John W. Cowper Co., Inc. v. Buffalo Hotel Development Venture

• Citation: 99 A.D.2d 19,471 N.Y.S.2d 913
• Parties: The JOHN W. COWPER COMPANY, INCORPORATED, on behalf of itself and others similarly situated, Respondents, v. BUFFALO HOTEL DEVELOPMENT VENTURE, a New York Limited Partnership, Clement Chen, Jr., LNC Development Corporation, Insurance Company of North America, Appellants, City of Buffalo Urban Renewal Agency, et al., Defendants, And a Third-Party action.
• Decision Date: 27 January 1984
• Court: New York Supreme Court — Appellate Division

Page 913

471 N.Y.S.2d 913

99 A.D.2d 19

The JOHN W. COWPER COMPANY, INCORPORATED, on behalf of itself and others similarly situated, Respondents, v. BUFFALO HOTEL DEVELOPMENT VENTURE, a New York Limited Partnership, Clement Chen, Jr., LNC Development Corporation, Insurance Company of North America, Appellants City of Buffalo Urban Renewal Agency, et al., Defendants And a Third-Party action.

Supreme Court, Appellate Division Fourth Department.

Jan. 27, 1984.

Renaldo, Myers & Regan, P.C., Buffalo, for appellants; Alioto & Alioto, Joseph Alioto, San Francisco, Cal., of counsel.

Saperston, Day, Lustig, Gallick, Kirschner & Gaglione, P.C., Buffalo (LAWRENCE

Schulz, Buffalo, of counsel), for respondents.

Before HANCOCK, J.P., and CALLAHAN, DENMAN, BOOMER and MOULE, JJ.

DENMAN, Justice.

This action arises from a contract for construction of a 500 room hotel and parking garage in downtown Buffalo. In its first five causes of action plaintiff, the general contractor, seeks money damages for separate breaches of the construction contract. The sixth cause of action seeks recovery under a quantum meruit theory for the reasonable value of labor, materials, and services. The seventh cause of action seeks foreclosure on a mechanic's lien on which plaintiff claims priority over other lienors named as defendants in the action (Lien Law, § 44). ^*

In their responsive pleading defendants asserted ten counterclaims, all of which seek money damages for breach of contract or tortious conduct except for the two which form the fulcrum of this appeal: the third counterclaim alleges that plaintiff unjustly enriched itself by using defendants' steel forms and tools in the construction of another hotel without defendants' consent; the ninth counterclaim asserts that plaintiff willfully exaggerated its mechanic's lien (Lien Law, §§ 39, 39-a).

Prior to filing a note of issue, plaintiff moved for an order pursuant to CPLR 4101 directing that defendants are not entitled to a jury trial. Special Term, 120 Misc.2d 350, 466 N.Y.S.2d 568, held that defendants waived their right to a jury trial by asserting counterclaims in a lien foreclosure action (Lien Law, § 45) and by joining an equitable counterclaim for unjust enrichment with their legal counterclaims. Subsequently, plaintiffs served a second amended complaint asserting two additional legal claims in response to which defendants served a third amended answer in which they eliminated their counterclaim for unjust enrichment, substituting therefor a legal counterclaim for conversion. At defendants' request Special Term reconsidered its decision but issued a supplemental decision adhering to its original determination. We disagree with that determination and hold that defendants are entitled to a jury trial on the legal issues raised by the pleadings.

It is hardly necessary to state that the right to trial by jury is zealously protected in our jurisprudence and yields only to the most compelling circumstances. "Trial by jury in all cases in which it has heretofore been guaranteed by constitutional provision shall remain inviolate forever;" (N.Y. Const., art. I, § 2). That guarantee extends to all causes of action to which the right attached at the time of adoption of the 1894 Constitution (4 Weinstein-Korn-Miller, N.Y. Civ. Prac., pars. 4101.07, 4101.08). Historically, however, actions at law were tried by a jury, matters cognizable in equity were tried by the chancellor. Even though the two systems have merged, vestiges of the law-equity dichotomy remain in the area relating to trial by jury (Siegel, New York Practice, § 4; 4 Weinstein-Korn-Miller, N.Y. Civ. Prac., par. 4103.07). For example, joinder in a complaint of both legal and equitable causes of action arising from the same transaction constitutes a waiver by plaintiff of his right to a trial by jury. Such waiver, of course, applies only to the plaintiff as defendant retains his right to a jury trial on the legal issues (DiMenna v. Cooper & Evans Co., 220 N.Y. 391, 115 N.E. 993; CPLR 4102, subd. [c] ).

Plaintiff claims, however, that this action is essentially one to foreclose a lien and that defendants, by asserting their legal counterclaims and a Lien Law counterclaim (Lien Law, §§ 39, 39-a), have effectively waived their right to a jury trial (Lien Law, § 45). Section 45 of the Lien Law provides as follows:

The court may adjust and determine the equities of all the parties to the action and the order of priority of different liens, and determine all issues raised by any defense or counterclaim in the action. But in no case shall the court determine any issue between the state and the contractor where a claim has been or can be submitted to the court of claims for adjudication and in case a counterclaim is set forth by any defendant in his answer, such defendant shall be deemed to have waived a trial by jury of the issues raised thereby.

Because the statute empowers the court to determine all issues involved in a lien foreclosure action, Special Term determined that defendants are not entitled to a jury trial on any of the issues involved. We believe that gives too narrow an interpretation to the statute and that the pleadings before us compel a contrary result. The cases cited by Special Term in support of its position are connected by a common thread: all involve only an action to foreclose a mechanics lien and there is no indication that plaintiffs joined any legal claims. The instant action cannot be so characterized.

The pleadings present eight causes of action seeking money damages for breach of contract and nine counterclaims for money damages resulting from breach of contract or from tortious conduct. To hold that defendants' right to trial by jury on those legal issues is forfeited would elevate form over substance. A plaintiff, simply by joining a single cause of action for lien foreclosure, (which incidently also seeks a money judgment), could effectively deprive defendants of their constitutional right to a jury trial on the contract claim. "A plaintiff cannot, by artful pleading, deprive a defendant of his constitutionally guaranteed right to a jury trial * * * by characterizing a legal action as equitable (citations omitted)" (Gordon v. Continental Cas. Co., 91 A.D.2d 987, 457 N.Y.S.2d 844). Despite inclusion of the lien foreclosure claim, the lawsuit is essentially one to recover money damages for breach of contract and the "critical factual issues should be resolved by a jury (Siegel, New York Practice, § 439; 4 Weinstein-Korn-Miller, N.Y. Civ. Prac., par. 4101.39; cf. Solnick v....