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Sixth Circuit Holds Bankruptcy Court Has Constitutional Authority to Enter Final Judgment in Non-Discharge Action

In Hart v. Southern Heritage Bank, Case No. 13-6188 (April 28, 2014), the United States Court of Appeals for the Sixth Circuit held that a Bankruptcy Court for the Eastern District of Tennessee had constitutional authority to enter a final monetary judgment in a case under 11 U.S.C. section 523. The decision addressed the parameters of the U.S. Supreme Court's decision in Stern v. Marshall, 131 S. Ct. 2594 (2011). The Court distinguished the case from Stern in two ways. First, the Court held that the Bank's claim against the Debtor arises specifically in bankruptcy (the discharge of a particular debt), and second, the Bank's non-discharge claim was resolvable by ruling on the Bank's proof of claim.
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