Jacobs v. O'Bannon (In Re O'Bannon)

49 B.R. 763, 1985 Bankr. LEXIS 6191, 13 Bankr. Ct. Dec. (CRR) 49
CourtUnited States Bankruptcy Court, M.D. Louisiana
DecidedMay 3, 1985
Docket19-10229
StatusPublished
Cited by37 cases

This text of 49 B.R. 763 (Jacobs v. O'Bannon (In Re O'Bannon)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, M.D. Louisiana primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Jacobs v. O'Bannon (In Re O'Bannon), 49 B.R. 763, 1985 Bankr. LEXIS 6191, 13 Bankr. Ct. Dec. (CRR) 49 (La. 1985).

Opinion

REASONS FOR JUDGMENT AWARDING DISCOVERY COSTS AND DETERMINING THE RIGHT TO TRIAL BY JURY ON THE ISSUE OF DIS-CHARGEABILITY OF A DEBT

WESLEY W. STEEN, Bankruptcy Judge.

I. Background

A. Procedural Status of the Case

On January 31, 1985, Chief Judge Parker referred this case to the undersigned Bankruptcy Judge for this district with instructions to determine sanctions for non-compliance with Rule 37 of the Federal Rules of Civil Procedure relating to discovery (applicable via Bankruptcy Rule 7037). The Chief Judge also instructed the Bankruptcy Judge to determine whether the parties to this adversary proceeding are entitled to trial by jury. Since the Chief Judge directed the undersigned Bankruptcy Judge to determine the issues, an order is issued this date in accordance with this opinion. Since the referral was limited to those two issues, the case is today returned to the Clerk of the District Court.

B. Background of the Case

This adversary proceeding was filed January 28, 1983. The complaint alleges that the Debtor is liable to the plaintiff in the amount of $28,000,000 for willful and malicious conduct, to wit: publishing “defamatory and libelous statements” concerning plaintiff in Suit No. 82-1307, U.S. District *764 Court for the Eastern District of Louisiana. The plaintiff demanded trial by jury. Because of a (now superseded) prohibition against bankruptcy judges’ conducting jury trials, 1 the Bankruptcy Judge of this district transferred this adversary proceeding to the United States District Court on February 2, 1983.

As noted, on January 31, 1985, the case was returned for the consideration of discovery sanctions and for the determination of the right to trial by jury. On February 14, 1985, an order issued setting March 4, 1985, to hear the issue of sanctions under Rule 37; a notice was mailed on February 15. On February 22, a second order was entered and a second notice was mailed; this second order expanded the March 4 hearing to include oral argument on the issue of trial by jury. Only the defendant filed a memorandum of authorities; no response of any kind was received from the plaintiff.

On March 4, 1985, the hearing was held. Only the Defendant appeared. Because of Plaintiff’s failure to appear and to respond, the Court concluded not to award discovery costs. Subsequent to the hearing, however, out of an abundance of caution, the Bankruptcy Judge obtained from the Clerk of the District Court photocopies of all pleadings in the case. It was then discovered that the Clerk of the District Court had failed to provide the Bankruptcy Court with the new proceeding record opened in the District Court. In that record, the Bankruptcy Judge discovered orders allowing the withdrawal and substitution of plaintiff's counsel after the referral of the case to the District Court. It thus appeared that notice of the March 4 hearing had been misdirected; Plaintiff’s new counsel had not been noticed of the March 4 hearing; that seemed a good excuse for her failure to appear. Consequently, a second hearing was set for April 24, 1985, and new notices were issued. In response to the notice, the Plaintiff’s counsel filed a memorandum of authorities on April 19, but Plaintiff’s counsel did not appear at the second hearing held on April 24.

II. Discovery Sanctions

The first issue is sanctions for failure to provide discovery. In opposition to the original motion to compel discovery, Defendant’s counsel argued that there was no need to comply with the Plaintiff’s request for discovery since identical data and answers were available to the Plaintiff in the related state court proceeding. The District Court rejected that argument. Having lost the first round, Defendant has urged the same argument as the sole grounds for not imposing the sanctions specified in Rule 37. The District Court’s determination that the argument was insufficient to excuse compliance, especially when followed by the District Court’s immediate referral of the case to determine application of sanctions, is implicit rejection of the sufficiency of the excuse as grounds to avoid imposition of sanctions.

Rule 37(a)(4) provides that costs shall be awarded “... unless the court finds ... that the opposition to the motion was substantially justified or that other circumstances make an award of expenses unjust.” The Rule 37 imposition of discovery costs is mandatory unless one of the two exceptions is met. There has been no showing in this case that either is satisfied. Therefore, the Court will require the payment of costs for the discovery motion by the party whose conduct necessitated the motion and by the attorney who represented that party. However, there has been no evidence, allegation, or even hint at what is the proper amount to award. Therefore, the order will be a minimal sum for dictating and filing a motion: $50.00.

III. Right to Trial by Jury

The second issue is whether there is a right to trial by jury. This is a proceeding to determine whether a debt allegedly owed by the Debtor to the Plaintiff is dis- *765 chargeable under 11 U.S.C. § 523(a)(6). The Plaintiff has prayed for a judgment both with respect to the issue of discharge-ability and with respect to the issue of ultimate liability. The law on this issue is very complex indeed.

A. Seventh Amendment Right to Jury in Bankruptcy Court

The Seventh Amendment to the United States Constitution provides:

“In suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury shall be otherwise reexamined in any Court of the United States, than according to the rules of the common law.”

It is clear from this language, and it is well established in the applicable case law, that the right to trial by jury exists only with respect to issues at common law and does not exist with respect to issues tried by the court in its equity jurisdiction. This principle was confirmed in the landmark bankruptcy case of Katchen v. Lan-dy, 382 U.S. 323, 86 S.Ct. 467, 15 L.Ed.2d 391 (1966). In that case, the Supreme Court held that even if an issue could be tried both in equity and at common law, a jury was not constitutionally mandated when the proceeding was before a bankruptcy court. Although the decision was rendered under the Bankruptcy Act, and although the decision rested in part on the confusing dichotomy between summary and plenary jurisdiction under that act, 2 Katchen v. Landy is instructive with respect to the Seventh Amendment requirements for trial by jury since the Supreme Court also considered that issue.

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Cite This Page — Counsel Stack

Bluebook (online)
49 B.R. 763, 1985 Bankr. LEXIS 6191, 13 Bankr. Ct. Dec. (CRR) 49, Counsel Stack Legal Research, https://law.counselstack.com/opinion/jacobs-v-obannon-in-re-obannon-lamb-1985.