On September 8, 2025, Justice Cohen of the New York County Commercial Division issued a decision in James Thomas Realty, LLC v Cheliotes, 2025 NY Slip Op. 33365(U), holding that there is no right to a jury trial in a derivative action, explaining:
The Constitution of the State of New York provides that the right to a trial by jury in all cases in which it has heretofore been guaranteed by constitutional provision shall remain inviolate forever; but a jury trial may be waived by the parties in all civil cases in the manner to be prescribed by law. Pursuant to that authority, CPLR 4101 [1] provides that included among the types of cases in which a right to a jury trial exists (unless waived) is an action in which a party demands and sets forth facts which would permit a judgment for a sum of money only. Although Plaintiff here seeks an accounting as part of its remedy, the predominant claim is to recover sums that were purportedly diverted from the Condo Association. Accordingly, the Court concludes that this is an action in which a party demands and sets forth facts which would permit a judgment for a sum of money only.
Nevertheless, it is well-settled that a plaintiff is not entitled to a jury trial where its action is primarily equitable in nature. There has, over the years, been some uncertainty and inconsistency in federal and state court decisions (in this State and others) as to whether a derivative action – regardless of the nature of relief sought – is an inherently equitable action precluding a right to a jury trial.
From its inception, the basis of the corporate derivative action has been the fiduciary relationship between shareholders and directors. The action is predicated on the historical power of the courts to provide a procedural avenue of relief to shareholders. As stated by the Court of Appeals, the right of a stockholder of a corporation to bring suit to enforce, for the benefit of the corporation, a cause of action, which belongs to the corporation, is purely equitable. The equity suit, when permitted, is in effect a combination of two causes of action which the stockholder asserts: namely, one against his own company, of which he is a corporator, for refusing to do what he has requested them to do; and the other against the party which contests the matter in controversy with that corporation. In describing the background of the derivative action, the U.S. Supreme Court explained that equity came to the relief of the stockholder, who had no standing to bring civil action at law against faithless directors and managers. Equity, however, allowed him to step into the corporation’s shoes and to seek in its right the restitution he could not demand in his own.
In Ross v Bernhard (396 US 531 [1970]), the U.S. Supreme Court reached a different conclusion, albeit under the Seventh Amendment to the United States Constitution rather than New York law. The Court found that the merger of law and equity practice under the Federal Rules of Civil Procedure minimized the significance of the derivative action’s historically equitable nature for purposes of assessing the right to a jury trial. It held that the right to jury trial attaches to those issues in derivative actions as to which the corporation, if it had been suing in its own right, would have been entitled to a jury. In reaching that decision, the Court observed that legal claims are not magically converted into equitable issues by their presentation to a court of equity in a derivative suit.
In Fedoryszyn v Weiss (62 Misc 2d 889, 893 [Sup Ct, Nassau County 1970]), decided a few months after Ross, the court relied upon the Supreme Court’s reasoning to uphold a derivative plaintiff’s right to a jury trial under New York law. The court found that the derivative plaintiff in that case had asserted a claim for monetary relief within the scope of CPLR 4101 and rejected the defendant’s argument (which relied upon Bookbinder and Goetz) that the derivative nature of the action forfeited the right to a jury trial. The court adopted the Ross analysis and emphasized that the plaintiff in the case before it did not request the unique remedies afforded by equity for fraud such as rescission, reformation, accounting or a constructive trust. Two subsequent decisions in this Court have reached a similar conclusion.
Thereafter, in Abrams v Rogers (195 AD2d 349 [1st Dept 1993] and Rocha Toussiery Asociados, S.C. v Rivero (201 AD2d 282 [1st Dept 1994]), the First Department found that plaintiffs in shareholder derivative actions were entitled to jury trials, albeit without delving into the issue in detail. In Rocha, the Court noted that the defendants challenged plaintiff’s right to a jury trial on the ground that the complaint included demands for equitable relief. Because the plaintiff alleges the existence of a conspiracy among the defendants, but alleges that the conspiracy acted in two fully separable transactions, the primary character of the demand for relief concerning the so-called Armco transaction is legal in nature, and the demand for an accounting is merely incidental.
However, the First Department has in two more recent cases addressed the question of jury trial rights in derivative actions somewhat more specifically and with different results. First, in Horizon Asset Mgt., LLC v Duffy (106 AD3d 594 [1st Dept 2013]), the court held that the counterclaim-plaintiff waived his jury right in the derivative action principally by joining legal and equitable claims for relief. However, the court also noted that in any event, contrary to counterclaim-plaintiff’s contention, the counterclaims for breach of contract and conversion for monetary damages, which he asserted derivatively, are not legal claims, since derivative actions have long been recognized in New York as equitable proceedings. Second, in Moyal v Sleppin (139 AD3d 605 [1st Dept 2016]), the court held that the trial court erred in finding that plaintiff in this shareholders’ derivative action was entitled to a jury trial, since the claims brought in his capacity as a shareholder were derivative and therefore equitable in nature.
Although Horizon and Moyal arguably conflict with the results in Abrams and Rocha (which each affirmed a jury trial right in derivative actions based on the particular claims at issue), they do appear to reflect the current view of the First Department and therefore are binding on this Court. And under that view, as the Court reads those decisions, a derivative plaintiff is not entitled to a jury trial under New York law even as to claims seeking purely monetary relief otherwise within the ambit of CPLR 4101. Plaintiff is, of course, free to seek relief from the First Department, which (unlike this Court) can determine whether to adopt a different approach.
(Internal quotations and citations omitted).