fife and company's motion to strike cbai's jury demand

Nate D. Ashcraft (9497)

Email: [email protected]

Jonathan K. Hansen (12349)

Email: [email protected]

HANSEN BLACK ANDERSON ASHCRAFT

2940 West Maple Loop Drive, Suite 103

Lehi, Utah 84043

Telephone: (801) 922-5004

Facsimile: (801) 922-5019

Attorneys for Defendants

IN THE UNITED STATES DISTRICT COURT

DISTRICT OF UTAH, CENTRAL DIVISION

CORD BLOOD AMERICA, INC.; a Florida

corporation,

Plaintiffs,

v.

TONAQUINT, INC., a Utah corporation;

ST. GEORGE INVESTMENTS, LLC, an

Illinois limited liability company,

Defendants.

TONAQUINT, INC., a Utah corporation;

ST. GEORGE INVESTMENTS, LLC, an

Illinois limited liability company,

Counter Plaintiffs,

vs.

CORD BLOOD AMERICA, INC.; a Florida

corporation,

Counter Defendants.

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DEFENDANTS MOTION TO STRIKE PLAINTIFFS JURY DEMAND AND SUPPORTING MEMORANDUM

Case No. 2:13-cv-00806-PMW

Judge Paul M. Warner

* * * * * * *

Case 2:13-cv-00806-RJS Document 27 Filed 02/20/14 Page 1 of 7

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Defendants Tonaquint, Inc. (Tonaquint) and St. George Investments, LLC (SGI)

(Tonaquint and SGI are sometimes collectively referred to herein as Defendants), by and

through counsel and pursuant to DUCivR 7-1(a) of the Rules of Practice for the United States

District Court for the District of Utah, hereby submit this motion to strike Plaintiff Cord Blood

America, Inc.s jury demand, and memorandum supporting Defendants motion.

RELIEF SOUGHT AND GROUNDS FOR MOTION

Defendants hereby move the Court to enter an Order striking the jury demand set forth in

Plaintiffs Complaint and requiring that all claims asserted by the parties in the above-captioned

action proceed as a bench trial. This motion is made on the grounds that Plaintiff expressly

waived its right to a jury trial through those agreements that are relevant to this action.

INTRODUCTION

On or about August 30, 2013, Plaintiff Cord Blood America, Inc. (CBAI) initiated the

above-captioned action by filing its Complaint and Jury Demand. The allegations of Plaintiffs

Complaint against Defendants are centered on a transaction that took place with Tonaquint in

2012. That transaction was memorialized in various transaction documents, including a Secured

Convertible Promissory Note, Securities Purchase Agreement, and Security Agreement. Plaintiff

negotiated, approved and executed each of these agreements. Though the applicable transaction

agreements contain clear and unambiguous jury waiver provisions, Plaintiff has, nonetheless,

demanded a jury trial in this matter. However, because Plaintiff has expressly waived its right to

a trial by jury, the court should strike Plaintiffs jury demand and enter an Order requiring that

this matter proceed as a bench trial.


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STATEMENT OF FACTS

1. On or about August 30, 2013, Plaintiff initiated the above-captioned action by

filing its Complaint and Jury Demand. (See Plaintiffs Complaint and Jury Demand on file with

the Court (Complaint)).

2. The transaction that is the subject of Plaintiffs Complaint was memorialized

through various transaction documents, including a Secured Convertible Promissory Note,

Securities Purchase Agreement, and Security Agreement. (Declaration of John M. Fife (2/20/14)

(Fife Decl.), 3).

3. On or about June 27, 2012, CBAI entered into a Secured Convertible Promissory

Note (Promissory Note). (Id. at 4, and Exhibit A thereto).

4. Paragraph 24 of the Promissory Note contains the following unambiguous and

conspicuous language:

THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT

MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL

FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN

CONNECTION WITH OR ARISING OUT OF THIS NOTE OR ANY

TRANSACTION CONTEMPLATED HEREBY.

(See Exhibit A to Fife Decl.) (emphasis in original).

5. On or about June 27, 2012, CBAI entered into a Securities Purchase Agreement

(Purchase Agreement). (Id. at 5, and Exhibit B thereto).

6. Paragraph 13.15 of the Purchase Agreement contains the following unambiguous

and conspicuous language:

Waiver of Jury Trial. EACH PARTY TO THIS AGREEMENT

IRREVOCABLY WAIVES ANY AND ALL RIGHTS IT MAY HAVE TO

DEMAND THAT ANY ACTION, PROCEEDING OR COUNTERCLAIM

ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT OR


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THE RELATIONSHIPS OF THE PARTIES HERETO BE TRIED BY JURY.

THIS WAIVER EXTENDS TO ANY AND ALL RIGHTS TO DEMAND A

TRIAL BY JURY ARISING UNDER COMMON LAW OR ANY

APPLICABLE STATUTE, LAW, RULE, OR REGULATION. FURTHER

EACH PARTY HERETO ACKNOWLEDGES THAT IT IS KNOWINGLY

AND VOLUNTARILY WAIVING IT RIGHT TO DEMAND A TRIAL BY

JURY.

(See Exhibit B to Fife Decl.) (emphasis in original).

7. On or about June 27, 2012, CBAI entered into a Security Agreement. (Id. at 6

and Exhibit C thereto).

8. Paragraph 8.10 of the Security Agreement contains the following unambiguous

and conspicuous language:

Waiver of Jury Trial. EACH PARTY TO THIS SECURITY AGREEMENT

IRREVOCABLY WAIVES ANY AND ALL RIGHTS IT MAY HAVE TO

DEMAND THAT ANY ACTION, PROCEEDING OR COUNTERCLAIM

ARISING OUT OF OR IN ANY WAY RELATED TO THIS SECURITY

AGREEMENT OR THE RELATIONSHIPS OF THE PARTIES HERETO BE

TRIED BY JURY. THIS WAIVER EXTENDS TO ANY AND ALL RIGHTS

TO DEMAND A TRIAL BY JURY ARISING UNDER COMMON LAW OR

ANY APPLICABLE STATUTE, LAW, RULE OR REGULATION. FURTHER,

EACH PARTY HERETO ACKNOWLEDGES THAT IT IS KNOWINGLY

AND VOLUNTARILY WAIVING ITS RIGHT TO DEMAND A TRIAL BY

JURY.

(See Exhibit C to Fife Decl.) (emphasis in original).

9. Notwithstanding Plaintiffs agreement to the above-referenced agreements and

jury waiver provisions, Plaintiff has, nonetheless, improperly demanded a trial by jury. (See

Complaint, at p. 23).

ARGUMENT

The law in Tenth Circuit is clear that a right to a trial by jury may be waived by contract.

The right to a jury trial in the federal courts is governed by federal law. Telum, Inc. v. E.F.


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Hutton Credit Corporation, 859 F.2d 835, 837 (10th Cir. 1988) (citing Simler v. Conner, 372

U.S. 221, 221-22, 83 S. Ct. 609, 609-10, 9 L. Ed. 2d 691 (1963) (per curiam) (jury trial right

controlled by federal law to insure uniformity in exercise required by seventh amendment)).

Agreements waiving the right to trial by are neither illegal nor contrary to public policy. Id.

(citing McCarthy v. Wynne, 126 F.2d 620, 623 (10th Cir.), cert. denied, 317 U.S. 640, 63 S. Ct.

31, 87 L. Ed 515 (1942); see Leasing Serv. Corp. v. Crane, 804 F.2d 828, 832 (4th Cir. 1986)

(right to jury trial, although fundamental, may be knowingly and intentionally waived by

contract); K.M.C. Co. v. Irving Trust Co., 757 F.2d 752, 755 (6th Cir. 1985) (considering it

clear that parties to a contract may by prior written agreement waive the right to a jury trial)).

In the instant action, the waiver of trial by jury is clear, unambiguous, and conspicuous in

multiple contract documents. By executing the referenced agreements Plaintiff knowingly and

intentionally waived its right to trial by jury. As set forth above, such agreements are neither

illegal nor contrary to public policy. Accordingly, Plaintiff is bound by those agreements and its

jury demand should be stricken.

It is expected that Plaintiff will attempt to argue that its allegations of fraud entitle it to a

jury trial, at least on that claim. However, such an argument would be unavailing. The Tenth

Circuit has held that allegations of fraud in the inducement going to the contract generally, are

insufficient to invalidate a jury waiver provision. See Prima Paint Corp. v. Flood & Conklin

Mfg. Co., 388 U.S. 395, 403-04, 87 S. Ct. 1801, 1805-06, 18 L. Ed. 2d 1270 (1967); Meyer v.

Dans un Jardin, S.A., 816 F.2d 533, 538 (10th Cir. 1987). Accordingly, Plaintiffs demand for a

trial by jury should be stricken and this matter should proceed as a bench trial.


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CONCLUSION

For the reasons set forth above, the Court should grant the foregoing Motion to Strike

Plaintiffs Jury Demand and enter an Order requiring that this matter proceed as a bench trial.

DATED this 20th day of February, 2014.

HANSEN BLACK ANDERSON ASHCRAFT

/s/ Nate D. Ashcraft

Attorneys for Defendants/Counter Plaintiffs


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CERTIFICATE OF SERVICE

I hereby certify that on this 20th day of February, 2014, I electronically filed, and caused

to be served via Notice of Electronic Filing, a true and correct copy of the foregoing

DEFENDANTS MOTION TO STRIKE PLAINTIFFS JURY DEMAND AND

SUPPORTING MEMORANDUM upon the following:

David L. Mortensen

[email protected]

Jill M. Pohlman

[email protected]

Jose A. Abarca

[email protected]

STOEL RIVES LLP

201 South Main Street, Suite 1100

Salt Lake City, Utah 84111-4904

/s/ Nate D. Ashcraft


fife and company's motion to strike cbai's jury demand

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