Section 2.15 When Is It Available?

• Library: Bankruptcy Practice (2007 Ed. + 2015 Cum Supp)

1. (§2.15) When Is It Available?

The Seventh Amendment to the United States Constitution preserves the right to trial by jury in suits “at common law.” The right to trial by jury is applicable to bankruptcy trials and extends to core proceedings, as well as non-core proceedings, provided that the proceeding is a suit at common law. Granfinanciera, S.A. v. Nordberg, 492 U.S. 33 (1989). In general, and in bankruptcy proceedings in particular, whether an action is a suit “at common law,” as opposed to a suit “in equity,” is not always clear.

In Katchen v. Landy, 382 U.S. 323 (1966), the Supreme Court held that a creditor who filed a claim against a bankruptcy estate, to which a trustee counterclaimed to recover an alleged preference, was not entitled to a jury trial on the preference counterclaim. Certain language in Katchen was widely interpreted to mean that bankruptcy courts primarily act as courts of equity, and hence jury trials are not available in core proceedings in bankruptcy courts. See, e.g., In re Kroh Bros. Dev. Co., 91 B.R. 889 (Bankr. W.D. Mo. 1988). But this reasoning was questioned after the Supreme Court’s decision in Granfinanciera. In Granfinanciera, the Supreme Court held that a defendant in a fraudulent conveyance action, who had not filed a proof of claim in the bankruptcy case, was entitled to a jury trial under the Seventh Amendment. The Supreme Court reasoned that fraudulent conveyance actions in England before adoption of the Seventh Amendment were conducted by courts “at law”...