Princess Kim, L.L.C. v. U.S. Bank, N.A.
2015 Ohio 4472
Ohio Ct. App.2015Background
- Princess Kim, LLC (with Farhad and Kim Sethna) borrowed $420,000 from U.S. Bank and executed a note and mortgage containing a prepayment-penalty clause (Article 9) and a bolded jury-waiver clause (Article 27).
- After ~3 years, Princess Kim sought to prepay the loan and claimed prior discussions with a bank representative had waived the prepayment penalty.
- Princess Kim sued for declaratory judgment (that the prepayment penalty was waived) and for fraud in the inducement; it later filed an amended complaint and demanded a jury trial.
- U.S. Bank moved to strike the jury demand based on the contractual jury-waiver; the trial court granted that motion and held a bench trial.
- The trial court ruled for U.S. Bank, principally on statute-of-frauds grounds (finding oral modification barred), and alternatively on the note’s no-oral-modification clause and lack of consideration; Princess Kim appealed.
- The Ninth District affirmed: it upheld the jury-waiver enforcement and affirmed judgment for U.S. Bank, relying on the unchallenged statute-of-frauds rationale among others.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Princess Kim timely and validly demanded a jury trial despite the note’s jury-waiver clause | Demand was timely after amended complaint and pretrial discussions showed intent to try to a jury | The note’s clear, bolded jury-waiver was a knowing, voluntary contractual waiver; jury demand waived | Court enforced contractual jury waiver; struck jury demand and affirmed bench trial |
| Whether U.S. Bank waived or orally modified the prepayment-penalty (Article 9) | Bank representative orally agreed to waive penalty; plaintiffs relied on that modification; apparent authority and estoppel apply | Oral modifications barred by the note’s integration/no-oral-modification clause, parol evidence rule, statute of frauds, and lack of consideration | Court affirmed judgment for bank; held claims barred by statute of frauds (primary), and alternatively by note language and lack of consideration |
Key Cases Cited
- Cassidy v. Glossip, 12 Ohio St.2d 17 (Ohio 1967) (parties may knowingly and voluntarily waive jury trial under Ohio Const.)
- Gries Sports Enters., Inc. v. Cleveland Browns Football Co., Inc., 26 Ohio St.3d 15 (Ohio 1986) (reversal requires showing of error that prejudiced appellant)