southern district of ohio mr ducasse appeals a decision that was made by the bankruptcy judge which held that mr ducasse does not have a claim against mr befell us under florida securities laws in other words those  as a judge determined to exempt securities under florida security law and does not so object to the registration requirements of the case however of which this appeal jettisons out of for lack of a better term at this point is has nothing to do with mr ducasse personally mr ducasse and one visit to one of mr duke is in today's quick capital of long island filed a proof of claim  in the book underline chapter eleven bankruptcy case and that case was the only that was part of me a back up and that that particular claim was filed and as a result of that claim being followed fellows followed an adversary complaint against quick capital and there were some personal claims against mr ducasse but that was a fifteen count adversary complaint in only one count out of those entire fifteen counts and that was count three was the quick capital count was actually tried over four days in april of tw when the bankruptcy court made its final ruling in this case they not only denied quick capitals proof of claim but they also determine that mr ducasse did not have a claim under florida securities laws i was mr is individual did not have a claim under florida securities laws that he could bring against mr pradelle it's now if in fact the bankruptcy court stops at the quick capital decision we're not here today but the bankruptcy court went too far and entered an order against mr duke because personally it which it does not have any jurisdictional right to do so it was a final order and importantly here your honor says mr never filed a proof of claim individual the only claim filed was filed by quick capital this appeal today goes to the heart of what is a core issue in bankruptcy and what  non core issue and bankruptcy i'm sure the courts aware if it's a court proceeding in bankruptcy the bankruptcy judge is perfectly authorized to enter a final judgment on that claim if it's a non co proceeding however the bankruptcy judge is limited to simply bringing in to bayer findings of fact and conclusions of law which are then subject to a did novo review by the district court in this case continues to be governed by this court's previous holding in wildland v stone which basically which held that while a certain claim and i think were top we call these claims starting claims now a days after the united states versus stern i mean stern versus marshall case in the united states supreme court in one of these type stern claims yes statutorily the bankruptcy court may have the right to consider something but there's a constitutional limit to how far a non article three court and a non article three judge can go in in the one element case this court said is really kind of a dual article three section one of the constitution has sort of a dual character to it it has a personal right which is always wave a ball and it has a structural right which is not wave a ball and in this case what we're talking about is a structural right which is not labeled this is a non core proceeding basically a creature of state law does mr ducasse have a claim against mr bell and did mr belin violate florida securities laws it's a state law claim which the bankruptcy judge ruled on in june the united states supreme court in another case called the executive benefits insurance agency versus ar address the issue of how courts should proceed when they are faced with one of these so called stern claims and what that their previous holding and started not really up the idea of the florida securities law in the right to pursue that in the first place that brings me to the invited error doctor which i was going to get to your honor inconceivably trial counsel did bring up those issues in the trial court and the reason he brought those issues up is we have to look at it in context part of the bellows his theory not only at trial but as you can see from the briefs in this case is to make mr ducasse look like a bad guy you know the old white hat black a distinction that all of us with gray hairs remember the old westerns they're trying to make mr ducasse with the black hat will put trial counsel was trying to do in that case by introducing the issues of florida security law it was not use that as a sword not use it as an affirmative claim but use it as a defense in other words you're saying my client mr duke this is the bad guy over here wearing the black hat now let me show you why mr develops as a bike attitude and some of the things that he did with respect to the private placement memorandum and other things that deal with the florida security also yes in fact trial counsel did bring that issue up but that was in the context of the initial claim being that this money was the law in then alternatively saying well if you don't really believe that you know you see or anyone else alone this money then the money was used to purchase stock and that's how the whole issue came before the court how would the court be able to decide the claim at all if it couldn't look at what the money was really for the issue of the quick capital money yet what it was for was a for the perp purchase a stock and again i think it's ok for the court to let that look at that in the context of the quick capital claim i don't think that's an issue at all your hono what i think is the issue is what i know is the issue is even if you look at it in that context that particular issue florida securities laws was never tried in the bankruptcy court it was not part of the trial and yet the judge went and made a decision even though that purpose was presented on a on a claim that was not before the court because mr duke has never filed a claim about that and it never was not part of the adversary proceeding that was tried so i think it's ok to look at it in context but i don't think it was ok for the bankruptcy court to make a decision in that context and that brings us to the issue of really what's going on here is that the the fellas in this case is really attempting to recast the issue on appeal and what he's saying is that you know mr duke has submitted a defacto claim to the court by bringing this information with the florida security laws before the court your honors i submit to you are specific categories specific ways of doing things in the bankruptcy code the federal rules of bankruptcy procedure the three thousand rules three thousand and one to three thousand and seven which have a specific criteria in a specific way you bring up p you either have a claim or you don't have a plan there is no defacto claim it's a legal fiction if you will and that's what they're trying to do they're trying to recast this issue and saying well mr druce the bankruptcy court had said the claim is for money and the money wasn't roll and it's not ok then what if the bankruptcy court says the money wasn't loaned and then just stops there from understand your hon questions correct if they say it wasn't for money loomed then i think what you're looking at we're still looking at a similar situation i think we're ok in that point if it's if if the bankruptcy judge says well it was it wasn't for money low it was for money alone or was it for money loaned i think he still just making a decision on the quick capital claim and that's the context that everything is supposed to fit in but in fact what he was doing is he was saying well it wasn't money loaned it was for the purchase of stock these are exempt securities under florida law all there is no and mr ducasse thus has no claim i don't think he was if he just says with what your honor says i think ok but i think he went too far beyond the jurisdictional limits of what a bankruptcy judge can do under article three but the adversary complaint as i'm remembering this was for the purpose of getting a judgment at least from m other counts in the embassy proceeding yes you're correct on that it was a fifteen county adversary proceeding but on the motion of mr develops one of those counts was bifurcated count three it was taken out carved out and that was the case that was tried right there so there was no case except the quick capital trial case that was tried before the bankruptcy court none of the rest of those claims and they are all still out there and so yes theoretically mr ducasse could probably bring a counter claim in the bankruptcy that's a decision he would have to make because if i understand it correctly this this complaint was amended recently as just a couple months ago so everything still in play except for count three count three was all that was tried before the court and that's why we say that the bankruptcy court didn't limit its issues to just that count three it went entirely too far which one of the wildmen case in the arcus in case goes entirely too far and that's the issue and the error this before this court and that's why we're asking this court to remand to think back to bankruptcy court and there's a procedure in place and i assume if you remained it back the bankruptcy court could now be instructed to find findings of fact in conclusions of law i assume that's what can happen the the person bringing the lawsuits the parties much like consenting to a magistrate judge can consent to the bankruptcy judge hearing a non core issue but that's  consent has to be specific and that's never done in this case and i can i can i can affirm to this court and tell you mr duke just won't consent to the bankruptcy court making a decision on the non core issue this is not a core issue it's a non core issue it's a byproduct of state securities laws only and the bankruptcy court went too far so we're asking you to reverse the decision of the bankruptcy court not so much time is just about up and i think you're on a three time thank you may please the court chris hogan for mr with ellis i'd like to start just briefly by touching on counsel's black hat comment i know he's portrayed us as attempting to paint mr ducasse in an unfavorable light i'd suggest that the hundred fifteen page decision from the bankruptcy judge sufficiently outlines the fraud committed by mr duke is that mr bell is doesn't need to paint mr ducasse with a black hat  but turning to what mr brown said i think there are a couple of fundamental premises that don't work in this case that mr brown has set force forth that the is the assertion that the bankruptcy court went too far in determining that mr duke is does not have a securities claim against mr bell's on fact the bankruptcy court went exactly as far as himself as a party to the proposed findings in conclusion specifically asked the bankruptcy court to find that he has a securities law claim of one point four million dollars against mr bell's that's what the bankruptcy court ruled on when it said he does not have such a claim now that there was some discussion about mr bell or mr ducasse never filed a proof of cl i disagree with that as well the proposed finding is in conclusions that specifically ask for the bankruptcy court to address that whether mr lucas has a securities claim a proof of claim and we can take out the defacto mr brown stated the three thousand series will rule three thousand three of the bankruptcy rules gives bankruptcy judges the discretion to extend the claims bar date so are the bankruptcy court had the ability to in fact did consider this belated proof of claim filed by mr dubious and in that circumstance the claims adjudication process as this court recognized involvement is at the heart not only of core bankruptcy jurisdiction but it is at the heart of the court's constitutional authority but does bankruptcy the ability to say that something that comes in through a proposed finding of fact in conclusion of law is a claim i would say that the court has the discretion it's essentially extend the deadline then and i'm not talking about the deadline you're talking about what is this animal it isn't explicitly a proof of claim so where in the bankruptcy rules would i work to find the discussion or the authority of the bankruptcy court to cast it as a lead clean a proof of claim certainly are that i'm not aware of the specific rule that states that i'm simply saving the discretion that the court has under rule three thousand and three i would say however that  certainly the bankruptcy court never engaged in that type of analysis but to to say that well mr ducasse didn't file a formal proof of claim on me you know the form that you can get from the clerk's website would elevate form over substance in terms of what happened here i mean a creditor has the the it's own discretion as to whether or not it wants to file a pro no actually the argument was that mr duke is and that's an important question your honor the how this came up was as part of the claim disallowance proceeding mr ducasse who was the sole witness for quick capital and is the sole owner of quick capital testified that he purchased the stock only as a loan for mr bell if not for his own benefit in his the evidence started going  that the story changed to the point where mr ducasse says oh well ok then i have a claim against mr bell this for violation of the security statutes because the evidence is coming in that well i actually bought stock for myself so  yes technically at the beginning mr ducasse was not a party to that particular count but he inserted himself into the process and then in express lee invited the court to rule out that claim and so i believe that not treating this as a proof of claim or de facto proof of claim would elevate form over substance because mr ducasse didn't have to ask the court to adjudicate it but he did in for him to come back after the fact in complain well the court shouldn't have done exactly what i asked him to do that's a quintessential application of the embodied in their doctrine whether or not rule three thousand whether it was belated under rule three thousand and three is not doesn't go to the courts constitutional authority it's not a stern issue it's just whether or not mr ducasse invited that particular error is assuming that oh that it had been filed a proof  ellis not for his own benefit would the court the bankruptcy court been able to dispose of that or would there be a jurisdictional bar if you had filed it as a proof of claim there would certainly be no jurisdictional bar that would be at the where the constitutional authority if you will is at its maximum because i would that if that had been filed that way could it have been resolved without reference to the florida securities laws certainly mr willis would have objected to it and the court would have had to determine the merits but again the proof of claims process is a voluntary submission by the creditor to have the bankruptcy court adjudicate it's proof of claim that's different than say an adversary proceeding like you had in stern where actually was the debtor asserting a state law claim against a creditor so i guess what i'm saying here is this is this is not like mr move that mr duke is filing a separate action under florida law against mr bell this is mr dubious bollen terribly electing to assert a proof of claim based on his securities law claim and asking expressly asking the bankruptcy court to adjudicate it as part of this overall claims disallowance process which is again at the heart of this of the bankruptcy courts jurisdiction so it's two opposite ends of the spectrum and i submit that this one falls on the claims disallowance process not the separate state law action if you will he could have chosen to do that but he did with the claims disallowance process that is to say this adversary action raising claim that there are neither quick cap quick capital nor mr ducasse had any claim against the estate could that have been resolved without reference to the flo could it have been certainly that i mean that the court had multiple grounds for finding that the capital claim had no validity  was purchased not for the benefit of the debtor but for the benefit of mr dubious and that had been the end of the court's finding then what with regard to the claim of securities law violation that that would be up to mr duke is he i mean if he thought he had a claim he could ask your leave from the automatic stay he could try something else but he made his choice and he'll acted to submit his claim as part of the claims disallowance process in bankruptcy court and when you elect to invoke that process then the bankruptcy court has the subject matter jurisdiction and the constitutional authority to issue a final ruling on that cla was truly just about the quick capital claim the court could have stopped at you know what i don't accept your theory that the claim is disallowed but again during the hearing mr do get one million four hundred sixty nine thousand dollars seven hundred ninety one seven hundred ninety one dollars plus interest costs in reasonable legal fees you're right if that's not in there the court didn't need to address it in terms of the capital claim but the bottom line is that is there dubious voluntarily elected to have the court address it that is a proof of claim it's not on this standard bankruptcy form but that's exactly what it's doing it's asking the bankruptcy court to find it has a claim against mr with alice's state and that's exactly what the bankruptcy court did in disallowing it i there only issues challenge were a couple of the provisions in the statute and it's clear from the private placement memory and then that there was a citation to the rescission period it's also clear from the record that mister provided mr ducasse all kinds of information warnings regulatory materials there's no evidence to support any type of material admission or mis conclusion i would just submit that let's place substance over form in the substance of what happened here is that mr bell is filed a proof of claim the court considered the evidence  disallowed it and that is the height of the bankruptcy courts constitutional authority and core subject matter jurisdiction in that decision should be affirmed i think you're  please the court just a briefly your owners with respect to paragraph one twenty four the proposed findings of fact that counsel is recited to you those were proposed findings of fact those were not in fact worked into the final order in this case so it's not a finding of fact to the bankruptcy court it's a proposed finding of fact that was submitted by trial counsel which was not adopted by the by the court really what these the bellus is saying in this case is that we have waived our personal rights to have an article three court determine the issue under florida security law it's not invited error it's a waiver that's what they're certain that we waive the rights to do so and we haven't done that even if the court had done everything correctly we've not waived our issues because this was a non core proceeding before the bankruptcy court and the bankruptcy court had went too far and had no right to determine it on the merits it's not example case of claim if it's form over substance as counsel would like you to believe then why do we have the bankruptcy rolls if everything that submitted to the bankruptcy court can conceivably be determined by the bankruptcy judge that it is a proof of claim then there would be no reason to have a specific procedure having brought it up because you do concede that you brought it up yes your honor trial counsel and you know having brought it up if the court had bankruptcy court viewed it in your favor and the other side had appealed and raised the argument you're now raising would you have agreed that the bankruptcy court didn't have any jurisdiction to rule in your jurisdictional limits are set forth by wallman versus stone so yes would i be here your honor candidly making a different argument absolutely but that's not the issue before this court today the issue is did the bankruptcy court go too far did we invite this error we did not invite any type of error that is a legal fiction and defacto claim also a legal fiction and that's why we're asking this court to reverse the decision of the bankruptcy court syndic back what so out if we have to try these security claims in the bankruptcy court will do so we may not have to do that we may be able to tame relief from state go to florida and do it it doesn't matter what we want to do is go back and let's get it right this time i