Menu    6 ABR 108
UNITED STATES DISTRICT COURT
DISTRICT OF ALASKA

G. OTTO HOLTA, )
)

Plaintiff,     

) Case No. A98-374 CV (JWS)
)

vs.

) ORDER FROM CHAMBERS
)
WARREN G. KELLICUT, )
)

Defendant.     

 )
_________________________________ )

I. INTRODUCTION

At docket 7, appellant G. Otto Holta ("Holta") appeals from an order of the United States Bankruptcy Court striking his jury trial demand. Appellee Warren G. Kellicut ("Kellicut") files his brief at docket 12. Oral argument has been requested, but would not assist the court.

II. BACKGROUND

Kellicut held a judgment lien against Eugene Brooks and a corporation through which Brooks conducted business, General Development, Inc. ("GDI"). (1) The judgment lien's face value was approximately $66,000. Holta purchased the judgment lien from Kellicut for $500. Holta then filed a proof of claim against the bankruptcy estate of Eugene and Patricia Brooks. Kellicut learned that funds were being held for GDI's creditors in the Brooks' bankruptcy proceeding. Kellicut intervened and filed a third-party complaint against Holta for breach of contract, misrepresentation, and fraud. Kellicut sought rescission of the contract by which he had sold his judgment lien to Holta. The parties moved for summary judgment. By order filed 6 ABR 109   TOP   February 24, 1998, United States Bankruptcy Judge MacDonald denied the motions for summary judgment and struck Holta's demand for a jury trial. (2) Judge MacDonald concluded:

Holta's demand for a jury trial is stricken. Holta has filed a proof of claim for $183,728.54 in this case. He has submitted himself to this court's equity jurisdiction and has no right to a jury trial. Lagenkamp v Culp, 492 U.S. 42, 45 (1991). (3)

After a bench trial, the Bankruptcy Court issued a Memorandum Decision on August 11, 1998. (4) The Bankruptcy Court found that Holta had committed fraud, and disallowed Holta's claim. (5) The Bankruptcy Court also ruled in Kellicut's favor, holding that he was entitled to rescission of the agreement by which he had sold his judgment lien to Holta. (6) This appeal followed. The sole issue on appeal is whether the Bankruptcy Court erred in striking Holta's demand for a jury trial.

III. STANDARD OF REVIEW

The district court reviews questions of law decided by the bankruptcy court de novo. In Re Kashani, 190 B.R. 875, 881 (B.A.P. 9th Cir. 1995).

IV. DISCUSSION

In order to have a Seventh Amendment right to a jury trial: (1) there must have been a right to a jury trial for the issues or claims in question in eighteenth century England; (2) the claims or issues must be legal not equitable; and (3) the matter must involve private not public rights. Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 41-42, 109 S. Ct. 2782, 2790 (1989). Filing a proof of claim against a bankruptcy estate subjects one to the bankruptcy court's equitable powers for resolving disputes concerning the allowance and disallowance of claims. Lagenkamp v. Culp, 498 U.S. 42, 44-45, 111 S. Ct. 330, 331-32 (1990). Disputes involving the restructuring of debtor-creditor relationships are equitable in nature. Id. Holta instituted the 6 ABR 110   TOP   underlying action to enforce a claim against the Brooks' bankruptcy estate. Once Holta filed his proof of claim against the estate, he submitted himself to the equitable jurisdiction of the bankruptcy court. Id.

Holta does not disagree with the preceding basic principles. However, Holta contends that his dispute with Kellicut was separate from his claim against the bankruptcy estate, and had "nothing to do with the process of allowance or disallowance of claims, or the restructure of a debtor-creditor relationship." (7) However, Holta cites no authority supporting his arguments. Furthermore, even if one accepted Holta's arguments, he would still not be entitled to a jury trial because Kellicut's claim was for rescission. Rescission is an equitable remedy. (8) No right to a jury trial is recognized for equitable remedies. (9)

V. CONCLUSION

For the foregoing reasons, the Bankruptcy Court's order striking Holta's demand for a jury trial is AFFIRMED.

DATED at Anchorage, Alaska, this 7th day of May 1999.

              JOHN W. SEDWICK
            UNITED STATES DISTRICT JUDGE


1. 6 ABR 108   TOP   The facts set forth here are primarily based on the Bankruptcy Court's Memorandum Decision filed August 11, 1998, which sets forth the undisputed factual circumstances of this dispute in considerable detail, and which is incorporated in this order by reference. See 5 ABR 493 (1998).

2. 6 ABR 109   TOP   Record on Appeal, vol. 5, docket entry 54 at 2.

3. 6 ABR 109   TOP   Id.

4. 6 ABR 109   TOP   See 5 ABR 493 (1998).

5. 6 ABR 109   TOP   Id. at 1, 10-11.

6. 6 ABR 109   TOP   Id.

7. 6 ABR 110   TOP   Reply Brief, docket 13 at 1.

8. 6 ABR 110   TOP   McKeown v. Kinney Shoe Corp., 820 P.2d 1068, 1071 (Alaska 1991).

9. 6 ABR 110   TOP   See, e.g., State v. First National Bank of Anchorage, 660 P.2d 406, 423-24 (Alaska 1982) (holding no right to jury trial exists under state law where only restitution and injunctive relief were sought).