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Keywords

defendantequityappealtrialtrustbankruptcycorporationcommon lawjury trial
trialtrustwillbankruptcycorporationrespondentjury trial

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Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 109 S.Ct. 2782, 106 L.Ed.2d 26, 57 USLW 4898, 20 Collier Bankr.Cas.2d 1216, 18 Fed.R.Serv.3d 435, 19 Bankr.Ct.Dec. 493, Bankr. L. Rep. P 72,855

Facts

The bankruptcy trustee for Chase & Sanborn Corporation filed a suit against Granfinanciera, S.A. and Medex, Ltda. to recover $1.7 million in allegedly fraudulent transfers made by the corporation's predecessor. The Bankruptcy Court denied the defendants' request for a jury trial, categorizing the action as a 'core action' that was traditionally non-jury under English common law. The District Court and the Court of Appeals affirmed this decision, leading to the Supreme Court's review.

The Chase & Sanborn Corporation filed a petition for reorganization under Chapter 11 of the Bankruptcy Code in 1983. A plan of reorganization approved by the United States Bankruptcy Court for the Southern District of Florida vested in respondent Nordberg, the trustee in bankruptcy, causes of action for fraudulent conveyances. In 1985, respondent filed suit against petitioners Granfinanciera, S.A., and Medex, Ltda., in the United States District Court for the Southern District of Florida. The complaint alleged that petitioners had received $1.7 million from Chase & Sanborn's corporate predecessor within one year of the date its bankruptcy petition was filed, without receiving consideration or reasonably equivalent value in return.

Issue

Does a person who has not submitted a claim against a bankruptcy estate have a right to a jury trial when sued by the trustee in bankruptcy to recover an allegedly fraudulent monetary transfer?

The question presented is whether a person who has not submitted a claim against a bankruptcy estate has a right to a jury trial when sued by the trustee in bankruptcy to recover an allegedly fraudulent monetary transfer.

Rule

The Seventh Amendment entitles a person who has not submitted a claim against a bankruptcy estate to a jury trial when sued by the bankruptcy trustee to recover an allegedly fraudulent monetary transfer, provided Congress has not assigned resolution of the claim to a non-Article III adjudicative body that does not use a jury as a factfinder.

Provided that Congress has not permissibly assigned resolution of the claim to a non-Article III adjudicative body that does not use a jury as factfinder, the Seventh Amendment entitles a person who has not submitted a claim against a bankruptcy estate to a jury trial when sued by the bankruptcy trustee to recover an allegedly fraudulent monetary transfer.

Analysis

The Supreme Court analyzed the nature of the action and determined that it was a legal claim rather than an equitable one, as it sought the recovery of a definite sum of money. The Court referenced historical practices in 18th-century England, where such actions were typically tried at law and not in equity. The Court concluded that the defendants were entitled to a jury trial under the Seventh Amendment, despite Congress's designation of fraudulent conveyance actions as 'core proceedings' in bankruptcy.

The nature of the relief respondent seeks—the recovery of money payments of ascertained and definite amounts—conclusively demonstrates that his cause of action should be characterized as legal rather than equitable, such that petitioners are prima facie entitled to a jury trial under the Amendment.

Conclusion

The Supreme Court reversed the lower court's decisions and remanded the case, affirming the defendants' right to a jury trial.

Held: This Court will not address respondent's contention that the judgment below should be affirmed as to petitioner Granfinanciera because it was a commercial instrumentality of the Colombian Government when it made its request for a jury trial and was therefore not entitled to such a trial under the Seventh Amendment or applicable statutory provisions.

Who won?

Granfinanciera, S.A. and Medex, Ltda. prevailed because the Supreme Court recognized their constitutional right to a jury trial under the Seventh Amendment.

Granfinanciera, S.A. and Medex, Ltda. prevailed because the Supreme Court recognized their constitutional right to a jury trial under the Seventh Amendment.

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