in Re Professional Pharmacy II ( 2010 )

COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 2-10-163-CV
IN RE PROFESSIONAL RELATOR
PHARMACY II
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ORIGINAL PROCEEDING
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MEMORANDUM OPINION1
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This is an original proceeding in which Relator Professional Pharmacy II
(Professional Pharmacy) contends that the trial court abused its discretion by
issuing its March 8, 2010 order granting JP Morgan Chase Bank, NA‘s (JP
Morgan‘s) motion to strike jury demand and enforce contractual waiver of jury
trial. Professional Pharmacy argues that the trial court abused its discretion by
granting the motion because it was filed more than a year and a half after
Professional Pharmacy filed its jury demand and only forty-six days before trial
1
Tex. R. App. P. 47.4.
was set to begin and because JP Morgan failed to prove the existence of a valid
jury waiver. Professional Pharmacy also contends that the provision at issue is
an arbitration provision and that JP Morgan waived its right to invoke arbitration.
We will conditionally grant the writ.
Background
On July 14, 2008, Professional Pharmacy filed suit against JP Morgan
asserting breach of a depository contract, seeking declaratory relief, and
requesting a jury trial. Over the next eighteen months, the parties conducted
discovery, filed motions, and filed a joint motion for continuance. On February 4,
2010, JP Morgan filed a motion to strike Professional Pharmacy‘s jury demand
and enforce a contractual waiver of jury trial contained within a ―master account
agreement.‖ On February 17, 2010, Professional Pharmacy filed a response to
the motion to strike in which it argued that 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. On March 5, 2010, the trial court held a hearing on JP Morgan‘s motion
to strike the jury demand, and it granted the motion by an order signed on March
8, 2010. On March 9, 2010, Professional Pharmacy paid the jury fee.2 On May
21, 2010, Professional Pharmacy filed this petition for writ of mandamus.
2
Although Professional Pharmacy had not paid the jury fee more than thirty
days before the trial setting as required by Rule 216 of the Texas Rules of Civil
2
Standard of Review
Mandamus relief is proper only to correct a clear abuse of discretion when
there is no adequate remedy by appeal. In re Columbia Med. Ctr. of Las Colinas,
290 S.W.3d 204, 207 (Tex. 2009) (orig. proceeding).
A trial court clearly abuses its discretion when it reaches a decision so
arbitrary and unreasonable as to amount to a clear and prejudicial error of law.
Walker v. Packer, 827 S.W.2d 833, 839 (Tex. 1992) (orig. proceeding). With
respect to the resolution of factual issues or matters committed to the trial court‘s
discretion, we may not substitute our judgment for that of the trial court unless
the relator establishes that the trial court could reasonably have reached only
one decision and that the trial court‘s decision is arbitrary and unreasonable. Id.
at 839–40. This burden is a heavy one. In re CSX Corp., 124 S.W.3d 149, 152
(Tex. 2003) (orig. proceeding). We give deference to a trial court‘s factual
determinations, but we review the trial court‘s legal determinations de novo. In re
Labatt Food Serv., L.P., 279 S.W.3d 640, 643 (Tex. 2009) (orig. proceeding). A
trial court abuses its discretion if it incorrectly interprets or improperly applies the
Procedure, that issue was not one of the grounds in JP Morgan‘s ―motion to
strike and enforce a contractual jury waiver‖, and the trial court‘s March 8, 2010
order does not list the failure to pay as a reason for granting JP Morgan‘s motion
to strike. See Tex. R. Civ. P. 216; Huddle v. Huddle, 696 S.W.2d 895, 895 (Tex.
1985); Univ. Printing Co., Inc. v. Premier Victorian Homes, Inc., 73 S.W.3d 283,
289 (Tex. App.—Houston [1st Dist.] 2001, pet. denied).
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law. In re Dep’t of Family & Protective Servs., 273 S.W.3d 637, 642–43 (Tex.
2009) (orig. proceeding); Walker, 827 S.W.2d at 840.
Absent extraordinary circumstances, mandamus will not issue unless
relator lacks an adequate remedy by appeal. In re Van Waters & Rogers, Inc.,
145 S.W.3d 203, 210–11 (Tex. 2004) (citing Walker, 827 S.W.2d at 839).
Whether a clear abuse of discretion can be adequately remedied by appeal
depends on a careful analysis of costs and benefits of interlocutory review. In re
McAllen Med. Ctr., Inc., 275 S.W.3d 458, 464 (Tex. 2008) (orig. proceeding). As
this balance depends heavily on circumstances, it must be guided by analysis of
principles rather than simple rules that treat cases as categories. Id. An
appellate remedy is adequate when any benefits to mandamus review are
outweighed by the detriments. In re Prudential Ins. Co. of Am., 148 S.W.3d 124,
136 (Tex. 2004) (orig. proceeding). When the benefits outweigh the detriments,
we must conduct further analysis. Id. An appeal is inadequate for mandamus
purposes when parties are in danger of permanently losing substantial rights,
such as when the appellate court would not be able to cure the error, the party‘s
ability to present a viable claim or defense is vitiated, or the error cannot be
made part of the appellate record. Van Waters & Rogers, Inc., 145 S.W.3d at
210–11; Walker, 827 S.W.2d at 843–44. An appellate court should also consider
whether mandamus will allow the court to give needed and helpful direction to
the law that would otherwise prove elusive in appeals from final judgments and
whether mandamus will spare litigants and the public the time and money utterly
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wasted enduring eventual reversal of improperly conducted proceedings. In re
Team Rocket, L.P., 256 S.W.3d 257, 262 (Tex. 2008) (orig. proceeding).
Improper denial of the constitutional right to trial by jury amounts to an
abuse of discretion. See McDaniel v. Yarbrough, 898 S.W.2d 251, 253 (Tex.
1995); In re Bradle, 83 S.W.3d 923, 928 (Tex. App.—Austin 2002, orig.
proceeding); Union Pac. Fuels, Inc. v. Johnson, 909 S.W.2d 130, 133 (Tex.
App.—Houston [14th Dist.] 1995, orig. proceeding); Rosenthal v. Ottis, 865
S.W.2d 525, 529 (Tex. App.—Corpus Christi 1993, orig. proceeding). The issue
of whether a presuit waiver of trial by jury is enforceable is reviewable by
mandamus. See In re Prudential, 148 S.W.3d at 138.
The Trial Court Abused its Discretion by Granting the Motion to Strike
Professional Pharmacy’s Jury Demand because JP Morgan Failed to Prove
a Valid and Enforceable Jury Waiver
In its second issue, Professional Pharmacy argues that the trial court
abused its discretion by granting the motion to strike the jury demand because
JP Morgan failed to establish the existence of a valid and enforceable jury
waiver. Professional Pharmacy contends that the contractual provision
contained within the master account agreement that JP Morgan contends is a
―jury waiver‖ is not a jury waiver but rather a portion of an arbitration clause. The
complete provision reads as follows:
4. 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
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established in the Account Disclosures and Regulations.
JP Morgan contends that the jury waiver ―provision provides for either
arbitration or for jury waiver.‖3 JP Morgan specifically argues that under the
provision at issue,
If a party files a lawsuit the dispute may be subject to arbitration (i.e.
―most disputes . . . are subject to‖ arbitration). In such a case, a
party may invoke the arbitration provision, and an arbitration would
be conducted by an arbitrator-not a judge. On the other hand, if a
party files a lawsuit, and if arbitration is not sought or the claims are
not subject to arbitration, the right to trial by jury is still waived.
There is nothing that precludes a party from invoking one portion of
the provision-i.e. right to trial by jury is waived.
This argument requires us to apply basic principles of contract
construction. When construing contracts and other written instruments, our
primary concern is to ascertain the true intent of the parties as expressed in the
instrument. See Baldaran v. Safeco Ins. Co., 972 S.W.2d 738, 741 (Tex. 1998);
NP Anderson Cotton Exch., L.P. v. Potter, 230 S.W.3d 457, 463 (Tex. App.—Fort
Worth 2007, no pet.); In re Estate of Dellinger, 224 S.W.3d 434, 438 (Tex. App.—
Dallas 2007, no pet.) (applying general principles of contract construction to the
interpretation of a bank account application); Allen v. Wachtendorf, 962 S.W.2d
3
In its response, JP Morgan also argues that Professional Pharmacy lacks
standing to assert claims against it for breach of contract, wrongful foreclosure,
negligence, and conversion because it is not a party to the master account
agreement. However, JP Morgan had filed a motion for summary judgment on
the standing issue, and the motion was denied by the trial court before this
original proceeding was filed. JP Morgan further argues that, even though
Professional Pharmacy lacks standing to complain of a breach of the master
account agreement, it is nonetheless bound by the ―jury waiver‖ contained within
the agreement.
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279, 283 (Tex. App.—Corpus Christi 1998, pet. denied) (applying general
principles of contract construction to the interpretation of a bank account
signature card). If a written contract is so worded that it can be given a certain or
definite legal meaning or interpretation, then it is not ambiguous and the court will
construe the contract as a matter of law. See Nat’l Union Fire Ins. Co. v. CBI
Indus., 907 S.W.2d 517, 520 (Tex. 1995). We must examine and consider the
entire contract in an effort to harmonize and give effect to all provisions so that
none are rendered meaningless. See Potter, 230 S.W.3d at 463; see also J.M.
Davidson, Inc. v. Webster, 128 S.W.3d 223, 229 (Tex. 2003). ―We construe
contracts ‗from a utilitarian standpoint bearing in mind the particular business
activity sought to be served‘ and ‗will avoid when possible and proper a
construction which is unreasonable, inequitable, and oppressive.‘‖ Frost Nat’l
Bank v. L & F Dist., Ltd., 165 S.W.3d 310, 312 (Tex. 2005) (quoting Reilly v.
Rangers Mgmt., Inc., 727 S.W.2d 527, 530 (Tex. 1987)). ―If, after the pertinent
rules of construction are applied, the contract can be given a definite or certain
legal meaning, it is unambiguous and we construe it as a matter of law.‖ Id.
(citing Webster, 128 S.W.3d at 229).
Examining the provision at issue in light of the pertinent rules of
construction, we conclude that JP Morgan‘s contention that the provision at issue
is both an arbitration provision and a jury waiver is incorrect. ―[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.]
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2009, no pet.). Arbitration is an agreement to resolve disputes out of court in the
first instance, not an agreement to waive a particular constitutional right available
within the judicial process. See id. (citing D. Wilson Const. Co., Inc. v. McAllen
Indep. Sch. Dist., 848 S.W.2d 226, 231 (Tex. App.—Corpus Christi 1992, writ
dism‘d w.o.j.)). When a party contractually agrees to arbitrate a dispute, it waives
its rights to recourse in the courts. D. Wilson Const. Co., Inc., 848 S.W.2d at
231.
The first sentence in the provision at issue clearly relates to arbitration as
the method that has been selected for resolving disputes.4 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.
Further, because Professional Pharmacy stands to lose a substantial right,
it lacks an adequate remedy by appeal. See Rosenthal, 865 S.W.2d at 529
4
We note that the provision refers to ―most disputes‖ without delineating
the disputes that are encompassed by that term. Because JP Morgan is not
seeking arbitration, however, we need not decide whether this language renders
the provision enforceable.
8
(stating adequate remedy by appeal does not exist for denial of jury trial). We
therefore sustain Professional Pharmacy‘s second issue and conditionally grant
Professional Pharmacy‘s petition for writ of mandamus. Because of our
disposition of Professional Pharmacy‘s second issue, we need not consider the
remaining issues, which all relate to the improper granting of JP Morgan‘s motion
to strike. See Tex. R. App. P. 47.1.
Conclusion
Having determined that the trial court abused its discretion by granting JP
Morgan‘s motion to strike Professional Pharmacy‘s jury demand, we order the
trial court to vacate its March 8, 2010 order granting the motion to strike. Only if
the trial court fails to comply with this court‘s order will we issue the writ.
ANNE GARDNER
JUSTICE
PANEL: LIVINGSTON, C.J.; GARDNER and MCCOY, JJ.
DELIVERED: September 23, 2010
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