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Tilley v. Malvern National Bank

Court of Appeals of Arkansas, Division III

March 1, 2017

KENNETH W. TILLEY, INDIVIDUALLY AND AS TRUSTEE OF THE KENNETH TILLEY FAMILY TRUST APPELLANT
v.
MALVERN NATIONAL BANK AND STEPHEN MOORE APPELLEES

         APPEAL FROM THE GARLAND COUNTY CIRCUIT COURT [NO. 26CV-11-1194] HONORABLE JOHN HOMER WRIGHT, JUDGE

          Eichenbaum Liles, P.A., by: James H. Penick III, for appellant.

          Wright, Lindsey & Jennings LLP, by: Charles T. Coleman, Adrienne L. Baker, and Kristen S. Moyers, for appellees.

          KENNETH S. HIXSON, Judge.

         This appeal arises out of litigation that began as a foreclosure proceeding. Appellant Kenneth W. Tilley, individually and as trustee of the Kenneth Tilley Family Trust (Tilley), was a borrower on a loan from appellee Malvern National Bank (MNB). Appellee Stephen Moore (Moore) was vice president of commercial lending at MNB during most of the time relevant to the case. MNB filed a foreclosure action against Tilley, and he responded by denying the allegations and filing a counterclaim against MNB and a third-party complaint against Moore. Tilley demanded a jury trial, but the circuit court ultimately struck his demand. After a bench trial, the circuit court ruled in favor of MNB and Moore on all claims. Tilley appeals and asks our court to hold that (1) the circuit court erred by striking his demand for jury trial and (2) the circuit court abused its discretion by refusing to admit evidence of his future lost profits. We affirm.

         I. Background

         In July 2010, Tilley and MNB entered into a loan agreement. The loan agreement included a jury-waiver clause in the event of a dispute between the parties. Tilley executed a promissory note in favor of MNB with a principal balance of $221, 000. The note was secured through a mortgage on certain real property in Garland County, Arkansas. Tilley defaulted on the loan. MNB accelerated the note and filed its complaint in foreclosure against Tilley in November 2011. Tilley answered the complaint, asserted affirmative defenses, reserved the right to file one or more counterclaims, and demanded a jury trial.

         In October 2012, Tilley filed a counterclaim against MNB and a third-party complaint against Moore. The essence of Tilley's counterclaim and third-party complaint is that Moore, acting on behalf of MNB, promised to loan him $350, 000 so that he could fund two development projects. The $350, 000 loan was never made to Tilley. For reasons unrelated to this litigation, Moore resigned from his position at MNB. Following Moore's resignation, Tilley entered into further negotiations with other representatives from MNB, resulting in Tilley and MNB entering into the $221, 000 loan agreement instead of the $350, 000 loan Tilley had originally requested and MNB had allegedly agreed on. Tilley alleged that MNB's failure to fulfill the promise to loan him $350, 000 caused him to default on the $221, 000 loan. Tilley sued for breach of contract, promissory estoppel, violations of the Arkansas Deceptive Trade Practices Act, tortious interference, negligence, and fraud and demanded a jury trial.

         The circuit court set the case for a jury trial. Shortly thereafter, MNB and Moore filed a motion to strike Tilley's jury-trial demand. Generally, they argued that Tilley was not entitled to a jury trial because (1) a foreclosure claim and all claims essential to the foreclosure proceeding should be tried to the court rather than a jury and (2) Tilley had waived his right to a jury trial in the loan agreement with MNB.[1] Tilley responded by arguing that he was entitled to a jury trial because his claims were claims at law and because his waiver of his right to a jury trial in the loan agreement was not knowing and voluntary. The circuit court struck Tilley's jury demand, and the parties proceeded to a bench trial.

         Following the bench trial, the circuit court ruled in favor of MNB on its foreclosure claim and against Tilley on his counterclaim and third-party complaint. The circuit court entered its findings of fact and conclusions of law and then entered a judgment and decree of foreclosure. Following the entry of these orders, Tilley filed a motion for new trial that was deemed denied. Tilley timely appealed arguing that (1) the circuit court erred by striking his jury-trial demand and (2) the circuit court abused its discretion by refusing to allow him to introduce evidence of his future lost profits.

         II. Entitlement to a Jury Trial[2]

         Whether a party is entitled to a jury trial is a legal issue centered on constitutional interpretation, reviewable de novo on appeal. Ludwig v. Bella Casa, LLC, 2010 Ark. 435, 372 S.W.3d 792. This court is not bound by the decision of the circuit court. First Nat'l Bank of DeWitt v. Cruthis, 360 Ark. 528, 203 S.W.3d 88 (2005).

         In support of his contention that he was entitled to have his counterclaim and third-party complaint decided by a jury, Tilley asserts that (1) he had a constitutional right to a jury trial on his claims; (2) the jury-waiver clause in his loan agreement with MNB was unenforceable as a matter of law; (3) MNB and Moore waived their right to enforce the jury-waiver provision; (4) his waiver was unenforceable because it was not ...


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