RREF RB-AL SLDL, LLC v. Saxon Land Development LLC et al
MEMORANDUM OPINION AND ORDER GRANTING plaintiff's 22 MOTION to Strike ; the jury demand asserted in Defendant Clifford Cleveland's 19 answer is hereby STRICKEN, pursuant to Federal Rule of Civil Procedure 12(f), as further set out in order. Signed by Honorable Judge Mark E. Fuller on 4/19/12. (Attachments: # 1 civil appeals checklist)(djy, )
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF ALABAMA
RREF RB-AL SLDL, LLC,
SAXON LAND DEVELOPMENT, LLC,
CASE NO. 2:11-cv-925-MEF
[WO – Do Not Publish]
MEMORANDUM OPINION AND ORDER
This case is before the Court on Plaintiff’s Motion to Strike (Doc. # 22) the jury
demand asserted at the end of Defendant Clifford Cleveland’s (“Cleveland”) Answer (Doc.
# 19). Having considered the parties’ briefs and the relevant law, the Court finds that
Plaintiff’s motion is due to be GRANTED.
On October 27, 2011, Plaintiff RREF RB-AL SLDL, LLC (“RREF”) filed a
Complaint against Defendants Saxon Land Development, LLC (“Saxon Land”), Cleveland,
and Richard M. Dorsey (“Dorsey”). The Complaint seeks repayment for two loans, one
made to Saxon Land in the original principal amount of $711,696.00, and evidenced by a
promissory note and mortgage executed by Saxon Land in favor of the original lender,
Regions Bank.1 The other loan was made to Cleveland in the original principal amount of
Cleveland also executed a guaranty with respect to this loan.
$192,000.00, and evidenced by promissory note and mortgage executed by Cleveland in
favor of the original lender, Regions Bank.2
On November 28, 2011, Cleveland, who is an attorney representing himself as well
as Saxon Land, filed a pithy one and one-quarter page motion to dismiss (Doc. # 6), which
the Court summarily denied (Doc. # 8). Although a number of defenses were listed (but not
briefed), arbitration was not one of them.
On February 23, 2012, the Court granted Plaintiff’s motion to appoint a receiver, and
appointed Franklin Street Management Services (“Franklin Street”) to take immediate
possession of the commercial property in Elmore County, Alabama (the “Property”), which
was the object of the loans. (Doc. # 17.)
On March 1, 2012, Defendant Cleveland, in response to the Court’s suggestion to
Plaintiff that he was in default (Doc. # 18), filed an Answer (Doc. # 19). The Answer lists
arbitration as an affirmative defense (Answer ¶ 96), and also states: “DEFENDANT
CLEVELAND REQUESTS A TRIAL BY JURY.”
II. STANDARD OF REVIEW
“The Federal Rules of Civil Procedure provide that ‘the court may order stricken from
any pleading any insufficient defense or any redundant, immaterial, impertinent, or
scandalous matter.’” Stephens v. Ga. Dep’t of Transp., 134 F. App’x 320, 322-23 (11th Cir.
2005) (quoting Fed. R. Civ. P. 12(f)).
Plaintiff RREF was assigned the Saxon Land loan and corresponding documents as
well as the Cleveland loan and corresponding documents by Regions Bank. (Compl. ¶¶ 12, 20.)
Plaintiff argues that Cleveland waived his Seventh Amendment right to demand a jury
trial by signing jury waivers in the Saxon Land promissory note, the Cleveland guaranty, and
the Cleveland promissory note. The waivers, which are substantially identical, read:
JURY WAIVER [or WAIVE JURY]: Lender and Borrower [or Guarantor]
hereby waive the right to any jury trial in any action, proceeding, or
counterclaim brought by either Lender or Borrower [or Guarantor] against the
(Doc. # 22, Exs. A-C.)
The right to a jury trial in a civil case is protected by the Seventh Amendment to the
United States Constitution. See Aetna Ins. Co. v. Kennedy, 301 U.S. 389, 393 (1937).
Federal courts apply federal law in determining whether a contractual jury waiver is
enforceable. Tracinda Corp. v. DaimlerChrysler AG, 502 F.3d 212, 222 (3d Cir. 2007)
(citing K.M.C., Inc. v. Irving Trust Co., 757 F.2d 752-56 (6th Cir. 1985)). Federal law is
appropriately applied because a contractual jury waiver implicates the waiver of a
“[A]s the right of jury trial is fundamental, courts indulge every reasonable
presumption against waiver.” Aetna, 301 U.S. at 393. Where the waiver is contractual, the
waiver will be enforced, but strictly construed, if it is made “knowingly and voluntarily based
on the facts of the case.” Tracinda, 502 F.3d at 222 (citing Brookhart v. Janis, 384 U.S. 1,
4 (1966)); see also Bakrac, Inc. v. Villager Franchise Sys., Inc., 164 F. App’x 820, 823 (11th
Cir. 2006) (“A party may validly waive its Seventh Amendment right to a jury trial so long
as the waiver is knowing and voluntary.”); Wells Fargo Bank v. JWWTEW, LLC, No.
10cv310, 2011 WL 245655, at *1 (S.D. Ala. Jan. 24, 2011).
In assessing whether a contractual jury waiver is enforceable, “courts consider the
conspicuousness of the waiver provision, the parties’ relative bargaining power, the
sophistication of the party challenging the waiver, and whether the terms of the contract were
negotiable.” Bakrac, 164 F. App’x at 823-34 (citing Leasing Serv. Corp. v. Crane, 804 F.2d
828, 833 (4th Cir. 1986)).
Without much elaboration, it is beyond dispute that these considerations all weigh in
favor of enforcing the jury waivers at issue. The waiver clauses are prefaced with “JURY
WAIVER” or “WAIVE JURY” in all-caps and bold type, and the clauses are presented in
paragraphs separate from other provisions of the contracts. Nor is there much disparity in
bargaining power. Cleveland and Saxon Land could have obtained financing elsewhere, or
could have negotiated the terms of the loans. Finally, Cleveland himself is an attorney and
is representing himself in this case; accordingly, there can be no argument as to his
Cleveland does not mount a challenge to these considerations. Rather, he argues that
the arbitration clause, also found in the notes and guaranty at issue, requires that Plaintiff’s
only recourse be arbitration. (Resp. 2 (Doc. # 25).) This argument is both perplexing and
meritless. It is perplexing for several reasons. First, in attempting to defend his jury demand,
Cleveland turns to another jury-waiving provision of the contracts: arbitration. Cleveland
accuses RREF’s invocation of the jury waiver clause, but not the arbitration clause, as an
attempt to “have the cake and eat it, too.” (Resp. 4.)
Even as Cleveland complains of RREF’s cake-hoarding tendencies, his very
accusation is made with a mouth full of cake. One cannot seriously defend a jury demand
by saying that the case should be arbitrated. Furthermore, in advancing his arbitration
argument, Cleveland makes a confounding assertion: that RREF has waived its right to
arbitration by invoking the litigation process. (Resp. 3.) This is not an argument a court
expects to hear from a party who genuinely wants to enforce an arbitration clause. Moreover,
whether or not RREF has waived its right to arbitration is irrelevant to the question of
whether Cleveland has waived his right to a jury trial. The only sense the Court can make
of this statement is that Cleveland is arguing that by waiving the arbitration clause, RREF
has also waived the jury waiver. To the extent that this is Cleveland’s argument – that the
jury waiver and arbitration clauses must be enforced in tandem – it is meritless. It is wellsettled that arbitration clauses and jury trial waivers present different issues. See, e.g.,
Sydnor v. Conseco Fin. Serv. Corp., 252 F.3d 302, 307-07 (4th Cir. 2001). The arbitrability
question is antecedent to the jury trial question. Arbitration clauses waive the judicial forum,
while jury waivers only waive the right to a jury once it has been decided that the case is
properly decided in a judicial forum. These are separate contractual provisions, and may be
enforced or waived separately. RREF’s invocation of the jury waiver clause does not require
it to invoke the arbitration clause as well.
Furthermore, Cleveland’s arbitration argument is meritless as he has not filed a motion
to compel arbitration, which is required under both the law and the terms of the contracts, all
of which state that the arbitration process may be invoked “upon request of either party.”
Burton-Dixie Corp. v. Timothy McCarthy Constr. Co., 436 F.2d 405, 407-08 (5th Cir. 1971)
(stating that an agreement to arbitrate, “just like any other contract . . ., may be waived”); see
also Ivax Corp. v. B. Braum of Am., Inc., 286 F.3d 1309, 1315-16 (11th Cir. 2002). No such
request has been made.3
Finally, this dispute falls within the express terms of the jury waiver clauses.
Accordingly, it is ORDERED that Plaintiff’s Motion to Strike (Doc. # 22) is
GRANTED. The Jury Demand asserted in Defendant Clifford Cleveland’s Answer (Doc.
# 19) is hereby STRICKEN, pursuant to Federal Rule of Civil Procedure 12(f). An amended
scheduling order will be entered placing this case on the next non-jury trial term.
DONE this 19th day of April, 2012.
/s/ Mark E. Fuller
UNITED STATES DISTRICT JUDGE
The Court takes this opportunity to note that, even if Cleveland’s response were to be
construed as a motion to compel arbitration, that motion is due to be denied. A two-part test is
employed to determine whether a party has waived its right to arbitrate a dispute: “First, we
decide if, ‘under the totality of the circumstances,’ the party ‘has acted inconsistently with the
arbitration right,’ and, second, we look to see whether, by doing so, that party ‘has in some way
prejudiced the other party.’” Ivax Corp. v. B. Braum of Am., Inc., 286 F.3d 1309, 1315-16 (11th
Cir. 2002) (quoting S & H Contractors, Inc. v. A.J. Taft Coal Co., 906 F.2d 1507, 1514 (11th Cir.
1990)). Cleveland’s shotgun-pleaded motion to dismiss listed many grounds for dismissal, but
did not mention arbitration. This case has been pending for nearly six months, in part on account
of Cleveland’s failure to timely file an answer; a receiver has been appointed; and a scheduling
order has been entered. On account of these facts, Cleveland has acted inconsistently with the
arbitration right, and were it to be invoked at this late stage, RREF would suffer prejudice.
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