Government Employees Insurance Company v. Saco et al
MEMORANDUM & ORDER, For the foregoing reasons, GEICO's (Dkt. 153) motion to strike demand for a jury trial is DENIED. The Estate's (Dkt. 166) crossmotionto file a jury demand is GRANTED. The Estate shall file a jury demand within thirty (30) days of this Order. So Ordered by Judge Nicholas G. Garaufis on 6/22/2020. Associated Cases: 1:12-cv-05633-NGG-ST, 1:15-cv-00634-NGG-ST (Lee, Tiffeny)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
GOVERNMENT EMPLOYEES INSURANCE
MEMORANDUM & ORDER
12-cv-5633 (NGG) (ST)
-againstDIANE SACO and FRANK A. SALANDRA, as the
Administrator for the Estate of Suzanne
FRANK A. SALANDRA, as the Administrator for
the Estate of Suzanne Kusulas, as assignee of
the rights of DIANE SACO,
15-cv-634 (NGG) (ST)
-againstGOVERNMENT EMPLOYEES INSURANCE
COMPANY, ALAN SIEGEL WAX, PAUL
FEINMAN and HELEN INDJEYIANNIS,
NICHOLAS G. GARAUFIS, United States District Judge.
This consolidated action concerns a long-running dispute between the Government Employees Insurance Company
(“GEICO”) and Frank A. Salandra—in his capacity as administrator of the estate of Suzanne Kusulas (the “Estate”)—stemming
from a February 23, 2006 car accident between Kusulas and
GEICO-insured driver Diane Saco. Noticing a disagreement in the
parties Joint Pre-Trial Order (“JPTO”) as to whether this case is
to be tried by a jury, the court ordered the parties to submit briefing on that question. (Nov. 15, 2018 Order.) Now before the
court are the parties’ cross-motions on this issue. (See GEICO
Mot. to Strike Demand for Jury Trial (“GEICO Mot.”) (Dkt.
153)1; Mem. in Supp. of GEICO Mot. (“Mem.”) (Dkt. 154); Estate
Opp. to GEICO Mot. & Cross Mot. to File Jury Demand (“Estate
Mot.”) (Dkt. 166); Mem. in Opp. to GEICO Mot. and in Supp. of
Cross Mot. (“Opp.”) (Dkt. 166); GEICO Reply (Dkt. 169).) For
the following reasons, GEICO’s motion is DENIED and the Estate’s cross-motion to file a jury demand is GRANTED.
The court assumes familiarity of the facts in this case which have
been discussed in further detail in the court’s prior opinions. (See
Mar. 30, 2017, Mem. & Order at 2-4 (“2017 M&O”) (Dkt. 133);
Dec. 10, 2018, Mem. & Order at 3-4 (“2018 M&O”) (Dkt. 157).)
The following supplements the facts of the case as necessary to
decide GEICO’s motion and the Estate’s cross-motion currently
before the court.
In 2007, Kusulas instituted an action against Saco in Kings
County Supreme Court (the “Underlying Action”). In 2010, the
state court granted Kusulas’s motion for summary judgment as
to liability, holding that Saco was fully liable for Kusulas’s injuries
resulting from the automobile accident; after a damages trial, a
jury awarded Kusulas $3,369,066.75 in compensatory damages.
Saco, who held insurance policies issued by GEICO, demanded
that GEICO pay the full award. GEICO then sought a declaratory
judgment from this court (the “Declaratory Judgment Action”)
that (1) GEICO was not required to make any payments in excess
of the limits on the GEICO policies (the “Policies”) held by Saco;
(2) the Policies do not require payment for Saco’s personal attorneys’ fees, and (3) GEICO is not subject to any claim for bad faith
in relation to its obligation to Saco. (See Comp. (Dkt. 1).) In her
Answer, Kusulas—to whom Saco assigned her rights against
GEICO—included two counterclaims: that (1) GEICO breached
Unless otherwise noted, citations to the docket refer to the earlier-filed of
the consolidated actions, No. 12-cv-5633.
its contract in failing to tender to Saco the full policy limits plus
prejudgment interest on that amount; and (2) GEICO acted in
bad faith towards Saco in its failure to settle the Underlying Action. (See Kusulas Answer (Dkt. 51) at 11.) Kusulas’s Answer also
included a jury demand. (Id.)
On November 19, 2014, Kusulas withdrew her bad faith claim
(Nov. 19, 2014 Min. Entry), which she subsequently brought as
a separate action in New York state court (the “Bad Faith Action”). That action was subsequently removed to this court (see
Not. of Removal (Dkt. 1), No. 15-cv-634, ¶¶ 3-4), and consolidated with the Declaratory Judgment Action (Aug. 4, 2015 Order
(Dkt. 99)). At no point did Kusulas make a jury demand in the
Bad Faith Action. In 2017, following cross-motions for summary
judgment, this court concluded that GEICO was entitled to summary judgment on Kusulas’s breach of contract counterclaim as
to its liability for prejudgment interest in excess of the policy limits, but denied GEICO’s motion for summary judgment as to
whether it discharged its duty of good faith. (See 2017 M&O at
The parties submitted a JPTO in preparation for trial which
evinced a disagreement as to whether this case will be tried to a
jury. (See JPTO (Dkt. 152). at 7-8.) The court ordered the parties
to brief the issue, and those cross-motions are now before the
GEICO argues that the Bad Faith Action should not be tried to a
jury for two reasons. First, GEICO argues that the Estate has
never served a demand for a jury trial in the Bad Faith Action and
the time to do so under New York law has since passed. GEICO
further argues that the Estate would not prevail in obtaining
leave to file a late jury demand under New York law. (See Mem.
at 3-7.) Second, GEICO argues that the jury demand asserted in
Kusulas’s Answer is no longer valid because (1) Kusulas withdrew her bad faith counterclaim and (2) this court granted
summary judgment in favor of GEICO on Kusulas’s breach of contract counterclaim. And, regardless, GEICO asserts that the
allegations in the Declaratory Judgment Action and the Bad Faith
Action differ in significant degree such that the Estate was required to file a separate jury demand in the Bad Faith Action. (Id.
The court finds that the Estate should be granted leave to file a
late jury demand in the Bad Faith Action. As such, the court need
not—and does not—address GEICO’s argument about the status
of the Declaratory Judgment Action jury demand.
A. Relevant Law
Federal Rule of Civil Procedure 81 governs jury demands in removal actions. Rule 81 provides that in cases where the plaintiff
requested a jury before the removal and in compliance with state
law, the right to a jury trial is preserved without an additional
request in federal court. Fed. R. Civ. P. 81(c)(3)(A). In cases
where the state law does not require the parties to expressly request a jury trial, the right to a jury trial is preserved unless the
federal court orders that the parties make an affirmative request.
Id. Lastly, in cases where all responsive pleadings were served
before the removal and neither party filed a jury demand as required by state law, a party may nonetheless preserve her right
to a jury trial by making the demand within fourteen days after
she files (or is served with) the removal petition. Fed. R. Civ. P.
81(c)(3)(B). None of those provisions, however, applies to the
Bad Faith Action: the Estate did not request a jury trial in state
court and New York requires a party to expressly make such a
request. See N.Y. C.P.L.R. § 4102(a). In addition, GEICO answered the complaint in the Bad Faith Action after removal,
making Rule 81(c)(3)(B) inapplicable.
When, as here, a removed case does not fall under Rule 81,
courts look to Rules 38 and 39, which govern jury demands in
federal courts. Under Rule 38(b), a party seeking a jury trial must
serve its demand within fourteen days after service of the last
pleading. Fed. R. Civ. P. 38(b). If the party fails to make a timely
jury request, Rule 38(d) states that the party has waived its right
to a jury trial. Fed. R. Civ. P. 38(d). Rule 39, however, governs
untimely requests for a jury. Rule 39(b) provides that “notwithstanding the failure of a party to demand a jury in an action in
which such a demand might have been made of right, the court
in its discretion upon motion may order a trial by a jury of any or
all issues.” Fed. R. Civ. P. 39(b). Addressing cases removed from
New York state court, the Second Circuit in Cascone v. Ortho
Pharm. Corp., 702 F.2d 389 (2d Cir. 1983), explained that while
a court “may not overlook lack of compliance with the federal
procedural rules in removed cases, there is nonetheless some
‘play in the joints’ for accommodating a removed party who may
not be as at ease in the new surroundings imposed upon him.”
Id. at 392.2 Cascone relied on the Second Circuit’s decision in Higgins v. Boeing Co., 526 F.2d 1004 (2d Cir. 1975), explaining that
“Higgins . . . weighed a number of factors,” when analyzing
whether a court should grant a late application for a jury demand
in cases removed from New York courts. Id. The court further
explained that courts should approach each such untimely jury
demand with “an open mind and an eye to the factual situation
in that particular case, rather than with a fixed policy against
granting the application or even a preconceieved notion that applications of this kind are usually to be denied.” Id.
In light of Higgins and Cascone, district courts in New York have
looked to several factors when deciding if late jury demands in
removal cases should be granted. These factors include: whether
When quoting cases, unless otherwise noted, all citations and quotation
marks are omitted and all alterations are adopted.
the case is one that is traditionally tried by a jury; whether the
parties assumed that the matter would not be tried by a judge;
whether granting a jury trial would prejudice the rights of the
adverse party; and the customary state practice, i.e. whether state
law would have allowed a jury trial demand late in the proceedings and whether state law grants judges discretion to allow such
late demands. See Rupolo v. Oshkosh Truck Corp., 749 F. Supp. 2d
31, 47 (E.D.N.Y. 2010) (collecting cases).
Applying those factors here, the court finds that the Estate should
be granted leave to file a late jury demand.
First, bad faith claims are traditionally tried by a jury. See N.Y.
C.P.L.R. § 4101(1); see also David D. Siegel, N.Y. Practice § 377
(4th ed.) (explaining that N.Y. C.P.L.R. 4101 requires a jury for
“actions evolved through the common law courts, as opposed to
those developed in equity.”); N.Y. Pattern Jury Instruction 4:67
(listing factors for jury to consider in bad faith settlement or failure to settle claims).
Second, the parties aver different expectations about whether the
Bad Faith Action was to be tried by a judge or jury (see generally
JPTO); as such, this factor is neutral. See Rupolo, 749 F. Supp. 2d
at 48 (finding party-expectation factor neutral where parties did
not share a common assumption about whether case would be
tried to a jury).
Third, GEICO has failed to demonstrate how it would be prejudiced by the Estate’s late demand. “[P]rejudice to the adverse
party is the most important or significant” factor. Rupolo, 749 F.
Supp. 2d at 47. The relevant “inquiry is not whether [GEICO]
will be prejudiced by a jury trial, but whether [GEICO] will suffer
prejudice as a result of the late demand for a jury trial.” Janetos v.
Home Depot U.S.A., Inc., No. 09-cv-1025 (AKT), 2012 WL
4364510, at *4 (E.D.N.Y. Sept. 25, 2012). A party claiming prejudice must detail with specificity how it will suffer as a result of
the late demand. See id. at *5 (requiring “a party claiming prejudice to make a specific demonstration of prejudice”); see also
Turkenitz v. Metromotion, Inc., No. 97-cv-2513 (AJP) (JGK), 1997
WL 773713, at *8 (S.D.N.Y. Dec. 12, 1997) (“[C]onclusory assertion[s] of prejudice [are] not sufficient.”).
Here, GEICO has failed to demonstrate how it would be prejudiced by the Estate’s late demand. In fact, GEICO only asserts
generic statements that “no jury demand has ever been made,
which led GEICO to believe that the Estate had chosen to forgo a
jury trial” and “a significant delay in seeking to file a demand for
a jury trial can provide a basis for establishing prejudice.” (See
Mem. at 6-7.) GEICO’s reliance on Ammirato v. Duraclean Int’l,
Inc., No. 07-cv-5204 (ARL), 2009 WL 3823342, at *2 (E.D.N.Y.
Nov. 16, 2009) is misplaced. In that case, the court held that the
defendant successfully demonstrated that it would be prejudiced
by a late jury demand because it had declined to depose witnesses due to its belief that the case would tried before a judge.
Id. Contrary to the defendant in Ammirato, GEICO has failed to
specify how its trial strategy would be prejudiced in any way if
the court were to allow the Estate to file a late jury demand. See,
e.g., Encarnacion v. Isabella Geriatric Ctr., No. 11-cv-3757 (GHW)
(JCF), 2014 WL 4494160, at *4 (S.D.N.Y. Sept. 11, 2004) (generic representations that litigation strategy would have been
handled differently had defendant known plaintiff would seek
jury trial lacked requisite specificity to demonstrate prejudice);
see also Luna v. American Airlines, No. 04-cv-1803 (MHD), 2010
WL 4159402, at *4-5 (S.D.N.Y. Oct. 12, 2010) (finding implausible defendants’ unexplained assertion that they would suffer
prejudice because their attorney tailored the presentation of evidence to be received by a court, not a jury). Nor does GEICO
explain how the simple passage of time demonstrates prejudice.
This is especially true in this case: because no trial date has been
set—and, given the current COVID-19 pandemic,3 one will not
likely be set in the near term—GEICO will have ample time to
prepare to try this case before a jury. See Janetos, 2012 WL
4364510, at *5.
Finally, granting the Estate leave to file a late jury demand accords with customary New York practice. New York law provides
that a jury demand is to be filed with a note of issue, see N.Y.
C.P.L.R. § 4102(a), but does not specify the time by which the
note must be filed; indeed, a party may request a jury up until
the point at which a case is actually ready for trial. See Cascone,
702 F.2d at 391. In addition, state judges retain broad discretion
to permit late jury demands absent undue prejudice. See N.Y.
C.P.L.R. § 4102(e); see also Cascone, 702 F.2d at 391 (referring
to § 4102(e) as “a broad grant of discretionary power.”). In other
words, New York state practice affords both an extended window
for timely jury demands and broad discretion for granting untimely demands such as the Estate’s in this case.
Accordingly, and in light of the more lenient standard that governs cases removed from state court and the fact that “courts
[should] indulge every reasonable presumption against waiver”
of the right to a jury trial, Janetos, 2012 WL 4364510, at *6
(quoting Aetna Ins. Co. v. Kennedy, 301 U.S. 389, 393 (1937)),
the court finds the totality of circumstances favors granting the
Estate’s motion to file a jury demand.
See In Re: Coronavirus/COVID 19 Pandemic (E.D.N.Y. Admin. Order No.
For the foregoing reasons, GEICO’s (Dkt. 153) motion to strike
demand for a jury trial is DENIED. The Estate’s (Dkt. 166) crossmotion to file a jury demand is GRANTED. The Estate shall file
a jury demand within thirty (30) days of this Order.
Brooklyn, New York
June 22, 2020
_/s/ Nicholas G. Garaufis_
NICHOLAS G. GARAUFIS
United States District Judge
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