MEMORANDUM AND ORDER
I. Background
Thе issue presented is whether the bankruptcy court should hold a jury trial in a case alleging a preferential transfer and a conversion. The debtor’s causes of actions arose in connection with its purchase of a restaurant that was subsequently damaged by fire. Both the debtor and the defendants were listed as beneficiaries of an insurance policy covering the restaurant building. 1 The insurance company issued a check for $156,163.97 under that policy. The debtor and the defendants endorsed the check and the defendаnts kept the proceeds. Thereafter the debtor filed a Chapter 11 petition and a complaint in this Court alleging that the defendants’ retention of the proceeds was both an avoidable preference under 11 U.S.C. § 547(b) and a conversion under state cоmmon law. The debtor now seeks a jury trial on those issues. The defendants have opposed the debtor’s jury trial demand.
II. Preference and Jury Trial
An action seeking to avoid or recover a preferential transfer is a core proceeding under 28 U.S.C. § 157(b)(2)(F). 2 The bankruptcy court may enter а final judgment in all core proceedings. 28 U.S.C. § 157(b)(1). Therefore, this Court has the power to enter a final judgment on whether the defendants here received a preference. As a result, this Court clearly may rule on whether a jury trial on that issued is permitted. 3
The right to a jury trial in fedеral court derives from the Seventh Amendment to the United States Constitution, a federal statute or a state constitution or statute. Fed.R.Civ.P. 38(a); Bankruptcy Rule 9015(a);
Matter of Hendon Pools of Michigan, Inc.,
The Sevеnth Amendment provides a right to a jury trial only for “[s]uits at common law where the value in controver
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sy shall exceed twenty dollars ...” Obviously, the United States Constitution governs in bankruptcy proceedings as in other kinds of cases. Thus, if the debtor (who obviously seeks to recover in excess of $20.00) could have sued to recover the alleged preference at common law, the debt- or would had a right to a jury trial in this proceeding as well. The problem is there was no right at common law for a debtor or creditor to sue to recover а preference. Instead at common law a debtor had a right to prefer any creditor it chose. It is only under the Bankruptcy Code that preferences are recoverable as such.
5
Because there was no common law preferencе action, there obviously was no common law right to a jury trial in actions to avoid preferential transfers. Thus the debtor has no Seventh Amendment right to have the preference claim resolved by a jury.
See In re Financial Partners, Ltd.,
¶ 70,805 (CCH) at 87,887, 87,888 (Bankr.N.D.Ill.1985)
citing In re Carriero,
In its consideration of similar jury right problems, the Supreme Court has tended to analyze the Seventh Amendment right to a jury trial by distinguishing between legal claims, which seek money damages, and equitable claims, which seek the exercise of a court’s equitable jurisdiction.
6
See e.g., Dairy Queen, Inc. v. Wood,
An action to avoid or recover a preference is a core proceeding that “is not an action seeking damages for an act complained of, but rather, seeks the return of the res for a more equitable distribution.”
In re Carriero,
The fact that the debtor seeks to recover money in this preference proceeding does not change the nature of the action to one for a legal remedy. The debtor is not rеally seeking damages for an injury. Instead the debtor by pursuing a preference action is seeking to recover a sum of money improperly paid to the creditor in Bankruptcy Code terms.
See Katchen v. Landy,
For all of the foregoing reasons, it is clear to the Court that the debtor is not entitled to a jury trial on the preference count.
III. Conversion and Jury Trial
An action for state law conversion is not specifically listed as a core proceeding under 28 U.S.C. § 157(b)(2). However, the list of core proceedings in the Judicial Code is not exclusive. In general, any matter that arises directly in a bankruptcy case under bankruptcy law is a core proceeding; any matter that arises under nonbankrupt-cy law and happens to be оf issue in a bankruptcy case merely because one of the parties to the dispute is the debtor in the bankruptcy case usually is a noncore proceeding.
See In re Yagow,
The debtor’s conversion action would be congnizable under state law had it not filed bankruptcy. This would not hold true for the debtor’s preference action, which is strictly a creature of § 547 of the Bankruptcy Code. The conversion action here, although noncore, is a “related
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proceeding,” related to the debtor’s bankruptcy case because
inter alia
any recovery would inure to the benefit of the debt- or’s creditors.
See Matter of Boughton,
This limitation on the jurisdiction that this Court may exercise over the non-core conversion count becomes particularly significant when considered in conjunction with the debtor’s demand for a jury trial on that count. The first question is whether the debtor has a jury trial right on the conversion count. Despite the fact that the conversion count is noncore, the issue of jury trial right should first be resolved by this Court. Bankruptcy Rule 9015(b)(3). As stated earlier, the Seventh Amendment guarantees a jury trial for common law actions. The debtor’s state law conversion claim is such an action. The debtor has preserved its right to a jury trial by making a timely demand in accordance with Bankruptcy Rule 9015(b). It therefore is entitled to a jury trial on the conversion count by virtue of the Seventh Amendment and Bankruptcy Rule 9015(a).
Accord In re Atlantic Energy, Inc.,
The final question is whether the bankruptcy court or the district court is the appropriate forum to hold the jury trial. Because the debtor’s adversary complaint is a noncore proceeding, the bankruptcy court is unable to enter a final judgment without the consent of the parties. 28 U.S.C. § 157(c)(1);
In re U.S. Bedding Co., Inc.,
It would be impractical and make no sense in terms of judicial economy for the bankruptcy court to hold a jury trial in a noncore proceeding where the parties have not given their consent to the bankruptcy court’s exercise of jurisdiction. The likelihood of a second jury trial in the district court is great. The waste of time and resources in having the bankruptcy court conduct its own jury trial in such circumstances is obvious. The vast majority of courts that have considered the question have agreed with this conclusion.
See Macon Prestressed Concrete Co. v. Duke,
Notes
. This Court previously found that these defendants were not entitled to the insurance proceeds paid on a policy covering the restaurant’s contents due to a defect in the perfection of a claimed security interest in the contents.
See Matter of Reda,
. It is for the bankruptcy court to detеrmine in the first instance if a matter is a core proceeding. 28 U.S.C. § 157(b)(3).
. Bankruptcy Rule 9015(b)(3) provides that the bankruptcy court may determine whether there is a right to a jury trial. The Bankruptcy Amendments and Federal Judgeship Act (“BAFJA") amendments do not invalidate this Rule.
Cf. In re Atlantic Energy, Inc.,
. 28 U.S.C. § 1480, the predecessоr to § 1411, provided that "this chapter and title 11 do not affect the 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_” Section 1411 provides that "... 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 tort claim." Courts interpreting both of these statutes have found, in part based on legislative statements that § 1411 inadvertently omitted the language in § 1480, that § 1411 supplements rather thаn limits a party’s right to a jury trial as it existed under § 1480.
See In re Energy Resources Co., Inc.,
.
In re Carriero,
. The former distinction for purposes of determining a jury trial right between summary proceedings (no jury right) and plenary proceedings (jmy right) is inapplicable because the Bankruptcy Code abolished these concepts as grounds for jurisdiction.
In re Energy Resources Co., Inc.,
. The expeditious and cost-effective administration of the bankruptcy courts would become jeopardized if routine preference actions such as this one would necessitate jury trials.
In re Best Pack Seafood, Inc.,
. Each of the courts that has allowed a jury trial demand in a preference action relied on the Supremе Court’s decision in
Schoenthal v. Irving Trust Co.,
. Although this reasoning was used by the Energy Resources court to describe an action to recover a fraudulent conveyance, the analysis is equally applicable to an action to avoid a preference. Both are attempts by debtors or trustees to recover money or property which the Bankruptcy Code deems to have been inequitably transferred by the debtor.