Court Opinion

ID: 3128544
Source: CourtListenerOpinion
Date Created: 2015-10-16 16:02:40.095966+00
Date Added: 2024-06-11T15:20:36.022360
License: Public Domain

COURT OF APPEALS
                           SECOND DISTRICT OF TEXAS
                                FORT WORTH

                                  NO. 2-10-182-CV

IN RE GO COLORADO 2007                                                     RELATOR
REVOCABLE TRUST

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                             ORIGINAL PROCEEDING

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                                     OPINION

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                                   I. INTRODUCTION

      In this original proceeding, Relator Go Colorado 2007 Revocable Trust (the

Trust) contends that the trial court abused its discretion by enforcing a contractual

jury waiver against the Trust when it did not exist at the time the guaranty containing

the contractual jury waiver was signed; did not sign the guaranty containing the

contractual jury waiver provision; and was not a party to, or assignee of, the guaranty

containing the contractual jury waiver provision. Because we hold that the trial court
abused its discretion by enforcing the guaranty’s jury waiver provision against the

Trust, we will conditionally grant the Trust’s petition for writ of mandamus.

                                    II. B ACKGROUND

      In May 2007, Gregory Obert created the Trust. In April 2006, prior to the

Trust’s creation, real party in interest Center Capital Corporation (CCC) entered into

a loan and security agreement that was guaranteed by Go Interests, LLC; Gregory

M. Obert; Gwendolyn M. Obert; Go Helicopters, Inc.; Helitrans Company; Hilltop

Commercial Holdings, Inc.; and HMC Helicopter Service, Inc.               Each of these

individuals and entities (the Guarantors) signed a guaranty. The last sentence of

each guaranty provides, “GUARANTOR HEREBY W AIVES TRIAL BY JURY AND

THE RIGHT THERETO IN ANY ACTION OR PROCEEDING OF ANY KIND

ARISING ON, OUT OF, UNDER OR BY REASON OF THIS GUARANTY.”

      Eventually, CCC sued the Guarantors for breach of their guaranties. CCC

later added the Trust as a defendant in the pending case. Obert did not sign the

guaranty in his capacity as trustee of the Trust; he signed it in his individual capacity.

In fact, the Trust was not in existence at the time the guaranties were executed.

CCC nonetheless sought enforcement of the guaranties’ jury waiver provisions

against the Trust, and the trial court signed a May 20, 2010 order enforcing the jury

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waiver and placing CCC’s lawsuit against all defendants, including the Trust, on the

court’s nonjury docket. 1

      The Trust filed this original proceeding, contending that the trial court abused

its discretion by enforcing the contractual jury waiver against it; CCC filed a

response.2

                                    III. ANALYSIS

                              A. Standard of Review

      Mandamus relief is proper only to correct a clear abuse of discretion when

there is no adequate remedy by appeal. In re Columbia Med. Ctr. of Las Colinas,

290 S.W .3d 204, 207 (Tex. 2009) (orig. proceeding). A trial court clearly abuses its

discretion when it reaches a decision so arbitrary and unreasonable as to amount

to a clear and prejudicial error of law. Walker v. Packer, 827 S.W .2d 833, 839 (Tex.

1992) (orig. proceeding). A trial court also abuses its discretion if it incorrectly

      1
          After hearing CCC’s motion to reconsider the jury setting and motion to
strike, the trial court granted the motion to strike by its May 20, 2010 order. CCC’s
suit against the Trust was placed on the trial court’s nonjury docket.
      2
         In its response, CCC points out that the contractual documents contain a
choice-of-law provision indicating that they are governed by Connecticut law. But
CCC also asserts that “[w]hether this court applies Texas law or Connecticut law, the
result is the same” and proceeds to cite and rely upon Texas case law in its
response. If the result is the same under the law of either jurisdiction, there is no
need to resolve the choice-of-law question. See, e.g., Duncan v. Cessna Aircraft
Co., 665 S.W .2d 414, 419 (Tex. 1984). Consequently, we need not do so here.

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interprets or improperly applies the law. In re Dep’t of Family & Protective Servs.,

273 S.W .3d 637, 642–43 (Tex. 2009) (orig. proceeding); Walker, 827 S.W .2d at 840.

      Absent extraordinary circumstances, mandamus will not issue unless a relator

lacks an adequate remedy by appeal. In re Van Waters & Rogers, Inc., 145 S.W .3d

203, 210–11 (Tex. 2004) (orig. proceeding) (citing Walker, 827 S.W .2d at 839).

W hen a trial court abuses its discretion by enforcing or by refusing to enforce a

contractual jury waiver provision, the parties have no adequate remedy by appeal.

See In re Gen. Elec. Capital Corp., 203 S.W .3d 314, 316–17 (Tex. 2006) (orig.

proceeding); In re Prudential Ins. Co. of Am., 148 S.W .3d 124, 136 (Tex. 2004) (orig.

proceeding); see also Van Waters & Rogers, Inc., 145 S.W .3d at 210–11 (explaining

that an appeal is inadequate for mandamus purposes when parties are in danger of

permanently losing substantial rights, such as when the appellate court would not

be able to cure the error, the party’s ability to present a viable claim or defense is

vitiated, or the error cannot be made part of the appellate record).

      B. The Trust Did Not Knowingly and Voluntarily Waive a Jury Trial

      A prelitigation contractual jury waiver must be made knowingly and voluntarily.

Prudential Ins. Co. of Am., 148 S.W .3d at 132 (holding constitutional right to jury trial

may be waived via contract so long as the waiver is made knowingly, voluntarily, and

intelligently “with sufficient awareness of the relevant circumstances and likely

consequences”); see also Gen. Elec. Capital Corp., 203 S.W .3d at 316–17. W aiver

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requires either the “intentional relinquishment of a known right or intentional conduct

inconsistent with claiming that right.” Gen. Elec. Capital Corp., 203 S.W .3d at 316.

      As set forth above, the Trust did not exist in April 2006 when Gregory Obert

and the other defendants executed the guaranties containing the jury waiver

provisions. Obert signed a guaranty in his individual capacity, not in his capacity as

trustee of the Trust. The Trust is not a party to a guaranty and does not qualify as

a “GUARANTOR [W HO] HEREBY W AIVES TRIAL BY JURY” under the guaranties.

Obert’s individual waiver of his right to a jury trial cannot, under any stretch of

reasoning, be construed as a knowing and voluntary waiver on behalf of the

subsequently-created Trust of the right to a jury trial. Obert could not have acted as

trustee of a trust that had not yet been created. How can an individual who is not yet

a trustee knowingly and voluntarily waive the constitutional right to a jury trial on

behalf of a trust that does not yet exist? See Prudential Ins. Co. of Am., 148 S.W .3d

at 136 (requiring jury trial waiver to be knowing and voluntary). W e hold that the

Trust did not knowingly and voluntarily waive its constitutional right to trial by a jury.

      W hile conceding that the Trust was not in existence when the guaranties were

executed, that Obert did not sign the guaranty as trustee of the Trust, and that the

Trust is not a party to any guaranty, CCC nonetheless argues that the trial court

properly enforced the guaranty’s jury waiver provision against the Trust for three

reasons. First, CCC argues that such a close nexus exists between Obert, who

signed a guaranty in his individual capacity, and the Trust that the guaranty’s jury

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waiver is enforceable against the Trust.         Second, CCC argues that arbitration

principles—which allow an arbitration agreement in certain narrow circumstances to

be enforceable against nonsignatories—apply to contractual jury waivers. Third,

CCC argues that equity demands enforcement of the jury waiver against the Trust. 3

W e need not address these arguments, however, because we hold that the fact that

the Trust was not in existence when Gregory Obert and the other defendants

executed the guaranties containing the jury waiver provisions conclusively

establishes as a matter of law that the Trust (which was not in existence) did not

knowingly and voluntarily waive its constitutional right to a jury trial. If the Trust had

existed prior to Gregory Obert’s execution of the guaranty containing the jury waiver

or if evidence established that the Trust had become an assignee of a Guarantor, 4

CCC’s three arguments may or may not have merit. See In re Credit Suisse First

Boston Mortg. Capital, L.L.C., 257 S.W .3d 486, 493 (Tex. App.—Houston [14th Dist.]

2008, orig. proceeding) (holding that trial court did not abuse its discretion by

refusing to enforce contractual jury waiver against nonsignatory, that jury waiver

provisions are not on the same footing as arbitration agreements, and that equitable

       3
           CCC makes several compelling arguments why monies in the Trust belong
to it. In fact, the trial court signed a temporary restraining order restricting the Trust’s
distributions and expenditures. W e do not address these merits-based arguments
by CCC; the sole issue before us is the enforceability of the guaranty’s jury waiver
provision against the Trust. That is, whether CCC can seek redress from the Trust
before a jury or only before a judge.
       4
        The guaranties provide that they are binding on the Guarantors’ “heirs,
legatees, distributees, successors, assigns, executors and administrators . . . (each
an ‘Assignee’).”

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estoppel cannot be used as a vehicle to circumvent the required “knowing and

voluntary” waiver standard).

                                   IV. C ONCLUSION

      Because the Trust had not yet been created when Obert and the other

defendants executed the guaranties containing the jury waiver provisions, because

Obert did not sign the guaranty containing the contractual jury waiver provision in his

capacity as trustee of the subsequently-created Trust, and because the Trust was

not a party to the guaranty containing the contractual jury waiver provision and

otherwise did not become an assignee of a Guarantor, we hold that the trial court

abused its discretion by enforcing the guaranties’ contractual jury waiver provision

against the Trust. W e conditionally grant the Trust’s petition for writ of mandamus.

      Respondent is ordered to enter an order setting aside that portion of its May

20, 2010 order that places CCC’s suit against the Trust on the nonjury docket. That

portion of Respondent’s May 20, 2010 order that places CCC’s claims against the

other seven defendants on the nonjury docket remains intact. The writ will issue only

if Respondent fails to comply.     Our stay order dated June 4, 2010 is ordered

dissolved.

                                                     SUE W ALKER
                                                     JUSTICE

PANEL: DAUPHINOT, W ALKER, and MEIER, JJ.

DAUPHINOT, J. dissents without opinion.

DELIVERED: July 15, 2010

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