Fort Worth Appeals Court Holds Arbitration Clause Not a Jury Waiver

The Fort Worth Appeals Court has held in a memorandum opinion that an arbitration clause does not constitute a jury waiver.

In In re Professional Pharmacy II, No. 2-10-163-CV, (Tex. App. – Fort Worth, September 23, 2010) the relator (Professional Pharmacy) sought a writ of mandamus from a district court’s March 8, 2010 order granting JP Morgan Chase Bank, NA’s (JP Morgan’s) motion to strike Professional Pharmacy’s jury demand and enforce a contractual waiver of jury trial.

In 2008, Professional Pharmacy filed a suit against JP Morgan which alleged breach of a depository contract, sought declaratory relief and requested a jury trial. For more than eighteen months, the parties conducted discovery, filed motions and filed a joint motion for continuance. In February 2010, JP Morgan filed a motion to strike Professional Pharmacy’s jury demand and enforce a contractual waiver of jury trial allegedly contained within a “master account agreement.” The complete provision stated:

Most disputes arising under this Agreement related to accounts or services hereunder are subject to mandatory binding arbitration. Rights to trial by judge or jury are waived hereby. Bank must be notified by depositor of claims and proceedings to enforce any such claims must be brought, within the time requirements established in the Account Disclosures and Regulations.

Professional Pharmacy responded: “JP Morgan had failed to meet its burden to prove the existence of a valid and enforceable jury waiver and that the provision relied upon by JP Morgan was not a jury waiver but rather an unenforceable arbitration provision that had been waived by JP Morgan’s actions.” According to Professional Pharmacy, the arbitration clause was unenforceable because JP Morgan filed the motion eighteen months after Professional Pharmacy filed its jury demand and a mere forty-six days before trial. A trial court granted JP Morgan’s motion on March 8, 2010. The next day, Professional Pharmacy paid a jury fee. Professional Pharmacy then filed a petition for a writ of mandamus.

According to the Appeals Court, “’[A] difference exists between a jury trial waiver and an agreement to arbitrate disputes.’ See Chambers v. O’Quinn, 305 S.W.3d 141, 149 (Tex. App.—Houston [1st Dist.] 2009, no pet.).” The court applied basic rules of contract construction in an effort to ascertain the intent of the parties and stated:

The first sentence in the provision at issue clearly relates to arbitration as the method that has been selected for resolving disputes. The sentence waiving trial by judge or jury also clearly contemplates arbitration as it attempts to take the dispute resolution out of the court system altogether. “Judge” and “jury” are mentioned in the same sentence, and there is nothing to indicate the waiver of jury standing alone. Accordingly, JP Morgan’s contention that the provision is a valid jury waiver fails. See Chambers, 305 S.W.3d at 149. Moreover, even if this provision was meant to serve as a jury waiver, it would fail because it is not conspicuous. See In re Bank of America, 278 S.W.3d 342, 344–45 (Tex. 2009) (per curiam); Prudential, 148 S.W.3d at 134.

The Court of Appeals conditionally granted Professional Pharmacy’s writ of mandamus and instructed the lower court to vacate its earlier order granting JP Morgan’s motion to strike.

Disputing discussed jury waivers in the context of In re Bank of America last year here and here.

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