UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF KENTUCKY
W.E.C. COAL SALES, INC.
DEBTOR CASE NO. 90-00345
W.E.C. COAL SALES, INC. PLAINTIFF
VS. ADV. NO. 90-0326
CHARLES THOMAS CONLEY,
BLACKHEART MINING, INC. and
DON SOWARDS DEFENDANTS
This matter is before the Court on jury trial demands by the plaintiff and defendants Charles Thomas Conley ("Conley") and Blackheart Mining, Inc. ("Blackheart"). The above-captioned adversary proceeding is characterized in the plaintiff's Verified Complaint as one "to recover money and prosecute a claim by the estate against the Defendants." The plaintiff has alleged that this Court has jurisdiction of this matter pursuant to 28 U.S.C. "'1134" ('1334) and that it is a core proceeding within the meaning of 28 U.S.C. '157. Defendants Conley and Blackheart deny the core nature of the proceeding and allege that it is based on a state law claim.
The record in this case reveals that prior to the filing of its Chapter 11 petition in November 1990, the plaintiff contracted with defendants Conley and Blackheart for coal loading services and with defendant Don Sowards for his employment as a coal blender. The Verified Complaint alleges that these defendants negligently discharged their duties to the plaintiff or, in the alternative, breached their duties of good faith and loyalty, resulting in plaintiff's loss of property in the approximate amount of $1,560,000.00. Defendants Conley and Blackheart have filed claims in the plaintiff's bankruptcy case. Conley and Blackheart filed proofs of claim. Their jury trial demands are therefore disposed of by the Supreme Court's holding in Langenkamp v. Culp, 111 S.Ct. 330 (1990) that creditors who had submitted claims against the debtor's bankruptcy estate had no Seventh Amendment right to a jury trial when sued by the bankruptcy trustee to recover allegedly preferential transfers. The filing of claims brought the creditors within the equitable jurisdiction of the bankruptcy court.
In Langenkamp the Court cited its decision in Granfinanciera, S.A. v. Nordberg, 492 U.S.____, 109 S.Ct. 2782, 2798-2799, 106 L.Ed.2d 26 (1989), wherein it "recognized that by filing a claim against a bankruptcy estate the creditor triggers the process of 'allowance and disallowance of claims', thereby subjecting himself to the bankruptcy court's equitable power." Langenkamp, p. 331.
There is no doubt, therefore, that Conley and Blackheart having brought themselves within the equitable jurisdiction of the bankruptcy court by the filing of claims herein, they are not entitled to a jury trial on the plaintiff's Complaint.
As concerns the plaintiff, similar reasoning has been applied to deny a jury trial demand by a debtor as was employed by the Langenkamp court. In In re Lion Country Safari, Inc. California, 124 B.R. 566 (Bkrtcy.C.D.Cal. 1991), the court held that a Chapter 11 debtor was not entitled to a jury trial on its cross claim in an adversary proceeding because it had voluntarily submitted itself to the equitable jurisdiction of the bankruptcy court by filing its bankruptcy petition. The court found that the voluntary act of filing a bankruptcy petition triggered the process of allowing or disallowing claims. In the case at bar, the plaintiff has not only filed a bankruptcy petition, it chose the bankruptcy court as the forum for this adversary proceeding. This Court is of the opinion that the plaintiff has brought itself within the equitable jurisdiction of the bankruptcy court, and is therefore not entitled to a jury trial.
By the Court -
Bill V. Seillor, Esq.
John P. Reisz, Esq.
Kevin M. Callihan, Esq.