MEMORANDUM OPINION AND ORDER DENYING MOTION TO VACATE

BARBARA J. HOUSER, Bankruptcy Judge.

Before the Court is the "Certain Defendants Motion to Vacate Final Judgment Pursuant to Fed.R.Civ.P. 60(b)(4) and Fed. R. Bankr.P. 9024" (the "Motion") filed by Defendants Gary M. Kornman, Steadfast Investments, L.P., GMK Family Holdings, LLC, Strategic Leasing, L.P., Executive Aircraft Management, L.L.C., Tickchik Investment Partnership, L.P., Executive Air Crews, L.L.C., Financial Marketing Services, Inc., Heritage Properties, L.L.C., Heritage Organization Agency, Inc., Valiant Leasing, L.L.C., Vehicle Leasing, L.L.C., and Ettman Family Trust I (collectively, the "Defendants"). In the Motion and its supporting Memorandum of Law, the Defendants argue that this "Court was without Article III power to enter such Final Judgment, and, thus, the Final Judgment and the Memorandum Opinion containing the findings and conclusions that support it are void," relying upon the Supreme Court's recent decision in Stern v. Marshall, ___ U.S. ___, 131 S.Ct. 2594, 180 L.Ed.2d 475 (2011).1 See Memorandum of Law in Support of Defendants' Motion, Docket No. 791 at p. 2.

The Motion is opposed by Dennis S. Faulkner, former Chapter 11 Trustee of The Heritage Organization, L.L.C. ("Heritage")(which filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code on May 17, 2004), who is now the trustee of a creditor trust established under the terms of the Second Amended Joint Plan of Liquidation (the "Plan") for Heritage that was confirmed by this Court on September 12, 2007 (the "Trustee"). The Trustee argues that: (1) the Motion is untimely under the applicable rules, (2) the Motion is not meritorious because the Court had subject matter jurisdiction and all of the Defendants expressly consented on several occasions to the entry of a final judgment by this Court, and (3) policy reasons dictate a denial of the Motion.

The Court heard the Motion on September 22, 2011. For the reasons explained more fully below, the Court will deny the Motion, although not for the reasons advanced by the Trustee. In short, this Court concludes that the Defendants' attack on the Final Judgment under Rule 60(b)(4)2 cannot be used as a substitute for their failure to prosecute their timely-filed appeal from what they now contend was this Court's erroneous ruling on its subject matter jurisdiction over the claims asserted against them in the Adversary Proceeding.3

FACTUAL AND PROCEDURAL BACKGROUND

As noted previously, Heritage filed its Chapter 11 case on May 17, 2004. Dennis S. Faulkner was appointed as Chapter 11 trustee shortly after the case was filed. Prior to its bankruptcy filing, Heritage advised extremely high net worth individuals regarding estate planning, business planning, tax planning and asset planning. The information and strategies about which Heritage advised its clients were enormously complex and individualized. The primary strategy that became the focal point of Heritage's bankruptcy case was a version of an investment transaction involving § 752 of the Internal Revenue Code. Heritage "sold" this strategy to a number of very wealthy clients who: (i) implemented it, (ii) were audited by the Internal Revenue Service, (iii) had the transaction disallowed, and (iv) were determined to owe not only the sheltered tax but penalties and interest on that tax to the United States Treasury. Many of these clients filed very large claims against Heritage in the bankruptcy case claiming, among other things, that they were defrauded by Heritage and, in particular, its principal Gary M. Kornman ("Kornman").

Heritage's bankruptcy case was an exceedingly difficult one, made more difficult by the conduct of Kornman and those persons and entities under his direction and control, including some of the Defendants.4 Ultimately, the Chapter 11 Trustee proposed and obtained confirmation of the Plan (over the vehement objection of Kornman), pursuant to which the claims in this Adversary Proceeding that underlie the Final Judgment were transferred to the Creditors Trust for continued prosecution by Faulkner as the trustee of that trust. Within days of confirmation, the Trustee, Kornman and certain Kornman family members and entities he controlled (the "Kornman Parties") reached an agreement whereby the Kornman Parties agreed (1) to make a payment of $30,000 to the Trustee, (2) not to appeal the confirmation order, and (3) to file certain certifications regarding turnover of Heritage's assets to the Trustee. In return the Trustee agreed, if those things were done, to withdraw a motion pending in Heritage's bankruptcy case for contempt and sanctions against Heritage and GMK Family Holdings, Inc. See Docket Nos. 1285, 1288 and 1291 in Case No. 04-35574-BJH-11. Kornman did not appeal the order confirming the Plan, and on October 4, 2007, the Trustee withdrew the pending motion for contempt and sanctions. See Docket No. 1305 in Case No. 04-35574-BJH-11. The Plan went "effective" on September 25, 2007. See Docket No. 1298 in Case No. 04-35574-BJH-11.

As the earlier reference to the sanctions motion in the Heritage bankruptcy case suggests, the Adversary Proceeding did not proceed smoothly or expeditiously. Kornman and the other Defendants were obstreperous, refusing to comply with discovery requests. The Trustee, over the course of years, filed no fewer than 8 motions to compel discovery or for sanctions, all of which were contested, against Kornman or various other Defendants affiliated with him. See Docket Nos. 81, 95, 194, 230, 299, 301, 302 and 460. Kornman or his affiliates sought to stay the Adversary Proceeding, and sought multiple continuances of various hearings or trial. See Docket Nos. 108, 200, 213, 348, 513, 598. Kornman and/or his affiliates changed counsel several times prior to trial.5 After numerous continuances and an admonition by the Court that the Adversary Proceeding would proceed to trial in September, 2008, on June 13, 2008 Kornman filed his "Motion for Trial by Jury and, Subject Thereto, Motion for Leave to Withdraw Claim Against Debtor and Motion for Continuance of Trial Date and Extension of Pre-Trial Deadlines, and Brief in Support," Docket No. 200, which was joined by the other Defendants. Docket Nos. 201, 239 (together, the "Motion for Jury Trial"). On June 30, 2008, Kornman filed a Supplement to his Motion for Jury Trial and sought to withdraw his proof of claim unconditionally. Docket No. 226.

On July 2, 2008, this Court held a hearing on the Motion for Jury Trial. At that hearing, the Court expressed its concerns about the impact on the bankruptcy system generally if proofs of claim were allowed to be withdrawn shortly before trial in connection with a jury demand in order to prevent a bankruptcy court from conducting that trial. Specifically, this Court stated:

Docket No. 267, p. 23:18-24. At the conclusion of the hearing, the Court took the Motion for Jury Trial under advisement because the Defendants indicated that they would be filing a motion to withdraw the reference and the Court wanted to consider those issues together.

On July 3, 2008, the Defendants filed their Motion to Withdraw the Reference from the Bankruptcy Court and a brief in support of that motion. Docket Nos. 233 and 235. In that brief the Defendants stated:

Docket No. 235 at ¶ 14. As it is required to do under Local Rule 5011-1, this Court scheduled a status conference on the Motion to Withdraw the Reference for July 31, 2008 so that it could make the required report and recommendation to the District Court with respect to that motion.

On July 30, 2008, all of the Defendants filed Notices of Withdrawal of their Motion for Jury Trial. Docket Nos. 292, 293, 294, and 295. At the scheduled status conference the next day, counsel for the Defendants unequivocally consented to this Court conducting the trial of the Adversary Proceeding and entering a final judgment at the conclusion of that trial—on both core and non-core claims. Specifically, the transcript of that status conference reflects the following exchange:

See Tr. 7/31/08, 22:18-23:25 (Docket No. 351). Somewhat surprised by this turn of events, the Court asked counsel for the Defendants why the Motion for Jury Trial and the motion to withdraw the reference were being withdrawn. Counsel for the Defendants responded:

Tr. 7/31/08, 21:3-13 (Docket No. 351).

The next day, on August 1, 2008, the Defendants filed their "Notice of (I) Waiver of Rights to Trial by Jury and (II) Consent to Entry of Final Orders and Judgment by Bankruptcy Court on All Matters" in which they stated:

Docket No. 306 at p. 2. On August 8, 2008, certain other defendants7 filed the same "Notice of (I) Waiver of Rights to Trial by Jury and (II) consent to Entry of Final Orders and Judgment by Bankruptcy Court on All Matters" that contained the identical statement quoted above.

The Court proceeded to trial on the claims against the Defendants on January 7-16, 2009. Closing arguments occurred on February 26, 2009 and on May 11, 2009, this Court entered its 118-page Memorandum Opinion, which contained detailed findings of fact and conclusions of law with respect to the claims at issue between the Trustee and the Defendants. Docket No. 582. A dispute then erupted respecting the form of judgment and the Trustee's entitlement to prejudgment interest. The Trustee filed a motion for an award of such interest and a "Motion to Amend or Supplement Pre-Trial Order to Specify Claim for Award of Prejudgment Interest and Brief in Support." See Docket Nos. 584 and 596. Further hearings were held on June 3, 2009, June 23, 2009 and July 2, 2009, following which the Court ruled that the Trustee was indeed entitled to pre-judgment interest. Docket No. 613. On July 13, 2009, this Court's Final Judgment was entered. Docket No. 608. Ten days later, the Defendants filed "Motions for New Trial, or to Amend or Make Additional Findings of Fact, to Alter or Amend Judgment, or for Relief from Judgment and Supporting Brief," Docket No. 612, which the Trustee opposed.8 The Court heard and denied that motion on August 27, 2009, and the order embodying that ruling was entered on September 1, 2009. See Docket No. 624.

On September 11, 2009, the Defendants filed their Notice of Appeal from the Final Judgment. See Docket No. 626. On October 1, 2009, the Trustee moved before the District Court seeking dismissal of the appeal as a sanction for the Defendants' failure to file a designation of items to be included in the appellate record and a statement of issues presented on appeal. See Docket No. 3 in Case No. 3:09-cv-01827-L. On November 12, 2009, the District Court entered its Order dismissing the appeal finding that "[a]fter Defendants' deadline to comply with Rule 8006 passed, their counsel sent an email stating that Defendants would withdraw the notice of appeal and that counsel would withdraw from the case. . . . Because Appellants do not wish to prosecute this appeal, the court hereby dismisses this bankruptcy appeal without prejudice. Accordingly, the court denies as moot the Trustee's Motion to Dismiss Appeal as Sanction." See Docket No. 10 in Case No. 3:09-cv-018270-L.

The Trustee issued Writs of Execution to the United States Marshal on October 16, 2009 but to date, the Trustee has recovered little on the Final Judgment. Extensive post-judgment discovery proceedings have occurred in this Adversary Proceeding. Further, extensive post-judgment collection activities have occurred in both the Southern District of Texas, where the Final Judgment was registered, and in various state courts.

As noted previously, the Motion was filed on August 9, 2011 and heard on September 22, 2011.

LEGAL ANALYSIS

Generally, if a judgment is void, the trial court that entered that judgment must grant relief from that judgment on motion made pursuant to Rule 60(b)(4). Carter v. Fenner, 136 F.3d 1000, 1005 (5th Cir.1998) ("When . . . the motion is based on a void judgment under rule 60(b)(4), the district court has no discretion, the judgment is either void or it is not") (quoting Recreational Properties, Inc. v. Southwest Mortg. Serv. Corp., 804 F.2d 311, 314 (5th Cir.1986)).9 Various circuit courts, however, including the Fifth Circuit, have cautioned that this general rule cannot be used as a substitute for a party's failure to timely appeal from an allegedly erroneous ruling on subject matter jurisdiction. For example, in Picco v. Global Marine Drilling Co., 900 F.2d 846 (5th Cir.1990), the Fifth Circuit was faced with an appeal from a district court's decision to set aside a prior dismissal order pursuant to a Rule 60(b) motion. In that case Picco sued Global Marine (and another defendant) in federal district court in the Eastern District of Texas. The defendants moved to dismiss on the ground of forum non conveniens. The district court denied the motion, which was then certified for appeal to the Fifth Circuit. While the interlocutory appeal was pending, Global Marine filed Chapter 11. The other defendant entered bankruptcy proceedings in Canada. The district court was advised of the bankruptcies and severed Picco's claim from other consolidated cases and suspended it pending a ruling on Picco's motion to lift the automatic stay. Before the stay was lifted, however, the district court dismissed the case, stating that the pending bankruptcy made it unnecessary to keep Picco's lawsuit on its docket and holding that American law did not apply to Picco's claim (Picco was a Canadian citizen who was injured on a Global Marine drilling rig moored in Canadian waters). For those reasons, the district court dismissed the lawsuit without prejudice on the ground of forum non conveniens. Picco filed no appeal from the dismissal, nor did he object to it being entered while the automatic stay was in effect.

Thereafter, the bankruptcy court presiding over Global Marine's case lifted the stay and Picco refiled his lawsuit against Global Marine (and the other defendant) in Canada. Picco eventually became dissatisfied with his progress in Canada. In light of developments in U.S. law regarding the effect of a federal forum non conveniens dismissal, Picco decided that he should have refiled his lawsuit in Texas state court rather than in Canada. However, by this time, the statute of limitations had run on his claims. So, Picco filed a Rule 60(b) motion before the district court that had dismissed his lawsuit, asking it to set aside its final judgment and redismiss the lawsuit with conditions that would allow him to refile in Texas state court not subject to limitations having run, which the district court did. Global Marine (and the other defendant) then appealed to the Fifth Circuit, which held that the district court had abused its discretion in granting Rule 60(b)(4) relief to Picco stating:

Id. at 850 (citations omitted). The Fifth Circuit went on to explain that "[t]his is not a case in which there is a `clear usurpation of power' or `total want of jurisdiction' that might make Rule 60(b)(4) an appropriate avenue for challenge to the district court's determination of jurisdiction." Id. at n. 6 (citations omitted).

The Fifth Circuit has continued to apply this analysis in other cases. See, e.g., U.S. v. Hansard, No. 07-30090, 2007 WL 2141950, *1 (5th Cir.2007) (unpublished disposition) ("Rule 60(b)(4) relief, however, is not available to Hansard. A district court's exercise of subject matter jurisdiction, even if erroneous, is res judicata and is not subject to collateral attack through Rule 60(b)(4) if the party seeking to void the judgment had the opportunity previously to challenge jurisdiction and failed to do so."); United States v. Hall, 183 Fed. Appx. 472, 473 (5th Cir.2006) (unpublished disposition) ("A district court's erroneous exercise of subject matter jurisdiction is res judicata and is not subject to collateral attack by way of a Rule 60(b)(4) motion if the party seeking to void the judgment had the opportunity to do so on direct review of the court's determination. Hall failed to challenge the exercise of jurisdiction by appealing that issue at the time. He may not do so collaterally."); Winograd v. Fowler, No. 98-20660, 1999 WL 499565 at *2 (5th Cir.1999) (unpublished disposition) ("It is firmly established that principles of res judicata apply to jurisdictional determinations, both subject matter and personal. Res judicata bars collateral attacks upon a judgment where the challenging party had the opportunity to raise the issue of jurisdiction. Res judicata bars Rule 60(b)(4) motions where `the challenging party was before the court when the order in question was entered and had notice of it and had a full and fair, unimpeded opportunity to challenge it, and the court's jurisdiction, by appeal. Thus, `the question is not whether the issue of subject matter [jurisdiction] was actually litigated, but instead whether the parties had the opportunity to raise the question.' Accordingly, `[i]f the parties against whom judgment was rendered did not appeal, the judgment became final and the court's subject matter jurisdiction is insulated from collateral attack.' Nevertheless, Rule 60(b)(4) relief may be appropriate to challenge a district court's determination of jurisdiction where there is a `clear usurpation of power' or `total want of jurisdiction.'") (citations omitted); Royal Ins. Co. of America v. Quinn-L Capital Corp., 960 F.2d 1286, 1293 (5th Cir.1992) ("If the parties against whom judgment was rendered did not appeal, the judgment becomes final and the court's subject matter jurisdiction is insulated from collateral attack").

Other circuit courts apply the same rule. See, e.g., In re Optical Technologies, Inc., 425 F.3d 1294, 1306 (11th Cir.2005) ("as a general matter, parties to a proceeding that do not raise jurisdictional objections are entirely barred from attacking jurisdiction collaterally" under Rule 60(b)(4)); Kocher v. Dow Chem. Co., 132 F.3d 1225, 1229 (8th Cir.1997) ("If a party fails to appeal an adverse judgment and then files a Rule 60(b)(4) motion after the time permitted for an ordinary appeal has expired, the motion will not succeed merely because the same argument would have succeeded on appeal"); Missouri Pacific R. Co. v. Cartwright Transfer & Storage, Inc., 968 F.2d 20 (10th Cir.1992) (failure to timely appeal a lower court's finding of subject matter jurisdiction is fatal even if the court's ruling was erroneous); In re Edwards, 962 F.2d 641, 644 (7th Cir.1992) ("Want of subject matter jurisdiction is not waivable—until the loser has exhausted his appellate remedies, after which courts will not treat the judgment as void unless the jurisdictional error is egregious . . . if it is not egregious, the courts say that the court that issued the judgment in excess of its jurisdiction had jurisdiction to determine jurisdiction, and its jurisdictional finding, even if erroneous, is therefore good against collateral attack, like any other erroneous but final judgment"); Nemaizer v. Baker, 793 F.2d 58 (2d. Cir. 1986).

Here, the Defendants questioned this Court's subject matter jurisdiction over the claims asserted against them in the Adversary Proceeding. They demanded a jury trial and asked for leave to withdraw the proofs of claim that certain of them had filed in the Heritage bankruptcy case. Docket Nos. 200, 201 and 239. They then moved to withdraw the reference—raising Marathon (the precursor to Stern) concerns over the power of the bankruptcy court to adjudicate the claims against them. Docket Nos. 233 and 235. Significantly, the Defendants then decided to withdraw the Motion for Jury Trial and the motion to withdraw the reference, Docket Nos. 292, 293, 294, and 295, and, at a status conference on their motion to withdraw the reference, unequivocally consented, on the record, to this Court's entry of a final judgment on both core and non-core claims, having decided that the Trustee would not be able to prove his case against them at trial. Docket No. 351. And, the very next day, the Defendants filed their written Notice of (I) Waiver of Rights to Trial by Jury and (II) Consent to Entry of Final Orders and Judgment By Bankruptcy Court On All Matters. Docket No. 306.

This Court, in reliance upon that oral and written consent, proceeded to trial and, following the issuance of a detailed Memorandum Opinion, entered a Final Judgment disposing of the Trustee's claims against the Defendants. The Defendants moved for a new trial, which this Court denied. The Defendants then appealed the Final Judgment, but thereafter notified the District Court that they no longer wished to pursue the appeal, following which the District Court dismissed the appeal. See Docket No. 9 in Case No. 3:09-cv-01827-L ("Since the filing of the Amended Notice of Appeal, counsel has again confirmed that the Defendants do not wish to pursue any appeal, either through the undersigned counsel, or through substitute counsel, because they are unable to pay the expenses of an appeal in such a complex and involved case, and because the corporate parties are unable to proceed in this case without retention of counsel . . . Appellants do not oppose dismissal of the appeal because of their inability to prosecute the appeal."). Some two years later, after extensive post-judgment collection activities by the Trustee, the Defendants filed the Motion seeking to attack the Final Judgment as void under Rule 60(b)(4).

Under these circumstances, even assuming there is a Stern problem here, this Court's exercise of jurisdiction over the claims asserted against the Defendants in the Adversary Proceeding was neither a "clear usurpation of power" or so glaring as to constitute a "total want of jurisdiction," Picco, 900 F.2d at 850, n. 6, nor "egregious . . ., where the court wrongfully extends its jurisdiction beyond the scope of its authority." Edwards, 962 F.2d at 644. The Defendants consented to this Court's exercise of jurisdiction and entry of a final judgment, had the opportunity to appeal if they changed their mind, did in fact appeal from the Final Judgment, and then agreed to the dismissal of that appeal. Whether characterized as a direct attack on the Final Judgment, see In re Acorn Hotels, LLC, 251 B.R. 696 (Bankr.W.D.Tex. 2000),10 or a collateral attack on the Final Judgment as in Picco, the Defendants are not entitled to Rule 60(b)(4) relief from the Final Judgment.11

For these reasons, the Motion is denied.

SO ORDERED.