On February 19, 2026, the First Department issued a decision in Penske v. National Holding Corp., 2026 NY Slip Op. 00978, holding that there was no right to a jury trial on a fraudulent inducement claim seeking recission, explaining:
[F]ollowing discovery, defendants moved for leave to amend their answer to add counterclaims for fraudulent inducement to enter the SPA, fraud in connection with a separate side letter agreement between the parties, non-occurrence of a condition precedent in the SPA and side letter, and breach of the SPA/breach of the covenant of good faith and fair dealing. In connection with their claims for fraudulent inducement and fraud, defendants sought rescission of the SPA and side letter, respectively, or in the alternative, compensatory and punitive damages. Supreme Court ultimately granted the motion to amend.
While defendants’ motion for leave to amend was pending, plaintiffs filed a note of issue, and defendants subsequently filed a demand for jury trial. Plaintiffs then moved to strike defendants’ jury demand, arguing that defendants expressly waived a jury trial as part of the SPA. Supreme Court denied plaintiffs’ motion to strike. Supreme Court explained that the SPA’s waiver provision did not apply because defendants’ counterclaim challenged the very existence of the contract, and they seek recission, not contractual damages, for their fraudulent inducement.
Initially, based on the allegations supporting defendants’ counterclaims, the SPA’s waiver of the right to a jury trial is not applicable to defendants’ fraud-based counterclaims. In cases where fraudulent inducement allegations, if proved, would void the agreement, including the jury waiver clause, the party is entitled to a jury trial on the claim. Here, a close review of the counterclaims establishes that the primary claim is fraudulent inducement and the validity of the contract is clearly being challenged.
Nevertheless, defendants are not entitled to a jury trial on their counterclaims. Generally, a party asserting a fraudulent inducement claim may pursue a jury trial, notwithstanding the existence of a jury waiver clause, when that party primarily seeks money damages. Here, by contrast, defendants’ counterclaims seek rescission of the contract and side letter agreement, with damages only sought in the alternative. As the Court of Appeals has held, all issues pertaining to an equitable defense and counterclaim, whether matters of fact or law, are to be determined by the court under CPLR 4101 and rescission claims, of course, are equitable in nature. Accordingly, defendants’ counterclaims must be tried by the court, not a jury, by virtue of the equitable relief they seek.
(Internal quotations and citations omitted).