Southern Minnesota Beet Sugar Cooperative v. Agri Systems

Background

Southern Minnesota Beet Sugar Cooperative (SMBSC) sued Agri Systems, doing business as ASI Industrial, Inc. (ASI), concerning the design and construction of six concrete sugar silos. SMBSC alleged that part of the equipment failed after construction and sought $3.3 million in damages.

SMBSC originally asserted six claims. The court had already granted summary judgment to ASI on Counts IV and VI. The claims remaining in this order were Counts I, II, and III—contract, express-warranty, and implied-warranty claims—and Count V, professional negligence.

The parties’ Design-Build Agreement included a provision waiving jury trials for disputes arising from or relating to the agreement and its related documents. Despite that provision, ASI demanded a jury trial in its answer. ASI later moved to withdraw its jury demand as to all remaining claims. SMBSC opposed the motion.

Contract Claims

The court held that the contractual jury-trial waiver was knowing and voluntary and therefore enforceable as to Counts I, II, and III. In reaching that conclusion, the court considered that the parties negotiated the agreement, exchanged revisions to the jury-waiver language, were represented by counsel, and were sophisticated business entities. The waiver was also set out in a separately labeled paragraph, and the record did not show unequal bargaining power or a lack of opportunity to review the agreement.

Because the waiver was valid, the court concluded that ASI’s jury demand was improper as to the contract claims. The court therefore allowed ASI to withdraw its jury demand for Counts I, II, and III.

Professional-Negligence Claim

The parties agreed that the jury waiver did not apply to Count V. The court relied on its earlier summary-judgment ruling that SMBSC’s professional-negligence claim was an independent tort that did not arise from the Design-Build Agreement.

Because the waiver did not cover Count V, ASI’s jury demand was proper for that claim. Under Federal Rule of Civil Procedure 38(d), ASI could not withdraw the demand without SMBSC’s consent. SMBSC did not consent, so the professional-negligence claim will proceed to a jury trial.

Disposition

The court ordered that ASI’s motion to withdraw its jury-trial demand was granted in part and denied in part. Unless SMBSC consents to a judge-only trial on all claims, the court will hold a bench trial—meaning a trial decided by the judge—on Counts I, II, and III, and a jury trial on Count V.