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In applying a presumption against the contractual waiver of the right to a jury trial, the Texas Court of Appeals held that the presumption in favor of arbitration does not extend to jury trial waivers because there are several differences between arbitration agreements and jury trial waivers, including the public policy in favor of arbitration and state and federal statutes requiring the enforcement of arbitration agreements.
In Mikey's Houses LLC v. Bank of America, N.A., No. 2-05-397-CV, 2007 WL 1299332 (Tex. App. May 3, 2007), Mikey's Houses entered into a contract to buy a house and lot from Bank of America. After the sales contract was signed, Bank of America presented Mikey's Houses with an addendum containing various provisions, including a waiver of the right to a jury trial. Both parties signed the addendum.
Mikey's Houses sued Bank of America when it discovered that it had bought only the lot and not the house. Bank of America filed a motion to enforce the jury trial waiver. The trial court granted the motion but signed an order allowing an interlocutory appeal.
The issue on appeal was whether Bank of America met its burden of proving that Mikey's Houses knowingly and voluntarily waived its right to a jury trial. In addressing this issue, the Court distinguished contractual jury waivers from arbitration agreements, explaining that "[t]he standards governing the enforceability of arbitration [agreements] are inapplicable to prelitigation contractual jury waiver[s] for several reasons."
The Court listed four reasons why jury waivers are treated differently from arbitration agreements. First, public policy favors arbitration. Second, there are "statutory directives" that require courts to enforce arbitration agreements. Third, "arbitration constitutes an agreement by the parties to avoid the judicial process altogether, not an agreement to limit one's rights following the invocation of the judicial process." Lastly, arbitration agreements are not subject to the "knowing and voluntary" standard that applies to jury waivers.
Given these distinctions, the presumption in favor of arbitration does not extend to jury waivers. Instead, in the case of a jury waiver, the starting point is "a presumption against the contractual waiver of the constitutional right to a jury trial." Proceeding from that presumption, the Court applied a multi-factor test and held that Bank of America failed to prove that Mikey's Houses knowingly and voluntarily waived its right to a jury trial.
Though not cited by the Court, there is another distinction between arbitration agreements and jury waivers which partly explains the public policy in favor of arbitration. Arbitration agreements alleviate the burden on the courts by providing a separate forum for dispute resolution. Conversely, jury waivers do not alleviate this burden. In fact, jury waivers actually increase the burden on the courts because the judge presiding over a court trial is often required to issue findings of fact and conclusions of law. See, e.g., Rule 296 of the Texas Rules of Civil Procedure.
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