ST. PAUL FIRE AND MARINE INSURANCE COMPANY, Plaintiff-Counter-Defendant-Appellee, v. LAGO CANYON, INC., Defendant-Counter-Claimant-Third-Party Plaintiff-Appellant, v. HMY Yacht Sales, Inc., Sunseeker International Limited, Third-Party Defendants, Sunseeker Florida, Inc., Tropical Marine Air Conditioning, Inc., Third-Party Defendants-Appellees.
No. 08-13398.
United States Court of Appeals, Eleventh Circuit.
March 6, 2009.
561 F.3d 1181
Andrew W. Anderson, Michelle Otero Valdes, Ryon Lyndon Little, Houck Anderson, P.A., Miami, FL, for St. Paul Fire and Marine Ins. Co., Sunseeker Florida, Inc., Tropical Marine Air Conditioning, Inc.
Before HULL, WILSON and HILL, Circuit Judges.
HULL, Circuit Judge:
Defendant-Appellant Lago Canyon, Inc. (“Lago Canyon”) appeals the district court‘s entry of a final judgment in favor of Plaintiff-Appellee St. Paul Fire & Marine Insurance Company (“St. Paul”). Lago Canyon owns a yacht that partially sank at a dock while undergoing engine repairs, causing over $1.2 million in damages. Lago Canyon filed a damage claim under its marine insurance policy (“the Marine Policy”) from St. Paul.
St. Paul filed a complaint for a declaratory judgment that the Marine Policy did not cover the damage because it was caused by a corroding part. Lago Canyon counterclaimed for breach of contract (i.e., the Marine Policy). After a three-day bench trial, the district court found that the “proximate cause of the damage was the failure of a hose barb which resulted from corrosion,” that the Marine Policy excluded corrosion, and that “the loss is not covered by the [Marine] Policy unless a provable manufacturer‘s defect can be shown.” The district court also found that the manufacturer‘s “use of yellow brass [for the hose barb] knowing its exposure to saltwater created a condition likely to cause corrosion” but that this defect was not covered by the term “manufacturer‘s defect” in the Marine Policy.
Lago Canyon appeals, claiming the district court erred in: (1) applying admiralty law and striking Lago Canyon‘s demand for a jury trial; (2) concluding that the Marine Policy did not cover the damage to the yacht; and (3) not awarding Lago Canyon prejudgment interest on the towing charges. After review and oral argument, we affirm in part and reverse in part.
I. THE MARINE POLICY AND PROCEDURAL HISTORY
Lago Canyon is the named insured under the “all risks” Marine Policy issued by St. Paul. The Marine Policy states that the Quay Marine Agreement, any endorsements or amendments thereto, and the declarations page constitute the coverage on the yacht. The Marine Policy has a property damage limit of $1.4 million, a property damage deductible of $7,500, and a personal property damage limit of $35,000.
The property damage coverage section of the Marine Policy provides that St. Paul “will pay for accidental direct physical loss of or damage to [the] yacht except as specifically stated or excluded in this policy.” The parties agree that “accidental” loss or damage to the yacht covers fortuitous loss unless subject to an exclusion. The coverage paragraph also states that if the loss is caused by a “provable manufacturer‘s defect,” no deductible will apply.1
The Marine Policy, however, expressly excludes loss or damage “caused by or resulting from . . . corrosion,” as follows:
Exclusions: We will not provide Property Damage Coverage for any loss or damage caused by or resulting from . . . wear and tear, electrolysis, lack of maintenance, corrosion, deterioration, mold, or fiberglass blistering.
(Emphasis added). The commercial towing section of the Marine Policy covers reasonable costs, up to $7,500, to tow the yacht if it is “disabled from a cause other than a covered loss.”3
St. Paul issued a Reservation of Rights advising Lago that its loss might not be covered. St. Paul then filed a declaratory judgment action based on admiralty jurisdiction under
Lago Canyon counterclaimed that St. Paul had breached its contract (i.e., the Marine Policy) by refusing to pay the damages to the yacht and demanded prejudgment interest. Lago Canyon‘s counterclaim is the flip side of St. Paul‘s own claim. Lago Canyon asserts its loss is covered by the Marine Policy, and St. Paul asserts no coverage. Thus, both parties make claims under the same maritime insurance contract. Lago Canyon‘s counterclaim also alleged that the action was between citizens of different states and the amount in controversy exceeded $75,000. Lago Canyon separately demanded a jury trial.
St. Paul then moved to strike Lago Canyon‘s demand for a jury trial. Based on our precedent in Harrison v. Flota Mercante Grancolombiana, S.A., 577 F.2d 968 (5th Cir. 1978),6 the district court granted St. Paul‘s motion and struck Lago Canyon‘s jury demand. The district court noted that “[t]he issue before the Court is whether St. Paul‘s election to bring this case in admiralty precludes Lago [Canyon] from demanding a jury trial on its related state common law counterclaim.” The district court concluded that St. Paul‘s Rule 9(h) designation of its marine insurance claim as an admiralty claim trumped Lago Canyon‘s jury-trial right on its breach-of-contract counterclaim where Lago Canyon‘s counterclaim arose out of the same operative facts and same Marine Policy as St. Paul‘s claim. The district court recognized that there was a split of authority on this issue but concluded the binding precedent in Harrison required that both claims be tried by the court.7
The district court acknowledged that the Marine Policy covered loss caused by a “manufacturer‘s defect.” Because the Marine Policy explicitly excludes damage “caused by or resulting from corrosion,” the district court determined that “the loss is not covered by the [Marine] Policy unless a provable manufacturer‘s defect can be shown.”
The district court treated the term “manufacturer‘s defect” in the Marine Policy as meaning a “manufacturing defect” and then distinguished between a “manufacturing defect,” a problem in the manufacturing process, and a design defect, a problem with the design of the product. The district court concluded that only manufacturing defects, not design defects, were covered by the Marine Policy. As to manufacturing defects, the district court found that Lago Canyon “failed to submit any evidence to establish that the hose barb deviated from the manufacturer‘s own design, standards or specifications, or establish that something went wrong during the manufacturing process.”
II. BENCH VS. JURY TRIAL
On appeal, Lago Canyon claims that the district court erred in striking its jury demand. We first review our Harrison precedent, which the district court applied as controlling on the admiralty and jury trial issue.10
A. Our Harrison Precedent
In Harrison, the plaintiff was a longshoreman who came into contact with liquid chemical isobutyl acrylate (IBA) while cleaning up a spill on a ship. 577 F.2d at 972. The plaintiff‘s condition steadily deteriorated until he was left totally disabled. Id. The plaintiff sued the vessel‘s owner, alleging negligence and unseaworthiness. Id. at 973. The plaintiff designated his claim as one “within the admiralty jurisdiction of this Honorable Court as that term is defined by
The defendant vessel-owner then impleaded the plaintiff‘s employer, alleging that any unseaworthiness of the vessel was due to the employer‘s negligence. Id. The employer, in turn, filed a fourth-party complaint against the shipper of the IBA, seeking indemnification based upon products liability and negligent failure to warn of the dangerous propensities of IBA. Id. The defendant vessel-owner then asserted a claim against the shipper. Id. The plaintiff amended his complaint to state a claim against the fourth-party defendant shipper, alleging products liability and negligent failure to warn, and the plaintiff again specified in his pleading that the action was within the court‘s admiralty jurisdiction under
The fourth-party defendant shipper of the IBA appealed, arguing, inter alia, that it was deprived of its right to trial by jury. Id. The shipper emphasized that the actions against it were predicated on negligence and products liability and, as such, fell within the diversity jurisdiction of the district court.12 Id.
The unification of the admiralty and civil rules in 1966 was intended to work no change in the general rule that admiralty claims are to be tried without a jury.
Fed.R.Civ.P. 9(h) serves only as a device by which the pleader may claim the special benefits of admiralty procedures and remedies, including a non-jury trial, when the pleadings show that both admiralty and some other basis of federal jurisdiction exist.
Id. at 986 (quotation marks and citations omitted). We explained that, in such dual jurisdiction cases, the plaintiff may elect to proceed in admiralty under
“Many claims, however, are cognizable by the district courts whether asserted in admiralty or in a civil action, assuming the existence of a nonmaritime ground of jurisdiction. Thus at present the pleader has (the) power to determine procedural consequences by the way in which he exercises the classic privilege given by the saving-to-suitors clause (
28 U.S.C. § 1333 ) or by equivalent statutory provisions.... One of the important procedural consequences 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.... The unified rules must therefore provide some device for preserving the present power of the pleader to determine whether these historically maritime procedures shall be applicable to his claim or not; the pleader must be afforded some means of designating his claim as the counterpart of the present suit in admiralty, where its character as such is not clear.... Other methods of solving the problem were carefully explored, but the Advisory Committee concluded that the preferable solution is to allow the pleader who now has power to determine procedural consequences by filing a suit in admiralty to exercise that power under unification, for the limited instances in which procedural differences will remain, by a simple statement in his pleading to the effect that the claim is an admiralty or maritime claim.”
Id. at 986-87 (quoting Fed.R.Civ.P. 9(h), Advisory Committee Note, 39 F.R.D. 69, 75-76 (1966)).
This Court also noted that “the fourth-party complaint is based upon the same set of operative facts which gave rise to the first complaint.” Id. at 987. We added, “[t]hat is, the facts which established admiralty jurisdiction for the plaintiff‘s original claim, injury upon navigable waters performing a task traditionally performed by seamen, also form[ed] the basis for the fourth-party action [by the plaintiff against the IBA shipper].” Id. We then determined that “the plaintiff has specifically elected to pursue a non-jury admiralty claim pursuant to
In this admiralty-Rule 9(h) case, the district court was, as we are, bound by Harrison and thus did not err in striking Lago Canyon‘s demand for a jury trial. St. Paul‘s declaratory judgment complaint as to its Marine Policy claimed the special benefits of admiralty procedures, including a non-jury trial, by setting forth why admiralty jurisdiction existed and by designating this action under
Lago Canyon contends that Harrison should not apply because St. Paul brought a declaratory judgment action, whereas the plaintiff in Harrison brought a suit for damages. Lago Canyon argues that the Supreme Court‘s decision in Beacon Theatres, Inc. v. Westover, 359 U.S. 500, 79 S.Ct. 948, 3 L.Ed.2d 988 (1959), requires a different result from that reached in 1978 in Harrison. St. Paul counters that: (1) Beacon Theatres, while involving a suit for declaratory relief, was not an admiralty case, but an antitrust case under the Sherman Antitrust Act where the Seventh Amendment right to a jury trial controlled; (2) Rule 9(h) was not at issue; and (3) there is no Seventh Amendment right to a jury trial on maritime claims.
The problem for Lago Canyon is that Harrison in no way depended on the fact that the plaintiff filed a complaint for damages instead of a declaratory judgment against a defendant. Rather, Harrison addressed what happens when both admiralty and some other ground of federal jurisdiction exist in the same case and the plaintiff invokes admiralty jurisdiction under
III. MANUFACTURER‘S DEFECT
On appeal, Lago Canyon asserts that the manufacturer‘s choice of yellow brass for the hose barb was a manufacturer‘s design defect which resulted in the corrosion and that the district court erred in concluding that the term “manufacturer‘s defect” in the Marine Policy did not cover design defects. More specifically, Lago Canyon emphasizes that its trial evidence showed that: (1) the hose barb corroded because it was made of yellow brass; (2) yellow brass was a material unsuitable for a part exposed to salt water; and (3) the use of yellow brass constituted a design defect by the manufacturer.17 In other words, Lago Canyon contends that the manufacturer‘s design defect caused the hose barb failure and ultimate water intrusion.
The district court found that: (1) Sunseeker International Ltd. was the manufacturer of the yacht and “[t]he failed hose barb was an original part of the vessel installed by the manufacturer”; (2) the failed hose barb was made of yellow brass; and (3) “[t]he use of yellow brass knowing its exposure to saltwater created a condition likely to cause corrosion.” However, even if yellow brass was an improper material choice, the district court concluded that (1) the Marine Policy covered only “manufacturing defects” and (2) the use of yellow brass did not constitute a manufacturing defect covered by the Marine Policy. As noted earlier, the district court found that there was no evidence that something went wrong in the manufacturing process or that “the hose barb deviated from its intended design.”
On appeal, Lago Canyon acknowledges that a design defect is different from a defect in the manufacturing process. Lago Canyon, however, points out that a manufacturer may be liable for both design defects and defects in the manufacturing process. Lago Canyon argues that the term “manufacturer‘s defect,” as used in the Marine Policy, means any defect attributable to the manufacturer and is not limited in any way. Lago Canyon thus claims that the term “manufacturer‘s defect” includes both design and manufacturing defects. Lago Canyon argues that the district court‘s order jumped from “manufacturer‘s defect” to “manufacturing defect” and erred in equating “manufacturer‘s defect,” as used in the Marine Policy, with “manufacturing defect.”
We agree with Lago Canyon that the district court erred in construing the term “manufacturer‘s defect” in the Marine Policy. The Marine Policy does not define the term “manufacturer‘s defect.” Although there is a distinct difference between a manufacturing defect and a design defect, manufacturers may be liable for both types of defects. See Jennings v. BIC Corp., 181 F.3d 1250, 1255 (11th Cir. 1999) (explaining that Florida has adopted the Restatement (Second) of Torts § 402(A), under which a manufacturer may be held liable for a design defect, a manufacturing defect, or an inadequate warning). Thus, both are manufacturer‘s defects. St. Paul‘s problem is that its Marine Policy uses the broad term “manufacturer‘s defect” and not “manufacturing defect” as focused on by the district court. Attempting to give the term “manufacturer‘s defect” its plain meaning and mindful
Because the district court interpreted the Marine Policy not to cover a manufacturer‘s design defect, the district court did not make findings as to other issues in the case. For example, although the district court found that “[t]he use of yellow brass knowing its exposure to saltwater created a condition likely to cause corrosion,” it did not determine whether the use of yellow brass rose to the level of a manufacturer‘s design defect and, if so, what impact this had on the multiple causation issues in the case and the court‘s other fact findings. While the district court found that “the proximate cause of the damage was the failure of a hose barb which resulted from corrosion” and corrosion was excluded, the district court also then found that “the loss is not covered by the [Marine] Policy unless a provable manufacturer‘s defect can be shown.” Because it concluded that a design defect was not a “manufacturer‘s defect,” the district court did not address further the interplay between the manufacturer‘s defect coverage and the corrosion exclusion or what impact such a design defect had on its causation findings. Therefore, because our ruling triggers the need for the district court to address other issues in the first instance and because this is such a fact intensive case, we remand this case to the district court for further bench trial proceedings consistent with this Court‘s ruling as to the “manufacturer‘s defect” issue.21
B. Prejudgment Interest
Lastly, we turn to Lago Canyon‘s contention that the district court erred in not awarding Lago Canyon prejudgment interest.22 “As a general rule, pre-judgment interest should be awarded in admiralty cases. Pre-judgment interest
Here, we not only have no clear finding of “peculiar circumstances,” but also no finding or mention at all of prejudgment interest. The district court‘s order does not deny or grant prejudgment interest. It says nothing about it. Thus, we remand the issue of prejudgment interest to the district court to address in the first instance.
III. CONCLUSION
For the foregoing reasons, we affirm the district court‘s rulings except as to the issue of the “manufacturer‘s defect” and prejudgment interest on the towing charges. Because of the fact intensive nature of this case, we vacate the judgment in favor of St. Paul and remand the case to the district court for further bench trial proceedings as to the alleged “manufacturer‘s defect” and prejudgment interest issues. We do not mean the district court must hear all the evidence again, but only that the parties should be able to supplement the record before the district court rules on the remaining issues.
AFFIRMED, IN PART; VACATED AND REMANDED, IN PART.
WILSON, Circuit Judge, concurring:
I concur in the Court‘s opinion but, as to section II, I have doubts about the correctness of our prior precedent in Harrison v. Flota Mercante Grancolombiana, S.A., 577 F.2d 968 (5th Cir. 1978).1 Relying on Harrison, the district court struck Lago‘s demand for a jury trial, reasoning that because “St. Paul elected to file this claim pursuant to
We are bound by our prior panel precedent in Harrison. In Harrison, Grover Harrison, a longshoreman, suffered injuries stemming from an incident aboard a freighter when barrels containing an industrial chemical fell and leaked in the hold and Harrison offered assistance as part of the clean-up crew. Harrison sued Flota Mercante Grancolombiana, S.A. (“Flota Mercante”), the owner of the vessel, alleging negligence and unseaworthiness. Harrison invoked admiralty juris
The district court found against Rohm and Haas, only. Rohm and Haas appealed, arguing, inter alia, that the district court deprived it of the right to trial by jury. In support, Rohm and Haas asserted two arguments: (1) Stevedores’ third-party complaint against it cited
The Fifth Circuit disagreed, explaining that “by electing to proceed under 9(h) rather than by invoking diversity jurisdiction, the plaintiff may preclude the defendant from invoking the right to trial by jury which may otherwise exist.” Id. at 986. The Harrison Court found the plaintiff‘s election under Rule 9(h) “dispositive” as to whether Rohm and Haas was entitled to a jury trial. Id. at 986. The Fifth Circuit then highlighted the fact that Harrison “elected to proceed against both the vessel [Flota Mercante] and the shipper, Rohm and Haas, pursuant to
Here, we conclude that “our prior precedent rule requires us to follow Harrison.” Majority Op. at 1188. See United States v. Vega-Castillo, 540 F.3d 1235, 1236 (11th Cir. 2008) (per curiam) (“Under the prior precedent rule, we are bound to follow a prior binding precedent unless and until it is overruled by this court en banc or by the Supreme Court.”) (citation and internal quotation marks omitted). Specifically, we rely on the following passage: “by electing to proceed under Rule 9(h), rather than by
Although we are bound by the Fifth Circuit‘s analysis, I believe that the Fourth Circuit sets forth a more persuasive analysis. In In re Lockheed Martin Corp., 503 F.3d 351 (4th Cir. 2007), cert. denied, — U.S. —, 128 S.Ct. 2080, 170 L.Ed.2d 815 (2008), a case indistinguishable from this case on its facts, the Fourth Circuit addressed “the right to a trial by jury in an admiralty case.” 503 F.3d at 352. There, Lockheed Martin‘s (“Lockheed”) ship suffered damages at sea and a dispute regarding coverage arose between Lockheed and its insurer, National Casualty Company (“National”). National filed a declaratory judgment action against Lockheed, seeking a declaration that Lockheed‘s claims were time barred.4 National designated its claim as one in admiralty. Lockheed answered and filed a counterclaim, seeking payments for the damages to the ship. Lockheed requested a jury trial, which the district court subsequently struck. Lockheed petitioned the Fourth Circuit for a writ of mandamus. The Fourth Circuit issued the writ and said that “[a]n admiralty plaintiff who chooses to proceed ‘at law,’ . . . has the right under the saving-to-suitors clause to demand a jury trial.” Id. at 355.5 Lockheed pre
Having determined that the Seventh Amendment applies to admiralty claims tried “at law” by way of the savings-to-suitors clause, the Fourth Circuit recognized that National decided to proceed in admiralty, not at law. Given the nature of a declaratory judgment action, the Fourth Circuit found National‘s admiralty designation under Rule 9(h) not to be dispositive of the right to a jury trial issue:
This case, like Beacon Theatres, involves a declaratory judgment action commenced by the party that, but for the existence of the declaratory judgment procedure, would have been the defendant. Although the action sounds in admiralty, that is only because National won the race to the courthouse door and made the Rule 9(h) designation first. Beacon Theatres, however, requires us to ignore National‘s status as the declaratory judgment plaintiff and to instead look to how the action otherwise would have proceeded. Without the declaratory judgment vehicle, Lockheed would have sued National for breach of the insurance policy, a claim over which admiralty and “law” courts have concurrent jurisdiction. As the plaintiff, Lockheed would have been entitled under the saving-to-suitors clause to designate its claim as a legal one as to which there is a Seventh Amendment right to jury trial.
Id. at 359. The Fourth Circuit‘s conclusion rested on two points: (1) “[i]n the usual course of events-that is, without the declaratory judgment vehicle-Lockheed would have sued National for breach of the insurance contract;” and (2) “under the saving-to-suitors clause, Lockheed would have been entitled to a jury trial on that claim.” Id. at 359-60. Accordingly, “Lockheed cannot lose its right to a jury trial simply because National initiated the declaratory judgment action.” Id. at 360.
This case stands on all fours with Lockheed Martin. The facts are indistinguishable: insurer sues insured for declaratory judgment that insurance policy does not provide coverage; insurer invokes
Generally speaking, the Seventh Amendment does not extend the right to a jury trial to cases in admiralty. See Waring, 46 U.S. at 460. Yet, “[w]hile [the Supreme] Court has held that the Seventh Amendment does not require jury trials in admiralty cases, neither that amendment nor any other provision of the Constitution forbids them. Nor does any statute of Congress, or Rule of Procedure, civil or admiralty, forbid jury trials in maritime cases.” Fitzgerald v. U.S. Lines Co., 374 U.S. 16, 20, 83 S.Ct. 1646, 10 L.Ed.2d 720 (1963). Under Supreme Court precedent, moreover, the Seventh Amendment right to a trial by jury may apply in admiralty cases tried at law by way of the savings-to-suitors clause. In Ellerman Lines, Leighton Beard, a longshoreman employed by Atlantic and Gulf Stevedores (“Atlantic”), suffered injuries while unloading bales of burlap from a vessel owned by Ellerman Lines, Ltd. (“Ellerman”), who had hired Atlantic to perform stevedoring services. 369 U.S. at 359-60. Beard sued Ellerman in United States District Court for the Eastern District of Pennsylvania based on diversity jurisdiction, alleging unseaworthiness of the vessel and negligence. Beard designated the action as one at law and demanded a jury trial. Ellerman, in turn, impleaded Atlantic as Beard‘s employer, alleging negligence based on its “manner and method of unloading” and seeking indemnification in the event it were held liable to Beard. Based on the jury‘s answers to special interrogatories, the district court entered judgment in favor of Beard against Ellerman and in favor of Atlantic on Ellerman‘s indemnity claim. The United States Court of Appeals for the Third Circuit affirmed the judgment in favor of Beard but reversed the judgment in favor of Atlantic. Finding a violation of the Seventh Amendment‘s prohibition against the reexamination of facts by a court,7 the Supreme Court reversed, reasoning that “neither we nor the Court of Appeals can redetermine facts found by the jury any more than the District Court can predetermine them.” Id. at 358-59. The Supreme Court began its analysis by noting the application of the Seventh Amendment to that case: “[t]he requirements of the Seventh Amendment were brought into play in this case, even though a stevedoring contract is a maritime contract.” Id. at 359. Of particular relevance here, the Supreme Court explained that “[t]his suit being in the federal courts by reason of diversity of citizenship carried with it, of course, the right to trial by jury.” Id. at 360.
Ellerman Lines affirms the principle that the Seventh Amendment may apply to admiralty claims tried at law by way of the savings-to-suitors clause. See Lockheed Martin, 503 F.3d at 356 (“In our view, Ellerman makes it clear that the Seventh Amendment applies to admiralty claims that are tried ‘at law’ by way of the saving-to-suitors clause.”); Ghotra by Ghotra v. Bandila Shipping, Inc., 113 F.3d 1050, 1054 (9th Cir. 1997) (“The difference between [proceeding in admiralty or at law in state or federal court] is mostly procedural; of greatest significance is that there is no right to jury trial if general admiralty jurisdiction is invoked, while it is preserved for claims based in diversity or
Ellerman Lines, therefore, belies St. Paul‘s argument that the Seventh Amendment does not apply to admiralty cases. As the Fourth Circuit in Lockheed Martin put it, such a contention is an “oversimplification:” “[w]hile the Seventh Amendment is not applicable to an admiralty claim, it can be applicable to certain claims—those over which the ‘law’ court has concurrent jurisdiction.” Lockheed Martin, 503 F.3d at 359. In addition, the Supreme Court has even endorsed allowing traditional non-jury admiralty claims to be tried by a jury. See Fitzgerald v. U.S. Lines Co., 374 U.S. 16, 21, 83 S.Ct. 1646, 10 L.Ed.2d 720 (1963) (holding “that a maintenance and cure claim joined with a Jones Act claim [that, by statute, carries the right to a jury trial] must be submitted to the jury when both arise out of one set of facts”).
Assuming the presence of diversity jurisdiction,8 the Seventh Amendment may apply to Lago‘s counterclaim for breach of the maritime insurance contract. See Ellerman Lines, 369 U.S. at 359-60 (providing that “a suit for breach of a maritime contract, while it may be brought in admiralty, may also be pursued in an ordinary civil action, since . . . it is a suit in personam”) (footnote and internal citation omitted).
Although St. Paul elected to proceed in admiralty, rather than at law, I do not believe that a plaintiff‘s election to proceed in admiralty pursuant to
In Beacon Theatres, the Supreme Court addressed the right to a jury trial when a claim for declaratory relief is a part of the equation. After Beacon Theatres, Inc. (“Beacon”) notified Fox West Coast Theaters (“Fox”) that it believed Fox had violated federal antitrust laws, Fox filed a declaratory judgment action, seeking a declaration that it had not violated the Sherman Antitrust Act. Beacon filed a counterclaim, alleging antitrust violations and seeking treble damages. Beacon also demanded a jury trial. The district court viewed Fox‘s claims as equitable and ordered that its claims be tried in a bench trial before a jury considered Beacon‘s counterclaim. Unsatisfied with that decision, Beacon sought a writ of mandamus from the United States Court of Appeals for the Ninth Circuit. The Ninth Circuit refused to issue the writ and Beacon appealed to the Supreme Court. The Supreme Court issued the writ, reasoning that the declaratory judgment statute while allowing prospective defendants to sue to establish their nonliability, specifically preserves the right to jury trial for both parties. It follows that if Beacon would have been entitled to a jury trial in a treble damage suit against Fox it cannot be deprived of that right merely because Fox took advantage of the availability of declaratory relief to sue Beacon first. Since the right to trial by jury applies to treble damage suits under the
St. Paul argues that Beacon Theatres does not apply here for two reasons: (1) it did not address the “interplay” of an admiralty claim and the Seventh Amendment, and (2) the Supreme Court decided it before the unification of civil and admiralty procedure in 1966. I find both reasons unavailing. Like Beacon Theatres, this case involves a “legal” claim (Lago‘s breach of contract) to which the Seventh Amendment applies just as the Seventh Amendment applied to Beacon‘s claim for treble damages under the Sherman Act. In addition, the Ninth Circuit found Beacon Theatres applicable in a similar scenario, holding that a plaintiff‘s election to proceed in admiralty does not deprive another party of a jury trial on a properly joined claim. See Wilmington Trust v. U.S. Dist. Court, 934 F.2d 1026, 1032 (9th Cir. 1991); see id. at 1031 (noting that the Supreme Court in Beacon Theatres “held that the right to a jury trial as provided by the seventh amendment overcomes another party‘s preference for a bench trial when those interests conflict”).9 Second, as to St. Paul‘s unification argument, “[t]he merger of civil and admiralty procedure in 1966 . . . made no change in the complicated pattern of when a right to jury trial exists.” 9 Charles Alan Wright & Arthur R. Miller, Federal Practice & Procedure § 2315 (2008).
As this Circuit has noted, in the context of a declaratory judgment action, “the normal position of the parties is reversed.” Hudson Ins. Co. v. Am. Elec. Corp., 957 F.2d 826, 828 (11th Cir. 1992); Stuart Weitzman, LLC v. Microcomputer Res., Inc., 542 F.3d 859, 862 (11th Cir. 2008). In that sense, Lago is the real plaintiff-in-interest and St. Paul is the real defendant-in-interest. Moreover, our precedent teaches that the complaint for declaratory relief does not control the case, at least for purposes of determining the presence of a federal question. In Hudson, we looked not to the face of the complaint but to the cause of action anticipated by the declara
In Beacon Theatres, a defendant‘s right to a jury trial on a “legal” counterclaim was upheld, even though the plaintiff sought declaratory relief in equity, traditionally a non-jury case. Similarly here, Lago should be entitled to a jury trial on its “legal” counterclaim for breach of contract even though St. Paul sought declaratory judgment and invoked admiralty jurisdiction, again, traditionally a non-jury case. Given the nature of a declaratory judgment action as a reversed lawsuit, Lago should not be deprived of the right to a jury trial because St. Paul “took advantage of the availability of declaratory relief to sue [Lago] first.” Beacon Theatres, 359 U.S. at 504.
Taking into consideration the savings-to-suitors clause and the nature of a declaratory judgment action Lago is entitled to a jury trial in this case. First, by way of the savings-to-suitors clause, the Seventh Amendment may apply to claims triable at law, such as Lago‘s breach of contract counterclaim. Second, Beacon Theatres instructs us to consider how the cause of action would have proceeded in the absence of the declaratory judgment vehicle. Therefore, Lago would have been entitled to designate his breach of contract counterclaim as “legal,” affording Lago the protection of the Seventh Amendment and the right to a trial by jury.
“Trial by jury is a vital and cherished right, integral in our judicial system.” City of Morgantown, W. Va. v. Royal Ins. Co., 337 U.S. 254, 258, 69 S.Ct. 1067, 93 L.Ed. 1347 (1949). Thomas Jefferson described “trial by jury as the only anchor ever yet imagined by man, by which a government can be held to the principles of its Constitution.” 3 The Writings of Thomas Jefferson 71 (Washington Ed. 1861). Under our current precedent, the guarantee of this “vital and cherished right” in an admiralty case where a counterclaim may be tried “at law” hinges on whether the insurer files a declaratory judgment action before the insured files his or her claim for breach of contract. The “anchor” in our Constitution demands more exacting scrutiny than a race to the courthouse doors.
Notes
Coverage Provided: We will pay for accidental direct physical loss or damage to your yacht except as specifically stated or excluded in the policy.... If the loss or damage is caused by a provable manufacturer‘s defect, caused by fire not originating from your yacht, or results from a collision caused by another vessel, no deductible will apply. In Bonner v. City of Prichard, Alabama, 661 F.2d 1206, 1207 (11th Cir. 1981) (en banc), the newly-formed Eleventh Circuit adopted as binding precedent all of the decisions of the former Fifth Circuit handed down prior to the close of business on September 30, 1981.
We will pay up to the amount of Commercial Towing / Emergency Services coverage shown on the Declarations Page for the following reasonable costs you incur if your yacht is disabled from a cause other than a covered loss:
1. towing to the nearest facility where proper repairs can be made.
2. emergency labor at the breakdown site.
3. the delivery of fuel, oil, battery or repair parts (excluding payment for the cost of these items).
4. tender trailer road service.
The district courts shall have original jurisdiction, exclusive of the courts of the States, of: (1) Any civil case of admiralty or maritime jurisdiction, saving to suitors in all cases all other remedies to which they are otherwise entitled. National later amended its complaint, alternatively seeking a declaration of Lockheed‘s amount of loss.
(h) Admiralty or Maritime Claim.
(1) How Designated. If a claim for relief is within the admiralty or maritime jurisdiction and also within the courts’ subject-matter jurisdiction on some other ground, the pleading may designate the claim as an admiralty or maritime claim for purposes of Rules 14(c), 38(e), and 82 and the Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions. A claim cognizable only in the admiralty or maritime jurisdiction is an admiralty or maritime claim for those purposes, whether or not so designated.
(2) Designation for Appeal. A case that includes an admiralty or maritime claim within this subdivision (h) is an admiralty case within
Fed.R.Civ.P. 9(h) (2006).
First, the claimant may invoke federal admiralty jurisdiction under the grant of original subject matter jurisdiction over admiralty, maritime, and prize cases set out in Section 1333. Neither diversity of citizenship nor a minimum amount in controversy need be shown under the statute. On the other hand, most plaintiffs have no right to a trial by jury if they invoke the federal court‘s general admiralty jurisdiction. Second, by virtue of the “saving clause,” plaintiff also may sue at law in a state court or in a United States district court. However, to pursue the latter choice, the requirements of diversity of citizenship and jurisdictional amount must be satisfied.
In re: Chimenti, 79 F.3d 534, 537 (6th Cir. 1996) (citation omitted). The Supreme Court, however, has limited the scope of the savings-to-suitors clause, drawing a distinction between an in rem claim and an in personam claim: “[w]here the suit is in personam, it may be brought either in admiralty or, under the saving clause, in an appropriate non-maritime court, by ordinary civil action.” Atl. & Gulf Stevedores, Inc. v. Ellerman Lines, 369 U.S. 355, 360, 82 S.Ct. 780, 7 L.Ed.2d 798 (1962) (citation and quotation marks omitted); see also Madruga v. Superior Court of State of Cal. in and for San Diego County, 346 U.S. 556, 560-61, 74 S.Ct. 298, 98 L.Ed. 290 (1954) (interpreting the savings-to-suitors clause to mean that the common law is “competent” to adjudicate cases proceeding in personam, where the defendant is a person, but not proceedings in rem). As such, the savings-to-suitors clause provides a plaintiff in a maritime case alleging an in personam claim with three options: (1) the plaintiff may file suit in federal court under admiralty jurisdiction; (2) the plaintiff may file suit in federal court under diversity jurisdiction; or (3) the plaintiff may file suit in state court.
We agree with National that permitting such counterclaims to effectively undo the plaintiff‘s Rule 9(h) designation would be inconsistent with the historic admiralty practice of giving the plaintiff the power to determine the manner in which his claims would be tried. We need not decide, however, whether the counterclaims asserted by Lockheed are “true” counterclaims, nor need we decide how a defendant‘s jury demand would be resolved if his counterclaims were not true counterclaims. We need not consider these issues because we agree with Lockheed that Beacon Theatres requires a jury trial in this case, even if no counterclaims had been filed.
Lockheed Martin, 503 F.3d at 358 (emphasis added).
Admiralty and maritime claims. 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. If the claim is cognizable only in admiralty, it is an admiralty or maritime claim for those purposes whether so identified or not. The amendment of a pleading to add or withdraw an identifying statement is governed by the principles of Rule 15. The reference in
Since Harrison, the form (but not the substance) of Rule 9(h) has been amended slightly. In any event, there is no question that St. Paul had the right to invoke the court‘s admiralty jurisdiction as to the Marine Policy. The only question is whether this precluded Lago Canyon from invoking diversity jurisdiction and obtaining a jury trial.