Loveridge v. Hall (In re Renewable Energy Dev. Corp.)
- Summarized by Steven Mulligan , Coan, Payton & Payne, LLC
- 9 years 6 months ago
- Citation:
- Loveridge v. Hall, et al. (In re Renewable Energy Dev. Corp.), Case No. 14-4001 (10th Cir. July 10, 2015). Published.
- Tag(s):
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- Ruling:
- Parties have the Constitutional right to have an Article III judge make a final judgment when plaintiff seeks recovery only under state law and when none of the claims necessarily involve the claims allowance process and the District Court cannot send parties to an Article I court for final decision without the parties’ consent.
- Procedural context:
- US District Court for Utah determined that the Article I Bankruptcy Court was the proper forum to finally resolve the parties’ dispute even though the parties did not consent. The 10th Circuit reversed and remanded holding that such a decision violated the parties’ Constitutional rights, that the District Court had subject matter jurisdiction and since it was an Article III court, it was the proper forum to resolve the dispute but that the District Court was free to refer the Case to the Article I Bankruptcy Court for a report and recommendation.
- Facts:
- A Ch. 7 Trustee engaged the help of Appellant, a client of Trustee, to evaluate debtor’s lease options. It was discovered that debtor had failed to pay the required consideration to the property owners and Trustee concluded that the lease options were unenforceable and Appellant, with Trustee’s encouragement, pursued its own leases. It was determined that debtor had the right to cure and Trustee saw this as a valuable opportunity for the debtor and its creditors and asked the Appellant to forego entering into new leases in favor of the debtor keeping the old leases. The matter got “so testy” that Trustee brought an adversary proceeding against his one client, the Appellant, on behalf of his other client, the debtor’s bankruptcy estate. The Appellant brought state law claims against the Trustee including malpractice, breach of fiduciary duty, “and a good many other things besides.” The Trustee was removed as trustee and Appellant brought suit against the Trustee in federal court alleging diversity jurisdiction.
- Judge(s):
- Tymkovich, Gorsuch, Phillips (Gorsuch)
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