Parsons v. Associated Banc Corp

• Decision Date: 13 April 2017
• Docket Number: No. 2014AP2581,2014AP2581
• Citation: 893 N.W.2d 212,2017 WI 37
• Parties: Taft PARSONS, Jr. and Carol Parsons, Plaintiffs-Appellants, v. ASSOCIATED BANC-CORP, Defendant-Respondent-Petitioner, XYZ Insurance Company, Defendant.
• Court: Wisconsin Supreme Court

893 N.W.2d 212

2017 WI 37

Taft PARSONS, Jr. and Carol Parsons, Plaintiffs-Appellants,

v.ASSOCIATED BANC-CORP, Defendant-Respondent-Petitioner,XYZ Insurance Company, Defendant.

No. 2014AP2581

Supreme Court of Wisconsin.

Oral Argument: December 2, 2016

Opinion Filed: April 13, 2017

For the defendant-respondent-petitioner, there were briefs by Robert G. Pyzyk, James J. Carrig and Niebler, Pyzyk, Roth and Carrig, LLP, Menomonee Falls.Oral argument by James J. Carrig.

For the plaintiffs-appellants, there was a brief by Alex Flynn, Marjorie R. Maguire and Alex Flynn and Associates, S.C., Milwaukee.Oral argument by Alex Flynn.

An amicus curiae brief was filed by Jonh E. Knight, Kirsten E. Spira and Boardman & Clark LLP, Madison, for Wisconsin Bankers Association.

An amicus curiae brief was filed by Michael J. Cerjak, PKSD, Milwaukee, Mark L. Thomsen and Cannon & Dunphy, S.C., Brookfield for Wisconsin Association for Justice.

ANNETTE KINGSLAND ZIEGLER, J.

¶1

This is a review of a published decision of the court of appeals, Parsons v. Associated Banc-Corp , 2016 WI App 44, 370 Wis.2d 112, 881 N.W.2d 793, which reversed the Milwaukee County circuit court's¹ order granting Associated Banc-Corp's ("Associated")motion to strike Taft and Carol Parsons' ("the Parsons") demand for a jury.

¶2 The Parsons are approaching a trial in their lawsuit against Associated for alleged racketeering activity and negligent hiring, training, and supervision.We are asked to decide what form that trial will take.The Parsons seek a jury trial, but Associated asserts that the Parsons contractually waived their right to a jury several years ago, before this litigation arose.

¶3 There are two basic issues on this appeal.First, we must examine whether the pre-litigation jury waiver provision in the contract between the Parsons and Associated is enforceable, either with or without proof extrinsic to the terms of the contract that the Parsons knowingly and voluntarily agreed to this waiver.Second, if we conclude that the provision is enforceable, we must examine whether Associated's motion to strike the Parsons' jury demand was untimely.

¶4We conclude that the pre-litigation jury waiver provision in the contract between the Parsons and Associated is enforceable and that Associated does not need to offer additional proof that the Parsons knowingly and voluntarily agreed to this waiver.We further conclude that Associated's motion to strike the Parsons' jury demand was not untimely.Consequently, we reverse the decision of the court of appeals and remand the case to the circuit court for further proceedings consistent with this opinion.

I.FACTUAL AND PROCEDURAL BACKGROUND

¶5 In part because of the unusual posture of this case, the facts pertaining to this lawsuit are largely unimportant to the disposition of this appeal.On May 26, 2011, the Parsons sued Associated in Milwaukee County circuit court asserting claims pertaining to, in the words of the Parsons, "a failed construction project in inner-city Milwaukee."

¶6 More specifically, the Parsons' complaint contains the following relevant allegations.In or before 2002, Taft Parsons("Taft")"conceived of the idea to turn the run-down houses on his block into modern affordable rowhouses."The Parsons obtained financing for this project through State Financial Bank, Associated's predecessor in interest.²According to the

Parsons, however, Associated"conspired with, aided, and/or allowed the general contractor and project manager [of the project] to improperly take hundreds of thousands of dollars of construction funds from the [Parsons] causing the [Parsons] substantial injury."The complaint asserted ten causes of action and, importantly, demanded a 12-person jury.

¶7 On December 12, 2012, the Parsons filed an amended complaint asserting eight causes of action.Before this court, the Parsons contend that they have now "limited their case" to the following two claims presented in their amended complaint: (1) racketeering activity in violation of Wis. Stat. § 946.83(1)(2013-14);³ and (2) negligent hiring, training, and supervision.In their amended complaint the Parsons again demanded a 12-person jury.On January 9, 2013, the Parsons submitted the jury fee to the circuit court.

¶8 On May 14, 2014, Associated filed a motion to strike the Parsons' jury demand.Associated provided the circuit court with a Promissory Note for several hundred thousand dollars dated May 26, 2004, and listing Taft as "Borrower" and Associated as "Lender."The note contained the following relevant language:

WAIVER OF JURY TRIAL.THE BORROWER AND THE LENDER (BY THEIR ACCEPTANCE HEREOF) HEREBY VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE (WHETHER BASED UPON

CONTRACT, TORT OR OTHERWISE) BETWEEN OR AMONG THE BORROWER AND THE LENDER ARISING OUT OF OR IN ANY WAY RELATED

TO THIS DOCUMENT, ANY OTHER RELATED DOCUMENT, OR ANY RELATIONSHIP BETWEEN THE BORROWER AND THE LENDER.THIS PROVISION IS A MATERIAL INDUCEMENT TO THE LENDER TO PROVIDE THE FINANCING DESCRIBED HEREIN OR IN OTHER LOAN DOCUMENTS.

...

PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE....BORROWER AGREES TO THE TERMS OF THE NOTE.

(Boldface omitted from first four words and last paragraph.)A few lines below this text was Taft's signature.Accordingly, Associated asked the court to strike the Parsons' jury demand "because it was contractually waived."

¶9 The Parsons offered a number of arguments in response to the motion to strike; the following ones are relevant to this appeal.First, while conceding that "the statutes do not provide a deadline for an opposing party to object to a jury demand," the Parsons argued that Associated's motion to strike was untimely and that Associated had waived its right to object to the jury demand.Second, the Parsons claimed that because of the lack of Wisconsin case law regarding contractual jury waivers, the circuit court was not required to enforce the jury waiver provided by Associated.Third, the Parsons contended that Carol Parsons("Carol") had not signed the Promissory Note and thus had not waived her right to a jury.Finally, the Parsons asserted that Taft "had no freedom not to sign the Promissory Note for the construction loan."

¶10 With regard to this final argument, the Parsons attached an affidavit in which Taft swore to the following, among other things: Taft "never noticed any jury waiver clause in the Promissory Note ... because [he] was not given time to review the loan documents prior to the closing"; Taft "had no counsel" at the time he signed the Promissory Note; Taft was told "that if [he] did not sign the closing documents immediately, [Associated] would withdraw its support for the construction project"; if Taft "had not gotten the construction loan," tens of thousands of dollars he had already obtained under another loan "for pre-construction costs would have been down the drain, and [he] would still have owed that money"; Taft "did not knowingly and freely waive any right to a jury trial"; and Taft signed the Promissory Note "under pressure."

¶11 On October 24, 2014, the circuit court granted Associated's motion to strike the Parsons' jury demand.Citing as "particularly relevant considerations""the parties' sophistication, whether the contract was procured fraudulently, and whether the jury waiver clause is conspicuous,"the circuit court concluded that the waiver was enforceable.The circuit court explained in part:

[Taft] is an intelligent business man who undoubtedly has experience reviewing paperwork and entering into contracts; he surely knows the importance of thoroughly reviewing documents....[T]he promissory note also contained multiple bold, capital letter acknowledgements above the signature line.The jury waiver clause is set off from the rest of the document by bold, capital letters, stating "WAIVER OF THE JURY TRIAL."[sic] It is unlikely that [Taft] overlooked the jury waiver clause as the promissory note itself is just a two-page document.Finally, Wisconsin courts presume that a party to a contract had knowledge of it and consented to its terms.

¶12The circuit court rejected the Parsons' timeliness argument in part because the Parsons had not provided any law establishing that Associated's putative delay in objecting to the jury demand waived Associated's right to object to the demand.With regard to the Parsons' claim that Carol was not bound by the jury waiver, the court concluded:

The argument made in the Parsons' brief ... was superficial.Regardless, the jury waiver applies to "any dispute ... between or among the Borrower and the Lender arising out of" the promissory note[,] any other related document, or "any relationship between the Borrower and the Lender."As [Carol]'s claims are ones arising out of the relationship between the borrower and the Bank, the waiver clause also applies to her.

The circuit court ordered that the Parsons' cause would be heard by court trial.

¶13 On November 25, 2014, the Parsons petitioned the court of appeals for leave to appeal a non-final order.On December 12, 2014, the court of appeals granted the petition.On May 20, 2016, in a published opinion, the court of appeals reversed the decision of the circuit court and remanded the case for a jury trial.Parsons , 370 Wis.2d 112, ¶1, 881 N.W.2d 793.

¶14The court of appeals began with the broad proposition that a person may waive his or her right to a jury trial under Article I, section 5 of the Wisconsin Constitution.Id.¶16.However, the court of appeals concluded that Associated bore the burden of demonstrating that the Parsons "understood the scope of and the specific nature of the rights given up by the waiver."Id.¶31.Relying on Taft's affidavit, the court determined that Associated had not met that burden and that the circuit court erred in concluding otherwise.Seeid.¶¶29-31.

¶15The court of...