  |
  |
  |
    
  
   |
 | |||
|
|
|
|
| |||
of prejudice without evidence of what was destroyed and how the destruction prejudiced the claimant. The court, nevertheless, concluded that the debtor's behavior warranted an award of a portion of the claimant's fees and costs for its trouble, to be determined at a later time.
* Sigma Micro Corp. v. Healthcentral.com (In re Healthcentral.com), 505 F.3d 775 (9th Cir. Sept. 2007) (Brunetti, J.)
The Seventh Amendment right to a trial by jury did not require immediate transfer to an Article III court. The defendant in this adversary proceeding argued that its Seventh Amendment right to a jury trial alone required the bankruptcy court to transfer the matter to the district court immediately (relying upon Granfinanciera, S.A. v. Nordberg for this proposition). The Ninth Circuit, however, disagreed that Granfinanciera stood for such a proposition. Instead, the court found that the mere right to a jury trial cannot mean that the bankruptcy court immediately must give up jurisdiction. The court of appeals pointed out the distinction between the right to a jury trial and the need for jury trial. By retaining jurisdiction over pre-trial matters, the Ninth Circuit held that the bankruptcy court did not abridge the defendant's Seventh Amendment right to a jury trial -- it merely determined whether a jury trial would be necessary. However, upon reviewing the merits of the bankruptcy court's summary judgment decision, the court of appeals reversed and remanded for further proceedings.
* MCI WorldCom Commc'ns, Inc. v. Commc'ns Network Int'l (In re WorldCom, Inc.), 378 B.R. 745 (Bankr. S.D.N.Y. Dec. 2007) (Gonzalez, J.)
It is the filing of a proof of claim which invokes a waiver, regardless of when the court determines the validity of a jury demand. The creditor asserted a proof of claim to which the debtor objected and filed several counterclaims against the creditor through an adversary proceeding. The creditor answered the counterclaims and asserted its jury demand in the answer. After a series of pre-trial rulings, the court disallowed the proof of claim, granted partial summary judgment on the debtor's counterclaims, but found that a trial was still necessary as to the amount of the creditor's liability to the debtor. The debtor then moved to strike the creditor's jury demand, which was the subject of this opinion. The court concluded that the creditor had waived its right to a jury trial by filing a proof of claim because the debtor's counterclaims were inextricably intertwined with the creditor's proof of claim and, thus, with the claims allowance process -- the claims were based on the same underlying contracts and were both logically related. The court further held that the sequence of orders was irrelevant. Said the court, "It is the filing of the proof of claim, not its validity, that invoked the waiver of a jury trial right." Despite the creditor's contention to the contrary,70 the debtor's counterclaim was not a separate issue merely because the court had already ruled on the validity of the creditor's claim. The court pointed out the absurdity of such logic -- only creditors whose claims were disallowed would have the right to a jury trial on debtors' counterclaims, while
70 The creditor contended that because court issued the order disallowing its proof of claim first, that order had the effect of withdrawing the proof of claim and the creditor's submission to the court's equitable jurisdiction.
