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Steiner-GoldsteinSteiner-Goldstein ()

For many commercial lenders, it is difficult to imagine a less appealing mechanism for adjudicating disputes arising out of its commercial contracts than trial by jury. Lenders often seek ways to avoid jury trials because jurors are generally perceived to be biased against institutional and corporate clients and to lack the expertise and competency to deliberate complex commercial cases. When awarding damages, juries are thought to be more capricious than a judge. One alternative that has been employed as a means to circumvent a trial by jury is binding arbitration. Lenders, however, have found resolution by arbitration to be less than ideal because the arbitrator is not required to follow the law or applicable evidentiary standards, third-party discovery can be difficult to enforce and the arbitrator’s decision is not easily appealable. One preferable method that is used to avoid jury trials is the inclusion of pre-dispute jury waiver provisions in loan documents. While nearly every state’s constitution guarantees the right to a civic jury trial, each state may enact legislation to allow parties to specifically waive that right, both pre- and post-dispute, thus compelling a proceeding in which the judge is the finder of fact. Two states, however, California and Georgia, do not permit pre-dispute jury trial waivers. A recent California case, Rincon EV Realty v. CP III Rincon Towers, 8 Cal. App. 5th 1, 213 Cal. Rptr. 3d 410 (Ct. App. 2017), serves to highlight this issue.

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