In re Tureaud
| Decision Date | 03 March 1987 |
| Docket Number | Bankruptcy No. 82-01269,Adv. No. 85-0148. |
| Citation | 70 BR 818 |
| Parties | In re Kenneth E. TUREAUD, a/k/a Kenneth E. Tureaud, d/b/a Saket Petroleum Company, a/k/a Kenneth E. Tureaud, d/b/a Kesat, a/k/a Saket Petroleum Company, a/k/a Kenneth E. Tureaud, d/b/a Saket Development Company, d/b/a Linda Vista Corporation, d/b/a Saket Development Corporation, a New Mexico corporation, a/k/a Deer Park, Inc., d/b/a Saket Realty, Inc., d/b/a Southern Lakes Development Corporation, d/b/a River Ridge Development Corporation, Debtor. R. Dobie LANGENKAMP, Trustee, Plaintiff, v. ANTIQUES, INC., an Oklahoma corporation; Dean Kruse d/b/a Itt Kruse International, and Richard "Ricky" Klein, a/k/a Ritchie Clyne, Defendants. |
| Court | U.S. Bankruptcy Court — Northern District of Oklahoma |
Sam G. Bratton II, for plaintiff/trustee.
Curtis L. Craig, for defendant/Richard Clyne.
John B. Jarboe, for defendant/Antiques, Inc.
Patrick J. Malloy III, for defendant/Dean Kruse.
ORDER DENYING APPLICATION FOR SETTING OF JURY TRIAL
Plaintiff, Trustee in the above-styled case under 11 U.S.C. Chapter 11, brought this adversary proceeding in Bankruptcy Court against parties alleged to have perpetrated a controlled auction of property of the Chapter 11 estate. The Trustee asserted three causes of action: (1) avoidance of the sale and/or recovery of damages under 11 U.S.C. § 363(n); (2) breach of contract for sale by auction; and (3) mock auction and fraud by auctioneer under 21 O.S.A. §§ 1506, 1507.
Defendants requested jury trial upon all three causes. At hearing on February 13, 1987, the Court ruled on defendants' request, written order being filed on February 27, 1987. The Court determined that the first cause of action under 11 U.S.C. § 363(n) was a core proceeding, as to which defendants' request for jury trial was denied, while the second and third causes of action, under the circumstances, were treated as non-core proceedings, as to which defendants' request for jury trial was granted. The Court set the core proceeding for non-jury trial on April 20, 1987, but reserved the non-core proceedings "to be set by application of the Defendants herein."
On February 23, 1987, defendant Richard Klein a/k/a Ritchie Clyne ("Clyne") filed his "Application for Setting of Jury Trial," which now comes on for consideration.
Clyne moves that the non-core proceedings, upon which defendants were granted trial by jury, be set "at the earliest convenience of the Court prior to April 20, 1987" (emphasis added), asserting that "pursuant to the Supreme Court decision in Beacon Theaters, Inc., v. Westover, 359 U.S. 500, 79 S.Ct. 948, 3 L.Ed.2d 998 (1959) and Dairy Queen, Inc. v. Wood, 369 U.S. 469, 82 S.Ct. 894, 8 L.Ed.2d 44 (1962), that where both legal and equitable issues are presented in the same case, that the legal claims shall be tried first by jury in order to avoid depriving the party of a determination by a jury on common issues," Clyne's applic. p. 2.
If Clyne is correct, the Bankruptcy Court and its Trustee cannot attempt to police an essential aspect of bankruptcy administration, namely the sale of estate property for the benefit of estate creditors, except by the cumbrous procedure of trial by jury, whose delay and expense must be borne by the estate and its creditors (apart from the cumulative effect which numerous jury trials in various cases would have on bankruptcy administration generally). To the extent that a jury trial is absolutely required by statute or Constitution, such requirement cannot be dispensed with because of mere expediency. But there is no statutory requirement for jury trials in bankruptcy. Nor does the Seventh Amendment of the U.S. Constitution provide an absolute right to jury trial. The Seventh Amendment preserves the right to jury trial as it existed at common law, where it was not an absolute right, but a "right" qualified by the usages of equity. In that sense, the Seventh Amendment constitutionalizes not only the legal right to have a jury trial, but the equitable right to dispense with jury trial in appropriate circumstances. "The right to have equity controversies dealt with by equitable methods is as sacred as the right of trial by jury," 27 AM.JUR.2D "Equity" § 6 p. 525; see generally 27 AM.JUR.2D, supra, §§ 5-6, 9-10, 19-51, 86-117; 47 AM.JUR.2D "Jury" §§ 31-38. The present inquiry concerns only whether, or to what extent, the jury right must override certain other rights.
In Beacon Theatres, Inc. v. Westover, supra, a U.S. District Court scheduled non-jury trial on a complaint for declaratory and injunctive relief before jury trial on counter- and cross-claims alleging antitrust violations. Complaint, counter- and cross-claims shared common issues, so that non-jury determination of the complaint might "operate either by way of res judicata or collateral estoppel so as to conclude both parties with respect thereto at the subsequent trial" by jury of the counter- and cross-claims, 359 U.S. at 504, 79 S.Ct. at 953, citing 252 F.2d 864 at 874. The District Court ruled that it might, in its discretion, schedule the non-jury trial first, precisely because of its preclusive effect, and by analogy with traditional equity practice: if the complaint had been filed in a court of equity, and then the counter- and cross-claims had been filed as separate actions in a court of law, the court of equity would have had power to enjoin the later legal proceedings, to enable the prior equitable proceedings to continue and "to allow the whole dispute to be determined in one case in one court," 359 U.S. at 505, 79 S.Ct. at 953. The U.S. Supreme Court reversed. Justice Black, for the majority, noted that the "equitable" complaint might be given precedence over the "legal" counter- and cross-claims only upon a showing of "irreparable harm and inadequacy of legal remedies," 359 U.S. at 506-507, 79 S.Ct. at 954. In the case before the Court, a multiplicity of actions might constitute "irreparable harm and inadequacy of legal remedies;" but given the joinder of law and equity in a single U.S. District Court, this harm might be avoided by a preclusive trial by jury as well as by a preclusive trial without jury, and such remedy would better comport with the Seventh Amendment's guarantee.
359 U.S. at 508, 510, 79 S.Ct. at 955, 956. Given sufficiently "imperative circumstances . . . the right to a jury trial of legal issues" might "be lost through prior determination of equitable claims," 359 U.S. at 511, 79 S.Ct. at 957. In the case before the Court, given the complete joinder of law and equity in the District Court, circumstances were not "imperative" enough to justify equitable pre-emption of trial by jury.
In Dairy Queen, Inc. v. Wood, supra, the main issue was whether a District Court had properly classified an action as "legal" or "equitable." The prior holding in Beacon Theatres, Inc. v. Westover, supra, was re-emphasized, but was not modified or extended in any significant way. For present purposes, reference may be made to Beacon Theatres alone.
Beacon Theatres is distinguishable from the matter now before this Court. The "equitable" or core proceeding can be finally determined by this Court sitting without a jury; but the non-core or "legal" proceedings cannot be finally determined by this Court, with or without a jury, absent consent of the parties which has not been given, 28 U.S.C. § 157(c)(1), (2). The Beacon Theatres doctrine presupposed the complete fusion of law and equity in one District Court, enabling the entire controversy to be disposed of "in one case before one court." The core/non-core dichotomy under which this Court labors is comparable to an incomplete fusion of law and equity, inhibiting disposition of all parts of this controversy "in one case before one court," and undermining the basis of the Beacon Theatres doctrine as applicable here.
The core/non-core separation might be melded by consent of all parties to final disposition of the non-core matters by this Court — or by withdrawal of reference of both core and non-core matters under 11 U.S.C. § 157(d), for trial before a District Judge. In either instance, the Beacon Theatres doctrine (interpreted, for the moment, without reference to later cases) would then apply. But even then, the Bankruptcy Judge, or a District Judge sitting as a Court of Bankruptcy, would still have to determine whether circumstances were sufficiently "imperative" to permit trial of the non-jury cause under 11 U.S.C. § 363(n) before the other causes. Few civil matters are as "imperative" as bankruptcy, representing as it does a degree of financial collapse enforcing stringent economy of administration to preserve as much of the estate's assets as possible for distribution to creditors.
Be that as it may, the Beacon Theatres doctrine must be interpreted with reference to later cases. Clyne does not cite Katchen v. Landy, 382 U.S. 323, 86 S.Ct. 467, 15 L.Ed.2d 391 (1966), in which the applicability and operation of Beacon Theatres and Dairy Queen in a bankruptcy context was severely limited.
In Katchen v. Landy, supra, it was argued that a bankruptcy court's summary (non-jury) proceedings in determination of a creditor's claim effectively denied the creditor's...
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