AUDREY R. EVANS, Bankruptcy Judge.
Now before the Court is a Demand for Trial by Jury filed by the Defendant, Bank of America, N.A. ("BANA"). (Dkt. No. 59). The Plaintiff, Stephanie A. Calderon, filed a voluntary Chapter 13 bankruptcy petition on April 21, 2011. She then filed an adversary complaint against various entities, alleging that they had willfully violated the automatic stay. The Plaintiff amended her complaint on January 23, 2013, to name BANA as a defendant. She seeks actual damages, punitive damages, and attorney's fees under 11 U.S.C. § 362(k)(1).
On April 4, 2013, the Defendant moved to withdraw the reference to the District Court. The Defendant maintained that because it requested a jury trial and did not consent to the Bankruptcy Court conducting one pursuant to 28 U.S.C. § 157(e), mandatory withdrawal of the reference was required under subsection 157(d). On May 2, 2013, the District Court entered an order, concluding that withdrawal of the reference was discretionary and declining to withdraw the reference until the Bankruptcy Court determined whether the Defendant was entitled to a jury trial. Stephanie A. Calderon v. Bank of Am. Corp., No. 4:13MC00005 KGB (E.D.Ark. May 2, 2012).
Because bankruptcy courts are Article I courts (or legislative courts) under the United States Constitution, Congress may proscribe the cases and circumstances in which a bankruptcy judge may conduct a jury trial.
28 U.S.C. § 157(e); see also Fed. R. Bankr.P. 9015(b). The District Court for the Eastern District of Arkansas has authorized the Bankruptcy Court to conduct jury trials. See E.D. Ark., Gen. Order No. 44 (effect. Nov. 13, 1995); see also Loc. Bankr.R. 9015-1. However, the Defendant has not consented to having the
The Defendant argues that it is entitled to a jury trial on the Plaintiff's § 362(k)(1) action under the Seventh Amendment of the United States Constitution. In its Brief in Support of its Motion to Withdraw the Reference of the Adversary Proceeding, the Defendant contends that it is constitutionally guaranteed a right to jury trial because the Plaintiff's action is a legal action, the action does not assert a "public right," and the Defendant has not filed a proof of claim in the Plaintiff's bankruptcy case. (Dkt. No. 71). The Plaintiff maintains that a § 362(k)(1) action is an equitable action or, alternatively, that her action asserts a "public right" which does not entitle the Defendant to a jury trial.
The right to a jury trial is preserved by the Seventh Amendment to the Constitution of the United States. The Seventh Amendment provides "[i]n suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved...." U.S. Const. amend. VII. "The Seventh Amendment protects a litigant's right to a jury trial only if a cause of action is legal in nature and involves a matter of `private right.'" Granfinanciera v. Nordberg, 492 U.S. 33, 42 n. 4, 109 S.Ct. 2782, 2790 n. 4, 106 L.Ed.2d 26 (1989). In Granfinanciera, the Supreme Court set forth the following analysis to determine whether a party has the right to a jury trial under the Seventh Amendment:
492 U.S. at 42, 109 S.Ct. at 2790 (internal quotations and citations omitted). "If, on balance, these two factors indicate that a party is entitled to a jury trial under the Seventh Amendment" the court must then determine if the claim asserts a "public" as opposed to a "private" right. 492 U.S. at 42, 109 S.Ct. at 2790, n. 4. Under the public rights analysis, a court "must decide whether Congress may assign and has assigned resolution of the relevant claim to a non-Article III adjudicative body that does not use a jury as factfinder." 492 U.S. at 42, 109 S.Ct. at 2790. Accordingly, after analyzing whether an action is one at common law (i.e., whether it is based on 18th Century English law and is legal as opposed to equitable in nature), the Court must then determine whether the action asserts a private or a public right.
The Defendant has cited no case law or other evidence to support the contention that there was anything resembling an automatic stay — let alone an action for its violation — in eighteenth century England. This is not surprising. At least one court has determined that a § 362(k)(1) action lacks a historical analogue in English common law. Gecker v. Gierczyk (In re Glenn), 359 B.R. 200, 203 (Bankr.N.D.Ill. 2006), appeal denied, No. ADV. 04A4493, 2006 WL 2252529 (N.D.Ill. Aug. 3, 2006). Moreover, a review of the history of bankruptcy law in the United States indicates that the concept of an automatic stay and an action for its violation are relatively new. The automatic stay only came into
The Defendant's argument that it is constitutionally entitled to a jury trial is largely based on the second prong of the Granfinanciera analysis. Specifically, the Defendant contends that because the Plaintiff seeks actual and punitive damages (i.e., money damages), the Plaintiff's action seeks "legal" rather than "equitable" relief.
"Generally, an action for money damages was `the traditional form of relief offered in the courts of law.'" Chauffeurs, Teamsters & Helpers, Local No. 391 v. Terry, 494 U.S. 558, 570, 110 S.Ct. 1339, 1347, 108 L.Ed.2d 519 (1990) (quoting Curtis v. Loether, 415 U.S. 189, 196, 94 S.Ct. 1005, 1009, 39 L.Ed.2d 260 (1974)). Additionally, "[r]emedies intended to punish culpable individuals, as opposed to those intended simply to extract compensation or restore the status quo, were issued by courts of law, not courts of equity." Tull v. United States, 481 U.S. 412, 422, 107 S.Ct. 1831, 1838, 95 L.Ed.2d 365 (1987). Thus, for example, the Supreme Court held in Curtis v. Loether, that actual and punitive damages sought for a statutory violation of the Civil Rights Act of 1968, was a request for legal rather than equitable relief. 415 U.S. 189, 196, 94 S.Ct. 1005, 1009, 39 L.Ed.2d 260 (1974).
However, the Supreme Court has never "go[ne][so] far as to say that any award of monetary relief must necessarily be `legal' relief." Curtis, 415 U.S. at 196, 94 S.Ct. at 1009. "First, a monetary award may be an equitable remedy if the award is `restitutionary' in nature, `such as in actions for disgorgement of improper profits.'" Hopkins v. Saunders, 199 F.3d 968, 977 (8th Cir.1999) (quoting Terry, 494 U.S. at 570, 110 S.Ct. at 1348); see also Great-W. Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 229-30, 122 S.Ct. 708, 723, 151 L.Ed.2d 635 (2002) (Ginsburg, J., dissenting) (collecting cases). "Second, a monetary award may be deemed an equitable remedy if the award is `incidental to or intertwined with injunctive relief.'" Hopkins, 199 F.3d at 977 (quoting Terry, 494 U.S. at 571, 110 S.Ct. at 1348). The Plaintiff clearly seeks monetary relief which renders her action legal in nature
Neither the actual damages nor the punitive damages sought by the Plaintiff can be properly characterized as restitutionary. A restitutionary award returns a defendant's wrongful gains to the plaintiff. See Great-W. Life, 534 U.S. at 230, 122 S.Ct. 708 (Ginsburg, J., dissenting); see also Bentley v. Arlee Home Fashions, Inc., 861 F.Supp. 65, 68 (E.D.Ark.1994) ("The main purpose of a damages award is some type of compensation for Plaintiff's loss — contrasted with restitution where the purpose is to deprive the defendant of his unjust gain."). Here, the Plaintiff's claimed actual damages are legal fees and medical expenses associated with the Defendant's alleged postpetition collection activities. These alleged damages are losses rather than wrongful gains obtained by the Defendant. Moreover, punitive damages are not restitutionary because they are designed to punish a defendant for its offense and to deter future conduct. State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 416, 123 S.Ct. 1513, 1519, 155 L.Ed.2d 585 (2003).
The second exception that the Supreme Court outlined in Terry might apply if the Plaintiff's requested relief can be characterized as "incidental to or intertwined with injunctive relief." The automatic stay has been characterized as a statutory injunction. Aiello v. Providian Fin. Corp., 239 F.3d 876, 878 (7th Cir.2001); see also Carver v. Carver, 954 F.2d 1573, 1578 (11th Cir.1992) ("[T]he automatic stay is essentially a court-ordered injunction...."); Lange v. Schropp (In re Brook Valley VII, Joint Venture), 496 F.3d 892, 899 (8th Cir.2007) ("When a bankruptcy court lifts the automatic stay, it merely removes an injunction barring creditors from bringing suit against the debtor."). Because a § 362(k)(1) action is a means of enforcing an injunction and vindicating the authority of the Bankruptcy Code, a stay violation action is arguably "intertwined" with injunctive relief. See In re Hookup, L.L.C., No. 12-33202-KRH, 2012 WL 4904538, *4 (Bankr.E.D.Va. Oct. 15, 2012) (Section 362(k)(1) action is an "equitable proceeding ... to enforce the Bankruptcy Code's statutory injunction that protects and preserves the bankruptcy estate" which does not give rise to a Seventh Amendment right of trial by jury).
Under the public rights analysis, the Court must initially determine whether Congress "has assigned" adjudication of § 362(k)(1) actions to the bankruptcy court. Granfinanciera, 492 U.S. at 42, 109 S.Ct. at 2790. If so, the Court must then decide whether Congress may make such an assignment. Id. The validity of the Congressional assignment turns on whether a § 362(k)(1) action asserts a "public right."
By statute, it appears that Congress has implicitly assigned adjudication of § 362(k)(1) actions to the bankruptcy court. Section 157(b)(1) of the Judicial Code provides that a bankruptcy court may enter final orders and judgments in core proceedings. Subsection (b)(2)(G) says that "[c]ore proceedings include, but are not limited to — motions to terminate, annul, or modify the automatic stay." Stay violation actions are not listed, but the omission is insignificant. In re Glenn, 359 B.R. at 203. The prefatory language "not limited to" indicates that subsection (b)(2)(G) does not purport to list the exclusive core proceedings involving the automatic stay. "A proceeding under section 362( [k] ) is a proceeding `arising under title 11' and is a core proceeding" under § 157 of the Judicial Code. Williams v. Gruber (In re Williams), 196 B.R. 120, 121 (Bankr.E.D.Ark.1996); see also MBNA Am. Bank, N.A. v. Hill, 436 F.3d 104, 108-09 (2d Cir.2006) ("Claims that clearly invoke substantive rights created by federal bankruptcy law necessarily arise under Title 11 and are deemed core proceedings."); 3 COLLIER ON BANKRUPTCY ¶ 362.11[3] at 362126126.1 (Alan N. Resnick & Henry J. Sommer eds., 15th ed. rev. 2005) ("[A]n action seeking a remedy under section 362(k) is a core proceeding that may be decided by the bankruptcy court.").
The Supreme Court has cautioned that the mere designation of a claim as "core" cannot strip a defendant of the right to a jury trial. In Granfinanciera, the Court held that although the recovery of fraudulent transfers was listed as a core proceeding under § 157(b)(2)(H) of the Judicial Code, a defendant that had not filed a proof of claim was still guaranteed a jury trial when sued by the trustee. 492 U.S. at 36, 109 S.Ct. at 2787. However, as noted in In re Glenn:
359 B.R. at 203 (Bankr.N.D.Ill.2006) (citing Halas v. Platek, 239 B.R. 784, 792 (N.D.Ill. 1999)); see also E. Equip. & Servs. Corp. v. Factory Point Nat'l Bank, 236 F.3d 117, 120-21 (2d Cir.2001) (holding state court tort actions to enforce the automatic stay were preempted by the comprehensive provisions of the Code); MSR Exploration, Ltd. v. Meridian Oil, Inc., 74 F.3d 910, 913-16 (9th Cir.1996); Startec Global Commc'ns Corp. v. Videsh Sanchar Nigam Ltd. (In re Startec Global Commc'ns Corp.), 292 B.R. 246, 254 (Bankr.D.Md.
The last question — whether Congress may assign adjudication of § 362(k)(1) actions to the bankruptcy court — requires a determination of whether an action for a violation of the automatic stay asserts a "public right." A public right may be asserted in two types of cases: (a) cases where the Federal Government is a party, and (b) cases between private parties. Granfinanciera, 492 U.S. at 54, 109 S.Ct. at 2797. In Granfinanciera, the Court stated that in cases between private parties, a statutory cause of action asserts a "public right" where:
492 U.S. at 54, 109 S.Ct. at 2797 (quotations omitted). More recently, in Stern v. Marshall, the Court noted that "public rights" disputes between private parties are limited:
___ U.S. ___, 131 S.Ct. 2594, 2613, 180 L.Ed.2d 475 (2011), reh'g denied, ___ U.S. ___, 132 S.Ct. 56, 180 L.Ed.2d 924 (2011); see id. at 2618 ("[T]he question is whether the action at issue stems from the bankruptcy itself or would necessarily be resolved in the claims allowance process.").
Applying the Supreme Court's varied public rights formulations, the Court joins those courts which have held that the rights created and vindicated by § 362(k)(1) "are so fundamental to our bankruptcy system ... that they should, therefore, be viewed as `public rights'...." Miranda v. Gonzalez (In re Gonzalez), No. 02-05485 BKT, 2010 WL 3395677, *3 (Bankr.D.P.R. Aug. 23, 2010) (quoting In re Glenn, 359 B.R. at 204); see also Turner v. First Cmty. Credit Union (In re Turner), 462 B.R. 214, 221 (Bankr. S.D.Tex.2011); In re Valley Steel, 147 B.R. at 192 (section 362(k)(1) actions involve public rights because "the application of the automatic stay to creditors is essential to the functioning of the bankruptcy process"); Gordon v. Friedman's Inc. (In re Gordon), 209 B.R. 414, 417 (Bankr. N.D.Miss.1997) (section 362(k)(1) actions "fit within the expanded definition of public rights as set forth in the Granfinanciera decision"). As stated by the Seventh Circuit:
Price v. Rochford, 947 F.2d 829, 831 (7th Cir.1991) (citing S.Rep. No. 95-989, 95th Cong., 2d Sess. 5455 (1978), reprinted in 1978 U.S.C.C.A.N. 5787, 5840-41). Consequently, § 362(k)(1)'s purpose "is not to redress tort violations but [rather] to protect
Having concluded that the Defendant is not entitled to a jury trial because a § 362(k)(1) action asserts a "public right," the Court now addresses the Defendant's argument that it is entitled to a jury trial under Granfinanciera and Langenkamp v. Culp solely because it has not filed a proof of claim. Generally, a creditor who files a claim against the estate "triggers the process of `allowance and disallowance of claims,' thereby subjecting himself to the bankruptcy court's equitable power" and is not entitled to a jury trial. Langenkamp v. Culp, 498 U.S. 42, 44, 111 S.Ct. 330, 112 L.Ed.2d 343 (1990) (quoting Granfinanciera, 492 U.S. at 58-59 & n. 14, 109 S.Ct. at 2799-2800 & n. 14). In Granfinanciera, the absence of filed proof of claims by the defendants was relevant to the Supreme Court's jury trial analysis because the fraudulent transfer actions brought by the trustee did not involve the adjudication of public rights. Consistent with Granfinanciera, the Supreme Court in Langenkamp held that defendants sued by the trustee for allegedly receiving preferential transfers were not entitled to a jury trial because they had filed proofs of claim. 498 U.S. at 45, 111 S.Ct. at 331. In dicta, the Court noted that a defendant in a preference action who does not file a proof of claim would be entitled to a jury trial. Id. The Court said that a preference "amounts to a legal action to recover a monetary transfer." Id. Notably, the Court did not address whether a preference action asserted a public right, under the third prong of the Granfinanciera analysis.
Finally, the Court notes that the allegations are that the Defendant willfully violated the automatic stay which implies that the Defendant had knowledge of the bankruptcy, and nevertheless, intentionally tried to collect a debt from the Plaintiff-Debtor. Knaus v. Concordia Lumber Co. (In re Knaus), 889 F.2d 773, 775 (8th Cir.1989) ("A willful violation of the automatic stay occurs when the creditor acts deliberately with knowledge of the bankruptcy petition.").
In summary, the Court finds that the Defendant is not entitled to a trial by jury under the Seventh Amendment. Applying the Seventh Amendment jury trial analysis set forth in Granfinanciera, the Court concludes that a § 362(k)(1) action does not have a historical analogue in eighteenth century England. Under the second prong of the Granfinanciera analysis, a § 362(k)(1) action may seek legal as opposed to equitable relief, but the Court need not resolve this close question because the Court concludes that a stay violation action under § 362(k)(1) asserts a public right. A § 362(k)(1) action is so fundamental to the enforcement of the automatic stay — one of the central protections provided by the Bankruptcy Code —
Accordingly, it is hereby