Lysyy v. Deutsche Bank National Trust Co

Summary

In Lysyy v. Deutsche Bank National Trust Co., ___ F.4th. ___ (W.D. Wash., May 27, 2025) (“Lysyy”), the United States District Court for the Western District of Washington (the “District Court”) granted the motion of the defendant (the “Defendant”) to strike the jury demand of the plaintiff (the “Plaintiff”) for violation of the automatic stay under Bankruptcy Code § 362(k) and to quiet title on the grounds that both were claims in equity for which the Seventh Amendment of the United States Constitution (the “Seventh Amendment”) does not guarantee a jury trial in federal court. 

Lysyy can be found here. 

Facts

The Defendant was a lender with a lien on the Plaintiff’s property.  The Plaintiff filed bankruptcy.  Because of Plaintiff’s failure to give the Defendant proper notice of the bankruptcy, the Defendant foreclosed on the property during the bankruptcy case.  Ultimately, the bankruptcy case was dismissed.  The Plaintiff then sued the Defendant in Washington state court, making a number of claims.  Of these, two were for violation of the stay under § 362(k) and quiet title.  For the former, the Plaintiff sought monetary damages.  The Plaintiff demanded  a jury trial.  The Defendant removed the action to the federal District Court.  Upon the Defendant’s motion, the District Court dismissed all the causes of action except for the § 362(k) and quiet title claims.  The Defendant then moved to strike the jury trial demand for those causes of action.  The Plaintiff challenged the motion on the grounds that the Seventh Amendment entitled her to jury trial.  The Defendant opposed.  The District Court granted the motion, striking the jury demand. 

Reasoning

The District Court first granted the motion regarding the § 362(k) claim.  It explained that the Seventh Amendment preserves the right to a jury trial in claims at common law.  According to the Supreme Court’s decision in Granfinanciera v. Nordberg, 492 U.S. 33, 42 n.4 (1989), a party has a right to a jury trial only for claims at law that involve a “private right”.  To determine whether there is a jury trial right for violation of a statute, the court must first determine whether the claim is analgous to a claim at law or in equity under English law prior to the merger of law and equity.  Next, if it is legal in nature, then there is a jury trial right if the claim involves a private right, but not if it involves a public right.  (Id.)  The District Court then determined, based on precedent, that seeking relief under § 362(k) involves a public right because the automatic stay is an eminent feature of the Bankruptcy Code system.  With respect to the quiet title claim, the District Court concluded that there also was no jury trial right because in Washington there is no jury trial right for quiet title actions in state or federal courts. 

Author’s Comment

The decision in Lysyy is straightforward.  Although not evident from the opinion, the result was almost inevitable because a review of the bankruptcy proceedings discloses that the Plaintiff abused the bankruptcy system by filing to give the Defendant, an obvious creditor, notice and other shenanigans.  Under such circumstances, one can imagine the District Court trying to find a credible way to protect the Defendant even if the impropriety of a jury trial were not so obvious. 

The Commercial Finance Newsletter is written by an ad hoc group of the California Lawyers Association (CLA) Business Law Section.  These materials were authored by Adam A. Lewis, Senior Counsel (Ret.), Morrison & Foerster LLP, a member of the ad hoc group, with editorial assistance by Hon. Meredith Jury (U.S. Bankruptcy Judge. C.D. Cal., Ret.), a member of the ad hoc group.  The opinions expressed herein are solely those of the author.