Counterclaim in Admiralty Case Does Not Create Right to Jury Trial

12.22.2021 by Milad Emam, Jason P. Minkin

Under the U.S. Federal Rules of Civil Procedure, when a plaintiff invokes a federal court’s admiralty jurisdiction, the parties are not entitled to a jury trial. See Fed. R. Civ. P. 38(e). Applying this principle, a federal district court recently held that, when a policyholder defendant’s counterclaims to a maritime insurance coverage action invokes a separate basis for federal court jurisdiction, the defendant still does not have a right to a jury trial. Great Lakes Ins., S.E. v. Gray Group Invs., LLC, No. 20-cv-2795, 2021 WL 5907710 (E.D. La. Dec. 14, 2021).

The case concerns a marine-insurance coverage dispute. The insurer provided cover to a yacht, which sustained significant damage during Hurricane Sally and ultimately sank at its mooring. After the yacht owner sought coverage for a total loss of the vessel, the insurer denied coverage and sought a declaration that the owner had breached warranties under the policy and that the policy was void ab initio. While the insurer had invoked the federal court’s admiralty jurisdiction, the owner filed an answer and counterclaims seeking to invoke the federal court’s diversity jurisdiction over state-law claims—having asserted that the insurer had violated Louisiana insurance law—and demanded a jury trial for those claims. The insurer moved to strike the owner’s jury demand, arguing that the owner did not become entitled to a jury trial by having invoked both admiralty and diversity jurisdiction in its counterclaims.

The court agreed with the insurer. According to the court, “[w]hen a plaintiff designates its claim as an admiralty claim … the defendant is not entitled to a jury trial” and a defendant may not “‘emasculate th[is] election’ … simply by bringing counter-claims or third-party actions.” 2021 WL 5907710, at *2 (citing Harrison v. Flota Mercante Gancolombiana, 577 F.2d 968, 987-88 (5th Cir. 1978)). Here, because the insurer filed suit seeking resolution of a marine-insurance contract dispute, a matter within the court’s admiralty jurisdiction, the case was designated in admiralty and the owner was not entitled to a jury trial. 2021 WL 5907710, at *2. 

The court also considered whether the owner’s counterclaims arose from the same transaction or occurrence as the insurer’s claim. According to the court, “the operative facts beneath the parties’ claims [we]re identical[,]” as the parties disputed the meaning of the same insurance contract and whether there was coverage under that contract. Id. Accordingly, the owner could not rely on its counterclaims to request a jury trial.