Allstate Insurance Company, et al v. Community Health Center, Inc, et al

Filing

UNPUBLISHED OPINION FILED. [14-30506 Reversed and Remanded ] Judge: EHJ , Judge: CH , Judge: MAC Mandate pull date is 04/06/2015 [14-30506]

Case: 14-30506

Document: 00512970322

Page: 1

Date Filed: 03/16/2015

IN THE UNITED STATES COURT OF APPEALS
United States Court of Appeals
FOR THE FIFTH CIRCUIT
Fifth Circuit

FILED
No. 14-30506

March 16, 2015
Lyle W. Cayce
Clerk

ALLSTATE
INSURANCE
COMPANY;
ALLSTATE
INDEMNITY
COMPANY; ALLSTATE PROPERTY AND CASUALTY COMPANY;
ALLSTATE FIRE AND CASUALTY INSURANCE COMPANY; ALLSTATE
COUNTY MUTUAL INSURANCE COMPANY,
Plaintiffs - Appellants
v.
COMMUNITY HEALTH CENTER, INCORPORATED; COMMUNITY
HEALTH & REHABILITATION CENTER, INCORPORATED; KATHY
HAMPTON; LEON HAMPTON; MID CITY IMAGING,
Defendants - Appellees
Appeal from the United States District Court
For the Middle District of Louisiana
USDC No. 3:08-CV-810
Before JONES and HAYNES, Circuit Judges, and CRONE ∗, District Judge.
PER CURIAM: **
Plaintiffs-Appellants Allstate Insurance Company, Allstate Indemnity
Company, Allstate Property and Casualty Company, Allstate Fire and
*

District Judge of the Eastern District of Texas, sitting by designation.

Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should
not be published and is not precedent except under the limited circumstances set forth in
5TH CIR. R. 47.5.4.
**

Case: 14-30506

Document: 00512970322

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Date Filed: 03/16/2015

No. 14-30506
Casualty Insurance Company, and Allstate County Mutual Insurance
Company (collectively, “Allstate”) sued Community Health Center, Inc.,
Community Health and Rehabilitation Center, Inc., Kathy Hampton, Leon
Hampton, and Mid City Imaging (collectively, “Community”) in December
2008, alleging that Community committed fraud by creating false patient
records to support fraudulent injury claims. Both parties requested a trial by
jury—Community in its answer and counterclaims of race discrimination and
defamation and Allstate in its answer to the counterclaims.
Allstate subsequently moved for summary judgment on its fraud claim
and Community’s counterclaims. Rather than filing a response, Community
filed a cross-motion for summary judgment, which the district court
dismissed as untimely. Community did not otherwise respond to Allstate’s
motion for summary judgment, and the district court granted the motion in
its entirety as unopposed and properly supported. The court then ordered a
trial “as to the amount owed to the plaintiffs.”
After the district court denied Community’s motion to reconsider, the
parties filed a joint pretrial order waiving their right to a jury trial as to
damages—the only remaining issue before the court. 1 Following the pretrial
conference,

the

district

court

expressed

concern

that

the

parties

misunderstood which claims and issues remained in the litigation after the
earlier order.

As a result, the district court vacated the order granting

summary judgment, reinstated all claims, and allowed the parties to amend
their pleadings before trial.
Allstate filed an amended complaint asserting further allegations of
fraud and requesting a trial by jury.

Allstate also moved separately to

The joint pretrial order stated in paragraph 14: “This case will be a bench trial.
This is currently set as a jury case. However, the parties agree to have the sole issue of
damages tried as a bench trial in New Orleans (as a result of the Court’s Judgment of
August 21, 2012).” (emphasis in original).
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reinstate the jury demand. The district court denied Allstate’s jury request
and proceeded to trial without a jury. In its final judgment, the district court
concluded that the majority of Allstate’s claims had prescribed and that
Allstate failed to prove fraud, negligent misrepresentation, or unjust
enrichment with respect to the remaining claims. Allstate timely appealed.
As Allstate conceded at oral argument, a district court has the
discretion to revisit and reverse a prior interlocutory order. See Harrell v.
DCS Equip. Leasing Corp., 951 F.2d 1453, 1460–61 (5th Cir. 1992) (noting
that it is “well within the trial court’s discretion to revise the partial
summary judgment order to permit the issue . . . to be more fully presented
at trial”).

Allstate contends, however, that the district court violated its

rights under the Seventh Amendment when it refused to reinstate a jury trial
after it vacated its order granting summary judgment.
Under the Seventh Amendment, a party in a suit at common law has a
right to a trial by jury. U.S. CONST. amend. VII. A party may waive this
right in only two circumstances: either by express action or by failing to
demand a jury trial within the requisite time. Bowles v. Bennett, 629 F.2d
1092, 1095 (5th Cir. 1980). “Whether a party is entitled to a jury trial is a
legal question that is reviewed de novo.” U.S. Bank Nat’l Ass’n v. Verizon
Commc’ns, Inc., 761 F.3d 409, 416 (5th Cir. 2014) (citing Provident Life &
Accident Ins. Co. v. Sharpless, 364 F.3d 634, 639 (5th Cir. 2004)). “The right
of jury trial is fundamental, and courts must indulge every reasonable
presumption against waiver.” Bowles, 629 F.2d at 1095 (quoting Aetna Ins.
Co. v. Kennedy, 301 U.S. 389, 393 (1937)) (internal quotation marks and
alterations omitted).
Under Federal Rule of Civil Procedure 38, a party must demand a jury
trial “no later than 14 days after the last pleading directed to the issue is

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served.” FED. R. CIV. P. 38(b). Failure to do so results in waiver. FED. R. CIV.
P. 38(d).

Here, although Allstate did not request a jury trial in its first

complaint, it added a jury demand in its response to Community’s
counterclaims. Furthermore, Community requested a jury in its answer to
the complaint, and Allstate was entitled to rely on Community’s request. See
Nimrod Mktg. (Overseas) Ltd. v. Tex. Energy Inv. Corp., 769 F.2d 1076, 1079
(5th Cir. 1985) (party could rely on other party’s demand until the other
party withdrew that request); Southland Reship, Inc. v. Flegel, 534 F.2d 639,
643 (5th Cir. 1976) (plaintiff was entitled to rely on demand made by
defendant); see also FED. R. CIV. P. 38 (“A proper demand may be withdrawn
only if the parties consent.”). Thus, Allstate did not waive its right to a jury
trial by default.
Additionally, Allstate could have subsequently waived its right to a
jury “by some express action by the party or his attorney which evidences his
decision not to exercise the right.” Bowles, 629 F.2d at 1095. Although the
district court found that Allstate waived its right to a jury trial by agreement
in the pretrial order, Allstate contends that its waiver was limited to the
issue of damages, which it believed was the only remaining issue after the
court granted its motion for partial summary judgment. Indeed, the plain
terms of the pretrial order reflect that the parties limited their waiver of a
jury trial to the issue of damages.
Furthermore, even if Allstate had waived its right to a jury trial in the
entirety in the pretrial order, the parties and the court were operating under
different understandings of what issues remained. Allstate could not have
anticipated when it waived its jury demand that the court would vacate its
earlier order granting summary judgment. “The right to a jury trial is too
important and the usual procedure for its waiver is too clearly set out by the

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Civil Rules for courts to find a knowing and voluntary relinquishment of the
right in a doubtful situation.” Jennings v. McCormick, 154 F.3d 542, 545 (5th
Cir. 1998) (citing Bowles, 629 F.2d at 1095).
Although

deference

is

generally

accorded

to

a

trial

judge’s

interpretation of a pretrial order, Allen v. U.S. Steel Corp., 665 F.2d 689, 696
(5th Cir. Unit B 1982), this court has an “obligation to ‘indulge every
reasonable presumption against waiver,’” Jennings, 154 F.3d at 545 (quoting
Bowles, 629 F.3d at 1095). Here, the plain language of the pretrial order
indicates that Allstate intended to limit its waiver to the issue of damages,
which it believed was the sole remaining issue in the case. At the very least,
this is a “doubtful situation.” See id. Accordingly, we find that Allstate did
not waive its right to a jury trial with respect to all of the issues in the case
and that the district court erred by proceeding with a bench trial on the
merits.
Finally, the district court’s error was not harmless, as a review of the
record reveals that Allstate could have withstood a motion for judgment as a
matter of law at trial. See Lewis v. Thigpen, 767 F.2d 252, 260 (5th Cir.
1985). “[A] motion for [judgment as a matter of law] is proper if the facts and
inferences point so strongly and overwhelmingly in favor of one party that
the Court believes that reasonable men could not arrive at a contrary
verdict.”

Id. (internal quotation marks omitted).

“A mere scintilla of

evidence is insufficient to present a question to the jury.”

McDonald v.

Steward, 132 F.3d 225, 230 (5th Cir. 1998). “‘[A] motion for [judgment as a
matter of law] must be acted on without weighing credibility of witnesses.’”
Jennings, 154 F.3d at 546 (quoting Kridler v. Bituminous Cas. Corp., 409
F.2d 88, 91 (5th Cir. 1969)). “Thus, [judgment as a matter of law] is not
properly granted when the outcome . . . is almost solely based on whether or

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not the witness’ testimony was credible.” Jennings, 154 F.3d at 546.
In the bench trial, the district court found that Community had
adduced sufficient evidence to prevail on its prescription defense for the
majority of Allstate’s claims and that Allstate failed to meet its burden to
prove intentional or negligent misrepresentation or unjust enrichment on its
remaining claims.

In making such factual findings, however, the district

court relied heavily on its weighing of the credibility of the witnesses’
testimony at trial. Yet, a reasonable jury could have given more weight to
the testimony of Allstate’s witnesses and reached a different conclusion than
the district court.

Because Allstate could have withstood a motion for

judgment as a matter of law, the district court’s error in proceeding without a
jury was not harmless.
Accordingly, we REVERSE the district court’s judgment and REMAND
the proceedings for a trial by jury.

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