New York courts routinely allow parties to waive by contract1 what the New York Constitution terms an “inviolate” right to a trial by jury.2 Courts have acknowledged, however, the anomaly of enforcing a jury waiver where the validity of the contract containing the jury waiver is in dispute.3 Over several decades, New York courts have outlined a general rule that a party challenging the validity or applicability of a contract should not be bound to a jury waiver provision therein where there is an unresolved issue over the contract’s application. A recent decision by Justice Bernard Fried of the New York County Commercial Division in D.B. Zwirn Special Opportunities Fund, L.P. v. Brin Investment, Corp., reaffirms this reasoning in leaving it to the jury to decide the disputed issue of whether the contract containing a jury trial waiver was binding.4 In addition, this decision appears to have added some clarity to the analysis of two 2007 commercial division decisions, in which the court, not a jury, decided the threshold issue of contract enforceability.5
Longstanding Precedent
In Federal Housecraft Inc. v. Faria,6 the Appellate Term, Second Department declined to enforce a jury waiver provision in the face of an affirmative defense that the contract containing that provision had been fraudulently induced. Rather than enforce the jury waiver provision as was the trend at that time,7 the Faria court held that, where a defendant challenges the validity of the instrument containing the jury waiver, “the party resisting the contract should be afforded the privilege of a preliminary trial by jury on the defense of fraud.”8 The court rejected the alternative of imposing a bench trial “by virtue of the waiver provision in an agreement which may be void in its entirety for want of legal consent.”9
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