Kahama VI, LLC v. HJH, LLC et al

Filing 259

ORDER: Plaintiff's Motion to Strike Jury Demand of Defendant Marks (Dkt. #247) is DENIED. Signed by Judge James S. Moody, Jr on 3/4/2014. (LN)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
KAHAMA VI, LLC,
Plaintiff,
v.

Case No: 8:11-cv-2029-T-30TBM

HJH, LLC, et al.,
Defendants.

ORDER
THIS CAUSE comes before the Court upon the Plaintiff's Motion to Strike Jury
Demand of Defendant Marks (Dkt. #247) and Defendant Marks' Response with
Affirmative Request for Evidentiary Hearing (Dkt. #257). Upon review and consideration,
it is the Court’s conclusion that the Motion should be denied.
Plaintiff moves to strike Defendant Howard S. Marks’ jury trial demand regarding
the sole count against him for fraudulent transfer. Plaintiff is suing the borrower, HJH,
LLC, and its guarantors for foreclosure and other remedies pursuant to a mortgage,
promissory notes, and guaranties (the “Instruments”) on commercial property. The
promissory notes contain language stating that “Neither the Borrower, assignee, successor,
heir or legal representation [sic] of any of the same shall seek a jury trial in any lawsuit,
proceeding, counterclaim or other litigation procedure arising from or based upon this
Promissory Note or other loan agreement or any loan document evidencing, securing or
relating to the obligations or to the dealings or relationship by or between the parties,

thereto….” Further the mortgage states that “Borrower and Lender hereby knowingly,
voluntarily and intentionally waive the right to trial by jury with regards to any litigation
based upon this loan or to any obligation resulting from or related to this loan, or guaranty
relating to this loan.” Therefore, Plaintiff argues that Marks waived a jury trial regarding
any matters involving the Instruments and the property that is the subject of the foreclosure.
The Seventh Amendment provides that “[i]n Suits at common law, where the value
in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved.”
U.S. Const. amd. VII. As the Supreme Court has noted, “[m]aintenance of the jury as a
fact-finding body is of such importance and occupies so firm a place in our history and
jurisprudence that any seeming curtailment of the right to a jury trial should be scrutinized
with the utmost care.” Chauffeurs, Teamsters and Helpers, Local No. 391 v. Terry, 494
U.S. 558, 564–65, 110 S.Ct. 1339, 108 L.Ed.2d 519 (1990).

However, it is well-

established that a party may waive its right to a jury trial if the waiver is knowing and
voluntary. Bakrac, Inc. v. Villager Franchise Sys., Inc., 164 Fed. Appx. 820, 823 (11th Cir.
2006). The Court must first determine whether the jury trial waivers contained in the
Instruments apply to Marks, and if so whether the waiver was knowing and voluntary.
Plaintiff asserts that the waiver language is binding on Marks because the cause of
action is based on Marks’ representation of HJH, LLC in the separate but related quiet title
action involving the property at issue in this foreclosure case. Plaintiff relies on several
cases which hold that waivers apply to guarantors and other third parties. The Court is not
persuaded that the cited cases apply to the specific set of circumstances at issue in the cause
of action against Marks and otherwise finds the cases distinguishable. See e.g. Kapila v.

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Bank of America, N.A. (In re Pearlman), 493 B.R. 878, 884-885 (M.D.Fla. 2013) (holding
that the bankruptcy trustee was bound by the jury trial waiver in the loan agreement in its
fraudulent transfer action where the transfers at issue in the case were loan payments made
pursuant

to

the

agreement);

Hancock

v.

Deutsche

Bank

Nat.

Trust

Co.,

8:06CV1724T27EAJ, 2006 WL 6319816 (M.D. Fla. 2006) (permitting non-signatory who
was assignee of mortgagor to enforce jury trial waiver in foreclosure action against
mortgagee who signed the loan agreement.)
Case law does allow a non-signatory to enforce a jury trial waiver against a
signatory. See e.g. Andre v. Sellstate Realty Sys. Network, Inc., 2:09-CV-503-FTM-36,
2010 WL 3259415 (M.D. Fla. 2010) report and recommendation adopted, 2:09-CV-503FTM-36, 2010 WL 3259413 (M.D. Fla. 2010) (holding that non-signatory defendants, who
were sued as agents of signatory could invoke the jury trial waiver provision against
plaintiffs who were signatories). These cases are distinguishable from the facts in this case,
since Plaintiff is the signatory attempting to enforce the provision against a non-signatory
who is not the assignee, successor or heir of the Borrower.
Plaintiff’s argument that Marks is HJH’s “agent” or “legal representative” and
therefore bound by the waiver provision is unpersuasive, since the waiver is specifically
limited to cases arising from or based upon the Instruments. The legal representation must
therefore arise out of or be based upon the promissory notes and mortgage. The fraudulent
transfer cause of action in this case alleges that Marks received funds pursuant to a
settlement agreement in the quiet title action with knowledge of the pending foreclosure.
That connection is too attenuated for this Court to hold that the allegations “arise from or

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[are] based upon” the notes or other loan agreement. See Telecom Italia, SpA v. Wholesale
Telecom Corp., 248 F.3d 1109 (11th Cir. 2001).
In Telecom Italia, SpA the Eleventh Circuit concluded that to determine whether a
cause of action arises out of or relates to the contract for purposes of enforcing an
arbitration clause, the Court should focus “on whether the tort or breach in question was
an immediate, foreseeable result of the performance of contractual duties[ ]” as “[d]isputes
that are not related-with at least some directness-to performance of duties specified by the
contract do not count as disputes ‘arising out of’ the contract, and are not covered by the
standard arbitration clause.” Id. at 1116.
Plaintiff also argues that Marks is a “borrower” since the promissory notes define
the term as including “HJH and any other person or entity, who is or may subsequently
become liable for the payment hereof.” The allegations in the complaint do not support
that Marks “is or may subsequently become liable for the payment” of the note or loan
agreement. In a fraudulent transfer action, the remedies afforded to the defrauded creditor
include avoidance of the transfer, attachment, an injunction, appointment of a receiver, and
“any other relief the circumstances may require.” Newman v. William L. Gunlicks
Irrevocable Trust, 897 F. Supp. 2d 1270, 1276 (M.D. Fla. 2012) (citing Fla. Stat. §
726.108(1)(b))). These remedies do not amount to Marks becoming liable for the payment
on the notes or mortgage.
Additionally, to the extent that Plaintiff relies on this Court’s endorsed order
granting its Motion to Strike HJH, the guarantors, and Kevin Donaghy’s jury trial demand
(Dkt. # 245), the Court specifically noted that those Defendants did not file an opposition

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to the Motion. The Order did not provide any analysis upon which Plaintiff may rely in
supporting its Motion against Marks.
It is therefore ORDERED AND ADJUDGED that Plaintiff's Motion to Strike Jury
Demand of Defendant Marks (Dkt. #247) is DENIED.
DONE and ORDERED in Tampa, Florida, this 4th day of March, 2014.

Copies furnished to:
Counsel/Parties of Record
S:\Odd\2011\11-cv-2029- motion to strike 247.docx

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