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
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 Because of a (now superseded) prohibition against bankruptcy judges’ conducting jury trials,
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-
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,
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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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
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,
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-
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,
Katchen v. Landy
is instructive with respect to the Seventh Amendment requirements for trial by jury since the Supreme Court also considered that issue. The court stated that bankruptcy courts are inherently courts of equity,
that the essential determinations of a bankruptcy case are issues triable in equity, and that with respect to such issues the court can hear, can determine, and can grant relief with respect to the equitable issue as well as with respect to necessarily associated legal issues without abridging a party’s constitutionally protected right to trial by jury.
Thus, it would appear that there is no
constitutional
right to a trial by jury in a bankruptcy case even on an issue otherwise purely an issue at law involving a “claim of debt or damages against the bankrupt.”
B. Statutory Authority for Jury Trials in Bankruptcy Court
If there is no constitutional right to trial by jury in the case at bar, one must determine whether there is a statutory right. There are two statutes to consider: 28 U.S.C. §§ 1480 and 1411. Unfortunately, they provide no guidance because § 1411(a) does not apply and § 1480(a) has been repealed.
28 U.S.C. § 1480 was enacted as part of the Bankruptcy Reform Act of 1978. The text was as follows:
“Section 1480. Jury Trials.
“(a) Except as provided in sub-section (b) of this section, this chapter and Title 11 do not affect any right to trial by jury, in a case under Title 11 or in a proceeding arising under Title 11 or arising in or
related to a case under Title 11, that is provided by any statute in effect on September 30, 1979.
“(b) The bankruptcy court may order the issues arising under § 303 of Title 11 to be tried without a jury.”
Section 402(b) of the Bankruptcy Reform Act (after all amendments except the Bankruptcy Amendments and Federal Judgeship Act of 1984) provided that § 1480 was to become effective on June 28, 1984.
The insoluble problem arises under the Bankruptcy Amendments and Federal Judgeship Act of 1984, which was signed by the President on July 10, 1984. Section 113 of that Act amended § 402(b) of the Bankruptcy Reform Act to provide that Title II and its amendments to Title 28 of the United States Code (which includes § 1480) “shall not be effective.” This amendment was effective retroactive to June 27, 1984.
However, in direct conflict with § 113, § 121(a) of the Bankruptcy Amendments and Federal Judgeship Act of 1984 provides that Title II' of the Bankruptcy Reform Act and its amendments to Title 28 of the United States Code become effective on
the date of enactment of the Bankruptcy Amendments and Federal Judgeship Act of 1984,
i.e.,
July 10, 1984. There is no completely satisfactory way to reconcile this conflict.
A strictly chronological interpretation would produce the following result:
but for
the retroactive amendment in the Bankruptcy Amendments and Federal Judgeship Act of 1984, § 1480 was in effect from June 28 to July 9. On July 10, 1984, but
retroactive to June 27, 1984,
the effective date of § 1480 was amended to delete the date “June 28, 1984” and to insert in its place the phrase “shall not be effective.” Also on July 10, but not retroactive, § 121(a) of the Bankruptcy Amendments and Federal Judgeship Act of 1984 purported to amend the statute further by substituting “July 10, 1984” for “June 28, 1984”; however, because of the retroactive effect of § 113, the date “June 28, 1984” was no longer in the statute, and, therefore, the July 10 date could not be substituted.
Therefore, if one adopts a chronological application of the effective date provisions of the Bankruptcy Amendments and Federal Judgeship Act, § 113 of that Act effectively repealed § 1480.
There is a second line of reasoning that supports the conclusion that § 1480 was retroactively repealed: if given literal effect, § 121(a) would reenact the entire jurisdictional scheme of the Bankruptcy Reform Act of 1978, which jurisdictional scheme has been determined by the United States Supreme Court to be unconstitutional.
But this could not have been intended, because a principal purpose of the Bankruptcy Amendments and Federal Judgeship Act of 1984 was to replace that statutory scheme, and to substitute the scheme enacted by the Bankruptcy Amendments and Federal Judgeship Act of 1984. Surely a drafting glitch must be interpreted as not effective at least to the extent that it would reenact the problems that the statute was intended to cure.
Those intent on unveiling the mysteries of the apparent conflict between §§ 113 and 121(a) of the Bankruptcy Amendments and Federal Judgeship Act of 1984 will find careful analysis of statutory language to be futile; the apparent inconsistency is an actual, irreconcilable, internal contradiction. Congress simply made a mistake when it enacted § 121(a).
Fortunately, as demonstrated above, there is a method of reaching the same conclusion through more traditional legal analysis than simply rejecting an obvious error.
The Bankruptcy Amendments and Federal Judgeship Act’s replacement for § 1480 is § 1411; it provides as follows:
“28 U.S.C. § 1411. Jury Trials.
“(a) Except as provided in sub-section (b) of this section, this chapter and title 11 do not affect any right to trial by jury that an individual has under applicable nonbankruptcy law with regard to a personal injury or wrongful death tort claim.
“(b) The district court may order the issues arising under § 303 of title 11 to be tried without a jury.”
The sub-section applicable .to this case,
i.e.,
sub-section (a), does not apply to cases that were pending on July 10,1984; neither does that sub-section apply to proceedings arising in or related to such cases.
With respect to cases to which it does apply, however, the language of the statute grants jury trial rights only for personal injury and wrongful death claims.
Why is § 1411(a) not effective to cases pending on July 10? What law
is
in effect regarding those cases? It would appear that there simply is no statutory right to jury trial in those cases.
C. Summary and Conclusion
There apparently is no constitutional or statutory right to jury trial in bankruptcy cases
except in proceedings involving personal injury and wrongful death arising in a case filed after July 10.
Since this case was filed before that date, and since former § 1480(a) is repealed, there is no jury trial right in this proceeding. Personal injury and wrongful death issues must be tried before the District Judge.
Since Congress repealed § 1480 (which provided for continuation of September 30, 1979, jury trial rights), those rights presumably do not continue. Since § 1411(a) states that it does not affect jury trial rights for personal injury or wrongful death claims, presumably it does affect (and eliminate by exclusion) such rights regarding other claims. Therefore, the only jury trial that should take place before a Bankruptcy Judge is a jury trial conducted under Rule 9015(e) of the Bankruptcy Rules. A broad reading of
Katchen v. Landy
would find no constitutional defect in such a statute to the extent that it applies to core issues and associated determinations of rights at law. Dischargeability is clearly a core issue;
the issue of liability
vel non
is clearly an issue necessary to be determined coincident with the issue of dischargeability.