Equity vs. Law: Understanding the Difference

{5:30 minutes to read} The decisions that parties make at the beginning of a lawsuit can  Equity vs. Law: Understanding the Difference by Bart Eaglehave lasting consequences throughout the litigation.

Many litigants have heard that historically, there had been a distinction between courts of equity and courts of law. Today, while there still exists a distinction between equitable claims, such as actions for an injunction, and legal claims, such as actions for tort or breach of contract, the same courts and judges hear both equitable and legal claims.

One of the primary distinctions between the way equitable and legal claims are handled is that a party is not entitled to a trial by jury of causes of action seeking equitable relief; they can only be decided by a judge, both in state and federal court.

In both state and federal court, one lawsuit can contain both equitable claims and legal claims. However, the distinctions can be especially important, depending upon the court in which the case is filed.

If a case is filed in federal court, and the case contains both equitable and legal causes of action, the evidence will be presented at one time, before the judge and jury.  The judge will decide the equitable claims, and the jury will decide the legal claims.

In New York State court, however, it is different. If a lawsuit seeks both equitable relief, such as, e.g., the issuance of a permanent injunction or rescission of a contract, and legal relief, such as monetary damages, for the same wrong, the fact that equitable causes of action were included precludes a jury trial, even of the legal claims; the plaintiff will have been deemed to have waived her right to a trial by jury of her legal claims. That would be true even if the causes of action seeking equitable relief were dismissed very early on in the litigation.

What is the practical effect of this? At the outset of litigation, a party and their attorney will decide what relief they will be seeking and the causes of action to bring. They may be in a position of asserting legal causes of action, but may also consider seeking equitable relief, such as the issuance of permanent injunction, prohibiting the other party from taking certain action. If she includes both the equitable and legal claims in her complaint, that party, in New York State court, would no longer, at any time, be entitled to a jury trial of any of the legal claims—even if at the outset of the case, the defendant successfully moves to dismiss the equitable claim seeking the preliminary injunction. In fact, after the cause of action is dismissed and the remaining causes of action are all legal claims, the case can proceed for a long period of time, with discovery and possibly motion practice, before it would ever get to trial, but the litigants would still not be entitle to a jury trial.

This could have a very profound impact. The decision of what causes of action to bring when commencing a lawsuit should be a strategic one. “Shotgun” approaches, where one includes every cause of action they can possible think of, is not strategic; and can often be harmful. Therefore, the parties should not make a knee-jerk decision on whether or not to include a request for equitable relief when starting a lawsuit. In addition to satisfying themselves that they have a legal basis to assert the equitable claim, if in New York State court, they should evaluate very carefully what is more important to them: the relief that the equitable claim, if they are successful, may afford them, or having their legal claims heard and determined by a jury.  

If you have questions about the distinction between equitable and legal claims, the impact such claims might have on a lawsuit you are thinking about commencing, and about how best to proceed, please do not hesitate to contact me here.

Bart J. Eagle
Attorney & Mediator
www.barteaglelaw.com
1700 Broadway, 41st Floor
New York, New York 10019
(212) 586-0052

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