Hudson View II Associates v. Gooden

• Decision Date: 25 June 1996
• Citation: 222 A.D.2d 163,644 N.Y.S.2d 512
• Parties: HUDSON VIEW II ASSOCIATES, et al., Plaintiffs-Appellants, v. Wilfred George GOODEN, et al. Defendants-Respondents, and Martin S. Turman, et al., Defendants. (Two Cases)
• Court: New York Supreme Court — Appellate Division

Page 512

644 N.Y.S.2d 512

222 A.D.2d 163

HUDSON VIEW II ASSOCIATES, et al., Plaintiffs-Appellants, v. Wilfred George GOODEN, et al. Defendants-Respondents and Martin S. Turman, et al., Defendants. (Two Cases)

Supreme Court, Appellate Division First Department.

June 25, 1996.

Kenneth G. Roberts, Carren Shulman, of counsel (Lowenthal Landau Fischer & Bring, P.C., for Plaintiffs-Appellants.

Phillip D. Miller, for Defendants-Respondents.

Before ROSENBERGER, J.P., and ELLERIN, WILLIAMS, TOM and MAZZARELLI, JJ.

ELLERIN, Justice.

The issue before us is the import of equitable defenses and/or counterclaims on defendants' right to a jury trial on plaintiffs' legal claims.

Plaintiffs are limited partnerships that own two Section 8 housing projects. They commenced this action to recover damages arising out of the alleged mismanagement of those buildings by defendants based on claims, inter alia, of breach of contract and conversion and seek to have the defendants-respondents removed as general partners and managing agents of the projects. In addition to raising both legal and equitable defenses to plaintiffs' causes of action, defendants asserted counterclaims for the recovery of the "reasonable commercial value" of services allegedly performed for plaintiffs as well as reimbursement for expenditures allegedly made for plaintiffs' benefit while defendants were engaged in managing the subject properties. Upon defendants' demand for a trial by jury, plaintiffs moved to strike the demand on the ground that defendants have no right to a jury trial on their equitable defenses and that, by asserting them, they have waived their right to a jury on plaintiffs' legal claims. Plaintiffs also argue that, even if defendants' assertion of equitable defenses did not act as a waiver, their assertion of equitable counterclaims along with their equitable defenses constituted such a waiver. The motion court denied plaintiffs' motion to strike the jury demand and sua sponte decided that the jury would serve in an advisory capacity with respect to any equitable claims and defenses.

Since the merger of law and equity, few situations remain in which the courts are required to make distinctions between what would once have been an action at law and what would have been a suit in equity. One of these situations is the determination of whether a litigant is entitled to a trial by jury, since, generally, if a matter was historically cognizable at equity, where there were no juries, no right to a jury exists today. If, however, a matter would historically have been decided in the common law courts before a jury, the right to a jury still exists.

The right to a trial by jury is governed by Art. I, subd. 2 of the New York State Constitution, which decrees that a "[t]rial by jury in all cases in which it has heretofore been guaranteed by constitutional provision shall remain inviolate forever". This provision, enacted in 1938, is generally interpreted to mean that the guarantee extends to all matters to which the prior Constitution, enacted in 1894, extended the guarantee. This includes all matters to which a constitutional right attached at the time of adoption of the first Constitution in 1777, i.e., matters traditionally triable before a jury in a court of law or to which the right had been extended by statute prior to 1777, as well as any matters as to which a right to trial by jury was created by statute between 1777 and adoption of the 1894 Constitution (Murphy v. American Home Prods. Corp., 136 A.D.2d 229, 231, 527 N.Y.S.2d 1; 4 Weinstein- Korn-Miller, N.Y.Civ.Prac., pars. 4101.06-4101.08; 7A Carmody-Wait 2d § 49:2; R. Kharas, "A Century of Law-Equity Merger in New York", 1 Syracuse L Rev 186, 200).

The threshold issue in this case, i.e., a defendant's right to a jury trial on equitable defenses, was, in fact, the subject of a statute prior to the adoption of the 1894 Constitution. Section 968 of the Code of Civil Procedure, enacted in 1876, and the forerunner of CPLR 4101, provided that all questions of fact arising in actions for a sum of money only, for ejectment, for dower, for waste, for a nuisance or to recover a chattel were required to be tried by a jury, unless waived or referred. In 1925, Justice Cardozo, writing for the Court of Appeals and interpreting identical language which had been incorporated into the subsequently enacted Civil Practice Act, stated that this statutory mandate also covered questions of fact arising from equitable defenses addressed to the specified causes of action (see, Susquehanna Steamship Co. v. A.O. Andersen & Co., 239 N.Y. 285, 295, 146 N.E. 381). Thus, with respect to actions enumerated in § 968, the right to a jury trial on the factual issues relating to equitable defenses would be constitutionally protected to the present time. However, this is not the case as to equitable defenses arising in actions not enumerated in § 968. While § 971 of that same Code of Civil Procedure permitted courts to submit to the jury questions of fact in other types of actions as to which the parties were not entitled to a jury trial and, indeed, the custom developed to have all equitable defenses tried by juries (id.; see also, Bennett v. Edison Electric Illuminating Co., 164 N.Y. 131, 58 N.E. 7), since a jury trial was not statutorily mandated as to such matters, no constitutional protection would be afforded today.

The practice of submitting equitable defenses to a jury, whether by statutory mandate or as a matter of discretion, was eliminated by the enactment of that part of CPLR 4101 providing that "equitable defenses and equitable counterclaims shall be tried by the court" (see, Mercantile & Gen. Reins. Co. v. Colonial Assur. Co., 82 N.Y.2d 248, 253, 604 N.Y.S.2d 492, 624 N.E.2d 629). One of the purposes of this provision was to eliminate the previously existing different treatment of equitable counterclaims, which were always tried by the court, and equitable defenses, which, as noted supra, could in certain instances be tried by a jury. This disparate treatment created significant confusion since, in many instances, counterclaims and defenses were virtually indistinguishable and difficult to separately categorize (see, 4 Weinstein-Korn-Miller, N.Y.Civ.Prac. § 4101.38; D. Siegel, Practice Commentaries, McKinney's Cons.Laws of N.Y., Book 7B, CPLR § 4101; 7A Carmody-Wait 2d N.Y.Prac. § 49:48).

Parenthetically, it may be noted that despite the salutary purpose intended by CPLR 4101, the arguably unconstitutional deprivation of a jury trial for certain equitable defenses which were statutorily required to be tried by jury prior to the adoption of the 1894 constitution has not gone completely unnoticed (see, Siegel, Practice Commentaries, McKinney's Cons.Laws of N.Y., Book 7B CPLR § 4101 at 191 ["the language of CPLR 4101 about equitable 'defenses' being triable by the court may be too sweeping, and run afoul of the constitutional right to trial by jury"].

In the case before us, since the main thrust of plaintiffs' action, and the relief sought, do not fall within the categories specified in predecessor § 968 of the Code of Civil Procedure, there could be no constitutional impediment to finding that defendants' equitable defenses must be tried by the court in accordance with the dictates of CPLR 4101.

However, the critical question, and the crux of plaintiffs' argument, is not merely that defendants are not entitled to a jury trial as to these defenses, but whether, by raising them defendants have also waived their right to a jury trial on plaintiffs' legal claims.

Clearly, a waiver of a jury trial may under certain circumstances be imputed to a plaintiff who actually joins an equitable claim with a legal claim arising from the same transaction (CPLR 4102[c]; see, City of Syracuse v. Hogan, 234 N.Y. 457, 138 N.E. 406; Kaplan v. Long Is. Univ., 116 A.D.2d 508, 509, 497 N.Y.S.2d 378). ¹ Moreover, as to the specific question of when a defendant waives its right to a jury trial, it has been held that, where a plaintiff brings a claim triable by jury and the defendant interposes both equitable defenses and counterclaims arising from the same transaction, the defendant waives a jury even on the main, legal, claim (Seneca v. Novaro, 80 A.D.2d 909, 910, 437 N.Y.S.2d 401; Compact Electra Corp. v. Connell, 46 A.D.2d 649, 359 N.Y.S.2d 686; but see, International Playtex v. CIS Leasing Corp., 115 A.D.2d 271, 495 N.Y.S.2d 864; Citizens Central Bank v. Fisher, 126 A.D.2d 968, 969, 511 N.Y.S.2d 743; see also, Siegel, Practice Commentaries, McKinney's Cons.Laws of N.Y., Book 7B, CPLR 4102:6 at 213). It has also been held that where plaintiff brings a claim triable by jury and the defendant asserts a related counterclaim not triable by jury, defendant thereby waives a jury trial in all respects, including on the main claim. (Seneca v. Novaro,...