High Rock Westminster Street, LLC v. Bank of America, N.A.
Filing
247
ORDER denying 167 Motion to Strike Plaintiff's Jury Demand. So Ordered by Chief Judge William E. Smith on 2/9/2016. (Jackson, Ryan)
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
___________________________________
)
)
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Plaintiff,
)
)
v.
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)
BANK OF AMERICA, N.A.,
)
)
Defendant.
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___________________________________)
HIGH ROCK WESTMINSTER STREET LLC,
C.A. No. 13-500 S
ORDER
WILLIAM E. SMITH, Chief Judge.
Before the Court is Bank of America’s (“BOA”) Motion to Strike
Plaintiff’s Jury Demand (“Motion”).
(ECF No. 167.)
High Rock
Westminster Street LLC (“High Rock”) opposes the Motion. (ECF No.
168.)
I.
For the reasons set forth below, BOA’s Motion is DENIED.
Background
The
facts
of
this
action
are
familiar
to
the
parties.
Accordingly, the Court only recounts them to the extent they are
relevant to the present Motion.
In 2003, Fleet National Bank
(“Fleet”) and Inland Real Estate Acquisitions, Inc. (“Inland”)
negotiated a sale-leaseback transaction for the property located
at
111
Westminster
“Property”). 1
1
Street
in
Providence,
Rhode
Island
(the
In the transaction, Inland, through Westminster
Subsequent to the leaseback-sale, on April 1, 2004, BOA
acquired Fleet, took over occupancy of 111 Westminster, and assumed
Office
1031,
L.L.C.
–
an
acquisition
company
it
created
and
controlled for the purpose of completing the 111 Westminster
transaction — purchased the Property from Fleet. Fleet then leased
the Property back from Inland pursuant to the terms of a ten-year
lease.
The
present
Motion
stems
from
a
jury
waiver
transaction’s Purchase and Sale Agreement (“PSA”).
in
the
The PSA, dated
February 28, 2003, provided:
35.
WAIVER OF TRIAL BY JURY.
SELLER AND PURCHASER HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY
IN ANY ACTION, SUIT OR COUNTERCLAIM ARISING IN
CONNECTION WITH, OUT OF OR OTHERWISE RELATING TO THIS
AGREEMENT.
(Ex. A ¶ 35 to BOA’s Motion, ECF No. 167-3 (emphasis in original).)
The lease agreement (the “Lease”), entered into on April 17,
2003,
did
not
contain
a
jury
waiver
provision,
and
did
not
reference the PSA at all, much less incorporate the PSA’s waiver
provision.
(See Ex. B to BOA’s Motion, ECF No. 167-4.)
The Lease
did, however, include an integration clause:
35.2.
Entire Agreement.
This Lease and the
exhibits and rider, if any, attached hereto and forming
a party hereof, set forth all the covenants, promises,
agreements,
conditions
and
understandings
between
Landlord and Tenant concerning the Premises and there
are no covenants, promises, agreements, conditions or
Fleet’s responsibilities under the lease agreement. Four years
later, on January 24, 2008, High Rock bought 111 Westminster and
took over Westminster’s rights and responsibilities under the
Lease.
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understandings, either oral or written, between them
other than are herein set forth.
No alteration,
amendment, change or addition to this Lease shall be
binding upon Landlord or Tenant unless reduced to
writing and signed by each party.
(Id. at ¶ 35.2.)
Further, the Lease’s only exhibits were a “Legal
Description of Premises” and “Subordination, Nondisturbance and
Attornment Agreement,” neither of which contained a jury waiver
nor referenced the PSA.
(See id. at 25.)
BOA and High Rock agree that both the PSA and Lease were the
result
of
extensive
negotiations
respective legal counsel.
between
Fleet
and
Inland’s
BOA and High Rock also agree that they
each assumed Fleet and Inland’s rights and obligations under the
Lease.
They, however, sharply disagree over whether the PSA’s
jury waiver applies to the Lease.
BOA argues that the Court must
consider the PSA and Lease as a single instrument in which the
parties waived all rights to a jury trial for suits brought under
either document.
High Rock argues that BOA is essentially asking
the Court to rewrite the Lease to include a jury waiver to which
neither Fleet nor Inland agreed.
As detailed below, High Rock has
the better argument.
II.
Discussion
“There is a presumption against denying a jury trial based on
waiver, and waivers must be strictly construed.”
Med. Air Tech.
Corp. v. Marwan Inv., Inc., 303 F.3d 11, 18 (1st Cir. 2002).
Indeed, because “right of jury trial is fundamental, courts indulge
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every reasonable presumption against waiver.”
Aetna Ins. Co. v.
Kennedy ex rel. Bogash, 301 U.S. 389, 393 (1937).
Nevertheless,
parties can contract away their right to a jury where (1) the
waiver unambiguously covers the claims asserted in the lawsuit;
and (2) the parties knowingly and voluntarily waived the right.
Med. Air Tech., 303 F.3d at 19.
Here, BOA’s claim fails on the
ambiguity prong of this waiver analysis.
To determine if a waiver provision is unambiguous, courts
first look to the plain language of the contract.
Id.
If the
language is unclear, courts then apply the applicable state’s
principals of contract interpretation.
See id. (construing a
contractual jury waiver in Massachusetts under Massachusetts law).
All of the claims at issue in this lawsuit arise from BOA’s alleged
breach of the Lease; none arise under provisions of the PSA.
And,
as noted above, the Lease does not contain a jury waiver, does not
expressly incorporate any provisions of the PSA, and contains an
integration clause that limits the Lease to its own terms and the
exhibits
attached
unambiguous:
it
to
it.
Thus,
does
not
contain
on
its
a
jury
face,
waiver
the
nor
Lease
is
does
it
incorporate other agreements that contain a waiver.
To avoid this inconvenient fact, BOA argues that the PSA and
the Lease constitute a single instrument under Rhode Island law,
and, as a result, the PSA’s jury waiver applies to the Lease.
BOA
is correct that, under Rhode Island law, “instruments executed at
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the same time, for the same purpose and in the course of the same
transaction * * * are to be considered as one instrument and are
to be read and construed together.”
Rhode Island Depositors Econ.
Prot. Corp. v. Coffey & Martinelli, Ltd., 821 A.2d 222, 226-27
(R.I. 2003) (quoting Old Kentucky Distributing Corp. v. Morin, 146
A. 403, 404 (R.I. 1929) (emphasis added)).
falters on two points.
“executed
But its argument
First, while BOA argues that the Lease was
contemporaneously
with
the
third
amendment
to
[PSA],” it cites to no evidence to support this assertion.
BOA’s Mem. in Supp. of Mot. 8, ECF No. 167-1.)
the
(See
And the documents
BOA does attach to its Motion contradict BOA’s assertion: the PSA
was dated February 28, 2003 and the Lease was dated April 17, 2003.
(See Exs. A & B to BOA’s Motion, ECF Nos. 167-3 & 167-4.)
Second,
while BOA argues that the PSA and Lease were part of the same
transaction (the sale-leaseback of the Property), it does not
articulate how the PSA and Lease were executed for the same
purpose.
Indeed,
the
documents
plainly
govern
different
relationships, with different obligations, to be carried out over
vastly different time periods.
The PSA related to a finite
transaction (the sale of the Property), operated for a short period
of time, and spelled out the obligations of the Property’s buyer
and
seller.
The
Lease,
on
the
other
hand,
governed
the
relationship between a landlord and tenant, and established their
obligations to each other for a period of ten years.
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In short,
whether the PSA and Lease constitute the same instrument is, at
best ambiguous, rendering application of the PSA’s jury waiver to
the Lease under this theory inappropriate.
Further, even if the Court were to construe the PSA and Lease
as a single instrument, it would still be unclear whether the PSA’s
jury waiver would apply to the Lease.
First, as noted above, the
Lease’s integration clause unambiguously limits the Lease’s terms
to the four corners of the documents and exhibits attached thereto.
It expressly states that (1) the Lease and its attachments “set
forth all the covenants, promises, agreements, conditions and
understanding” between Inland; and (2) disclaims the existence of
any other oral or written agreement other than those set forth in
the Lease.
(See Ex. B ¶ 35.2 to BOA’s Motion, ECF No. 167-4.)
The PSA was not attached to, nor referenced by, the Lease, and BOA
has
presented
no
authority
suggesting
that
the
Court
should
overlook an unambiguous integration clause even when construing
instruments together.
Further, by its own terms, the PSA’s jury waiver does not
extend beyond suits related to the purchase of the Property.
Specifically, the PSA limits the jury waiver to lawsuits and
actions “arising in connection with, out of or otherwise relating
to this Agreement.”
(emphasis added).)
(Ex. A ¶ 35 to BOA’s Motion, ECF No. 167-3
The PSA defines “Agreement” as the “Purchase
and Sale Agreement” and then goes on to recount the conditions of
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sale for the Property.
(Id. at 1.)
While one condition was Fleet
leasing the Property back from Inland, the PSA does not purport to
govern the conduct of the parties during the Lease or otherwise
incorporate the terms of the Lease into the PSA.
Finally, the Court must note – as BOA admits – that the PSA
and
Lease
were
sophisticated
extensively
legal
counsel,
negotiated
counsel
who
by
the
ostensibly
parties’
knew
the
significance of waiving their respective rights to a jury trial.
It strains credulity to believe that such counsel would rely on a
single jury waiver in the PSA if they also intended to waive their
jury rights for the ten year term of the Lease.
The more likely
conclusion is that the parties did not intend to waive their right
to a jury in the Lease, but only for the discrete, relatively short
duration of the PSA.
In any event, the Court need not guess the
intentions of capable lawyers in 2003.
The PSA’s jury waiver to
the Lease is, to this Court’s eyes, not applicable, and, at best,
ambiguous.
reasonable
Particularly
presumption
where
against
the
Court
waiver,
denied.
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must
BOA’s
indulge
Motion
every
must
be
III. Conclusion
For the foregoing reasons BOA’s Motion to Strike Plaintiff’s
Jury Demand is DENIED.
IT IS SO ORDERED.
William E. Smith
Chief Judge
Date: February 9, 2016
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