In re Southern Indus. Banking Corp., Civ. No. 3-86-800

• Court: U.S. District Court — Eastern District of Tennessee
• Writing for the Court: EDGAR
• Citation: In re Southern Indus. Banking Corp., 70 B.R. 196 (E.D. Tenn. 1986)
• Decision Date: 17 December 1986
• Docket Number: Civ. No. 3-86-800,Adv. No. 3-83-00372.
• Parties: In re SOUTHERN INDUSTRIAL BANKING CORPORATION, Debtor. Hugh G. ANDERSON and Hazel Anderson, et al., Defendants/Appellants, v. Thomas E. DUVOISIN, Liquidating Trustee, Plaintiff/Appellee.

70 B.R. 196 (1986)

In re SOUTHERN INDUSTRIAL BANKING CORPORATION, Debtor Hugh G. ANDERSON and Hazel Anderson, et al., Defendants/Appellants, v. Thomas E. DUVOISIN, Liquidating Trustee, Plaintiff/Appellee.

Civ. No. 3-86-800, Adv. No. 3-83-00372.

United States District Court, E.D. Tennessee, N.D.

December 17, 1986.

John A. Lucas, Jeffrey Norwood, Knoxville, Tenn., for plaintiff-appellee.

W.C. Myers, Jr. (Lead), Knoxville, Tenn., for defendants-appellants.

MEMORANDUM

EDGAR, District Judge.

This matter is presently before the Court on an interlocutory appeal from the United States Bankruptcy Court for the Eastern District of Tennessee. The defendants in this action appeal the decision of the bankruptcy court denying a jury trial in this matter. 66 B.R. 370 (1986). The liquidating trustee, the plaintiff, has also filed a number of motions seeking to have several of the defendants' notices of appeal dismissed. For the following reasons, the defendants' motions will be DENIED and the plaintiff's motions will be GRANTED. This Court's jurisdiction is proper under 28 U.S.C. § 158(a) and § 1334(b).

I.

The proceedings in the bankruptcy court were initiated by the liquidating trustee beginning in early 1984 to recover alleged preferential transfers, pursuant to 11 U.S.C. § 547. The debtor, Southern Industrial Banking Corporation ("SIBC"), an industrial loan and thrift company under T.C.A. §§ 45-5-101-612, filed a voluntary petition in bankruptcy court under Chapter 11 of the Bankruptcy Code on March 10, 1983. The approximately 800 defendants in this consolidated adversary proceeding were "investors" in SIBC who withdrew part or all of their "deposits" during the 90-day period preceding SIBC's Chapter 11 petition filing.

This matter first came before this Court over a year ago to decide whether SIBC was an eligible debtor under 11 U.S.C. § 109(b)(2). By an order dated January 16, 1986, this Court held that SIBC was eligible to be a debtor based on the Court's analysis of SIBC under both the law of the state of incorporation and the Bankruptcy Code. See 2 L. King, Collyer on Bankruptcy ¶ 109.02 (1985). See also Cash Currency Exchange, Inc. v. Shine (In re Cash Currency Exchange, Inc.), 762 F.2d 542 (7th Cir.), cert. denied sub nom. Fryzel v. Cash Currency Exchange, Inc., ___ U.S. ___, 106 S.Ct. 233, 88 L.Ed.2d 232 (1985); First American Bank & Trust Co. v. George, 540 F.2d 343 (8th Cir.), cert. denied, 429 U.S. 1011, 97 S.Ct. 634, 50 L.Ed.2d 620 (1976). Subsequent to this order, a group of defendants asked this Court to amend its January 16, 1986 order to include its certification for interlocutory appeal to the court of appeals as required under 28 U.S.C. § 1292(b). By an order dated February 21, 1986, the Court denied these defendants' certification based on its determination that there was not a "substantial ground for difference of opinion." Cardwell v. Chesapeake & Ohio Rwy. Co., 504 F.2d 444, 446 (6th Cir.1974). The Court also concluded that certification was not justified in the case as it was doubtful whether an immediate appeal would materially advance the ultimate termination of the litigation. The Court found that an interlocutory appeal of the admittedly complicated issues involved, rather than an appeal at the conclusion of the bankruptcy court proceedings, would not expedite the delivery of justice.

Since the February order of this Court, the liquidating trustee has been proceeding with the actions to recover alleged preferences. In their answers to the liquidating trustee's complaints, many of the defendants requested a jury trial in this matter. On September 3, 1985, the bankruptcy court ordered the parties to submit briefs discussing the right to a jury trial in preference actions and discussing whether the bankruptcy court was authorized to conduct a jury trial in such a proceeding. On September 26, 1986, the bankruptcy court denied the defendants' request for a jury trial. The bankruptcy judge ruled that the defendants to this preference action in which the only relief sought was a monetary judgment did not have the right to a jury trial. The court did not reach the second issue as to whether a bankruptcy court has the authority to conduct a jury trial in a core proceeding such as an action to recover a preference.

The bankruptcy court noted in its memorandum that there is no constitutional right to a jury trial in bankruptcy proceedings, given the equitable nature of these proceedings. Beery v. Turner (In re Beery), 680 F.2d 705, 710 (10th Cir.) ("The right to a jury trial in bankruptcy proceedings is purely statutory."), cert. denied, 459 U.S. 1037, 103 S.Ct. 449, 74 L.Ed.2d 604 (1982). The bankruptcy court then analyzed the possible statutory sources for the right, including the Constitution as a source. The bankruptcy court first addressed 28 U.S.C. § 1411 which appears to allow jury trials under Title 11 for personal injury or wrongful death tort claims and may possibly permit jury trials in cases involving other types of claims. The court found that this section only applies to cases, unlike the present case, which were filed after the 1984 effective date of the section. Next, the bankruptcy court examined 28 U.S.C. § 1480 but, as this section was implicitly repealed, the court ruled that this section also did not provide the defendants with a right to a trial by jury. Jacobs v. O'Bannon, 49 B.R. 763, 766-68 (Bankr.M. D.La.1985). The bankruptcy court concluded, therefore, that any right to a jury trial in this action would have to be founded on the seventh amendment to the Constitution. The court noted that the seventh amendment preserves the right to trial by jury only for certain "suits at common law." The bankruptcy court then proceeded to determine whether a preference action as involved in the present case was such a cause of action. After a lengthy historical discussion, the bankruptcy court concluded that no right to trial by jury attaches in preference actions. Katchen v. Landy, 382 U.S. 323, 86 S.Ct. 467, 15 L.Ed.2d 391 (1966). The court also found that 28 U.S.C. § 157(b) reflects an implicit congressional intent that preference actions be tried without a jury. Morgan v. Lefton (In re Hendon Pools of Michigan, Inc.), 57 B.R. 801, 803 (E.D.Mich.1986); Baldwin-United Corp. v. Thompson (In re Baldwin-United Corp.), 48 B.R. 49, 56 (Bankr.S.D.Ohio 1985); Pennels v. Barnes (In re Best Pack Seafood, Inc.), 45 B.R. 194 (Bankr.D.Me. 1984).

II.

Before discussing the merits of the defendants' interlocutory appeal, this Court must first address a jurisdictional issue. Appeals from interlocutory orders in bankruptcy cases are governed by 28 U.S.C. §§ 158(a) and 1334(b) and Bankruptcy Rules 8001(b), 8002, and 8003. Bankruptcy Rule 8002(a) provides in relevant part:

The notice of appeal shall be filed with the clerk of the bankruptcy court within ten days of the date of the entry of the judgment, order, or decree appealed from. If a timely notice of appeal is filed by a party, any other party may file a notice of appeal within ten days of the date on which the first notice of appeal was filed, or within the time otherwise prescribed by this rule, whichever period last expires.

The first notice of appeal in this matter was filed on October 6, 1986, allowing all other parties through October 16, 1986 to file their notice with the bankruptcy court.¹ The time limits contained in the Rules are to be strictly enforced and, accordingly, this Court is without jurisdiction to rule on the motions filed after October 16, 1986. Bankr. Rule 8001(a)-(b). In re Universal Minerals, Inc., 755 F.2d 309, 311 (3d Cir. 1985); Walker v. Bank of Cadiz (In re LBL Sports Center, Inc.), 684 F.2d 410, 412 (6th Cir.1982). Thus, an appropriate order will enter dismissing these late appeals.

III.

28 U.S.C. § 158(a) provides: "The district courts of the United States shall have jurisdiction to hear appeals from final judgments, orders, and decrees, and, with leave of the court, from interlocutory orders and decrees, of bankruptcy judges entered in cases and proceedings under Chapter 11." A final order is an order which ends litigation on merits leaving only the execution of the judgment remaining. Catlin v. United States, 324 U.S. 229, 233, 65 S.Ct. 631, 633, 89 L.Ed. 911 (1945). See also Sun Valley Foods Co. v. Detroit Marine Terminals, Inc. (In re Sun Valley Foods Co.), 801 F.2d 186, 189 (6th Cir. 1986). Denial of a jury trial may not be characterized as a final order. The Court is aware that "final" has assumed a slightly different meaning for the purpose of bankruptcy matters than in other federal cases. In re Fox, 762 F.2d 54 (7th Cir. 1985). However, the denial of a jury trial in this matter did not conclusively determine any controversy, and the defendants have not shown that they will be caused any serious harm by delaying the appeal. In re Sun Valley Foods, at 189; Teleport Oil Co. v. Security Pacific Nat'l Bank (In re Teleport Oil Co.), 759 F.2d 1376 (9th Cir.1985). By contrast, the granting or denying relief from automatic stays by bankruptcy courts which have been held to be "final" orders reviewable by district courts, see, e.g., In re Sun Valley Foods, involve actions which could not easily be corrected, if needed, on appeal.

As a denial of trial by jury is not a "final" order, the decision whether to grant the defendants' leave to appeal under § 158(a) is left to the discretion of the Court. It has been suggested that such applications for leave to appeal should be liberally granted where review will expedite the case's resolution. Robinson v. Johns-Manville Corp. (In re Johns-Manville Corp.), 45 B.R. 833, 835 (S.D.N.Y. 1984). Considerations of judicial economy and the interest of saving the parties' time and money should also be given weight in this decision. In re Pleasant View Utility Dist. of Cheatham County, 27 B.R. 552, 553 (M.D.Tenn.1982). In view of these policy concerns, the Court finds...