United States District Court, Southern District of New York
March 29, 2001
URBAN OUTFITTERS, INC., PLAINTIFFS
166 ENTERPRISE CORP. AND IG SECOND GENERATION PARTNERS, L.P., DEFENDANTS. IG SECOND GENERATION PARTNERS, L.P., THIRD-PARTY PLAINTIFF V. MASTERBUILDERS, POMPEI A.D., WAI-TONG CHAN, VIKRANT S. SAMPAT, P.E., AND STEVEN S. SHORE P.E., THIRD-PARTY DEFENDANTS.
The opinion of the court was delivered by: John E. Sprizzo, United States District Judge.
MEMORANDUM OPINION AND ORDER
The above-captioned actions come before the Court on Defendant IG
Second Generation Partners, L.P.'s ("IG Second") Motion to Strike
Plaintiff Urban Outfitters, Inc.'s ("Urban") Jury Demand. For the reasons
that follow, Defendant's motion is denied.
These actions center upon allegations by Plaintiff-subtenant Urban that
Defendant-landlord IG Second and Defendant-tenant 166 Enterprise Corp.
("166 Enterprise") breached various agreements between the parties in
providing Urban with a commercial property at 166 Second Avenue, New
York, New York ("the Property") that was unsuitable for Urban's
purposes. See Affidavit of David M. Cassidy dated March 15, 2001 ("Cassidy
Aff."), Exhibit ("Exh.") F, Complaint dated October 14, 1998 ("Cmplt.")
at ¶¶ 9-16. In addition to Plaintiff's claims, Defendants have
asserted cross-claims against each other pursuant to an indemnification
agreement between them, and Defendant 166 Enterprise has asserted a
counterclaim against Urban alleging failure to pay rent. Defendant IG
Second has also impleaded several Third-Party Defendants hired by Urban
to work on the premises, including Urban's general contractor, structural
engineer, engineer, architect, and designer, alleging that such
individuals are responsible for the unsuitability of the premises. See
Affidavit of Geoffrey A. Mason dated February 6, 2001 ("Mason Aff."),
Exh. C., Answer of IG Second dated November 11, 1998 at ¶ 9; Mason
Aff., Exh. D., Answer of 166 Enterprises dated December 8, 1998 at
¶¶ 9-14; Third-Party Complaint by IG Second dated October 29, 1999.
Several of these Third-Party Defendants have in turn asserted
counterclaims against IG Second. See e.g., Counterclaims of Defendants
Vikrant K. Sampat and Wai-Tong Chan dated June 16, 2000 and July 5,
2000. Both Urban and Third-Party Defendant Pompei, the property
designer, have made jury demands for all issues triable by a jury. See
Cassidy Aff., Exh. G, Urban's Demand for Trial by Jury dated November
20, 1998; Cassidy Aff., Exh. I, Pompei's Amended Answer to Amended
Third-Party Complaint dated June 26, 2000, at 8.
Most relevant to the instant motion, on July 31, 1996, Defendants IG
Second and 166 Enterprise entered into a lease for the Property ("the
Prime Lease") which contained the following clause:
It is mutually agreed by and between Owner and Tenant
that the respective parties hereto shall and they
hereby do waive trial by jury in any action,
proceeding or counterclaim brought by either of the
parties hereto against the other (except for personal
injury or property damage) on any matters whatsoever
arising out of or in any way connected with this
lease, the relationship of Owner and Tenant, Tenant's
use of or occupancy of said premises, and any
emergency statutory or other statutory remedy.
Cassidy Aff., Exh. B, Prime Lease at ¶ 25.
The term "Tenant" is not specifically defined in the Prime Lease,
however, the Prime Lease concludes with a recital
stating, "In Witness
Whereof, Owner and Tenant have respectively signed and sealed this
lease," which is followed by signatures of Lloyd Goldman, as President of
IG Second, and Miriam Ben-Moha as President of 166 Enterprise. See Prime
Lease at 82.
Subsequently, on December 19, 1997, 166 Enterprises entered into a
Sublease Agreement with Urban ("the Sublease Agreement") which in part
This sublease is subordinate to all of the terms,
covenants and provisions contained in the Prime Lease
. . . except Articles 2, 40, 41, 53, and 78 . . . and
to the extent . . . such terms, covenants, conditions
and provisions have been modified [by the Sublease
Agreement or other agreements between Urban, IG Second
and 166 Enterprise].
Cassidy Aff., Exh. C, Sublease Agreement at ¶ 10. Articles 2, 40,
41, 53 and 78 are not relevant to this dispute. See Prime Lease at
¶ 2, 40, 41, 53, 78.
Urban also entered into two agreements with both 166 Enterprises and IG
Second, an Agreement of Non-Disturbance and Consent dated February 11,
1998 ("the Consent Agrement") and an Indemnity Agreement dated April 15,
1998 ("the Indemnity Agreement"). See Cassidy Aff., Exh. D, Consent
Agreement; Cassidy Aff., Exh. E, Indemnification Agreement. In
particular, the Indemnity Agreement provided that "[e]xcept as
specifically modified herein, the Sublease and the Consent Agreement
remain unmodified and in full force and effect." Mason Aff., Exh. I,
Indemnity Agreement at ¶ 1.
Courts are to strictly construe jury waiver clauses, as the right to a
jury trial is fundamental and protected by the Seventh Amendment. See
Gargiulo v. DelSole, 769 F.2d 77, 79 (2d Cir. 1985). This right can only
be waived knowingly and intentionally, and waiver is not lightly inferred
or extended. See id. As such, the burden of proving an intentional waiver
is upon the party asserting waiver, here Defendant IG Second. See
Sullivan v. Ajax Navigation Corp., 881 F. Supp. 906, 910 (S.D.N.Y.
With respect to the instant motion, the Second Department's decision in
Cantor v. Techlease, 59 A.D.2d 699 (N.Y. App. Div. 1977) is directly
relevant and dispositive. As happened here, the subtenant in Cantor
agreed only to a general incorporation of prime lease terms agreed upon
by the original tenant and its landlord. See id. at 699. In finding the
jury waiver in the prime lease ineffective against the subtenant, the
Cantor Court made particular note that the prime lease agreement
"provided only that the `lessor and lessee' waived a jury trial in any
action `by either of them against the other.'" Accordingly, the Cantor
Court found that a general incorporation of these terms was insufficient
to support the inference that plaintiff had voluntarily waived its
fundamental right to a jury trial. See id. at 700.
As in Cantor, the Prime Lease here contains a waiver clause which
provides specifically that the "Owner and Tenant" waive a jury trial "in
any action, proceeding or counterclaim brought by either of the parties
hereto against the other." Prime Lease at ¶ 25 (emphasis added).
Such language is nearly identical to that in Cantor, and this Court
similarly cannot imply a waiver of a fundamental right through the
general incorporation of these terms into the Sublease Agreement.*fn1
Moreover, almost all authorities cited by defendant to support its
position of waiver are easily distinguishable, as they either involve
direct disputes between signatory landlords and tenants over prime leases
that contain wavier clauses, or disputes in which a party is not a
subtenant, but instead is an assignee who has been fully assigned rights
under a prime lease.*fn2 See Sherry Assocs. v. Sherry-Netherland. Inc.,
273 A.D.2d 14, 16 (N.Y. App. Div. 2000); Pratt v. Trustees of the
Sailors' Snug Harbor, 189 N.Y.S.2d 312, 312 (N.Y. App. Div. 1959); Leav
v. Weitzner, 268 A.D. 466, 467 (N.Y. App. Div. 194 4) (prime tenancies);
see also Kimi Jewelers, Inc. v. Advance Burglar Alarm Sys., Inc.,
161 A.D.2d 273, 273 (N.Y. App. Div. 1990); Fay's Drug Co. v. P&C Prop.
Coop., Inc., 51 A.D.2d 887, 887 (N.Y. App. Div. 1976) (assignments).
For the foregoing reasons, Defendant IG Second's Motion to Strike
Plaintiff Urban's Jury Demand shall be and is hereby denied.