MEMORANDUM
Before the Court are Motions (two) to Strike Defendant’s claims for a jury trial in this adversary proceeding. The debtor’s complaint, by way of factual background, alleges that Richard Rosen (“Rosen”), was formerly president and a director of Erco. During his tenure, Erco had advanced Ro-sen over $600,000 in addition to his salary. In December 1982, immediately prior to the filing, the Board of Directors of Erco voted to accept an agreement whereby Rosen would be discharged as president of Erco; his debt to Erco would be discharged; Ro-sen would assume Erco’s obligations to Texen (Erco’s subsidiary); Rosen would receive 80% of the stock in Texen; and certain liens filed by Texen against Erco’s property would be discharged. The Complaint alleges that formal acceptance of this agreement by Erco was subject to approval of the chief executive officer, Alio J. Buselli, and that Buselli would not execute such agreement without the approval of Erco’s major creditors and investors. It is further alleged that Rosen implemented portions of this Agreement in January of 1983 by causing it to be executed by another officer on behalf of Erco. Rosen caused 80% of Texen stock to be transferred to himself. He still possesses 80% of Texen stock and is exercising control over Texen. Erco’s claims against Rosen for more than $600,000 in advances were assigned to Tex-en.
Count I of the Complaint seeks a determination that the purported agreement between Erco and Rosen is invalid because it was entered into without authority and contrary to express conditions, and seeks turnover of Texen stock to Erco. Count 2 of the Complaint seeks to avoid Erco’s transfer of stock in Texen to Rosen as a fraudulent transfer on the ground that it was unsupported by fair consideration 1 and requests reconveyance of the stock. Count 3 actually states two separate claims. It seeks to set aside the assignment of Erco’s claims against Rosen to Texen as a preferential transfer pursuant to 11 U.S.C. § 547 and to avoid liens Texen filed against Erco properties between November 1982 and January 1983 as preferential transfers.
Texen’s Answer and Rosen’s Answer are virtually identical in all material respects. They answer count one by asserting that the agreement was not subject to conditions and is valid. In response to count two, they admit the Texen stock has not been surrendered. In response to count *281 three the defendants admit that Erco assigned to Texen its claim against Rosen.
As affirmative defenses Rosen and Tex-en assert that the Bankruptcy Court has no jurisdiction to determine this controversy. Rosen asserts that if any determination is made concerning the so-called “advance account”, he is entitled to a credit of $40,000.
DISCUSSION
At the outset, it is important to emphasize that this proceeding does not involve the question of whether the Bankruptcy Court has the power to conduct a jury trial, which is the subject of dispute in light of the 1984 amendments.
Compare In re Smith-Douglass, Inc.
Nothing in the Bankruptcy Code expands or diminishes a litigant’s right to a jury trial under the seventh amendment to the United States Constitution, any guarantee under applicable State Constitution, or under any applicable statute. 2 The Bankruptcy Court is the appropriate tribunal for determining whether there is a right to a trial by jury of issues for which a jury trial is demanded. Bankruptcy Rule 9016(b)(3) (1983).
In deciding whether a litigant has the right to a jury trial in a bankruptcy proceeding some courts analyze whether the action in question would have been a summary proceeding (requiring no jury trial) or a plenary proceeding (requiring a jury trial) under the Bankruptcy Act of 1898.
See, e.g., In re Portage Associates, Inc.,
The seventh amendment of the United States Constitution preserves the right to a jury trial “[in] suits at common law.” The Supreme Court in discussing the right to a jury trial has distinguished between legal claims, those seeking a judgment for money damages, and claims which seek the exercise of a court’s equitable jurisdiction.
See, e.g., Dairy Queen, Inc. v. Wood,
It is now firmly established that an action to avoid a fraudulent conveyance is purely equitable in nature and does not require a jury trial even when an alternative claim for monetary relief is made.
E.g., In re Graham,
Whether there is a right to a jury trial in a preference action is less clearly answered. The Supreme Court in
Schoenthal v. Irving Trust,
“... [I]n actions sounding in account and contract there is a right to a jury trial under the seventh amendment to the Constitution.”
Matter of Kakolewski,
Some actions involving contract disputes are inappropriate for trial by jury. Generally, suits for recission or reformation .are traditionally considered equitable because the plaintiff asks that the contract
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be rewritten as opposed to enforcement of the contract.
E.g., Lulling v. Barnaby’s Family Inns Inc.,
In the present case, the pleadings on file do not raise issues of a legal nature so as to require trial by jury. Count one of the Complaint, although confusing because it contains allegations raising multiple legal issues, basically seeks a declaratory judgment that Rosen’s implementation of the proposed agreement to obtain Texen stock and to forgive Erco’s claims against him were ultra vires and void because the appropriate corporate authorities did not approve the agreement. The relief sought in this count is equitable in that it seeks to cancel a purported agreement. Count one is not an action for breach of contract, but rather an action to void an alleged contract. Count two of the complaint seeks simply to avoid the transfer by Erco of 80% of the stock in Texen as a fraudulent transfer, and seeks return of the stock. This action is purely equitable in nature. Count three of the complaint seeks to avoid liens recorded by Texen against properties of Erco and to avoid assignments to Texen of Erco’s claim against Rosen on the ground that these transfers constituted voidable preferences; since the request is for avoidance of liens, it is an equitable claim.
The prayers for relief support the conclusion that all three counts arise in equity. The plaintiff requests a preliminary injunction enjoining defendants from transferring Texen stock or from paying Rosen without Erco’s approval, seeks an order that Rosen turnover the Texen stock, seeks an order that Texen relinquish all claims against Rosen to Erco on the ground that assignment of such claims was a preferential transfer, and seeks an order setting aside Texen’s liens in Erco’s oil properties. Finally the applicant seeks “further relief as may be just and proper”. Nowhere in the complaint is there any request for relief other than equitable in nature.
The defendant’s Answers do not raise legal issues requiring a jury trial. The Answers contend that the agreement was properly executed, admit the advances by Erco to Rosen, admit that the stock has not been surrendered, and seek a credit in favor of Rosen on any claim against Rosen transferred back to Erco. The request for a credit does not alter the equitable nature of the claim.
In summary, the case turns on whether the Court should exercise its equitable powers of avoidance and turnover. The right to a jury trial does not exist in this case.
For these reasons the Motion to Strike Defendants’ Demand for Júry Trial is allowed.
Notes
. The debtor does not specify under which statute it is proceeding with respect to this Court. It appears that the debtor could assert its cause of action in this Court under 11 U.S.C. § 548 or pursuant to M.G.L. c. 109A § 7, through 11 U.S.C. § 544.
. This remains true even though the 1984 amendments omit the saving language of the now repealed provision of the Code. Whereas former 28 U.S.C. § 1480 provided: "This chapter and title 11 do not affect any right to a trial by jury in a case under title 11 or in a proceeding arising under title 11 or arising in or related to a case under title 11 ...”, the new statute merely provides: "... this chapter and title 11 do not affect any right to a trial by jury that an individual has under applicable nonbankruptcy law with regard to a personal injury or wrongful death for a claim.” 28 U.S.C. § 1411. The leislative leaders responsible for drafting amendments have made clear that despite the inadvertent omission of the general preservation of the right to a jury trial, the right to a jury trial remains unaffected by the Bankruptcy Code. See Statement of Sen. Dennis DeConcini, III ABI News Letter No. 3, at p. 3 (Winter 1984/1985).