KFC Corporation v. Iron Horse of Metairie Road, LLC et al
Filing
183
ORDER AND REASONS: The Court DENIES defendants' 166 motion to enforce settlement and 171 motion for additional discovery. The Court GRANTS defendants' 171 Rule 39(b) motion for a trial by jury. A scheduling conference will be held by telephone on 3/28/2019 at 10:45 a.m. for the purpose of scheduling a jury trial, as well as a pretrial conference. The Court will initiate the telephone conference call, as set forth in document. Signed by Judge Sarah S. Vance on 3/12/2019.(jls)
Case 2:16-cv-16791-SSV-MBN Document 183 Filed 03/12/19 Page 1 of 27
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
KFC CORPORATION
CIVIL ACTION
VERSUS
NO. 16-16791
IRON HORSE OF METAIRIE ROAD,
LLC AND IRON ROOSTER, LLC
SECTION “R” (5)
ORDER AND REASONS
Before the Court is (1) defendants’ motion to enforce settlement, 1 and
(2) defendants’ motion for a jury trial and discovery. 2 The Court denies the
motion to enforce settlement because defendants fail to present evidence
that the parties entered into an enforceable compromise. The Court grants
defendants’ motion for a jury trial, but denies their motion for additional
discovery.
I.
BACKGROUND
A.
Litigation Background
This case arises out of a dispute over the remediation of environmental
contamination on property in Metairie, Louisiana.3 In 1991, Kentucky Fried
1
2
3
R. Doc. 166.
R. Doc. 171.
R. Doc. 1.
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Chicken (KFC) of California purchased a piece of real property located at 702
Metairie Road in Metairie, Louisiana (the Property). 4 KFC California later
learned that the Property and an adjoining property located at 800 Metairie
Road were contaminated with perchloroethylene and its metabolites (the
PERC contamination).5 According to the complaint, this contamination was
caused by a dry-cleaning facility that operated on the premises before KFC
California purchased the Property. 6
In 2000, the owner of the adjoining property filed suit against KFC
California and other defendants over the environmental contamination.7
The litigation ended in a settlement and stipulated consent decree.8 In the
consent decree, KFC California agreed to remediate the PERC contamination
on the Property and the adjoining property.9 The agreement provided that
remediation would be subject to oversight and approval by the Louisiana
Department of Environmental Quality (LDEQ), and would follow timetables
and deadlines set by the LDEQ. 10
4
5
6
7
8
9
10
R. Doc. 65-3 at 1; R. Doc. 76-1 at 2.
Id.
R. Doc. 1 at 2.
R. Doc. 1-2; R. Doc. 65-3 at 2; R. Doc. 76-1 at 2.
R. Doc. 1-2.
Id. at 2.
Id. at 3.
2
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In November 2004, KFC California completed a Voluntary Remedial
Action Plan (VRAP) prepared by Professional Service Industries, Inc. (PSI). 11
PSI is an environmental consultant.12 This plan was submitted in March
2005 and approved by the LDEQ.13 In 2005, KFC California transferred its
interest in the property to KFC U.S. Properties, Inc.14 KFC U.S. Properties
later merged into plaintiff KFC Corporation.15
KFC prepared several
addenda to the VRAP, which were approved by LDEQ. 16
On September 20, 2013, defendant Iron Horse of Metairie Road, LLC,
agreed to purchase the Property from KFC in a written purchase agreement. 17
The purchase agreement provided for a 30-day inspection and due diligence
period, and gave Iron Horse the right to cancel the purchase agreement
during this period. 18 Iron Horse later assigned the purchase agreement to
defendant Iron Rooster, LLC. 19 On February 14, 2014, KFC sold the property
to Iron Rooster.20 On the date of sale, KFC, Iron Rooster, and Iron Horse
11
12
13
14
15
16
17
18
19
20
R. Doc. 13-13; R. Doc. 13-16.
R. Doc. 65-3 at 2; R. Doc. 76-1 at 3.
R. Doc. 13-13; R. Doc. 13-17 at 39.
R. Doc. 65-3 at 3; R. Doc. 76-1 at 3.
R. Doc. 65-3 at 7; R. Doc. 76-1 at 5.
R. Doc. 13-13 at 2.
R. Doc. 13-9; R. Doc. 65-3 at 3; R. Doc. 76-1 at 4.
R. Doc. 13-9 at 2; R. Doc. 65-3 at 3; R. Doc. 76-1 at 4.
R. Doc. 65-3 at 7; R. Doc. 76-1 at 5.
Id.
3
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signed an Assignment, Assumption, and Indemnification Agreement. 21 The
indemnification agreement provided that Iron Horse and Iron Rooster
would assume KFC’s obligations related to the contamination, the
remediation, and the settlement agreement, and that they would complete
the remediation “in a diligent and expeditious manner.”22
In June 2016, the LDEQ sent letters to both KFC and Iron Rooster
regarding the status of remediation.23 A June 14, 2016 letter to Iron Rooster
stated that off-site remediation sampling revealed that constituents of
concern exceeding applicable standards were present on the adjoining
property and would require additional remediation.24 A June 6, 2016 letter
to KFC states that on-site remediation and monitoring of site conditions
ceased after Iron Rooster purchased the Property, and that KFC remains
obligated to remediate the on-site and off-site contamination. 25
On December 1, 2016, KFC filed suit against Iron Rooster and Iron
Horse.26 KFC alleged that defendants failed to fulfill their obligation under
the purchase agreement and the indemnification agreement to remediate the
21
22
23
24
25
26
R. Doc. 13-11; R. Doc. 65-3 at 7; R. Doc. 76-1 at 5.
R. Doc. 13-11 at 3.
R. Doc. 1-2; R. Doc. 76-4.
R. Doc. 76-4 at 1.
R. Doc. 1-2 at 41-42.
R. Doc. 1.
4
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PERC contamination. 27 On February 23, 2017, defendants filed an answer
to KFC’s complaint and counterclaims. 28
Then on February 9, 2018,
defendants filed a motion seeking leave to file a third-party complaint
against PSI, 29 which the Court granted. 30 On July 31, 2018, the Court granted
PSI’s motion to transfer defendants’ third-party action to the Northern
District of Illinois for forum non conveniens.31 Trial was scheduled to
commence on August 13, 2018. 32
B.
Settlement Discussions
In July 2018, the parties engaged in settlement discussions. On July
24, 2018, counsel for defendants submitted a letter to Magistrate Judge
North setting forth the terms of a settlement offer. 33 The letter presented
three possible settlement options that defendants would be willing to
accept.34 On July 25, KFC responded to defendants’ letter. 35 KFC dismissed
two of the options as unacceptable, and presented a counteroffer to the third
27
28
29
30
31
32
33
34
35
Id. at 9-10.
R. Doc. 7.
R. Doc. 47.
R. Doc. 57.
R. Doc. 154.
R. Doc. 49.
See R. Doc. 173-2.
Id.
See R. Doc. 173-3.
5
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option. 36
In this counteroffer, KFC agreed to waive its claims against
defendants in exchange for (1) a payment equal to “all of the costs and
expenses” KFC incurred after the sale of the property to defendants, and (2)
defendants’ entering into a consent decree governing defendants’ future
remediation of the Property.37 That proposed consent decree would require
defendants to remediate the property in accordance with the LDEQ’s
requirements, at no cost to KFC. 38
Stephen P. Schott, counsel for KFC, states in an affidavit that KFC
intended in the July 25 counteroffer to retain its indemnification rights
under the parties’ indemnification agreement for any costs KFC incurred
after settlement was reached. 39 Schott avers that KFC intended to waive only
the indemnification claim in its complaint in this lawsuit, through which KFC
sought to recover the costs incurred before any settlement agreement. 40
On the morning of July 31, John Waters, counsel for defendants, sent
Schott a text message with regard to KFC’s July 25 counteroffer. The text
message stated:
36
37
38
39
40
Id.
Id. at 1-2.
Id.
R. Doc. 173-1 at 1-2.
Id.
6
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Steve, thanks for your call yesterday evening. Spoke to Mr.
Caldarera.41 He’s not interested. His proposal is simple: a
$150,000 payment by KFC, and KFC lets Iron Rooster control
the remediation including the VRAP going forward. Let me know
by 10:30 this morning.42
Schott states that after he received this text message, he and Waters had a
telephone conversation, in which he restated to Waters KFC’s requirement
that, consistent with KFC’s July 25 letter, the remediation must result in a
certificate of completion from LDEQ and must satisfy KFC’s remediation
obligations stemming from its original 2000 settlement and stipulated
consent decree. 43 According to Schott, Waters stated that he understood
KFC’s requirements.44 The parties then informed the Court that they had
reached a settlement agreement. 45 The Court subsequently issued an order
of dismissal, in which it stated that “having been advised by counsel for all
parties that they have firmly agreed upon a compromise,” the action was
dismissed “without prejudice to the right, upon good cause shown, within
sixty days, to reopen the action if settlement is not consummated.” 46
41
42
43
44
45
46
Joseph Caldarera is Iron Rooster’s owner. See R. Doc. 99-2 at 2.
R. Doc. 173-1 at 2; R. Doc. 166-3.
R. Doc. 173-1 at 2-3.
Id. at 3.
Id.
R. Doc. 155.
7
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Later in the afternoon of July 31, the parties began the process of
formalizing their settlement agreement. Schott emailed Waters and Rick
Curry, another lawyer for defendants, that he would “prepare a summary of
the terms of the settlement.”47 Schott attached to that email a copy of the
July 25 counteroffer that he sent to Magistrate Judge North and
defendants.48 Schott now claims that he attached the July 25 letter because
he “understood that certain terms set forth in the letter were part of the
settlement.”49
Less than an hour after Schott sent this email, Curry
responded with what defendants “anticipate[d]” in the formal settlement
materials. 50 Curry stated, inter alia:
[I]f requested by KFC, Iron Rooster will list KFC as a co-applicant
on any voluntary remedial action plan addressing contamination
on the Property, provided, however, that KFC shall have no role
in choosing the timing, sequence or method of investigation or
remediation, or in choosing the contractor or in making any
other decision by which Iron Rooster conducts investigation and
remediation of either the Property or the Adjoining Property. . . .
Iron Rooster requires absolute control over the remediation
process. . . . If the LDEQ initiates an enforcement action against
KFC based on abandonment of the remediation by Iron Rooster,
then KFC may or may not have a right to move to enforce the
stipulated judgment; however, Iron Rooster will not agree to any
47
48
49
50
R. Doc. 173-4.
See id.
R. Doc. 173-1 at 3.
R. Doc. 173-5.
8
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language in the settlement or judgment that could be construed
as an agreement to reopen the litigation. 51
The parties continued to discuss the particulars of a formal settlement
agreement the rest of that afternoon and evening.52 Curry sent a follow-up
email stating that Iron Rooster “will commit to remediate the properties to
LDEQ[’s] standards,” but that the settlement agreement would “need to
make explicit that Iron Horse has no ongoing obligation.”53 In response to
this email, Schott indicated that KFC sought a provision allowing it to reopen
the litigation to enforce the settlement agreement, if necessary.54 Curry
responded that Iron Rooster would “not agree to any provision that would
give KFC any right to reopen the settlement based on KFC’s dissatisfaction
with the method or pace of remediation.” 55 Curry emphasized that Iron
Rooster did not want to “give KFC any authority to monitor Iron Rooster’s
remediation” of the Property. 56
The next day, on August 1, 2018, KFC sent defendants the formal letter
detailing the terms of a settlement agreement.57
The letter outlined
Id.
See R. Doc. 173-6.
53
Id.
54
See id. (“I think it is reasonable and typical to have a reopener
provision to enforce the settlement if necessary.”).
55
Id.
56
Id.
57
See R. Doc. 173-7.
9
51
52
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defendants’ obligations to remediate the Property and the adjoining
property. 58 The letter further stated that the parties would enter into a
“Remediation and Settlement Agreement,” whereby the parties would
mutually release their causes of action against one another.59 Finally, the
letter stated that in the event that the LDEQ or any other government agency
threatened to take enforcement action against KFC because Iron Rooster had
failed to complete its remediation obligations, KFC had the right to file a
motion reopening this litigation to enforce the terms of the agreement. 60
The parties continued to negotiate the terms of an agreement
throughout August. 61 On August 31, 2018, Curry emailed Schott a version of
KFC’s most recent version of the agreement, with defendants’ revisions in
redline.62 Curry stated in his cover email that he did not “believe that there
is serious substantive disagreement on the majority” of the provisions in the
agreement.63 But defendants’ redline revisions show that the parties still had
a disagreement about the degree of defendants’ control over the remediation,
and defendants’ obligations to KFC in the event that the LDEQ initiated
58
59
60
61
62
63
Id. at 2-3.
Id. at 4.
Id. at 4-5.
See R. Doc. 173-8.
Id.
Id. at 1.
10
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additional adverse actions against KFC. 64 For instance, defendants deleted
a provision requiring Iron Rooster to reimburse KFC for all costs, fees, and
expenses KFC would incur in the event that the LDEQ initiates any
enforcement action against KFC for defendants’ inability to remediate the
Property.65 Defendants’ revisions also added a sentence providing that the
settlement agreement would supersede any other agreements the parties had
previously entered into. 66
According to KFC, this provision would
“effectively eliminate KFC’s indemnification rights” contained in the
indemnification agreement the parties entered into in connection with the
sale of the Property. 67
According to Schott, the parties continued to attempt to resolve their
differences after this August 31 correspondence.68 But the parties were
unable to come to an agreement. On November 7, 2018, KFC filed an ex
parte motion to reopen the case. 69
See id. at 4-5.
Id. at 4.
66
Id. at 5.
67
R. Doc. 173 at 7.
68
R. Doc. 173-1 at 4.
69
R. Doc. 165. Prior to moving to reopen the case, the parties had twice
moved for extensions to consummate the agreement they purportedly
entered into on July 31, 2018. See R. Doc. 157; R. Doc. 162. The Court
granted both motions. See R. Doc. 159; R. Doc. 164.
11
64
65
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On November 8, 2018, defendants moved to enforce the settlement
agreement the parties purportedly entered into. 70 Defendants claim that the
parties agreed to a settlement of this litigation on the terms included in their
counsel’s July 31 text message to KFC’s counsel.71 Defendants separately
move for a jury trial under Federal Rule of Procedure 39(b).72 KFC opposes
both motions. 73
II.
DISCUSSION
A.
Motion to Enforce Settlement
Louisiana law applies to plaintiff’s motion to enforce settlement
because the Court’s jurisdiction is based on the parties’ diversity of
citizenship. Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938). Louisiana
law provides that a settlement, or “compromise” agreement, “is a contract
whereby the parties, through concessions made by one or more of them,
settle a dispute or an uncertainty concerning an obligation or other legal
R. Doc. 166.
R. Doc. 166-3 at 1.
72
R. Doc. 171.
73
R. Doc. 173; R. Doc. 178. In its 60-day dismissal order, the Court
specifically stated that it retained jurisdiction over this action if settlement is
not consummated. See Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S.
375, 381 (1994) (a court may retain jurisdiction over a settlement agreement
by including in its order of dismissal a provision stating that it intends to
retain jurisdiction).
12
70
71
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relationship.” La. Civ. Code art. 3071. The agreement must “be made in
writing or recited in open court” to be enforceable. La. Civ. Code art. 3072.
Emails and text messages can qualify as signed writings under this provision.
Preston Law Firm, LLC v. Mariner Health Care Mgmt. Co., 622 F.3d 384,
391 (5th Cir. 2010); La. R.S. 9:2607 (“A record or signature may not be
denied legal effect or enforceability solely because it is in electronic form.”).
Louisiana law does not require all of the terms of a settlement agreement to
be contained in one document. Parich v. State Farm Mut. Ins. Co., 919 F.2d
906, 913 (5th Cir. 1990). Instead, “multiple documents which, when read
together, outline the obligations of each party and evidence each party’s
acquiescence in the agreement may effect a valid compromise agreement.”
Id. “There are two essential elements of a compromise: (1) mutual intention
of preventing or putting an end to the litigation, and (2) reciprocal
concessions of the parties to adjust their differences.” Preston Law Firm,
LLC, 622 F.3d at 390 (quoting Klebanoff v. Haberle, 978 So. 2d 598, 602
(La. App. 2 Cir. 2008)).
There is no enforceable compromise between the parties because the
record before the Court indicates there was never a meeting of the minds as
to the specific terms of a settlement. Defense counsel’s July 31 text message
to KFC’s counsel presented the terms of defendants’ proposed settlement
13
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offer. 74 According to Schott, KFC agreed to settle the matter after receiving
this text message because it was under the impression that the terms in KFC’s
July 25 proposal related to defendants’ remediation obligations would be
included in a final, formal agreement.75 KFC’s acquiescence to defendants’
July 31 text message was not reduced to writing other than in the Court’s 60day dismissal order, which simply stated that the Court had “been advised by
counsel for all parties” that a compromise had been reached. 76 There is thus
no documentary evidence before the Court establishing that KFC agreed to a
settlement on the terms presented in the July 31 text message alone.
The record before the Court instead shows that the parties never came
to an agreement as to the terms of a final compromise. On the evening of
July 31, 2018—hours after they notified the Court of their settlement—the
parties had a clear disagreement about the settlement’s terms. 77 The emails
between the parties reveal that they disagreed about KFC’s ongoing rights
with respect to defendants’ remediation. 78
Specifically, KFC sought to
include a provision allowing it to reopen the litigation if defendants failed to
74
75
76
77
78
See R. Doc. 166-3 at 1.
R. Doc. 173-1 at 3.
See R. Doc. 155.
See R. Doc. 173-5; R. Doc. 173-6.
See R. Doc. 173-6.
14
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remediate the Property. 79 Defendants objected to such a provision, and did
not want “to give KFC any authority to monitor Iron Rooster’s
remediation.”80
The parties’ email correspondence further shows that
throughout August 2018, they also disagreed about whether Iron Rooster
would indemnify KFC for any costs it incurred during a subsequent LDEQ
action related to the Property. 81 These disagreements prevented the parties
from finalizing and consummating a settlement.
Defendants argue that KFC attempted to add new terms into the
parties’ compromise after KFC agreed to settle the matter pursuant to the
terms in defendants’ July 31 text message. 82 But, as already addressed, there
is no documentary evidence establishing that KFC agreed to settle this
dispute according to the terms in defendants’ text message. Instead, the
record indicates that KFC had a different understanding of what defendants’
counsel meant when he wrote in his text message that KFC would “let[] Iron
Rooster control the remediation including the VRAP going forward.”83 This
Id.
Id.
81
R. Doc. 173-8 at 4 (defendants’ removing from draft settlement
agreement a statement that “Iron Rooster shall, promptly after demand by
KFC, reimburse KFC for all costs, fees, and expenses, including reasonable
attorneys’ fees, that KFC incurs to prevent or respond” to any LDEQ actions).
82
R. Doc. 177 at 3-7.
83
R. Doc. 166-3 at 1.
15
79
80
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is evident from KFC’s counsel’s insistence on including a provision in the
compromise allowing KFC to reopen the litigation if defendants failed to
remediate the property. 84 This misunderstanding surfaced only after the
parties notified the Court that they reached an agreement and set out to
document the compromise. In such a situation, there is no enforceable
compromise between the parties. See Amy v. Schlumberger Tech. Corp., 771
So. 2d 669, 672 (La. App. 3 Cir. 2000) (finding no enforceable compromise
when the parties agreed to settle the action for a sum of money, but
subsequent negotiations between the parties revealed they “envisioned
something different with regard to the release [defendant] would obtain in
exchange for the sum agreed upon”); Davis v. Garrison Prop. & Cas. Ins. Co.,
119 So. 3d 927, 930 (La. App. 4 Cir. 2013) (no meeting of the minds when the
plaintiff agreed to settle the matter for a sum of money, but the parties later
disputed whether the settlement encompassed all of the plaintiff’s claims or
only her personal injury claim).
It is noteworthy that defendants—who now seek to enforce the
purported text message compromise—themselves proposed new terms on
the evening of July 31 that were not included in their counsel’s earlier text.85
84
85
See R. Doc. 173-6.
See id.
16
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Defendants’ counsel stated in an email that evening that “as [the parties had]
discussed, the settlement will also need to make explicit that Iron Horse has
no ongoing obligation.”86 Thus, while defendants now seek to enforce the
terms of their July 31 text message, the documentary evidence before the
Court shows that shortly after the text, defendants were adding new terms to
the parties’ supposedly final compromise. Defendants actions indicate that
neither party intended to be bound by the barebones terms of defendants’
July 31 text message.
Finally, the Court notes that this ruling does not turn on a finding that
the parties’ agreement failed to satisfy Article 3072’s requirement that a
compromise “be made in writing or recited in open court.” Defendants
contend that the Court’s 60-day dismissal order satisfies this requirement.87
The Fifth Circuit has been inconsistent on whether such an order is
satisfactory under Article 3072. Compare Mull v. Marathon Oil Co., 658
F.2d 386, 1981 (5th Cir. 1981) (district court’s 60-day dismissal order, along
with defendant’s letter to plaintiff confirming the settlement and including
the settlement sum, satisfied the writing requirement); with Breland v. La.
Pac. Corp., 698 F.2d 773, 774-75 n.3 (5th Cir. 1983) (writing requirement not
86
87
Id.
R. Doc. 177 at 8-9.
17
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satisfied despite district court’s issuance of 60-day dismissal order, because
neither the “fact nor the terms of th[e] settlement were recorded in open
court”). Courts in this district have cited Mull for the proposition that a 60day dismissal order satisfies Article 3072’s “in writing” requirement. See,
e.g., Melerine v. State Farm Ins. Co., No. 06-9568, 2008 WL 506093, at *2
(E.D. La. Feb. 20, 2008); Smith v. Ford Motor Co., No. 98-2299, 1999 WL
649636, at *2 (E.D. La. Aug. 24, 1999). In those cases—and unlike here—the
court was able to ascertain the settlement terms to which the parties agreed.
While the Court is silent as to whether a 60-day dismissal order in the
context of this case can satisfy the “in writing” requirement, the present
motion highlights the advantages of having the terms of a final agreement in
writing, or stated in open court, rather than merely the fact of the agreement.
“The requirement that the compromise be in writing or recited in open court
and susceptible of being transcribed from the record aims at avoiding
litigation over what the terms of the settlement are.” Morris, Lee, & Bayle,
LLC v. Macquet, 192 So. 3d 198, 210 (La. App. 4 Cir. 2016). Here, defendants
ask the Court to enforce a settlement according to their July 31 text message,
but there is no written evidence that KFC intended to agree to those terms.
It is apparent that both parties thought they had an agreement on the
afternoon of July 31, which the Court memorialized in its dismissal order.
18
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But the terms of that purported agreement are not in writing, were not
recited to the Court, and thus cannot be readily ascertained. Defendants now
seek to enforce their subjective sense of that agreement, with no
documentary evidence that KFC had the same intent. In all, because there is
no evidence that the parties had a meeting of the minds as to the terms of the
compromise, defendants’ motion is denied.
B.
Motion for Trial by Jury and Discovery
1.
Rule 39(b) Motion for Trial by Jury
Defendants also move to convert the action to a jury trial under Federal
Rule of Civil Procedure 39(b), and for discovery.88 Defendants have not,
before to this motion, demanded a jury trial with respect to the claims
between them and KFC.
KFC did not include a jury demand in its
complaint. 89 Defendants also did not make a jury demand in their answer to
KFC’s complaint and counterclaim.90 On February 9, 2018, defendants
sought leave to file their third-party complaint against PSI, which included a
88
89
90
R. Doc. 171.
See R. Doc. 1.
See R. Doc. 7.
19
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jury demand. 91 But on July 31, 2018, the Court transferred defendants’ thirdparty complaint to the Northern District of Illinois. 92
Thus, when the parties notified the Court on July 31 that they had
reached a settlement, the only remaining claims in this matter were KFC’s
and defendants’ claims against one another, and neither side had made a jury
demand with respect to those claims. Defendants filed the instant motion on
November 19, 2018. 93
Defendants do not dispute that they failed to comply with Federal Rule
of Civil Procedure 38(b) and thereby waived their right to a trial by jury. 94
See Fed. R. Civ. P. 38(b)(1) (a party may demand a jury trial “no later than
14 days after the last pleading directed to the issue is served”); Fed. R. Civ. P.
38(d) (a party waives its demand “unless its demand is properly served and
filed”). The question at this point is whether the Court should exercise its
discretion to order a jury trial under Rule 39(b), which states:
Issues not demanded for trial by jury as provided in Rule 38 shall
be tried by the court; but, notwithstanding the failure of a party
to demand a jury in an action in which such a demand might have
been made of right, the court in its discretion upon motion may
order a trial by a jury of any or all issues.
See R. Doc. 47; R. Doc. 47-2 at 30. The Court granted defendants’
motion on February 28, 2018. R. Doc. 55.
92
R. Doc. 154.
93
R. Doc. 171.
94
R. Doc. 182 at 1-2.
20
91
Case 2:16-cv-16791-SSV-MBN Document 183 Filed 03/12/19 Page 21 of 27
Fed. R. Civ. P. 39(b). Under Rule 39(b), “the court has broad discretion in
determining whether to relieve a party from waiver of jury trial.” Swofford
v. B & W, Inc., 336 F.2d 406, 408 (5th Cir. 1964). The Fifth Circuit has
explained that the right to a jury in a federal court as declared by the Seventh
Amendment is a basic and fundamental feature of our system. And when the
discretion of the court is invoked under Rule 39(b), the court should grant a
jury trial in the absence of strong and compelling reasons to the contrary.”
Id. at 409. Thus, a Rule 39(b) motion “should be favorably received unless
there are persuasive reasons to deny it.” Unum v. United States, 658 F.2d
300, 303 (5th Cir. 1981).
In Daniel International Corporation v. Fischbach & Moore,
Incorporated, the Fifth Circuit listed five factors to guide the Court’s
discretion under Rule 39(b). 916 F.2d 1061, 1064 (5th Cir. 1990). The
district court is instructed to consider (1) whether the case involves issues
which are best tried to a jury, (2) whether granting the motion would result
in a disruption of the court’s schedule or that of an adverse party, (3) the
degree of prejudice to the adverse party, (4) the length of delay in requesting
a jury trial, and (5) the reason for that delay. Id. (citing Parrot v. Wilson,
707 F.2d 1262, 1267 (11th Cir. 1983)). No single factor is dispositive, and
“[t]he trial court ought to approach each application under Rule 39(b) with
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an open mind and an eye to the factual situation in the particular case, rather
than with a fixed policy against granting the application or even a
preconceived notion that applications of this kind are usually to be denied.”
Lewis v. Thigpen, 767 F.2d 252, 257 (5th Cir. 1985) (quoting Pinemont Bank
v. Belk, 722 F.2d 232, 237 (5th Cir. 1984)). The Court finds that the Daniel
factors weigh in favor of granting defendants’ motion under Rule 39(b).
First, the remaining issues in this case amount to a contract dispute.
The Fifth Circuit has held that such disputes are “well within the
comprehension of a jury.” Daniel Int’l Corp., 916 F.2d at 1064. The parties
dispute whether KFC misrepresented the condition of the Property in the
purchase agreement, the indemnification agreement, and in the documents
exchanged in advance of those agreements. 95
The parties also dispute
whether defendants satisfied their remediation obligations under the terms
of the various agreements. 96 These issues are not—as KFC contends97—
See R. Doc. 153 at 14-16 (pretrial order list of contested issues of fact);
see also R. Doc. 87 at 9 (Order and Reasons denying KFC’s motion for
summary judgment on its claims, in which Judge Engelhardt held that
whether KFC “made material [mis]representations regarding the status of
remediation is a plainly disputed question of fact”).
96
See R. Doc. 153 at 14-16; see also R. Doc. 87 at 9 (noting that “the
parties dispute the extent of defendants’ alleged efforts to fulfill the
remediation obligations, specifically whether such efforts were ‘diligent and
expeditious,’ as required by the contract”).
97
R. Doc. 178 at 7-8.
22
95
Case 2:16-cv-16791-SSV-MBN Document 183 Filed 03/12/19 Page 23 of 27
matters of contractual interpretation, but factual questions related to the
parties’ fulfillment of their contractual obligations. The first factor thus
weighs in favor of granting defendants’ motion. Id.
Second, granting the motion will not disrupt the Court’s schedule. A
new scheduling order has not yet been issued since the matter was reopened.
The second Daniel factor thus also weighs in favor of granting the motion.
Third, KFC has not shown how granting defendants’ motion would
subject it to significant prejudice that outweighs the Fifth Circuit’s guidance
that Rule 39(b) motions should be “favorably received.” Unum, 658 F.2d at
303. KFC contends that all of its trial preparation, “including the manner in
which it conducted discovery, the selection of its witnesses, the selection of
expert witnesses and the preparation of expert reports, was done based on
the expectation that the case would be submitted to a judge, rather than a
jury.”98 But following the issuance of this Order, KFC will have ample time
to prepare for a jury trial, because the Court will not set the trial date until at
least September 2019. KFC will thus have time to tailor its evidence to be
presented to a jury. Cf. Hogan v. Bituminous Cas. Co., No. 96-1135, 1998
WL 2360, at *3 (E.D. La. Jan. 5, 1998) (finding prejudice to nonmoving party
98
Id. at 9.
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when trial was scheduled to commence two months from the date of the
court’s order).
KFC has also not specifically stated how it would have conducted its
depositions, selected its witnesses, or prepared its expert reports differently
had it known its claims would be tried by a jury. See Parakkavetty v. Indus
Int’l, Inc., No. 02-1461, 2003 WL 22939104, at *2 (N.D. Tex. Dec. 2, 2003)
(granting motion for jury trial when defendant failed to demonstrate how it
would have conducted discovery differently). While granting this motion
may result in slight prejudice to KFC because of the decisions it made during
discovery, the Court does not find that such prejudice outweighs the Fifth
Circuit’s clear preference for trials by jury. See Swofford, 336 F.2d at 408;
Dallas & Mavis Specialized Carrier Co., LLC v. Pac. Motor Transp. Co., No.
06-1992, 2008 WL 696430, at *4 (N.D. Tex. Mar. 12, 2008) (finding that
“slight degree of prejudice” to defendant as a result of the manner in which
it conducted discovery did not weigh against granting the plaintiff’s Rule
39(b) motion).
The fourth and fifth Daniel factors do weigh against defendants’
motion. Because KFC answered defendants’ counterclaim on April 5, 2017,99
defendants’ were required to file a jury demand with respect to the claims
99
R. Doc. 9.
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between them and KFC by April 19, 2017. See Fed. R. Civ. P. 38(b)(1).
Defendants did not file a jury demand before that date. They instead first
formally moved for a jury trial on these claims when they filed the instant
motion on November 19, 2018. Defendants now argue that they were under
the “perhaps incorrect[]” assumption that the jury demand in their thirdparty complaint against PSI applied to the claims between them and KFC.100
Defendants’ assumption is difficult to fathom. They appeal to no caselaw or
logical principles to support their contention that a jury demand in a thirdparty complaint could or would automatically apply to the other claims in a
case. As the present motion shows, defendants evidently understand that a
Rule 39(b) motion is the proper mechanism for seeking a jury trial after the
deadline for making a demand has passed. But defendants did not make
such a motion when they sought leave to file their third-party complaint on
February 9, 2018, nearly ten months after the Rule 38(b) deadline had
elapsed.
The Court nevertheless concludes that the Daniel factors weigh in favor
of granting defendants’ motion. Because there is no trial date currently
scheduled, granting defendants’ motion has no effect on the Court’s
schedule, and KFC will have ample time to prepare its evidence to be
100
R. Doc. 171-1 at 12.
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presented to a jury. Any slight prejudice to KFC is not sufficient to overcome
the Fifth Circuit’s clear preference for granting Rule 39(b) motions.
2.
Motion for Discovery
Defendants also seek additional discovery before trial. 101 Defendants
bluntly contend that “discovery is not complete” because when the parties
purported to settle this matter on July 31, defendants had a pending motion
to compel discovery and for sanctions before the Magistrate Judge. 102 That
motion was noticed for hearing on August 1. 103 The discovery deadline had
already passed when defendants filed their motion.104
Defendants do not present any compelling reason for why discovery
should be reopened before trial. Defendants instead simply rehash the
arguments they present in their motion to compel. 105 Defendants are entitled
to whatever relief the Magistrate Judge grants them in light of their pending
motion to compel and for sanctions. But the Court denies defendants’
motion to the extent defendants seek to reopen discovery beyond whatever
may be compelled by the Magistrate Judge. The Court requests that the
Id. at 14-15.
Id.
103
R. Doc. 152.
104
See R. Doc. 49 (setting discovery deadline as 60 days prior to the
August 13, 2018 trial date); R. Doc. 142 (defendants motion to compel and
for sanctions dated July 17, 2018).
105
See R. Doc. 171-1 at 14-15; R. Doc. 182 at 5-8; R. Doc. 142.
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101
102
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Magistrate Judge specify the limits of any discovery that it compels in
response to the pending motion.
III. CONCLUSION
For the foregoing reasons, the Court DENIES defendants’ motion to
enforce settlement and motion for additional discovery. The Court GRANTS
defendants’ Rule 39(b) motion for a trial by jury. A scheduling conference
will be held by telephone on March 28th at 10:45 a.m. for the purpose of
scheduling a jury trial to take place the week of October 7, 2019, or October
15, 2019, as well as a pretrial conference.
The Court will initiate the
telephone conference call and will be represented at the conference by its
case manager.
12th
New Orleans, Louisiana, this _____ day of March, 2019.
_____________________
SARAH S. VANCE
UNITED STATES DISTRICT JUDGE
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