46 Conn. App. 432 | Conn. App. Ct. | 1997
Lead Opinion
The plaintiffs appeal from the judgment of the trial court rendered in favor of the defendant in this lender liability action. On appeal, the plaintiffs claim that the trial court improperly (1) granted the defendant’s motion to strike the lender liability claims from the jury docket, (2) found the subordination agreement unenforceable, (3) held that the defendant was excused from subordinating because the plaintiffs could not satisfy the Mechanics Savings Bank commitment, (4) held that the plaintiffs had failed to mitigate their damages, and (5) failed to recuse itself. We conclude that the trial court improperly granted the defendant’s motion to strike the lender liability claims from the jury docket and, accordingly, we reverse the judgment of the trial court.
The following facts are pertinent to our resolution of this appeal. On or about June 30, 1989, the Connecticut National Bank (CNB) loaned L & R Realty (L & R) $500,000 in connection with the purchase by L & R of approximately three acres of land in Colchester. At the June 30, 1989 closing, L & R delivered to CNB (1) a commercial promissory note in the principal amount of $500,000 (note), (2) a guarantee agreement (guarantee) by which the general partners of L & R personally guaranteed payment of the note, (3) a mortgage by which L & R created a first mortgage lien on the Colches-ter property in favor of CNB to secure due performance of L & R’s obligations under the note, and (4) a collateral assignment of rents and security agreement by which L & R provided CNB with further security for the performance of L & R’s obligations due under the note.
The general partners of L & R claimed that prior to the closing, a senior vice president of CNB orally agreed to subordinate its mortgage to any future construction mortgage placed on the Colchester property. In reliance
On March 25, 1991, L & R received a commitment from Mechanics Savings Bank that it would loan L & R funds for construction on the Colchester property. L & R notified CNB of the construction loan and requested that CNB subordinate its mortgage to this new construction mortgage. On April 15, 1991, CNB refused to subordinate their mortgage to this new construction mortgage without additional collateral. This refusal prevented the construction loan from closing. In April, 1991, L & R stopped paying the CNB note. On February 24, 1992, CNB commenced an action to foreclose its mortgage. L & R responded by bringing a lender liability action against CNB, claiming compensatory and punitive damages on a number of theories: (1) breach of the subordination agreement, (2) promissory estoppel, (3) breach of good faith and fair dealing, (4) fraud, (5) wrongful interference with prospective business relations, (6) economic duress, and (7) engagement in unfair and deceptive practices in violation of the Connecticut Uniform Trades Practices Act, General Statutes § 42-110a et seq. L & R also asserted those claims as counterclaims in the foreclosure action.
In November, 1992, the trial court consolidated the foreclosure and the lender liability actions. After a nine day trial, the trial court found that the note, the mortgage, and the other security documents delivered by L & R at the closing constituted a complete, final and integrated agreement, and, thus, the trial court found that there was no valid subordination agreement. Accordingly, on June 20, 1995, the trial court rendered
The plaintiffs first claim that the trial court improperly granted the defendant’s motion to strike the plaintiffs’ lender liability claims from the jury docket. Specifically, the plaintiffs argue that, in this case, where the record before the trial court, Hurley, J., was devoid of evidence that the jury trial waiver clauses located in the loan documents
Certain additional facts are necessary to an understanding of our resolution of this claim. On November 2, 1993, the defendant moved to strike the plaintiffs’ lender liability claims from the jury docket “on the
On November 26, 1993, the trial court granted the defendant’s motion to strike the plaintiffs’ claims from the jury docket. The trial court ruling consisted of one line: “The court finds that by signing the note the [plaintiffs] waived all claims to a trial by jury.”
In Krupa v. Farmington River Power Co., 147 Conn. 153, 156, 157 A.2d 914 (1959), cert. denied, 364 U.S. 506, 81 S. Ct. 281, 5 L. Ed. 2d 258 (1960), our Supreme Court held that, “the right to a jury trial is a right which, like
We begin by examining our law regarding the general concept of waiver. “ ‘Waiver involves an intentional relinquishment of a known right. . . . There cannot be a finding of waiver unless the party has both knowledge of the existence of the right and intention to relinquish it.’ ” Cassella v. Kleffke, 38 Conn. App. 340, 347, 660 A.2d 378, cert. denied, 235 Conn. 905, 665 A.2d 899 (1995). “Inherent in the concept of waiver is the notion of assent, which is an act of understanding that presupposes that the party to be affected has knowledge of its rights but does not want to assert them.” Fisette v. DiPietro, 28 Conn. App. 379, 385, 611 A.2d 417 (1992). “Waiver may be inferred from the circumstances if it is reasonable so to do . . . . Whether conduct constitutes a waiver is a question of fact. . . . When the trial court is required to make a finding that depends on issues of fact which are disputed, due process requires that a trial-like hearing be held, in which an opportunity is provided to present evidence and cross-examine adverse witnesses. ... In order to prevail at this trial-like hearing the movant must introduce evidence to
Our Superior Courts have dealt extensively with the specific issue of whether an evidentiary hearing is required to determine the validity of a contractual jury trial waiver. While Connecticut Superior Court opinions are by no means binding upon us, they may be persuasive. See Johnson v. Murzyn, 1 Conn. App. 176, 181, 469 A.2d 1227, cert. denied, 192 Conn. 902, 471 A.2d 244 (1984).
Our Superior Courts have found that a valid and enforceable contractual jury trial waiver must have been made knowingly, intelligently and voluntarily. See Connecticut National Bank v. Romagna, Superior Court, judicial district of New London at New London, Docket No. 521920 (December 1, 1994). Our Superior Courts further explain that “ ‘[w]aiver may be made by the specific and knowing agreement of the parties. The mere inclusion of a waiver provision in a document. . . does not in and of itself automatically in all instances constitute a binding waiver by the party against whom waiver is claimed.’ ” Happens, LLC v. Webster Bank, Superior Court, judicial district of Meriden, Docket No. 251241 (October 2, 1996) (17 Conn. L. Rptr. 639, 640); Centerbank v. Fazzone, Superior Court, judicial district of Litchfield, Docket No. CV94-0066746 (October 19, 1995) (15 Conn. L. Rptr. 377, 378). “The mere signing of a document purporting to waive a constitutional right will [not] be automatically enforced against a party.” Connecticut National Bank v. Swanney Toyota, Inc., Superior Court, judicial district of Hartford-New Britain at Hartford, Docket No. 5066919 (June 9,1993) (9 Conn. L. Rptr. 241, 242).
Our Superior Courts are split as to whether an eviden-tiary hearing is necessary to the factual determination of whether the contractual jury trial waiver was entered into knowingly, voluntarily and intelligently. See Happens, LLC v. Webster Bank, supra, 17 Conn. L. Rptr. 639. The majority of Connecticut Superior Courts, however, have held that an evidentiary hearing is necessary to this factual determination; see id.; Connecticut National Bank v. Romagna, supra, Superior Court, Docket No. 521920; Bank of Boston Connecticut v. Rus-coni, Superior Court, judicial district of Hartford-New Britain at Hartford, Docket No. CV92-0507230 (September 9, 1994) (9 C.S.C.R. 1091); Connecticut National Bank v. Swanney Toyota, Inc., supra, 9 Conn. L. Rptr. 241; Bank of New York v. Griffis Sandler Co., Superior Court, judicial district of Stamford-Norwalk at Stamford, Docket No. CV922 0122444 (March 16, 1993); and have further held that the party seeking to enforce the waiver bears the burden of proof at such an evidentiary hearing. See Bank of Boston Connecticut v. Rusconi, supra, 1091; Connecticut National Bank v. Swanney Toyota, Inc., supra, 241.
The federal standard for determining the validity of a contractual waiver of the right to a jury trial is whether the waiver was knowing, voluntary and intelligent. See Phoenix Leasing, Inc. v. Sure Broadcasting, Inc., 843 F. Sup. 1379, 1384 (D. Nev. 1994), aff'd, 89 F.3d 846 (9th Cir. 1996); see also Leasing Service Corp. v. Crane, 804 F.2d 828, 832-33 (4th Cir. 1986); In re Reggie Packing Co., 671 F. Sup. 571, 573 (N.D. Ill. 1987). The factors used by federal courts to decide whether a waiver was knowing, voluntary and intelligent are similar to the factors used by our Superior Courts and include: “ ‘(1) whether there was a gross disparity in bargaining power between the parties; (2) the business or professional experience of the party opposing the waiver; (3) whether the opposing party had an opportunity to negotiate contract terms; and (4) whether the clause containing the waiver was inconspicuous.’ ” Phoenix Leasing, Inc. v. Sure Broadcasting, Inc., supra, 1384; see also A. Dickerson, “Contractual Jury Waiver Provisions A Striking Idea,” 39 Fed. B. News & J. 206 (March/
The majority of the federal district courts, as well as the second and fourth circuits, have held that, in the context of an express contractual waiver of the right to a juiy trial, the party seeking enforcement of the waiver has the burden of showing that the consent of the party objecting to waiver was knowing, voluntary, and intelligent. See Leasing Service Corp. v. Crane, supra, 804 F.2d 832-33; National Equipment Rental Ltd. v. Hendrix, 565 F.2d 255, 258 (2d Cir. 1977); Phoenix Leasing, Inc. v. Sure Broadcasting, Inc., supra, 843 F. Sup. 1384; Smyly v. Hyundai Motor America, supra, 762 F. Sup. 429; Bonfield v. Aamco Transmissions, Inc., 717 F. Sup. 589, 595 (N.D. Ill. 1989); N. Feldman & Son, Ltd. v. Checker Motors Corp., 572 F. Sup. 310, 313 (1983); Dreiling v. Peugeot Motors of America, Inc., 539 F. Sup. 402, 403 (D. Colo. 1982); National Westminster Bank, U.S.A. v. Ross, 130 B.R. 656, 667 (Bankr. S.D.N.Y. 1991); see also A. Dickerson, supra, 39 Fed. B. News & J. 208 (“most reasoned approach in allocating the burden of proof is to follow general rules regarding waiver, i.e., that the party asserting waiver bears the burden of proof’); but see K.M.C. Co. v. Irving Trust Co., 757 F.2d 752, 758 (6th Cir. 1985) (burden on party attacking waiver provision).
The Connecticut Superior Courts’ resolution of the issue of whether an evidentiary hearing is required to determine the validity of a contractual jury trial waiver represents a logical application of our general waiver law to the specific issue of contractual jury trial waivers. Moreover, the similarity between the federal courts’
We conclude, therefore, that the trial court improperly granted the defendant’s motion to strike the plaintiffs’ lender liability claims from the jury docket. The only evidence before the trial court was the loan documents. Execution of a document that contains a jury trial waiver provision does not automatically constitute a valid waiver of the right to a jury trial. Moreover, evidence of the execution of such a document, in and of itself, is not sufficient evidence of a voluntary, knowing and intelligent waiver of the constitutional right to a jury trial. Thus, the trial court should have held an evidentiary hearing where the defendant bore the burden of proving that the contractual jury trial waivers were knowing, voluntary and intelligent. In determining the validity of the contractual jury trial waivers at this evidentiary hearing, the trial court should have considered such factors as (1) the conspicuousness of the waiver provisions, (2) whether the parties were represented by counsel, (3) whether there was a gross disparity in bargaining power between the parties, (4) the
The judgment is reversed and the case is remanded with direction to deny the defendant’s motion to strike the lender liability claims from the jury docket and to conduct an evidentiary hearing in accordance with this opinion.
In this opinion DUPONT, C. J., concurred.
Paragraph seventeen of the note states: “Waiver of Trial By Jury: Borrower and Other Obligors irrevocably waive all right to a trial by jury in any proceeding hereafter instituted by or against the Borrower or Other Obligors in respect of this note or collateral which may secure this note.”
Paragraph ten of the guarantee provides: “The undersigned irrevocably waives all right to a trial by jury in any proceeding hereafter instituted by or against the undersigned in respect of this guaranty or any collateral securing this guaranty.”
The plaintiffs also argue that, under Northeast Savings, F.A. v. Plymouth Commons Realty Corp., 229 Conn. 634, 642 A.2d 1194 (1994), because the lender liability claims are legal in nature, they should have been tried to a jury. The plaintiffs further argue that the jury trial waiver does not extend to the lender liability claims. The trial court, however, granted the defendant’s motion to strike the lender liability claims from the jury docket solely on the ground that “by signing the note the [plaintiffs] waived all claims to a trial by jury.” Thus, while we agree with the plaintiffs that this first issue would be governed by Northeast Savings, F.A., we conclude that the trial court did not rule on either of these issues. Moreover, the plaintiffs failed to file a motion for articulation of the trial court’s decision granting the motion to strike or to raise these issues as alternative grounds for affirmance. For these reasons, we decline to review these two claims. See Claveloux v. Downtown Racquet Club Associates, 44 Conn. App. 691, 693 n.4, 691 A.2d 1112 (1997).
We examine the federal courts’ treatment of contractual jury trial waivers rather than examining our sister states’ treatment of this issue because the federal courts have developed a uniform standard by which to judge the validity of a contractual jury trial waiver, while the state courts’ approaches to this issue remains quite varied. See K. Stout, “No Prehtigation Contractual Waiver of Jury Trial: Bank South, N.A. v. Howard, A Step Backward For Georgia,” 12 Ga. St. U. L. Rev. 929, 947-48 (1996). Moreover, while the federal constitution’s provision regarding the right to a jury trial is similar to our state constitution’s right to a jury trial provision, some of our sister states’ constitutional right to jury trial provisions differ significantly from article first, § 19, of the Connecticut constitution. See, e.g., Ga. Const., art. I, § 1, para. XI.; see also A. Dickerson, “Contractual Jmy Waiver Provisions A Striking Idea,” 39 Fed. B. News & J. 206 n.4 (March/April 1992).
Our resolution of the plaintiffs’ first claim is dispositive of this appeal, and, thus, we do not reach the plaintiffs’ other claims.
Dissenting Opinion
dissenting. I respectfully dissent from the majority opinion for the same reasons I set forth in the dissent in the companion case of Connecticut National Bank v. L & R Realty, 46 Conn. App. 443, 446, 699 A.2d 297 (1997). I would affirm the granting of the motion to strike from the jury docket by the trial court, Hurley, J., and I would affirm the judgment rendered by the trial court, Austin, J.
