In Re: RFC and RESCAP Liquidating Trust Litigation

Background

This order concerns the related case ResCap Liquidating Trust v. iServe Residential Lending, LLC as successor to United Residential Lending LLC, Case No. 13-cv-3531. The court noted that ResCap Liquidating Trust was the sole plaintiff in that case.

On August 25, 2004, ResCap and iServe’s predecessor companies signed a three-page client contract. The contract stated, in bold lettering under a separate “Waiver of Jury Trial” heading, that both parties fully waived any right to a jury trial to the extent such a right existed or later arose. It also stated that the waiver covered every instance and issue for which a jury trial would otherwise be available, and that either party could submit the contract to a court as conclusive evidence of the waiver.

ResCap sued iServe on December 15, 2013, alleging breach of contract and contractual indemnification. ResCap did not demand a jury trial in its complaint. iServe nevertheless demanded a jury trial in its answers to the complaint and the second amended complaint.

In January 2015, the case was consolidated with dozens of other cases for pretrial purposes. The parties completed discovery and engaged in motion practice without addressing whether the case would be tried to a judge or jury. As the case neared trial, ResCap learned that iServe would not agree to a bench trial. ResCap then moved to strike iServe’s jury demand on December 7, 2018.

Parties’ positions

ResCap argued that iServe had contractually waived its jury-trial right and that Federal Rule of Civil Procedure 39 permits a party to challenge a jury demand at any time.

iServe argued that ResCap’s delay made the request untimely because the parties and the court had proceeded on the assumption that the case would be tried to a jury. iServe said it had developed its litigation strategy on that assumption and had refrained from offering certain expert witnesses because it feared they might confuse a jury. The opinion states that iServe did not provide more specific examples of prejudice.

Court’s analysis

The court held that parties may knowingly and voluntarily waive the constitutional right to a jury trial by contract, and found that the parties had done so here. It also relied on decisions holding that a party may move to strike a jury demand based on a contractual waiver at any time, including shortly before trial.

The court rejected iServe’s argument that ResCap had waived its ability to enforce the contractual waiver. It found that ResCap had never expressly relinquished the waiver. The court also concluded that, even if the timing of the request involved judicial discretion, ResCap’s delay had not substantially prejudiced iServe. In the court’s view, the contract had made the possibility of a jury-demand challenge clear from the beginning, so iServe should have planned its litigation strategy accordingly.

Disposition

The court GRANTED ResCap’s request to strike iServe’s jury demand. The action will be tried to the court rather than to a jury. Judge Susan Richard Nelson signed the order on December 20, 2018.