In Re: RFC and RESCAP Liquidating Trust Litigation

Filing 4799

ORDER re #4752 Letter to District Judge by ResCap Liquidating Trust and iServe Residential regarding the parties' jury waiver dispute. This document relates to: ResCap Liquidating Trust v. iServe Residential Lending, LLC as successor to United Residential Lending LLC, Case No. 13-cv-3531 (SRN/HB) (Written Opinion). Signed by Judge Susan Richard Nelson on 12/20/2018. (SMD)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA

In Re: RFC and RESCAP Liquidating
Trust Action

Case No. 0:13-cv-3451 (SRN/HB)

This document relates to:
ResCap Liquidating Trust v. iServe
Residential Lending, LLC as successor to
United Residential Lending LLC, Case No.
13-cv-3531 (SRN/HB)

ORDER RE: PLAINTIFF’S REQUEST
TO STRIKE DEFENDANT iSERVE’S
JURY TRIAL DEMAND

SUSAN RICHARD NELSON, United States District Judge
For the following reasons, the Court grants Plaintiff’s1 request to strike Defendant
iServe’s jury demand. This action will be tried to the Court.
I.

BACKGROUND
On August 25, 2004, Plaintiff and Defendant’s predecessor companies signed a three-

page “client contract” in which both parties agreed to, among other things, “fully waive any
right to trial by jury to the extent that any such right now exists or arises after the date of this
Contract.” (Dec. 7, 2018 Letter [Doc. No. 4752] Ex. A § 15 (“Client Contract”).) Moreover,
the parties agreed, “this waiver of the right to trial by jury . . . is intended to encompass each
instance and each issue for which the right to trial by jury would otherwise apply.” (Id.) The
Contract further stated that either party may submit “this Contract” “to any court having

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On December 11, 2018, the parties stipulated that ResCap Liquidating Trust is the
sole Plaintiff in this case. (See Doc. No. 4760.) The Court will therefore use the singular
“Plaintiff” in this Order.

jurisdiction over the subject matter” “as conclusive evidence of this waiver.” (Id.) This waiver
is in bold lettering and sits in a stand-alone paragraph titled “Waiver of Jury Trial.”
On December 15, 2013, Plaintiff sued Defendant for breach of contract, and for
contractual indemnification. (See Case No. 13-cv-3531 Compl. [Doc. No. 1].) The Complaint
did not include a jury trial demand. However, notwithstanding the aforementioned waiver,
Defendant included a demand for “a jury trial on all issues so triable” in its Answer to this
Complaint, as well as in its Answer to Plaintiff’s Second Amended Complaint. (See Case No.
13-cv-3531 An. [Doc. No. 75]; Case No. 13-cv-3451 An. to Second Am. Compl. [Doc. No.
1188].)
In January 2015, Defendant iServe’s case was consolidated with dozens of other cases
brought by Plaintiff against similarly-situated mortgage lender defendants, for pre-trial
purposes. As the consolidated action proceeded through discovery and motion practice,
Plaintiff did not move to strike Defendant’s jury trial demand. Indeed, neither party raised the
issue of bench trial versus jury trial at all. However, as this individual case neared trial,
Plaintiff discovered that Defendant would not consent to a bench trial.
As such, on December 7, 2018, Plaintiff moved to strike Defendant’s jury trial
demand. (See Dec. 7, 2018 Letter.)2 Put simply, Plaintiff argues that Defendant “contractually
waived its right to a jury trial,” and, under numerous cases applying Federal Rule of Civil
Procedure 39, a party’s “prior jury demand may be stricken at any time.” (Id. at 1-3.)
Defendant, in contrast, argues that, because “the parties and the Court have consistently

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Plaintiff made this motion by way of a joint letter, in which both parties detailed
their respective positions.
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conducted themselves on the assumption that this case would be heard by a jury,” “it is too
late now for [Plaintiff] to seek enforcement of a contractual jury waiver.” (Id. at 3-4.)
II.

RULING
The Court agrees with Plaintiff. Defendant’s argument that Plaintiff “waived its right

to enforce the jury waiver” lacks legal support. (Id. at 3.) For one, it is black-letter law that a
party may “knowingly and voluntarily” waive its Seventh Amendment right to trial by jury
by contract, just as the parties did here. See Nw. Airlines, Inc. v. Air Line Pilots Ass’n, Int’l,
373 F.2d 136, 142 (8th Cir. 1967) (“[I]t is . . . well-settled that a right to a jury trial may be
waived.”). Moreover, numerous courts have held that a party that has contracted for a waiver
of its jury trial right may move to strike a jury trial demand “at any time, even on the eve of
trial.” See, e.g., Tracinda Corp. v. DaimlerChrysler AG, 502 F.3d 312, 226-27 (3d Cir. 2007)
(upholding motion to strike jury demand based on contractual waiver “a few weeks before
trial” and noting that “a party may file a motion to strike a jury demand at any time under Fed.
R. Civ. P. 39(a)”); Mowbray v. Zumot, 536 F. Supp. 2d 617, 621 (D. Md. 2008) (determining,
approximately one month before trial, that case would proceed as a bench trial based on
contractual waiver and stating that “it is well-established that a party (or the Court on its own
initiative) may move to strike a jury demand at any time, even on the eve of trial”); accord
United States v. Schoenborn, 860 F.2d 1448, 1455 (8th Cir. 1988) (upholding a court’s
decision to strike a jury demand “the day before trial,” on grounds that the defendant had “no
constitutional or statutory right to a jury trial” in an equitable action brought by the
government); Dec. 7, 2018 Letter at 2-3 (citing numerous other cases).

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Defendant does not cite any case law to the contrary. 3 Rather, Defendant suggests that
the Court should “exercise its discretion” “[i]n the particular circumstances of this case,” and
find Plaintiff’s motion to strike untimely. (Dec. 7, 2018 Letter at 4.) Specifically, Defendant
argues that Plaintiff’s delay in moving to strike prejudiced it. For instance, Defendant notes
that, because it believed this case would be tried before a jury, it “devised its litigation
strategy” on that assumption and “refrain[ed] from offering certain expert witnesses it feared
might unduly confuse a jury.” (Id.) Defendant does not offer any more specific examples of
prejudice.
Here, Plaintiff and Defendant, both sophisticated financial entities, knowingly and
voluntarily contracted away their Seventh Amendment jury trial rights. And Plaintiff has
never expressly relinquished that right. The Court is therefore dutybound to uphold the
parties’ contractual waiver, even with discovery complete and trial scheduled for early next
year. Moreover, to the extent the timeliness of Plaintiff’s Rule 39 motion is a matter for the
Court’s discretion, the Court finds that, under the unique circumstances of this consolidated
action, Plaintiff did not substantially prejudice Defendant by waiting to bring this motion. The
Client Contract makes plain that Plaintiff’s motion to strike has been a possibility since the
onset of this action. Defendant should have “devised its litigation strategy” accordingly. (Id.
at 4.) To paraphrase a fellow District Court’s observation in an analogous situation, it was not
reasonable to “assum[e],” even following years of discovery, “that [Plaintiff] had by its

3

Although Defendant cites general Minnesota state law holding that a contractual
right may be waived by “unreasonable delay in asserting the right,” it does not cite any
case law addressing the specific circumstance at issue here. (See Dec. 7, 2018 Letter at 3
(citing Winters v. Kiffmeyer, 650 N.W.2d 167, 170 (Minn. 2002)).)
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silence on the subject acquiesced in a jury trial . . . given the waiver [Plaintiff] bargained for,
obtained, and never stated was relinquished.” Bear Stearns Funding, Inc. v. Interface GroupNevada, Inc., No. 03-cv-8259 (CSH), 2007 WL 3286645, at *5 (S.D.N.Y. Nov. 7, 2007)
(granting motion to strike jury demand two-and-a-half years after jury demand asserted).
For these reasons, Plaintiff’s motion to strike Defendant iServe’s jury demand [Doc.
No. 4752] is GRANTED. This action will be tried to the Court.
Dated: December 20, 2018

/s/ Susan Richard Nelson
SUSAN RICHARD NELSON
United States District Judge

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