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finding contract terms negotiable where "counsel represented defendants, reviewed the contracts, and made some revisions to the documents prior to defendants signing them" and where there was no "evidence suggesting that defendants were in a position where they had no choice but to sign the documents"
Summary of this case from Kortright Capital Partners LP v. Investcorp Inv. Advisers Ltd.Opinion
94 Civ. 8294 (PKL)
August 7, 2003
Joseph G. Colao, Esq., LEADER BERKON LLP, New York, NY, and Daniel J. Kelly, Esq., GADSBY HANNAH LLP, Boston, MA, Attorneys for Plaintiff.
Brooks Banker, Jr., Esq., ABBERLEY KOOIMAN LLP, New York, NY, Attorney for Defendants.
OPINION AND ORDER
Plaintiff Raymond H. Wechsler, the administrative trustee overseeing the assets of Towers Financial Corporation ("Towers"), 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.
As this Court has previously noted, by Order of United States Bankruptcy Judge Prudence Carter Beatty dated August 5, 1999, the Towers Financial Administrative Trust was terminated and the Trust's claim against Hunt Health was assigned to Raymond H. Wechsler in his personal capacity.
BACKGROUND
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.
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. ("Esperanza"), 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.
Esperanza is a Texas limited partnership that was formed on April 2, 1993 by P G and Friendship. By written agreement executed that same day, Hunt Health agreed to sell Esperanza some of Hunt Health's assets in exchange for Esperanza's assumption of some of Hunt Health's liabilities. See Wechsler, 198 F. Supp.2d at 513.
DISCUSSION
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 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 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 where the party consenting to the terms had no opportunity to have an attorney review the contract prior to signing it. See Hendrix, 565 F.2d at 256-57 (court did not enforce a jury waiver provision partly because at the time the defendant signed the contract, he was "dissuaded" by the plaintiff from consulting an attorney about the contract). In the present case, counsel represented defendants, reviewed the contracts, and made some revisions to the documents prior to defendants signing them. See Wechsler, 198 F. Supp.2d at 511-12; Deposition of Gail Gaines, sworn to on Oct. 29, 1999 ("Gaines Dep."), attached as Ex. 4 to the Affidavit of Daniel J. Kelly, Esq. in Support of Plaintiff's Motion to Bifurcate Trial ("Kelly Aff"), at 82-84. This fact, combined with the lack of evidence suggesting that defendants were in a position where they had no choice but to sign the documents, demonstrates that the jury waiver provisions in this case were negotiable terms.
The fact that both sides to the contracts in this case were of relatively equal bargaining power also demonstrates that the defendants' consent to the jury waivers was knowing, intentional, and voluntary. "[G]ross inequality in bargaining power suggests . . . that [an] asserted waiver was neither knowing nor intentional." Hendrix, 565 F.2d at 258; Sullivan, 881 F. Supp. at 911 ("[I]nequality in relative bargaining positions suggests that the asserted waiver was neither knowing nor intentional."). But see Morgan Guaranty Trust Co., 36 F. Supp.2d at 604 (upholding a jury waiver provision even though there was a difference in bargaining power between the parties because the party opposing the waiver was not completely unfamiliar with either the process involved, or the party with whom they were contracting, and therefore maintained the ability to negotiate effectively). By contrast, little or no disparity in bargaining power reflects voluntary action and intent. Oei, 957 F. Supp. at 523. Here, the parties to the agreements were all experienced corporate entities, of relatively equal bargaining power, thus further establishing the validity of the waivers.
The fact that the parties opposing the jury trial waiver — the defendants — are experienced business people also suggests that the waiver should be enforced. Extensive past business experience on behalf of the party contesting a jury waiver is an indication that this party knowingly and intentionally consented to the waiver. Hendrix, 565 F.2d at 258 (noting that it would be unfair to uphold jury waivers in situations where the parties who signed the contract are laymen, who cannot be expected to understand what exactly they were agreeing to); Morgan Guaranty Trust Co., 36 F. Supp.2d at 604 (listing he various qualifications of the parties who were denying the validity of the jury waiver, including their work tasks and previous business transactions, as evidence that they knowingly agreed to the provisions); Oei, 957 F. Supp. at 523 (denying plaintiff's jury demand because plaintiff "was an experienced businessman" who had worked as a product manager for IBM for several years, and therefore he knowingly and intentionally waived his right to a jury when he signed the contract at issue); Nat'l Westminster Bank v. Ross, 130 B.R. 656, 667 (S.D.N.Y. 1991) (listing defendant's education credentials, occupation, and past negotiating experience as evidence that he voluntarily and intentionally waived his right to a jury trial); N. Feldman Son, 572 F. Supp. at 313 (enforcing a jury waiver in part because the plaintiff had previously entered similar agreements with the defendant that included the same jury waiver provision). The defendants who consented to waivers in this case are Hunt Health Systems, Ltd., a limited partnership, and its corporate partners, P G Enterprises, Inc. and MHTJ Investments, Inc. Presumably, as corporate entities engaged in various business transactions, these parties are familiar with a multitude of different types of business transactions, perhaps not unlike the one at issue in this case. Therefore, the Court finds that each defendant possessed sufficient business acumen to understand what they were agreeing to, and thus, are deemed to have given their consent knowingly, intentionally, and voluntarily.
Finally, the conspicuous placement of the waivers within the documents is yet another factor indicating that defendants consented to these waivers knowingly and voluntarily. Courts may refuse to uphold jury waivers if they are "set deeply and inconspicuously in the contract."Hendrix, 565 F.2d at 258. Although there is no articulated standard for the appropriate placement of waiver provisions, prior case law offers helpful guidelines for determining whether a jury waiver was so embedded and hidden in a text that it should not be enforced. Factors to consider when making this determination include: the placement of the waiver, i.e. whether the provision was "buried in a multitude of words," see id.; the size and style of the print, see Morgan Guaranty Trust Co., 36 F. Supp.2d at 604 (upholding a jury waiver that was written in all capital letters, in contrast toHendrix, 565 F.2d at 258, where the unenforced waiver was in "fine print"); Ross, 130 B.R. at 667 (finding a jury trial waiver knowing and intentional based on the fact that the provision was "printed in small but entirely legible text," similar to the rest of the agreement); and the location of the provision within the entire document.See Morgan Guaranty Trust Co., 36 F. Supp.2d at 604 (finding a waiver provision "quite conspicuous" because it was "in the sole paragraph on the signature page itself, . . . it was the last sentence in that paragraph, [and] it immediately preceded the [defendants'] signatures"); Oei, 957 F. Supp. at 522-23 (describing a jury waiver located in its own paragraph, immediately above the signatures, as "highly conspicuous," even though the provision was part of a form);N. Feldman Son, 572 F. Supp. at 313 (noting that evidence that the waiver was voluntary and informed included the fact that it was "clearly visible and located directly above the signatures of the contracting parties"). The jury waiver provisions in this case are sufficiently conspicuous to warrant enforcement because they are set off in separate paragraphs containing other provisions related to litigation procedures, and are clearly stated in the first sentence of these paragraphs. See Ex.1 at p. 4, ¶ 10; P G Enterprises, Inc.'s "Guaranty" of Hunt Health's obligations and liabilities to Towers under the HCP Agreement, attached as Ex. 2 to Kelly Aff. ("Ex. 2"), at p. 2; MHTJ Investments, Inc.'s "Guaranty" of Hunt Health's obligations and liabilities to Towers under the HCP Agreement, attached as Ex. 3 to Kelly Aff. ("Ex. 3"), at 2. The waiver in the HCP Agreement is in the paragraph immediately preceding the signature lines.See Ex. 1 at p. 4, ¶ 10. Moreover, the provisions in all three agreements are legible and set out in the same typeface as the rest of the document in which they appear. See Ex. 1; Ex. 2; Ex. 3. Given this evidence of conspicuousness, coupled with the negotiability of the waivers, the relative equality in bargaining power between the parties, and the business acumen of the defendants, the Court finds that the jury trial waivers were entered knowingly, intentionally, and voluntarily, and therefore, must be upheld.
The Court notes that the jury waiver provision in the HCP Agreement is located in a paragraph labeled "Miscellaneous," which contains both litigation and non-litigation related provisions. However, the Court finds that the jury waiver in the HCP agreement is conspicuous nonetheless, because it is set out in the same typeface as the rest of the document, and it is in the first sentence of the only complete paragraph on the signature page. See Health Care Purchase Contract ("HPC Agreement") between Towers and Hunt Health, attached as Ex. 1 to Kelly Aff. ("Ex.1"), at p. 4, ¶ 10
Defendants unconvincingly argue that even if the jury trial waivers are valid, they are of limited scope and not applicable to the claims raised in this case. The language of enforceable waiver provisions must be construed literally. See Ross, 130 B.R. at 668-69 (interpreting a jury waiver clause that "waive[d] the right in any litigation with the Bank . . . to trial by jury" as applicable to "any litigation," including counterclaims that did not directly arise from the agreement containing the clause). In the present case, the jury waiver provision in the HCP states, "You hereby waive any and all right to trial by jury in any action or proceeding arising from any action brought under this Agreement." Ex. 1 at 4, ¶ 10 (emphasis added). The waiver provisions in the Guarantees state, "The undersigned hereby expressly waives the right to trial by jury . . . in connection with this guaranty." Ex. 2 at 2, ¶ 6; Ex. 3 at 2, ¶ 6. The contract claims raised by the plaintiff and the counterclaim raised by defendants do indeed fall within the rubric of this broad language. Specifically, the Security Agreement, an inducement for agreement to the HCP Agreement,see Security Agreement, attached as Ex. D to Affirmation of Brooks Banker, Jr., Esq. in Opposition to Plaintiff's Motion to Bifurcate Trial ("Banker Affirm.") at 1, is a proceeding arising out of the HCP Agreement, and therefore, is subject to the waiver provision in the HCP Agreement. Furthermore, the Security Agreement is linked to the HCP Agreement through a merger provision, which states that the Security Agreement, together with "the other written agreements between [Hunt Health and Towers] represent the entire agreement between [Hunt Health and Towers] concerning the subject matter hereof." See Ex. D ¶ 55. Moreover, contrary to what defendants suggest, since the conversion claim was brought only against Hunt Health, one of the parties who consented to the jury waiver, it is appropriate to apply the waiver to this claim as well. See First Amended Complaint ("Am. Comp.") ¶ 40, ¶ 63(b). Therefore, because the contract claims in this case arise from the HCP Agreement and the Guarantees, consistent with the broad language of the jury trial waivers therein, the waivers are applicable and therefore will be enforced.
II. Bifurcation Is Appropriate
Federal Rule of Civil Procedure 42(b) provides that the Court may order separate trials of any claims or counterclaims "in furtherance of convenience or to avoid prejudice, or when separate trials will be conducive to expedition and economy." Fed.R.Civ.P. 42(b). "The decision to separate claims and bifurcate a trial rests firmly within the discretion of the trial court." Hal Leonard Publishing Corp. v. Cherry Lane Magazines, Inc., No. 93 Civ. 5290, 1994 U.S. Dist. LEXIS 5195, at *4 (S.D.N.Y. Apr. 21, 1994) (citing Simpson v. Pittsburgh Corning Corp., 901 F.2d 277, 283 (2d Cir. 1990)); see also Katsaros v. Cody, 744 F.2d 270, 278 (2d Cir. 1984). While bifurcation is considered "the exception rather than the rule,"Bowers v. Navistar Int'l Transp. Corp., No. 88 Civ. 8857, 1993 WL 159965 (S.D.N.Y. May 10, 1993) (Sotomayor, J.), in some instances, separate trials are necessary to serve the ends of justice. See 9 C. Wright A. Miller, Federal Practice and Procedure § 2388 (1995) ("The piecemeal trial of separate issues in a single lawsuit or the repetitive trial of the same issue in severed claims is not to be the usual course. Thus, Rule 42(b) should be resorted to only in the exercise of informed discretion when the court believes that separation will achieve the purposes of the rule."). Furthermore, in assessing the usefulness of bifurcation, the Second Circuit has noted that "bifurcated trials have frequently been employed with great success." In Re Master Key Antitrust Litig., 528 F.2d 5, 15 (2d Cir. 1975). Therefore, "Rule 42(b) does not call for a bright-line test; rather, a factual and legal analysis of each case informs the court as to the propriety of separate trials." Bowers, 1993 WL 159965; see also Monaghan v. SZS 33 Assocs., L.P., 827 F. Supp. 233, 245 (S.D.N.Y. 1993) (finding that, while informative, cases in which Rule 42(b) bifurcation has been granted are not decisive in the court's determination of whether to bifurcate in the present case because "Rule 42(b) simply does not give rise to a bright-line test"). Moreover, in this determination, the moving party bears the burden of establishing that separate trials are necessary to prevent prejudice or confusion and serve the ends of justice.See, e.g., Bowers, 1993 WL 159965; Buscemi v. Pepsico, Inc., 736 F. Supp. 1267, 1271 (S.D.N.Y. 1990).
Plaintiff argues that while bifurcation is most commonly used to separate trials into liability and damage phases, it is appropriate in this case to separate the claims which are to be tried before this Court in a bench trial, and those claims which are to be tried by a jury.See Memorandum of Law in Support of Plaintiff s Motion to Bifurcate Trial ("PI. Mem.") at 6. Furthermore, plaintiff argues that it is in the interest of judicial economy to conduct a bench trial of the claims to which defendants have waived their right to a jury, see supra, before a jury trial on the fraudulent conveyance claim, since, if the Court finds for the defendant on the contract claims, such a finding will obviate the need for a subsequent jury trial. See id.; Morse/Diesel, Inc. v. Fidelity and Deposit Co. of Maryland, 763 F. Supp. 28, 35 (S.D.N.Y.), modified in part on other grounds, 768 F. Supp. 115 (S.D.N.Y. 1991) (Leisure, J.) ("Generally speaking, bifurcation is most frequently ordered when the resolution of one claim or issue may obviate the need for trial of other, more complicated issues." (citing Sogmose Realties, Inc. v. Twentieth Century-Fox Film Corp., 15 F.R.D. 496, 497 (S.D.N.Y. 1954))).
In deciding whether a separate trial will further convenience, avoid prejudice and ultimately serve the ends of justice, courts have considered factors such as, among other things: "the nature and relation of the claims and the evidence necessary to establish each claim," Bowers, 1993 WL 159965; the likelihood that bifurcation, or the failure to bifurcate would result in risk of substantive prejudice; and the likelihood that bifurcation would enhance juror comprehension of the issues presented in the case. See Union Carbide Corp. v. Montell N.V., 28 F. Supp.2d 833, 837 (S.D.N.Y. 1998); see also Hal Leonard Publishing Corp., 1994 U.S. Dist. LEXIS 5195, at *5.
The fraudulent conveyance claims, to which defendants are entitled to determination by a jury, are distinct from the contract claims to which defendants have waived their right to a jury. The bench trial regarding the contract claims will address issues including: whether defendants' breaches of the HCP Agreement were material; the amount of damages, if any, that were suffered by Towers as a result of these breaches; and whether a prior breach by Towers excused further performance of defendants' obligations under the HCP Agreement. See PL Mem. at 9. On the other hand, in a jury trial on plaintiff's fraudulent conveyance claims, the jury will be asked to determine whether Hunt Health's assets were fraudulently transferred to Esperanza, and if Esperanza is therefore liable for Hunt Health's indebtedness to Towers.See id.
In its April 18, 2002 ruling on the parties' renewed summary judgment motions in this action, this Court held that Hunt Health was indebted to Towers for the accounts receivable as well as factoring fees associated with those advances, and that Hunt Health has a "present and future obligation to remit to Towers the proceeds on accounts purchased by Towers." See Wechsler, 198 F. Supp.2d at 522. However, the Court also found that there remained a genuine issue of material fact as to the exact amount of Hunt Health's indebtedness. See id. at 522-23.
Plaintiff alleges that there will be no overlap of evidence in the two trials, and that "no facts found by the Court in the trial on the breach of contract claims would deprive defendants of their right to a jury on the fraudulent conveyance claim," PI. Mem. at 9, while defendants argue that, in fact, there are common issues of fact and law to be determined in the contract claims and the fraudulent conveyance claim, and therefore conducting a bench trial on the contract claims before a jury trial on the fraudulent conveyance claim would deprive defendants of "their Seventh Amendment right to a complete trial by jury on the fraudulent conveyance issue." Memorandum of Law in Opposition to Plaintiff's Motion to Bifurcate Trial ("Def. Mem.") at 9. Defendants cite to Dollar Sys. Inc. v. Avcar Leasing Sys., Inc., 890 F.2d 165, 170 (9th Cir. 1989), which held that, "where there are issues common to both the equitable and legal claims, `the legal claims involved in the action must be determined prior to any final court determination of [the] equitable claims.'"Id. (quoting Dairy Queen Inc. v. Wood, 369 U.S. 469, 479 (1962)). The Dollar court explained that if the legal claims were not determined prior to the equitable claims, the "`prior non-jury trial of the equitable claims may infringe the right to jury trial on the legal claims because of the collateral estoppel or res judicata effect of a prior judicial determination of issues common to the two sets of claims.'"Id. (quoting Calnetics Corp. v. Volkswagen of America, Inc., 532 F.2d 674, 690 (9th Cir. 1976)). However, where there are no common issues of law and fact between the two distinct set of claims to be tried, as was the case in Dollar, "`the order of trial is immaterial and may be left in the discretion of the court.'" 890 F.2d at 171 (quoting 9 C Wright A. Miller, Federal Practice and Procedure § 2305, at 35 (1971)).
Defendants attempt to distinguish the finding in Dollar, permitting non-jury claims to be tried prior to the jury claims, by arguing that, in the present case, the two sets of claims do involve common questions of fact and law, and therefore bifurcation is inappropriate. See Def. Mem. at 9, n. 8. In support of this argument, defendants point to common issues of fact between determinations which will be made by the Court in the non-jury claims, and certain elements which the plaintiff must establish to a jury in order to prevail on the fraudulent conveyance claims under New York law. To prevail on a fraudulent conveyance claim under New York law, a plaintiff must show (1) "the status of plaintiff as creditor of transferors;" (2) "the existence of a debt antecedent to the transfer;" (3) "a conveyance;" (4) "that the conveyance was made at a time of insolvency on the part of the transferors;" (5) "the absence of fair consideration for the transfer;" and (6) "the intent to defraud."Network Enters., Inc. v. APBA Offshore Prods., Inc., No. 01 Civ. 11765, 2002 WL 31050846, *6 (S.D.N.Y. Sept. 12, 2002) (quotingLoblaw Inc. v. Wylie, 50 A.D.2d 4, 8 (N.Y.App.Div. 1975)). Defendants argue that the Court's bench determination regarding plaintiff's status as a creditor and the existence of a debt antecedent to the transfer, prior to a jury trial on plaintiff's fraudulent conveyance claim, would infringe upon defendants' Seventh Amendment right to have every element of the fraudulent conveyance claim determined by a jury. See Def. Mem. at 9.
Plaintiff argues that cases such as Dollar, which prohibit resolution of the non-jury claims before resolution of the jury claims when there are common elements between the two, are inapplicable to the case at bar since those cases all pertain to situations where legal and equitable claims are joined. See Dollar, 890 F.2d at 170;Beacon Theatres Inc. v. Westover 359 U.S. 500 (1959) (holding that where legal and equitable issues are presented in a single case, "only under the most imperative circumstances . . . can the right to a jury trial of legal issues be lost through prior determination of equitable claims"). In the present case, there are no equitable claims, rather only legal claims, the majority of which the defendants have waived their right to a jury trial. Furthermore, while defendants have not waived their right to a jury trial on the fraudulent conveyance claim, plaintiff argues that defendants have explicitly waived their right to a jury trial on the question of whether defendants owe a debt to plaintiff under the HCP Agreement; therefore, plaintiff argues, defendants do not have a Seventh Amendment right to a jury trial on these issues. Furthermore, plaintiff argues, requiring a jury trial prior to a bench trial on issues to which defendants have explicitly waived their right to a jury determination would "deprive plaintiff of the benefit of their bargain." Okura Co. (America), Inc. v. The Careau Group, 783 F. Supp. 482, 491 n. 3 (C.D. Cal. 1991) (stating that, in a case involving a contractual jury waiver applicable to most but not all causes of action, "to the extent there are overlapping factual issues, to require a jury trial to proceed first on the basis of Beacon Theatres would deprive plaintiff of its benefit of the bargain.")
The Court finds that while there may indeed be common issues of fact between the contract claims and the fraudulent conveyance claim, in particular in the determination of plaintiff s status as a creditor and the existence of a debt antecedent to the transfer, these are questions to which defendants have waived their right to a jury determination, and therefore allowing a bench determination of these claims to precede the jury trial on the fraudulent conveyance claim would not infringe upon defendants' Seventh Amendment right to a jury trial on the fraudulent conveyance claim. Moreover, bifurcation of the two sets of claims in this case, and conducting a bench trial on the contract claims prior to a jury trial on the fraudulent conveyance claim, would serve the interests of judicial economy and efficiency without prejudicing either party, since a finding for defendants in the bench trial would obviate the need for a jury trial on the fraudulent conveyance claim.
The Court notes that, in its April 18, 2002 ruling on the parties' renewed summary judgment motions in this action, this Court found that Hunt Health was indebted to Towers, and that Hunt Health has a "present and future obligation to remit to Towers the proceeds on accounts purchased by Towers." Wechsler, 198 F. Supp.2d at 522;see also supra note 4.
CONCLUSION
For the foregoing reasons, the Court finds that the jury waiver provisions in the contracts signed by the defendants are valid, and the Court grants plaintiff's motion to bifurcate this trial. Therefore, this Court will first conduct a bench trial on the contract claims, and then, if necessary, the parties will try the fraudulent conveyance claims before a jury, upon completion of the bench trial.
SO ORDERED.