Judge: Stephen I. Goorvitch, Case: 19STCV15381, Date: 2023-04-13 Tentative Ruling

Case Number: 19STCV15381    Hearing Date: April 13, 2023    Dept: 39

Lakeshore Investment, LLC v. NOW Solutions, Inc.

Case No. 19STCV15381

Motion for Relief from Jury Waiver

            Plaintiff Lakeshore Investment, LLC (“Plaintiff”) filed this case against Now Solutions, Inc. (“Now Solutions”) and Vertical Computer Systems, Inc. (“Vertical Computer Systems”) (collectively, “Defendants”) on May 2, 2019.  Plaintiff did not request a jury trial.  Defendants checked the box on the case management form requesting a jury trial.  Defendants were required to post jury fees on or before the case management conference, per Code of Civil Procedure section 631(c).  Defendants failed to do so.  The Court (Feffer, J.) conducted a case management conference on October 2, 2019, and specifically reminded Defendants’ counsel to post jury fees.  Judge Feffer ordered: “Jury fees are to be posted by 10/4/19 or jury is waived.”  (See Case Management Order, dated October 2, 2019; see also Court’s Minute Order, dated October 2, 2019.)  No jury fees were posted until February 22, 2023, before the then-trial date of March 1, 2023. 

Defendants move for relief from waiver of jury trial.  “Waiver of jury is not, however, irrevocable.” (Wharton v. Superior Court (1991) 231 Cal.App.3d 100, 103.)  “The court may, in its discretion upon just terms, allow a trial by jury although there may have been a waiver of a trial by jury.” (Code Civ. Proc., § 631, subd. (g).) “Trial by jury is an inviolate right and shall be secured to all ....” (Cal. Const., art. I, § 16.)  This is “[a] right so fundamental and sacred to the citizen whether guaranteed by the Constitution or provided by statute, should be jealously guarded by the courts.” (Wharton v. Superior Court (1991) 231 Cal.App.3d 100, 103.)  “The court abuses its discretion in denying relief where there has been no prejudice to the other party or to the court from an inadvertent waiver.” (Gann v. Williams Brothers Realty, Inc. (1991) 231 Cal.App.3d 1698, 1704.)  “The mere fact that trial will be by jury is not prejudice per se.” (Johnson–Stovall v. Superior Court (1993) 17 Cal.App.4th 808, 811.)

Defendants’ counsel states in a declaration signed under penalty of perjury: “I  inadvertently failed to post fees and never was informed nor realized this until receipt of the brief filed by Plaintiff on or about 2-17-2023.”  (Declaration of Chad Biggins, ¶ 2.)  Defendants’ counsel’s representation is not correct.  In fact, Judge Feffer informed the parties at the case management conference that jury fees must be posted or his clients would waive jury.  Defendants’ counsel was present at the case management conference.  (See Court’s Minute Order, dated October 2, 2019.)  Therefore, the Court does not find Defendants’ counsel’s representation to be credible.

The Court finds that ordering a jury trial at this stage would unduly prejudice Plaintiff/Cross-Defendants.  Both “have engaged in substantial preparation of their cases, both affirmatively on Lakeshore’s breach of contract cause of action and defensively from Movants’ myriad of cross-claims.”  (Declaration of Jonathan Nguyen, ¶ 13.)  Counsel “estimate[s]  that having to modify Respondents’ case strategies to be jury-trial oriented, including but not limited to preparing voir dire questions and the associated analysis of potential jurors, and prepare the litany of additional documents necessary for a jury trial, would impose an additional 50 to 100 hours of legal work on Respondents.”  (Ibid.)  The Court agrees with Plaintiff’s counsel’s analysis that a bench trial would take two to three days, but a jury trial would take approximately two weeks.  (Id., ¶ 14.) 

The Court finds that Plaintiff’s counsel’s belief that this case would proceed as a bench trial was reasonable.  The parties’ “Secured Term Promissory Note,” dated January 9, 2013, stated:

Any legal action or proceeding with respect to any dispute will be tried in a court of competent jurisdiction by a judge without a jury.  [Now Solutions] waives any right to a jury trial in any such action or proceeding and acknowledges that your acceptance of this note constitutes your waiver of any right to a jury trial in any such action or proceeding.

(Complaint, Exh. A, ¶ 6.12.)  The parties’ “Security Agreement” has a similar provision which states:

[Plaintiff] and [Now Solutions] hereby waive the right to any jury trial in any action, cross-complaint, counterclaim, or other proceeding based upon, arising out of, or in any way relating to: (a) the note, or (b) any other present or future instrument or agreement between [Plaintiff] and [Now Solutions], or (c) any conduct, acts or omissions of [Plaintiff] and [Now Solutions], or any of their respective directors, officers, members, employees, agents, attorneys, or any other persons affiliated with [Plaintiff] and [Now Solutions], or any of them.

(Complaint, Exh. B, ¶ 14.)  These agreements were signed by Richard Wade, who was the Chairman of Now Solutions and the President/CEO of Vertical Computer Systems.  A letter from Vertical Computer Systems makes clear that the Secured Term Promissory Note, dated January 9, 2013, applied to both Defendants.  (See Complaint, Exh. C.)

            Finally, the Court considers the delay in requesting waiver from relief in jury trial, which occurred after the case had been pending for almost four years, shortly before trial.  These factors support the Court’s decision to deny Defendants’ motion. 

            In sum, if the Court granted Defendants’ motion under these circumstances, it effectively would hold that the requirement to post jury fees under Code of Civil Procedure section 631 has no meaning.  Defendants’ counsel should have posted the fees without being reminded, but Judge Feffer did, in fact, remind him, and he still did not post fees.  Then, Defendants’ counsel waited until the case had been pending for almost four years to seek relief from his waiver, shortly before trial, after Plaintiff’s counsel reasonably believed the case would proceed as a jury trial.  The Court accepts Plaintiff’s counsel’s representation that changing to a jury trial at this stage would entail 50 to 100 more hours of preparation work, and agrees that doing so would lengthen the trial by approximately five days.  It is not fair that Plaintiff/Cross-Defendants would have to pay for these additional hours due to Defendants’ counsel’s negligence.

            Based upon the foregoing, the Court orders as follows:

            1.         The Court denies Defendants’ motion for relief from jury waiver.

            2.         The Court may “in its discretion upon just terms” allow a trial by jury even after a waiver, per Code of Civil Procedure section 631(g).  The Court will reconsider this ruling if Defendants agree to pay counsel for Plaintiff/Cross-Defendants the sum of $75,000 to cover the additional trial preparation and time as a result of a jury trial (based upon approximately 150 hours at a reasonable billing rate of $500 per hour). 

            3.         Defendants’ counsel shall provide notice and file proof of such with the Court.