Lateral Recovery LLC v. BMF Advance, LLC

Background

The case concerns six agreements between FTE Networks, Inc. and the Funderz Defendants. The Funderz Defendants characterized the agreements as merchant cash advances, while the plaintiffs alleged that they were usurious loans. The plaintiffs asserted claims under the Racketeer Influenced and Corrupt Organizations Act.

The complaint and amended complaint did not demand a jury trial. The Funderz Defendants also did not demand a jury trial in their answers, which were filed on December 29, 2022, or within the 14-day period required by Federal Rule of Civil Procedure 38. The docket therefore listed the jury demand as “None.”

Several later case-management plans and scheduling orders contained a checked box stating that the case would be tried to a jury. The court approved those plans. On November 6, 2024, however, the court scheduled a bench trial for April 14, 2025. The Funderz Defendants then moved for a jury trial under Rule 39(b), or alternatively for an extension of time to make a jury demand under Rule 6(b).

The court’s analysis

The court held that the Funderz Defendants had waived their right to a jury trial because they did not properly serve and file a timely demand. A party generally must demand a jury trial no later than 14 days after the last pleading directed to the issue. The court also held that the case-management plans did not themselves create or restore a jury-trial right after the deadline had expired.

Under Rule 39(b), a court may allow a jury trial even when no timely demand was made. But Second Circuit precedent requires a showing beyond mere inadvertence when a case was filed in federal court. The Funderz Defendants did not offer an explanation beyond inadvertence, so the court held that their Rule 39(b) request could not be granted.

The court separately considered Rule 6(b), which can permit an untimely jury demand upon a showing of excusable neglect. The court considered the length and reason for the delay, prejudice to the plaintiffs, and whether the defendants acted in good faith. It found that the nearly two-year delay, the fact that discovery had closed, and the plaintiffs’ specific claims of prejudice weighed against relief. The plaintiffs stated that they had not videotaped depositions and had settled with one defendant based on an understanding that the case would be tried to the court.

The court also found that the agreements underlying the lawsuit contained jury-trial waivers and had been drafted by the Funderz Defendants. Although the court did not decide whether that contractual waiver applied to Lateral Recovery LLC, it said the waiver suggested that the defendants’ original failure to demand a jury was a considered choice rather than a mistake. The court further noted that the motion was filed after a summary-judgment decision that could have been viewed as unfavorable to the defendants, suggesting possible bad faith.

Disposition

The court denied the Funderz Defendants’ motion for a jury trial or, alternatively, to serve an untimely jury demand. The Clerk was directed to close the motion at Docket Number 177.