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DAB, Inc. v. Sunbelt Rentals, Inc.

United States District Court, D. Nebraska

January 20, 2017

DAB, INCORPORATED, a Nebraska Corporation; NCS TRANSPORTATION, INC., a Nebraska Corporation; CAROL A. BENSON, AND MARVIN D. BENSON, Plaintiffs,
v.
SUNBELT RENTALS, INC., a North Carolina Corporation; Defendant.

          MEMORANDUM AND ORDER

          CHERYL R. ZWART UNITED STATES MAGISTRATE JUDGE.

         This matter is before the court on the Motion to Strike Plaintiff's Jury Demand filed by Defendant Sunbelt Rentals Inc. (Filing No. 14). For the following reasons, the motion will be granted.

         BACKGOUND

         Defendant Sunbelt is a rental equipment company located in South Carolina. (Filing No. 1 ¶ 6). Plaintiffs DAB Inc. (“DAB”) and NCS Transportation, Inc. (“NCS”) are equipment rental companies located in Nebraska. (Filing No. 1). DAB and NCS are owned by Plaintiffs Marvin Benson and Carol Benson, respectively. (Filing No. 1 ¶¶ 4, 5). Defendant and Plaintiffs negotiated a purchase agreement for the sale of DAB and NCS assets to Sunbelt. The resulting Asset Purchase Agreement (“Purchase Agreement”), which was entered into by the parties on December 16, 2014, (Filing No. 1-1), required certain funds to be held in escrow according to an Escrow Agreement. (Filing No. 1-1 at CM/ECF p. 12). The Escrow Agreement was attached to the Purchase Agreement as an exhibit and was expressly incorporated into the terms of the Purchase Agreement. (See Filing No. 1-1 at CM/ECF pp. 1, 8; Filing No. 20 ¶ 4).[1]

         On December 16, 2014, the Purchase Agreement was executed and signed by Kurt Kenkel, as Executive Vice President to Sunbelt, Marvin Benson both as the President of DAB and as its shareholder, and Carol Benson both as the President of NCS and as its shareholder. According to the terms of the Purchase Agreement, the Escrow Agreement was to be executed on January 2, 2015.[2] The Escrow Agreement was signed by Kurt Kenkel as Executive Vice President to Sunbelt, Marvin Benson as the President of DAB, Carol Benson as the President of NCS, and by Allison Lancaster-Poole as the Escrow Agent. (Filing No. 15-2 at CM/ECF pp. 13- 14).

         The Escrow Agreement contains the following jury waiver provision:

27. WAIVER OF TRIAL BY JURY. EACH PARTY TO THIS ESCROW AGREEMENT HEREBY WAIVES ANY RIGHT THAT IT MAY HAVE TO A TRIAL BY JURY ON ANY CLAIM, COUNTERCLAIM, SETOFF, DEMAND, ACTION OR CAUSE OF ACTION (1) ARISING OUT OF OR IN ANY WAY RELATED TO THIS ESCROW AGREEMENT OR (2) IN ANY WAY IN CONNECTION WITH OR PERTAINING OR RELATED TO OR INCIDENTAL TO ANY DEALINGS OF THE PARTIES TO THIS ESCROW AGREEMENT OR IN CONNECTION WITH THIS ESCROW AGREEMENT OR THE EXERCISE OF ANY SUCH PARTY'S RIGHTS AND REMEDIES UNDER THIS ESCROW AGREEMENT OR THE CONDUCT OR THE RELATIONSHIP OF THE PARTIES TO THIS ESCROW AGREEMENT, IN ALL OF THE FOREGOING CASES WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER IN CONTRACT, TORT OR OTHERWISE. EACH OF THE PARTIES HERETO HEREBY FURTHER ACKNOWLEDGES AND AGREES THAT EACH HAS REVIEWED OR HAD THE OPPORTUNITY TO REVIEW THIS WAIVER WITH ITS RESPECTIVE LEGAL COUNSEL, AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH SUCH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, THIS ESCROW AGREEMENT MAY BE FILED AS A CONSENT BY ALL PARTIES TO A TRIAL BY THE COURT.

(Filing No. 15-2 at CM/ECF p. 12) (capitalization in original). This waiver provision was a separately numbered paragraph of the Escrow Agreement and printed in all capital letters.

         Plaintiffs DAB, NCS, Carol Benson, and Marvin Benson filed their complaint against Defendant Sunbelt on September 16, 2016. (Filing No. 1). In the Complaint, Plaintiffs assert a single claim for breach of contract, alleging the defendant breached the Purchase Agreement by failing to pay for certain assets. (Filing No. 1). Defendant has filed a counterclaim against Plaintiffs alleging a breach of the Purchase Agreement claiming Plaintiffs have failed to pay Sunbelt for certain defective or missing equipment. (Filing No. 13).

         ANALYSIS

         The right to a jury trial is guaranteed in certain civil cases under the Seventh Amendment of the United States Constitution. Fed. R. Civ. P. 38(a) provides “[t]he right of a trial by jury as declared by the Seventh Amendment . . . shall be preserved to the parties inviolate.” However, this right may be waived, either expressly or impliedly. Bostic v. Goodnight, 443 F.3d 1044, 1047 (8th Cir. 2006); Northwest Airlines, Inc. v. Air Line Pilots Ass'n, Int'l, 373 F.2d 136, 142 (8th Cir. 1967). An express waiver of the right to a jury trial may occur by contract. See Northwest Airlines, Inc., 373 F.2d at 142; Cooperative Fin. Ass'n, Inc v Garst, 871 F.Supp. 1168, 1171 (N.D. Iowa 1995).

         Defendant argues the Asset Purchase Agreement and Escrow Agreement were executed as part of the same transaction, the Escrow Agreement was incorporated into the Purchase Agreement, and the jury waiver is therefore applicable to any dispute related to or arising from the Purchase agreement due to its broad language. Plaintiffs argue the claims in this case arise solely out of and are governed by the terms of the Purchase Agreement which did not contain a jury trial waiver. Additionally, Plaintiffs argue even if the trial waiver extended to the Purchase Agreement, it is no longer binding because the Escrow Agreement has terminated and the individual Plaintiffs, Marvin and Carol Benson, were not parties to the Escrow Agreement.

         “[C]ourts have long recognized that a contract may consist of more than one instrument.” Dakota Gasification Co. v. Natural Gas Pipeline Co., 964 F.2d 732, 734 (8th Cir. 1992) (citing St. Paul Fire & Marine Ins. Co. v. Tennefos Constr. Co., 396 F.2d 623, 628 (8th Cir. 1968). Where multiple agreements “represent successive steps which were taken to accomplish a single purpose, ” they should be read together. St. Paul Fire, 396 F.2d at 628; see also Unison Co., Ltd. v. Juhl Energy Development, Inc., 789 F.3d 816, 819-820 (8th Cir. 2015)(reading separate documents that cross-reference one another and are contingent on one another as two parts of one transaction); Paramount Tech. Prods. v. GSE Lining Tech., Inc., 112 F.3d 942, 945 (8th Cir. 1997)(“[W]hen two contracts are executed at the same time, by nearly identical parties and as part of the same transaction, those contracts are to be read together.”). Indeed, “hinging one contract upon the execution of another contract . . . heightens the need for joint interpretation.” Dakota Gasification Co., 964 F.2d at 735. And other courts have applied this general principle to find a party has waived its right to a jury trial. See Gandy Marketing & Trucking, Inc. v. Tree Town Holding, Ltd., case no. H-08-1053, 2009 WL 82062 at *2 (S.D. Texas Jan. 9, 2009).

         This rule of joint interpretation applies even though the executing parties differ, as long as “the several contracts were known to all the parties and were delivered at the same time to accomplish an agreed purpose.” St. Paul Fire, 396 F.2d at 628 (quoting Pet ...


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