Tilley v. Malvern Nat'l Bank

• Decision Date: 12 December 2019
• Docket Number: No. CV-18-1002,CV-18-1002
• Citation: 2019 Ark. 376,590 S.W.3d 137
• Parties: Kenneth W. TILLEY, Individually and as Trustee of the Kenneth Tilley Family Trust, Appellant v. MALVERN NATIONAL BANK and Stephen Moore, Appellees
• Court: Arkansas Supreme Court

2019 Ark. 376

590 S.W.3d 137

Kenneth W. TILLEY, Individually and as Trustee of the Kenneth Tilley Family Trust, Appellant

v.MALVERN NATIONAL BANK and Stephen Moore, Appellees

No. CV-18-1002

Supreme Court of Arkansas.

Opinion Delivered December 12, 2019

Eichenbaum Liles P.A., by: Joshua Allen, Little Rock, and Christopher O. Parker, for appellant.

Wright, Lindsey & Jennings LLP, Little Rock, by: Charles T. Coleman, Adrienne L. Baker, and Kristen S. Moyers, for appellees.

JOSEPHINE LINKER HART, Justice

Kenneth W. Tilley, Individually and as Trustee of the Kenneth Tilley Family Trust appeals the reinstatement of his bench-trial judgment that we had set aside in Tilley v. Malvern National Bank , 2017 Ark. 343, 532 S.W.3d 570 ( Tilley I ). In Tilley I , we held that "pre-dispute contractual jury waivers are unenforceable under the Arkansas Constitution." Id. at 15, 532 S.W.3d at 578. Accordingly, we reversed and remanded the case to the Garland County Circuit Court for a jury trial. Instead, the circuit court applied Act 13 of 2018 (Act 13), legislation that was passed by the General Assembly after our mandate issued, but before Tilley's jury trial was scheduled. The circuit court ruled that Tilley's right to a jury trial had been obviated by the new legislation.

On appeal, Tilley raises two points: (1) the circuit court erred in ruling that Act 13 applies to this case; and (2) the circuit court erred in holding that the jury-waiver provision in that legislation is valid and enforceable. We reverse and remand this case for a jury trial.

In the circuit court proceeding in Tilley I , Tilley timely asserted his right to a jury trial. However, because there was a jury-trial waiver clause in the loan agreement that was the subject of the litigation, the circuit court struck Tilley's demand for a jury trial. After a bench trial, the circuit court entered judgment against Tilley. As noted previously, we held that a pre-dispute jury-waiver clause did comport with the Arkansas Constitution. Article 2, section 7 provides:

The right of trial by jury shall remain inviolate, and shall extend to all cases at law, without regard to the amount in controversy; but a jury trial may be waived by the parties in all cases in the manner prescribed by law; and in all jury trials in civil cases, where as many as nine of the jurors agree upon a verdict, the verdict so agreed upon shall be returned as the verdict of such jury, provided, however, that where a verdict is returned by less than twelve jurors all the jurors consenting to such verdict shall sign the same.

In our opinion in Tilley I , we construed the phrase "but a jury trial may be waived by the parties in all cases in the manner prescribed by law" to mean in accordance with the Arkansas Rules of Civil Procedure, specifically Rules 38 and 39 and by Arkansas Statute Annotated section 27-1743.2, which was superseded by Rule 38. The passage of amendment 80, charged the Arkansas Supreme Court with the duty to "prescribe the rules of pleading, practice and procedure for all courts." Ark. Const. amend. 80, § 3. The constitutional vesting of the authority to prescribe rules of practice and procedure in the Arkansas Supreme Court stands in marked contrast to the federal system where Congress has the authority to prescribe the rules of practice and procedure. Even so, section 3 of amendment 80 limits our rule-making authority, allowing us to prescribe rules "provided these rules shall not abridge, enlarge or modify any substantive rights and shall preserve the right of trial by jury as declared in this Constitution."

After Malvern National Bank's (MNB) and Moore's petition for rehearing was denied, the mandate issued on January 25, 2018. Our mandate stated:

THIS APPEAL WAS SUBMITTED TO THE ARKANSAS SUPREME COURT ON THE RECORD OF THE GARLAND COUNTY CIRCUIT COURT AND BRIEFS OF THE RESPECTIVE PARTIES. AFTER DUE CONSIDERATION, IT IS THE DECISION OF THE COURT THAT THE JUDGMENT OF THE CIRCUIT COURT IS AFFIRMED IN PART; REVERSED AND REMANDED IN PART; COURT OF APPEALS' OPINION VACATED FOR THE REASONS SET OUT IN THE ATTACHED OPINION.

Thus, in accordance with our mandate, this case was remanded to the circuit court for a jury trial on Tilley's counterclaims and third-party claims for (1) breach of contract/breach of the duty of good faith and fair dealing; (2) promissory estoppel; (3) violation of the Arkansas Deceptive Trade Practices Act; (4) tortious interference with a business relationship or expectancy; (5) negligence; and (6) deceit/fraud in the inducement. Tilley I , supra .

After the mandate was issued, the General Assembly passed Act 13 on March 19, 2018. Act 13 states:

SECTION 1. As authorized by Article 2, § 7, of the Arkansas Constitution, Arkansas Code Title 16, Chapter 30, is amended to add an additional section to read as follows:

16-30-104. Contractual waiver of jury trial.

A written provision in a contract to borrow money or to lend money in which the parties agree to waive their respective rights to a trial by jury under Arkansas Constitution, Article 2, § 7, is valid and enforceable except upon those grounds that exist at law or in equity for the revocation of any contract.

SECTION 2. DO NOT CODIFY. Retroactivity.

(a) This act applies retroactively to a contract to waive a jury trial entered into before the effective date of this act.

(b) This act applies retroactively to all judicial proceedings in which a contract to waive a jury trial is at issue if the judicial proceeding is still pending on the effective date of the act.

SECTION 3. EMERGENCY CLAUSE. It is found and determined by the General Assembly of the State of Arkansas that decisions of the Arkansas Supreme Court regarding contractual jury waiver provisions leave parties in doubt about the applicability of their contracts; that this uncertainty must be resolved immediately; and that this uncertainty may only be resolved through the immediate effectiveness of this act. Therefore, an emergency is declared to exist, and this act being immediately necessary for the preservation of the public peace, health, and safety shall become effective on:

(1) The date of its approval by the Governor;

(2) If the bill is neither approved nor vetoed by the Governor, the expiration of the period of time during which the Governor may veto the bill; or (3) If the bill is vetoed by the Governor and the veto is overridden, the date the last house overrides the veto.

2018 Ark. Acts 13 (2d Ext. Sess.). Essentially, Act 13 purports to supersede our decision in Tilley I .

Following the passage of Act 13, the circuit court, sua sponte, requested the parties to brief the issue of whether Act 13 applies to this case. The circuit court ultimately ruled that "Act 13 was clearly intended to apply to this case" and found that "the jury waiver clause in the Loan Agreement at issue in this case is valid and enforceable, there being no grounds at law or equity for revocation of the jury waiver clause or the Loan Agreement." Accordingly, the circuit court stated that Act 13 required enforcement of the jury-waiver clause and therefore held that Tilley was not entitled to a jury trial on his claims. In light of this ruling, the parties agreed that the mandate did not require a second bench trial on Tilley's claims. The circuit court entered a judgment based on its findings from the previous bench trial.

Tilley first argues that in applying Act 13 to this case, the circuit court violated the mandate rule and the law-of-the-case doctrine. He asserts that in reversing this case, we held that the circuit court erred in denying his constitutional right to a jury trial on his legal claims.

The mandate is the official notice by the appellate court, directed to the court below, advising that court of the action taken by the appellate court, and directing the lower court to duly recognize, obey, and execute the appellate court's judgment. Dye v. Diamante , 2017 Ark. 37, 509 S.W.3d 643. Under the mandate rule, a circuit court has no power or authority to deviate from the mandate issued by an appellate court. Id. Accordingly, a lower court is bound by the judgment or decree of a higher court as law of the case and must carry the decision of the higher court into execution pursuant to the mandate. Ingle v. Ark. Dep't of Human Servs. , 2014 Ark. 471, 449 S.W.3d 283. The lower court may not vary the decision or judicially examine it for any purpose other than execution. Id. The lower court's jurisdiction is limited to that which is conferred by the appellate court mandate. Wal-Mart Stores, Inc. v. Regions Bank Tr. Dep't , 356 Ark. 494, 156 S.W.3d 249 (2004). The law-of-the-case doctrine prohibits a court from reconsidering issues of law and fact that have already been decided on appeal. Cadillac Cowboy, Inc. v. Jackson , 347 Ark. 963, 69 S.W.3d 383 (2002). Therefor, the law of the case doctrine serves the goals of efficiency and finality in the judicial process, as well as maintaining consistency and avoiding reconsideration of matters once decided in the course of a single, continuing lawsuit. Green v. George's Farms, Inc. , 2011 Ark. 70, 378 S.W.3d 715.

Tilley asserts that because we held in Tilley I that he was entitled to a jury trial, the circuit court did not have the authority to deviate from the supreme court mandate. Conversely, MNB argues that Tilley I did not foreclose, but actually invited the legislature to supply the legal authority for upholding pre-dispute jury-waiver clauses. MNB notes that in Act 13, the legislature manifested a clear intent that this legislation be given retroactive effect. Furthermore, MNB asserts that our court of appeals has "recognized" exceptions to the law-of-the-case doctrine "that might allow a matter to be revisited: (1) the availability of new evidence; (2) an intervening change of controlling law ; and (3) the need to correct a clear error or prevent manifest injustice." Turner v. Northwest Arkansas Neurosurgery Clinic, P.A. , 91 Ark. App. 290,...