01-1238 Marseilles Hydro Power, LLC v. Marseilles Land & Water Co.

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“The complaint in this case sought an injunction against the canal company’s preventing the power company from going on the canal company’s land to repair the canal at the latter’s expense, as well as specific performance (the granting of a lien), also a form of equitable relief. If that were all, it would be clear there was no right to a jury trial. But declaratory relief was also sought…. [A]s the Third Circuit put it nicely in Owens-Illinois, Inc. v. Lake Shore Land Co., 610 F.2d 1185, 1189 (3d Cir. 1979), ‘If the declaratory judgment action does not fit into one of the existing equitable patterns but is essentially an inverted law suit-an action brought by one who would have been a defendant at common law- then the parties have a right to a jury. But if the action is the counterpart of a suit in equity, there is no such right.’… The ‘nature of the underlying dispute’ here is breach of contract, but a plaintiff who is seeking equitable relief and not damages cannot wrest an entitlement to a jury trial by the facile expedient of attaching a claim for declaratory judgment. Otherwise anyone seeking an injunction could obtain a jury trial.

“So neither the power company nor the canal company had a right to demand a jury trial on the basis of the complaint. Any such right would have had to arise later. It did arise later; it arose when the canal company counterclaimed for the withheld rent. Founded on an alleged breach of contract by the power company, the counterclaim was a claim for damages and hence-despite its being a counterclaim rather than a free-standing lawsuit, since a counterclaim is a suit, only joined for economy with an existing suit-it was a suit at common law within the meaning of the Seventh Amendment. … At that point the fact that there was a common issue underlying both the equitable and the legal claims, namely the duty if any of the power company to pay rent, and under that issue perhaps the deeper issue of which party had actually broken the contract, became significant. Common issues, if triable at all in the sense that their resolution requires resolving a material dispute of fact, as was the case here, must be tried to a jury in order to prevent a judge’s determination from foreclosing a party’s right to have the issues in a common law suit tried by a jury. Dairy Queen, Inc. v. Wood, 369 U.S. 469, 472-73, 479 (1962); Wade v. Orange County Sheriff’s Office, 844 F.2d 951, 954 (2d Cir. 1988). So the demand for a jury trial was timely and its rejection error; and until the jury trial to which the canal company is entitled is completed issuance of an injunction is premature.”

Reversed and Remanded.

Appeal from the United States District Court for the Northern District of Illinois, Conlon, J., Posner, J.