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Tilley v. Malvern National Bank

Supreme Court of Arkansas

December 12, 2019

Kenneth W. TILLEY, Individually and as Trustee of the Kenneth Tilley Family Trust, Appellant
v.
MALVERN NATIONAL BANK and Stephen Moore, Appellees

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[Copyrighted Material Omitted]

Page 139

          APPEAL FROM THE GARLAND COUNTY CIRCUIT COURT [NO. 26CV-2011-1194], HONORABLE JOHN HOMER WRIGHT, JUDGE

         Eichenbaum Liles P.A., by: Joshua Allen, Little Rock, and Christopher O. Parker, for appellant.

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

         OPINION

         JOSEPHINE LINKER HART, Justice

          Kenneth W. Tilley, Individually and as Trustee of the Kenneth Tilley Family Trust appeals the reinstatement of his bench-trial judgment that we had set aside in Tilley v. Malvern National Bank, 2017 Ark. 343, 532 S.W.3d 570 (Tilley I ). In Tilley I, we held that "pre-dispute contractual jury waivers are unenforceable under the Arkansas Constitution." Id. at 15, 532 S.W.3d at 578. Accordingly, we reversed and remanded the case to the Garland County Circuit Court for a jury trial. Instead, the circuit court applied Act 13 of 2018 (Act 13), legislation that was passed by the General Assembly after our mandate issued, but before Tilley’s jury trial was scheduled. The circuit court ruled that Tilley’s right to a jury trial had been obviated by the new legislation.

          On appeal, Tilley raises two points: (1) the circuit court erred in ruling that Act 13 applies to this case; and (2) the circuit court erred in holding that the jury-waiver provision in that legislation is valid and enforceable. We reverse and remand this case for a jury trial.

         In the circuit court proceeding in Tilley I, Tilley timely asserted his right to a jury trial. However, because there was a jury-trial waiver clause in the loan agreement that was the subject of the litigation, the circuit court struck Tilley’s demand for a jury trial. After a bench trial, the circuit court entered judgment against Tilley. As noted previously, we held that a pre-dispute jury-waiver clause did comport with the Arkansas Constitution. Article 2, section 7 provides:

The right of trial by jury shall remain inviolate, and shall extend to all cases at law, without regard to the amount in controversy; but a jury trial may be waived by the parties in all cases in the manner prescribed by law; and in all jury trials in civil cases, where as many as nine of the jurors agree upon a verdict, the verdict so agreed upon shall be returned as the verdict of such jury, provided, however, that where a verdict is returned by less than twelve jurors all the jurors consenting to such verdict shall sign the same.

         In our opinion in Tilley I, we construed the phrase "but a jury trial may be waived by the parties in all cases in the manner prescribed by law" to mean in accordance with the Arkansas Rules of Civil Procedure, specifically Rules 38 and 39 and by Arkansas Statute Annotated section 27-1743.2, which was superseded by Rule 38. The passage of amendment 80, charged the Arkansas Supreme Court with the duty to "prescribe the rules of pleading, practice and procedure for all courts." Ark. Const. amend. 80, § 3. The constitutional

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vesting of the authority to prescribe rules of practice and procedure in the Arkansas Supreme Court stands in marked contrast to the federal system where Congress has the authority to prescribe the rules of practice and procedure. Even so, section 3 of amendment 80 limits our rule-making authority, allowing us to prescribe rules "provided these rules shall not abridge, enlarge or modify any substantive rights and shall preserve the right of trial by jury as declared in this Constitution."

          After Malvern National Bank’s (MNB) and Moore’s petition for rehearing was denied, the mandate issued on January 25, 2018. Our mandate stated:

THIS APPEAL WAS SUBMITTED TO THE ARKANSAS SUPREME COURT ON THE RECORD OF THE GARLAND COUNTY CIRCUIT COURT AND BRIEFS OF THE RESPECTIVE PARTIES. AFTER DUE CONSIDERATION, IT IS THE DECISION OF THE COURT THAT THE JUDGMENT OF THE CIRCUIT COURT IS AFFIRMED IN PART; REVERSED AND REMANDED IN PART; COURT OF APPEALS’ OPINION VACATED FOR THE REASONS SET OUT IN THE ATTACHED OPINION.

         Thus, in accordance with our mandate, this case was remanded to the circuit court for a jury trial on Tilley’s counterclaims and third-party claims for (1) breach of contract/breach of the duty of good faith and fair dealing; (2) promissory estoppel; (3) violation of the Arkansas Deceptive Trade Practices Act; (4) tortious interference with a business relationship or expectancy; (5) negligence; and (6) deceit/fraud in the inducement. Tilley I, supra .

          After the mandate was issued, the General Assembly passed Act 13 on March 19, 2018. Act 13 states:

SECTION 1. As authorized by Article 2, § 7, of the Arkansas Constitution, Arkansas Code Title 16, Chapter 30, is amended to add an additional section to read as follows:
16-30-104. Contractual waiver of jury trial.
A written provision in a contract to borrow money or to lend money in which the parties agree to waive their respective rights to a trial by jury under Arkansas Constitution, Article 2, § 7, is valid and enforceable except upon those grounds that ...

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