Opinion
No. 03 C 4043
September 19, 2003
MEMORANDUM OPINION AND ORDER
Plaintiff Andrew J. Maxwell, trustee of the bankruptcy estate, brought this action against defendant LeaveLaw.com, Inc. (LeaveLaw) in the United States Bankruptcy Court for the Northern District of Illinois, seeking return of an alleged preference payment Defendant filed a motion to withdraw reference to the bankruptcy court. For the following reasons, defendants' motion is granted.
On April 9, 2003, Maxwell filed his initial complaint against LeaveLaw in the bankruptcy court. Not wanting to concede jurisdiction in the bankruptcy court, defendant simultaneously filed its answer to the complaint, its counterclaims, a demand for a jury trial and this motion to withdraw. In its counterclaims, defendant alleges violations of the Illinois Collection Agency Act and the Illinois Consumer Fraud and Deceptive Business Practices Act, as well as common law fraud. These claims are against Maxwell as trustee, rather than against the bankruptcy estate. LeaveLaw argues that it has the right to a jury trial and that this action must therefore be withdrawn and heard by the district court rather than the bankruptcy court.
"The district court may withdraw, in whole or in part, any case or proceeding referred under this section, on its own motion or on timely motion from any party, for cause shown." 28 U.S.C. § 157(d). A federal bankruptcy court has the power to hold a jury trial only "if designated to exercise such jurisdiction by the district court and with the express consent of all the parties." 28 U.S.C. § 157(e). Because neither party expressed its consent to a jury trial by the bankruptcy court, that court has no authority to conduct such a trial. As plaintiff concedes, if defendant is entitled to a jury trial, we must grant the motion to withdraw.
A defendant in a preference action who has filed a claim against the bankruptcy estate has the constitutional right to a jury trial.Granflnanciera. S.A. v. Nordberg, 492 U.S. 33, 58-59 (1988). If such a defendant files a claim against the estate, it consents to the jurisdiction of the bankruptcy court and waives this rightLangenkamp v. Gulp, 498 U.S. 42, 45 (1990). Plaintiff argues that because defendant filed counterclaims as part of this action, it must have consented to the jurisdiction of the bankruptcy court. Unlike the party in Langenkamp. however, defendant here filed Its claims solely against the trustee, personally, rather than against the estate. Moreover, it was clear when filing its responsive pleadings that defendant did not consent to the jurisdiction of the bankruptcy court Defendant has the right to a jury trial for this action and therefore has the right to withdraw the case to the district court.
Because defendants show cause to withdraw the action, we do not need to decide whether or not this action is a core proceeding. This determination has no effect on whether or not the action may be withdrawn from the bankruptcy court. In re Sevko. Inc., 143 B.R. 114, 115-16 (N.D. Ill. 1992). Further, we do not reach plaintiffs motion to dismiss the counterclaims, to which defendant has not yet responded.
CONCLUSION
For the foregoing reasons, defendant's motion to withdraw reference to the bankruptcy court is granted. Defendant shall respond to the pending motion to dismiss by October 6, 2003, and plaintiff shall reply by October 16, 2003;