Towers v. Titus
| Decision Date | 23 July 1979 |
| Docket Number | No. C-77-0979 WHO.,C-77-0979 WHO. |
| Citation | 5 BR 786 |
| Court | U.S. District Court — Northern District of California |
| Parties | Edward F. TOWERS, Trustee in Bankruptcy, v. DeWayne F. TITUS, Sr., Mary Teresa Fearon, aka Mary Teresa Kolsch, Frank J. Reno, Thelma R. Reno, Danny Leroy Titus, DeWayne F. Titus, Jr., Orville W. Titus, Suzette Titus, United States of America, Lawrence A. Watson, Wright's Dehydrated Foods, Inc., a California Corporation, Steelgard, Inc., Gordon Nelson, Al Barker, Elmer C. Goodman. |
COPYRIGHT MATERIAL OMITTED
Leroy Rice, Vernon W. Humber, Harvey W. Hoffman, Hoffman, Kelly & Izmirian, San Francisco, Cal., for plaintiff.
DeWayne F. Titus, Sr. in pro. per.
G. William Hunter, U.S. Atty., Jeffrey S. Niesen, Asst. U.S. Atty., Chief, Tax Division, George L. Bevan, Jr., Special Asst. U.S. Atty., San Francisco, Cal., for United States.
Mary Teresa Kolsch, in pro. per.
Thelma & Frank Reno, in pro. per.
Edward R. Fitzsimmons, Richard M. Heimann, Oakland, Cal., for Steelgard, Inc., Orville W. Titus, DeWayne F. Titus, Jr., Danny L. and Suzette Titus.
Gordon Nelson, in pro. per.
Jones & Wilson, West Los Angeles, Cal., for Al Barber.
Dennis J. Tonsing, Lafayette, Cal., for Elmer C. Goodman.
Andrew J. Capestro, Capestro & Lichtenegger, Monterey, Cal., for Lawrence A. Watson.
Plaintiff Edward F. Towers, Trustee for the Bankruptcy Estate of DeWayne F. Titus, Sr., brings this plenary action to recover numerous parcels of real estate and other assets allegedly transferred, or held by Titus' nominees, in fraud of the bankrupt's creditors.1 The case is presently before the Court on plaintiff's motion to strike the demand of certain defendants that this matter be tried before a jury. For the reasons stated herein, the motion is granted.
Plaintiff was appointed Trustee of Titus' bankruptcy estate on July 12, 1976, at the first meeting of creditors. He filed the initial complaint2 in this action on May 11, 1977, alleging that certain properties, legal title to which is in the names of individuals and entities other than the bankrupt, are in reality owned by Titus, and should thus be held by his successor, the Trustee, for the benefit of creditors of the bankruptcy estate. The numerous individual and corporate defendants are those persons and entities presently holding legal title to the subject properties. The United States has been joined as a defendant because it is asserting federal tax liens for income and employment tax liabilities of the bankrupt (in excess of 2.4 million dollars) against all property and rights to property belonging to the bankrupt. The United States' interest in having Titus declared the owner of the subject property is aligned with that of the Trustee. Because, however, it is a priority creditor, whose claim to any properties recovered may supersede that of the Trustee, it has been joined as a defendant in an action to quiet title to the properties. Defendants Steelgard, Inc., DeWayne Titus, Jr., Orville W. Titus, Danny Titus and Suzette Titus made timely demands for trial by jury.
The complaint sets forth four causes of action. First, the Trustee seeks to set aside, as fraudulent, transfers of some twenty-four parcels of real property, the title3 to which is or was formerly held in the names of some forty-six defendants.4 In conjunction with these claims, the Trustee seeks to obtain title to these properties, to recover, after an accounting, all rents, profits, and payments received from them, and to enjoin further exercise of control over them by defendants.5 In addition, the Trustee seeks to recover assets held by Steelgard, Inc. on the theory that it is the alter ego of DeWayne Titus, Sr. or, alternatively, under a fraudulent conveyance theory.6
The machinations allegedly employed by Titus from 1969 to the present to conceal his assets defy simple description. At trial, plaintiff intends to trace the chain of title of each parcel of property through a maze of transfers, beginning with money held by Titus in several bank accounts, and ultimately resting with various defendants.7 Titus' alleged modus operandi involved innumerable transfers and reconveyances of properties and funds, and the formation, dissolution, and reorganization of numerous corporations alleged to be under his control and ownership, in a labyrinthine scheme to conceal, launder, and reinvest assets, all for the purpose of hindering and defrauding his creditors.
In this country there has always been a strong presumption in favor of jury trials for resolving issues of fact in civil litigation. Dimick v. Schiedt, 293 U.S. 474, 485-86, 55 S.Ct. 296, 79 L.Ed. 603 (1935); Beacon Theatres v. Westover, 359 U.S. 500, 79 S.Ct. 948, 3 L.Ed.2d 988 (1959). Nonetheless, the Seventh Amendment right to a jury trial is neither absolute nor rigidly applied. It must oftentimes yield to other considerations such as procedural innovations, Parklane Hosiery v. Shore, 439 U.S. 322, 99 S.Ct. 645, 58 L.Ed.2d 552 (1979), or the inability of jurors to understand and decide a case. Ross v. Bernhard, 396 U.S. 531, 538 n. 10, 90 S.Ct. 733, 24 L.Ed.2d 729 (1970); Note, The Right to a Jury Trial in Complex Civil Litigation, 92 Harv.L.Rev. 898 (1979) (hereinafter cited as "Harvard Note"). Central to the concept of a jury trial is the notion that litigants' rights will be adjudicated in a fair manner by impartial, capable fact finders representing a cross section of the community. To ensure fair and rational decisions, the right to trial by jury has been limited throughout history in two often overlapping areas: cases arising under "equity" and cases which are extraordinarily complex. In re United States Financial Securities Litigation, 75 F.R.D. 702, 708-09 (S.D.Cal.1977); Bernstein v. Universal Pictures, Inc., 79 F.R.D. 59, 67-68 (S.D.N.Y.1978).
In recent years, the Supreme Court has on several occasions addressed the scope of a litigant's Seventh Amendment rights,8 and in so doing has developed standards governing the right to trial by jury. Under the standard applicable to this case, the three-pronged test found in footnote ten of Ross v. Bernhard, supra,9 a district court must characterize each issue in the case before it as legal or equitable according to the following criteria: "first, the pre-merger custom with reference to such questions; second, the remedy sought; and third, the practical abilities and limitations of juries." 396 U.S. at 538, 90 S.Ct. at 738 n. 10. Each and every legal issue is entitled to be tried before a jury.
Plaintiff and defendant United States, shortly before the original trial date and after extensive discovery, jointly moved to strike defendants' jury demand, contending that, under the above criteria, all issues in this case are equitable. Although the Court must examine all pleadings in applying the Ross test, the right to a jury trial cannot be made to depend solely upon the choice of words used in any particular pleading, Dairy Queen v. Wood, 369 U.S. 469, 477-79, 82 S.Ct. 894, 8 L.Ed.2d 44 (1962), the prayer for relief in the complaint, Prudential Oil Corp. v. Phillips Petroleum Co., 392 F.Supp. 1018, 1022 (S.D.N.Y.1975); 5 J. Moore, Federal Practice ¶ 38.17 (2d ed. 1978) (hereinafter cited as "Moore"), or the supposed intent of the pleader. Schaefer v. Gunzburg, 246 F.2d 11, 13 (9th Cir. 1957), cert. denied, 355 U.S. 831, 78 S.Ct. 45, 2 L.Ed.2d 43 (1957). Rather, the Court must consider the nature of the issues in the case before it, regardless of how they have been labeled by the pleader. 9 C. Wright and A. Miller, Federal Practice and Procedure § 2804 (1971) (hereinafter cited as "Wright & Miller"). Each claim or issue which the Court finds to be "legal" is entitled to trial by jury, without regard to its weight relative to the remainder of the case, Dairy Queen v. Wood, supra, 369 U.S. at 473, 82 S.Ct. 894; or to the character of the overall action, Ross v. Bernhard, supra, 369 U.S. at 538, 90 S.Ct. 733. Having examined countless pleadings and decided numerous motions, this Court, now intimately familiar with the Titus case, finds that, under the criteria set forth in Ross v. Bernhard, every remaining issue and claim for relief is equitable in nature.
Under the tripartite test in Ross, we must initially determine the pre-merger custom in regard to the requested claims. The gravamen of this entire action is fraud. Actions for fraud are not readily characterized as legal or equitable, and are more aptly described according to the attendant remedies sought. Hyde Properties v. McCoy, 507 F.2d 301, 305 (6th Cir. 1974); 5 Moore ¶ 38.20; 9 Wright & Miller § 2311. Actions for fraudulent conveyance, however, seeking something more than a money judgment, have traditionally been deemed equitable. See, e.g., Johnson v. Gardner, 179 F.2d 114 (9th Cir. 1949), cert. denied, 339 U.S. 935, 70 S.Ct. 661, 94 L.Ed. 1353 (1950); Hyde Properties v. McCoy, supra; Senchal v. Carroll, 394 F.2d 797 (10th Cir. 1968), cert. denied, 393 U.S. 979, 89 S.Ct. 448, 21 L.Ed. 440 (1968); Damsky v. Zavatt, 289 F.2d 46 (2d Cir. 1961); Mission Bay Campland, Inc. v. Sumner Financial Corp., 72 F.R.D. 464 (M.D.Fla.1976); Conn v. Kohlemann, 2 F.R.D. 514 (E.D.Pa.1942); Williams v. Collier, 32 F.Supp. 321 (E.D.Pa. 1940); 9 Wright & Miller § 2311 at 53-54; 5 Moore ¶ 38.304 at 228-29.10 The reason for this frequent characterization was well summarized by Professor Moore:
5 Moore ¶ 38.304 at 229-30 (footnotes omitted.)
Although the underlying basis for the Trustee's claims, fraud, is usually considered...
To continue reading
Request your trial