Wheeless v. Gelzer

765 F. Supp. 741, 1991 U.S. Dist. LEXIS 7450, 1991 WL 94369
CourtDistrict Court, N.D. Georgia
DecidedApril 26, 1991
DocketNo. 1:89-CV-2177-RHH
StatusPublished

This text of 765 F. Supp. 741 (Wheeless v. Gelzer) is published on Counsel Stack Legal Research, covering District Court, N.D. Georgia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Wheeless v. Gelzer, 765 F. Supp. 741, 1991 U.S. Dist. LEXIS 7450, 1991 WL 94369 (N.D. Ga. 1991).

Opinion

ORDER

ROBERT H. HALL, Jr., District Judge.

This is an action seeking to set aside two transfers of ownership of certain stocks and securities as based upon fraud and undue influence. Plaintiffs seek rescission of the ownership transfers, the return of the stocks and securities to their deceased father’s estate, and reimbursement for any accumulated dividends relating to the stocks and securities. Plaintiffs also seek recovery of attorney’s fees expended in the bringing of this lawsuit.

Jurisdiction is vested with this Court pursuant to 28 U.S.C. § 1332. A pretrial conference has been held and a pretrial order drafted. The case is currently before the Court on Defendant’s demand for a jury trial. The Court DENIES Defendant’s demand.

DISCUSSION

Defendant submits her demand for a jury trial pursuant to the Seventh Amendment to the United States Constitution and Fed.R.Civ.P. 38. The Seventh Amendment provides that “[i]n suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved....” Rule 38 allows a party to “demand a trial by jury of any issue triable of right by a jury.... ”

In determining if the right to a jury trial exists in a particular case, courts have construed the Seventh Amendment as requiring a jury trial in those actions that are analogous to “[sjuits at common law.” Tull v. U.S., 481 U.S. 412, 417, 107 S.Ct. 1831, 1835, 95 L.Ed.2d 365 (1987). In making this determination, courts examine the nature of both the action and the remedy sought. Id.

The basic consideration for determining when the right to a jury trial exists is the historical distinction between law and equity. For those claims which traditionally were cognizable at law, the right to a jury is historically preserved; for those claims which historically were considered equitable, no jury trial is mandated.

Phillips v. Kaplus, 764 F.2d 807, 813 (1985), cert. denied, 474 U.S. 1059, 106 S.Ct. 802, 88 L.Ed.2d 778 (1986) (citing In re Graham, 747 F.2d 1383 (11th Cir.1984)).

Although in this case, the determination of the rights and remedies to which Plaintiffs are ultimately entitled is governed by Georgia law, Id. at 812, Defendant’s right to a jury trial pursuant to the Seventh Amendment is governed by federal law. Id.; Simler v. Conner, 372 U.S. 221, 83 S.Ct. 609, 9 L.Ed.2d 691 (1963). The three factors to be considered in making this determination were enumerated by the Supreme Court in Ross v. Bernhard, 396 U.S. 531, 90 S.Ct. 733, 24 L.Ed.2d 729 (1970): (1) the customary manner of trying such a case before the merger of law and equity in 1938; (2) the remedy sought by the plaintiff; and (3) the practical abilities and limitations of a jury in deciding the issue. Id. at 538 n. 10, 90 S.Ct. at 738 n. 10.

The third Ross factor is of little consequence. As the court noted in Phillips, the Supreme Court has ignored it in subsequent decisions, and “[wjhether or not this factor retains any vitality is indeed open to question.” 764 F.2d at 814 n. 6. Regarding the first Ross factor, an action to rescind or cancel a contract or other instrument is traditionally one in equity. Phillips, 764 F.2d at 812 (“[T]he federal law is clear that an action for rescission is equitable, triable by the court without a jury.”). In fact, under Georgia law as well, the power to cancel or set aside a transaction is codified as a grant of equitable jurisdiction. See O.C.G.A. § 23-2-60 [743]*743(“Fraud will authorize equity to annul conveyances, however solemnly executed.”). Defendant does not contend otherwise.

Thus, a final determination regarding Defendant’s demand turns upon consideration of the second Ross factor, the remedy sought. Plaintiffs seek rescission of the ownership transfers, return of the stocks and securities to their deceased father’s estate, and reimbursement for any accumulated dividends relating to the stocks and securities. Plaintiffs also seek an award of attorney’s fees in connection with the bringing of this lawsuit. O.C.G.A. § 13-6-11 provides for the award of attorney’s fees where the “deféndant has acted in bad faith, has been stubbornly litigious, or has caused the plaintiff unnecessary trouble and expense....”

In making her demand for a jury trial, Defendant admits that an action to rescind ownership transfer agreements such as the ones at issue in this case is traditionally an action in equity. However, she argues that Plaintiffs’ additional claim for attorney’s fees is a claim for damages, thus affording her the right to a jury trial. Here, Defendant argues that Plaintiffs’ claim for attorney’s fees is so “inextricably intertwined” with their equitable claims as to preclude characterization of the instant action as one in equity. See Brief in Support of Defendant’s Demand for a Jury Trial, p. 9.

Plaintiffs, in contrast, contend that their additional claim for attorney’s fees does not change the nature of the underlying action from one which is equitable in nature. Characterizing their request for attorney’s fees as “incidental” to their equitable claims, Plaintiffs contend that Defendant is not thereby entitled to a jury trial. They further argue that the allowance of attorney’s fees and money awards which are restitutionary in nature has long been within the power given the courts of equity.

The Court finds that a jury trial is not mandated in the present case. It is clear that the allowance of attorney’s fees and other expenses as court costs has long been considered “part of the historic equity jurisdiction of the federal courts.” Sprague v. Ticonic Nat’l Bank, 307 U.S. 161, 59 S.Ct. 777, 83 L.Ed. 1184 (1939). In Sprague, the Court stated:

Plainly, the foundation for the historic practice of granting reimbursement for the costs of litigation other than the conventional taxable costs is part of the original authority of the chancellor to do equity in a particular situation.

Id. at 166, 59 S.Ct. at 780. In addition to having the power to award attorney’s fees as costs, courts of equity have long been empowered to provide monetary awards that are restitutionary in nature and thus do not amount to legal relief. Tull, 481 U.S. at 424, 107 S.Ct. at 1839 (“a court in equity may award monetary restitution as an adjunct to injunctive relief”).

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Related

Sprague v. Ticonic National Bank
307 U.S. 161 (Supreme Court, 1939)
Simler v. Conner
372 U.S. 221 (Supreme Court, 1963)
Ross v. Bernhard
396 U.S. 531 (Supreme Court, 1969)
Tull v. United States
481 U.S. 412 (Supreme Court, 1987)
Rogers v. Georgia Ports Authority
358 S.E.2d 855 (Court of Appeals of Georgia, 1987)
Brown v. Baker
398 S.E.2d 797 (Court of Appeals of Georgia, 1990)
King v. Pate
112 S.E.2d 589 (Supreme Court of Georgia, 1960)
Bankers Fidelity Life Insurance v. Oliver
126 S.E.2d 887 (Court of Appeals of Georgia, 1962)
Bowman v. Poole
91 S.E.2d 770 (Supreme Court of Georgia, 1956)
Griffin v. United States Postal Service
635 F. Supp. 190 (N.D. Georgia, 1986)
Wright v. Southeast Alabama Gas District
376 F. Supp. 780 (M.D. Alabama, 1974)
Kaplus v. Phillips
474 U.S. 1059 (Supreme Court, 1986)

Cite This Page — Counsel Stack

Bluebook (online)
765 F. Supp. 741, 1991 U.S. Dist. LEXIS 7450, 1991 WL 94369, Counsel Stack Legal Research, https://law.counselstack.com/opinion/wheeless-v-gelzer-gand-1991.