A recent case reminds us how easy it is to unintentionally waive one’s right to a jury when dealing with mechanic’s liens.

The right to have a jury of your peers decide your case is significant, and often sought after, right. Contracting parties have long been able to negotiate away their right to a jury trial, but at least they do so with their eyes open. But there are other strategic moves that can result in an automatic, but unintended, waiver of the right to a jury trial.
 
In Aussie Painting Corp. v. Western Surety Company and Kiska Construction, Inc., Aussie contended it was owed contract and extra work balances from Kiska. Kiska, as prime contractor, had terminated Aussie for failing to properly man the project, leading to delays. Aussie filed a mechanic’s lien and then commenced an action against Kiska and Western, its payment bond surety, for breach of the subcontract; foreclosure of its mechanic’s lien; and on the payment bond. Kiska counterclaimed for breach and for willful exaggeration of Aussie’s mechanic’s lien. Aussie filed a demand for a jury trial. Kiska moved to strike the jury demand, alleging that it had been waived.
 
As it turns out, the subcontract had an express waiver of jury trial provision, so the case could have ended there. But the court went on to remind the parties that it would have been deemed waived even absent the contract.
 
One may not seek a jury to adjudicate an “equitable” cause of action. A lien foreclosure is deemed to be “equitable” in nature and, therefore, may not be submitted to a jury. More importantly, where one joins a related “legal” (i.e., non-equitable) claim with an equitable claim, the right to a jury is waived for all the claims. Furthermore, Western, as the surety, has the same right to enforce the jury waiver as Kiska, and so the bond claims are subject to the jury waiver as well.
 
Not discussed by the court, but relevant to this discussion is section 45 of the NY Lien Law providing that a counterclaim asserted in a lien foreclosure action also results in a jury waiver by the defendant.
 
Thus, there are many strategic decisions to make before combining legal claims with equitable claims, or asserting counterclaims in a lien foreclosure action. It is critical that counsel familiar with lien foreclosure actions be consulted before commencing such litigation.

Contact GDB Construction Law attorney Randy J. Heller, Esq. for more information.