June 8, 2012
JUNG SOOK LEE, PLAINTIFF-RESPONDENT,
TENAFLY ASSOCIATES LLC, DEFENDANT-APPELLANT.
On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-9328-07.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued March 28, 2012 -
Before Judges Sapp-Peterson and Ostrer.
This appeal involves the enforceability of a contractual waiver of a jury trial, and the appropriate remedy where a jury trial was conducted in contravention of the waiver. The trial court denied defendant's motion to strike plaintiff's jury demand. The court reasoned that defendant did not accept the jury waiver provision because it failed to place its initials next to plaintiff's on the line provided below the jury waiver provision. The case proceeded to trial by jury and plaintiff obtained a favorable verdict.
We reverse because a signature is not essential, as a matter of law, to manifest assent to a contract. We remand for the trial court to ascertain, notwithstanding the absent initials, whether defendant expressed an intention to be bound by the jury waiver. If defendant did so, then the court must determine, applying equitable principles we identify, if defendant is entitled to a new trial without a jury.
The jury waiver appeared in a 2005 agreement to purchase a $1.5 million condominium to be constructed in Tenafly. A dispute arose between the parties, which we discussed at length when we reversed the trial court's order of summary judgment in favor of defendant, who is the developer and seller, against plaintiff, the purchaser. Lee v. Tenafly Assoc., LLC, No. A-0144-09 (App. Div. July 28, 2010). In short, plaintiff tried to cancel her purchase because of construction delays. She asked defendant to return her ten percent deposit plus almost $56,000 she paid for extras. Defendant claimed plaintiff was in breach and kept the payments as liquidated damages. We held "ambiguities abound" involving the contractual provisions governing the closing date, extensions and postponements of it, and the parties' respective notice obligations. Id. at slip op. 13. We remanded for trial. The jury waiver provision was not raised as an issue.
In plaintiff's December 2007 complaint, she demanded trial by jury. Defendant's February 2008 answer included a separate defense invoking the jury waiver and "reserv[ing] the right to move to strike the jury demand[.]" About a year later, the parties cross-moved for summary judgment. Shortly after our remand, the parties received an August 2010 order scheduling the matter for trial on October 25, 2010. Defendant then filed its motion to strike the jury demand.
The jury waiver provision, paragraph 22.7 of the purchase agreement, which accompanied a choice of forum provision, includes separate lines for initials, and states:
Seller and Purchaser(s) hereby submit to personal jurisdiction in the State of New Jersey in any action or proceeding arising out of this Agreement. The parties hereto waive trial by jury regarding any legal action arising from the negotiation or breach of this Contract. Purchaser's initials ___ Seller's initials ____
Plaintiff initialed the paragraph, but defendant did not.
The provision was one of several in section 22 of the agreement, which was entitled "Miscellaneous." Also included was an integration clause barring oral modifications and a provision expressly rejecting the rule of contra proferentem, pursuant to which ambiguous provisions are construed against their drafter, although defendant prepared the contract. At the end of the eighteen-page document were signature lines for purchaser and seller. Plaintiff apparently executed the agreement October 19, 2005. Defendant did not immediately do so.
Plaintiff availed herself of the attorney review period and, through her attorney, secured defendant's consent to several modifications of the agreement. Plaintiff's attorney included these changes in a letter agreement that he signed on plaintiff's behalf on November 2, 2005. He did not object to, nor seek to modify, the jury waiver provision. According to counsel's letter to defendant, "Upon my receipt of the fully executed signature pages, the statutory attorney review will be considered concluded and the Agreement finalized." Defendant's representatives signed the letter-rider on November 3, and the main purchase agreement on November 4, 2005. However, defendant did not initial the jury waiver provision.
In response to the motion to strike, plaintiff argued the provision was ineffective because defendant did not initial it. Alternatively, plaintiff argued the provision was unenforceable because she was not personally aware of it. She certified that although she relied on her real estate broker and attorney "to help me comprehend the substance of the contract," she was unaware of the jury waiver; "never knew what . . . 'right of trial by jury' meant[;]" and did not intend to waive a jury. Her real estate broker certified that she served as an intermediary for plaintiff and her attorney because "[p]laintiff spoke limited English" and "there was never any discussion or advice being given on jury waiver at any point of the contract formation or attorney review."
After oral argument on October 1, 2010, the court entered an order denying the motion, which included the following statement of reasons:
Paragraph 22.7 (the waiver of the trial by jury) is not initialed by both parties and thus this specific provision never materialized into the parties' agreement. This was a contract prepared by the seller in 2005 and clause 22.7 specifically required the seller to initial same, which was not done.
In addition and in the alternative, there is a question whether the [plaintiff], who is a Korean national with little understanding of the English language, knowingly, willingly and voluntarily waived her right to a jury trial at the signing of this contract by her real estate broker or attorney or even herself.
Defendant sought leave to appeal, which this court denied on November 9, 2010. Defendant unsuccessfully renewed its argument before a different judge on the eve of trial on March 21, 2011. After a four-day trial, the jury returned a verdict for plaintiff and awarded damages of $206,851. We later granted a stay of the judgment pending appeal, subject to defendant's depositing the $206,851 into court.
Defendant presents the following point on appeal:
THE LACK OF DEFENDANT-SELLER'S INITIALS ON THE CONTRACT PROVISION DEALING WITH JURY TRIAL WAIVER DOES NOT RENDER THE PROVISION UNENFORCEABLE AGAINST PLAINTIFF-PURCHASER.
Defendant also challenges the court's conclusion that plaintiff's waiver was ineffective because she did not understand English well and therefore did not voluntarily and knowingly waive her right to a jury trial.*fn1
In the absence of a factual dispute, we review de novo a trial court's interpretation of a contract, including issues of contract formation. Kieffer v. Best Buy, 205 N.J. 213, 222-23 and 223 n. 5 (2011) ("The interpretation of a contract is subject to de novo review by an appellate court."); NAACP of Camden Cnty. E. v. Foulke Mgmt. Corp., 421 N.J. Super. 404, 430 (App. Div.) (reviewing de novo trial court's determination regarding contract formation), certif. granted, 209 N.J. 96 (2011). Here, the trial court found no disputed issues of fact related to the interpretation or enforceability of the jury waiver. Consequently, we owe no deference to the "trial court's interpretation of the law, and the legal consequences that flow from established facts[.]" Manalapan Realty, L.P. v. Twp. Comm., 140 N.J. 366, 378 (1995).
Defendant's failure to initial the jury waiver provision did not conclusively reflect a lack of assent to it. On the other hand, the present record does permit a definitive finding the provision is enforceable. There exist issues of fact regarding the meaning of the initial lines and the intent of the parties, which require the trial court's resolution. After additional submissions, the court may find no genuine issue remains, or it may determine an evidentiary hearing is necessary.
As a threshold matter, we do not share the trial court's certainty that the initial lines were designed to enable the parties to express their specific written acceptance of the jury waiver provision. It is conceivable the lines were placed there simply to render the provision conspicuous, and to obtain evidence that plaintiff was aware of the jury waiver. This is plausible in light of case law questioning the enforceability of a jury waiver that is inconspicuously placed in an agreement. See Fairfield Leasing Corp. v. Techni-Graphics, Inc., 256 N.J. Super. 538, 540 (Law Div. 1992). Arguably, actual acceptance of the jury waiver provision and all other provisions of the agreement is reflected by signature on the last page.
On the other hand, if this were the sole purpose for the initials line, there would apparently be no purpose in placing a line for defendant's initials. Cf. Washington Constr. Co. v. Spinella, 8 N.J. 212, 217 (1951) (stating that all parts of a writing and every word of it will, if possible, be given effect) (citation omitted); Caruso v. John Hancock Mut. Ins. Co., 136 N.J.L. 597, 598 (E. & A. 1948) (stating that contract terms should not be left useless). Defendant obviously was aware of the provision, as it drafted the form of contract. Thus, the meaning of the initials lines is ambiguous. See M.J. Paquet v. N.J. Dep't of Transp., 171 N.J. 378, 396 (2002) (contract is ambiguous if it is susceptible to two reasonable alternative interpretations).
Resolution of ambiguity is a fact issue. Michaels v. Brookchester, Inc., 26 N.J. 379, 388 (1958); Deerhurst Estates v. Meadow Homes, Inc., 64 N.J. Super. 134, 152 (App. Div. 1960), certif. denied, 34 N.J. 66 (1961). However, a plenary hearing is required to resolve an ambiguous contract only if, after considering all relevant materials, a genuine issue of fact remains. In re Teamsters Indus. Emp. Welfare Fund, 989 F.2d 132, 135 (3d Cir. 1993). In any event, the court shall decide whether the party has waived his or her right to a jury, just as the court shall decide whether a party has waived the right to trial at all and accepted arbitration. Cf. Bd. of Educ. of Twp. of Bloomfield v. Bloomfield Educ. Ass'n, 251 N.J. Super. 379, 383 (App. Div. 1990) ("Whether the parties are contractually obligated to arbitrate a particular dispute is a matter for judicial resolution."), aff'd, 126 N.J. 300 (1991); Moreira Constr. Co. v. Twp. of Wayne, 98 N.J. Super. 570, 575 (App. Div.) ("[I]t is inescapably the duty of the judiciary to construe the contract to resolve any disagreement of the parties as to whether they have agreed to arbitrate.") certif. denied, 51 N.J. 467 (1968).
Even if the court ultimately determines the signature lines were intended to reflect explicit acceptance of the jury waiver provision, defendant's failure to initial does not end the matter. "[C]ontracts do not need to be in writing to be enforceable." Leodori v. Cigna Corp., 175 N.J. 293, 304-05, cert. denied, 540 U.S. 938, 124 S. Ct. 74, 157 L. Ed. 2d 250 (2003). While signatures are customary and desirable, a contract may be enforceable upon proof of some other explicit indication of intent to be bound. Id. at 305. See also In re Vic Supply Co. v. Bank One Illinois, N.A., 227 F.3d 928, 932 (7th Cir. 2000) ("Acceptance can be effectuated by performance as well as by a signature."); Roadway Express, Inc. v. Gen. Teamsters Chauffeurs & Helpers Union, 330 F.2d 859, 863 (3d Cir. 1964) ("[T]he fact that the proposed written agreement was not signed did not demonstrate as a matter of law that there was no contract."); Richard A. Lord, Williston on Contracts, § 6:44 (4th ed. 2007) ("Indeed, any written contract, though signed by only one party, will bind the other if he or she accepts the writing."). We note the contract here did not expressly state that neither party would be bound until both actually signed the writing.
In In re Vic Supply Co., supra, the court held a bank's inadvertent failure to sign a recorded security agreement, after which it extended credit, did not nullify the agreement. The court reasoned it was "apparent from the wording of the signature requirement . . . that the requirement was intended solely for the bank's protection, and was not intended to confer any right on Vic[,]" the creditor. 227 F.3d at 932. The same may be said of the initials lines in the contract before us. They arguably were intended solely to assure the buyer's acceptance of the jury waiver provision, to which the seller had already evidenced its assent by including it in its own proposed form of contract, which defendant's representative signed without revision.
In sum, the trial court must determine whether defendant objectively manifested the intention to be bound by the jury waiver provision, notwithstanding its failure to initial the provision itself.
Nor are we convinced the jury waiver is unenforceable because, as plaintiff claims, she did not understand it, and was not even aware of it, although she or someone on her behalf initialed it. Plaintiff's subjective understanding is of no moment in determining the agreement of the parties. At issue are the parties' objective manifestations of intent. See Friedman v. Tappan Dev. Corp., 22 N.J. 523, 531 (1956) ("It is not the real intent but the intent expressed or apparent in the writing that controls."); George M. Brewster & Son, Inc. v. Catalytic Constr. Co., 17 N.J. 20, 32 (1954) ("[T]he quest is for the reasonably certain meaning of the language used, taken as an entirety, considering the situation of the parties, the attendant circumstances, the operative usages and practices, and the objects the parties were striving to achieve."). "[A] contracting party is bound by the apparent intention he outwardly manifests to the other contracting party. To the extent that his real, secret intention differs therefrom, it is entirely immaterial." Cohn v. Fisher, 118 N.J. Super. 286, 291 (Law Div. 1972).
Plaintiff's failure to read, or understand the provision, notwithstanding the advice of counsel, does not preclude enforcement. "Failing to read a contract does not excuse performance unless fraud or misconduct by the other party prevented one from reading." Gras v. Assoc's First Capital Corp., 346 N.J. Super. 42, 56 (App. Div. 2001) (internal quotation and citation omitted), certif. denied, 171 N.J. 445 (2002). Moreover, there is no evidence in the record of coercion or duress to support the court's conclusion that plaintiff's approval was not voluntary.
Nor would it offend public policy to enforce the provision against plaintiff. "[P]arties in a civil action may waive their right to a jury trial[.]" LaManna v. Proformance Ins. Co., 184 N.J. 214, 226 (2005); see also Franklin Discount Co. v. Ford, 27 N.J. 473, 492 (1958) (holding "[p]laintiff's contractual right to a non-jury trial is an affirmative right which may be asserted at the subsequent trial" on remand); Sexton v. Newark Dist. Tel. Co., 84 N.J.L. 85, 101 (Sup. Ct. 1913) (approving practice of waiving a trial by jury in civil cases), aff'd on other grounds, 86 N.J.L. 701 (E. & A. 1914). Indeed, our rules provide that a party may waive the right to a jury trial by failing to serve a timely demand for one at the outset of the case, Rule 4:35-1(c), or by failing to preserve the right in a pretrial order. Guber v. Peters, 149 N.J. Super. 138, 140 (App. Div. 1977).
Parties may choose to waive juries in order to expedite trials and reduce litigation costs. They may also waive a jury because they believe a judge would be more dispassionate than a jury, and perhaps more familiar with the complexities of law presented in a case. Analogously, "our jurisprudence has recognized arbitration as a favored method for resolving disputes." Garfinkel v. Morristown Obstetrics & Gynecology Assocs., 168 N.J. 124, 131 (2001). Yet, arbitration involves not just the waiver of juries, but the waiver of judicial dispute resolution entirely. See Martindale v. Sandvik, Inc., 173 N.J. 76, 96 (2002) (enforcing arbitration agreement that "addressed specifically a waiver of the right to a jury trial, augmenting the notice to all parties to the agreement that claims involving jury trials would be resolved instead through arbitration"). Enforcement of civil jury waivers would be consistent with our pro-arbitration policy. See IFC Credit Corp. v. United Bus. & Ind. Fed. Credit Union, 512 F.3d 989, 994 (7th Cir. 2008) ("Agreement to a bench trial cannot logically be treated less favorably than agreement to . . . arbitrate, or litigate in a forum that will not use a jury."); S. Ware, "Mandatory Arbitration: Arbitration Clauses, Jury-Waiver Clauses, and Other Contractual Waivers of Constitutional Rights," 67 Law & Contemp. Prob. 167 (Winter/Spring 2004) (suggesting the prerequisite showing to enforce a jury-waiver clause be aligned with the requirements applicable to arbitration agreements).
On the other hand, a jury trial waiver, like an agreement to arbitrate, should be clearly stated. See Martindale, supra, 173 N.J. at 96 (finding contractual agreement waiving jury and accepting arbitration was clear and unambiguous); Garfinkel, supra, 168 N.J. at 132 (although agreement "should be read liberally in favor of arbitration," arbitration's "favored status . . . is not without limits" and a party's waiver "'must be clearly and unmistakably established and contractual language alleged to constitute a waiver will not be read expansively'").
A provision waiving the right of trial by jury, like other contract provisions, is also subject to our jurisprudence on adhesion contracts and unconscionability. See Rudbart v. N. Jersey Dist. Water Supply Comm'n, 127 N.J. 344, 356 (1992) (in deciding enforceability of adhesion contract, courts consider "not only . . . the take-it-or-leave-it nature of the standardized form of the document but also . . . the subject matter of the contract, the parties' relative bargaining positions, the degree of economic compulsion motivating the 'adhering' party, and the public interests affected by the contract."). In Martindale, supra, 173 N.J. at 91-92, the Court performed a Rudbart analysis and found no basis to withhold enforcement of an arbitration agreement included in an employment application. The court declined to find the applicant was forced to sign without an opportunity for attorney review or discussion, but even if that were the case, the court found no basis to invalidate the agreement based on its "subject matter and the public interests affected" and rejected the notion the arbitration agreement was "oppressive or unconscionable." Id. at 91.
In Fairfield Leasing Corp., supra, 256 N.J. Super. at 540, the trial court declined to enforce a jury waiver clause that was not negotiated, was inconspicuous, and was contained in a standardized form contract of adhesion executed without advice of counsel. Yet, "where the parties have been represented by counsel or where there was evidence of negotiation without substantial inequality in bargaining positions, or the waiver provision was conspicuous, the tendency has been to enforce the waiver." Id. at 542. Cf. Gras, supra, 346 N.J. Super. at 56 ("Although plaintiff contended that defendant never alerted him to the arbitration provision, no such obligation exists where the provision is not hidden.").
In this case, the initial lines drew attention to the jury waiver provision, making it conspicuous; plaintiff had the advice of counsel and actively negotiated changes to the contract; and the contract was not a standardized adhesion contract. There is no evidence in the record to support the conclusion that the jury waiver provision was non-negotiable. Thus, we discern no policy-based impediment to enforcing the jury waiver in this case, presuming the court finds on remand that defendant, like plaintiff, assented to it, although defendant, unlike plaintiff, did not place initials immediately beneath the provision.
Should the trial court find the parties agreed to the jury waiver, the court must determine the appropriate remedy. At bottom, defendant seeks a remedy for a breach of a contract. Assuming the parties agreed to the jury waiver provision, then plaintiff's request for a jury trial constituted a breach of the contract. Cf. Versatile Housewares & Gardening Sys., Inc. v. Thill Logistics, Inc., 819 F. Supp. 2d 230, 239 (S.D.N.Y. 2011) (party's suit in forum outside one identified in forum selection provision constituted breach of contract). Assuming breach, defendant seeks a new trial before the court. In other words, defendant seeks specific performance of the jury waiver provision, as plaintiff would be required to prove her case anew before the court. Cf. Id. at 240 (characterizing as specific performance the transfer of a case to comport with forum selection clause).
It is well-settled that specific performance is a discretionary remedy subject to the court's application of equitable principles. Barry M. Dechtman, Inc. v. Sidpaul Corp., 89 N.J. 547, 551-52 (1982). "There is no automatic right to specific performance." William Dreier and Paul Rowe, Guidebook to Chancery Practice in New Jersey, § II.G (2008) ("Chancery Practice"). However, the court's discretion is not unbridled. Marioni v. 94 Broadway, Inc., 374 N.J. Super. 588, 601 (App. Div.), certif. denied, 183 N.J. 591 (2005). We have identified the factors that generally govern the decision whether to order performance:
[W]hen specific performance is sought, the court is required to do more than merely determine whether the contract is valid and enforceable; the court of equity must also "appraise the respective conduct and situation of the parties," the clarity of the agreement itself notwithstanding that it may be legally enforceable, and the impact of an order compelling performance, that is, whether such an order is harsh or oppressive to the defendant, or whether a denial of specific performance leaves plaintiff with an adequate remedy[.] [Id. at 600 (quoting Friendship Manor, Inc. v. Greiman, 244 N.J. Super. 104, 113 (App. Div. 1990), certif. denied, 126 N.J. 321 (1991) (internal citations omitted)).]
The conduct of the party seeking performance must also have been "'fair, just and equitable, and not sharp or aiming at unfair advantage.'" Ibid. (quoting Stehr v. Sawyer, 40 N.J. 352, 357 (1963)).
A court must also consider the reasonableness and burdensomeness of the remedy, especially on a non-contracting party, such as the court itself. "Specific performance will not be decreed . . . where a third party's discretion or interests will be affected (including a governmental unit)." Chancery Practice, at § II.G. A court will decline to order specific performance when it will be excessively burdened with supervising the performance. Fleischer, supra, 1 N.J. at 148.
Similarly, a court may consider the burden on the judicial system itself in a case like this, in which specific performance would involve a second expenditure of time without any identification of error or unfairness in the jury trial itself.
We recognize that this case does not present a typical request for specific performance. The relief sought does not involve solely the compelled performance of a contracting party. The specific performance here would involve not just compelling plaintiff to re-present her case before a judge, but would involve the court's cooperation in affording the parties a second trial after discarding the results of the first.
We are unable to determine on the record before us whether specific performance consisting of a new trial would be equitable, assuming defendant does establish that both parties assented to the enforceable jury waiver. See Cooper v. Nutley Sun Printing Co., 36 N.J. 189, 199 (1961) (stating that before court exercises equitable powers, it must have full facts before it). We note defendant has not identified any errors or unfairness in the trial itself. Moreover, because we have not been provided with the trial transcript, we are unable to determine, for example, if defendant afforded the trial judge an opportunity to determine whether it was entitled to an involuntary dismissal pursuant to Rule 4:37-2 or judgment following a motion pursuant to Rule 4:40-1 and 2. The trial court on remand is in the best position to consider these factors, along with other considerations, in assessing the burden, if any, upon the court in conducting a new trial and the appropriateness of such relief.
Mindful of the proofs presented, the court may assess whether defendant has a reasonable possibility of prevailing in a retrial. If, based on the proofs in the first trial, the court finds that trial is likely to result in the same verdict, then the court may determine that specific performance would be unduly burdensome, as it would likely result in a futile exercise. Cf. Fiedler, Inc. v Coast Finance Co., 129 N.J. Eq. 161 (E. & A. 1941) ("Decrees that would in the final result be nugatory should not be made."). However, the judge who presided over the jury trial may not simply re-try the case on the record created before the jury. See State v. Miller, 382 N.J. Super. 494, 503-04 (App. Div. 2006) (where jury failed to reach a verdict on a lesser included disorderly persons offense, judge was not permitted to render a verdict on the jury trial record, as defendant was entitled to new trial before municipal court).
Reversed and remanded. We do not retain jurisdiction.