In re Felice, 2012 WL 4757791 (Bkrtcy.D.Mass., Slip Copy, Oct. 5, 2012).
United States Bankruptcy Court, D. Massachusetts,
Eastern Division.
In re Ernest J. FELICE and Michelle Felice, Debtors.
Harold B. Murphy, Plaintiff
v.
Ernest J. Felice, Michelle Felice, Danielle J. Felice and Ernest O. Felice in his individual capacity and as Trustee of the Ernest O. Felice Family Trust, Defendant.
Bankruptcy No. 07–17589–FJB.
Adversary No. 08–01355.
Oct. 5, 2012.
Kathleen R. Cruickshank, Murphy & King P.C., Boston, MA, for Harold B. Murphy.
Jordan L. Shapiro, Shapiro & Hender, Malden, MA, for Ernest J. Felice, Michelle Felice, Danielle J. Felice.
MEMORANDUM OF DECISION
FRANK J. BAILEY, Bankruptcy Judge.
I. INTRODUCTION
*1 This is an action by the chapter 7 trustee against debtor Ernest J. Felice, his sister, and his father to establish the bankruptcy estate's interest in certain family trusts; in the final count, the trustee also objects to the debtors' discharge. The issues before the Court are, as to each count, (1) whether the bankruptcy court has authority under 28 U.S.C. § 157 to enter a final order; (2) whether that authority is consistent with Article III of the United States Constitution; and (3) whether the defendants are entitled to a jury trial.
II. BACKGROUND FACTS and PROCEDURAL HISTORY
Ernest J. Felice (“Ernest”) and Michelle Felice (“Michelle”) (together, the “Debtors”) filed a joint petition for relief under chapter 7 of the Bankruptcy Code on November 28, 2007. On their initial bankruptcy schedules, the Debtors listed no real property. On May 3, 2010, they amended Schedule A to include Ernest's life estate in real property located at 20 Mandalay Drive, Peabody, Massachusetts (“Mandalay Drive”). The Debtors stated that the listing of Mandalay Drive was “for information and disclosure purposes only as the asset is NOT property of the estate[.]” The chapter 7 trustee, Harold B. Murphy (the “Trustee”), disagreed with this characterization and commenced the present action against the Debtors, Ernest's father, Ernest O. Felice (“Ernest Senior”), and Ernest's sister, Danielle Felice (“Danielle”) (collectively, the “Defendants”). Except as noted below, the following facts appear undisputed.
Ernest Senior and his wife, Phyllis Felice (“Phyllis”), owned Mandalay Drive as tenants by the entirety. On September 21, 1981, Ernest Senior created the Felice Realty Trust (the “1981 Realty Trust”), naming himself as trustee and Phyllis as beneficiary. That same day, the couple deeded Mandalay Drive to Ernest Senior as trustee of the 1981 Realty Trust. On January 10, 2001, following his wife's death, Ernest Senior transferred 100 percent of the beneficial interest in the 1981 Realty Trust to himself. The 1981 Realty Trust contained a provision providing for its self-termination on September 21, 2001.
On September 27, 2001, Ernest Senior's children, Ernest and Danielle, created two trusts: the Ernest O. Felice Realty Trust (the “2001 Realty Trust”) and the Ernest O. Felice Family Trust (the “Family Trust”). Ernest and Danielle are co-trustees of both trusts and co-beneficiaries of the Family Trust. The 2001 Realty Trust holds Mandalay Drive for the benefit of the Family Trust.
The same day his children created the 2001 Realty Trust and Family Trust, Ernest Senior deeded Mandalay Drive to Ernest and Danielle as trustees of the 2001 Realty Trust, subject to a reserved life estate in the property for himself.FN1 The parties agree that the deed that transferred Mandalay Drive from the 1981 Realty Trust to the 2001 Realty Trust contains a scrivener's error. It identifies the grantor as “Ernest O. Felice, as trustee of the Ernest O. Felice Family Trust.” It should have read “Ernest O. Felice, as trustee of the Felice Realty Trust” because, as of September 27, 2001, Ernest Senior still held Mandalay Drive in his capacity as trustee of the 1981 Realty Trust.FN2 The Family Trust's beneficial interest in Mandalay Drive inured to the Family Trust's co-beneficiaries, Ernest and Danielle.FN3 The Family Trust contains a “Spendthrift Clause” prohibiting Ernest and Danielle from selling, pledging, or transferring their interests in the trust and removing their interests from the reach of creditor process.
FN1. The parties dispute whether Ernest Senior was also a settlor of the Family Trust.
FN2. In their Motion to Dismiss, the Defendants argue that because the 1981 Realty Trust expired by its own terms on September 21, 2001—six days before Ernest Senior executed the deed—the conveyance from the 1981 Realty Trust to the 2001 Realty Trust was defective.
FN3. A third sibling was also a beneficiary of the Family Trust until his death on November 3, 2002. Since then Ernest and Danielle have been the only beneficiaries of the Family Trust.
*2 On January 14, 2003, Ernest and Danielle executed a First Amendment to the Family Trust, granting Ernest 75% of the beneficial interest and Danielle, 25%. The First Amendment provided that Danielle would automatically forfeit her interest if she ceased using the second floor of Mandalay Drive as her primary residence.FN4 The Trustee alleges Danielle has done just that. The Defendants neither admit nor deny this and the factual allegations on which it is founded.
FN4. See Amended Complaint, Exh. F, “ Ernest O. Felice Family Trust, Second Amendment of Trust II.” Although this document is titled the “Second Amendment of Trust,” a subsequent amendment, executed in 2008, is also titled the Second Amendment. The amendment executed in 2003 appears by all accounts to be the first amendment to the Family Trust.
On January 28, 2008, Ernest executed a Second Amendment to the Family Trust. This occurred after he filed bankruptcy and without permission of the Court. The Second Amendment gave Ernest and Danielle each a 50% beneficial interest in the Family Trust.
On April 30, 2008, Ernest and Michelle signed an affidavit (the “2008 Affidavit”) under penalty of perjury in which they averred: “Neither of us are aware of who the beneficiaries of the Ernest O. Felice Trust are. Neither of us have ever been informed by Ernest O. Felice of (sic) anyone else that either of us are beneficiaries of this trust.”
On November 21, 2008, the Trustee commenced the present adversary proceeding. In his Amended Complaint (hereinafter “Complaint”), the Trustee seeks: (1) a declaration that Ernest held a 100 percent beneficial interest in the Family Trust at the time he and Michelle filed bankruptcy and, consequently, that Ernest owns Mandalay Drive subject to the life estate of Ernest Senior; (2) a declaration that Ernest's interest in Mandalay Drive is property of the Debtors' bankruptcy estate pursuant to 11 U.S.C. § 541; (3) reformation of the deed executed by Ernest Senior that purportedly transferred Mandalay Drive into the 2001 Realty Trust; (4) avoidance and recovery for the benefit of the estate of Ernest's post-petition transfer of one-half of his beneficial interest to his sister Danielle; (5) a declaration that the Debtors have no claim of exemption in Mandalay Drive; and (6) denial of the Debtors' discharge. FN5 In response, the Defendants argue that by virtue of the Spendthrift Clause in the Family Trust and § 541(c)(2) of the Bankruptcy Code, Ernest's interest in Mandalay Drive is excluded from property of the estate. On May 3, 2010, the Debtors filed a motion in the adversary proceeding for “Determination that the Debtor's Beneficial Interest in Various Trust Documents is not an (sic) Property of the Estate, Due to the Spendthrift Clause Contained Therein” (the “Defendants' Motion”). The Trustee filed a cross-motion for summary judgment.
FN5. The Trustee's Complaint also contains three counts for avoidance based on fraudulent transfer, which counts the parties later dismissed by stipulation. See Docket No. 90.
On September 20, 2010, after a hearing on the Defendants' Motion and the Trustee's Cross–Motion for Summary Judgment, I ordered the parties to file briefs addressing the following issues for each count of the complaint: (1) whether the relief requested constitutes a “core” proceeding under 28 U.S.C. § 157; and (2) whether the Defendants have a right to a jury trial under the Seventh Amendment. The Trustee filed his response, arguing that each count is a core proceeding and that no count carries a right to a jury trial. The Defendants have filed the required brief, but theirs sets forth no arguments regarding the Court's jurisdiction under 28 U.S.C. § 157. In a separate document, their Statement in Compliance with Pretrial Order, the Defendants clearly stated that they do not consent to the bankruptcy court's entering final judgment on any count it determines to be “non-core.” The Defendants did brief the jury issue, but in doing so they treated the Complaint as if it were one to recover specific real property under a fraudulent conveyance theory. The Defendants argue that since such an action has historically been brought at common law, the Seventh Amendment guarantees them a right to a jury trial.
III. DISCUSSION
*3 First, in view of the record of proceedings and the relief requested by the Defendants, this Court, pursuant to 28 U.S.C. § 157(b)(3), must determinate whether the claims made by the Trustee in this adversary proceeding are “core” or “otherwise related to” the Debtors' case under title 11. Second, in light of the Supreme Court's decision in Stern v. Marshall, 564 U.S. ––––, 131 S.Ct. 2594 (2011), I recognize that even if a proceeding is “core” under § 157, a bankruptcy judge may not have constitutional authority to enter a final order on it. See Siegel v. FDIC (In re Indymac Bancorp Inc.), 2011 WL 2883012 at *6 (CD.Cal. July 15, 2011) (after Stern, “it is insufficient to simply meet Congress's definition of core under § 157(b)(2)(C)”). Accordingly, I must determine a bankruptcy judge's constitutional authority to do so. And third, the Defendants having generally demanded a trial by jury, I must determine whether they are entitled to one under the Seventh Amendment to the Constitution. The Court must address each of these issues with respect to each count of the Complaint.
A. The Extent of Ernest's Interest in Mandalay Drive and Whether Such Interest is Property of the Estate
Count I involves two separate issues: (1) whether Ernest's interest in Mandalay Drive is property of the bankruptcy estate; and (2) the extent of his interest on the petition date. I must analyze jurisdiction and the right to a jury trial separately with respect to each issue.
1. Determining Whether Ernest's Beneficial Interest in the Family Trust Constitutes Property of the Estate
Pursuant to section 541(a)(1) of the Bankruptcy Code,FN6 all legal and equitable interests of a debtor in property as of the commencement of the case become property of the estate. This general rule is subject to the exception set forth in § 541(c)(2), which excludes from the estate a debtor's beneficial interest in a trust if the trust contains a restriction on the transfer of that interest that would be enforceable under “applicable nonbankruptcy law.” See Lassman v. Tosi (In re Tosi), 383 B.R. 1, 10 (Bankr.D.Mass.2008) (“ Section 541(c)(2) of the Bankruptcy Code carves out an exception to section 541(a)(1).”). If a restriction on the transfer of a beneficial interest is unenforceable at state law, § 541(c)(2) does not apply, and the beneficial interest is property of the estate.
FN6. 11 U.S.C. § 101 et seq.
In this case, the Defendants argue that the Spendthrift Clause in the Family Trust restricts Ernest's ability to transfer his beneficial interest and, therefore, that his interest in Mandalay Drive is excepted from property of the estate by § 541(c)(2). The Trustee counters that the Spendthrift Clause is unenforceable under Massachusetts law due to the “self-settled” nature of the Family Trust and, consequently, that Ernest's interest in Mandalay Drive is property of the estate under § 541(a)(1).
(a) Authority of the Bankruptcy Court to Enter a Final Judgment
(i) Statutory Authority under 28 U.S.C. § 157
*4 The issue presented is whether a bankruptcy judge has statutory authority under 28 U.S.C. § 157 to enter a final judgment regarding whether the Spendthrift Clause in the Family Trust excludes Ernest's interest in Mandalay Drive from property of the estate. A bankruptcy judge is authorized to hear and determine all core proceedings arising under title 11 or arising in a case under title 11 and to enter appropriate orders and judgments in those proceedings. 28 U.S.C. § 157(b)(1). A bankruptcy judge may also hear a proceeding that is not core but “otherwise related to” the bankruptcy case—colloquially termed a “non-core” proceeding—and submit proposed findings of fact and conclusions of law to the district court for entry of final order or judgment. The statute does not define “core,” though § 157(b)(2) provides a non-exhaustive list of core proceedings.FN7 In general, a proceeding is core if it relates to a function essential to the administration of the bankruptcy case. See McCabe v. Braunstein (“ Braunstein II ”), 439 B.R. 1, 7 (Bankr.D.Mass.2010). Non-core proceedings involve controversies that do not depend on the bankruptcy laws for their existence and could proceed in another court in the absence of bankruptcy.FN8
FN7. See 28 U.S.C. § 157(b)(2)(A)-(P).
FN8. “A proceeding will not be considered ‘core,’ even if it falls within the literal language of § 157(b) if it is a state law claim that could exist outside of bankruptcy and is not inextricably bound to the claims allowance process or a right created by the Bankruptcy Code.” Sheridan v. Michels (In re Sheridan), 362 F.3d 96, 108–09 (1st Cir.2004), quoting Bethlahmy v. Kuhlman ( In re ACI–HDT Supply Co.), 205 B.R. 231, 236 (B.A.P. 9th Cir.1997).
The count to determine the status of Ernest's interest in the Family Trust is a core proceeding under 28 U.S.C. § 157(b)(1) because this controversy would not exist outside of bankruptcy. Unlike a non-core proceeding, determining the extent of property of the estate is a proceeding that can only arise under the Bankruptcy Code. See Braunstein II, 439 B.R. at 7 (noting that non-core proceedings are state or federal claims which could survive outside of bankruptcy and, in the absence of bankruptcy, would have been initiated in a state or federal district court). The present controversy is created by § 541 of the Code. Section 541(a)(1) provides the Trustee's basis for including Mandalay Drive in the bankruptcy estate. The Defendants' only recourse for excluding it lies in § 541(c)(2). The fact that Massachusetts law will decide the outcome is not dispositive of whether the proceeding is core or non-core. Routine bankruptcy decisions in core proceedings are often based on rights created at state law.FN9 A controversy that could exist outside of bankruptcy is not the same as a right which exists outside of bankruptcy but is relevant inside bankruptcy. Put simply, by operation of § 541 of the Bankruptcy Code, the filing of a bankruptcy petition creates an estate that either includes Ernest's beneficial interest in the Family Trust or does not. A proceeding to determine whether § 541 brings a particular asset of the debtor into the estate is a core proceeding within the meaning of § 157(b).
FN9. “ ‘Property interests are created and defined by state law,’ and ‘[u]nless some federal interest requires a different result, there is no reason why such interests should be analyzed differently simply because an interested party is involved in a bankruptcy proceeding.’ “ Stern, 131 S.Ct. at 2616, quoting Butner v. United States, 440 U.S. 48, 55 (1979).
(ii) Constitutional Authority
The Supreme Court's decision in Stern v. Marshall recognized constitutional limitations on the bankruptcy court's authority under § 157(b) to enter final orders. See 131 S.Ct. at 2618. In Stern, the Court held that a bankruptcy judge lacked constitutional authority to decide a debtor's counterclaim despite having statutory authority to do so under 28 U.S.C. § 157. See id . at 2620. Since my authority to enter final judgment on the Trustee's claims in this case comes from the same statute, I must decide whether the Constitution allows me to render a final judgment.
*5 The long travel of the dispute between Vickie Lynn Marshall and her stepson, E. Pierce Marshall, that led to the Supreme Court's decision in Stern is recounted in numerous cases and legal articles.FN10 Vickie, better known to the world as Anna Nicole Smith, widow to the Texas multi-millionaire J. Howard Marshall, filed a bankruptcy case in California. Pierce filed a proof of claim against her bankruptcy estate, alleging her lawyers had defamed him in the press. Vickie counterclaimed against Pierce, alleging he had tortiously interfered with a monetary gift she expected to receive from her late husband. Although the bankruptcy court ruled in her favor, the Supreme Court held that the bankruptcy judge lacked the constitutional authority to enter the judgment because doing so required the exercise of the judicial power of the United States. See id. at 2620.
FN10. See, e.g., S. Todd Brown, Constitutional Gaps in Bankruptcy, 20 Am. Bankr.Inst. L Rev. 203–09 (2012).
Article III of the Constitution states that the “judicial power” of the United States shall be vested in “one supreme Court, and in such inferior Courts as the Congress may from time to time ordain and establish.” U.S. Const, art. III, § 1. The judges of these “Article III” courts “shall hold their Offices during good Behavior, and shall ... receive for their Services a Compensation which shall not be diminished during their Continuance in Office.” Id. A bankruptcy judge is not an Article III judge. A bankruptcy judge for a particular district is appointed by the court of appeals for the circuit in which the district is located, and the term of appointment is fourteen years. See 28 U.S.C. § 152.FN11 Congress has set the salary of bankruptcy judges by statute, 28 U.S.C. § 153(a), and may diminish it by amending the statute. For lack of Article III status, a bankruptcy judge cannot enter a final order or judgment in any proceeding if doing so would require exercise of the judicial power of the United States. See Northern Pipeline v. Marathon Pipe Line Co. 458 U.S. 50, 52 (1982); accord Stern, 131 S.Ct. at 2609 (“When a suit is made of ‘the stuff of the traditional actions at common law tried by the courts at Westminster in 1789,’ and is brought within the bounds of federal jurisdiction, the responsibility for deciding that suit rests with Article III judges in Article III courts.”) (internal citation omitted).
FN11. The congressional designation of Article III judges to appoint bankruptcy judges is explicitly provided for in the Constitution. Article II, Section 2 provides that “Congress may by law vest the appointment of such inferior officers, as they think proper ... in the Courts of Law.” U.S. Const. art. II, § 2.
In Northern Pipeline, the Supreme Court identified three instances where the judicial power of the United States may be exercised by non-Article III tribunals: (1) territorial courts; (2) courts-martial; and (3) cases involving “public rights.” Of these three, only the “public rights” exception is arguably applicable to bankruptcy courts within the United States.FN12 See id. at 64–68. The Supreme Court first articulated the “public rights” doctrine in Murray's Lessee v. Hoboken Land & Improvement Co. See 59 U.S. 272, 284 (1855). The Court noted that Congress may not withdraw matters which are the subject of a suit at common law, equity, or admiralty from Article III courts. See id. The Court recognized, however, that there are other matters involving “public rights ..., which are susceptible of judicial determination, but which congress may or may not bring within the cognizance of [ Article III courts].” See id.
FN12. The plurality in Northern Pipeline distinguished territorial courts and courts-martial from bankruptcy courts. A court-martial is clearly a different court entirely. Territorial courts exist in areas of governance where the Executive and Legislative branches have extraordinary control over the subject matter at issue. In particular, Article IV of the Constitution gives Congress broad powers of governance over the territories, including the power to create courts independent of Article III limitations. See American Ins. Co. v. Canter, 26 U.S. 511, 546 (1828) (affirming the use of judicial power and entry of a final judgment by a federal judge appointed to a four-year term in the then-territory of Florida because “[a]lthough admiralty jurisdiction can be exercised in the states in those Courts, only, which are established in the pursuance of the 3d article of the Constitution; the same limitation does not extend to the territories. In legislating for them, Congress exercises the combined powers of the general, and of a state government.”). Because I sit in a federal bankruptcy court located within the Commonwealth of Massachusetts, which is a state and not a territory, Article III limits what Congress may authorize me to decide.
*6 The Supreme Court has considered the “public rights” doctrine in the context of bankruptcy three times since the Bankruptcy Act of 1978 created the modern bankruptcy court and the office of bankruptcy judge. Each time, the Court did not find a “public rights” exception that would allow the bankruptcy judge to decide the proceeding at issue,FN13 yet expressly declined to consider whether “public rights” might arise in other facets of restructuring debtor-creditor relations in bankruptcy.FN14 In Stern, the Court acknowledged that the “public rights” exception might allow a non- Article III tribunal to adjudicate a dispute between two private individuals, but only if the claim at issue derives from a federal regulatory scheme, or requires resolution by an expert government agency to serve a limited regulatory objective within the agency's authority. See 131 S.Ct. at 2613. The claim at issue in Stern did not “fall within any of the varied formulations of the public rights exception.” Id. at 2614.
FN13. See Stern, 131 S.Ct. at 2601 (proceeding to determine creditor's liability to debtor for tortious interference with a gift); Granfinanciera v. Nordberg, 492 U.S. 33, 56 (1989) (holding that a fraudulent conveyance action was a private right, and therefore, the defendant was entitled to a trial by jury); Northern Pipeline, 458 U.S. at 56 (proceeding to determine private party's liability to debtor for breach of contract).
FN14. See Northern Pipeline, 458 U.S. at 71 (“[T]he restructuring of debtor-creditor relations, which is at the core of the federal bankruptcy power, must be distinguished from the adjudication of state-created private rights, ... The former may well be a ‘public right,’ but the later obviously is not.”); Granfinanciera, 492 U.S. at 56 n. 11 (“We do not suggest that the restructuring of debtor-creditor relations is in fact a public right ... and we need not and do not seek to defend [this thesis] here.”); Stern, 131 S.Ct. 2614 n. 7 (explaining that Granfinanciera declined to consider the “public rights” exception beyond whether it allowed a bankruptcy judge to decide a fraudulent conveyance action despite the defendant's demand for a jury trial and commenting, “[b]ecause neither party asks us to reconsider the public rights framework for bankruptcy, we follow the same approach here”).
Following the Supreme Court's decision in Stern, Bankruptcy Judge Jeffrey Hughes analyzed the “public rights” doctrine with erudition in Meoli v. Huntington Nat'l Bank ( In re Teleservices Group, Inc.), 456 B.R. 318, 328–32 (Bankr.W.D.Mich.2011). After providing a brief summary of the proceeding at issue in Murray's Lessee,FN15 Judge Hughes highlighted the link between Article III's limitation on who may exercise the judicial power of the United States and the Fifth Amendment's guarantee of due process. Murray's Lessee is, first and foremost, a case concerning whether a person received due process before the government took his property. The Supreme Court only mentions “public rights” towards the end of its opinion and only in response to a specific argument made by the losing party.FN16 See Murray's Lessee, 59 U.S. at 282. The Fifth Amendment provides that no person shall be deprived of life, liberty, or property, without due process of law.FN17 Judge Hughes notes:
FN15. The dispute arose because the federal government had employed a fellow named Swartwout to collect customs duties at the port of New York. Unfortunately, Swartwout had fallen behind on his accounting, which prompted the U.S. Treasury to not only assess Swartwout for the missing duties but also to levy and sell his property under a distress warrant issued by the solicitor of the treasury. All of this, though, was done without the benefit of any court. Therefore, when the purchaser of a particular property under the warrant attempted to evict an unwanted tenant, the tenant responded with a constitutional challenge. Specifically, ‘Murray's lessee’ maintained that only an Article III court could have ordered the seizure and sale of the property that the purchaser claimed.” See Teleservices, 456 B.R. at 328.
FN16. Once the Court had determined that the proceeding by which the U.S. Treasury adjudged the customs collector delinquent and levied on his property did not amount to a judicial controversy requiring the use of judicial power, it had to explain why Congress could nevertheless make the procedure subject to judicial review. Thus, the Court made the declaration that there were matters “involving public rights, which may be presented in such form that the judicial power is capable of acting on them, and which are susceptible of judicial determination, but which [C]ongress may or may not bring within the cognizance of the courts of the United States as it may deem proper.” See Murray's Lesee, 59 U.S. at 284.
FN17. U.S. Const. amend. V.
Therefore, Murray's Lessee is on all fours with Stern. Each is about Congress'[s] use of an extrajudicial device to recover an amount claimed. In Murray's Lessee, it was [the] treasury's summary proceedings against Swartwout; in Stern, it was a non-Article III judge's entry of a final judgment against the stepson. And in each instance, the device employed raised questions whether the person targeted was being denied the due process rights the [Fifth Amendment] guarantees through the establishment of an independent Article III judiciary.
Teleservices, 456 B.R. at 332. Judge Hughes points out that Article III's requirement that the judicial power of the United States be exercised by life-tenured judges with protected salaries is not simply a structural feature of the Judicial Branch; it is the process which is due for every judicial controversy arising at law or equity between private citizens that comes within the jurisdiction of the federal courts. The Supreme Court in Murray's Lessee understood the Fifth Amendment as limiting Congress's legislative power:
*7 It is manifest that it was not left to the legislative power to enact any process which might be devised. The article [i.e., the Fifth Amendment] is a restraint on the legislative as well as on the executive and judicial powers of the government, and cannot be so construed as to leave congress free to make any process ‘due process of law/ by its mere will.
Id. at 330 quoting Murray's Lessee, 59 U.S. at 276.
Although the extent to which the “public rights” doctrine reaches into the bankruptcy system—if it does at all—remains undefined, it is clear that the ability of a bankruptcy judge to adjudicate a proceeding without “running afoul of the Constitution and the protections it affords through Article III” is, to some extent, a function of whether the bankruptcy judge's adjudication of that proceeding might deprive a party of liberty or property without due process of law. Id at 324. Judge Hughes concludes:
[T]he question raised by the tenant in Murray's Lessee and the stepson in Stern is the same. In Murray's Lessee, it was whether the summary proceeding the treasury had employed was actually an exercise of the judicial power protected by Article III just as the question in Stern was whether the bankruptcy court's entry of a final judgment was an exercise of that same protected power. Therefore, what the Court said in the opening paragraphs of Murray's Lessee is just as true for Stern—that “whether these acts were an exercise of the judicial power of the United States, can best be considered under another inquiry,” that being whether “the effect of the proceedings ... [deprived] the party ... of his liberty and property, ‘without due process of law;’ and, therefore, is in conflict with the fifth article of the amendments of the constitution.” Murray's Lessee, 59 U.S. at 275. And what distinguishes Murray's Lessee from Stern is that the Court in Murray's Lessee was able to find a historical exception to the due process clause whereas the Court in Stern did not even attempt to find one because there was none to be found.
Id. at 343.
While the Supreme Court declined to elaborate on the presence of “public rights” in bankruptcy, its decision in Stern does speak to the authority of bankruptcy judges to enter final orders or judgments pursuant to 28 U.S.C. § 157. The bankruptcy judge in Stern entered a final order on a debtor's state-law counterclaim against a creditor who had filed a proof of claim against the estate. See 131 S.Ct. at 2600. The Court held that although § 157(b)(2)(C) authorized the bankruptcy judge to decide the counterclaim, this statutory authorization was an unconstitutional delegation of judicial power outside Article III. See id. at 2608. The counterclaim was a common law tort claim, which “simply attempt[ed] to augment the bankruptcy estate.” See id. at 2616. On this point, the Court affirmed the reasoning of a prior decision dealing with the constitutionality of bankruptcy courts, Granfinanciera v. Nordberg, 492 U.S. 33 (1989),FN18 stating:
FN18. In Granfinanciera, the Court held that, in a fraudulent conveyance action to recover a definite sum of money, the defendant had a right to a jury trial under the Seventh Amendment. See 492 U.S. at 58–59. The Court acknowledged that Congress may deny trials by jury in cases where “public rights” are litigated. See id. at 51. The Court noted, however, that fraudulent conveyance actions are not part of the proceedings in bankruptcy but “more nearly resemble state-law contract claims brought by a bankrupt corporation to augment the bankruptcy estate than they do creditors' hierarchically ordered claims to a pro rata share of the bankruptcy res.” The Court concluded, “[t]hey therefore appear matters of private rather than public right.” See id. at 56 (emphasis added). Limiting its holding to whether the defendants were entitled to a jury trial under the Seventh Amendment, the Court did not decide whether Article III permits bankruptcy judges to conduct such jury trials. See id. at 64.
*8 We see no reason to treat [the debtor's] counterclaim any differently from the fraudulent conveyance action in Granfinanciera [citation omitted]. Granfinanciera 's distinction between actions that seek “to augment the bankruptcy estate” and those that seek “a pro rata share of the bankruptcy res,” reaffirms that Congress may not bypass Article III simply because a proceeding may have some bearing on a bankruptcy case; the question is whether the action at issue stems from the bankruptcy itself or would necessarily be resolved in the claims allowance process.
Id. at 2618 (emphasis added). Therefore, despite being a “core” proceeding within the meaning of 28 U.S.C. § 157(b)(2), final resolution of the debtor's counterclaim in Stern required adjudication by an Article III judge. See id.
Judge Hughes' understanding in Teleservices of the connection between Article III authority and due process is consistent with the Supreme Court's view that proceedings seeking to “augment the estate” might be beyond a bankruptcy judge's authority to decide. Northern Pipeline and Stern use the phrase “augment the bankruptcy estate” in reference to actions that ultimately would result in transferring property belonging to a third party at the commencement of the bankruptcy into the bankruptcy estate. See 458 U.S. at 72 (action to determine third party's liability to debtor for breach of contract); 131 S.Ct. at 2618 (action to determine creditor's liability to debtor for tortious interference with a gift). In finding the bankruptcy judge's authority lacking in both cases, the Supreme Court explicitly stated the need to protect the integrity of Article III of the Constitution. See, e.g., Stern, 131 S.Ct. at 2620 (“A statute may no more chip away at the authority of the Judicial Branch than it may eliminate it entirely.”). But Northern Pipeline and Stern can also be read as implicitly protecting the defendants' Fifth Amendment right to due process in proceedings affecting their property rights. See Teleservices, 456 B.R. at 343. An action that successfully augments the bankruptcy estate inevitably requires the defendant, compelled by court order if necessary, to part with money or property. If the defendant is a private party, then adjudication of the action requires a court authorized to exercise the judicial power of the United States. In this sense, due process and Article III are “fused at the hip.” FN19 Professor Douglas Baird explains:
FN19. See Douglas G. Baird, Blue Collar Constitutional Law, 86 Am. Bankr.L. J., 3, 5 (2012).
Obtaining a judgment is the way that one private citizen can call upon the state to use force against another citizen to vindicate her rights. Authorizing the forcible seizure of property is a serious business. It is the essence of the judicial power. Because the bankruptcy judge is not an Article III judge, she lacks the power to authorize one citizen to take property away from another. It is just as if a janitor at the courthouse entered the judgment. He does not possess the judicial power either. If you want authorization to take someone else's property in the federal judicial system on account of an ordinary debt, you need to get it from an Article III judge.FN20
FN20. Id.
*9 Sweeping aside the professor's regard for my “custodial” role in the bankruptcy system, I agree that I lack the Article III status necessary to exercise the judicial power of the United States where no exception applies.
Although an Article III judge must decide proceedings requiring the exercise of the judicial power of the United States for which there is no “public rights” exception, Stern's distinction of proceedings that “augment” the bankruptcy estate from those that fix creditors' entitlement to distribution from the estate suggests that not all bankruptcy proceedings necessarily require an exercise of judicial power. “Congress, without question, has the ability under its authority to enact uniform bankruptcy laws to incorporate into the Bankruptcy Code court-like features just as Congress had the ability under its authority to collect taxes and duties to adopt a summary procedure for the treasury to collect a debt from one of its agents.” Id. at 343. Historically, bankruptcy referees, lacking life tenure, entered final orders reviewable only by appeal on disputes incident to the administration of property in the actual or constructive possession of the court. Cf. Katchen v. Landy, 382 U.S. 323, 329 (1966) (affirming Congress's use of a summary process overseen by referees under the Bankruptcy Act of 1898 to allow, disallow, and reconsider claims against the bankruptcy estate). Therefore, without Article III status, a bankruptcy judge's authority to adjudicate a matter must stem either from Congress's power under Article I to enact bankruptcy laws or from Congress's power under the “public rights” doctrine to assign the matter to a non-Article III tribunal for final resolution without violating the due process clause of the Fifth Amendment.
Writing for the Stern majority, Chief Justice John Roberts stated that the question presented in Stern was a “narrow” one and that Congress had “in one isolated respect” exceeded the limitations Article III of the Constitution places on who may exercise the judicial power of the United States. See id. at 2620. Citing this language, some courts have declined to apply Stern to proceedings that do not involve counterclaims brought by the bankruptcy estate against persons filing claims against the estate. Still, other courts find Stern's reasoning calls into question the authority of bankruptcy judges to decide other core proceedings set forth in 28 U.S.C. § 157(b). See Burtch v. Seaport Capital, LLC ( In re Direct Response Media, Inc.), 466 B.R. 626, 639–44 (Bankr.D.Del.2012) (discussing the “broad” and “narrow” interpretations of Stern and citing cases).
Courts that interpret Stern narrowly argue that its holding removed only a debtor's state-law counterclaim under § 157(b)(2)(C) from the final adjudicatory authority of the bankruptcy court. See, e.g., Burtch, 466 B.R. at 642–44; In re USDigital, Inc., 461 B.R. 276, 292 (Bankr.D.Del.2011); In re Salander O'Reilly Galleries (“ Salander ”), 453 B.R. 106, 115 (Bankr.S.D.N.Y.2011). The “narrow interpretation” focuses on Justice Roberts' observation that the Court's decision would not “meaningfully change[ ] the division of labor” between the bankruptcy court and the district court. Stern, 131 S.Ct. 2620; see, e.g., Salander, 453 B.R. at 115–16 (“ Stern is replete with language emphasizing that the ruling should be limited to the unique circumstances of that case, and the ruling does not remove from the bankruptcy court its jurisdiction over matters directly related to the estate that can be finally decided in connection with restructuring debtor and creditor relations.”). Proponents of the narrow interpretation also argue that because Justice Scalia concurred in the judgment but disavowed its reasoning, Stern's proposition that bankruptcy judges cannot decide core proceedings that seek to “augment the estate,” such as fraudulent conveyance actions, received support from only four justices and, therefore, is not binding. See Burtch, 466 B.R. at 643.
*10 However, a growing number of courts are interpreting Stern broadly, casting doubt on a bankruptcy court's authority to determine other core proceedings. See generally Teleservices, 456 B.R. 318. This “broad interpretation” focuses on the binary distinction set forth in Granfinanciera and reaffirmed in Stern between claims that seek to “augment the estate” and those that seek a “pro rata share of the bankruptcy res.” See Stern, 131 S.Ct. at 2618; Granfinanciera, 492 U.S. at 56. This interpretation is considered “broad” because it expands Stern's holding beyond state-law counterclaims. Indeed, courts have focused on the “augment” language to conclude that bankruptcy courts may not decide fraudulent conveyance actions brought by a trustee under 11 U.S.C. § 548. See, e.g., In re Canopy Fin., Inc., 464 B.R. 770, 773 (Bankr.N.D.Ill.2011); Teleservices, 456 B.R. at 338; Sitka Enters., Inc. v. Wilfredo Segarra–Miranda, 2011 WL 7168645, at *3 (D.P.R. Aug. 12, 2011).
The broad interpretation of Stern focuses on the Supreme Court's statement: “the question is whether the action at issue stems from the bankruptcy itself or would necessarily be resolved in the claims allowance process.” See Stern, 131 S.Ct. 2618. Some courts call this the Stern “Two–Prong Test” for bankruptcy judge authority. See, e.g., Burns v. Dennis ( In re Southeastern Materials, Inc.) 467 B.R. 337, 348 (Bankr.M.D.N.C.2012). If either prong of the test is met, then the bankruptcy court has constitutional authority to enter a final order. See id. at 348. Conversely, if the action neither stems from the bankruptcy itself nor would necessarily be resolved in the claims allowance process, the bankruptcy court lacks constitutional authority to enter a final judgment and may only submit proposed findings of fact and conclusions of law to the district court for entry of final judgment under 28 U.S.C. § 157(c)(1).FN21 See id .
FN21. The Defendants do not consent to my entering final judgment; therefore I need not determine whether a bankruptcy judge could decide the proceedings at issue with the parties' consent pursuant to 28 U.S.C. § 157(c)(2).
(iii) Application of Stern in this Case
If the sheer volume of decisions spawned by Stern shows anything, it is that the debate over whether to apply Stern narrowly or broadly is unsettled. Pending clarification at the circuit level, each bankruptcy judge must decide on a course of jurisprudence. In this case, however, I need not adopt either a “broad” or “narrow” interpretation of Stern because I would have constitutional authority to decide the core proceedings at issue even under the broadest application of Stern. See 131 S.Ct. at 2618.
An action to determine whether the Spendthrift Clause in the Family Trust excludes Ernest's interest in that trust from property of the estate pursuant to 11 U.S.C. § 541(c)(2) “stems from the bankruptcy itself.” See id; In re Garcia, 2012 WL 1021449, at *4 (Bankr.D.P.R. Mar. 26, 2012). A debtor's voluntary commencement of a bankruptcy case automatically creates an estate. See 11 U.S.C. § 541(a). Establishment of the estate is central to a bankruptcy's collective debt-collection scheme. See In re Garcia, 2012 WL 1021449, at *4. The estate serves (1) as the receptacle of all property that is to be subject to the proceeding and (2) as the vehicle through which that property is to be administered and then distributed. Teleservices, 456 B.R. at 332. The Code directs the bankruptcy trustee to “collect and reduce to money the property of the estate[.]” See 11 U.S.C. § 704(a)(1). The trustee may distribute this property pursuant to § 726(a) without order from any court. See 11 U.S.C. § 726(a); Teleservices, 456 B.R. at 333. Therefore, a controversy over whether a particular asset of the debtor is subject to the trustee's powers to collect and distribute under the Bankruptcy Code stems directly from the bankruptcy filing itself. See Olivie Dev. Grp. LLC v. Park, 2012 WL 1536207, *4 (W.D.Wash. Apr. 30, 2012) (“ Stern did not hold that a bankruptcy judge lacks authority to enter judgment regarding what property is included in the estate.”); Southeastern, 467 B.R. at 352–53 (“There can be no dispute that this [Bankruptcy] Court has the authority to determine what is and is not property of the Debtor's bankruptcy estate and enter final orders regarding the same.”).
*11 Moreover, the Trustee's action, if successful, will not “augment the bankruptcy estate,” at least not in any way that invokes the Stern case. See 131 S.Ct. 2618. An action to determine whether an asset of the debtor is property of the estate does not give rise to the constitutional concern about the deprivation of property without due process of law implicit in Stern's and Northern Pipeline's discussions of actions that seek to “augment” the bankruptcy estate. See 458 U.S. at 56; 131 S.Ct. at 2601. Ernest's own right to due process is not at issue because he voluntarily submitted to the authority of the bankruptcy court when he filed his petition. Cf. id. at 333–34 (concluding that a sale of estate assets ordered pursuant to 11 U.S.C. § 363(b) does not involve a “taking” of the debtor's property and noting, “[a]fter all, the debtor would have long ago acquiesced to the trustee's disposing of his property as part of his decision to file a voluntary petition.”). If the Trustee successfully establishes that Ernest's interest the Family Trust is property of the estate, his action will not have augmented the estate with an asset belonging to a third party. Rather, it will merely have established that Ernest's interest in a trust is not excluded from the estate by § 541(c)(2). Such adjudication is similar to determining the amount of a debtor's exemption or a creditor's claim to property of the estate. Cf. Langenkamp v. Culp, 498 U.S. 42, 45 (1990) (holding that when respondents filed a claim against the bankruptcy estate, they brought themselves within the equitable jurisdiction of the bankruptcy court to process said claim).
In sum, I conclude that an action under 11 U.S.C. § 541 to determine whether an interest of the debtor is property of the estate stems from the bankruptcy, affects only the debtor's property interests, and does not augment the estate. Accordingly, a bankruptcy judge may decide the issue without wielding the judicial power of the United States and can enter a final judgment.
(b) Whether the Defendants Are Entitled to Have a Jury Decide Whether Ernest's Interest in the Family Trust is Property of the Estate
A party's right to a jury trial in federal court is governed by federal law and therefore must either arise from the Seventh Amendment to the Constitution or be granted by a federal statute. See Nickless v. Distefano (In re Basile), 2012 WL 1987354, at *2 (Bankr.D. Mass. June 4, 2012). In this case, the Defendants assert a right to a jury trial based on the Seventh Amendment.
The Seventh Amendment provides: “In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved[.]” U.S. Const. amend. VII. In Granfinanciera, the Supreme Court interpreted the phrase “suits at common law” to refer to “suits in which legal rights were to be ascertained and determined, in contradistinction to those where equitable rights alone were recognized, and equitable remedies were administered.” See 492 U.S. at 41 quoting Parsons v. Beford, 3 Pet. 433, 447 (1830). Granfinanciera holds that the Seventh Amendment also applies to actions brought to enforce statutory rights that are analogous to common-law causes of action ordinarily decided in English law courts in the late 18th century. See id. at 42.
*12 The First Circuit has articulated a three-part test, based on the Supreme Court's analysis in Granfinanciera, to determine whether the right to jury trial is present in a particular action. See Braunstein v. McCabe (“ Braunstein I ”), 571 F.3d 108, 118 (1st Cir.2009). First, the court must “compare the statutory action to 18th-century actions brought in the courts of England prior to the merger of the courts of law and equity.” See id. quoting Granfinanciera, 492 U.S. at 42. Second, the court must “examine the remedy sought and determine whether it is legal or equitable in nature.” Id. This step is more important that the first. See Basile, 2012 WL 1987354, at *3 (“Simply stated, claims which seek legal remedies generally implicate the constitutional right to a jury trial while those sounding in equity or admiralty do not.”). Third, if the first two steps indicate a party has a jury trial right, the court “must decide whether Congress may assign and has assigned resolution of the relevant claim to a non-Article III adjudicative body that does not use a jury as factfinder.” FN22 Id.
FN22. When the Supreme Court decided Granfinanciera in 1989, the current statutory provision for jury trials in bankruptcy proceedings was “notoriously ambiguous,” and the Court proceeded as if there were no statutory predicate for the particular proceeding at issue. See 492 U.S. at 42 n. 3. Congress has since enacted 28 U.S.C. § 157(e) authorizing bankruptcy judges to conduct jury trials with consent of the parties. This provision “answer[s] many of the questions the third prong of Granfinanciera addresses.” See Braunstein I, 571 F.3d at 118 n. 11. Because I find that the first two factors do not weigh in favor of a right to jury trial, I do not decide whether the third part of the Granfinanciera test survives. See, e.g., Pereira v. Farace, 413 F.3d 330, 357 (2d Cir.2005) (applying Granfinanciera as a two-step test).
Basile offers additional guidance on applying the Granfinanciera test to actions that involve both legal and equitable claims:
When an action involves a combination of both legal and equitable claims, “the right to jury trial on the legal claim, including all issues common to both claims, remains intact.” Curtis v. Loether, 415 U.S. 189, 196 n. 10, 94 S.Ct. 1005, 39 L .Ed.2d 260 (1974). Consequently, facts common to legal and equitable claims must be adjudicated by a jury. Beacon Theatres, Inc. v. Westover, 359 U.S. 500, 510–11, 79 S.Ct. 948[ ] (1959). The right to a trial by jury must be preserved even if the legal claims are characterized as incidental to the equitable claims. Dairy Queen, Inc. v. Wood, 369 U.S. 469, 473 n. 8, 82 S.Ct. 894, 897 n. 8, 8 L.Ed.2d 44 (1962). In such instances a court may not try the equitable claims first because to do so would subject the jury's findings to the principals of collateral estoppel. Id. at 479. Because protection of the right to trial by jury is so important, “only under the most imperative circumstances ... can the right to a jury trial of legal issues be lost through prior determination of equitable claims.” Beacon Theatres, 359 U.S. at 510–11. See also Abbott GmbH & Co., KG v. Centocor Ortho Biotech, Inc., 2012 WL 837313, at *13 (D.Mass. May 4, 2012).
Id.
Count I of the Trustee's Complaint seeks a declaratory judgment that Ernest's interest in the Family Trust is property of the estate under § 541(a) of the Bankruptcy Code and is not exempted by § 541(c)(2). Following Granfinancieara, I must first determine whether this action sounded in common law in England before the enactment of the Seventh Amendment, or whether there was an analogous action at law. See Braunstein I, 571 F.3d at 118. Next, I must consider whether the request for declaratory relief is legal or equitable in nature.
(i) Analogous Common–Law Causes of Action in 18th-century England
*13 Bankruptcy law in England was the creation of Parliament, not the common law. See Thomas E. Plank, Why Bankruptcy Judges Need Not and Should Not Be Article IllJudges, 72 Am. Bankr.L.J. 567,575 (1998). Initial adjudication of bankruptcy proceedings under the acts of Parliament was made by bankruptcy commissioners appointed by the Lord Chancellor of England. See id. at 574. Issues determined by the commissioners included the administration of the estate and the case, the eligibility of the bankrupt, the property of the bankrupt, the allowance of claims by creditors, the distribution of the bankrupt's assets, and the discharge of the bankrupt's debts. See id at 576. Aggrieved parties could petition for review in the courts of law or Chancery. See id. at 576–77. Upon review, law courts occasionally employed juries, but their function was the resolution of legal questions, not the determination of facts. See id. at 595.
In a general sense, 18th-century English bankruptcy was a creature of equity, and bankruptcy commissioners, an arm of the Lord Chancellor. See id. quoting Comm. Of Unsecured Creditors of N.C. Hosp. Ass'n Trust Fund v. Mem'l Mission Med. Ctr., Inc. (In re N.C. Hosp. Assin Trust Fund), 112 B.R. 759, 762 (Bankr.E.D.N.C.1990) (“In 18th-century England bankruptcy was essentially a creditor's remedy involving the equitable distribution of the bankrupt's estate .”). In his Commentaries, William Blackstone writes of bankruptcy as a proceeding in equity:
By the several statutes relating to bankrupts, a summary jurisdiction is given to the chancellor, in many matters consequential or previous to the commissions thereby directed to be issued; from which the statutes give no appeal.
1 William Blackstone & George Chase, The American Blackstone, Commentaries on the Laws of England in Books 3d ed. 821 (1890). The English bankruptcy acts of the 18th century expanded the powers of bankruptcy commissioners over property of the estate, including property conveyed before the act of bankruptcy. See Plank, 72 Am. Bankr.L.J. at 584–86.
Modern courts agree that a bankruptcy trustee's gathering of the “property” of the estate, as both that property and the exclusions have been defined by Congress, is inherently an equitable task. See Braunstein I, 571 F.3d at 119 (citing cases). Moreover, proceedings involving trusts are inherently equitable. See Clews v. Jamieson, 182 U.S. 461, 480 (1901) (“All possible trusts, whether express or implied, are within the jurisdiction of the chancellor.”); see also 2 William Blackstone, Commentaries § 570 *440 (“The form of a trust ... gives the courts of equity an exclusive jurisdiction as to the subject matter of all settlements and devises in that form.”); 2 Joseph Story, Commentaries on Equity Jurisprudence as in England and America 274 (1888) (“Trusts in real property ... are exclusively cognizable in equity.”). Modern bankruptcy courts agree. See Compton v. Walker ( In re Coral Petroleum, Inc.), 249 B.R. 721, 733 (Bankr.S.D .Tex.2000) (“[A] trust matter is within the equity jurisdiction of the court even if the relief sought is monetary recovery.”).
*14 In this case, resolution of the Trustee's request for declaratory relief on Count I turns on whether Ernest can exclude his beneficial interest in the Family Trust under 11 U.S.C. § 541(c)(2). Ernest's ability to exclude this interest turns on state law relating to trusts; whether under Massachusetts law a spendthrift clause in a self-settled trust is effective against creditors of the settlor-beneficiary. Early Massachusetts court decisions make clear that a proceeding involving a trust has always sounded in equity. See Commissioner of Banks v. Harrigan, 291 Mass. 353, 355 (1935) ( “The preservation and enforcement of trusts, the ascertainment of violations of duty respecting the management and execution of trusts, and the establishment of the extent of injury caused by infraction of fiduciary obligations ... constitute a familiar division of chancery jurisprudence.”). Recent bankruptcy court decisions applying Granfinanciera to proceedings involving trusts hold that jury trials are not required by the Seventh Amendment. See Coral Petroleum, Inc., 249 B.R. at 734 (holding that a jury trial was not constitutionally required in an adversary proceeding brought by a successor trustee against the former trustee of a chapter 11 liquidating trust for breach of fiduciary duty “because trusts are special creatures over which courts of equity had virtually exclusive jurisdiction”). Accordingly, I find that the first prong of the Granfinanciera test favors the Trustee because the Trustee's action for declaratory relief that Ernest's interest in the Family Trust is property of the estate is analogous to 18th-century actions heard in equity, or more likely before bankruptcy commissioners sitting without a jury.
(ii) The Nature of the Relief Sought
I also find that the greater-weighted second prong of the Granfinanciera test favors the Trustee. In Walker v. Weese, the district court held that an action by a chapter 7 trustee to recover assets that the debtors had fraudulently conveyed into a trust on the eve of bankruptcy sounded in equity and did not entitle the debtors to a jury trial under the Seventh Amendment. See 286 B.R. 294, 298–99 (D.Md.2002). There, the court relied on Granfinanciera itself for the proposition that fraudulent conveyance actions to recover a definite sum of money were analogous to actions at law in 18th-century England. See id. at 297. However, considering the second prong of the Granfinanciera test, the court noted that the relief sought by the trustee was equitable in nature, and thus, no right to a jury trial existed. See id. at 297–98. The court explained:
[Debtors'] argument has a surface appeal because, as previously stated, the common law claim to which this cause of action is most analogous is a fraudulent conveyance claim. The [debtors] had the assets prior to the initiation of bankruptcy proceedings and divested themselves of the assets in an apparent attempt to place them beyond the reach of their creditors. [The trustee], however, is not attempting to prove the [debtors] committed fraud. At least in this lawsuit, [the trustee] is actually alleging that the [debtors] failed in their attempt to fraudulently convey the assets. [The trustee's] request for declaratory relief does not rely upon the finding of a fraudulent conveyance.
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