The opinion of the court was delivered by: Peter Leisure, District Judge
OPINION AND ORDER [ Page 2]
Plaintiff Raymond H. Wechsler, the administrative trustee overseeing the assets of Towers Financial Corporation ("Towers"),*fn1 brings this action against Hunt Health Systems, Ltd. ("Hunt Health") and affiliated entities for alleged breach of contract and fraudulent conveyance in connection with the parties' factoring agreements. Plaintiff now requests that this Court enforce the jury waiver clauses in the contracts signed by defendants and, pursuant to Rule 42(b) of the Federal Rules of Civil Procedure, bifurcate the trial of this action. Defendants oppose this request, arguing that plaintiff has not established that defendants signed a valid jury waiver in this case; and even if such a waiver existed, defendants argue that bifurcation would be inappropriate. For the following reasons, the Court finds that defendants did sign valid jury waivers in this action, waiving their right to a jury on all claims that arose from those contracts, specifically, plaintiff's breach of contract, conversion, and breach of guaranty claims, as well as defendants' counterclaim for breach of contract (hereinafter "the contract claims"). Furthermore, the Court grants plaintiff's motion to bifurcate the two sets of claims in this case, and therefore, will conduct a bench trial on the contract claims first, and then, if necessary, a jury trial on plaintiff's fraudulent conveyance claim.
Familiarity with the prior decisions in this case is assumed. Except as indicated, the parties have stipulated to or do not contest the following facts. [ Page 3]
Before it filed for bankruptcy, Towers engaged in the business of factoring accounts receivable, including the accounts receivable of health care providers. Hunt Health is a Texas limited partnership that was formed in 1991 to operate a drug and alcohol dependency rehabilitation center located in Hunt, Texas, doing business as "La Hacienda Treatment Center," or "La Hacienda." In 1991 and during its relationship with Towers, Hunt Health was owned by two corporate partners — defendants P & G Enterprises, Inc. ("P & G") and MHTJ Investments, Inc. ("MHTJ"). P & G and MHTJ are Texas corporations that are both limited and general partners of Hunt Health, and each one owns 50% of Hunt Health. See Wechsler v. Hunt Health Systems, Ltd., 198 F. Supp.2d 508, 511 (S.D.N.Y. 2002). On July 10, 1991, Towers executed an accounts receivable purchase contract (the "HCP Agreement") with Hunt Health. Prior to its execution, the form HCP Agreement offered by Towers was reviewed by an attorney retained by Hunt Health, and the form was amended at Hunt Health's request prior to its execution. See id. at 511-12. On the same date that the defendants signed the HCP Agreement, July 10, 1991, Towers entered into letter agreements (hereinafter "the Guarantees") with P & G and MHTJ. These Guarantees "set forth absolute and unconditional guaranties by P & G and MHTJ of Hunt Health's obligations and liabilities to Towers, if any." Id. at 511.
Plaintiff brings this action alleging breach of contract, conversion, and breach of guaranty against Hunt Health, as the obligor of the HCP Agreement, and defendants P & G and MHTJ as guarantors of Hunt Health's obligations. Defendants have brought a counterclaim against plaintiff for breach of contract. Additionally, plaintiff brings claims of constructive and actual fraudulent conveyance against Esperanza Health Systems, Ltd. [ Page 4]
("Esperanza"),*fn2 as the transferee of assets from Hunt Health, and P & G and Friendship, Inc. ("Friendship") as general partners of Esperanza. Therefore, the claims in this case can be separated into two categories: (1) the contract claims (i.e. breach of contract, conversion, breach of guaranty, and defendants' counterclaim for breach of contract) regarding which, the plaintiff alleges that the defendants have waived their right to a jury, and (2) the fraudulent conveyance claims, to which both parties agree, defendants are entitled to a jury trial.
I. Defendants Waived Their Right to a Jury Trial on The Contract Claims.
Defendants waived their right to a jury trial on all of plaintiff's contract claims by signing three contracts prior to this litigation, all of which contained jury trial waivers. "[P]arties to a contract may, by prior written agreement entered into knowingly and voluntarily, waive the [Seventh Amendment] right to a jury trial." Morgan Guaranty Trust Co. of New York v. Crane, 36 F. Supp.2d 602, 603 (S.D.N.Y. 1999). Although there is a presumption against waiver, Aetna Ins. Co. v. Kennedy, 301 U.S. 389, 393 (1937) (citations omitted); Nat'l Equip. Rental, Ltd. v. Hendrix, 565 F.2d 255, 258 (2d Cir. 1977), and contract provisions containing jury trial waivers are narrowly construed, Morgan Guaranty Trust Co., 36 F. Supp.2d at 603, such a waiver may be upheld if the party attempting to enforce it is able to prove that the waiver was entered into knowingly, intentionally, and voluntarily. See Hendrix, 565 F.2d at 258 (refusing to enforce a jury waiver provision against the defendant because the plaintiff failed to provide sufficient [ Page 5]
evidence that the waiver was either knowing or intentional); Sullivan v. Ajax Navigation Corp., 881 F. Supp. 906, 910-11 (S.D.N.Y. 1995) ("The burden of proving that a waiver was knowing and intentional rests with the party attempting to enforce the purported waiver.") (citations omitted); N. Feldman & Son, Ltd. v. Checker Motors Corp., 512 F. Supp. 310, 313 (S.D.N.Y. 1983) ("When the purported waiver exists in a contract signed prior to the contemplation of litigation, the party seeking to enforce it must demonstrate that the consent was both voluntary and informed."). Moreover, despite the close scrutiny which the Court will apply to the enforcement of any jury waiver, most notably in the determination of whether a waiver was entered knowingly, intentionally, and voluntarily, jury trial waivers are commonly upheld, see, e.g., Morgan Guaranty Trust Co., 36 F. Supp.2d at 603 (citing Hendrix, 565 F.2d at 258), and it is proper to do so in this case.
Plaintiff adequately proves that the defendants knowingly, intentionally, and voluntarily waived their right to a jury trial when they signed the three agreements containing jury waiver provisions. When determining whether a waiver was entered knowingly, intentionally, and voluntarily, courts must consider the following factors: "negotiability of the contract terms, disparity in bargaining power between the parties, the business acumen of the party opposing the waiver, and the conspicuousness of the jury waiver provision." Sullivan, 881 F. Supp. at 911; see also Morgan Guaranty Trust Co., 36 F. Supp.2d at 604.
The first element, negotiability, is evidenced in this case by the defendants' opportunity to review and revise the documents and provisions at issue prior to signing them. The fact that a contract term was negotiable at the time the contract was being [ Page 6]
contemplated, even if the term itself was never specifically negotiated, suggests that subsequent consent to such term was knowing and voluntary. See Morgan Guaranty Trust Co., 36 F. Supp.2d at 604 (upholding a jury waiver in part because "there [was] no indication that the terms of the note were not negotiable," and "[s]imply because the [defendants] did not attempt to negotiate its provisions does not mean that" they were precluded from negotiating about the waiver); Oei v. Citibank, 957 F. Supp. 492, 523 (S.D.N.Y. 1997) (upholding a jury waiver based on similar reasons). Proof of the negotiability of a contract term may include the fact that other provisions of the contract were successfully negotiated and changed. See Morgan Guaranty Trust Co., 36 F. Supp.2d at 604 (noting that, the fact that other parts of the contract were successfully changed by the party challenging the term in question, serves as an indication that this term was also negotiable). On the other hand, non-negotiability of a contract term may be demonstrated when the party consenting to the term was in a position where the party had no choice but to accept the provision, see Hendrix, 565 F.2d at 258 (refusing to uphold a jury waiver in a situation where the defendant "did not have any choice but to accept the . . . contract as written if [the defendant] was to get badly needed funds"); Sullivan, 881 F. Supp. at 911 (finding a waiver provision non-negotiable because "plaintiff had no choice other than to accept the contract as written"). Similarly, courts have deemed the terms of certain contracts to be non-negotiable ...