Trial by Jury in Real Property Cases

• Publication year: 2014
• Author: By Randall Block and Victoria Paal

Trial by Jury in Real Property Cases

By Randall Block and Victoria Paal

©2014 All Rights Reserved.

I. INTRODUCTION

Any litigator (and most transactional lawyers) can recite the basic law that the right to a jury depends generally upon whether the action to be adjudicated is legal or equitable. But whether a party has a right to a jury trial in a given case involving real property can be surprising, even to long-time practitioners. What is legal and what is equitable depends upon the particular action's historical underpinnings; whether the action is one or the other is not necessarily intuitive in the real property context. A lawsuit seeking an injunction against interference with an easement can be a legal cause of action, providing for a right to trial by jury. By contrast, a foreclosure action in which the mortgage holder seeks the recovery of real property collateral after a determination that money is owing upon a note is equitable. A declaratory relief action is neither legal nor equitable, but is sui generis, and might or might not, include the right to a jury in a given case. The following is a practical primer on the right to a jury trial in real property disputes.

II. GENERAL CONCEPTS

A. The Basic Law

The basic law underlying the right to a jury trial is well known and well developed.¹ The right is guaranteed under both the United States and California Constitutions.² The right guaranteed under the federal constitution, however, does not generally apply to civil cases in state court.³ The California Constitution provides that the right to a jury trial, even in civil cases, is an inviolate right.⁴ The right is guaranteed as it existed in common law in 1850, when the California Constitution was first adopted.⁵ Significantly, although the right to a jury trial is an "inviolate" right under California law, the right to a jury trial in a federal case based upon diversity jurisdiction is governed by federal law.⁶

In California, in addition to the rights provided under the Constitution, the Code of Civil Procedure also provides for trial by jury in certain specific instances. Thus, where an action seeks recovery of specific real property, or claims money due for breach of contract, it will ordinarily include a right to have such a dispute tried by a jury.⁷

Under these broad precepts, the right to a jury trial depends generally upon whether the relief sought is legal or equitable.⁸ The "right so guaranteed, however, is the right as it existed at common law in 1850, . . . 'and what that right is, is a purely historical question . . . .'"⁹ As such, the prayer for relief is not conclusive.¹⁰ A claim may be legal even though it requires the application of equitable principles,¹¹ while a suit to recover money damages might nonetheless be equitable in nature.¹²

It is important to differentiate between a factual dispute that is triable to a jury or a judge (that is, whether there is a right to a jury trial) and issues that a judge determines as a matter of law. A jury's role is to determine disputed issues of fact, and it is error to submit an issue of law to the jury as a question of fact.¹³ Issues of law for the judge include the legal sufficiency of the pleadings,¹⁴ interpretation of statutes,¹⁵ interpretation of a contract,¹⁶ admissibility of evidence,¹⁷ the existence of a legal duty,¹⁸ and whether a contract is reasonably susceptible of a proffered meaning under the parol evidence rule.¹⁹ A judge's role in ruling on issues of law in a jury case is separate and distinct from a jury's role in determining disputed issues of fact; thus, even where a party has the right to a jury trial in a real property case, the judge will almost certainly play an important role.

B. A Jury Trial May Not Be Waived Before a Lawsuit Has Been Filed

In all events, the California Supreme Court has ruled that the right to a jury trial is so important that it cannot be waived before a lawsuit has been filed.²⁰ In Grafton Partners v. Superior Court, plaintiffs and PriceWaterhouseCoopers entered into an agreement that included a waiver of jury trial in case of a dispute between the parties. When a dispute arose, plaintiffs demanded a jury trial, and the trial judge, relying on the waiver, granted defendant's motion to strike the jury demand. The court of appeal reversed and the California Supreme Court affirmed. The Supreme Court reasoned that,

When parties elect a judicial forum in which to resolve their civil disputes, article I, section 16 of the California Constitution accords them the right to trial by jury . . . . Our Constitution treats the historical right to a jury resolution of disputes that have been brought to a judicial forum as fundamental, providing that in 'a civil cause,' any waiver of the inviolate right to a jury determination must occur by the consent of the parties to the cause as provided by statute.²¹

Since the statute implementing this constitutional provision did not expressly provide for pre-dispute waiver of a jury trial right, the court ruled that such a waiver was invalid.

C. Arbitration

To be sure, not every predispute agreement to have a dispute resolved without a jury trial is invalid. Thus, parties to a contract may agree at the time of contracting and before any dispute arises to arbitrate their dispute. The Court in Grafton differentiated arbitration from jury waiver, noting that,

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The analogy to arbitration agreements is not persuasive. Unlike predispute jury waivers, predispute arbitration agreements are specifically authorized by statute. (§ 1281 ["A written agreement to submit to arbitration an existing controversy or a controversy thereafter arising is valid, enforceable and irrevocable, save upon such grounds as exist for the revocation of any contract."] . . . .)²²

Although an agreement to arbitrate effectively avoids a jury trial, the court in Grafton ruled that an agreement to arbitrate did not constitute waiver of a jury trial, noting the policy in favor of arbitration and the fact that pre-dispute arbitration agreements are specifically authorized by statute.

D. Judicial Reference

After Grafton, transactional lawyers sought to come up with alternatives that would allow for a predispute jury waiver agreement. For reasons we have addressed elsewhere, arbitration has largely gone out of favor, and might not be an acceptable way for the parties to avoid a jury because of its expense, and lack of finality, predictability, and efficiency.²³

One popular alternative is judicial reference. Judicial reference is provided for in the Code of Civil Procedure and authorizes a judicial officer to rule on certain facts or an entire dispute.²⁴ CCP Section 638 does not expressly use the terms "jury" or "waiver." However, in Woodside Homes v. Superior Court, the court of appeal held that the superior court erred in vacating the appointment of a judicial referee, concluding that the statute unambiguously allows for waiver of a jury trial, citing among other law, the ruling in Grafton.²⁵

Although judicial reference thus appears to be an effective predispute means to avoid a jury, the parties are still likely to face many challenges similar to those encountered in an arbitration, including expense and potential inefficiency. However, unlike arbitration, the referee's decision becomes a judgment that is fully appealable.²⁶ This is beneficial for a party concerned with the proper application of the law, but may limit the efficiency and finality of the proceedings. Further, like arbitration, the parties generally must foot the bill.²⁷

III. SOME PARTICULAR REMEDIES IN THE REAL PROPERTY CONTEXT

A. Some Common Causes of Action

The broad range of remedies in real property cases makes it difficult to predict without knowing the historical basis of a cause of action whether a...