Opinion
97 Civ. 4134 (RWS).
November 14, 2007
OPINION
This dispute between the plaintiff, Edward C. King ("King" or the "Plaintiff"), a musician, and his lawyer, defendant Lawrence A. Fox ("Fox" or the "Defendant") concerning the retainer agreement between them has occupied this Court, the magistrate judge, the Court of Appeals on two occasions, and the New York Court of Appeals over the past ten years. Presently at issue is Fox's motion to strike King's demand for a jury trial; initially made in August, 2003, deferred as a consequence of the grant of summary judgment for Fox in January, 2004, and renewed on October 31, 2007, after the remand from the Court of Appeals on August 11, 2006. For the reasons stated below, the motion will be denied.
The Seventh Amendment to the United States Constitution provides that "[i]n Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved." The jury right shall be preserved in "suits in which legal rights are to be ascertained and determined, in contradistinction to those where equitable rights alone are recognized, and equitable remedies are administered."Chauffeurs, Teamsters Helpers, Local No. 391 v. Terry, 494 U.S. 558, 564 (1990) (citation, internal quotation marks, and brackets omitted).
To determine whether the plaintiff is entitled to trial by jury, courts engage in a two-step inquiry. "First, we compare the statutory action to 18th-century actions brought in the courts of England prior to the merger of the courts of law and equity. Second, we examine the remedy sought and determine whether it is legal or equitable in nature." Id. at 565 (quoting Tull v. United States, 481 U.S. 412, 417-18 (1987)). "The second stage of this analysis is more important than the first." Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 42 (1991).
If the Court finds that even one of Plaintiff's claims is legal, then absent "the most imperative circumstances, circumstances which in view of the flexible procedures of the Federal Rules we cannot now anticipate," Plaintiff's right to a jury determination on that claim may not be abridged. Dairy Queen, Inc. v. Wood, 369 U.S. 469, 472-73 (1962).
King seeks the following remedies: compensatory damages for loss of royalty payments and interest and profits thereon; an accounting of all interest and profits earned by Fox while he held monies allegedly belonging to Plaintiff; restitution of all monies wrongfully taken from Plaintiff; disgorgement of all interest and profits derived from the use of such funds; and rescission of the Agreement.
The majority of the causes of action in the Complaint are equitable in nature. See Mertens v. Hewitt Assocs., 508 U.S. 248, 257 (1993) (holding that breach of fiduciary duty was traditionally determined by the courts of equity); Doctor's Assocs. v. Jabush, 89 F.3d 109, 113 (2d Cir. 1996) (noting that unconscionability is a traditionally equitable doctrine); Reich v. Continental Casualty Co., 33 F.3d 754, 756 (7th Cir. 1994) (same, for breach of fiduciary duty); Emmpresa v. Culbro Corp., 123 F. Supp. 2d 203, 206 (S.D.N.Y. 2000) (same, for unjust enrichment); Fleischmann Distilling Corp. v. Distillers Co., 395 F. Supp. 221, 231 (S.D.N.Y. 1975) (same, for undue influence). But see Ross v. Bernhard, 396 U.S. 531, 533 (1970) (noting that conversion is a traditionally legal action); Schweizer v. Mulvehill, 93 F. Supp. 2d 376, 407 (S.D.N.Y. 2000) (same, for legal malpractice).
While the Complaint initially sounded primarily in equity, the continuous representation established in subsequent proceedings eliminated the statute of limitations defense. The issues described above are essentially contract issues properly for jury determination.
Furthermore, at the second step of the Terry analysis, while Plaintiff has sought a number of equitable remedies, see Tull, 481 U.S. at 424 (noting that disgorgement is a traditionally equitable remedy); Ballow Brasted O'Brien Rusin P.C. v. Logan, 435 F.3d 235, 240 (2d Cir. 2006) (same, for rescission); Reich, 33 F.3d at 756 (same, for restitution); Levitin v. Rosenthal, 903 F. Supp. 400, 406 (E.D.N.Y. 1995) (same, for accounting), the Complaint also seeks compensatory damages, the most fundamental of legal remedies. See Terry, 494 U.S. at 570.
The questions to be resolved on remand are:
1. Did the retainer agreement provide that Fox would receive one third of the proceeds received by King?
2. Was the retainer agreement ratified?
3. Was the ratification induced by misconduct by Fox?
Any question of unconscionability is for the Court, King v. Fox, 418 F.3d 121, 130 n. 5 (2d Cir. 2005), although any factual dispute relating to unconscionability will be resolved by the jury.
It is so ordered.