Recent Development by Denise M. Barton
In 1993, the Heelco Corporation filed a voluntary petition for Chapter 7 bankruptcy. The trustee of the estate filed a complaint in bankruptcy court seeking turnover and avoidance of preferential and fraudulent transfers and post-petition transactions between the debtor and petitioners, Raymond and Scott Clay. In response, the Clays filed a demand for a jury trial in the bankruptcy court and a motion to withdraw the reference of the case from the bankruptcy court in the District Court for the Western District of Texas. Judge Clark of the bankruptcy court held that the Clays had a Seventh Amendment right to a jury trial and further held that it had the authority to conduct the jury trial. The district court entered an order denying the Clays' motion to withdraw the reference to the bankruptcy court and concluded that the bankruptcy judge had the authority to conduct a jury trial.
The Clays then filed a petition for writ of mandamus questioning the constitutional and statutory basis for the bankruptcy court to conduct a jury trial without their consent. The Fifth Circuit Court of Appeals granted the writ holding that because the Bankruptcy Amendments and Federal Judgeship Act of 1984 do not explicitly grant bankruptcy judges the power to conduct jury trials and because the legislative history does not demonstrate a clear intent to grant such power, bankruptcy judges do not have the authority to preside over jury trials. In re Clay, 35 F.2d 190 (5th Cir. 1994).
About the Author
Denise M. Barton.
Citation
69 Tul. L. Rev. 1703 (1995)