Saturday, March 28, 2009

Contractual Jury Waiver Enforced by Mandamus

In Re Bank of America, N.A. (Tex. 2009)
No. 07-0901 (Tex. Feb. 27, 2009) (per curiam mandamus) (contractual jury waiver enforced by mandamus in analogy to arbitration clauses, conspicuousness of waiver, knowing and voluntary waiver)


In this contract dispute, we decide whether our holding in In re Prudential—which held that a contractual waiver of a jury trial is enforceable—creates a presumption against waiver that places the burden on the party seeking enforcement to prove that the opposing party knowingly and voluntarily agreed to waive its constitutional right to a jury trial. See In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 30–33 (Tex. 2004).

On interlocutory appeal, the court of appeals applied such a presumption and reversed the trial court’s enforcement order. 232 S.W.3d at 151–52. Today, we conditionally grant Bank of America’s petition for writ of mandamus to clarify that Prudential does not impose a presumption against a contractual jury waiver.

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In Prudential, we agreed with the United States Supreme Court that “arbitration and forum-selection clauses should be enforced, even if they are part of an agreement alleged to have been fraudulently induced, as long as the specific clauses were not themselves the product of fraud or coercion.” 148 S.W.3d at 134–35 (citing Scherk v. Alberto-Culver Co., 417 U.S. 506 (1974)).

Since Prudential indicates that the same dispute resolution rule expressed by the United States Supreme Court in Scherk should apply to contractual jury-waiver provisions, the court of appeals’ analysis errs by distinguishing jury waivers from arbitration clauses, thereby imposing a stringent initial presumption against jury waivers. 232 S.W.3d at 151–52. Statutes compel arbitration if an arbitration agreement exists, see Tex. Civ. Prac. Rem. Code Sec.171.021(a) (Texas General Arbitration Act), and more importantly, “Texas law has historically favored agreements to resolve such disputes by arbitration.” In re Poly-America, L.P., 262 S.W.3d 337, 348 (Tex. 2008); see also In re. D. Wilson Constr. Co., 196 S.W.3d 774, 782–83 (Tex. 2006) (recognizing presumption favoring arbitration clauses).

We see no reason why there should be a different rule for contractual jury waivers.

We hold that Prudential does not impose a presumption against jury waivers that places the burden on Bank of America to prove that the waiver was executed knowingly and voluntarily. Therefore, we conditionally grant the petition for writ of mandamus and direct the court of appeals to vacate and withdraw the opinion and judgment of May 3, 2007, and to reinstate the trial court order enforcing the parties’ jury waiver. Tex. R. App. P. 52.8(c); see also Prudential, 148 S.W.3d at 139–140 (holding that mandamus is appropriate remedy to enforce contractual jury waivers). We are confident the court of appeals will comply, and the writ will issue only if it fails to do so.

IN RE BANK OF AMERICA, N.A.; from Tarrant County; 2nd district (02-05-00397-CV, 232 SW3d 145, 05-03-07) Pursuant to Texas Rule of Appellate Procedure 52.8(c), without hearing oral argument, the Court conditionally grants the petition for writ of mandamus. Per Curiam Opinion(Justice Johnson not sitting)

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