Opinion
No. 3:02-CV-0112-G
June 18, 2002
MEMORANDUM ORDER
Before the court is the motion of plaintiff United States of America ("the government" or "United States") to strike the jury demand of pro se defendant Melvin R. Hassell ("Hassell"). For the reasons stated below, the motion is granted.
I. INTRODUCTION
On January 15, 2002, the United States filed a complaint, pursuant to 26 U.S.C. § 7403, against Hassell, his wife, Nelda J. Hassell, and Summit Christian Academy ("SCA") "to reduce to judgment certain tax assessments, to set aside a fraudulent transfer of certain real property, to foreclose federal tax liens on certain real property, and to receive a judgment for any unpaid tax liability not satisfied by the sale of the property." United States' Complaint ("Complaint") at 1. According to the government, the property in question "was once owned by the Hassells, but was fraudulently transferred by them to [SCA], although the Hassells continue to reside there." United States' Motion to Strike Hassell's Jury Demand and Supporting Brief ("Motion") at 1. On April 29, 2002, Hassell wrote to the Clerk of Court for the Northern District of Texas and requested a jury trial. April 29, 2002 letter of Melvin R. Hassell ("April 29 letter"), attached as Exhibit 1 to Motion. Less than a week later, the government filed the instant motion seeking to strike Hassell's jury demand. Motion at 1.
II. ANALYSIS
The government moves to strike Hassell's jury demand because the cause of action under 26 U.S.C. § 7403 does not specifically convey a right to a jury trial. Id. That statute provides, in part, that "[t]he court shall, after the parties have been duly notified of the action, proceed to adjudicate all matters involved therein and finally determine the merits of all claims to and liens upon the property. . . ." 26 U.S.C. § 7403 (c). In response, Hassell asserts that he has a Seventh Amendment right to a jury trial. Answer to the United States' Motion to Strike Hassell's Jury Demand, and Supporting Brief ("Response") at 1; April 29 letter.
The Seventh Amendment provides that "[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. This guarantee of a jury trial extends to those suits tried in 18th-century courts of law, as opposed to those tried in courts of equity. See Tull v. United States, 481 U.S. 412, 417 (1987). To determine whether a party has a right to a jury trial, the court first examines the nature of the action and "compare[s] the statutory action to 18th-century actions brought in the courts of England prior to the merger of the courts of law and equity." Id. Second, the court examines "the remedy sought" to "determine whether it is legal or equitable in nature." Id. at 418. The second inquiry is "more important" than the first. Id. at 421.
Consistent with this approach, albeit before the Tull decision was rendered, the Fifth Circuit had held that there is no right to a jury trial in an action to foreclose tax liens pursuant to § 7403. See Gefen v. United States, 400 F.2d 476, 478 (5th Cir. 1968) (holding "foreclosure through decree of sale, provided for United States tax liens by I.R.C. § 7403, is sufficiently akin to the historic equity practice to preclude successful contention for a right to jury trial with respect to the ascertainment of the amount of the tax lien as against taxpayer's property and enforcement of the lien by sale"), cert. denied, 393 U.S. 1119 (1969), overruling recognized on other grounds by Barnett v. Internal Revenue Service, 988 F.2d 1449, 1454 n. 10 (5th Cir.), cert. denied, 510 U.S. 990 (1993); see also Federal Deposit Insurance Corporation v. New London Enterprises, Ltd., 619 F.2d 1099, 1103 (5th Cir. 1980) (citing Gefen for the "holding [that] there was no right to a trial by jury in a foreclosure pursuant to a United States tax lien. . . ."); Damsky v. Zavatt, 289 F.2d 46, 53-54 (2nd Cir. 1961) (holding taxpayer is not entitled to a jury trial in a civil action to enforce federal tax liens on real property for unpaid federal income taxes); United States v. Annis, 634 F.2d 1270, 1272 (10th Cir. 1980) (holding no right to a jury trial exists in an action to foreclose tax liens because such an action is equitable in nature).
In this case, the complaint alleges three claims, in separate counts, against the defendants: (1) tax liabilities; (2) liens and foreclosure; and (3) request for a ten percent surcharge. Complaint at 2-10. The government has provided evidence that the Hassells unsuccessfully litigated their federal income taxes that are the subject of this case in the United States Tax Court. See Decision of Judge Arthur L. Nims, III, entered September 20, 1990, attached as Exhibit 2 to Motion. Because this case concerns the enforcement of federal tax liens on real property for unpaid taxes, Hassell has no right to trial by jury. See Gefen, 400 F.2d at 478.
In the complaint, the government states that this is also a suit "to set aside a fraudulent transfer of certain real property. . . ." Complaint at 1; see also Complaint at 7 ("The transfer of the property at 906 Kessler Parkway was made with the intent and purpose to delay and hinder creditors of Mr. and Mrs. Hassell, and more particularly, the United States of America, and is therefore void. The transfer to Summit Christian Academy is void under §§ 24.005 and 24.006 of the Texas Uniform Fraudulent Transfers Act."). In Darnsky, the Second Circuit held that there is no right to a jury trial in an action to set aside fraudulent conveyances because that action was equitable in nature. 289 F.2d at 53. Other courts have also so held. See, e.g., In re Graham, 747 F.2d 1383, 1387-88 (11th Cir. 1984). The Supreme Court, in dicta, appears to have questioned those decisions, see Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 46 n. 5 (1989), and some federal courts have found that the Seventh Amendment requires a jury trial for claims to set aside fraudulent transfers of real property. See, e.g., In re Southeast Connectors, Inc., 113 B.R. 85, 86 (S.D. Fla. 1990). The Third Circuit, however, read Granfinanciera as preserving the understanding that there is no right to a jury trial on the issue of fraudulent conveyances of real property. See In re Pasquariello, 16 F.3d 525, 530 (3rd Cir. i994) (citing numerous cases). Moreover, the Supreme Court has stated that actions under 26 U.S.C. § 7403 to enforce tax liens are by their nature proceedings in equity. United States v. Rodgers, 461 U.S. 677, 708 (1983). Accordingly, because this suit is brought under § 7403 and because there is apparently no established right to jury trial on the issue of the fraudulent transfer of real property, the government's motion to strike is granted to the extent Hassell seeks a jury trial on any claim relating to the fraudulent transfer of the property at 906 Kessler Parkway. See United States v. Cram, No. 2:97-CV-502K, 1998 WL 919871 (D. Utah Dec. 3, 1998) at *4-*5.
III. CONCLUSION
For the reasons discussed above, the government's motion to strike Hassell's jury demand is GRANTED.
SO ORDERED.