Case Title: Busby v. BancorpSouth Bank

Citation: 

Docket Number: 1111209

State: alabama

Court: Alabama Supreme Court

Date: 2012-10-19T00:00:00Z

Document:
Rel: 10/19/2012
Notice: This opinion is subject to formal revision before publication in the advance
sheets of Southern Reporter.  Readers are requested to notify the Reporter of Decisions,
Alabama Appellate Courts, 300 Dexter Avenue, Montgomery, Alabama 36104-3741 ((334)
229-0649), of any typographical or other errors, in order that corrections may be made
before the opinion is printed in Southern Reporter.
SUPREME COURT OF ALABAMA
OCTOBER TERM, 2012-2013
_________________________
1111209
_________________________
Ex parte BancorpSouth Bank
PETITION FOR WRIT OF MANDAMUS
(In re:  Thomas L. Busby
v.
BancorpSouth Bank)
(Baldwin Circuit Court, CV-11-901025)
MAIN, Justice.
BancorpSouth Bank ("the Bank") petitions this Court for
a writ of mandamus directing the trial court to vacate its
1111209
order denying the Bank's motion to strike the jury demand in
the complaint filed against it by Thomas L. Busby and to enter
an order granting the Bank's motion, thereby 
enforcing Busby's
waiver of a jury trial.  We grant the petition and issue the
writ.  
I. Factual Background and Procedural History
Busco, LLC, a limited-liability company of which Busby
was a member, built a house for resale using the proceeds from
a construction loan provided Busco by the Bank.  Busco sold
the house to Jeanette Sims, whose mortgage loan was
insufficient to pay the construction loan in full.  The Bank
then loaned Sims $70,000 to pay off the construction loan and
to provide funds for additional improvements to the house.  In
connection with the Bank's loan to Sims and the later
refinancing of that loan, Busby signed three documents, one
each in 2008, 2009, and 2010, entitled "Unconditional and
Continuing Guaranty."  Each guaranty agreement consisted of
two pages and contained the following language on the first
page in the same type size as the other language:  
"7. Waivers.  Guarantor expressly waives TRIAL BY
JURY per Section 22 ...."  
(Capitalization in originals.)    
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Each guaranty agreement contained the following language on
the second page in Section 22, which, as the last section of
the agreement, was located a few inches above the signature
line and which provided in bold, capitalized type:  
"22. Waiver of Trial by Jury. GUARANTOR AND BANK
WAIVE ANY RIGHT OF TRIAL BY JURY IN ANY ACTION BY
BANK OR BY GUARANTOR IN ANY WAY CONNECTED WITH THIS
GUARANTY, THE OBLIGATION EVIDENCED HEREBY, INCLUDING
THOSE OF BORROWER, UNDER OR ARISING FROM ANY OTHER
LOAN DOCUMENTS, THE TRANSACTION(S) RELATED HERETO,
OR THE DEBTOR-CREDITOR RELATIONSHIP CREATED HEREBY."
The only item between the signature line and Section 22 was a
box labeled "NOTICE TO GUARANTOR," which phrase was also
capitalized in bold type.  
The Bank states that Busby has both an undergraduate
degree in business and a law degree, that he has worked as a
stockbroker, that he is the majority owner of a company that
teaches clients about the stock market, that he has guaranteed
approximately 20 other loans for various entities, and that he 
has borrowed money himself on various occasions.  The Bank
states that Busby is able to read and to understand promissory
notes and that he understands the difference between a limited
guaranty and an unlimited guaranty.  The Bank also states,
citing Busby's deposition, that Busby admitted that he did not
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read the guaranty agreements before he signed them but
conceded that he had the opportunity to read them before
signing them.  Busby also stated in his deposition that he did
not read the guaranty agreements because the 
amount 
guaranteed
was not what he had agreed to and he expected to receive
paperwork "fixing it" from Phillip Webb, the loan officer with
whom he dealt at the Bank.   
Sims defaulted on the loan, and the Bank sought payment
from Busby, as guarantor.  Busby then sued the Bank, alleging
that the Bank had defrauded him by representing that his
guaranty was for $63,000 when in fact it was for $70,000 (the
full amount of Sims's loan) and by promising him that it would
modify the guaranty agreement so that it would cover only 89%
of Sims's indebtedness.  Busby also sought a judgment
declaring that his guaranty had been terminated by an
agreement of the parties, and he demanded a jury trial.  The
Bank filed a counterclaim alleging that Busby had breached the
guaranty agreements and sought a judgment declaring the 
extent
of Busby's obligations under the agreements.  The Bank moved
to strike Busby's jury demand on the basis of the jury-trial
waivers in the guaranty agreements executed by Busby.  Busby
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opposed the Bank's motion.  The trial court denied the Bank's
motion to strike Busby's jury demand.  Busby then filed an
amended complaint, alleging that the Bank had misrepresented
the terms and amount of the guaranties, that it had
"willfully, wantonly or negligently breached a duty to fully
inform Busby of the amount and duration of the loan he
guaranteed [and] suppressed its intent to hold Busby liable
for the full amount ... [and had] failed to mitigate its
damages."  The Bank then petitioned this Court for a writ of
mandamus.  
II. Standard of Review
"The standard governing our review of an issue
presented in a petition for the writ of mandamus is
well established:
"'[M]andamus 
is 
a 
drastic 
and 
extraordinary
writ to be issued only where there is (1)
a clear legal right in the petitioner to
the order sought; (2) an imperative duty
upon 
the 
respondent 
to 
perform, 
accompanied
by a refusal to do so; (3) the lack of
another adequate remedy; and (4) properly
invoked jurisdiction of the court.'
"Ex parte Edgar, 543 So. 2d 682, 684 (Ala. 1989).
"Mandamus is an appropriate remedy where the
availability of a jury trial is at issue, as it is
in this case.  Ex parte Merchants Nat'l Bank of
Mobile, 257 Ala. 663, 665, 60 So. 2d 684, 686
(1952)."  
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Ex parte Cupps, 782 So. 2d 772, 774-75 (Ala. 2000).  
III. Analysis
The right to a jury trial is a significant right in our
jurisprudence.  "Public policy, the Alabama Rules of Civil
Procedure, and the Alabama Constitution all express a
preference for trial by jury."  Ex parte AIG Baker Orange
Beach Wharf, LLC, 49 So. 3d 1198, 1200-01 (Ala. 2010) (citing 
Ex parte Cupps, 782 So. 2d at 775).  Nevertheless, the right
to a jury trial is not absolute in that "no constitutional or
statutory provision prohibits a person from waiving his or her
right to trial by jury."  Mall, Inc. v. Robbins, 412 So. 2d
1197, 1199 (Ala. 1982).  
The Bank first argues that the jury-trial waivers in the
guaranty agreements signed by Busby are enforceable.  In
Gaylord Department Stores of Alabama v. Stephens, 404 So. 2d
586, 588 (Ala. 1981), this Court articulated three factors to
consider in evaluating whether to enforce a 
contractual 
waiver
of the right to trial by jury: (1) whether the waiver is
buried deep in a long contract; (2) whether the bargaining
power of the parties is equal; and (3) whether the waiver was
intelligently and knowingly made.  The Bank argues that all
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three of these factors support enforcing Busby's waiver of the 
right to a jury trial.  
As to the first factor, the Bank argues that none of the
jury-trial waivers are hidden deep within a long contract.  We
agree.  The guaranty agreements are each only two pages long,
and, although the waiver provision in Section 7 on the first
page does not stand out, i.e., it is not emphasized by bold
type or capitalization, there is no question that the waiver
in Section 22 on the second page is clear and noticeable.  It
is a separate paragraph; the text is bold and capitalized; and
it is located only one paragraph above the signature line. 
Busby does not disagree as to the first factor. 
As to the second factor, the Bank contends that courts
addressing jury-trial waivers have focused on the business
experience or acumen of the party signing the waiver.  See,
e.g., Mall, Inc., 412 So. 2d at 1199.  In this case, the Bank 
argues, Busby has both a business degree and a law degree and
is an experienced businessman, all elements tending to show
equal bargaining power between the parties.  Busby, however,
argues in his brief that the bargaining power between him and
the Bank was not equal.  Busby argues:
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"[The Bank] uses form documents which are not
susceptible to negotiation.  Despite Busby being a
businessman and having a law degree, or perhaps
because of his being a businessman, he understood
that nothing in the boilerplate of the guaranty was
negotiable.  
"He understood any attempt to modify the
standard terms would be futile.  His choice was to
sign the guaranty to allow the Sims loan to close or
to walk away.  He had no bargaining power when it
came to the language in the guaranty.  The form was
prepared by [the Bank] and was its standard form of
guaranty. ...
"Equally clear is that Busby did not knowingly
and intentionally sign away his right to a jury
trial by signing the waiver.  Even though he did
knowingly and intentionally sign a form of guaranty,
he also understood that he had to take the form as
it was.  He did not have any opportunity to
negotiate changes but was presented with a completed
guaranty at one [branch of the Bank] that had been
prepared at another."
  
Busby's brief, at 15.  If we accepted Busby's argument,
however, every form contract drafted and presented by a
business institution and signed by an individual, no matter
how educated the individual was, would be subject to being
disavowed by the signatory on the basis of "unequal bargaining
power."  Busby and the Bank contracted with each other for
Busby to guarantee the Sims loan, and each party clearly  had 
equal bargaining power in entering into that contract.  We
will not rewrite the contract for either party.  
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As to the third factor, the Bank points out that Busby
has extensive experience in borrowing money and signing
guaranty agreements and that he can understand legal
documents, including loan documents and guaranty agreements. 
The jury-trial waiver language is clear and uncomplicated. 
Furthermore, Busby, with his business and law degrees, has the
knowledge and experience to satisfy this Court that the waiver
of the rights to a jury trial was knowingly and intelligently
made.  
After reviewing the three Gaylord factors, we conclude
that the jury-trial waivers in the guaranty agreements signed
by Busby are enforceable.  We now turn to the Bank's second
argument-- 
that, 
despite 
Busby's 
assertion 
that 
the 
jury-trial
waivers do not apply to his tort claims sounding in fraud, the
jury-trial waivers in the guaranty agreements are applicable
to all the claims asserted in Busby's original and amended
complaints.  
In Ex parte AIG Baker Orange Beach Wharf, L.L.C., supra,
this Court enforced broad jury-trial waiver language in a
contract and ordered the trial court to grant the petitioner's
motion to strike the jury demand.  This Court recognized a
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1111209
distinction between contractual jury waivers that are limited
to claims "arising from" the agreement, which are to be
narrowly constructed and which exclude claims that do not
require a reference to or construction of the underlying
contract for resolution, and broader waiver provisions that
cover claims "arising out of or relating to" a contract.  The
AIG Baker Court relied upon analogous cases dealing with
arbitration clauses, such as Selma Medical Center v. Manayan,
733 So. 2d 382 (Ala. 1999) (holding that arbitration clause
covering any dispute "concerning any aspect of" agreement
between 
doctor 
and 
hospital 
required 
arbitration 
of
fraudulent-inducement claim); Beaver Construction Co. v.
Lakehouse, L.L.C., 742 So. 2d 159, 165 (Ala. 1999) (noting
that "'relating-to' language has been held to constitute a
relatively 
broad 
arbitration 
provision"); 
General 
Motors 
Corp.
v. Stokes, 850 So. 2d 1239 (Ala. 2002) (broadly interpreting
provision 
in 
dealer-relocation 
agreement 
calling 
for
arbitration 
of claims "arising under or relating to" 
agreement
and negotiation thereof to include claims that manufacturer
fraudulently 
induced dealer to enter into agreement); Ex 
parte
Gates, 675 So. 2d 371 (Ala. 1996) (holding that clause in
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mobile-home 
sales 
contract 
providing 
for 
arbitration 
of 
claims
"arising from or relating to" the contract required
arbitration 
of 
buyers' 
claims 
that 
defendants 
had 
misrepresented or concealed facts to induce them to enter into
agreement because claims were asserted "in connection with"
contract); and Ex parte Lorance, 669 So. 2d 890 (Ala. 1995)
(holding that clause in doctor's professional-services
contract requiring arbitration of any controversy or claim
"arising out of or relating to" contract covered doctor's
claim that he was fraudulently induced to enter into
agreement).  
The Bank argues that the jury-trial waivers in the
guaranty  agreements executed by Busby fall within the broader
category, covering "any action in any way connected with" the
guaranty agreements.  Busby argues that none of his claims are
"connected with" the guaranty agreements "as that phrase is
used in the jury waiver."  Relying on Parker v. State, 333 So.
2d 806, 809 (Ala. 1976), Busby argues that "[t]he language
'connected 
with' applies only prospectively after 
an event 
has
occurred."  Busby's brief, at 9.  He contends that the Bank's
alleged misrepresentations preceded his signing the guaranty
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agreements, and he argues that, "[b]y analogy, 'connected
with' would apply only to conduct occurring after a contract
has been entered into because there is no contract with which
the conduct can be connected until the contract actually
exists."  Busby's brief, at 9-10.  
Busby's reliance on Parker is misplaced.  In Parker, this
Court considered the question "whether an office holder may be
impeached for [a criminal] offense involving moral turpitude
which occurred prior to his assumption of office."  333 So. 2d
at 806.  The Court interpreted a constitutional provision
providing for the removal from office of certain State
officers 
"'for willful neglect of duty, corruption in office,
incompetency, or intemperance in the use of
intoxicating liquors or narcotics to such an extent,
in view of the dignity of the office and importance
of its duties, as unfits the officer for the
discharge of such duties, or for any offense
involving moral turpitude while in office, or
committed 
under 
color 
thereof, 
or 
connected
therewith.'"
333 So. 2d at 807 (quoting § 173, Art. VII, Ala. Constitution
1901).  The Court concluded that it could not see "how an
individual's acts could possibly be connected with an office
which he did not hold either de jure or de facto at the time
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the alleged acts were committed."  333 So. 2d at 809.  The
Parker 
Court's 
holding 
has 
nothing 
to 
do 
with 
the
interpretation of contractual language of any kind, including
whether the signatory of the contract has waived the right to
a jury trial.  
Busby also argues in his brief that none of his claims
are 
"connected or related to an interpretation and 
performance
of the guaranty but, instead, to [the Bank's] insistence on
compelling Busby to pay amounts the [Bank] itself has agreed
Busby does not owe."  Busby's brief, at 17.  We disagree.  In
his 
initial 
complaint, 
Busby 
alleged 
that 
the 
Bank
fraudulently represented to him that it would modify the
amount he had guaranteed and that the Bank breached its
guaranty 
agreements with him because it "caus[ed] the 
guaranty
to cover a different, larger amount of debt than agreed upon
by [Busby]."  He also sought a judgment declaring that he was
"not indebted to [the Bank] because the original guaranty was
terminated by agreement."  In his amended complaint, Busby
further alleged that the Bank "engaged in deceptive behavior"
when it presented him with incomplete guaranty agreements for
his signature and then filled in the blanks in those
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agreements without his knowledge or permission; that the Bank
engaged in promissory fraud when it induced him to sign
guaranty agreements that were incorrect as represented, which
errors the Bank did not intend to correct when it made them; 
that the Bank breached its duty "to make full and truthful
disclosures in connection with all its loans"; that the Bank
fraudulently suppressed its intent to hold him liable for more
than he agreed to guarantee; and that the Bank failed to
mitigate its damages.  The jury-trial waiver language in the
guaranty agreements says not only that both the Bank and Busby
waive a jury trial in "any action by bank or by guarantor in
any way connected with this guaranty," but also that the Bank
and Busby waive a jury trial as to "the obligation evidenced
hereby, including those of borrower, under or arising from any
other loan documents, the transaction(s) related hereto, or
the debtor-creditor relationship created hereby."  The
foregoing language is substantially similar to the jury-trial
waiver language in AIG Baker, in which this Court held that
the defendant's "allegations of fraudulent inducement on [the
plaintiff's] part in entering into the lease agreement and the
guaranty document clearly pertain to or relate to the lease
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agreement (its negotiation), the 'dealings of the parties'
with respect to the lease agreement and the guaranty document,
and a 'dispute or controversy' between the parties."  49 So.
3d at 1202.  In this case, the jury-trial waiver language
clearly applies to all of Busby's allegations that are "in any
way 
connected 
with" 
the 
guaranty 
agreements, 
"the
transaction(s) related hereto," or "the debtor-creditor
relationship" 
created by the guaranty agreements.  We 
conclude
that the scope of the jury-trial waiver language in the
guaranty agreements is broad enough to encompass Busby's
claims.  
We note that Busby contends that the Bank submitted
deposition testimony to this Court that it did not present to
the trial court when that court denied the Bank's motion to
strike Busby's jury demand.  Therefore, Busby argues, the Bank
does not have a clear legal right to a writ of mandamus
because, he argues, the Bank can file a motion to reconsider
with the trial court that includes the material the trial
court did not previously consider.  The Bank replies that it
has submitted nothing to this Court that it did not submit to
the trial court.  It attached to its reply brief an e-filed
stamped copy of its motion to strike the jury demand and 
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Exhibit A attached to that motion, which consisted of excerpts
and exhibits from Busby's deposition.  The Bank says that the
same deposition excerpts are included in Appendix C to its
petition for a writ of mandamus filed with this Court.  This
Court has reviewed the exhibits and appendices and has
determined that the Bank has not submitted any documentation
to this Court that was not before the trial court.  Therefore,
we conclude that the Bank has demonstrated that it has a clear
legal right to have Busby's jury demand stricken.  
IV.  Conclusion
We grant the petition, and we direct the trial court to
vacate its order denying the Bank's motion to strike Busby's
jury demand and to enter an order granting the Bank's motion. 
PETITION GRANTED; WRIT ISSUED. 
Malone, C.J., and Woodall, Bolin, and Murdock, JJ.,
concur. 
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