In Re Lockheed Martin Corp.
68 Fed. R. Serv. 3d 1598, 503 F.3d 351, 2007 A.M.C. 2304 (2007)
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Rule of Law:
A party's Seventh Amendment right to a jury trial on a legal claim cannot be defeated merely because the opposing party initiated a declaratory judgment action first and designated it as an admiralty claim. The court must look at how the action would have proceeded without the declaratory judgment vehicle to determine if a jury right exists.
Facts:
- Lockheed Martin owned a ship that was insured by National Casualty Company.
- In June 2001, the ship sustained damage while at sea.
- In April 2005, Lockheed submitted an insurance claim to National for over $2,600,000 in damages.
- A dispute arose between the parties regarding whether Lockheed's claim was time-barred under the insurance policy's statute of limitations.
- Lockheed informed National that it intended to file a lawsuit by July 29, 2005, unless National acknowledged a longer limitations period.
Procedural Posture:
- National Casualty Company filed a declaratory judgment action against Lockheed Martin in federal district court, designating it as a non-jury admiralty claim under Rule 9(h).
- Lockheed filed an answer and a compulsory counterclaim for breach of contract, demanding a jury trial.
- The district court dismissed one of National's declaratory requests but declined to dismiss the other.
- The district court struck Lockheed's jury demand, ruling that Lockheed did not have a right to a jury trial.
- Lockheed filed a petition for a writ of mandamus with the U.S. Court of Appeals for the Fourth Circuit, asking the appellate court to order the district court to grant its jury demand.
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Issue:
Does a defendant in a declaratory judgment action brought under admiralty jurisdiction have a Seventh Amendment right to a jury trial on a compulsory legal counterclaim that could have been brought 'at law' under the 'saving to suitors' clause?
Opinions:
Majority - Traxler
Yes. A defendant in a declaratory judgment action brought under admiralty jurisdiction does not lose its Seventh Amendment right to a jury trial on a compulsory legal counterclaim. The court reasoned that the right to a jury trial depends on how the action would have proceeded without the declaratory judgment vehicle. Here, National Casualty won the 'race to the courthouse' and filed a declaratory judgment action, designating it as a non-jury admiralty claim. However, without this procedural vehicle, Lockheed would have been the plaintiff, suing National for breach of the insurance contract. Under the 'saving to suitors' clause, Lockheed could have brought this in personam action 'at law' in federal court based on diversity jurisdiction, which would have preserved its Seventh Amendment right to a jury trial. Citing Beacon Theatres, Inc. v. Westover, the court held that a party cannot be deprived of its jury trial right merely because the opposing party took advantage of the declaratory relief procedure to sue first. To allow National's Rule 9(h) admiralty designation to preclude Lockheed's jury right would improperly elevate the customary bench trial in admiralty to a right not to have a jury trial, which is inconsistent with the preservation of the constitutional right to a jury.
Analysis:
This decision reinforces the primacy of the Seventh Amendment right to a jury trial, extending the 'inverted lawsuit' logic of Beacon Theatres into the context of admiralty jurisdiction. It prevents plaintiffs from using the declaratory judgment procedure and a Rule 9(h) admiralty designation as a strategic tool to unilaterally strip defendants of their right to a jury on otherwise legal claims. The ruling clarifies that the 'saving to suitors' clause protects a party's option for a jury trial even when that party is forced into a defensive posture by a preemptive lawsuit. This precedent significantly limits the ability of potential defendants in maritime insurance disputes to control the mode of trial by racing to the courthouse.
