Synovus Bank v. Scenic Oaks Development, LLC et al
MEMORANDUM OPINION AND ORDER: IT IS THEREFORE ORDERED AND ADJUDGED that Plf's 25 & 39 Motions to Strike is granted. Signed by Honorable Judge Keith Starrett on 7/11/2016. (wcl, )
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF ALABAMA
CIVIL ACTION NO. 3:15-CV-612-KS-GMB
SCENIC OAKS DEVELOPMENT, LLC, et al.
MEMORANDUM OPINION AND ORDER
This matter is before the Court’s on its own Order  requiring parties to provide
additional briefing on Plaintiff Synovus Bank’s Motion to Strike Jury Demand (“Motion to Strike”)
. After reviewing the submissions of the parties, the record, and the applicable law, the Court
finds that the motion is well taken and should be granted.
Plaintiff Synovus Bank (“Plaintiff”) originally brought this action to recover an amount owed
under a promissory note (the “Note”) executed by Defendants Scenic Oaks Development, LLC
(“Scenic Oaks”), House Mountain, LLC (“House Mountain”), and Edmund Rasha Cannon, Jr.
(“Race Cannon”). Plaintiff filed suit on August 21, 2015. Plaintiff was granted summary judgment
as to the breach of contract claim on June 23, 2016.
Plaintiff sought and was granted leave to amend its complaint in order to add three
defendants, Edmund Rasha Cannon 2013 Irrevocable Trust (“Race Cannon Trust”), Heather
Shackleford Cannon 2013 Irrevocable Trust (“Heather Cannon Trust”), and Heather Shackleford
Cannon (“Heather Cannon”) (collectively “Defendants”), and two fraudulent transfer claims. Only
these claims and defendants remain pending. These claims allege that Race and Heather Cannon
created Cannon Holding, LLC (“Cannon Holding”), and transferred to it all of their ownership
interests in Cannon Real Estate Holdings, LLC, Southeastern Mobile Homes, LCC, Cannon Timber
& Land, LLC, and Wittel Dorm, LLC, all of which were listed as assets on the loan documents given
to Plaintiff in the execution of the Note. Race and Heather Cannon each received 0.5 Class A unit
and 49.5 Class B units in the new Cannon Holding, which were then transferred to the Race Cannon
Trust and the Heather Cannon Trust, allegedly to keep them from Plaintiff.
In its previous Order , the Court deferred ruling on Plaintiff’s Motion to Strike  and
requested more briefing on the jury demand issue. Plaintiff and Defendants responded to this
request on July 7, 2016. Plaintiff filed its response to the Order  as a new Motion to Strike .
Because the new motion simply reurges the original motion, they shall be considered together. After
considering the submissions of the parties, the record, and the applicable law, the Court is now ready
to rule on the Motions to Strike .
Parties disagree over whether federal or state law should be applied in determining whether
a right to trial by jury exists in this case. When such a conflict exists, federal courts are instructed
to determine “whether a congressional statute or Federal Rule of Civil Procedure covers the disputed
issue. If a federal statute or rule of procedure is on point, the district court is to apply federal rather
than state law.” Esfeld v. Costa Crociere, S.P.A., 289 F.3d 1300, 1307 (11th Cir. 2002) (citing
Hanna v. Plumer, 380 U.S. 460, 469-70, 85 S. Ct. 1136, 1143, 14 L.Ed.2d 8 (1965)) (internal
citations omitted). Trial by jury is governed by Federal Rule of Civil Procedure 39, which states
that, once a jury trial is demanded by a party, a “trial on all issues so demanded must be by jury
unless . . . the court, on motion or on its own, finds that on some or all of those issues there is no
federal right to a jury trial.” Fed. R. Civ. P. 39(a) (emphasis added). Therefore, if no federal right
to a jury trial exists on the pending issues in this case, Plaintiff’s Motions to Strike  must
As this is a claim derived from state statutory law, the only federal right to a jury trial that
could be implicated is that derived from the Seventh Amendment. The Seventh Amendment
provides a right to a trial by jury in “suits in which legal rights were to be ascertained and
determined, in contradistinction to those where equitable rights alone were recognized, and equitable
rights were administered.” Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 41, 109 S. Ct. 2782, 106
L.Ed.2d 26 (1989) (quoting Parsons v. Bedford, 3 Pet. 433, 447, 7 L.Ed. 732 (1830)) (emphasis in
original). To decide if the Seventh Amendment confers a right to a trial by jury, “[f]irst, we compare
the statutory action to 18th-century actions brought in the courts of England prior to the merger of
the courts of law and equity. Second, we examine the remedy sought and determine whether it is
legal or equitable in nature.” Id. at 42 (quoting Tull v. United States, 481 U.S. 412, 417-18, 107 S.
Ct. 1831, 95 L.Ed.2d 365 (1987)).
The first step in the analysis is to determine whether an English court of equity or court of
law would have presided over a comparable 18th-century action. The Supreme Court has held the
following with regards to fraudulent conveyances:
If the subject matter is a chattel, and is still in the grantee's possession, an action in
trover or replevin would be the trustee's remedy; and if the fraudulent transfer was
of cash, the trustee's action would be for money had and received. Such actions at
law are as available to the trustee to-day [sic] as they were in the English courts of
long ago. If, on the other hand, the subject matter is land or an intangible, or the
trustee needs equitable aid for an accounting or the like, he may invoke the equitable
process, and that also is beyond dispute.
Granfinanciera, 492 U.S. at 44, 109 S. Ct. 2782 (quoting G. Glenn, Fraudulent Conveyances and
Preferences § 98, pp. 183-84 (rev. ed. 1940)). Therefore, the first part of the analysis turns on the
classification of the interests in Cannon Holding that were allegedly fraudulently transferred—that
is, whether these interests are chattel or intangibles. Shares in Cannon Holding are best classified
as intangibles. See California v. Texas, 437 U.S. 601, 603, 98 S. Ct. 3107, 57 L.Ed.2d 464 (1978)
(classifying shares of stock in a holding company as intangibles) (per curiam). The first step in the
analysis, then, establishes that a court of equity would have heard a comparable action in 18thcentury England and weighs against the right to a jury in this action. See Granfinanciera, 492 U.S.
at 42-44, 109 S. Ct. 2782.
The second step in the analysis from Granfinanciera directs the Court to look at the remedies
sought by the plaintiff. 492 U.S. at 42, 109 S. Ct. 2782 (quoting Tull, 481 U.S. at 417-18, 107 S.
Ct. 1831). In its Amended Complaint,1 Plaintiff requests avoidance of the transfers, for the Court
to levy execution against the Class B units in Cannon Holding, an appointment of a receiver for
these units, disgorgement of assets, and injunctions against further disposition. These remedies are
all equitable in nature and do not support the right to a trial by a jury in this case. See
Granfinanciera, 492 U.S. at 42-44, 109 S. Ct. 2782.
Therefore, because the only remedies sought are equitable remedies and because a
comparable 18th-century action would be heard in an English court of equity, the Court finds that
defendants have no federal right to a trial by jury under the Seventh Amendment. As such,
Plaintiff’s Motions to Strike  must be granted.
IT IS THEREFORE ORDERED AND ADJUDGED that Plaintiff’s Motions to Strike
 is granted.
SO ORDERED AND ADJUDGED this the 11th day of July, 2016.
UNITED STATES DISTRICT JUDGE
The Court notes that Plaintiff has yet to file its Amended Complaint, though it has been
granted leave to do so.
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