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Century 21 Real Estate LLC, A Delaware Limited Liability Company v. All Professional Realty

July 3, 2012

CENTURY 21 REAL ESTATE LLC, A DELAWARE LIMITED LIABILITY COMPANY FORMERLY KNOWN AS CENTURY 21 REAL ESTATE CORPORATION,
PLAINTIFF,
v.
ALL PROFESSIONAL REALTY, INC., A CALIFORNIA CORPORATION DOING BUSINESS AS CENTURY 21 ALL PROFESSIONAL; STEVEN M. WRIGHT, AN INDIVIDUAL; AND CAROL WRIGHT, AN INDIVIDUAL, DEFENDANTS.



MEMORANDUM & ORDER RE: MOTION TO STRIKE JURY DEMAND

CONSOLIDATED

Century 21 Real Estate LLC ("Century 21") filed an action against All Professional Realty, Inc., Steven M. Wright,*fn1 and Carol Wright (collectively "All Professional") arising from All Professional's continued use of Century 21's trademarks following the termination of real estate brokerage franchise agreements for unpaid fees. (No. 2:10-2751.) Steve Wright, Carol Wright, and All Professional filed a related action against Century 21 arising from the franchise agreements. (No. 2:10-2846.) Century 21 filed a third action against All Professional Hawaii Realty Inc. ("All Professional Hawaii"), John Sherman, Steve Wright, and Carol Wright arising from All Professional Hawaii's allegedly wrongful use of Century 21's trademarks following the termination of another real estate brokerage franchise agreement. (No. 2:11-2497.) All three of these cases have been consolidated. Presently before the court is Century 21's motion pursuant to Federal Rule of Civil Procedure 39(a) to strike the demands for jury trial made by All Professional.

I. Factual and Procedural Background In 1994, Steve and Carol Wright formed All

Professional, a real estate brokerage company. (Carol Wright Decl. in Opp'n to Mot. to Strike ("Carol Wright Decl.") ¶ 2 (No. 2:10-2751, Docket No. 89-1); Steve Wright Decl. in Opp'n to Mot. to Strike ("Steve Wright Decl.") ¶ 2 (No. 2:10-2751, Docket No. 89-2).) All Professional signed its first franchise agreement with Century 21 in 1994. (Carol Wright Decl. ¶ 3; Steve Wright Decl. ¶ 3; see also Steve Wright Decl. Ex. 1.)

All Professional operates multiple offices and each office is governed by a separate franchise agreement with Century

21. In November of 2005, All Professional signed three ten-year renewals of franchise agreements with Century 21 for two offices in Sacramento and one office in Folsom, California. (Garner Decl. Ex. A ("Carol Wright Dep.") Exs. 13-15 (No. 10-2751, Docket No. 76-2); see also Carol Wright Decl. ¶ 8; Steve Wright Decl. ¶ 8.)

Unlike the original franchise agreements which did not contain waivers of the right to a jury trial, (Carol Wright Decl. ¶ 3; Steve Wright Decl. ¶ 3), each of these renewals contained the following language in bold type: "WAIVER OF JURY TRIAL, The parties waive the right to a jury trial in any action related to this Agreement or any aspect of the relationship between [All Professional], [Century 21], any guarantor and their respective successors and assigns." (Carol Wright Dep. Ex. 13 § 22.9, Ex. 14 § 22.9, Ex. 15 § 22.9.) According to the Wrights, they had to sign the agreements to remain franchisees and "based on [their] long relationship with Century 21, [they] did not carefully review the franchise agreements" and "did not realize that the franchise agreements contained a waiver of [their] right to a jury trial." (Carol Wright Decl. ¶ 8; Steve Wright Decl. ¶ 8.)

Following these renewals, the Wrights and a third individual, John Sherman, entered into a new franchise agreement with Century 21 for a Hawaii office to be run by All Professional Hawaii, a corporation formed by the Wrights and Sherman. (Carol Wright Dep. Ex. 19.) That agreement contained the same jury waiver provision. (Id. Ex. 19 § 22.9.)

In Century 21 Real Estate LLC v. All Professional Realty, Inc., Case No. 2:10-2751 WBS GGH, All Professional included a demand for jury trial in its Answer. (No. 2:10-2751, Docket No. 17.) In Wright v. Century 21 Real Estate LLC, Case No. 2:10-2846 WBS GGH, All Professional filed a separate demand for jury trial. (No. 2:10-2846, Docket No. 8.) Although counsel for All Professional stated at oral arguments that it had filed a timely jury demand in all three consolidated cases, the court has been unable to locate a jury demand in the third case. For the purposes of this motion, however, the court will assume that a timely demand was filed in that case. The same contract language is at issue in all three cases and neither party has suggested either that the motion to strike All Professional's jury demands would not apply equally to all three proceedings or that there would be any difference in the court's analysis with respect to the three cases.

Century 21 now moves pursuant to Federal Rule of Civil Procedure 39(a) to strike the demands for a jury trial. (No. 2:10-2751, Docket No. 76.)

II. Discussion

Under Rule 39(a), where a party has demanded a jury trial pursuant to Rule 38, "the trial of all issues so demanded shall be by jury, unless . . . the court upon motion or on its own initiative finds that a right of trial by jury on some or all of [the] issues does not exist under the Constitution and statutes of the United States." Fed. R. Civ. P. 39(a).*fn2 This rule can be used to strike a jury demand where the parties have waived their rights to a trial by jury. Mowbray v. Zumot, 536 F. Supp. 2d 617, 621-22 (D. Md. 2008) (holding that it was appropriate to apply Rule 39(a) to strike a jury demand pursuant to a contractual waiver because once the right to a jury trial had been waived, it no longer existed).

"Generally, the right to a jury trial in federal court is governed by federal law." Fin. Tech. Partners L.P. v. FXN Ltd., No. C 07-01298, 2009 WL 464762, at * 1 (N.D. Cal. Feb. 24, 2009) (citing Simler v. Conner, 372 U.S. 221, 221-22 (1963)). Although there is a strong presumption against waiver of the fundamental right to a jury trial, United States v. Cal. Mobile Home Park Mgmt. Co., 107 F.3d 1374, 1378 (9th Cir. 1997), under federal law, the right to a jury "may be waived by a contract knowingly and voluntarily executed," Okura & Co., Inc. v. Careau Grp., 783 F. Supp. 482, 488 (C.D. Cal. 1991) (citing Leasing Serv. Corp. v. Crane, 804 F.2d 828, 832-33 (4th Cir. 1986)).

California law provides that parties may not validly contract to waive their right to a jury trial before legal action is initiated. Grafton Partners L.P. v. Superior Court, 36 Cal. 4th 944, 957-58 (2005) (determining that the California Constitution and California Civil Code section 631 do not permit predispute jury waivers). Citing Financial Technology, All Professional urges the court to apply California law instead of federal law because this ...


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