## Facts

- Chase & Sanborn Corporation filed for Chapter 11 reorganization in 1983.
- A trustee, Paul C. Nordberg, sued Granfinanciera, S.A. and Medex, Ltda. in federal district court to avoid and recover approximately $1.7 million in alleged fraudulent transfers made within one year before bankruptcy.
- The suit sought recovery of money (plus costs, expenses, interest), not injunctive or other equitable relief.
- The matter was referred to the bankruptcy court as a “core proceeding.”
- Granfinanciera and Medex demanded a jury trial; the bankruptcy judge denied the request.
- After a bench trial, the bankruptcy court rejected actual fraud but entered judgment for the trustee on constructive fraud ($1,500,000 against Granfinanciera; $180,000 against Medex).
- The district court and the Eleventh Circuit affirmed, reasoning that fraudulent conveyance actions in bankruptcy were equitable and that Congress could assign “core” proceedings to bankruptcy judges without juries.
- The defendants had not filed claims against the bankruptcy estate.

## Issues

1. Whether the Seventh Amendment entitles a defendant who has not filed a claim against a bankruptcy estate to a jury trial when the trustee sues to recover an allegedly fraudulent monetary transfer.
2. Whether Congress may eliminate any jury-trial right by classifying fraudulent conveyance actions as “core proceedings” triable in bankruptcy court by a non-Article III judge without a jury.
3. Whether Granfinanciera’s status as a nationalized instrumentality of a foreign government affected any jury-trial entitlement.

## Decision

- The Supreme Court reversed.
- A defendant who has not submitted a claim against the bankruptcy estate has a Seventh Amendment right to a jury trial when sued by the trustee to recover a fraudulent monetary transfer, unless the claim is permissibly assigned to a non-Article III tribunal under the public-rights doctrine.
- Fraudulent conveyance actions seeking money judgments are legal in nature for Seventh Amendment purposes.
- Congress’s “core proceeding” label does not by itself remove the claim from the Seventh Amendment or convert a legal claim into an equitable one.
- The Court declined to decide the foreign-government instrumentality jury-trial argument because it was not properly raised and would alter the parties’ rights under the judgment below.

## Legal Principles

- Seventh Amendment analysis asks (1) whether the action is analogous to an 18th-century action at law or in equity, and (2) whether the remedy sought is legal or equitable; the remedy inquiry is especially important.
- A trustee’s fraudulent conveyance action seeking a money judgment is a legal claim that historically was tried to a jury.
- Bankruptcy’s general equitable character does not extinguish the Seventh Amendment jury right for legal claims.
- Congress may dispense with a jury only where the claim falls within the public-rights category permissibly assigned to non-Article III adjudication.
- A fraudulent transfer action by a trustee against a non-claimant third party is a private-right dispute; it is not converted into a public right merely because it arises in bankruptcy.
- A defendant’s failure to file a proof of claim matters: non-claimants do not invoke the claims-allowance process in a way that subjects them to purely equitable resolution without a jury.

## Conclusion

The Court held that a bankruptcy trustee’s suit against non-claimant defendants to recover an allegedly fraudulent monetary transfer is a private, legal action for which the Seventh Amendment requires a jury trial, and Congress cannot avoid that result solely by designating the action a “core” bankruptcy proceeding.


Granfinanciera, S.A. v. Nordberg, 492 U.S. 33 (1989)