Jury Trial Waiver in Escrow Agreement Governed Suit on Related Purchase Agreement

On November 21, 2017, the First Department issued a decision in Highbridge House Ogden LLC v. Highbridge Entities LLC, 2017 NY Slip Op. 08187, holding that a jury trial waiver in an escrow agreement applied to an action based on a related purchase agreement, explaining:

The plain terms of the Purchase Agreement and the Escrow Agreement clearly evince the parties' intent to waive their rights to a trial by jury. The right to a jury trial may be waived in an instrument other than that representing the agreement upon which the action is founded.

The Escrow Agreement had a broad, clear and complete waiver with respect to "ANY ACTION OR PROCEEDING ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT," and the express terms of both agreements memorialize the parties' intent that the two documents be read in tandem. The Purchase Agreement provides that the Escrow Agreement, which was attached as an exhibit, was "hereby made part hereof." It also provided that all exhibits, including the Escrow Agreement, were to be "incorporated into this [Purchase] Agreement as if fully set forth herein." The Escrow Agreement provided that it and the Purchase Agreement "contain[ed] the entire agreement and understanding between the parties." Regardless, even if the parties had not intended for the Purchase Agreement and the Escrow Agreement to be read together, this dispute, concerning return of the escrow funds, "arises out of" and is "in connection with" the Escrow Agreement. The broad jury waiver provision in the Escrow Agreement clearly applies.

(Internal quotations and citations omitted) (emphasis added).

One of the reasons people choose to have their contracts governed by New York law is that it is predictable and enforces the terms to which the parties agreed. However, as this decision shows, not every case is simple. With our focus on litigation in the Commercial Division of the New York state courts, we have participate in myriad cases involving the interpretation of contracts under New York law. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you face a tough question of New York contract law.