Geovera Specialty Ins. Co. v. Small

• Decision Date: 11 July 2011
• Docket Number: CIVIL ACTION NO. 1:10-00641-KD-N
• Parties: GEOVERA SPECIALTY INSURANCE CO., Plaintiff, v. STANLEY E. SMALL, et al., Defendants.
• Court: U.S. District Court — Southern District of Alabama

GEOVERA SPECIALTY INSURANCE CO., Plaintiff,

v.STANLEY E. SMALL, et al., Defendants.

CIVIL ACTION NO. 1:10-00641-KD-N

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF ALABAMA SOUTHERN DIVISION

DONE and ORDERED: July 11, 2011

ORDER

This matter is before the Court on Plaintiff's "Motion to Strike Jury Demand" (Doc. 41), Defendant LaFredrique George's Response in opposition (Doc. 45), and Plaintiff's Reply (Doc. 48). For the reasons stated herein, Plaintiffs motion is due to be DENIED.

I. Facts & Procedural History

On March 25, 2011, Plaintiff GeoVera Specialty Insurance Co. ("GeoVera") filed an Amended Complaint against Defendants Stanley E. Small, Frank H. Kruse as Administrator for the Estate of Ryan Scott Small, Deceased, and LaFredrique George ("George"), seeking declaratory judgment under 28 U.S.C. § 2201-02 as to the rights and obligations of all parties to this action pursuant to a Homeowners Insurance Policy ("the Policy") it issued to Stanley Small. Jurisdiction is proper pursuant to 28 U.S.C. §1332(a)(1). (Doc. 18).

The Amended Complaint alleges the following: On March 31/April 1, 2009, Ryan Small, son of Stanley Small, attacked and injured George on premises in Mobile, Alabama, owned by Stanley Small and covered by the Homeowners Insurance Policy. Ryan Small was arrested and charged with attempted murder because of the incident. George filed a civil suit in the Circuit Court of MobileCounty, Alabama, against Ryan Small for damages. Ryan Small has died since the inception of George's civil suit. GeoVera is currently defending in George's civil suit under a reservation of rights. In the present action, GeoVera seeks declaratory judgment as to whether there is coverage available under the Policy for the incident involving George and Ryan Small. (Id.).

GeoVera's original Complaint did not include George as a defendant. (Doc. 1). In his Answer to the original Complaint, Stanley Small demanded a trial by jury. (Doc. 5). GeoVera filed a motion to strike Stanley Small's jury demand (Doc. 7). Because Stanley Small filed no objection, the motion was granted as being unopposed and his jury demand was stricken. (Doc. 11).

GeoVera's Amended Complaint added George as a defendant "with interest in the outcome of this declaratory judgment action." (Doc. 18). In his Answer to the Amended Complaint, George demanded a trial by jury. (Doc. 40). GeoVera has moved to strike George's jury demand as well. (Doc. 41).

II. Analysis

Rule 57 of the Federal Rules of Civil Procedure expressly preserves the right to a jury trial in declaratory judgment actions of issues which would ordinarily be tried to a jury and also incorporates the provisions of Rule 38. Rule 57 sets forth as follows:

These rules govern the procedure for obtaining a declaratory judgment under 28 U.S.C. § 2201. Rules 38 and 39 govern a demand for a jury trial . . .

Fed. R. Civ. P. Rule 57. Rule 38 sets forth as follows:

(a) Right Preserved. The right of trial by jury as declared by the Seventh Amendment to the Constitution--or as provided by a federal statute--is preserved to the parties inviolate.

(b) Demand. On any issue triable of right by a jury, a party may demand a jury trial by (1) serving the other parties with a written demand--which may be included in apleading--no later than 14 days after the last pleading directed to the issue is served; and (2) filing the demand in accordance with Rule 5(d).

(c) Specifying Issues. In its demand, a party may specify the issues that it wishes to have tried by a jury; otherwise, it is considered to have demanded a jury trial on all the issues so triable. If the party has demanded a jury trial on only some issues, any other party may--within 14 days after being served with the demand or within a shorter time ordered by the court--serve a demand for a jury trial on any other or all factual issues triable by jury.

Fed. R. Civ. P. 38. Finally, Rule 39(a)(2) provides:

(a) When a Demand Is Made. When a jury trial has been demanded under Rule 38, the action must be designated on the docket as a jury action. The trial on all issues so demanded must be by jury unless . . . (2) the court, on motion or on its own, finds that on some or all of those issues there is no federal right to a jury trial.

Fed. R. Civ. P. 39(a)(2). Thus, a party to a declaratory judgment action may demand a jury trial on some or all issues triable of right by a jury under federal law. See also Simler v. Conner, 372 U.S. 221, 222 (1963) ("[T]he right to a jury trial in the federal courts is to be determined as a matter of federal law in diversity as well as other actions."). George has been properly added as a defendant in this action.¹ His jury demand reads "Defendant, LaFredrique George, demandstrial struck by jury." (Doc. 40 at 3). Because the demand does not specify certain issues, it will therefore apply to "all the issues so triable" in this case. Fed. R. Civ. P. 38(c).

"When the right to a jury trial is at issue, a court should first look to see if Congress has provided the right to a jury trial; if Congress has created a legal right, a jury trial is required. If Congress has not provided an express right, then the court must decide if a constitutionally protected right to a jury trial exists under the seventh amendment to the United States Constitution." Alexander v. Chattahoochee Valley Cmty. Coll., 303 F. Supp. 2d 1289, 1291 (M.D. Ala. 2004) (citing Tull v. United States, 481 U.S. 412, 417-27 (1987), Lorillard v. Pons, 434 U.S. 575, 585 (1978), Waldrop v. Southern Company Services, Inc., 24 F.3d 152, 155 (11th Cir. 1994), and Kennedy v. Ala. State Bd. of Educ., 78 F. Supp. 2d 1246, 1250 (M.D. Ala. 2000) (Thompson, J.)). "The Declaratory Judgment Act [] preserves the right to jury trial for both parties, but does not create a right to a jury trial." Sunshine Co. Food Distrib., Inc. v. U.S. Citizenship & Immigration Servs., 362 F. App'x 1, 4 (11th Cir. 2010) (internal quotations omitted). Because the Declaratory Judgment Act does not itself create a right to a jury trial, the Court looks to the Seventh Amendment to determine if George has a right to a jury trial in this declaratory action. The Eleventh Circuit has held:

The Seventh Amendment preserves the right to a jury trial "in suits at common law, where the value in controversy shall exceed twenty dollars." The amendment extends the right to a jury trial to all suits where legal rights are involved, whether at common law or arising under federal legislation. See, e.g., Curtis v. Loether, 415 U.S. 189, 194, 94 S. Ct. 1005, 1008, 39 L. Ed. 2d 260 (1974) . . . In contrast, the right to a jury trial does not extend to cases in which only equitable rights are at stake. Curtis, 415 U.S. at 198, 94 S. Ct. at 1010.

Waldrop v. S. Co. Servs., 24 F.3d 152, 156 (11th Cir. 1994). With regard to declaratory judgments specifically, the Eleventh Circuit has stated:

Suits for declaratory judgment are a statutory creation enacted by Congress in the Declaratory Judgment Act, 28 U.S.C.A. secs. 2201-02, and are neither inherently legal nor equitable in nature. American Safety Equip. Corp. v. J.P. Maguire & Co., 391 F.2d 821, 824 (2d Cir. 1968). When determining whether a declaratory judgment action is legal or equitable, "courts have examined the basic nature of the issues involved to determine how they would have arisen had Congress not enacted the Declaratory Judgment Act." Wallace v. Norman Indus., Inc., 467 F.2d 824, 827 (5th Cir. 1972); United States v. New Mexico, 642 F.2d 397, 400 (10th Cir. 1981); Diematic Mfg. Corp. v. Packaging Indus., Inc., 516 F.2d 975, 978 (2d Cir.), cert. denied, 423 U.S. 913, 96 S. Ct. 217, 46 L. Ed. 2d 141 (1975); American Safety, supra; Chevron, U.S.A., Inc. v. Oubre, 93 F.R.D. 622, 623 (M.D. La. 1982); seegenerally Hartford Financial Systems v. Florida Software Serv., 712 F.2d 724, 726-27 (1st Cir. 1983).

Gulf Life Ins. Co. v. Arnold, 809 F.2d 1520, 1523 (11th Cir. 1987) (footnote omitted). See also Marseilles Hydro Power, LLC v. Marseilles Land & Water Co., 299 F.3d 643, 649 (7th Cir. 2002) ("[C]asting one's suit in the form of a suit for a declaratory judgment, or adding a claim for a declaratory judgment to one's other claim or claims for relief, does not create a right to a jury trial. Rather, as the Third Circuit put it nicely in Owens-Illinois, Inc. v. Lake Shore Land Co., 610 F.2d 1185, 1189 (3d Cir. 1979), 'If the declaratory judgment action does not fit into one of the existing equitable patterns but is essentially an inverted law suit -- an action brought by one who would have been a defendant at common law -- then the parties have a right to a jury. But if the action is the counterpart of a suit in equity, there is no such right.'").

In Gulf Life, a "fiduciary file[d] a declaratory judgment action seeking to determine its liability for benefits claimed by a former employee who was a participant in the fiduciary-employer's ERISA-qualified employee benefit plan." 809 F.2d at 1522. The court held that "[b]ut for the Declaratory Judgment Act, the only way this action could have arisen is as a suitby Arnold to collect the severance pay he claims he is due -- a legal, not equitable, action. Thus, Gulf Life's declaratory judgment action was not a civil action seeking equitable relief." Id. at 1523 (internal quotations omitted).

As to whether George has a right to demand a jury trial as a properly-added defendant who is not a party to the Policy but has an interest in the outcome of this litigation due to his state court lawsuit, the Court looks to Reiswerg v. Great American Insurance Co., No. 1:07-cv-42-WTL-DML, 2009 WL 2923036, 2009 U.S. Dist. LEXIS 81927 (S.D. Ind. Sept. 8, 2009) (slip opinion), which examined the right of a party similar to George to demand a jury trial on a declaratory judgment claim and which applied analysis similar to that in Gulf Life:

This cause is before the Court on the motion of Great American Insurance Company ("Great American") entitled Motion to

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