TD Bank, N.A. v. Burke ( 2015 )


Menu:
  • TD Bank, N.A. v. Burke, No. 563-12-14 Wmcv (Wesley, J., June 12, 2015).
    [The text of this Vermont trial court opinion is unofficial. It has been reformatted from the original. The accuracy of the text
    and the accompanying data included in the Vermont trial court opinion database is not guaranteed.]
    STATE OF VERMONT
    SUPERIOR COURT                                                                                     CIVIL DIVISION
    Windham Unit                                                                           Docket No. 563-12-14 Wmcv
    TD Bank, N.A. f/k/a TD Banknorth vs. Burke et al
    ENTRY REGARDING MOTION
    Click here to enter text.
    Title:              Motion to Strike Jury Demand (Motion 2)
    Filer:              TD Bank, N.A. f/k/a TD Banknorth
    Attorney:           Elizabeth A. Glynn
    Filed Date:         April 23, 2015
    Response filed on 05/04/2015 by Attorney Lawrin P. Crispe for Defendant M & M Holdings, LLC
    Response filed on 05/11/2015 by Attorney James B. Anderson for party 1 Co-counsel
    The motion is GRANTED.
    Procedural History
    In 2003 Plaintiff TD Bank extended a commercial loan for Defendant M&M Holding Co.,
    LLC (M&M Holding) and on January 23, 2003 M&M Holding executed a promissory note (“the
    Note”), which was eventually increased to reflect a principal of $352,054.78. See Pl’s Compl.
    Ex. A. M&M Holding pledged the title and rents of several real properties in New Hampshire
    and Vermont as security for the loan. See 
    id. In addition,
    Defendants Robert M. Burke and
    Michael R. Momaney executed and delivered to Plaintiff commercial guaranties, promising to
    pay Plaintiff any indebtedness of M&M Holding. See Pl’s Compl. Ex. B and C. Sometime before
    2008, the note went into default and Plaintiff foreclosed on the real property. After foreclosure,
    a deficiency of over $135,000 remained. On Dec. 18, 2014, Plaintiff filed a complaint relying on
    the commercial guaranties against Defendants M&M Holding, Robert M. Burke, and Michael R.
    Momaney, seeking to recover the deficiency that remained after foreclosure. On January 22,
    2014, Defendant Momaney responded denying Plaintiffs claim and raising several
    counterclaims. Defendants Robert M. Burke and M&M Holding responded on January 26, 2015,
    denying that Plaintiff could recover the deficiency, raising eight affirmative defenses as well as a
    single counterclaim. As part of their response, Defendants Burke and M&M Holding demanded
    a jury trial. On February 13, 2015, Plaintiff answered the counterclaim but did not address
    Defendants’ request for a jury trial. On April 23, 2015, Plaintiff filed the motion to strike
    Defendants’ jury demand now before the Court for decision.
    Discussion
    Plaintiff contends that Defendants have waived their right to a jury trial by signing the
    Note, which provides: “Jury Waiver. Lender and Borrower hereby waive the right to jury trial in
    any action, proceeding, or counterclaim brought by either Lender or Borrower against the
    other.” See Pl’s Compl. Ex A, p. 1.1 Further, Plaintiff argues Defendants again waived their right
    to a jury trial by signing the commercial guaranties which state: “Waive Jury. Lender and
    Guarantor hereby waive the right to any jury trial in any action, proceeding, or counterclaim
    brought by either Lender or Borrower against the other.” See Pl’s Compl. Ex. B and C.
    Defendants Burke and M&M Holding oppose the motion, arguing Plaintiff waived its
    right to enforce the jury waiver provision by not raising the issue in Plaintiff’s answer to
    Defendants’ counterclaim. Defendants also claim that the law disfavors contractual jury waivers
    and Plaintiff’s motion seeks to deprive Defendants of their “long established Constitutional
    rights,” thus Plaintiff’s motion should be dismissed. Defendants’ claims are legally unsupported
    and fail to challenge the valid contractual jury waiver, and thus Plaintiff’s motion to strike the
    jury demand is GRANTED.
    The Seventh Amendment to the United States Constitution and Chapter II, § 38 of the
    Vermont Constitution ensures litigants the right to a jury in civil trials. That right, however, may
    be waived. See V.R.C.P. 38(d); Vt. Const. ch. II, § 38 (“Trials . . . shall be by Jury, except where
    parties otherwise agree.”). Despite Defendants’ suggestion, pre-litigation contractual jury
    waivers are a valid and binding method of waiving one’s right to a jury trial. See Merryl Lynch &
    Co., Inc. Allegheny Energy, Inc., 
    500 F.3d 171
    , 188 (2d Cir. 2007). In fact, a contractual waiver of
    the right to a jury trial is common in many contracts, and can take the form of an agreement to
    arbitrate, a bench trial agreement, or as in the contract here, an express waiver of the right. See
    L&R Realty v. Connecticut Nat. Bank, 
    715 A.2d 748
    , 753 (Conn. 1998) (discussing the various
    ways the right to a jury trial may be waived).
    For a contractual jury waiver to be valid and binding many courts require the waiver be
    made knowingly and voluntarily. See Merryl Lynch, 
    500 F.3d 171
    , at 188; see also Medical Air
    Technology Corp. v. Marwan Inv., Inc., 
    303 F.3d 11
    , 19 (1st Cir. 2002). Defendants have made
    no assertion that the waiver here, executed in the context of a commercial lending relationship
    between two business entities, was not made knowingly and voluntarily. Rather, Defendants
    claim that Plaintiff has waived its right to contest Defendants’ demand for a jury. Defendants
    assert that Plaintiff’s claim amounts to an affirmative dense and because Plaintiff did not timely
    assert the defense, it was waived. See V.R.C.P. 8(c).
    Defendants provide no authority for the proposition that a contractual waiver of the
    right to a jury comes within the procedural requirements associated with an affirmative
    defense. A jury waiver has no impact on the legal claims a party may bring, the parties may
    assert the same defenses and claims whether the matter is tried before a judge or jury. The
    Court does recognize, however, that the jury waiver found in the Note and the guaranties is a
    contract right that may be waived like any other contract right, and such a waiver may be
    implied by a party’s failure to assert the contractual right. See Union School Dist. No. 45 v.
    1
    A later change in terms agreement that increased the amount on the Note, which was signed by both individual
    defendants, contained the same jury waiver provision.
    2
    Wright & Morrissey, Inc., 
    2007 VT 129
    , ¶ 9, 
    183 Vt. 555
    ; see also Brennan v. Kenwick, 
    425 N.E.2d 439
    , 441 (Ill. App. 1981). Even so, there is no set amount of time after which delay will
    constitute a waiver of a contractual right.
    The Vermont Rules of Civil Procedure establish a deadline by which parties must request
    a jury trial, see V.R.C.P. 38, but the procedural requirements of Rule 38 do not govern the
    assertion of a right established under a valid pre-litigation contract to protest a jury demand.
    Rather, like the waiver of an arbitration clause, the waiver issue here is a question of fact to be
    resolved under the circumstances. See Lamell Lumber Corp. v. Newstress Intern, Inc., 
    2007 VT 83
    , ¶ 11, 
    182 Vt. 282
    . Courts addressing whether a party has waived a right to enforce an
    arbitration agreement consider whether “under the totality of the circumstances, the
    defaulting party acted inconsistently with the [right].” Home Gas Corp. of Massachusetts, Inc. v.
    Walter’s of Hadley, Inc., 
    532 N.E.2d 681
    , 683 (Mass. 1989). Moreover, courts that have
    specifically considered whether a party has waived a right to assert a contractual jury waiver
    provision often find no waiver unless unfair prejudice will result to the party arguing for the
    jury. See National Westminster Bank, U.S.A. v. Ross, 
    130 B.R. 656
    , 688 (S.D.N.Y. 1991) (rejecting
    defendant’s argument that the bank had waived its right to enforce jury waiver by failing to
    timely move to strike, finding bank had not been dilatory and defendant would not suffer any
    prejudice).
    Here, the two month delay between Plaintiff’s answer and motion to strike jury demand
    was not dilatory. See 
    id. Further, the
    Court cannot conclude that Plaintiff has acted
    inconsistently with its right to a bench trial. See Quinn Const., Inc. v. Skanska USA Bldg., Inc, No.
    07-406, 
    2010 WL 4909587
    at *2–3 (E.D.Pa. 2010) (finding that a party that demanded a jury
    trial in answer and then over a year later withdrew demand, did not waive its contractual rights
    to a bench trial); see also Allaway v. Prospect Mortg., No. 13 c 3004, 
    2013 WL 6231382
    at *1
    (N.D.Ill. 2013)(finding plaintiff did not waive right to a bench trial by joining a collective action
    where representatives of the class demanded a jury trial). Moreover, no prejudice to
    Defendants will result by granting Plaintiff’s motion to strike. See Ross, 
    130 B.R. 656
    at 688.
    The case is not on the eve of trial and further pre-trial development will be unaffected by the
    designation of the matter as lying within the Court’s bench docket, as opposed to its jury
    docket.
    Electronically signed on June 12, 2015 at 02:24 PM pursuant to V.R.E.F. 7(d).
    ______________________________________
    John P. Wesley
    Superior Court Judge
    Notifications:
    Elizabeth A. Glynn (ERN 1594), Attorney for Plaintiff TD Bank, N.A. f/k/a TD Banknorth
    Lawrin P. Crispe (ERN 2383), Attorney for Defendant Robert M. Burke
    Lawrin P. Crispe (ERN 2383), Attorney for Defendant M & M Holdings, LLC
    Defendant Michael R. Momaney
    Mark L. Zwicker (ERN 3625), Attorney for party 2 Co-counsel
    3
    Mark L. Zwicker (ERN 3625), Attorney for party 4 Co-counsel
    Michael J. Marks (ERN 4944), Attorney for Neutral Mediator/Arbitrator/Evaluator Michael J.
    Marks
    James B. Anderson (ERN 3794), Attorney for party 1 Co-counsel
    wesley
    4