StarNet Insurance Company v. LA Marine Service LLC et al

Filing 60

ORDER AND REASONS - plaintiff's motion 55 for entry of default is DENIED. Plaintiffs motion 29 to strike defendants' jury demand is GRANTED. Signed by Judge Sarah S. Vance on 7/21/17. (jjs)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
STARNET INSURANCE COMPANY
VERSUS

CIVIL ACTION
NO. 16-13511

LA MARINE SERVICE LLC AND
LEONARD JOURDAN, JR

SECTION “R” (3)

ORDER AND REASONS
Before the Court are plaintiff’s motion for entry of default 1 and
plaintiff’s motion to strike defendants’ jury demand.2 For the following
reasons, the Court denies the motion for entry of default and grants the
motion to strike the jury demand.

I.

BACKGROUND
This case arises out of the sinking of Defendant LA Marine Service

LLC’s vessel, the M/V CAPT. LJ.3 Defendant Leonard Jourdan, Jr. is the
owner of LA Marine Service. 4 Plaintiff Starnet Insurance Company supplied

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2
3
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R. Doc. 55.
R. Doc. 29.
R. Doc. 1 at 2-3.
Id. at 3.

insurance to the defendants to cover losses or damages to the M/V CAPT.
LJ. 5 According to the complaint, this insurance policy does not cover losses
resulting from the vessel owner’s bad faith or neglect in permitting a vessel
to go to sea in an unseaworthy condition. 6 The M/V CAPT. LJ was afloat on
the navigable waters of the United States near Empire, Louisiana, when it
allegedly capsized and sank in clear weather and calm waters. 7 Plaintiff
asserts that it investigated the incident and determined that the vessel’s
sinking was caused by a lack of due diligence in failing to remedy
unseaworthy conditions on the vessel.8 Following its investigation, plaintiff
issued a denial of coverage. 9
On August 2, 2016, plaintiff filed a complaint for declaratory judgment
asking the Court to declare that it does not owe insurance coverage for losses
arising out of the sinking of the M/V CAPT. LJ. 10 The complaint asserted
that the Court has diversity jurisdiction under 28 U.S.C. § 1332 and admiralty
or maritime jurisdiction under 28 U.S.C. § 1333.11 On September 19, 2016,
defendants filed an answer, affirmative defenses, and a counterclaim for

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6
7
8
9
10
11

Id. at 3-4.
Id. at 4-5.
Id. at 2-3.
Id. at 6.
R. Doc. 1 at 6.
Id. at 1-7.
Id. at 2.
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declaratory judgment and other relief.12

In their answer, defendants

responded to the factual allegations in plaintiff’s complaint and admitted
that the Court has subject-matter jurisdiction. 13 Defendants requested “a
trial by jury on all issues so triable.”14
On October 11, 2016, plaintiff filed an amended complaint designating
all claims as admiralty or maritime claims under Rules 9(h) and 38(e) of the
Federal Rules of Civil Procedure. 15 The amended complaint reiterates all
other allegations against the defendants and does not include any
substantive changes to the factual allegations in the original complaint.16
Defendants did not respond to the amended complaint. Plaintiff now moves
for an entry of default 17 against defendants and separately asks the court to
strike defendants’ jury demand.18

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13
14
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17
18

R. Doc. 13.
Id.
Id. at 15.
R. Doc. 19 at 1.
Id. at 2.
R. Doc. 55.
R. Doc. 29 at 1-2.
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II.

DISCUSSION
A. Entry of Default
Plaintiff argues that defendants’ failure to respond to its amended

complaint warrants an entry of default under Rule 55(a) of the Federal Rules
of Civil Procedure. 19 Defendants oppose this motion and contend that they
have sufficiently answered the factual allegations in plaintiff’s complaint.20
Defendants further argue that plaintiff’s admiralty designation is a legal
conclusion that does not require a response. 21
Rule 55(a) directs the clerk to enter a party’s default when the party
“has failed to plead or otherwise defend.” Fed. R. Civ. P. 55(a). The clerk’s
“authority to enter a default is not a limitation on the power of the court to
do so. But the court should exercise discretion in deciding whether or not to
order a default.” Betz v. First Credit Services, Inc., 139 F.Supp.3d 451, 455
(D.D.C. 2015) (quoting 10A Wright & Miller, Federal Practice and
Procedure, § 2682 (3d ed. 2015)). The Fifth Circuit has held that “any doubt,
should, as a general proposition, be resolved in favor of . . . securing a trial
upon the merits.” Davis v. Parkhill-Goodloe Co., 302 F.2d 489, 495 (5th Cir.
1962) (upholding a trial court’s refusal to direct the clerk to enter default).

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20
21

R. Doc. 55-1 at 2.
R. Doc. 56 at 2.
Id. at 3.
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Here, defendants filed an answer and responded to the factual and
jurisdictional allegations in the original complaint, including the plaintiff’s
invocation of the Court’s admiralty jurisdiction under 28 U.S.C. § 1333.22
Although the amended complaint more explicitly designates plaintiff’s claim
as an admiralty claim under Rule 9(h) of the Federal Rules of Civil
Procedure, the defendants’ failure to respond to that designation does not
warrant an entry of default. The Court therefore denies entry of default.
B. Jury Demand
Plaintiff argues that defendants have no right to a trial by jury because
plaintiff designated its claim as an admiralty claim under Federal Rule of
Civil Procedure 9(h).23 Defendants have not responded to this motion.
The Court has admiralty jurisdiction in this matter. Plaintiff asserts
that admiralty jurisdiction is proper because plaintiff’s claims involve the
interpretation and application of a policy of marine insurance and the
sinking of a vessel on the navigable waters of the United States. 24 “A marine
insurance contract is indisputably a marine contract within federal admiralty
jurisdiction.” New Hampshire Ins. Co. v. Martech USA, Inc., 993 F.2d 1195,
1198 (5th Cir. 1993). If a claim is within the Court’s “admiralty or maritime

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23
24

R. Doc. 13.
R. Doc. 29 at 1-2.
R. Doc. 1 at 2.
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jurisdiction and also within the court’s 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.” Fed. R. Civ. P.
9(h). Rule 38(e), in turn, provides that the “rules do not create a right to a
jury trial on issues in a claim that is an admiralty or maritime claim under
Rule 9(h).” Fed. R. Civ. P. 38(e).
When a plaintiff designates its claim as an admiralty claim under Rule
9(h), the defendant is not entitled to a jury trial. See Harrison v. Flota
Mercante Gancolombiana, 577 F.2d 968, 987-88 (5th Cir. 1978) (trial court
properly denied third-party defendant’s jury demand where plaintiff
specifically elected to pursue non-jury admiralty claim under Rule 9(h)); see
also Hamm v. Island Operating Co., Inc., 450 F. App’x 365, 369 (5th Cir.
2011) (“In situations like [plaintiff’s], the election made available to the
pleader pursuant to Rule 9(h) is dispositive.”) (internal citation omitted).
Defendants have made no effort to establish why admiralty jurisdiction
is not proper or why they should be entitled to a jury trial. On the contrary,
defendants explicitly assert that their counterclaim arises from the same
transaction or occurrence as the plaintiff’s claim and that the counterclaim
falls within the Court’s jurisdiction under 28 U.S.C. § 1333. 25 See Harrison,

25

R. Doc. 13 at 9.
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577 F.2d at 987 (affirming denial of jury demand where the “facts which
established admiralty jurisdiction for the plaintiff’s original claim” also form
the basis for defendant’s claim).

III. CONCLUSION
For the foregoing reasons, plaintiff’s motion for entry of default is
DENIED. Plaintiff’s motion to strike defendants’ jury demand is GRANTED.

21st
New Orleans, Louisiana, this _____ day of July, 2017

_____________________
SARAH S. VANCE
UNITED STATES DISTRICT JUDGE

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