Gulf Bay Capital, Inc. v. Textron Financial Corporation
OPINION AND ORDER granting in part and denying in part 115 Defendant's Motion to Strike Jury Demand. The Court will bifurcate these proceedings and first conduct a bench trial on Plaintiff's reformation claim and request for related declaratory relief. If Plaintiff succeeds in having the Intercreditor Agreement reformed, Plaintiff's breach of contract claims and request for related declaratory relief may be tried to a jury. See Opinion for details. Signed by Judge John E. Steele on 7/27/2016. (KP)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISION
GULF BAY CAPITAL, INC.,
Case No: 2:14-cv-209-FtM-29CM
OPINION AND ORDER
This matter comes before the Court on Defendant's Motion to
Strike Jury Demand (Doc. #115) filed on May 27, 2016.
filed a Response in Opposition (Doc. #126) on June 13, 2016.
the reasons set forth below, the Motion is granted in part and
denied in part, and trial of Plaintiff’s claims is bifurcated.
This case seeks to adjudicate Plaintiff Gulf Bay Capital,
Inc.’s (Gulf Bay) contractual right to purchase a debt from Textron
Financial Corporation (Textron) for the same price offered Textron
by a third party. 1
Neither party’s pleading demands a jury trial,
and under Federal Rule of Civil Procedure 38(b), the time to make
such a demand expired on May 6, 2014.
Nevertheless, the parties
filed a Case Management Report (Doc. #12) on June 2, 2014 stating
that they “have agreed on” a jury trial and estimating that trial
The Complaint (Doc. #2) asserts claims
declaratory judgment, and breach of contract.
would last five (5) days.
The Case Management Report was signed
by counsel for both parties.
Accordingly, the Court’s June 9,
2014 Case Management and Scheduling Order (Scheduling Order) (Doc.
#15) scheduled trial to proceed before a jury.
On April 7, 2016 - nearly two years later - Textron filed a
Motion to Amend/Correct Case Management and Scheduling Order (Doc.
#87), requesting that the Court “correct” the Scheduling Order by
striking the jury designation, since the Case Management Report
“incorrectly and mistakenly designate[d] the trial of this case as
a jury trial.”
(Id. at 1.)
Textron emphasized that neither
party’s pleading contains a jury demand and also pointed to a jury
waiver clause in the Intercreditor Agreement that is the subject
of Gulf Bay’s lawsuit.
Gulf Bay opposed the Motion, claiming that
Textron itself waived (or rather, “un-waived”) any prior jury
waiver by taking “affirmative actions (i.e., drafting, revising,
signing and filing the CMR) and fail[ing] to take timely corrective
actions (i.e., failing to object to the jury trial designation for
twenty-two (22) months).”
(Doc. #103, p. 2.)
On May 20, 2016, this Court issued an Order (Doc. #114)
denying the Motion because there was nothing in the Scheduling
Order to “correct”; the Scheduling Order simply reflects the Case
Management Report’s jury-trial designation.
The May 20th Order
did, however, expressly leave open certain collateral issues that
were not properly before the Court, “including whether all the
claims are equitable in nature, whether this characterization
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alone is sufficient to determine a right to a jury trial, and
whether the parties can agree to a jury trial where no such right
would otherwise exist.”
(Id. at 3.)
The instant Motion to Strike Jury Designation addresses those
Textron first claims that all of Gulf Bay’s claims should
be resolved at a bench trial because neither party made a proper
jury demand, the Intercreditor Agreement contains a jury-waiver
clause, and Textron has never consented to a jury trial on any
“consented” to a jury trial via the signed Case Management Report
and by failing to timely object to the jury designation, Textron
requests bifurcation of Gulf Bay’s claims, with the reformation
claim to be resolved first at a bench trial.
If Gulf Bay is
successful, Textron continues, then the breach of contract claims
may proceed before a jury.
In support of the request to bifurcate,
Textron contends that it has the right to withdraw its consent to
Amendment’s jury-guarantee ambit.
Gulf Bay opposes the Motion, arguing that Textron indeed
consented to a jury trial in the Case Management Report.
argues further that Textron cannot withdraw its consent to a jury
trial on the equitable reformation claim, because that claim shares
common issues with Gulf Bay’s claim for breach of contract, giving
Gulf Bay a Seventh Amendment right to try both before a jury.
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Whether Textron Consented to a Jury Trial
Textron contends that a jury trial is not warranted because
neither party made a timely jury demand. 2
Federal Rule of Civil
Procedure 38(b) requires that a party seeking to assert a right to
proceed before a jury file a writing “demand[ing] a jury trial”
within “14 days after the last pleading directed to the issue is
Where a party fails to do so, the ability to legally
“demand” a jury trial is lost.
See Heil Co. v. Evanston Ins. Co.,
690 F.3d 722, 732 (6th Cir. 2012) (defining “demand” as “the
assertion of a legal or procedural right” (emphasis added) (quoting
Black's Law Dictionary 462 (8th ed. 2004))).
This does not,
Burns v. Lawther, 53 F.3d 1237, 1240 (11th Cir. 1995)
(“[B]ecause the right to a jury trial is fundamental, courts must
indulge every reasonable presumption against waiver.” (citation
motion, [to] order a jury trial on any issue for which a jury might
have been demanded.”
Fed. R. Civ. P. 39(b).
Textron also argues that the jury designation should be stricken
because the Intercreditor Agreement states that both parties
“waive the right to a trial by jury.”
(Doc. #2, p. 24.)
Court is not persuaded. Not only did almost two years pass before
Textron challenged the designation, the same clause in the
Agreement also purports to give exclusive jurisdiction over all of
the parties’ disputes to the bankruptcy court.
pick and choose which clauses are binding and which are optional.
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It is undisputed that neither party filed a Rule 38(b) written
accurately reads “Jury Demand: None.”
But whether a jury trial
was “demanded” in accordance with the Federal Rules (it was not)
and whether Gulf Bay waived its right to so “demand” (it did) are
not the controlling issues.
The question instead is whether the
jury designation in the joint Case Management Report is sufficient
to establish Textron’s subsequent consent to a jury trial.
The Court finds that it is.
Textron is a sophisticated
business entity represented by sophisticated legal counsel.
Case Management Report was filed approximately six weeks after
Textron removed the case to this Court, and the Report – along
with its jury-trial designation and this Court’s Order scheduling
the case for a jury trial – were on the docket for nearly two years
before Textron sought to correct the “mistake.”
In the absence
of any case law to the contrary (none of which has been presented
to this Court), the Court finds that Textron consented to a trial
by jury by signing a joint case management report containing that
806CV2073T24TBM, 2008 WL 151850, at *1 (M.D. Fla. Jan. 15, 2008)
(denying motion to strike plaintiff’s jury demand where defendants
demanded a jury trial (and they did not indicate their objection
thereto) and they failed to object to the Court's scheduling orders
setting this case for a jury trial”); Coleman v. Lazy Days RV Ctr.,
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Inc., No. 8:05-CIV-930-T17TBM, 2007 WL 2696789, at *2 (M.D. Fla.
Sept. 12, 2007) (“The defendant agreed to a jury trial in the Case
Management Report by a way of signature . . . .”).
Whether Textron Can Revoke Its Consent to a Jury Trial
Textron argues that even if it did consent to a jury trial by
virtue of the case management report, it can withdraw or revoke
constitutionally permitted to do so.
Whether Gulf Bay is correct
turns on whether there exists a Seventh Amendment right 3 to have
a jury try reformation and breach of contract causes of action. 4
Right to a Jury Trial – “Equitable” vs. “Legal” Claims
Under Federal Rule of Civil Procedure 38(d), “[a] proper
[jury] demand may be withdrawn only if the parties consent.”
Although no proper jury demand was filed in this case, this
language has been interpreted to mean that once a jury-trial
designation has occurred, the consent of both parties is required
“In Suits at common law, where the value in controversy shall
exceed twenty dollars, the right of trial by jury shall be
preserved, and no fact tried by a jury, shall be otherwise
reexamined in any Court of the United States, than according to
the rules of the common law.” U.S. Const. amend. VII.
The declarations requested in Gulf Bay’s declaratory judgment
count mimic Gulf Bay’s claims for breach of contract and
reformation. Whether the relief sought should be adjudicated at
a bench trial or by a jury is impliedly addressed by the Court’s
discussion on the reformation and breach claims. Gulf Life Ins.
Co. v. Arnold, 809 F.2d 1520, 1523 (11th Cir. 1987) (“When
determining whether a declaratory judgment action is legal or
equitable, courts have examined the basic nature of the issues
involved to determine how they would have arisen had Congress not
enacted the Declaratory Judgment Act.” (citation omitted)).
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to withdraw the designation as to claims for which there is a
Seventh Amendment right to a jury trial.
See Kramer v. Banc of
Am. Sec., LLC, 355 F.3d 961, 967-68 (7th Cir. 2004).
exists no such right, a party may unilaterally withdraw consent by
filing a motion to strike the jury-trial designation.
Civ. P. 39(a); Kramer, 355 F.3d at 968 (citation omitted); United
States v. Schoenborn, 860 F.2d 1448, 1455 (8th Cir. 1988).
“The Seventh Amendment preserves the right to trial by jury
in suits in which legal rights are to be determined in contrast to
Phillips v. Kaplus, 764 F.2d 807, 811-12 (11th Cir. 1985); see
also, e.g., Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 41
Gulf Bay’s breach of contract claim “is a legal issue to
be tried by a jury.”
Borgh v. Gentry, 953 F.2d 1309, 1311 (11th
withdrawal of the jury-trial designation for that claim requires
both parties’ consent.
In contrast, mutual consent to withdraw a
jury designation on a reformation claim is not typically needed,
because “the Seventh Amendment [does not] guarantee the right to
Such a reformation is an equitable decision made by
the court, not the jury, and the parties are not entitled to a
jury trial . . . .”
Enserch Corp. v. Shand Morahan & Co., 952
F.2d 1485, 1502 (5th Cir. 1992); see also Phillips, 764 F.2d at
814; Barber v. Am.'s Wholesale Lender, No. 8:12-CV-01124-T-27TB,
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2013 WL 1149316, at *4 (M.D. Fla. Mar. 19), aff'd, 542 F. App'x
832 (11th Cir. 2013).
Gulf Bay acknowledges this principle of law but nevertheless
proposal should be rejected because the lawsuit has equitable and
issues,” Gulf Bay argues it is entitled to try both before a jury.
Joinder of Legal with Equitable Claims
“permit[ted] the joinder of legal and equitable claims in a single
Dairy Queen, Inc. v. Wood, 369 U.S. 469, 471 (1962).
“As a result of the merger of law and equity in the federal courts,
however, . . . courts have at times struggled with [how to
determine jury rights in cases mixing legal and equitable claims].”
Phillips, 764 F.2d at 813.
Beginning with the Supreme Court’s
seminal decision in Beacon Theatres, Inc. v. Westover, 359 U.S.
500 (1959), it has since become black-letter law that “if a ‘legal
claim is joined with an equitable claim, the right to jury trial
on the legal claim, including all issues common to both claims,
Tull v. United States, 481 U.S. 412, 425 (1987)
Where a case involves legal and equitable causes of action,
the court should not conduct a bench trial on equitable claims
first if doing so “might, through collateral estoppel, prevent a
full jury trial of the [legal claim].”
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Beacon Theatres, 359 U.S.
at 505; see also Phillips, 764 F.2d at 812 (“[A] legal cause of
action is not to be defeated or impaired by a prior proceeding
“The Seventh Amendment requires that when
a cause of action involves legal and equitable claims, ‘only under
the most imperative circumstances . . . can the right to a jury
trial of legal issues be lost through prior determination of
Williams v. City of Valdosta, 689 F.2d 964,
977 n.11 (11th Cir. 1982) (alteration in original) (quoting Beacon
Theatres, 359 U.S. at 510-11)).
equitable claims,” namely Gulf Bay’s reformation claim and claim
for related declaratory relief.
Whether the Seventh Amendment so
permits depends on if a prior judicial determination on reformation
will cause Gulf Bay to lose the “right to a jury trial of legal
issues” for the breach of contract claim.
The Court must
determine, therefore, whether resolving the reformation claim will
usurp the jury’s power to independently adjudicate common issues
when deciding the breach of contract claims.
Beacon Theatres, 359
U.S. at 505; Williams, 689 F.2d at 977 n.11.
If so, prior judicial
resolution of the reformation claim would trespass on Gulf Bay’s
jury rights under the Seventh Amendment, and the Court must allow
Gulf Bay to try both claims to the jury.
Dairy Queen, 369 U.S.
at 479; see also Thermo-Stitch, Inc. v. Chemi-Cord Processing
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Corp., 294 F.2d 486, 491 (5th Cir. 1961) (“As long as any legal
cause is involved[,] the jury rights it creates control.”). 5
After reviewing the case law cited in the parties’ memoranda,
bifurcating the trial of Gulf Bay’s claims is constitutionally
A bench trial on the reformation cause of action
will not constrict Gulf Bay’s Seventh Amendment right to have its
breach of contract claims fully and fairly tried by a jury.
Because Florida’s parol evidence rule permits extrinsic evidence
to be considered when resolving a reformation claim, but not for
the typical breach of contract claim, prior judicial resolution of
the reformation claim will not, “through collateral estoppel,
prevent a full jury trial of the [breach claim].”
359 U.S. at 505.
Consequently, Textron may revoke its consent to
have the reformation claim tried by a jury.
Florida’s Parol Evidence Law and Contract Construction
unambiguous, but allegedly-incorrect, written agreement, the trier
of fact must determine whether the agreement’s written terms
accurately reflect the bargain the parties struck, viz., the factfinder is called upon to adjudicate the intended terms of the
To do so typically requires consideration of parol
Decisions of the Fifth Circuit Court of Appeals handed down prior
to the close of business on September 30, 1981 are binding Eleventh
Circuit precedent, which the district courts must follow. Bonner
v. City of Prichard, Ala., 661 F.2d 1206, 1207 (11th Cir. 1981).
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Providence Square Ass'n, Inc. v. Biancardi,
507 So. 2d 1366, 1371 (Fla. 1987) (“In a reformation action in
equity, . . .  parol evidence is admissible for the purpose of
demonstrating that the true intent of the parties was something
other than that expressed in the written instrument.”).
In contrast, under Florida law, the trier or fact on a breach
claim involving an unambiguous contract may not - absent other
exceptions to the parol evidence rule not implicated here - look
outside the four corners of the contract. 6
Key v. Allstate Ins.
Co., 90 F.3d 1546, 1549 (11th Cir. 1996) (“[I]f the terms of a
. . . contract are clear and unambiguous, a court must interpret
the contract in accordance with its plain meaning, and, unless an
ambiguity exists, a court should not resort to outside evidence .
. . to construe the contract.” (citations omitted)).
Unlike in a
reformation action then, a jury deciding a breach of contract claim
is foreclosed from independently concluding that a mutual mistake
caused the contract to have terms different from those the parties
“This is especially true when the contract contains an
integration clause indicating that the parties intended the
written agreement to be the entire agreement” – as does the
parties’ Intercreditor Agreement. In re Yates Dev., Inc., 256 F.3d
1285, 1289-90 (11th Cir. 2001) (citation omitted); see also Jenkins
v. Eckerd Corp., 913 So. 2d 43, 53 (Fla. DCA 1st 2005) (“[A] merger
clause . . . generally works to prevent a party from introducing
parol evidence to vary or contradict the written terms.”).
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intended to include. 7
Providence, 507 So. 2d at 1371 (“[T]he
general rule in actions at law based on contracts and other written
instruments is that ordinarily the writing itself must stand as
the only exposition of the parties' intent.”).
Because the jury is bound to follow the written terms of an
unambiguous contract in deciding a breach of contract claim, prior
judicial resolution of Gulf Bay’s reformation claim will not
Agreement should be reformed to reflect the parties’ true bargain,
then the jury will decide whether there was a breach of that
Agreement as-reformed and resultant damages, just as it would in
any case alleging breach of an unambiguous contract.
Gulf Bay urges the Court to follow Smith Flooring, Inc. v.
Pennsylvania Lumbermens Mutual Insurance Co., in which the Eighth
Circuit held that a plaintiff “had a Seventh Amendment right to a
trial by jury [on both the reformation and breach of contract
By way of a simple analogy, consider an agreement between Smith
and Jones in which Smith agrees to purchase 10 televisions from
Jones for $1,000. Due to a mutual mistake, the executed agreement
reads “computers” instead of “televisions.” Smith demands Jones
sell him 10 televisions for $1,000, as the parties agreed, and
Jones refuses, because the contract says “computers.” Smith then
files an action in Florida state court seeking reformation of the
agreement and damages for breach of the reformed agreement. Under
Florida law, the trier of fact deciding the reformation claim could
evaluate parol evidence to determine whether the parties intended
for Jones to sell Smith televisions, not computers. In contrast,
a jury adjudicating the breach claim before the reformation claim
had been resolved would have to conclude that the parties intended
for Jones to sell Smith computers, as the contract stated.
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claims] on the common issue of what the terms of the intended
713 F.3d 933, 938-39 (8th Cir. 2013).
But a key
difference between Florida’s parol-evidence law and Missouri’s
(the state whose law was considered in Smith Flooring) prevents
that case from being persuasive here. 8
The Court finds more
convincing Royal Aviation, Inc. v. Aetna Casualty & Surety Co.,
which rejected the argument that a “claim for damages on [a]
equitable reformation claim,” since “a jury would decide no issue
. . . that would be in common with the issues in the claim for
770 F.2d 1298, 1302 (5th Cir. 1985), abrogated on
other grounds as recognized in, Parsaie v. United Olympic Life
Ins. Co., 29 F.3d 219, 221-22 (5th Cir. 1994); see also Giant
Eagle, Inc. v. Fed. Ins. Co., 884 F. Supp. 979, 985-86 & n.3 (W.D.
Pa. 1995) (rejecting argument that equitable reformation claim
overlapped with breach claim, as “the ‘intention of the parties’
. . . is relevant only to prove mutual mistake as a basis for
reformation”); Bennington Foods, L.L.C. v. St. Croix Renaissance
Grp., L.L.L.P., No. CIVA 06-154, 2010 WL 1608483, at *4, 7 n.6
(D.V.I. Apr. 20, 2010) (disagreeing that judicial resolution of
Smith Flooring’s conclusion was based, in part, on the fact that
“Missouri's parol evidence rule includes exceptions for mutual
mistake” and thus, unlike Florida law, does not “bar the jury from
considering the same extrinsic evidence for the breach-of-contract
claim as would be available for the reformation claim.” 713 F.3d
The court observed, however, that if “the admissible
proof differ[ed] in each instance[,]” there would likely be “no
common issue.” Id. That is precisely the situation here.
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reformation claim “trespassed on the jury’s role as fact-finder”
on breach claim, since “[t]he jury’s role . . . would have been to
determine the amount of damages to which [plaintiff] was entitled
under the terms of the . . . Contract,” after the court had
determined “what the terms of that contract actually were”).
Accordingly, it is hereby
Defendant’s Motion to Strike Jury Demand (Doc. #115) is
GRANTED in part and DENIED in part.
The Court will bifurcate
these proceedings and first conduct a bench trial on Plaintiff’s
reformation claim and request for related declaratory relief.
Plaintiff succeeds in having the Intercreditor Agreement reformed,
the breach of contract claims and request for related declaratory
relief may be tried before a jury.
DONE and ORDERED at Fort Myers, Florida, this 27th day of
Counsel of Record
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