Counterclaim in Admiralty case does not create right to jury trial

Milad Emam and Jason P Minkin of US legal firm Bates Carey have reported in the case of Great Lakes Ins SE v Gray Group Invs in which it was ruled that a counterclaim in an Admiralty case, under the US Federal Rules of Civil Procedure, did not create the right to a trial by jury when a plaintiff invokes a federal court’s admiralty jurisdiction.

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.

In 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 (from the beginning). 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.”

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

re identical[,]” as the parties disputed the meaning of the same insurance contract and whether there was coverage under that contract. Accordingly, the owner could not rely on its counterclaims to request 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).

https://www.batescarey.com/blog/counterclaim-in-admiralty-case-does-not-create-right-to-jury-trial/