Grabill Corp., Matter of, 91-3381

• Decision Date: 23 October 1992
• Docket Number: No. 91-3381,91-3381
• Parties: Bankr. L. Rep. P 74,982 In the Matter of GRABILL CORPORATION, Camdon Companies, Incorporated, Foxxford Group, Limited, et al., Debtors. Appeal of NCNB NATIONAL BANK OF NORTH CAROLINA.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1126

976 F.2d 1126

Bankr. L. Rep. P 74,982

In the Matter of GRABILL CORPORATION, Camdon Companies,

Incorporated, Foxxford Group, Limited, et al., Debtors.

Appeal of NCNB NATIONAL BANK OF NORTH CAROLINA.

No. 91-3381.

United States Court of Appeals, Seventh Circuit.

Oct. 23, 1992.

On Petition for Rehearing with Suggestion for Rehearing En Banc.

Glen H. Kanwit, Matthew J. Botica, Hopkins & Sutter, Chicago, Ill., for plaintiff-appellee.

Edward T. Joyce, Raymond A. Fylstra, Joyce & Kubasiak, Chicago, Ill., Robert D. Dearborn, Hayden J. Silver, III, Moore & Van Allen, Charlotte, N.C., for defendant-appellant.

Before BAUER, Chief Judge, CUMMINGS, CUDAHY, POSNER, COFFEY, FLAUM, EASTERBROOK, RIPPLE, MANION, KANNE, and ROVNER, Circuit Judges.

On consideration of the petition for rehearing and suggestion for rehearing en banc filed in the above-entitled cause, 967 F.2d 1152, on July 27, 1992 by petitioner-appellee, a vote of the active members of the court was requested, and a majority of the active members of the court have voted to deny a rehearing en banc.

Circuit Judges CUDAHY, POSNER and EASTERBROOK voted to grant rehearing en banc.

COFFEY, Circuit Judge, concurring in the denial of rehearing en banc.

The whole scheme of bankruptcy administration rests on a swift, efficient resolution of claims in a speedy trial in order that the debtor's business might continue or at least attempt to be salvaged in a timely manner while protecting the interests of the creditors. Allowing costly, time consuming, adjournment prone, cumbersome jury trials in the bankruptcy process defeats the very purpose of a speedy, inexpensive resolution of bankruptcy cases. See Fed.R.Bankr.P. 1001 ("These rules shall be construed to secure the just, speedy, and inexpensive determination of every case and proceeding.") (Emphasis added). ¹ The delay incumbent in jury trial proceedings (from docketing, voir dire, challenges from the beginning to end, depositions, pre-trial conferences, expert witnesses, adjournments, jury instructions, and jury deliberations) necessitates keeping the number of jury trials in bankruptcy to an absolute minimum. ² In fact, jury trials are the very antithesis of the speedy bankruptcy procedure. This Circuit, along with the Sixth, Eighth, and Tenth Circuits, have properly concluded that bankruptcy judges are unauthorized to conduct jury trials. See In re Baker & Getty Fin. Servs., Inc., 954 F.2d 1169 (6th Cir.1992); In re Kaiser Steel Corp., 911 F.2d 380 (10th Cir.1990); In re United Missouri Bank, 901 F.2d 1449 (8th Cir.1990).

We as federal judges possess only that authority entrusted to us under the Constitution and subsequent Congressional enactments. Because bankruptcy courts receive their jurisdiction and authority from Congress, it is not for us, an appellate court, to expand upon what Congress has delineated. Palmore v. United States, 411 U.S. 389, 396, 93 S.Ct. 1670, 1675, 36 L.Ed.2d 342 (1973). Contrary to the suggestion of my colleagues, Judges Posner and Easterbrook, we need not infer nor attempt to read in jurisdiction that Congress chose not to confer, rather we must recognize and always be cognizant of the fact that we have only that amount of power, authority and jurisdiction that Congress has seen fit to grant. Id.; In re Kaiser, 911 F.2d at 391 ("finding [that bankruptcy judges may hold jury trials] as an implied power [is] contrary to the doctrine of statutory interpretation that implied powers 'must be practically indispensable and essential in order to execute the power actually conferred' ") (quoting In re United Missouri Bank, 901 F.2d at 1456 (emphasis added)). Certainly it cannot be said that it is either essential or indispensable that bankruptcy judges conduct jury trials. The district courts are--and I am quite sure in the future will remain--quite capable of handling these infrequent jury trials.

In the Bankruptcy Amendments and Federal Judgeship Act of 1984, Congress overhauled the bankruptcy process and failed to express an intention to empower bankruptcy judges to conduct jury trials. Moreover, because the United States Supreme Court has not seen fit to specifically reach this issue, Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 65, 109 S.Ct. 2782, 2803, 106 L.Ed.2d 26 (1989), In re Ben Cooper, Inc., 896 F.2d 1394 (2d Cir.), cert. granted, --- U.S. ----, 110 S.Ct. 3269, 111 L.Ed.2d 779 vacated and remanded on other grounds, --- U.S. ----, 111 S.Ct. 425, 112 L.Ed.2d 408 (1990), reinstated, 924 F.2d 36 (2d Cir.), cert. denied, --- U.S. ----, 111 S.Ct. 2041, 114 L.Ed.2d 126 (1991), we too should refrain from implying what Congress never intended.

One of my colleagues suggests that "[e]veryone believes that bankruptcy judges appointed under Article III could hold jury trials." Easterbrook dissent at 7. The bankruptcy code itself rejects this contention, "[e]ach bankruptcy judge, as a judicial officer of the district court, may exercise the authority conferred under this chapter...." 28 U.S.C. § 151 (emphasis added). Because Congress has not conferred the power to conduct jury trials on bankruptcy judges, all discussion regarding the qualifications of bankruptcy judges (comparing them to magistrate judges) is misleading. Magistrates have been expressly authorized by Congress to conduct jury trials within specific limits while bankruptcy judges are without such jurisdiction. See 28 U.S.C. § 636(c)(1) (authorizing magistrates to conduct civil trials when designated by the district court and consent is obtained from each of the parties).

Judge Posner maintains that "the panel majority has made a serious mistake" by refusing to expand the statutorily authorized powers of bankruptcy judges. Posner dissent at 5. I might suggest that my dissenting colleagues reread what they themselves have written on previous occasions when faced with similar problems, namely, a specific lack of authority, and have written that Congress itself should resolve such questions. See, e.g., Board of Trade v. S.E.C., 923 F.2d 1270, 1277 (7th Cir.1991) (Posner, J.) ("[t]his is a question for Congress to decide"); International Union, UAW v. Johnson Controls, Inc., 886 F.2d 871, 910, 915 (7th Cir.1989) (Easterbrook, J., dissenting) (suggesting that Congress is the appropriate forum for the dispute).

The panel majority has properly determined that bankruptcy judges may not conduct jury trials. The full Court need not reexamine this question, rather if a problem really exists, it is for the United States Congress to resolve after the full panoply of hearings, discussion, debate and action in order that all interested and well-versed advocates and/or objectors may be allowed to participate in this questionable expansion of the bankruptcy process.

POSNER, Circuit Judge, dissenting from denial of rehearing en banc.

The interest and importance of the issue--whether bankruptcy judges can conduct jury trials--warrant its consideration by the entire court, even though we cannot resolve the conflict among the circuits. I explained in my dissent from the panel's decision why I think bankruptcy judges do have this power. Judge Easterbrook, in his opinion dissenting from the denial of rehearing en banc, reaches the same conclusion by a slightly different route, confirming my view that the panel majority has made a serious mistake the correction of which is the proper business of the full court.

EASTERBROOK, Circuit Judge, dissenting from the denial of rehearing in banc. This case illustrates how a question implies an answer. The panel asks "whether bankruptcy courts possess the statutory ... authority to conduct jury trials". 967 F.2d 1152, 1152 (7th Cir.1992). The majority answers "No." Nothing in the Bankruptcy Code authorizes that mode of procedure in bankruptcy courts. What is not authorized is forbidden, at least to judges without life tenure, the majority believes. The dissenting opinion accepts the question but says that silence in the Code means that courts may choose for themselves and permit bankruptcy judges to hold jury trials in order to facilitate disposition of cases without scattering issues among judges.

Suppose we ask, instead, "May bankruptcy judges with jurisdiction to try core proceedings use those procedures the Constitution prescribes?" Congress provided that "[b]ankruptcy judges may hear and determine all cases under title 11 and all core proceedings arising under title 11". 28 U.S.C. § 157(b)(1). "[A]ll core proceedings" does not occasion deep hermeneutical difficulties. Sometimes the seventh amendment creates a right to jury trial, for example in a preference-recovery action against a person who has not made a claim against the estate. Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 109 S.Ct. 2782, 106 L.Ed.2d 26 (1989); Langenkamp v. Culp, 498 U.S. 42, 111 S.Ct. 330, 112 L.Ed.2d 343 (1990). Does the scope of "all core proceedings" shrink when the Constitution gives a party this right? Preference-recovery and fraudulent conveyance actions remain "core" proceedings, 28 U.S.C. § 157(b)(2)(F), (H), and "all" is still inclusive. The majority of the panel made a pass at § 157 by observing that Congress told bankruptcy "judges" rather than bankruptcy "courts" to hear and determine cases, but even in a jury trial the judge determines the case by passing on legal issues and entering judgment, sometimes judgment notwithstanding the verdict. Juries return verdicts, but only judges decide cases.

So we have a text committing all core proceedings to bankruptcy judges, and the fact that the proceeding is no less "core" if a jury sits. The subject matter of the claim, not the procedure used to assess factual disputes, determines "core" status in bankruptcy. 28 U.S.C. § 157(b)(2). Perhaps a tour through the legislative debates, stopping to savor the opaque comments about why Congress repealed 28 U.S.C. §§ 1471(b)-(c) and 1480 in 1984, would provide amusement, but today the Supreme Court espouses...