Lease Clause Waiving Tenant’s Right to Jury Trial Is Unenforceable

What Happened: The owners of a hair salon sued their shopping center landlord for breach of lease, wrongful eviction, and other claims. They wanted a jury trial, but the landlord objected, citing the lease provision purporting to waive the tenants’ “right to a trial by jury in any action, proceeding or counterclaim on any matter whatsoever arising out of or in any way connected with this lease.” The tenants claimed the waiver clause was unenforceable. 

Ruling: The Maryland federal court agreed and nixed the landlord’s motion to dismiss the case.

Reasoning: Under federal law, parties to a contract are allowed to waive their Seventh Amendment right to a trial by jury in a civil case. But the party seeking to enforce the waiver has the burden of proving that consent to the provision was “voluntary and informed.” In this case, the three factors that courts look at to determine “voluntary and informed” all worked against the landlord:

• Relative bargaining power: At the time the lease was signed, the tenants had no business experience while the landlord had been in business for over a decade and owned multiple other commercial properties;
• Inconspicuousness of the provision: The waiver appeared on page 30 of a 48-page lease, in plain text without any use of boldface or underlining, and in the middle of a lengthy paragraph containing multiple other waiver provisions; and
• Whether the provision is comprehensible: While acknowledging that the waiver language in this case was comprehensible, the court concluded that its inconspicuousness made its comprehensibility of “limited significance because it is not possible to comprehend an unseen contractual provision.

• Coleman v. New Generation Mgmt., 2024 U.S. Dist. LEXIS 116084