DeFelice v. American Intern. Life Assur. Co. of New York

• Decision Date: 21 April 1997
• Docket Number: No. 540,D,540
• Citation: 112 F.3d 61
• Parties: Susan DeFELICE, Plaintiff-Appellee, v. AMERICAN INTERNATIONAL LIFE ASSURANCE COMPANY OF NEW YORK, Defendant-Appellant. ocket 96-7512.
• Court: U.S. Court of Appeals — Second Circuit

Page 61

112 F.3d 61

Susan DeFELICE, Plaintiff-Appellee, v. AMERICAN INTERNATIONAL LIFE ASSURANCE COMPANY OF NEW YORK Defendant-Appellant.

No. 540, Docket 96-7512.

United States Court of Appeals Second Circuit.

Argued Dec. 4, 1996.

Decided April 21, 1997.

Mark E. Schmidtke, Boca Raton, FL (Leonard A. Sheft, Edward Hayum, Howard K. Fishman, Sheft, Golub & Kamlet, New York City; Jaime Ruth Ebenstein, J.R. Ebenstein Consultants, Boca Raton, FL; Steven P. Del Mauro, Del Mauro & Associates, Morristown, NJ, of counsel), for Defendant-Appellant.

Norman A. Senior, New York City (Jeffery H. Sheetz, Gerard J. Costello, Greenfield Stein & Senior, L.L.P., of counsel), for Plaintiff-Appellee.

Before NEWMAN, Chief Judge, OAKES and WINTER, Circuit Judges.

OAKES, Senior Circuit Judge.

Appellant American International Life Assurance Company of New York ("American") appeals from a judgment entered April 3, 1996, after jury trial, in the United States District Court for the Southern District of New York, Allen G. Schwartz, Judge, in favor of Plaintiff-Appellee Susan DeFelice. Following the death of her husband, Kent DeFelice, Ms. DeFelice sued American under ERISA, 29 U.S.C. §§ 1001, et seq., asserting that because her husband had died by choking, she was entitled to recovery in the amount of $1 million on his accidental death policy. American contended that Mr. DeFelice died from a massive coronary, which does not constitute "accidental death" within the meaning of the policy. On appeal, American asserts that the district court erred in four respects: 1) by submitting the action seeking recovery of benefits under an ERISA plan to a jury; 2) by expanding the evidentiary record at trial beyond the scope of the administrative record available to the ERISA Appeals Committee; 3) by not admitting the entire administrative record into evidence; and 4) by denying American's request for judgment as a matter of law.

As to the first assertion, we remand to the district court for findings consistent with this opinion. We affirm the court on the second point of appeal, reverse on the third, and withhold decision on the fourth in light of the remand.

I Facts

We need not recount the extensive factual and medical record related to this trial in order to decide the legal points. We briefly set forth the basis for the dispute, and the procedural history of the case.

Kent DeFelice died on September 10, 1993, while on a business trip in Mexico City. He was sitting at the breakfast table with his colleagues when suddenly, apparently without warning, he collapsed onto the table. After several attempts to administer CPR, he was pronounced dead by an emergency medical service some time later. Drs. Garcia Rojas, Noguez Blancas and Sosa Guadarrama, the Mexican doctors who performed Mr. DeFelice's autopsy, noted the presence of "pink liquid" in the stomach and trachea along with obstruction in the trachea, and Dr. Rojas stated his conclusion that the death was due to choking. Although Dr. Rojas noted that Mr. DeFelice's heart was enlarged, he stated that many athletes had such enlarged hearts, and that the condition was not uncommon.

Ms. DeFelice submitted her claim for accidental death benefits on October 25, 1993. American had cause to doubt the conclusions of the autopsy report, however, and thus initiated its own investigation on November 4, 1993. The results of the preliminary investigation led American to believe that Mr. DeFelice had not died of choking, and thus it sought to obtain complete medical records as well as tissue samples. After reviewing Mr. DeFelice's records, American's in-house experts stated that the enlargement of the heart was likely due to a cardio-pulmonary condition, and indicated that it was highly unlikely that Mr. DeFelice had choked to death. They based this opinion on the absence of any gastric contents and the testimony of witnesses who said that he had had nothing but coffee to eat or drink that morning. ¹ The American experts thus opined that Mr. DeFelice had died of a heart attack. Because heart attacks are not considered "accidents" under the American accidental death policy, American denied Ms. DeFelice's claim.

The case proceeded to an ERISA Appeals Committee consisting entirely of American employees, which ruled in favor of American. Ms. DeFelice then filed suit in federal court pursuant to 29 U.S.C. §§ 1001, et seq.

On December 9, 1994, Plaintiff made a motion for trial by jury. On November 13, 1995, over American's objections, Judge Schwartz granted that motion. The court examined the rulings of the eight other circuits which had addressed the issue of whether a right to trial by jury exists in ERISA claims, and determined, contrary to those opinions, that it did exist. The case then proceeded to trial, and the jury held in Ms. DeFelice's favor.

American challenges Judge Schwartz's decision to hold the trial by jury, as well as the decisions to admit evidence not in front of the ERISA Appeals Committee, and not to admit certain other evidence which was before the Committee. American also asserts that it was entitled to judgment as a matter of law.

II Discussion

A. The District Court's Grant of a Jury Trial.

1. Trial By Jury

Appellant American's first argument is that an action for ERISA plan benefits under § 502(a)(1)(B) of ERISA, 29 U.S.C. § 1132(a)(1)(B), is equitable in nature and contains no right to trial by jury. American cites to our recent decision in Sullivan v. LTV Aerospace and Defense Co., 82 F.3d 1251 (2d Cir.1996), which came down approximately six months after the district court's opposite ruling on this point. ² Appellant also argues that Sullivan 's holding is retroactive, and that the jury's verdict must therefore be vacated and the case remanded to the district court for bench trial. Plaintiff responds that her claim is more properly characterized as a legal claim for breach of contract, with the relief of money damages, and that she therefore has an absolute right to trial by jury under the Seventh Amendment. Chauffeurs, Teamsters and Helpers Local No. 391 v. Terry, 494 U.S. 558, 110 S.Ct. 1339, 108 L.Ed.2d 519 (1990); Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 109 S.Ct. 2782, 106 L.Ed.2d 26 (1989); Ben Cooper, Inc. v. Insurance Co. of Pennsylvania (In re Ben Cooper, Inc.), 896 F.2d 1394 (2d Cir.1990).

American's reliance upon Sullivan is well-placed. Sullivan made clear that cases involving ERISA benefits are inherently equitable in nature, not contractual, and that no right to jury trial attaches to such claims. Sullivan, 82 F.3d at 1257-59. Though Sullivan and most of the cases cited in footnote 2 rejected a jury trial where the issue was whether a plan administrator's decision was arbitrary and capricious, and the inappropriateness of this issue for jury consideration was part of the rationale of Sullivan, see 82 F.3d at 1258 (citing Berry v. Ciba-Geigy Corp., 761 F.2d 1003, 1006-07 (4th Cir.1985)), we think the trust-like nature of the remedy renders a claim like DeFelice's equitable, even though review of the denial is de novo. See Blake v. Unionmutual Stock Life Insurance, 906 F.2d 1525, 1526 (11th Cir.1990).

Sullivan is also without question retroactively applicable. Ms. DeFelice therefore did not have a right to have her claim tried by a jury. Here, however, because she has already received a jury trial, our question is more properly stated in the inverse: Does American have a right to a bench trial? We hold that American does have this right for this equitable claim.

With regard to the role of the jury in this case, we note, as did Sullivan, the longstanding tradition in common law courts that a trial court may consult with an advisory jury during a bench trial so long as the court retains the ultimate responsibility for findings of fact and conclusions. Fed.R.Civ.P. 39(c); (American) Lumbermens Mut. Cas. Co. of Illinois v. Timms & Howard, Inc., 108 F.2d 497 (2d Cir.1939); Wright & Miller, Federal Practice & Procedure: Civil 2d § 2335. However, the Sullivan district court had explicitly adopted the jury's findings as its own, yet we remanded with instructions to explain how the findings were made. Sullivan, 82 F.3d at 1261. Here, the court has neither made its own findings nor adopted those of the jury. Because American may have suffered prejudice as a result of the jury trial, i.e., an outcome that the court as fact-finder would not have reached, we must remand to the district court with instructions to make its own factual findings and conclusions, in reliance upon the advisory jury's verdict if the court so chooses, and to explain how it arrived at those findings and conclusions.

2. Judgment as a Matter of Law

We decline to address Appellant's argument that it was entitled to judgment as a matter of law, pending Judge Schwartz's findings upon remand.

B. The District Court's Review

1. Standard of Review

Both parties agree with the district court's decision that Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 956-57, 103 L.Ed.2d 80 (1989), mandates de novo review of the ERISA Appeals Committee's denial of benefits. See id. ("a denial of benefits ... is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe terms of the plan."). Appellant, however, argues that de novo means a de novo review only of the record previously established by the Committee, not literally a de novo trial.

Courts presented with this issue have reached varied results. The Sixth Circuit has held that no evidence beyond the administrative record is permissible, on the grounds that district courts ought not to become "substitute plan administrators." Perry v. Simplicity Eng'g, 900 F.2d 963, 966-67 (6th Cir.1990). While the Eleventh Circuit seems comfortable allowing district courts to rely upon entirely new evidence without...