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Case: 02-56002 05/06/2010 Page: 1 of 8              ID: 7328650 DktEntry: 245




Case Nos. 02-56002, 02-56067
Date of Decision: March 19, 2010
Date rehearing denied: May 5, 2010
Before Hon. Beezer, Kleinfeld, Paez

               IN THE UNITED STATES COURT OF APPEALS
                        FOR THE NINTH CIRCUIT

                         In re: VICKIE LYNN MARSHALL,
                                      Debtor.

                     ELAINE T. MARSHALL, EXECUTRIX
                  OF THE ESTATE OF E. PIERCE MARSHALL,

                      Appellant and Cross-Appellee,
                                    v.
            HOWARD K. STERN, EXECUTOR OF THE ESTATE OF
                      VICKIE LYNN MARSHALL,
                      Appellee and Cross-Appellant.
                    ____________________________
                     Appeal from Decision of the United States District Court
                                 Central District of California
                              Case No. Case No. SA CV-01-00097
                               (Honorable David O. Carter, Judge)
                       _________________________________

                          MOTION FOR STAY
          OF MANDATE PENDING PETITION FOR CERTIORARI
           _________________________________________________
 Philip W. Boesch, Jr.                            Bruce S. Ross
 THE BOESCH LAW GROUP                             Vivian L. Thoreen
 225 Santa Monica Boulevard, 11th Fl.             HOLLAND & KNIGHT LLP
 Santa Monica, California 90401                   633 West 5th Street, Ste. 2100
 (310) 578-7880 // (310) 310-578-7880 fax         Los Angeles, California 90071
                                                  (213) 896-2400 // (213) 896-2450 fax
                                  Kent L. Richland
                                    Alan Diamond
                                 Edward L. Xanders
                    GREINES, MARTIN, STEIN & RICHLAND LLP
                         5900 Wilshire Boulevard, 12th Floor
                            Los Angeles, California 90036
                         (310) 859-7811 // (310) 276-5261 fax
           Attorneys for Appellee and Cross-Appellant Howard K. Stern,
                  Executor of the Estate of Vickie Lynn Marshall
Case: 02-56002 05/06/2010 Page: 2 of 8        ID: 7328650 DktEntry: 245



                     MOTION FOR STAY OF MANDATE
                   PENDING PETITION FOR CERTIORARI

       Under Federal Rule of Appellate Procedure 41(d)(2) and Circuit Rule 41-1,

Appellee and Cross-Appellant Howard K. Stern, Executor of the Estate of Vickie

Lynn Marshall (referred to in this Motion and the attached Declaration as

“Vickie”), respectfully moves to stay the mandate following this Court’s denial of

Vickie’s petition for hearing and rehearing en banc on May 5, 2010, pending the

filing and final disposition of Vickie’s petition for writ of certiorari to the United

States Supreme Court.1 As set forth in the attached declaration of Alan Diamond,

the petition for certiorari will present substantial questions and good cause exists

for a stay.

Dated: May 6, 2010                Respectfully submitted,
                                  THE BOESCH LAW GROUP
                                   Philip W. Boesch, Jr.

                                  HOLLAND & KNIGHT, LLP
                                   Bruce S. Ross
                                   Vivian L. Thoreen

                                  GREINES, MARTIN, STEIN & RICHLAND LLP
                                   Kent L. Richland
                                   Alan Diamond
                                   Edward L. Xanders
                                  By:          /s/ Alan Diamond
                                  Attorneys for Appellee and Cross-Appellant
                                  Howard K. Stern, Executor of the Estate of Vickie
                                  Lynn Marshall


       1
           Both original parties are now deceased, but for the sake of readability
Vickie and Pierce Marshall are sometimes referred to as though still the current
parties, as was done in the Opinion.

                                           1
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                    DECLARATION OF ALAN DIAMOND

      I, Alan Diamond, declare as follows:

      1.     I am an attorney licensed to practice in the State of California and am

admitted to practice before this Court. I am an attorney in the law firm of Greines,

Martin, Stein & Richland LLP, counsel for Appellee and Cross-Appellant Howard

K. Stern, Executor of the Estate of Vickie Lynn Marshall (“Vickie”), in this appeal.

I make this declaration of my personal, firsthand knowledge and, if called as a

witness, I could and would testify competently thereto.

      2.     In 2006, the United States Supreme Court reversed this Court’s

holding in this case that the probate exception barred the federal courts from

hearing Vickie’s counterclaim for tortious interference with gift filed to Pierce

Marshall’s proof of claim for defamation. Marshall v. Marshall, 547 U.S. 293,

314-15 (2006).

      3.     On remand, in a published opinion filed on March 19, 2010, the Ninth

Circuit panel has again reversed the district court’s decision in Vickie’s favor.

Opn:4534-35. The Opinion holds that Vickie’s tortious interference counterclaim

was not a core proceeding under 28 U.S.C. § 157(b)(2)(C), and therefore the

bankruptcy court’s judgment was not final. Opn:4520-28. Relying on Northern

Pipeline Constr. Co. v. Marathon Pipe Line Co., 458 U.S. 50 (1982) (plurality

opinion) (Marathon), the Opinion holds that bankruptcy courts can enter final

judgments on compulsory counterclaims under 28 U.S.C. § 157(b)(2)(C) only if

                                          2
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“‘the resolution of the counterclaim is necessary to resolve the allowance or

disallowance of the claim itself,’” supposedly because any broader construction

would run afoul of Article III of the United States Constitution. Opn:4510-11,

4520-28 (citation omitted).

      4.     This is the first court to adopt that standard. Applying this newly-

minted test, the Opinion holds that Vickie’s compulsory counterclaim “was not a

necessary predicate to the bankruptcy court’s decision to allow or disallow

[Pierce’s] defamation claim” because even if Vickie showed the statements

underlying the defamation claim were true (which would defeat Pierce’s creditor’s

claim), she would have to prove additional factual elements to establish her

counterclaim. Opn:4524-27.

      5.     After concluding that the bankruptcy court did not have the power

under 28 U.S.C. § 157(b)(2)(C) to enter final judgment, the Opinion holds that a

later judgment in a Texas probate court entered while the district court was

reviewing the bankruptcy court ruling precludes Vickie from establishing her

tortious interference counterclaim. Opn:4528, 4534.

      6.     An order denying Vickie’s petition for rehearing and rehearing en

banc was filed on May 5, 2010.

      7.     Vickie will be filing a petition for a writ of certiorari in the United

States Supreme Court within the time prescribed by law.



                                           3
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      8.     Vickie’s petition for a writ of certiorari will present substantial

constitutional and statutory questions regarding the scope of bankruptcy courts’

power to enter final judgments on compulsory counterclaims filed to creditors’

claims. It will contend, among other things, that the Opinion:

             (a)   Conflicts with the uniform rule of every Circuit that has applied

28 U.S.C. §157 (b)(2)(C) that core jurisdiction exists over any compulsory

counterclaim to a creditors’ claim. In re CBI Holding Co., 529 F.3d 432, 461-63 &

n.12 (2d Cir. 2008); In re Am. Bridge Prods. Inc., 599 F.3d 1, 4 (1st Cir. 2010); In

re Baudoin, 981 F.2d 736, 741-44 (5th Cir. 1993).

             (b)   Mistakenly relied on Marathon as compelling its new standard,

even though Marathon did not involve a compulsory counterclaim to a proof of

claim or the revamped post-Marathon bankruptcy scheme;

             (c)   Ignores and contravenes a key post-Marathon Supreme Court

decision upholding the constitutionality of a statutory scheme allowing non-Article

III judges to decide compulsory counterclaims. Commodity Futures Trading

Comm’n v. Schor, 478 U.S. 833, 837, 850 (1986).

             (d)   Ignores that Congress enacted the present statutory scheme “for

the specific purpose of curing the constitutional problems of the scheme under

which [Marathon] arose.” In re Mankin, 823 F.2d 1296, 1306 (9th Cir. 1987);

28 U.S.C. §§ 1334(a), (b), 157(a), (d), 151-152.



                                           4
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             (e)    Contravenes Congress’ intent in enacting the present statutory

scheme and makes 28 U.S.C. § 157(b)(2)(C) superfluous. See In re Arnold Print

Works, Inc., 815 F.2d 165, 168-69 (1st Cir. 1987) (Congress believed that almost

all proceedings before bankruptcy judges—the sponsors said 95%—would be

core); 28 U.S.C. § 157(b)(2)(B).

             (f)    Drastically alters everyday bankruptcy practice and undermines

efficient bankruptcy administration by saddling courts with jurisdictional battles

and splintering inextricably-linked claims between bankruptcy and district courts.

      10.    Marathon involved a debtor’s state law claim against a third party that

was a complete stranger to the debtor’s bankruptcy, not a debtor’s counterclaim to

a creditor’s claim; it held unconstitutional certain statutes that have since been

repealed and replaced by the current bankruptcy law. In re CBI Holding Co., 529

F.3d at 459; In re Mankin, 823 F.2d at 1306, 1309. The Supreme Court has never

considered the constitutionality of 28 U.S.C. § 157(b)(2)(C) or the scope of

bankruptcy courts’ power to enter final judgments on compulsory counterclaims to

creditors’ claims. We will explain that the Opinion’s new and restrictive test for

core jurisdiction over compulsory counterclaims raises compelling reasons for the

Supreme Court to grant certiorari and settle these significant questions of federal

law, and that these questions entail an overriding need for national uniformity, as

they implicate bankruptcy practice throughout the United States.



                                           5
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      11.    This motion is made in good faith for the reasons stated and not for

purposes of delay.

      I declare under penalty of perjury under the laws of the United States of

America that the foregoing is true and correct.

      Executed this 6th day of May, 2010, at Los Angeles, California.



                                 /s/ Alan Diamond
                                       Alan Diamond




                                         6
Case: 02-56002 05/06/2010 Page: 8 of 8       ID: 7328650 DktEntry: 245



                         CERTIFICATE OF SERVICE

      I am employed in the County of Los Angeles, State of California, am over
the age of 18, and am not a party to the within action.

      I certify that on May 10, 2010, I electronically filed the foregoing
APPELLEE’S/CROSS-APPELLANT’S MOTION FOR STAY OF
MANDATE PENDING PETITION FOR CERTIORARI with the Clerk of the
Court for the United States Court of Appeals for the Ninth Circuit by using the
appellate CM/ECF system.

      Participants in the case who are registered CM/ECF users will be served by
the appellate CM/ECF system.

      I further certify that some of the participants in the case are not registered
CM/ECF users. I have mailed the foregoing document by First-Class mail, postage
prepaid, to the following non-CM/ECF participants:

N/A

      I enclosed a copy of the document in a sealed, addressed envelope and
placed the envelope for collection and mailing in the United States mail at Los
Angeles, California, following our ordinary business practices on the aforesaid
date.

                                       /s/ Leanna Sun Borys




                                         7

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Stern motion for stay of mandate

  • 1. Case: 02-56002 05/06/2010 Page: 1 of 8 ID: 7328650 DktEntry: 245 Case Nos. 02-56002, 02-56067 Date of Decision: March 19, 2010 Date rehearing denied: May 5, 2010 Before Hon. Beezer, Kleinfeld, Paez IN THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT In re: VICKIE LYNN MARSHALL, Debtor. ELAINE T. MARSHALL, EXECUTRIX OF THE ESTATE OF E. PIERCE MARSHALL, Appellant and Cross-Appellee, v. HOWARD K. STERN, EXECUTOR OF THE ESTATE OF VICKIE LYNN MARSHALL, Appellee and Cross-Appellant. ____________________________ Appeal from Decision of the United States District Court Central District of California Case No. Case No. SA CV-01-00097 (Honorable David O. Carter, Judge) _________________________________ MOTION FOR STAY OF MANDATE PENDING PETITION FOR CERTIORARI _________________________________________________ Philip W. Boesch, Jr. Bruce S. Ross THE BOESCH LAW GROUP Vivian L. Thoreen 225 Santa Monica Boulevard, 11th Fl. HOLLAND & KNIGHT LLP Santa Monica, California 90401 633 West 5th Street, Ste. 2100 (310) 578-7880 // (310) 310-578-7880 fax Los Angeles, California 90071 (213) 896-2400 // (213) 896-2450 fax Kent L. Richland Alan Diamond Edward L. Xanders GREINES, MARTIN, STEIN & RICHLAND LLP 5900 Wilshire Boulevard, 12th Floor Los Angeles, California 90036 (310) 859-7811 // (310) 276-5261 fax Attorneys for Appellee and Cross-Appellant Howard K. Stern, Executor of the Estate of Vickie Lynn Marshall
  • 2. Case: 02-56002 05/06/2010 Page: 2 of 8 ID: 7328650 DktEntry: 245 MOTION FOR STAY OF MANDATE PENDING PETITION FOR CERTIORARI Under Federal Rule of Appellate Procedure 41(d)(2) and Circuit Rule 41-1, Appellee and Cross-Appellant Howard K. Stern, Executor of the Estate of Vickie Lynn Marshall (referred to in this Motion and the attached Declaration as “Vickie”), respectfully moves to stay the mandate following this Court’s denial of Vickie’s petition for hearing and rehearing en banc on May 5, 2010, pending the filing and final disposition of Vickie’s petition for writ of certiorari to the United States Supreme Court.1 As set forth in the attached declaration of Alan Diamond, the petition for certiorari will present substantial questions and good cause exists for a stay. Dated: May 6, 2010 Respectfully submitted, THE BOESCH LAW GROUP Philip W. Boesch, Jr. HOLLAND & KNIGHT, LLP Bruce S. Ross Vivian L. Thoreen GREINES, MARTIN, STEIN & RICHLAND LLP Kent L. Richland Alan Diamond Edward L. Xanders By: /s/ Alan Diamond Attorneys for Appellee and Cross-Appellant Howard K. Stern, Executor of the Estate of Vickie Lynn Marshall 1 Both original parties are now deceased, but for the sake of readability Vickie and Pierce Marshall are sometimes referred to as though still the current parties, as was done in the Opinion. 1
  • 3. Case: 02-56002 05/06/2010 Page: 3 of 8 ID: 7328650 DktEntry: 245 DECLARATION OF ALAN DIAMOND I, Alan Diamond, declare as follows: 1. I am an attorney licensed to practice in the State of California and am admitted to practice before this Court. I am an attorney in the law firm of Greines, Martin, Stein & Richland LLP, counsel for Appellee and Cross-Appellant Howard K. Stern, Executor of the Estate of Vickie Lynn Marshall (“Vickie”), in this appeal. I make this declaration of my personal, firsthand knowledge and, if called as a witness, I could and would testify competently thereto. 2. In 2006, the United States Supreme Court reversed this Court’s holding in this case that the probate exception barred the federal courts from hearing Vickie’s counterclaim for tortious interference with gift filed to Pierce Marshall’s proof of claim for defamation. Marshall v. Marshall, 547 U.S. 293, 314-15 (2006). 3. On remand, in a published opinion filed on March 19, 2010, the Ninth Circuit panel has again reversed the district court’s decision in Vickie’s favor. Opn:4534-35. The Opinion holds that Vickie’s tortious interference counterclaim was not a core proceeding under 28 U.S.C. § 157(b)(2)(C), and therefore the bankruptcy court’s judgment was not final. Opn:4520-28. Relying on Northern Pipeline Constr. Co. v. Marathon Pipe Line Co., 458 U.S. 50 (1982) (plurality opinion) (Marathon), the Opinion holds that bankruptcy courts can enter final judgments on compulsory counterclaims under 28 U.S.C. § 157(b)(2)(C) only if 2
  • 4. Case: 02-56002 05/06/2010 Page: 4 of 8 ID: 7328650 DktEntry: 245 “‘the resolution of the counterclaim is necessary to resolve the allowance or disallowance of the claim itself,’” supposedly because any broader construction would run afoul of Article III of the United States Constitution. Opn:4510-11, 4520-28 (citation omitted). 4. This is the first court to adopt that standard. Applying this newly- minted test, the Opinion holds that Vickie’s compulsory counterclaim “was not a necessary predicate to the bankruptcy court’s decision to allow or disallow [Pierce’s] defamation claim” because even if Vickie showed the statements underlying the defamation claim were true (which would defeat Pierce’s creditor’s claim), she would have to prove additional factual elements to establish her counterclaim. Opn:4524-27. 5. After concluding that the bankruptcy court did not have the power under 28 U.S.C. § 157(b)(2)(C) to enter final judgment, the Opinion holds that a later judgment in a Texas probate court entered while the district court was reviewing the bankruptcy court ruling precludes Vickie from establishing her tortious interference counterclaim. Opn:4528, 4534. 6. An order denying Vickie’s petition for rehearing and rehearing en banc was filed on May 5, 2010. 7. Vickie will be filing a petition for a writ of certiorari in the United States Supreme Court within the time prescribed by law. 3
  • 5. Case: 02-56002 05/06/2010 Page: 5 of 8 ID: 7328650 DktEntry: 245 8. Vickie’s petition for a writ of certiorari will present substantial constitutional and statutory questions regarding the scope of bankruptcy courts’ power to enter final judgments on compulsory counterclaims filed to creditors’ claims. It will contend, among other things, that the Opinion: (a) Conflicts with the uniform rule of every Circuit that has applied 28 U.S.C. §157 (b)(2)(C) that core jurisdiction exists over any compulsory counterclaim to a creditors’ claim. In re CBI Holding Co., 529 F.3d 432, 461-63 & n.12 (2d Cir. 2008); In re Am. Bridge Prods. Inc., 599 F.3d 1, 4 (1st Cir. 2010); In re Baudoin, 981 F.2d 736, 741-44 (5th Cir. 1993). (b) Mistakenly relied on Marathon as compelling its new standard, even though Marathon did not involve a compulsory counterclaim to a proof of claim or the revamped post-Marathon bankruptcy scheme; (c) Ignores and contravenes a key post-Marathon Supreme Court decision upholding the constitutionality of a statutory scheme allowing non-Article III judges to decide compulsory counterclaims. Commodity Futures Trading Comm’n v. Schor, 478 U.S. 833, 837, 850 (1986). (d) Ignores that Congress enacted the present statutory scheme “for the specific purpose of curing the constitutional problems of the scheme under which [Marathon] arose.” In re Mankin, 823 F.2d 1296, 1306 (9th Cir. 1987); 28 U.S.C. §§ 1334(a), (b), 157(a), (d), 151-152. 4
  • 6. Case: 02-56002 05/06/2010 Page: 6 of 8 ID: 7328650 DktEntry: 245 (e) Contravenes Congress’ intent in enacting the present statutory scheme and makes 28 U.S.C. § 157(b)(2)(C) superfluous. See In re Arnold Print Works, Inc., 815 F.2d 165, 168-69 (1st Cir. 1987) (Congress believed that almost all proceedings before bankruptcy judges—the sponsors said 95%—would be core); 28 U.S.C. § 157(b)(2)(B). (f) Drastically alters everyday bankruptcy practice and undermines efficient bankruptcy administration by saddling courts with jurisdictional battles and splintering inextricably-linked claims between bankruptcy and district courts. 10. Marathon involved a debtor’s state law claim against a third party that was a complete stranger to the debtor’s bankruptcy, not a debtor’s counterclaim to a creditor’s claim; it held unconstitutional certain statutes that have since been repealed and replaced by the current bankruptcy law. In re CBI Holding Co., 529 F.3d at 459; In re Mankin, 823 F.2d at 1306, 1309. The Supreme Court has never considered the constitutionality of 28 U.S.C. § 157(b)(2)(C) or the scope of bankruptcy courts’ power to enter final judgments on compulsory counterclaims to creditors’ claims. We will explain that the Opinion’s new and restrictive test for core jurisdiction over compulsory counterclaims raises compelling reasons for the Supreme Court to grant certiorari and settle these significant questions of federal law, and that these questions entail an overriding need for national uniformity, as they implicate bankruptcy practice throughout the United States. 5
  • 7. Case: 02-56002 05/06/2010 Page: 7 of 8 ID: 7328650 DktEntry: 245 11. This motion is made in good faith for the reasons stated and not for purposes of delay. I declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct. Executed this 6th day of May, 2010, at Los Angeles, California. /s/ Alan Diamond Alan Diamond 6
  • 8. Case: 02-56002 05/06/2010 Page: 8 of 8 ID: 7328650 DktEntry: 245 CERTIFICATE OF SERVICE I am employed in the County of Los Angeles, State of California, am over the age of 18, and am not a party to the within action. I certify that on May 10, 2010, I electronically filed the foregoing APPELLEE’S/CROSS-APPELLANT’S MOTION FOR STAY OF MANDATE PENDING PETITION FOR CERTIORARI with the Clerk of the Court for the United States Court of Appeals for the Ninth Circuit by using the appellate CM/ECF system. Participants in the case who are registered CM/ECF users will be served by the appellate CM/ECF system. I further certify that some of the participants in the case are not registered CM/ECF users. I have mailed the foregoing document by First-Class mail, postage prepaid, to the following non-CM/ECF participants: N/A I enclosed a copy of the document in a sealed, addressed envelope and placed the envelope for collection and mailing in the United States mail at Los Angeles, California, following our ordinary business practices on the aforesaid date. /s/ Leanna Sun Borys 7