Amoco Oil Co. v. Torcomian

722 F.2d 1099 (3d Cir. 1983)

What's Going On?

Defendants appeal from the district court's denial of a jury trial in a case involving claims based in law and equity.

Who's Who?

Plaintiff       :

Amoco Oil Co. – owner of service station franchise.

Defendants :

John and Albert Torcomian – operators of Plaintiff's franchise who intended to become franchisees.

Facts:

Plaintiff Amoco Oil Co. owned a service station which was operated by Defendants John and Albert Torcomian for a period of several months. Defendants desired to become Plaintiff's franchised dealers, but never executed the franchise agreement [sent to them by Plaintiff]. The parties fell into a dispute over whether one of Plaintiff's representatives had promised that Defendants met the franchisee qualifications, and would be accepted as franchisees. [Plaintiff insisted that Defendants vacate the service station, and Defendants refused.] Plaintiff brought suit against Defendants seeking extensive relief, including money damages. Jurisdiction was predicated on both diversity and the existence of a federal question. At trial, however, Plaintiff attempted to orally amend its complaint to delete the portions that sought money damages other than for mesne profits. Plaintiff's goal in doing this was to eliminate any claims that might be construed as legal, rather than equitable, thereby foreclosing Defendants' right to a jury trial. Defendants filed a compulsory counterclaim seeking attorneys' fees, injunctive relief, and over $1 million in lost profits. The district court found for Plaintiff on all issues following a trial without a jury.

Issue:

Does the fact that equitable relief is sought in addition to substantial legal relief eliminate a party's right to a jury trial?

Decision:

No. Neither joinder of an equitable claim with a legal claim nor joinder of a prayer for equitable relief with a claim for legal relief, as to a legal claim, can defeat an otherwise valid seventh amendment right to a jury trial. Therefore, if the main claim—Plaintiff's complaint—comprised any legal claims seeking legal relief, the district court's judgment must be vacated as to those claims, unless Plaintiff was entitled to a directed verdict on the claim. Plaintiff's claim for ejectment is considered to be a legal claim by federal law. Although Plaintiff cites state law cases holding an action for ejectment to be equitable in nature, in diversity cases, federal law determines whether a claim is considered legal or equitable for purposes of whether a right to a jury trial exists. Even if the main claim had been equitable, a right to a jury trial may still arise as a result of a legal compulsory counterclaim. Defendants' breach of contract claim stemming from the alleged franchise agreement is a legal claim. Therefore, the district court's denial of a jury trial over at least the legal elements of both parties' claims is erroneous. Such error may be considered harmless if Plaintiff would nevertheless have been entitled to a directed verdict. Because a trial judge considering a motion for a directed verdict would have to consider the evidence in a manner most favorably to the defendants, the district court would have concluded that a jury could have found a franchise agreement to exist, and would not have directed a verdict for Plaintiff. Therefore, the district court's error cannot be considered harmless. The district court judgment is vacated and remanded.

Basic Rule:

The fact that equitable relief is sought in addition to substantial legal relief does not eliminate a right to a jury trial.

Terms:

Ejectment :

A legal action to recover damages and possession where a plaintiff has been wrongfully ejected from property.

Mesne profits :

Profits derived from the use of property which have accumulated during the period in which a plaintiff has been wrongfully been kept out of that property.

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