Opinion
Civil Action No. 03-PC-1621 (BNB).
September 28, 2004
MEMORANDUM OPINION AND ORDER
This is a declaratory judgment action involving a marine insurance contract. The matter before the court is Plaintiff's Motion to Deny Defendant's Request for Jury Trial [filed February 23, 2004]. The parties consented to disposition of this action by a United States Magistrate Judge under 28 U.S.C. § 636(c) on March 23, 2004. The motion is fully briefed and I have determined that oral argument would not aid the resolution of this matter.
I.
Plaintiff ING Groep, NV ("ING"), a corporation organized and existing under the laws of the United Kingdom, filed a complaint for declaratory judgment in the United States District Court for the District of Oregon on April 25, 2002 seeking a declaration of non liability for certain alleged losses suffered by defendant Stegall, the holder of a marine insurance policy issued by ING, when Stegall's sailboat, "The DreamChaser," partially sank and sustained extensive hull damage. The sailboat was subsequently declared a constructive total loss. ING denied Stegall's claim for payment in the amount of $135,000 based on its determination that Stegall failed to exercise due diligence to maintain the vessel in seaworthy condition, as required by the terms of the policy.
Defendant, who is pro se, filed his Answer on May 7, 2003, denying that the vessel was unseaworthy at the time of the incident. The action was transferred to the United States District Court for the District of Colorado on August 6, 2003, pursuant to 28 U.S.C. § 1404(a), because the defendant and some of the witnesses reside in Colorado.
Defendant filed a "Counterclaim" in this court on September 16, 2003 asking that judgment be entered in his favor in the policy amount of $135,000 because the damage to the DreamChaser was not related to her seaworthiness. Defendant requested a jury trial in the Scheduling Order filed on September 26, 2003, and in the Preliminary Pretrial Order filed on February 23, 2004. See Scheduling Order, at 6; Preliminary Pretrial Order, at 6. Defendant later clarified that he is requesting a jury trial for his counterclaim only. See defendant's response to Plaintiff's Motion to Deny Defendant's Request for Jury Trial, filed March 16, 2004.
I liberally construe defendant's compulsory counterclaim(s) as sounding in contract, and possibly, tort. See Haines v. Kerner, 404 U.S. 519 (1972) (holding that pro se pleadings are held to less stringent standards than those drafted by lawyers).
I note that defendant filed his counterclaim and jury trial demand more than four months after he filed his Answer. Plaintiff does not move to strike the counterclaim and jury demand as untimely but does argue that the court should not allow defendant to amend his Answer to include the omitted counterclaim because the requirements of Fed.R.Civ.P. 13(f) have not been satisfied. Rule 13(f) provides that a defendant may be allowed to amend his Answer to include an omitted counterclaim when the omission was due to "oversight, inadvertence, or excusable neglect" or "when justice requires." The issue of the timeliness of the counterclaim and jury demand has not been fully briefed and will be decided at a later date. For purposes of this Memorandum Opinion and Order only, I assume, without deciding, that defendant has asserted a timely counterclaim and jury demand.
Plaintiff asks the court to deny defendant's request for a jury trial on his counterclaim(s) because plaintiff's Fed.R.Civ.P. 9(h) election to proceed under the court's admiralty jurisdiction requires that the entire action be tried to the court.
II.
The federal district courts have original jurisdiction of "[a]ny civil case of admiralty or maritime jurisdiction, saving to suitors in all cases all other remedies to which they are otherwise entitled." 28 U.S.C. § 1333(1). A suit seeking a declaratory judgment as to the rights and responsibilities of parties to a marine insurance contract is within the federal district court's admiralty jurisdiction. See New England Mutual Marine Ins. Co. v. Dunham, 78 U.S. 1 (1870); Windsor Mount Joy Mut. Ins. Co. v. Giragosian, 57 F.3d 50, 54 (1st Cir. 1995); New Hampshire Ins. Co. v. Martech U.S.A., Inc., 993 F.2d 1195, 1198 (5th Cir. 1993); Continental Cas. Co. v. Anderson Excavating Wrecking Co., 189 F.3d 512, 517 (7th Cir. 1999). However, such suits may also be pursued in an ordinary civil action pursuant to the "savings to suitors" provision. See Atlantic Gulf Stevedores, Inc. v. Ellerman Lines, Ltd., 369 U.S. 355, 359 (1962).
Fed.R.Civ.P. 9(h) sets forth the procedure for a party to invoke the federal court's admiralty jurisdiction when a complaint can be characterized as an admiralty action or a general civil suit. See 5A Wright Miller, Federal Practice and Procedure: Civil 3d § 1313, at 367-68 (2004). Rule 9(h) states: "A pleading or count setting forth a claim for relief within the admiralty and maritime jurisdiction that is also within the jurisdiction of the district court on some other ground may contain a statement identifying the claim as an admiralty or maritime claim for the purposes of Rules 14(c), 38(e), 82 and the Supplemental Rules for Certain Admiralty and Maritime Claims."
Plaintiff alleges that this case "is an admiralty and maritime cause within the meaning of Rule 9(h) of the Federal Rules of Civil Procedure, and this Court has jurisdiction pursuant to Title 28 of the United States Code, sec. 1333." (Compl., ¶ 3) The plaintiff's statement that the action is one in admiralty within the meaning of Rule 9(h) is sufficient to invoke the court's admiralty jurisdiction. See Bodden v. Osgood, 879 F.2d 184, 186 (5th Cir. 1989); Wingerter v. Chester Quarry Co., 185 F.3d 657, 666 (7th Cir. 1998) (citing cases).
Generally, admiralty claims are decided in a non-jury trial. See Natasha, Inc. v. Evita Marine Charters, Inc., 763 F.2d 468, 470 (1st Cir. 1985) (recognizing that there is "no right to a jury trial in admiralty"); Bodden, 879 F.2d at 186 (recognizing that "a plaintiff in an admiralty action is not entitled to a jury trial"); Wingerter, 185 F.3d at 667 ("[A] plaintiff that invokes admiralty jurisdiction is not entitled to a jury trial"); Koch Fuels, Inc. v. Cargo of 13,000 Barrels of No. 2 Oil, 704 F.2d 1038, 1041 (8th Cir. 1983) (recognizing that the plaintiff's election to proceed in admiralty under Rule 9(h) generally precludes a jury trial); Ghotra v. Bandila Shipping, Inc., 113 F.3d 1050, 1054 (9th Cir. 1997) (stating that "there is no right to jury trial if general admiralty jurisdiction is invoked"); see, also, Fed.R.Civ.P. 9(h), Advisory Committee Notes (stating that there is no right to jury trial in admiralty suits except as provided by statute); Fed.R.Civ.P. 38(e) (providing that the Federal Rules of Civil Procedure shall not be construed to create a right to a jury trial in an admiralty or maritime case within the meaning of Fed.R.Civ.P. 9(h)).
When the plaintiff's admiralty claim triggers a compulsory legal counterclaim and jury demand, the federal courts are divided about whether the defendant is entitled to a jury trial on his counterclaim.
Although the Tenth Circuit has not addressed the question, the majority of courts to do so have held that the plaintiff's Rule 9(h) election to proceed under admiralty law governs the entire proceeding and precludes the defendant's right to a jury trial which may otherwise exist. See Harrison v. Flota Mercante Grancolombiana, S.A., 577 F.2d 968, 986-88 (5th Cir. 1978); Royal Ins. Co. of America v. Hansen, 125 F.R.D. 5, 9 (D.Mass. 1988); Norwalk Cove Marina, Inc. v. S/V/ Odysseus, 100 F.Supp.2d 113, 114 (D.Conn. 2000); Windsor Mount Joy Mutual Ins. Co. v. Johnson, 264 F.Supp.2d 158, 162 (D.N.J. 2003); Matter of Armatur, 710 F.Supp. 404, 405 n. 4 (D.P.R. 1989); St. Paul Fire and Marine Ins. Co. v. Holiday Fair, Inc., 1996 WL 148350 at *2 (S.D.N.Y. 1996); Jefferson Ins. Co. of New York, 2001 WL 484040 at *2 (D. Maine 2001); Underwriters Subscribing to Certif. of Ins. No. 98B1/800 . . . v. On the Loose Travel, Inc., 1999 WL 694212 at *1 (S.D.Fla. 1999). These courts reason that allowing the defendant to defeat the plaintiff's right to designate the action as an admiralty case by demanding a jury trial would undermine the purposes of Rule 9(h). Id.
Other courts have concluded that a defendant's Seventh Amendment right to a jury trial on his legal counterclaim must be preserved when a non maritime ground of federal jurisdiction exists. See Wilmington Trust v. United States Dist. Ct. for the Dist. of Hawaii, 934 F.2d 1026, 1031-32 (9th Cir. 1991); Sphere Drake Ins. PLC v. J. Shree Corp., 184 F.R.D. 258, 260-61 (S.D.N.Y. 1999); Reliance Nat'l Ins. Co. (Europe) Ltd. v. Hanover, 222 F.Supp.2d 110, 115-116 (D.Mass. 2002); Progressive Northern Ins. Co. v. Bachman, 314 F.Supp.2d 820, 833 (W.D. Wis. 2004); Canal Barge Co. v. Commonwealth Edison Co., 2002 WL 206054 at **3-4 (N.D.Ill. 2002).
Although it is a close and difficult question, I am persuaded by the majority view. If plaintiff had not elected to proceed under the court's admiralty jurisdiction, the court would have jurisdiction over the plaintiff's claims and the counterclaim(s) under the diversity jurisdiction statute, 28 U.S.C. § 1332, and either party would have a right to a jury trial under the Seventh Amendment. There is no constitutional right to a jury trial in a maritime action, however. See Fitzgerald v. U.S. Lines, Inc., 374 U.S. 16, 20 (1963) (recognizing that the Constitution neither requires nor forbids a jury trial in admiralty cases); see, also, Harrison, 577 F.2d at 986 ("[I]n the suit in admiralty there is no right to jury trial except as provided by statute.")
Moreover, resolution of the plaintiff's claims and the defendant's counterclaim(s) hinges on the determination of ING's obligations, if any, with regard to the marine insurance contract in question. The plaintiff's right to have its claims decided in a non-jury trial will be lost if the defendant is granted a jury trial on his closely intertwined counterclaim(s) because the entire case will have to be tried to the jury, see Wilmington Trust, 934 F.2d at 1032; or, if the claims and counterclaim(s) are severed, the common operative factual issues will be tried to the jury first which will effectively dispose of all or part of the plaintiff's action. See, e.g., Royal Ins. Co. of America, 125 F.R.D. at 9 (denying defendant a jury trial on his legal counterclaim asserted in action designated by plaintiff as one in admiralty under Rule 9(h) because the claims and counterclaims arose from a common set of facts and were based on the same maritime insurance contract); Windsor Mount Joy Mut. Ins. Co., 264 F.Supp.2d at 162-63 (same); Jefferson Ins. Co. of New York, 2001 WL 484040 at *2 (same).
Generally, when a case involves both a jury trial and a bench trial, any material factual issues which are central to both must be first tried to the jury so that the litigant's Seventh Amendment rights are not foreclosed. See Dairy Queen, Inc. v. Wood, 369 U.S. 469, 472-73 (1962).
The circumstances presented in this case are thus distinguishable from the facts in Koch Fuels, Inc. There, the plaintiff initiated an in rem action seeking a declaration of ownership and possession of a cargo of oil and invoked the court's admiralty jurisdiction pursuant to Rule 9(h). Koch Fuels, Inc., 704 F.2d at 1039. The defendant counterclaimed for breach of contract and requested a jury trial. Id. The district court severed the counterclaim and granted defendant a jury trial. Id. On appeal, the plaintiff claimed that the trial court erred in granting a jury trial on the counterclaim after plaintiff designated its claim as one in admiralty. Id. The Eighth Circuit affirmed the district court's decision, concluding that a trial court must preserve a litigant's Seventh Amendment right to a jury trial whenever possible, and noting that neither the Constitution, nor federal statute or federal rule of procedure forbids jury trials in admiralty cases. Id. at 1041-42. The Eighth Circuit held that severance of the claim and counterclaim was appropriate under Fed.R.Civ.P. 42(b) because the plaintiff's action in rem was independent of the defendant's breach of contract counterclaim; thus, both parties could prevail on their respective claims before different triers of fact "without prejudicing the other party or arriving at inconsistent results." Id. at 1042. Here, defendant could not prevail on his legal counterclaim(s) without prejudicing the plaintiff because the claims and counterclaims are based on the same marine insurance policy and arise from a common set of facts. Thus, defendant is not entitled to a jury trial on his counterclaim(s).
The Supreme Court's decision in Fitzgerald does not compel a different result. In that case, the plaintiff seaman sued his employer for negligence under the Jones Act, 46 App. U.S.C.A. § 688, and for failure to provide maintenance and cure after he injured his back while working on his employer's ship. Fitzgerald, 374 U.S. at 17. The trial court granted the plaintiff a jury trial for the Jones Act claim, but held a bench trial on the maintenance and cure claim. Id. The Supreme Court held that when claims under the Jones Act and for maintenance and cure arise from one set of facts, the plaintiff is entitled to have both claims tried to the jury in the interests of fairness and judicial economy. Id. at 18-21. Here, the plaintiff has invoked the court's admiralty jurisdiction as to all claims and I will not nullify that election by granting the defendant a jury trial on his closely intertwined counterclaim(s).
I respectfully disagree with the Ninth Circuit's decision in Wilmington Trust. In that case, the Ninth Circuit held that the union was entitled to a jury trial on its legal counterclaims which were properly before the federal district court under the general civil jurisdictional statutes, notwithstanding plaintiff's Rule 9(h) election to proceed under the court's admiralty jurisdiction for its in rem claim to foreclose a first preferred ship mortgage against the vessel and related in personam claim against the vessel's owner. Wilmington Trust, 934 F.2d at 1032. The Ninth Circuit concluded that the Union's Seventh Amendment right to a jury trial must be given effect over plaintiff's "preference" for a bench trial when the parties' interests conflicted, citing Beacon Theatres, Inc. v. Westover, 359 U.S. 500, 510-11 (1959) and Fed.R.Civ.P. 38(a). Id. at 1031-32.
In Beacon Theatres, Inc., 359 U.S. at 502-03, the plaintiff sued for declaratory and injunctive relief, claiming non liability to the defendant under the Sherman Antitrust Act ("Act"). The defendant counterclaimed for treble damages under the Act and demanded a jury trial. Id. at 503. The district court held a bench trial on the plaintiff's equitable claims before trying the defendant's counterclaim to the jury. Id. The claims and counterclaim were based on some common factual issues. Id. at 503-04. The Supreme Court found that the district court's decision deprived the defendant of his constitutional right to a full jury trial on his counterclaim. Id. at 508. The Court held that where legal and equitable causes are asserted in the same action, a federal district court must endeavor to preserve a litigant's constitutional right to a jury trial. Id. at 510-11 (stating that the "right to a jury trial of legal issues [cannot] be lost through prior determination of equitable claims."). Beacon Theatres was not a maritime case involving a Rule 9(h) election and is therefore factually distinguishable from the present action. As discussed previously, the Supreme Court has recognized that there is no constitutional right to a jury trial in an admiralty case. Fitzgerald, 374 U.S. at 20.
Further, although Fed.R.Civ.P. 38(a) provides that the Seventh Amendment right to a jury trial "shall be preserved inviolate," the Advisory Committee Notes to Fed.R.Civ.P. 9(h) support my determination that preclusion of a jury trial on the defendant's legal counterclaim(s) is an intended procedural consequence of the plaintiff's invocation of the court's maritime jurisdiction. See Fed.R.Civ.P. 9(h), Advisory Committee Notes (stating "[o]ne of the important procedural consequences [of Rule 9(h)] is that in the civil action either party may demand a jury trial, while in the suit in admiralty there is no right to jury trial except as provided by statute.") Accordingly, it is
HEREBY ORDERED that Plaintiff's Motion to Deny Defendant's Request for Jury Trial [filed February 23, 2004] is GRANTED. This admiralty action will be tried in its entirety, if necessary, in a non-jury trial.