Opinion ID: 2638908
Heading Depth: 2
Heading Rank: 1

Heading: New Mexico Follows the Beacon Theaters Approach

Text: {5} In New Mexico, as under the federal constitution, there is a constitutional right to trial by jury where the remedy sought is legal, rather than equitable. N.M. Const. art. II, § 12; Strasser, 99 N.M. at 789, 664 P.2d at 987. Where a case involves both legal and equitable claims, the court must decide the order in which the claims will be heard. Plaintiff claims New Mexico follows the approach of Beacon Theaters, which held that when a case involves legal and equitable claims and deciding the equitable claims first would infringe an individual's Seventh Amendment right to have a jury decide the factual issues underlying the legal claims, the judge's traditional discretion to hear equitable claims first is narrowly limited in light of the constitutional considerations. Beacon Theaters, 359 U.S. at 503-04, 508. In Beacon Theaters, the Supreme Court vacated a district court's order which it concluded deprived the defendant of a jury trial on the legal issues raised by its counter and cross-claims arising from the original suit, holding that [o]nly under the most imperative circumstances . . . can the right to a jury trial of legal issues be lost through prior determination of equitable claims. Id. at 510-11. In doing so, the Court emphasized that [m]aintenance of the jury as a fact-finding body is of such importance and occupies so firm a place in our history and jurisprudence that any seeming curtailment of the right to a jury trial should be scrutinized with the utmost care. Id. at 501 (quoted authority omitted). The Supreme Court later applied this same approach to a shareholder's derivative action, holding there was a right to a jury trial on those issues to which the corporation, had it brought the action itself, would have had the right to a jury trial. Ross v. Bernhard, 396 U.S. 531, 532-38 (1970). {6} New Mexico appellate courts have recognized that a party's right to a jury trial under the state constitution could be infringed if, in a case involving both equitable and legal claims, the equitable claims are decided before the legal claims. Scott v. Woods, 105 N.M. 177, 183, 730 P.2d 480, 486 (Ct. App.), cert. quashed, 105 N.M. 26, 727 P.2d 1342 (1986); see also Peay v. Ortega, 101 N.M. 564, 565, 686 P.2d 254, 255 (1984) (holding that after parties stipulated to jury trial, case could not be withdrawn from the jury simply because equitable issues were involved, implying that to do so could infringe the right to jury trial on material factual issues underlying the legal claims). We applied the Beacon Theaters rule for the first time in Strasser, 99 N.M. at 789-90, 664 P.2d at 987-88, when we determined that parties in an equitable proceeding had a right to a jury trial when their counterclaim involved legal issues. The Court of Appeals subsequently extended that principle when it adopted the reasoning of Ross, which stated that where equitable and legal issues are joined in the same action, there is a right to jury trial on the legal claims which must not be infringed either by trying the legal issues as incidental to the equitable ones or by a court trial of a common issue existing between the claims. Ross, 396 U.S. at 537-38; Woods, 105 N.M. at 181-83, 730 P.2d at 484-86. The Court of Appeals emphasized that in determining whether a jury trial is necessary, the appropriate focus is not the character of the overall action, but the nature of the individual issues to be tried. Woods, 105 N.M. at 183, 730 P.2d at 486 (applying the Seventh Amendment analysis from Ross, 396 U.S. at 537-38, to jury trial rights under the New Mexico Constitution). Thus, when equitable and legal claims present a common issue of fact which is material to the disposition of each claim, the legal claim must be submitted to a jury before the equitable claim is decided. See Beacon Theaters, 359 U.S. at 503-04, 508; Woods, 105 N.M. at 181-85, 730 P.2d at 484-88. {7} However, in McAdams, decided just four months after Woods, this Court held that when legal and equitable issues are joined in a lawsuit the trial court should first decide the equitable issues, and then if any independent legal issues remain, those issues may be tried to a jury upon appropriate request. 105 N.M. at 97, 728 P.2d at 1366. We recognize this statement in McAdams is inconsistent with Strasser and Woods. McAdams also failed to mention Woods and mischaracterized Strasser as standing for the proposition that when legal and equitable claims are joined in a proceeding, the equitable claims must be heard first. McAdams, 105 N.M. at 97, 728 P.2d at 1366. To the extent that McAdams suggests a trial court must always consider equitable claims before legal claims, thereby diverging from the Beacon Theater rule, we overrule McAdams. A party is entitled to have a jury determine any disputed fact issues that are material to disposing of both the equitable and legal claims. {8} The case before us is illustrative. Once Plaintiff raised her two equitable claims as a means of foreclosing Defendant's statute of limitations defense, the trial court had to first determine whether either equitable claim required resolution of disputed facts that were material to the medical negligence claim. If it was possible to dispose of the equitable claims without resolving disputed issues of fact common to both claims, the court properly exercised its discretion in hearing the equitable claims, even though doing so resulted in a dismissal of Plaintiff's legal claim. As discussed below, Plaintiff's equitable estoppel claim did not raise factual issues in common with the legal claim; therefore, the trial court did not err in exercising its discretion to decide the equitable estoppel claim. While the fraudulent concealment claim did raise some factual issues in common with the legal claim, the trial court properly exercised its discretion in deciding the fraudulent concealment claim because the common fact issues were not material to whether Plaintiff knew of her cause of action or could have discovered it by exercising reasonable diligence during the statutory limitations period. {9} As a preliminary matter, however, we must address Plaintiff's argument that in addition to infringing on her jury trial rights by hearing the equitable claims first, the trial court erred in granting summary judgment to Defendant on his claim that he was a public employee at all times relevant to Plaintiff's claim of medical negligence. If Defendant was not a public employee, and therefore not covered by the two-year statute of limitations, Plaintiff's equitable claims would, of course, be irrelevant.