Court Opinion

ID: 2655297
Source: CourtListenerOpinion
Date Created: 2014-03-01 06:04:30.91508+00
Date Added: 2024-06-11T12:59:16.211619
License: Public Domain

IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT
                                                                        United States Court of Appeals
                                                                                 Fifth Circuit

                                                                               FILED
                                        No. 12-51270                    February 28, 2014
                               Consolidated with No. 12-51279
                                                                          Lyle W. Cayce
                                                                               Clerk

In the Matter of: BP RE, L.P.,
                                                          Debtor.

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BP RE, L.P.,

                                                          Appellant,

versus

RML WAXAHACHIE DODGE, L.L.C.;
RML-MCLARTY-LANDERS AUTOMOTIVE HOLDINGS, L.L.C;
RML WAXAHACHIE FORD, L.L.C; RML WAXAHACHIE GMC, L.L.C.;
RLJ-MCLARTY-LANDERS AUTOMOTIVE GROUP,

                                                          Appellees.

                     Appeals from the United States District Court
                           for the Western District of Texas

                      ON PETITION FOR REHEARING EN BANC
                       (Opinion November 11, 2013, 735 F.3d 279)
Before SMITH, GARZA, and SOUTHWICK, Circuit Judges.
PER CURIAM:
       Treating the petition for rehearing en banc as a petition for panel
rehearing, the petition for panel rehearing is DENIED.                         The court having
been polled at the request of one of its members, and a majority of the judges
who are in regular active service and not disqualified not having voted in favor
(FED. R. APP. P. 35 and 5TH CIR. R. 35), the petition for rehearing en banc is
DENIED.
       In the en banc poll, 6 judges voted in favor of rehearing (Chief Judge
Stewart and Judges Jolly, Davis, Dennis, Graves, and Higginson, and 8 judges
voted against rehearing (Judges Jones, Smith, Clement, Prado, Owen, Elrod,
Southwick, and Haynes).

ENTERED FOR THE COURT:

      /s/ Jerry E. Smith
JERRY E. SMITH
United States Circuit Judge

                                   ***************

HIGGINSON, Circuit Judge, with whom, STEWART, Chief Judge, JOLLY, 1
DAVIS, DENNIS, and GRAVES, Circuit Judges, join, dissenting from the

1 Judge E. Grady Jolly concurs only to the extent that he considers it imprudent to enforce the panel’s
opinion in light of the anticipated opinion of the Supreme Court in Executive Benefits.
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denial of rehearing en banc:
      I write in dissent of denial of full court rehearing to note that this case
presents an enbancworthy issue—whether a bankruptcy court, consistent with
its statutory authority under 28 U.S.C. § 157(c)(2), may enter final judgment
in a non-core proceeding with the parties’ consent. The panel opinion holds that
it cannot do so consistent with Article III of the United States Constitution.
The Supreme Court has granted certiorari and heard argument in Executive
Benefits Insurance Agency v. Arkison (In re Bellingham Ins. Agency, Inc.), 702
F.3d 553 (9th Cir. 2012), cert. granted, 133 S. Ct. 2880 (2013), a case that
presents the question of whether a bankruptcy court can enter judgment in a
core proceeding with the parties’ consent. Hence, and speaking to the issue’s
significance, the role of consent in delineating the scope of Article III is before
the Supreme Court and I would be loath to anticipate its answer. I will not
belabor the importance of a case that, in effect, strikes down a federal statute
and whose result may disrupt the way our district and bankruptcy courts
handle a large volume of routine bankruptcy business. Instead, I especially see
significance to examining any rationale that might logically extend to
precluding magistrate judges from entering judgment with parties’ consent.
      In Technical Automation Services Corporation v. Liberty Surplus
Insurance Corp., 673 F.3d 399, 407 (5th Cir. 2012), this court upheld a
magistrate judge’s capacity to enter final judgment in civil cases with the
parties’ consent. In the instant matter, the panel opinion asserts no conflict
with Technical Automation, but it is hard to see how there is not tension
between this case and Technical Automation. Both cases recognize the
similarities between magistrate and bankruptcy judges. Further, the
respective statutes providing a basis for entering judgment with parties’
consent are similar. Then, and even assuming BP RE’s correctness, our law

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after BP RE is that a magistrate judge’s judgment is proper under 28 U.S.C.
§ 636(c)(1), but a bankruptcy judge’s judgment under 28 U.S.C. § 157(c)(2) is
improper. Maybe there are good reasons for incongruity, but they are ones I
perceive that our full court should explore.
      As to BP RE’s merits, the panel opinion acknowledges that Stern
announced a limited holding: “We conclude today that Congress, in one isolated
respect, exceeded that limitation in the Bankruptcy Act of 1984.” Stern v.
Marshall, 131 S. Ct. 2594, 2620 (2011). BP RE concludes that Stern’s reasoning
requires the conclusion that Congress exceeded Article III in another respect,
even though Stern did not address parties’ consent. Instead, Stern may be less
decisive than CFTC v. Schor, 478 U.S. 833, 851 (1986), which noted that when
“Article III limitations are at issue, notions of consent and waiver cannot be
dispositive because the limitations serve institutional interests that the parties
cannot be expected to protect.” But Schor has language supporting both sides
of this controversy. Schor proclaims: “the parties cannot by consent cure the
constitutional difficulty for the same reason that the parties by consent cannot
confer on federal courts subject-matter jurisdiction beyond the limitations
imposed by Article III, § 2,” id. at 851, but also that:
      the decision to invoke this forum is left entirely to the parties and the
      power of the federal judiciary to take jurisdiction of these matters is
      unaffected. In such circumstances, separation of powers concerns are
      diminished, for it seems self-evident that just as Congress may
      encourage parties to settle a dispute out of court or resort to arbitration
      without impermissible incursions on the separation of powers, Congress
      may make available a quasi-judicial mechanism through which willing
      parties may, at their option, elect to resolve their differences.
Id. at 855. There is no determinative guidance as to the role consent plays in
the Article III analysis of § 157(c)(2). It may be, as BP RE suggests, irrelevant
as an impermissible cure attempt, or alternatively, consent may be part of the
multifactor balancing test to determine whether there is an Article III problem
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in the first instance. Fortunately, Executive Benefits likely will shed light on
this issue. Our court will benefit from that guidance, and I write separately to
note that I would usefully have incorporated such guidance into our own full
court assessment of these weighty constitutional boundaries.

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