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Current Developments in the Commercial Divisions of the
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Posted: October 20, 2013

Equitable Claims Defeat Jury Demand

On October 17, 2013, Justice Bucaria of the Nassau County Commercial Division issued a decision in National Grid Corporate Services, LLC v. LeSchack & Grodensky, P.C., 2013 N.Y. Slip Op. 23354, highlighting a significant procedural difference between litigating commercial cases in New York’s state and federal courts: which claims can be tried by a judge versus a jury. Unlike federal courts, New York does not permit a jury trial where claims seeking legal relief and claims seeking equitable relief are alleged in the same complaint. Indeed, a jury trial can be lost even if a plaintiff’s initially-pled equitable claims are subsequently withdrawn or dismissed, leaving only the claims seeking money damages to be tried.

National Grid Corporate Services (actually two cases that were consolidated) involves a dispute between a law firm and its former client over unpaid legal fees. The claims asserted by the client included declaratory relief that the client had terminated the law firm for cause, a claim for disgorgement of legal fees, an alternative claim for quantum meruit if the client was found not to have terminated the law firm for cause, conversion, unjust enrichment, monies had and received, and breach of fiduciary duty, an accounting, a declaratory judgment for a retaining lien, and a breach of contract claim relating to a collection services agreement. The law firm initially filed a note of issue seeking a jury trial but subsequently moved to withdraw its jury demand, which it could do only if the former client consented or if it was not entitled to a jury trial in the first place. Justice Bucaria granted the motion to withdraw the jury demand on the ground that the former client’s unjust enrichment claim (even though it sought money damages) was an equitable claim and thus defeated the right to a jury trial.

The lesson to be learned from this decision is that, as tempting as it is to plead alternative causes of action in a complaint, sometimes plaintiff’s counsel can plead away the plaintiff’s right to a jury trial by including duplicative equitable claims along with legal claims for money damages. This may be an awfully high price to pay for the alternative relief requested.

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