Memorandum of Decision Re: Procedural Sinkhole

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Decisions
IN THE UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA
In re RICHARD and JOANN O'NEIL,                                                                           No. 96-12610        Debtors. ___________________________/ ALLEN SILVERA,        Plaintiff,      v.                                                                                                                       A.P. No. 96-1317 RICK O'NEIL,        Defendant. ______________________________/
Memorandum and Order
     This case is rapidly becoming a procedural sinkhole. The complaint includes claims for breach of contract and constructive fraud, which are not assertable as to the debtors and are assertable against the estate only by filing a proof of claim. The complaint seeks imposition of a constructive trust against non-exempt assets, yet the trustee is not a party (nor should he be). The complaint alleges defalcation in a fiduciary party, but there is no indication of any express trust.      The debtors scheduled no claim against plaintiff nor claimed any such rights against plaintiff as exempt, yet have filed a counterclaim.      The only legitimate issue in this adversary proceeding is whether the debtors owe a nondischargeable debt to plaintiff. There is no right to a jury in a dischargeability action.      IT IS THEREFORE ORDERED as follows:      1. The first and fifth claims in the complaint are dismissed, without prejudice to the filing of a proof of claim.      2. The third claim is dismissed without prejudice to an action against the trustee, if such an action can be maintained in good faith.      3. The sixth claim is dismissed with leave to amend because it fails to allege the existence of an express trust.      4. The jury demand is stricken.      5. The counterclaim is dismissed, without prejudice at such time as the claim is duly scheduled and either exempted or abandoned. The counterclaim may not be prosecuted as part of this adversary proceeding in any event.      6. The stipulation to allow the filing of an amended reply to the counterclaim is not approved.      7. Any portion of this order may be reconsidered on 20 days notice. However, any motion seeking such reconsideration must be adequately supported by applicable federal authority.
Dated: March 19, 1997                                                                       _______________________                                                                                                            Alan Jaroslovsky                                                                                                            U.S. Bankruptcy