

Opinion issued February 27, 2012.

In The
Court of
Appeals
For The
First District
of Texas
————————————
NO. 01-11-00618-CV
———————————
IN RE KEY EQUIPMENT FINANCE INC. AND 
AMERICAN BUSINESS MACHINES, INC., Relators

 

 
Original Proceeding on Petition for Writ of Mandamus

 

 
O P I N I O N
The dispute in this commercial case is whether a contractual
waiver of a trial by jury is enforceable. 
Key Equipment Finance Inc. (Key) and American Business Machines, Inc.
(ABM), seek mandamus relief from the trial court’s order denying their motion
to strike Austin Maintenance & Construction Inc.’s (Austin’s) jury demand.[1]  Key and ABM contend that the trial court
erred in failing to enforce the contractual jury waiver set forth in the
parties’ lease agreement and service contract. 
We agree and conditionally grant relief. 
Background
In 2007, Austin contracted with ABM to lease and service an
array of copiers and other business equipment, as it had similarly done on
multiple earlier occasions.  The 2007 lease
agreement appears on the front and back of a single sheet of paper.  The front of the first page contains several blocked
spaces for customer information, the quantity of machines under the lease, and
the length of the lease term.  Near the
bottom are two spaces for the customer to sign—one signifying acceptance of the
agreement’s terms and the other, acceptance of delivery.  The text above the space for the latter
reads: 
You certify that the equipment listed above has been furnished, that
delivery and installation has been duly completed and satisfactory.  Further, all conditions and terms of this
Agreement have been reviewed and acknowledged. 
Upon your signing below, your promises herein will be irrevocable and
unconditional in all respects.
The back of the first page contains eighteen numbered
paragraphs that fill about three-quarters of the page.[2]  A line space appears between each
paragraph.  The text, all printed in the
same-size font, begins each paragraph with a heading written in all capital
letters.  The paragraph pertinent to the
jury waiver issue reads:
15.  CONSENT TO LAW,
JURISDICTION, AND VENUE:  This Agreement shall be deemed duly executed
and performed in the state of Owner or its Assignee’s principal place of
business and shall be governed by and construed in accordance with its
laws.  If the Owner or its Assignee shall
bring any judicial proceeding in relation to any matter arising under the
Agreement, the Customer irrevocably agrees that any such matter may be adjudged
or determined in any court or courts in the state of the Owner or its
Assignee’s principal place of business, or in any court or courts in Customer’s
state of residence, or in any other court having jurisdiction over the Customer
or assets of the Customer, all with the consent and in the sole election of the
Owner.  The Customer hereby irrevocably
submits generally and unconditionally to the jurisdiction of any such court so
elected by the Owner in relation to such matters.  You waive trial by jury in any action between
us.
          This provision is identical to those
in the more than ten prior lease agreements that Austin and ABM had executed
from 2004 through 2006.  Austin required
that its in-house legal department review all contracts before it executed them.  
Austin also signed a customer service contract with ABM in
2007.  Like the lease agreement, the
service contract covers the front and back of one page, along with an attached
schedule identifying the copiers covered by the contract and another page
entitled “Added Value & Technical Support Guarantee” (Guarantee).  The front of the first page contains blocked
spaces for details pertaining to the specific customer, including the extent of
the service to be provided under the contract, the cost, and the length of the
contract’s term.  The reverse side, entitled “TERMS AND CONDITIONS,” opens:  
I HAVE READ AND UNDERSTAND THE TERMS AND
CONDITIONS OF THIS CONTRACT.  [ABM] by its acceptance hereof, agrees to
furnish to the named customer with maintenance service as described below on
the equipment listed on this contract.
Next
appear twenty-four numbered paragraphs, printed in seven-point font, that
delineate each party’s rights and responsibilities.  Paragraph 20 reads:
20.     All claims, disputes, and
controversies arising out of or relating in any way to the executed Customer
Service Contract will to the fullest extent be resolved by binding
arbitration.  Any party may initiate
arbitration by sending written notice of its intent to arbitrate [Notice] to
the other party.  The Notice shall
contain a description of the claim, dispute, or controversy and the remedy
requested.  It is understood that the
parties waive any right to a jury trial or a trial in court.  The parties understand that the rules
applicable to arbitrations and the rights of parties in arbitrations differ
from the rules and rights applicable in court. 
Two years after signing the 2007 lease agreement, Austin
informed ABM that it intended to terminate the agreement.  Austin invoked express language in paragraph
5 of the lease agreement, as well the guarantee language that accompanied the
service contract.  Citing other contract
language, ABM disputed Austin’s right to terminate the contract after two
years.
In February 2009, Austin sent a letter to the American
Arbitration Association requesting arbitration of its dispute “in accordance
with the arbitration provisions of the . . . lease agreement.”  ABM protested Austin’s invocation of the
service contract’s arbitration provision, and Austin filed the underlying suit
in state district court, asserting breach of contract and common-law fraud
claims.  Austin attached both the lease
agreement and the service contract to its petition.  
Austin made a jury demand in a separate filing in early
August 2009.  Three weeks later, Austin
amended its petition to name Key, to which ABM had assigned the Lease
Agreement, as a defendant.[3]  Key was not served with Austin’s jury demand,
and its jury demand did not appear in the amended petition.  Key answered and counterclaimed, seeking
declaratory relief and financial recovery under an unjust enrichment
theory.  
Key twice moved for a continuance, first in March 2010 and
again in July, citing the need to take additional depositions, including the
deposition of the only employee who had personal knowledge of the circumstances
surrounding the execution of the lease agreement and service contract.  Following the trial court’s ruling continuing
the trial until January 2011, ABM and Key moved to strike Austin’s jury
demand.  The trial judge denied the
motion.  After a new judge succeeded the
judge who initially ruled on the motion, ABM and Key moved in the trial court
to reconsider that ruling.  The trial
court again denied the motion.
Discussion
I.        Standard of review
A writ of mandamus issues to correct a clear abuse of
discretion when no adequate remedy at law exists.  Walker v. Packer, 827 S.W.2d 833, 839 (Tex. 1992).  A trial court has no discretion to determine
what the law is or apply the law incorrectly.  Id. at 840.  A party seeking relief from
the failure or refusal to enforce a valid contractual jury waiver has no
adequate remedy at law and is entitled to mandamus relief to correct a clear
abuse of discretion by the trial court.  In re Prudential Ins. Co. of Am., 148
S.W.3d 124, 135–40 (Tex. 2004, orig. proceeding).  
II.      Laches
Before the trial court, Austin contended that ABM and Key had
waived their right to assert the contractual jury waiver by failing to exercise
diligence in challenging Austin’s jury demand. 
“Although mandamus is not an equitable remedy, its issuance is largely
controlled by principles of equity.”  In re Northrop, 305 S.W.3d 172, 175
(Tex. App.—Houston [1st Dist.] 2009, orig. proceeding) (citing In re Roxsane R.,
249 S.W.3d 764, 771 (Tex. App.—Fort Worth 2008, orig. proceeding); In re Users Sys. Servs.,
Inc., 22 S.W.3d 331, 337 (Tex. 1999) (orig. proceeding); Rivercenter Assocs. v. Rivera, 858 S.W.2d 366, 367 (Tex. 1993) (orig.
proceeding)). One of these principles is that “equity aids the diligent and not
those who slumber on their rights.” Northrop,
305 S.W.3d at 175 (citing Rivercenter, 858 S.W.2d at 367).  
“Two essential elements of laches are (1) unreasonable delay
by one having legal or equitable rights in asserting them; and (2) a good faith
change of position by another to his detriment because of the delay.”  Rogers v. Ricane Enters., 772 S.W.2d 76,
80 (Tex. 1989).  In Rivercenter, the
petitioner “was sent notice on the day the jury demand was filed, yet for no
apparent reason delayed filing its motion to quash [for over four months].”  858 S.W.2d at 367.  The Rivercenter petitioner, like Austin, had demanded the jury
trial from which it later sought relief. 
Id.  These facts triggered a winning equitable
defense to mandamus relief from a jury demand. 
Id.  In contrast, the Supreme Court concluded
that the factual differences before it in General
Electric Capital warranted a different outcome:
Unlike the circumstances in Rivercenter, General Electric had already asserted its
contractual right to a non-jury trial when Small filed his jury demand.  Moreover, unlike Rivercenter, General Electric
explains its delay in moving to quash the demand as a consequence of Small’s
failure to send notice. Small disputes this, but there is nothing in the record
to document his assertion that he served the demand on General Electric. Thus,
the issue here is not whether General Electric was diligent in asserting its
contractual right in the first place, but rather whether General Electric
waived its right to a non-jury trial by failing to notice the docket change
over a ten month period.
In re Gen. Elec. Capital Corp., 203 SW 3d 314, 315 (Tex. 2006); see also AutoNation USA Corp. v. Leroy,
105 S.W.3d 190, 202 (Tex. App.—Houston [14th Dist.] 2003, orig. proceeding)
(rejecting contention that laches barred party from invoking arbitration
clause, holding that any delay in seeking arbitration did not cause opposing party
to suffer actual prejudice).  This case
is more akin to General Electric Capital.  Austin complains of ABM and Key’s delay in
enforcing the waiver clause, but it has not articulated any detrimental change
in position resulting from that delay.  And,
as the trial court observed in ruling on this matter, the record shows none.  Nor are the complained-of
delays wholly unexplained.  Key and ABM
point out that they moved to strike the jury demand six days after they deposed
the only employee identified by Austin who had personal knowledge relating to
the review and execution of the lease agreement.  Further, a new trial judge had succeeded the
judge who initially ruled on the motion to strike, and thus Key and ABM could
not petition for mandamus relief until the new judge had reconsidered the
matter.  Because Austin has not shown
prejudice and Key and ABM have shown unassailed reasons for their delay, we hold
that laches bars neither the invocation of the contractual jury waiver nor the
request for mandamus review of the trial court’s ruling.
II.      Enforceability of contractual waiver
The Texas Constitution
guarantees the right to jury trial.  Tex. Const. art. V, § 10.
 A party may nevertheless agree to waive
that right.  Contractual jury waivers do
not violate public policy and are enforceable as long as the waiver is voluntary,
knowing, and intelligent, and with full awareness of the legal consequences.  Prudential, 148 S.W.3d at 132.  In light of the strong public policy favoring
freedom of contract, contractual jury waivers deserve no more scrutiny than
agreements to waive the judicial forum entirely and arbitrate any future
dispute.  See id. (observing that party who agrees to arbitrate waives both
right to jury trial and right to appeal and finding it “preferable to enforce th[e] agreement [to limit dispute resolution to non-jury
trial] rather than leave them with arbitration as their only enforceable
option”); see also Bank of Am., 278
S.W.3d at 344 (holding that Texas does not apply presumption against
contractual jury waivers).  NAFTA Traders, Inc. v. Quinn,
339 S.W.3d 84, 95 (Tex. 2011) (“As a fundamental matter, Texas law recognizes
and protects a broad freedom of contract.”).  
The jury waiver clause in the contract in this case was not
conspicuous in comparison to any other provision.  A conspicuous jury waiver provision is “prima
facie evidence of a knowing and voluntary waiver and shifts the burden to the
opposing party to rebut it.”  In re Gen. Elec. Capital Corp., 203 S.W.3d 314,
316 (Tex. 2006) (per curiam); Prudential,
148 S.W.3d at 134.[4]
 The Supreme Court has intimated that,
while a prima facie case is established with proof of a conspicuous jury waiver
provision, a lack thereof does not foreclose its enforcement altogether.  See Bank
of Am., 278 S.W.3d at 346 (noting presumption for enforceability of
contractual jury waivers).  Rather, the
burden remains on the party seeking to enforce the provision to show that the
waiver was knowingly and voluntarily made. 
See id. at 344 (holding that
Texas law does not impose a presumption against jury trial waivers, but courts
should look to whether they are knowingly made “to address the argument that
parties may be inclined to use contractual waivers to take unfair advantage of
others, using bargaining position, sophistication, or other leverage to extract
waivers from the reluctant or unwitting.” (quoting Prudential, 148 S.W.3d at 132); cf. Brady v. United States,
397 U.S. 742, 756, 90 S. Ct. 1463 (1970) (holding that defendant voluntarily
waived right to trial where he was advised by competent counsel, he was made
aware of the nature of the charge against him, and there was nothing to
indicate that he was incompetent or otherwise not in control of his mental
faculties).  Because the provision here
was not conspicuous, Key and ABM have the burden to show that Austin willingly
accepted it.  For the following reasons,
we hold that the record establishes that Key and ABM have met that burden.
First, absent fraud or mistake, Texas courts presume that “a party
who signs a contract knows its contents.”  Bank of
Am., 278 S.W.3d at 344 (quoting In re
Bank One, N.A., 216 S.W.3d 825, 826 (Tex. 2007)); Prudential, 148 S.W.3d at 134 & n.37 (holding that “[a]lthough the [parties] did not read the paragraph
[containing the jury waiver], they are charged with knowledge of all the lease
provisions absent some claim that they were tricked into agreeing to them”).  The provision’s placement in the paragraph
headed “Consent to Law, Jurisdiction, and Venue” was reasonable, given that the
provision limits other related rights such as choice of law, forum selection,
and venue.  See In re J.W. Resources Exploration & Dev., Inc., No.
07-09-00189-CV, 2009 WL 2601567, at *4 (Tex. App.—Amarillo 2009, orig.
proceeding) (mem. op., not designated for
publication) (disagreeing with contention that provision waiving right to a
jury trial was unenforceable because it was “embedded” in arbitration clause).  The jury waiver provision in the lease agreement
was no less or more conspicuous than any other contractual provision—all are in small type—and
as legible as every
other provision.  And, the lease is a
brief two pages, with relatively few contractual provisions, with each
provision set apart by line and numbered individually, and it includes substantive,
bolded introductions.  See Bank of Am., 278
S.W.3d at 344–45.  The jury waiver
language is itself direct and to the point: 
“You waive trial by jury in any action between us.”  
Second, this is a contract between sophisticated parties who
had an established course of commercial dealings with each other.  Key and ABM introduced business records
reflecting several earlier lease agreements between the parties with the same
jury waiver provision.  The parties’
history of signing lease agreements containing the same jury waiver language
evidences an understanding of the provision and a willingness to be bound by
it.  See
Strickland v. Coleman, 824 S.W.2d 188, 192 (Tex. App.—Houston [1st Dist.]
1991, pet. denied) (noting that evidence of course of dealing may help
interpret terms of contract.).
Third, Austin’s practice of having its in-house legal counsel
review all of its contracts, including this one, means that this contract was
or could have been vetted more thoroughly than a contract sprung on an
unsuspecting consumer.  Key and ABM
offered the testimony of Karen Cryer, an Austin
employee, who sent the agreements to Austin’s legal department for review, and
understood that an in‑house lawyer would have or should have reviewed the
lease agreement before it was executed.  Nothing
in the record indicates any disparate bargaining power between the parties, nor
a lack of Austin’s ability to negotiate the inclusion of a jury waiver provision.  Importantly, Austin has not adduced any
evidence negating the evidence that ABM and Key presented to the trial court in
connection with the motion for reconsideration, including a course of dealing and
legal review.
Although the jury waiver in this case was not conspicuous,
ABM and Key adduced evidence that Austin knowingly accepted it, and Austin
offered none to the contrary. 
Considering the relevant factors, we hold that the record demonstrates
that ABM and Key met their burden of showing that Austin voluntarily executed
the lease agreement that waived its right to a jury trial.  The trial court thus erred in failing
to enforce the jury waiver provision.  
Conclusion
The trial court erred in refusing to strike ABM’s jury
demand.  We therefore conditionally grant
a writ of mandamus, and direct the trial court to vacate its March 15, 2011 order and to grant the joint motion to strike ABM’s jury demand.  A writ will issue only if the trial court fails
to do so.
 
 
                                                                      Jane
Bland
                                                                      Justice

 
Panel
consists of Chief Justice Radack and Justices Bland and Huddle.




[1]
             The
underlying case is Austin Maintenance
& Construction, Inc. v. American Business Machines, Inc., Key Equipment
Finance, Inc. and Kelly Ames Chisholm, Individually and as Representative of
American Business Machines, Inc.; No. 2009-29149, pending in the 55th
District Court of Harris County, Texas, the Honorable Jeff Shadwick
presiding.


[2]
             The
remainder of the page lists provisions labeled “FOR MUNICIPALITIES ONLY,” which
do not apply here.
 


[3]              ABM retained the service
contract.


[4]
             A
stricter burden—to show fair notice—inheres
in the policy considerations underlying
enforcement of some other kinds of contractual provisions.  Dresser
Indus. Inc. v. Page Petroleum, Inc., 853 S.W.2d 505, 509 (Tex. 1993)
(explaining that Court developed fair notice requirements to apply under the
express negligence doctrine “[b]ecause
indemnification of a party for its own negligence is an extraordinary shifting
of risk”); see Cate v. Dover Corp., 790 S.W.2d 559, 562 (Tex. 1990)
(observing that object of the conspicuousness requirement, as it applies to a
disclaimer of implied warranties, “is to protect the buyer from surprise and an
unknowing waiver of his or her rights”). 
A party satisfies the fair notice requirement of the express negligence
doctrine, for example, by showing that (1) the parties intent is specifically
stated within four corners of contract, and (2) conspicuousness, which mandates
“that something must appear on the face of the [contract] to attract the
attention of a reasonable person when he looks at it.”  Storage
& Processors, Inc. v. Reyes, 134 S.W.3d 190, 192 (Tex. 2004) (quoting Dresser Indus., 853 S.W.2d at 509–10).


