), 702 F.3d 553, 562 (9th Cir. 2012), cert. granted, 133 S. Ct. 2880 (2013).
Procedural context:
Debtor appealed the final judgment entered against it by the bankuptcy court and affirmed by the district court, arguing in part that the bankruptcy court lacked the constitutional authority to enter a final judgment on its state law tort and contract theories.
Debtor filed an adversary proceeding against multiple RML entities ("RML") alleging state-law tort and contract theories and filed therewith a “Statement Regarding Consent” consenting to the entry of a final order by the bankruptcy court. [P-2] Debtor later requested a jury-trial that was denied as untimely, then unsuccessfully sought to withdraw the reference. [P-3-4] The bankruptcy court entered a final judgment against Debtor, and Debtor appealed to the District Court. The district court essentially affirmed the final judgment. On appeal to the Fifth Circuit, the Debtor made several arguments as to the merits, but also posited that the bankruptcy court lacked constitutional authority to enter a final, appealable judgment. [P-1].
Before SMITH, GARZA, and SOUTHWICK, Circuit Judges.

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