Lowe Enterprises v. Dist. Ct.

• Decision Date: 13 February 2002
• Docket Number: No. 37003.,37003.
• Parties: LOWE ENTERPRISES RESIDENTIAL PARTNERS, L.P., a California Limited Partnership; California Indemnity Insurance Company; and Commercial Casualty Insurance Company, Petitioners, v. The EIGHTH JUDICIAL DISTRICT COURT OF the STATE of Nevada, In and For the COUNTY OF CLARK, and the Honorable Michael Cherry, District Judge, Respondents, and Robert V. Jones, in his individual capacity and in his capacity as Trustee of the Scotsman Trust; the Robert V. Jones Company; the Robert V. Jones Corporation, and the Sanctuary, Ltd., Real Parties in Interest.
• Court: Nevada Supreme Court

40 P.3d 405

118 Nev. 92

LOWE ENTERPRISES RESIDENTIAL PARTNERS, L.P., a California Limited Partnership; California Indemnity Insurance Company; and Commercial Casualty Insurance Company, Petitioners, v. The EIGHTH JUDICIAL DISTRICT COURT OF the STATE of Nevada, In and For the COUNTY OF CLARK, and the Honorable Michael Cherry, District Judge, Respondents, and Robert V. Jones, in his individual capacity and in his capacity as Trustee of the Scotsman Trust; the Robert V. Jones Company; the Robert V. Jones Corporation, and the Sanctuary, Ltd., Real Parties in Interest.

No. 37003.

Supreme Court of Nevada.

February 13, 2002.

Smith Larsen & Wixom, Las Vegas; Irell & Manella, LLP, and Andra Barmash Greene, Newport Beach, California, for Petitioner Lowe Enterprises.

Schreck Brignone Godfrey and James J. Pisanelli and Nikki L. Baker, Las Vegas, for Petitioners California Indemnity Insurance Company and Commercial Casualty Insurance Company.

James J. Lee, Las Vegas, for Real Parties in Interest.

Before the Court En Banc.

OPINION

AGOSTI, J.

In October 1996, The Robert V. Jones Corporation contracted to purchase certain real property from a third party not related to this proceeding. Thereafter, The Sanctuary, Ltd. ("Sanctuary") was created to develop a residential community project on the property. The petitioner, Lowe Enterprises Residential Partners, L.P. ("Lowe"), made a loan to Sanctuary for the development of the project. In connection with the loan, the parties executed various loan documents. Additionally, Robert V. Jones, individually, The Robert Jones Company and The Robert V. Jones Corporation executed a payment guaranty to "absolutely and unconditionally guarantee[ ]" the loan.

The relations between the parties soured when Sanctuary, Robert V. Jones, The Robert V. Jones Company and The Robert V. Jones Corporation (collectively "real parties in interest") allegedly defaulted on the loan and the payment guaranty. Consequently, Lowe filed suit in district court against real parties in interest alleging breach of contract, unjust enrichment, fraud and negligent misrepresentation. Real parties in interest counterclaimed, cross-claimed and demanded a jury trial.

Lowe filed a motion to strike the jury demand, arguing that real parties in interest were precluded from making a jury demand because they "knowingly, voluntarily and specifically waived their right to try this case before a jury" in the loan documents and payment guaranty. Lowe set forth the following language contained in section 1.26(b) of the loan documents:

BORROWER, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL, WAIVES, RELINQUISHES AND FOREVER FORGOES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO THE INDEBTEDNESS SECURED HEREBY OR ANY CONDUCT, ACT OR OMISSION OF LENDER, TRUSTEE OR BORROWER, OR ANY OF THEIR DIRECTORS, OFFICERS, PARTNERS, MEMBERS, EMPLOYEES, AGENTS OR ATTORNEYS, OR — ANY OTHER PERSONS AFFILIATED WITH LENDER, TRUSTEE OR BORROWER, IN EACH O[F] THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.

Lowe also cited section 6.1.9 of the payment guaranty which reads as follows:

Guarantor hereby waives to the extent permissible by law ... the right to trial by jury in any litigation arising out of, relating to, or connected with this Guaranty, it being acknowledged by each Guarantor that each Guarantor is a professional developer engaged and knowledgeable in sophisticated commercial real estate transactions, and that each Guarantor makes this waiver of trial by jury knowingly and voluntarily and only after consultation with sophisticated legal counsel of Guarantors' choosing.

Also, section 6.2 of the payment guaranty provided that "[i]t is agreed between Guarantor and Lender that the foregoing waivers are of the essence of the Loan transaction and that, but for this Guaranty and such waivers, Lender would decline to make the Loan." Therefore, Lowe urged the district court to strike the jury demand because real parties in interest contractually waived their right to a trial by jury.¹

Real parties in interest argued that the jury trial waivers contained in the various loan documents were unenforceable as a matter of law under NRS 40.453 which provides that it is against public policy for any document relating to the sale of real estate to contain any provision that waives any right secured to a mortgagor or guarantor by Nevada law. Accordingly, because the various loan documents related to the financing and sale of real property, real parties in interest asserted that NRS 40.453 precluded the district court from enforcing the contractual jury trial waivers.

Petitioners finally argued that the waivers were enforceable because real parties in interest were sophisticated borrowers who knowingly, voluntarily and unambiguously waived their jury trial rights. Petitioners also argued that real parties in interest misconstrued NRS 40.453 beyond the statute's intended purpose, namely, the protection of rights under Nevada's anti-deficiency legislation.

On October 5, 2000, without hearing arguments from the parties, and without addressing the arguments raised by the parties in their briefs, the district court denied petitioners' motion to strike the jury demand. The district court reasoned that the right to a jury trial was too important to be precluded by the waiver. Accordingly, the district court entered an order denying petitioners' motion to strike the jury demand.

Petitioners now seek a writ of mandamus from this court compelling the district court to strike real parties in interest's jury demand.

Extraordinary review is available in this case

Under NRS 34.160, this court may issue a writ of mandamus to compel the performance of an act that the law requires as a duty resulting from an office, trust or station.² Extraordinary relief will only issue where "there is not a plain, speedy and adequate remedy in the ordinary course of law."³ Petitioners argue that if they had to wait to challenge the district court's denial of their motion to strike the jury demand on appeal, petitioners would have to show that they were "actually prejudiced" by the district court's grant of a jury trial. The petitioners contend that actual prejudice resulting from the grant of a jury trial is too difficult a burden to meet upon appellate review. Accordingly, the petitioners seek a writ of mandamus pursuant to NRS 34.160. Petitioners assert that such extraordinary review is warranted because no other plain, speedy or adequate remedy exists.

In support of this argument, petitioners cite to this court's decision in El Cortez Hotel, Inc. v. Coburn.⁴ In El Cortez, we held that in order to establish grounds for reversal, the appellant must "show that the errors complained of would have so substantially affected its rights that it could be reasonably assumed that if it were not for the alleged errors, a different result might reasonably have been expected."⁵ Accordingly, petitioners assert that extraordinary review is available because it would be almost impossible for them to show that the grant of a jury trial substantially affected their rights.⁶

Although we have not addressed the issue of whether extraordinary review is available when a district court denies a party's motion to strike a jury demand, we note that other jurisdictions have addressed the issue.⁷ In Beasley v. Wells Fargo Bank, the California Court of Appeals stated that extraordinary writ proceedings were an expedient way to resolve such an issue.⁸ Additionally, in Ex parte SouthTrust Bank of Alabama, N.A., the Alabama Supreme Court issued a writ of mandamus directing the trial court to grant the defendant's motion to strike the plaintiff's jury demand.⁹ The court concluded that since the plaintiff's claims were equitable in nature, writ relief was appropriate because the plaintiff was not entitled to a jury trial under Alabama law.¹⁰

Similarly, we conclude that extraordinary review is available in this case because "there is not a plain, speedy and adequate remedy in the ordinary course of law."¹¹ If petitioners had to wait to challenge the district court's denial of their motion to strike the jury demand on appeal, petitioners would have too difficult a burden to meet upon appellate review. The burden would be too difficult because Nevada case law requires appellants to show that the error complained of substantially affected their rights. Further, Nevada case law requires appellants to show that, in the absence of such error, the outcome of the case would have been different.

Additionally, extraordinary review is available because the validity of contractual jury trial waivers in Nevada is a matter of great importance. We have previously stated that "`where an important issue of law needs clarification and public policy is served by this court's invocation of its original jurisdiction, our consideration of a petition for extraordinary relief may be justified.'"¹² Clearly, the validity of contractual jury trial waivers is an important issue of Nevada law that needs clarification, and public policy would be served by our invocation of original jurisdiction.

Contractual jury trial waivers are valid and enforceable in Nevada

The issue of whether a contractual jury trial waiver is valid and enforceable in Nevada is one of first impression for this court. Most courts addressing the issue have held that such waiver provisions are enforceable if they are knowingly, voluntarily and intentionally made. Various federal circuit courts have determined that the constitutional right to a jury trial in civil cases may be knowingly and intentionally waived.¹³ For instance, the Fourth Circuit Court of Appeals stated that "[t]he seventh amendment right [to a trial by jury] is of course a fundamental one, but it is one that can be...