Jerry Namba, Chapter 7 Trustee v. Mahmood Jafroodi and Michael Kaylor, in His Capacity as Trustee of the Jafroodi Private Retirement Trust Plan Dated April 6th, 2018; Jerry Namba, Chapter 7 Trustee v. Vahid Jafroodi and Azar Jafroodi

Summary

The United States Bankruptcy Court for the Central District of California considers whether Mahmood Jafroodi and Michael Kaylor preserved their Seventh Amendment right to a jury trial on the trustee’s fraudulent-transfer and related avoidance claims. The court rejects the trustee’s arguments that the defendants waived the jury-trial right by failing to seek prompt withdrawal of the reference or that a prior district-court order denying withdrawal precludes a jury trial. The court concludes that the proceeding should be transferred to the district court for a jury trial on the avoidance actions and for further adjudication of the remaining claims.

Holdings

1. A party that timely and properly demands a jury trial under Federal Rule of Civil Procedure 38(b) and Federal Rule of Bankruptcy Procedure 9015 does not waive the Seventh Amendment jury-trial right merely by failing to immediately seek withdrawal of the bankruptcy reference.
2. The district court's prior denial of withdrawal did not extinguish defendants' timely asserted Seventh Amendment jury-trial rights.
3. Because pretrial matters were complete and Jafroodi and Kaylor retained their jury-trial rights, the proceeding should be transferred to the district court for a jury trial on the fraudulent-transfer claims and for determination of how to adjudicate the remaining claims.

Questions Presented

1. Whether defendants who timely demand a jury trial waive their Seventh Amendment rights by failing to promptly seek withdrawal of the reference to the bankruptcy court.
2. Whether the district court's prior denial of a motion to withdraw the reference extinguished defendants' timely asserted jury-trial rights.
3. Whether the bankruptcy court should transfer the proceeding to the district court for a jury trial on the fraudulent-transfer claims.

Disposition

other