An adversary proceeding is a lawsuit in the bankruptcy action and related in some way to the action. An adversary proceeding is a sub-case or proceeding of the bankruptcy proceeding. It has an adversary case number which is listed under the bankruptcy case number in the caption of the case. In the Diocese case, the case by THE CATHOLIC BISHOP OF SPOKANE against PAINE HAMBLEN, LLP, is ADV. PROC NO. 14-80001-FPC under the bankruptcy CASE NO. 04-08822-FPC11.
This adversary case is divided into two cases — the core issues case and non-core issues case with right to jury trial. Case issues which are “core” bankruptcy matters will be heard on February 17, 2015 by bankruptcy judge Frederick P. Corbit. These core issues are those which relate to the claim that due to a conflict of interest by Paine Hamblen, the attorneys’ fees paid to the firm should be “disgorged” by reason of a violation of the bankruptcy code.
The non-core issues relate to the negligence claims brought of The Catholic Bishop of Spokane against Paine Hamblen. The attorneys for the Bishop demand a jury trial regarding the claims. They would be willing to have the bankruptcy judge hear the claims with a jury. The attorneys for Paine Hamblen disagree, so this part of the adversary case will be referred to, or sent to, the United States District Court for the Eastern District of Washington for decision by an Article III federal judge.
Regarding this difference between core and non-core proceedings the legal authority of the judge deciding the question is of importance. The difference is between an “Article I, Article II” judge and an “Article III” judge. Bankruptcy judges are appointed, they are “Article I, Article II” judges. United States District Court judges are “Article III” judges.
For a discussion of Article II and Article III judges go here. Judith Resnik, The Mythic Meaning of Article III Courts, 56 U. Colo. L. Rev. 581 1984-1985.
For a discussion of core and non-core proceedings go to Allaw.com Core & Non-Core Proceedings in Bankruptcy.