In a recent ruling, the Appellate Division of the Supreme Court of the State of New York upheld a lower court's decision to deny a jury trial in the case of James Thomas Realty, LLC v. Cheliotes. This decision affects James Thomas Realty, the plaintiff, as well as the defendants, including Arthur Cheliotes and members of the New York Mercantile Exchange Condominium Association. The ruling is significant as it clarifies the conditions under which parties in derivative actions can demand a jury trial.
The case began when James Thomas Realty, LLC, filed a lawsuit against Arthur Cheliotes and others, alleging that the defendants caused the condominium association to pay more than it owed on a loan. The dispute arose from claims that were primarily equitable in nature, which typically do not allow for jury trials. The case was filed under Index No. 651836/16 and is identified as Appeal No. 6751 and Case No. 2025-06348.
In the lower court, Justice Joel M. Cohen ruled in favor of the defendants, granting their motion to strike the plaintiff's demand for a jury trial. The court concluded that the plaintiff's claims were primarily equitable, which does not warrant a jury trial under New York law. This ruling was based on the New York Civil Practice Law and Rules (CPLR) 4101(1), which states that a party is entitled to a jury trial only in actions for legal relief that demand a judgment for a sum of money only.
The Appellate Division affirmed this decision on May 28, 2026. The court stated, "Supreme Court properly granted defendants' motion to strike plaintiff's demand for a jury trial." The judges involved in this ruling included Webber, Gesmer, Rodriguez, Pitt-Burke, and O'Neill Levy. The court noted that the plaintiff's claim for an accounting was merely a method to determine monetary damages, which further supported the ruling that the primary character of the case was equitable.
The court also addressed the plaintiff's argument that it should follow the precedent set in the federal case of Ross v. Bernhard, which held that a plaintiff in a derivative action seeking money damages is entitled to a jury trial under the Seventh Amendment. However, the Appellate Division clarified that the protections offered by the Seventh Amendment do not apply in state courts, stating, "the contours of the federal guarantee differ from the protections afforded the right to a jury trial in civil cases in this State." This distinction is crucial as it reinforces the limitations on jury trials in New York state courts.
The impact of this ruling is significant for future cases involving derivative actions in New York. It reaffirms that plaintiffs in such cases may not be entitled to a jury trial if the primary nature of their claims is equitable. This decision may discourage some plaintiffs from pursuing derivative actions if they believe they will not have the opportunity for a jury trial. It also sets a clear precedent regarding the interpretation of what constitutes equitable versus legal claims in the context of jury trials.
Moving forward, this ruling may influence how similar cases are approached in New York courts. Legal representatives for plaintiffs in derivative actions will need to carefully consider the nature of their claims and whether they can justify a demand for a jury trial. The decision could prompt further discussions about the rights of plaintiffs in derivative actions and how those rights align with state and federal laws.
As of now, it is unclear whether the plaintiff, James Thomas Realty, LLC, will seek to appeal this decision. Details regarding any potential appeals or related cases were not available in the court filing. However, the ruling stands as a key reference point for future litigation involving derivative actions and jury rights in New York.