SENIOR HOU. PROP. TRUST v. HEALTHSOUTH CORP., 447 Mass. 259 (2006)

Supreme Judicial Court of Massachusetts. Suffolk.March 7, 2006.
July 17, 2006.

Present: MARSHALL, C.J., GREANEY, IRELAND, SPINA, COWIN, CORDY, JJ.

Practice, Civil, Jury trial, Transfer of action to Superior Court, Waiver, Judicial discretion. Rules of Civil Procedure. Jury and Jurors.

The defendant in a Land Court proceeding waived its right to a trial by jury on its counterclaim by failing to comply with the requirement of G. L. c. 185, § 15, that it file a statement of framed jury issues within thirty days after the service of the last pleading directed to such issues, which in this case was the plaintiff’s answer to the defendant’s counterclaim [266-270]; in light of the mandatory language of the statute, a judge in the Land Court abused his discretion in invoking the provisions of Mass. R. Civ. P. 39(b), 365 Mass. 801
(1974), to revive the defendant’s right to a trial by jury on its counterclaim [270-273].

CIVIL ACTIONS commenced in the Land Court Department on February 3, 2003, and April 16, 2003.

After consolidation, a demand for jury trial was heard by Keith C. Long, J.

An application for leave to prosecute an interlocutory appeal was allowed in the Appeals Court by Mel L. Greenberg, J.

The Supreme Judicial Court on its own initiative transferred the case from the Appeals Court.

Paul B. Galvani (Jane E. Willis with him) for Senior Housing Properties Trust another.

Philip Y. Brown (Brian R. Birke with him) for HRPT Properties Trust.

Gary R. Greenberg (Jonathan D. Cohen with him) for Greenery Securities Corporation another.

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MARSHALL, C.J.

This appeal arises from consolidated cases pending in the Land Court among various trusts and corporate entities and their subsidiaries concerning the sale and lease back arrangements of five nursing homes and two rehabilitation hospitals located in the Commonwealth. At issue is whether a judge in the Land Court may invoke the provisions of Mass. R. Civ. P. 39 (b), 365 Mass. 801 (1974), to revive a right to a trial by jury that has been waived for failure to comply with the procedures set forth in G. L. c. 185, § 15. That statute provides, in part, that failure to enter in the Superior Court (within a specified period) questions that have been “framed” in the Land Court “shall constitute a waiver of the claim to a trial by jury, and thereafter the superior court shall have no further jurisdiction of the case.”[3]

In this case a judge in the Land Court concluded that the defendant, HealthSouth Corporation (HealthSouth), failed to comply with the requirements of G. L. c. 185, § 15, and consequently had waived its right to a jury trial. Invoking rule 39 (b), the judge then ruled, as a matter of discretion, that HealthSouth “may have a jury trial on all issues so triable.” The judge denied the plaintiffs’ subsequent request that he report

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his order to the Appeals Court pursuant to Mass. R. Civ. P. 64 (a), as amended, 423 Mass. 1403 (1996). The plaintiffs petitioned for interlocutory relief, G. L. c. 231, § 118, first par., and a single justice of die Appeals Court granted leave to pursue an interlocutory appeal from the judge’s order. We transferred the case here on our own motion. We affirm so much of the judge’s order as ruled that HealthSouth waived its right to a jury trial and reverse so much of his order as granted Health-South the right to a jury trial in the Superior Court.

1. Background. The plaintiffs, Senior Housing and HRPT Properties Trust (HRPT Trust), are real estate investment trusts that own and lease commercial real estate, including nursing homes and hospitals. HealthSouth is a health care services provider that owns and leases medical facilities to conduct its operations. For disputed reasons not relevant to our decision, in January, 2002, HealthSouth and Senior Housing restructured their existing financial arrangements and entered into a new “Exchange Agreement” whereby HealthSouth conveyed two rehabilitation hospitals to Senior Housing and Senior Housing conveyed live nursing homes to HealthSouth. By separate agreement signed the same day, HealthSouth leased the two hospitals from Senior Housing, with an option to purchase.[4] HealthSouth subsequently conveyed one of the five nursing homes it had purchased, a skilled nursing facility in North Andover, to Senior Residential Care/North Andover, Limited Partnership (Senior Residential Care).[5]

The Land Court cases arose from these transactions: the first,

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which we shall refer to as the parking lot case, was initiated by HRPT Trust, and the second, which we shall refer to as the lease reformation case, was commenced by Senior Housing. We review the procedural history of both cases in some detail as it is relevant to our analysis of G. L. c. 185, § 15.

On February 3, 2003, HRPT Trust commenced an action against Senior Residential Care to quiet title, pursuant to G. L. c. 240, §§ 1-10,[6]
claiming that Senior Residential Care was wrongfully using a parking lot and buildings owned by HRPT Trust in North Andover adjacent to one of the skilled nursing facilities involved in the 2002 transaction between Senior Housing and HealthSouth. HRPT Trust also sought declaratory relief, remedies for trespass and ejectment, and damages. On March 18, 2003, pursuant to Mass. R. Civ. P. 24, 365 Mass. 769 (1974), HealthSouth filed a motion to intervene in the parking lot case and filed a complaint and a jury demand, naming Senior Housing and HRPT Trust as defendants (rule 24 complaint).[7] Health-South advanced claims of breach of contract, breach of implied covenant of good faith and fair dealing, reformation, fraud, negligent misrepresentation, civil conspiracy, and violations of G. L. c. 93A, alleging that it had acquired the disputed property in North Andover under the January, 2002, exchange agreement with Senior Housing, and that, during negotiations, Senior Housing had misrepresented that it was the record owner of the disputed property, when HRPT Trust was its actual owner.[8] On June 2, 2003, Senior Housing and HRPT Trust, represented by die same counsel, filed a joint answer to HealthSouth’s rule 24 complaint, together with a demand for a jury trial.[9]

Meanwhile, on April 16, 2003, Senior Housing had commenced a separate action in the Land Court against HealthSouth

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(lease reformation case), alleging that HealthSouth’s chief financial officer had misrepresented its creditworthiness during the January, 2002, lease negotiations,[10] and that its creditworthiness was a “primary factor” on which the 2002 amended lease agreement was based. Senior Housing sought reformation of the lease.[11] On May 23, 2003, HealthSouth filed its answer as well as counterclaims in the lease reformation case, together with a demand for a jury trial.[12] On July 11, 2003, HealthSouth’s motion to consolidate the two cases was allowed. Mass. R. Civ. P. 42 (a), as amended, 423 Mass. 1402 (1996). Thereafter, on September 16, 2003, Senior Housing only, now represented by separate counsel, filed an answer to HealthSouth’s counterclaims in the lease reformation case.[13] There matters stood. Of relevance to this case, no party framed jury trial issues in the Land Court or filed a statement of jury issues in the Superior Court. See G. L. c. 185, § 15.

Six months later, on March 12, 2004, Senior Housing moved to amend its complaint in the lease reformation case, which was allowed on September 22, 2004.[14] On November 2, 2004, Health-South filed its answer to the amended complaint. It once again asserted counterclaims against both Senior Housing and HRPT

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Trust, and made a demand for a jury trial.[15] Senior Housing (but again not HRPT Trust) filed an answer to HealthSouth’s amended counterclaims on November 22, 2004.

On December 3, 2004, a case management conference was scheduled. By this date no party had filed a statement of jury issues as required by G. L. c. 185, § 15. In response to a claim of Senior Housing that HealthSouth had waived its right to a jury trial, the judge in the Land Court invited all parties to submit statements on that question, which Senior Housing and Health-South did on December 20, 2004.[16] Senior Housing acknowledged that HealthSouth had made a jury demand no “later than 10 days after the service of the last pleading directed to such issue,” in accordance with Mass. R. Civ. P. 38 (b), 365 Mass. 800
(1974), pointing to HealthSouth’s demand for a jury trial filed with its first answer and counterclaims on May 23, 2003. Senior Housing argued, however, that HealthSouth had thereafter waived its right to a jury trial by failing to file a statement of jury issues in the Superior Court “within thirty days after the expiration of the time for claiming a trial by jury,” as required by G. L. c. 185, § 15.[17] HealthSouth countered that, while

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Senior Housing had responded to its November 2, 2004, amended counterclaims, HRPT Trust had not yet done so, and that accordingly the ten-day period for HealthSouth to demand a jury trial had not yet started to run, nor had the thirty-day period for filing the statement of jury issues in the Superior Court been triggered.

On January 27, 2005, HRPT Trust filed its statement on the question. Noting that HealthSouth’s November, 2004, claims against it were exactly the same as HealthSouth’s allegations against it in HealthSouth’s March, 2003, rule 24 complaint, which HRPT Trust had previously answered, HRPT Trust argued that its answer filed on June 2, 2003, in response to HealthSouth’s rule 24 complaint, constituted its response to HealthSouth’s claims; that a response to HealthSouth’s November, 2004, counterclaims would be duplicative; and that HealthSouth had waived its right to a jury trial by failing to comply with the requirements of G. L. c. 185, § 15.[18] On March 16, 2005, in response to HealthSouth’s motion to compel it to do so,[19] HRPT Trust filed an answer to HealthSouth’s November 2, 2004, counterclaims. On April 12, 2005, for the first time, HealthSouth filed in the Land Court a motion to frame the jury issues, which HRPT Trust opposed.

On May 13, 2005, the Land Court judge issued his ruling on the jury trial issue. He concluded that the deadline for HealthSouth

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to file its statement of jury issues in the Superior Court as required by G. L. c. 185, § 15, had expired “long before April 12, 2005,” and that HealthSouth had waived its right to a jury trial. The judge then stated that he was exercising his discretion under rule 39 (b) to order a jury trial[20] because application of G. L. c. 185, § 15, he said, would work a “grave injustice” on HealthSouth.[21]

2. Waiver of claim to a trial by jury. The Legislature has determined that, for cases commenced in the Land Court in which a timely demand for a jury trial is made, the Superior Court is the appropriate forum to try the jury issues. See G. L. c. 185, § 15. See also G. L. c. 185, § 25
(Land Court “shall hold no trials by jury”); Weld v. Clarke, 215 Mass. 324, 325 (1913). As to such cases, G. L. c. 185, § 15, lays out a two-step procedure for perfecting a timely demand for a jury trial. First, a party must make a jury demand “in accordance with” rule 38 (b) (party must “serv[e] upon the other parties a demand therefor in writing at any time after the commencement of the action and not later than 10 days after the service of the last pleading directed to such issue”).[22] See G. L. c. 185, § 15. As to that step, Senior Housing and HRPT Trust readily agree that

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HealthSouth made a timely jury demand in its rule 24 complaint filed on March 18, 2003, and in its answer and counterclaims filed on May 23, 2003.

Second, the jury issues “shall be framed” in the Land Court, and the party requesting a jury trial “shall” file a statement of framed issues and “all other material papers in the case” in the Superior Court “within thirty days after the expiration of the time for claiming a trial by jury.” G. L. c. 185, § 15. The thirty-day period commences ten days after “service of the last pleading directed to such issue.” Mass. R. Civ. P. 38 (b). Failure to comply with the second step “shall constitute a waiver” of the claim to a trial by jury. G. L. c. 185, § 15. The dispute in this case turns on whether HealthSouth satisfied the second step. That question in turn is resolved by identifying the “last pleading directed to such issue.” Mass. R. Civ. P. 38 (b).

Senior Housing argues that the relevant “last pleading” was its answer to HealthSouth’s counterclaims, filed on September 16, 2003. HealthSouth responds that the relevant “last pleading” was HRPT Trust’s March 16, 2005, answer to HealthSouth’s amended counterclaims, and that the thirty-day period did not begin to run until March 26, 2005,[23] For several reasons we conclude that HealthSouth did not satisfy the requirements of G. L. c. 185, § 15, and has therefore waived its right to a jury trial.

First, an amended pleading does not extend the time for demanding a jury trial, nor does it revive a right to a jury trial that has been waived, unless the amendment contains new issues not presented in the original pleadings. See Dole v. Wool-dredge, 142 Mass. 161, 180-182
(1886); Pyramid Co. of Holyoke v. Homeplace Stores Two, Inc., 175 F.R.D. 415, 418 (D.

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268 Mass. 1997); J.W. Smith, H.B. Zobel, C.S. Murphy, Rules Practice § 38.3, at 12 (Supp. 2006). See also Sharon v. Newton, 437 Mass. 99, 101-103 (2002) (in negligence action, amended answer, which raised additional affirmative defense of release based on document that defendant came across during course of discovery, did not raise new issue); Communications Maintenance, Inc. v. Motorola, Inc., 761 F.2d 1202, 1208 (7th Cir. 1985), quoting Connecticut Gen. Life Ins. Co. v. Breslin, 332 F.2d 928, 931 (5th Cir. 1964) (it is “well-settled law” that supplemental pleadings do not extend time for making demand for jury trial “except as to new issues raised by die new pleadings,” interpreting Federal Rules of Civil Procedure); In re N-500L Cases, 691 F.2d 15, 23
(1st Cir. 1982) (“One issue is the same as another when it is based on the same conduct or concerns the same general area of dispute”); Lanza
v. Drexel Co., 479 F.2d 1277, 1310-1311 (2d Cir. 1973) (amended complaint, which added new claim and sought punitive damages, raised no new issues where “same conduct and same allegedly false documents” constituted basis for all claims and defendant “had been put on notice of the underlying facts and basic legal theory — fraud — upon which plaintiffs sought relief”).

In these cases, none of the 2004 amended pleadings of the parties raised “new” issues. Senior Housing’s motion to file the amended complaint makes this clear: its 2004 amendments supplemented its existing claim of fraud by HealthSouth by seeking “additional or alternative remedies” available under applicable law for its claim of fraud and “amplify[ing]” that claim “by alleging additional facts.”[24] Cf Lanza v. Drexel Co., supra. The various claims and responsive counterclaims asserted by HealthSouth did not change, see notes 8, 12, and accompanying

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text, supra, and its November, 2004, amended answer and counterclaim do nothing more than elaborate its damages. See note 15, supra. See Pyramid Co. of Holyoke v. Homeplace Stores Two, Inc., supra at 419-420 (as it was based on same factual claim, amendment of answer to assert counterclaim for first time did not revive waived right to jury trial); Berisford Capital Corp. v. Syncom Corp., 650 F. Supp. 999, 1001-1002 (S.D.N.Y. 1987) (amended complaint does not revive waived jury right unless it “raises issues not fairly present in the original complaint”; court will look to “the underlying essence of the two complaints to see if they differ, rather than focusing on the fine-tuning of legal theories or the artful sharpening of allegations”).

Second, and perhaps more telling, after the initial round of pleadings were completed on September 16, 2003, HealthSouth should have perfected its jury claim by filing its statement of framed issues in the Superior Court on or before October 26, 2003. It did not do so, thereby waiving its demand for a jury trial. HealthSouth could not have predicted that Senior Housing would file a motion to amend its complaint many months later on March 12, 2004,[25] Cf. Communications Maintenance, Inc. v Motorola, Inc., supra (court must decide at what point “the pleadings finally framed the various issues to be put before the trier-of-fact; that is, when did the pleadings cease raising new factual issues, and begin simply alleging new legal theories or particularized facts”). Had Senior Housing’s amended complaint of March, 2004, raised “new” issues, which it did not, HealthSouth could have filed an amended motion to frame, had one been necessary. See note 24, supra.

By strong affirmative language the Legislature has directed that the Superior Court shall lose jurisdiction of a case if a party making a jury demand does not timely file framed jury issues in the Superior Court. This reflects a legislative response

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to the complexity of having a single case proceed in two separate trial court departments at the same time, the Land Court and the Superior Court. It is not unreasonable to expect parties to comply assiduously with the requirements of the statute in order to secure the greatest possible efficiency in the administration of these complex parallel proceedings. Once the pleadings are complete, a party that has made a timely demand for a jury trial must promptly assess the case in its entirety and determine whether to proceed in the Land Court alone, thereby forgoing its right to a jury, or whether to proceed in the Superior Court with its jury claims and the attendant expense of two trials, one in the Land Court and one in the Superior Court. The Legislature no doubt anticipated that a party might make a timely demand for a jury trial, and then (once the pleadings were complete) decide to forgo its right to a jury because of the costs and delay involved. Compliance with the statutory mandate places on a party the obligation of making that determination as soon as possible, permitting a considered but efficient process for trying appropriate issues to a jury in the Superior Court for cases commenced in the Land Court. As the judge in the Land Court noted, G. L. c. 185, § 15, requires the framing of jury issues in the Land Court “at a point very near the beginning of a case.” HealthSouth knew no later than September, 2003, that it had equitable and legal claims against Senior Housing and HRPT Trust. It would defy a plain reading of the statute to conclude that, by waiting until April, 2005, to frame the issues in the Land Court, it has complied with its obligations under G. L. c. 185, § 15.

3. Judicial discretion to revive right to a jury trial. Rule 39 (b) grants “discretion upon motion” to a judge to “order a trial by jury of any or all issues” where a party had a right to a jury trial but failed to demand one.[26] A judge’s discretion under rule 39 (b) to order a jury trial is “largely unlimited.” Reporters’ Notes to Mass. R. Civ. P. 39 (b), Mass. Ann. Laws, Rules of Civil Procedure at 649 (LexisNexis 2005), citing former G. L. c. 231,

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§ 60; Gechijian v. Richmond Ins. Co., 305 Mass. 132, 143-144 (1940) (after plaintiff waived jury trial right in stipulation, judge’s granting of jury trial under former G. L. c. 231, § 60, reviewed for abuse of discretion). See, e.g., Dolan v. Boott Cotton Mills, 185 Mass. 576, 577-578
(1904) (judge has power to extend time for demanding jury trial). Here, however, the judge’s exercise of discretion must be considered in light of G. L. c. 185, § 15, which provides that the jury issues “shall be framed” in the Land Court and “shall be entered” in the Superior Court within a specifically defined time, and that failure to do so “shall” constitute a waiver of a claim to a trial by jury, which “shall” divest the Superior Court of further jurisdiction over the case.[27]

It requires little parsing of the mandatory language of G. L. c. 185, § 15, to recognize that it is irreconcilable with the discretionary language of rule 39 (b). And where there is an irreconcilable conflict between a court rule and a statute, the rule generally must yield to the statute. See Eastern Energy Corp. v. Energy Facilities Siting Bd., 419 Mass. 151, 154-155 (1994) (rejecting plaintiff’s request to apply Mass. R. A. P. 4 [a], as amended, 395 Mass. 1110 [1985], to salvage its untimely appeal, where rule “would contradict the provisions of G. L. c. 25, § 5, which specifically govern the timing of appeals”); Friedman v Board of Registration in Med., 414 Mass. 663, 665 (1993) (“statutory appeal period . . . cannot be overridden by a contrary rule of court when the manner and time for effective filing of an appeal are delineated in the statute”); Harper v. Division of Water Pollution Control, 412 Mass. 464, 465-466

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(1992) (same); LaRoche v. Flynn, 55 Mass. App. Ct. 419, 421 (2002) (“a court rule generally may not override a statute”). Cf. Garrett v Director of the Div. of Employment Sec., 394 Mass. 417, 419 (1985) (purpose of Mass. R. Civ. P. 81 [d], 365 Mass. 841 [1974], which provides that “[i]n applying these rules to any proceedings to which they apply, the terminology of any statute which also applies shall, if inconsistent with these rules, be taken to mean the analogous device or procedure proper under these rules,” is not to make rules of civil procedure paramount to express statutory language).[28]

Contrary to HealthSouth’s argument, exercise of discretion pursuant to rule 39 (b) cannot be harmonized with the explicit command of G. L. c. 185, § 15: the language of the statute is mandatory.[29] See Hashimi
v. Kalil, 388 Mass. 607, 609 (1983) (“‘shall’ is ordinarily interpreted as having a mandatory or

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imperative obligation”); Johnson v. District Attorney for the N. Dist., 342 Mass. 212, 215 (1961) (use of “shall” in statute is “inconsistent with the idea of discretion”). Rather, G. L. c. 185, § 15, limits a Land Court judge’s otherwise broad discretion to act under rule 39 (b), and we see no reason why the explicit language of the statute should be ignored.[30] See McGrath v. Lynch, 323 Mass. 151, 152 (1948) (affirming judge’s decision to strike claim for jury trial where plaintiff’s demand was not timely under G. L. c. 185, § 15, despite fact that jury demand would have been timely under G. L. c. 231, § 60; Legislature “did not intend to substitute the procedure set up in § 60 for that in § 15”). See also note 28, supra; Reporters’ Notes to Mass. R. Civ. P. 39 (b), Mass. Ann. Laws, Rules of Civil Procedure at 649 (LexisNexis 2005), citing former G. L. c. 231, § 60.

For all of these reasons we affirm so much of the judge’s order that ruled that HealthSouth waived its right to a jury trial because it failed to comply with the requirements of G. L. c. 185, § 15, and vacate so much of the judge’s order that granted HealthSouth the right to a jury trial in the Superior Court.

So ordered.

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