United States District Court, D. Kansas
MEMORANDUM & ORDER
MURGUIA United States District Judge.
matter comes before the court upon defendants Paul Robben and
RDC Holdings, LLCs' Motion to Strike Plaintiffs' Jury
Trial Demand (Doc. 133) and Plaintiffs' Motion to Strike
Arguments First Raised in Defendants' Reply (Doc. 156).
claims in this case relate to a real estate development in
Olathe, Kansas. All parties to this suit were involved in
developing land in 2008, just before the real estate market
collapsed. Plaintiff Foxfield Villa Associates, LLC
(“FVA”) owns the land, which it obtained through
loans from Bank of Blue Valley and Bank Midwest. FVA is owned
by plaintiffs Bartlett Family Real Estate Fund, LLC
(“BFREF”) and PRES, LLC. BFREF is owned by
plaintiff Richard A. Bartlett and his wife. PRES, LLC, is
owned by plaintiff Ernest J. Straub, III, although in 2008
when the venture was just getting started, defendant RDC
Holdings, LLC, had a financial interest in PRES, LLC also.
RDC Holdings, LLC is owned by defendant Paul Robben.
Defendants currently have no financial interest in the
seek to enforce a jury trial waiver clause in the Operating
Agreement that governs FVA's development. Plaintiffs
respond that the FVA Operating Agreement limits its scope to
itself and its members-PRES and BFREF-so none of the
individuals, Robben, Straub, and Bartlett, can be bound by
the jury waiver or enforce it. And they agreed to abandon the
jury waiver provision. In any case, plaintiffs argue that any
claims not based on the FVA operating agreement, for example
plaintiff Straub's individual claims against defendants,
should not be barred by any jury waiver provisions.
right to a jury trial in civil cases is a basic and
fundamental right guaranteed by the Seventh Amendment. U.S.
Const. amend. XII. “[C]ourts indulge every reasonable
presumption against wavier, ” Aetna Ins. Co. v.
Kennedy to Use of Bogash, 301 U.S. 389 (1937), but
agreements waiving the right to a jury trial in federal court
are not illegal or contrary to public policy and are governed
by federal law. Telum, Inc. v. E.F. Hutton Credit
Corp., 859 F.2d 835 (10th Cir. 1988). To decide whether
a contractual waiver is valid, the court considers whether
the waiver was knowing and voluntary. Hulsey v.
West, 966 F.2d 579, 581 (10th Cir. 1992). Generally,
courts require the party seeking to enforce the waiver to
bear the burden of showing it was knowing and voluntary.
determine whether waiver is knowing and voluntary, courts
consider: (1) whether the waiver clause was conspicuous; (2)
whether there was a gross disparity in the parties'
bargaining power; (3) the professional or business experience
of the party opposing the waiver; and (4) whether the party
opposing waiver had an opportunity to negotiate the
agreement's terms. Boyd v. U.S. Nat'l
Ass'n, No. 06-2115-KGS, 2007 WL 2822518, at *18 (D.
Kan. Sept. 26, 2007). But as a preliminary matter, any jury
trial waiver provision only impacts the rights of the parties
to the agreement. Hulsey, 966 F.2d at 581.
Operating Agreement's jury waiver states:
11.17 WAIVER OF JURY TRIAL. THE COMPANY AND THE
MEMBERS HEREBY KNOWINGLY, IRREVOCABLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHTS EACH MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY ACTION, PROCEEDING, COUNTERCLAIM OR
DEFENSE BASED ON THIS AGREEMENT, OR ARISING OUT OF, UNDER OR
IN ANY WAY CONNECTED TO THIS AGREEMENT OR THE COMPANY, OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
ORAL OR WRITTEN) OR ACTIONS OF ANY PARTY HERETO RELATING TO
THE COMPANY OR THIS AGREEMENT.
(Doc. 143-2 at 26.) The plain language of the provision
states that the agreement applies to FVA (the company) and
BFREF and PRES, LLC (the members). A reasonable
interpretation of the waiver is that the parties to the FVA
Operating Agreement agreed not to make jury demands against
each other should disputes arise. “The company and the
members hereby . . . waive any rights each may have to a
trial by jury . . . [in a case against] any party hereto . .
. .” (Id.) Defendants urge the court to expand
the scope of membership to include plaintiffs Straub and
Bartlett, and defendant Robben based on agency theory,
because they were principals or agents of PRES, LLC and
BFREF. Defendants cite case law from other circuits in
support of this argument. The court prefers to rely on case
law from the Tenth Circuit when it is available and a common
sense reading of the provision.
Hulsey, the Tenth Circuit made factual distinctions
that this court finds relevant and helpful. 966 F.2d 579. Mr.
Hulsey's company and a bank entered into several loan
agreements, but he did not sign any of those agreements in
his individual capacity. Instead he signed as the president
of the company. The Tenth Circuit found that he could not be
bound by the jury waiver. Id. Even though Mr. Hulsey
had provided a personal guarantee for the loan, the Tenth
Circuit found that he should not be bound by the waiver.
Plaintiffs argue that defendant Robben was not a party to the
Operating Agreement in his individual capacity and that he
therefore has no right to enforce the jury waiver provision.
The court agrees and finds that defendants have not met their
burden to show that the jury waiver provision should be
have not shown that any individuals involved in this
case-Robben, Bartlett, or Straub-were ever parties to the FVA
agreements in their individual capacities. Bartlett and
Straub signed as representatives for their companies. Based
on Tenth Circuit law, this does not seem to be sufficient to
give defendants a right to invoke the jury waiver provision.
Likewise, although RDC had a financial interest in PRES, LLC
initially, and PRES, LLC was a member under the Operating
Agreement, RDC no longer has a financial interest in FVA and
no longer has any interest in PRES, LLC. In light of the
court's policy of indulging every ...