FILED

U.S. COURT OF APPEALS

ELEVENTH CIRCUIT

OCTOBER 19, 2009

THOMAS K. KAHN

CLERK

 [PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

________________________

NO. 08-14414

________________________

D. C. Docket No. 05-01060-CV-AR-S

MEGA LIFE AND HEALTH INSURANCE COMPANY, THE,

Plaintiff-Counter-DefendantAppellant, Cross-Appellee,

versus

DONALD D. PIENIOZEK, 

individually and as administrator of

the estate of Kellie O. Pieniozek, Deceased,

Defendant-Counter-ClaimantAppellee, Cross-Appellant,

ESTATE OF KELLIE O. PIENIOZEK,

Deceased,

Defendant.

_________________________

Appeals from the United States District Court

for the Northern District of Alabama

__________________________

(October 19, 2009)
Before CARNES and PRYOR, Circuit Judges, and DOWD, District Judge. *

DOWD, District Judge:

I. Overview

This appeal is the second appeal in this case before the Court. In the first

appeal, the Court vacated the district court’s grant of summary judgment in favor

of Mr. Pieniozek (“Pieniozek”) on Mega Life and Health Insurance Company’s

(“Mega”) claim for rescission of Ms. Pieniozek’s life insurance policy and

Pieniozek’s counterclaim for breach of contract, and remanded the case for

determination by a fact-finder as to Mega’s obligation to pay the life insurance

contract. Mega Life & Health Ins. Co. v. Pieniozek, 516 F.3d 985, 991 (11th Cir.

2008). On remand, the district court conducted a bench trial over Mega’s

objection that the case should have been tried to a jury. At the conclusion of the

trial, the district court found for Pieniozek and entered a money judgment in his

favor.

The preliminary issue on appeal is whether the district court erred in

determining that no jury trial was effectively demanded on the single remaining

issue regarding the life insurance policy before the district court on remand, i.e.,

Honorable David D. Dowd, Jr., United States District Judge for the Northern District of *

Ohio, sitting by designation.

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Mega’s obligation to pay, or in different terms, Pieniozek’s entitlement to

payment. We conclude that the district court properly determined that no timely

jury demand was filed and served by either party with respect to the only issue

before it on remand. Further, we find no error with respect to Mega’s remaining

issues on appeal, and affirm the judgment of the district court. 

II. Facts and Procedural History

The basic facts are as follows. In September 2004, Kellie Pieniozek applied

for a life insurance policy with Mega and also applied for accidental death

coverage. The application reflected an income of $700 per week. Mega issued a

life insurance policy to Ms. Pieniozek with a death benefit of $500,000 and an

accidental death benefit of $300,000. 

Ms. Pieniozek died on December 14, 2004 in a single-car accident when she

swerved to avoid striking a deer. Defendant was a passenger in the car at the time. 

Mega does not contend suicide or foul play in connection with Ms. Pieniozek’s

death.

 After Pieniozek filed a claim with Mega on his wife’s life insurance policy,

Mega discovered that Ms. Pieniozek was earning much less than $700 per week. 

Mega claims that if it had known Ms. Pieniozek’s actual income, it would have not

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issued a policy, or it would have issued a policy with lower coverage.

On May 20, 2005, Mega filed a two count complaint for declaratory

judgment. Count 1 of the complaint sought a declaration that Mega was entitled to

rescind Kellie Pieniozek’s life insurance policy on the grounds that Ms. Pieniozek

misrepresented her income on the policy application. In Count 2, Mega sought an

alternative declaration that if the district court determined that Mega was not

entitled to rescission, the accidental death benefit was not payable because

accidental death was not established by an autopsy. No jury was demanded. 

Pieniozek filed an answer on October 18, 2005. The answer was a general

denial and no jury was demanded. On December 6, 2005 and without leave of

court, Pieniozek filed an amended answer which included a jury demand. Except

for the jury demand, the amended answer was identical to the original answer.

After Mega moved for summary judgment and with leave of the district

court, Pieniozek filed counterclaims, with jury demand, for payment on the life

insurance policy (Count 1) and bad faith (Count 2). Mega answered and also

moved for summary judgment on the counterclaims. Pieniozek opposed Mega’s

motion and moved for summary judgment on his counterclaim for breach of

contract. 

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The district court granted Mega’s motion for summary judgment as to

Pieniozek’s bad faith claim, but granted Pieniozek’s motion for summary

judgment as to the contract claim and entered judgment for Pieniozek. Both sides

appealed. This Court affirmed the district court in granting summary judgment in

favor of Mega on Pieniozek’s bad faith claim, but vacated and remanded for

resolution by a fact-finder the issue of Mega’s obligation and Pieniozek’s

entitlement under the life insurance policy. See Mega Life & Health Ins. Co., 516

F.3d 985. 

Upon remand, the district court rejected Mega’s claim that it was entitled to

a jury and conducted a bench trial. In an oral opinion setting forth the findings of

fact to justify his conclusions, the district court awarded judgment to Pieniozek in

the total sum $800,000 on the life insurance policy, plus interest calculated at the

rate of 6% in the sum of $160,832.80, for a total judgment of $960,832.80. A

motion by Mega pursuant to Fed. R. Civ. P. 59 was partially granted by the

district court, and the judgment was reduced to $959,916.16 because of an

adjustment in the interest calculation.

Both parties again appealed. Mega’s appeal claims that the district court

erred by ruling that a jury trial was not required on remand, by not applying the

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“law of the case” with respect to the insured’s annual income and finding the term

“annual income” to be ambiguous, and by awarding pre-judgment interest at a rate

of 6%. Pieniozek acknowledges that his appeal regarding dismissal of his

amended cross-claim is moot unless the case is remanded.

III. Law and Analysis

A. Neither Party Timely Demanded a Jury Trial

The first issue requiring resolution by this Court is whether the district court

properly denied Mega’s contention it was entitled to a trial by jury upon remand

from the first appeal. We address that issue at the outset because if the district

court erred, a reversal and remand would be required. 

Interpretation of the Federal Rules of Civil Procedure presents a question of

law subject to de novo review, and denial of a jury trial is reviewed with the most

“exacting scrutiny.” City of Morgantown v. Royal Ins. Co., 337 U.S. 254, 258-60,

69 S. Ct. 1067, 1070, 93 L. Ed. 1347 (1949); Burns v. Lawther, 53 F.3d 1237,

1240 (11th Cir. 1995) (citing McBride v. Sharpe, 25 F.3d 962, 967-68 (11th Cir.

1994)). The right to trial by jury is fundamental, and this Court “indulge[s] every

reasonable presumption against waiver.” LaMarca v. Turner, 995 F.2d 1526,

1544 (11th Cir. 1993) (quoting Aetna Ins. Co. v. Kennedy, 301 U.S. 389, 393, 57

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S. Ct. 809, 812, 81 L. Ed. 1177 (1937)).

Rule 38 of the Federal Rules of Civil Procedure preserves the right of trial

by jury as declared by the Seventh Amendment to the Constitution, and provides

that:

(b) Demand. On any issue triable of right by a jury, a party may demand 

a jury trial by:

(1) serving the other parties with a written demand—which may be

included in a pleading—no later than 10 days after the last

pleading directed to the issue is served; and

(2) filing the demand in accordance with rule 5(d).

Fed. R. Civ. P. 38(b).

In its complaint, Mega sought a declaration that it was entitled to rescind

Kellie Pieniozek’s life insurance policy because the annual income stated on her

insurance application was a material misrepresentation. This case came before the

district court on diversity jurisdiction, and under Alabama law, materiality of a

misrepresentation on a policy application is triable by a jury. Bennett v. Mutual of

Omaha Ins. Co., 976 F.2d 659, 661 (11th Cir. 1992) (citing Federal Kemper Life

Assurance Co. v. First Nat’l Bank, 712 F.2d 459, 462 (11th Cir. 1983); State Farm

Ins. Co. v. Whiddon, 515 So. 2d 1266 (Ala. Civ. App. 1987)); Alfa Life Ins. Corp.

v. Lewis, 910 So. 2d 757, 762 (Ala. 2005) (citing Bennett, 976 F.2d at 661; Clark

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v. Ala. Farm Bureau Mut. Cas. Ins. Co., 465 So. 2d 1135 (Ala.Civ.App. 1984)). 

Mega could have demanded a jury trial in its complaint for rescission but failed to

do so. 

Pieniozek answered on October 18, 2005 in the form of a general denial and

did not make a jury demand. On December 6, 2005, Pieniozek filed, without leave

of the district court, an amended answer which included a jury demand. The

amended answer was identical to the original answer save for the jury demand.

Amendments not introducing new issues do not renew a party’s right to

demand a jury trial. Guajardo v. Estelle, 580 F.2d 748, 753 (5th Cir. 1978) (citing

Conn. General Life Ins. Co. v. Breslin, 332 F.2d 928, 931 (5th Cir. 1964) (“The

original answer of the appellant, which did not contain a demand for a jury trial,

contained a denial of the allegations of the appellee’s complaint . . . . The amended

answer, which contained a demand for a jury trial, . . . did not raise any issues

which were in any material way different from those presented by the original

answer. In such a case the waiver originally made remains effective and the

subsequent demand is ineffective.”)), abrogated on other grounds by Thornburg v.

Abbott, 490 U.S. 401, 423-24, 109 S. Ct. 1874, 104 L. Ed. 2d 459 (1989). 

Pieniozek’s amended answer demanding a jury trial was ineffective because it was

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outside the time parameters for demanding a jury trial established by Rule 38 and

did not raise new issues upon which a party may properly demand a jury trial.

Subsequently, with leave of the district court, Pieniozek filed counterclaims

for breach of contract and bad faith. The counterclaims included a jury demand.

The question that emerges is whether Pieniozek’s counterclaim for breach

of contract, accompanied by a request for a jury, raised a new issue within the

meaning of Rule 38 that would give rise to a renewed right to demand a jury.

“The term ‘new issues’ has been interpreted to mean new issues of fact, not new

theories of recovery.” Guajardo, 580 F.2d at 753; see also LaMarca, 995 F.2d at

1545. 

Mega’s obligation to pay the policy and Pieniozek’s entitlement to payment

under the policy are two sides of the same coin. Defendant’s counterclaim for

breach of contract is not a new issue for the purposes of Rule 38, but simply a

different version of the denial in his answer to plaintiff’s claim for rescission. 

Neither Mega nor Pieniozek made a timely jury demand on the issue of Mega’s

obligation/Pieniozek’s entitlement under the policy. See Lanza v. Drexel & Co.,

479 F.2d 1277, 1310 (2d Cir. 1973) (en banc) (complaint placed defendant on

notice of underlying facts and basic legal theory upon which relief was sought and

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amendment did not raise “new issues” for purposes of Rule 38). 

Accordingly, even indulging every reasonable presumption against waiver,

we find no error in the district court’s determination that the parties were not

entitled to a jury trial on the issue of rescission-breach of contract before the

district court upon remand from the first appeal.

B. District Court Did Not Violate “Law of the Case”

A district court’s ruling on the application of the “law of the case” doctrine

is subject to de novo review. Transamerica Leasing, Inc. v. Inst. of London

Underwriters, 430 F.3d 1326, 1331 (11th Cir. 2005). Under this doctrine,

“‘findings of fact and conclusions of law by an appellate court are generally

binding in all subsequent proceedings in the same case in the trial court or on a

later appeal.’” Id. (quoting Heathcoat v. Potts, 905 F.2d 367, 370 (11th Cir.

1990)). However, the law of the case doctrine does not apply to bar

reconsideration of an issue when: “(1) a subsequent trial produces substantially

different evidence; (2) controlling authority has since made a contrary decision of

law applicable to that issue; or (3) the prior decision was clearly erroneous and

would work a manifest injustice.” Heathcoat, 905 F.2d at 371. 

On remand and after a bench trial, the district court ruled that Mega was not

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entitled to rescission or reformation. Among other findings of fact supporting that

conclusion, the district court found that “I don’t believe that Mr. Waliagha’s

testimony that [Ms. Pieniozek] told him [her income was] $700 a week. I find it

incredible and I do not believe it.”

Mega now argues on appeal that the district court’s finding of fact that Ms.

Kellie Pieniozek did not tell her insurance agent, Ahmed Waliagha, that she

earned $700 per week violated the “law of the case” because that finding is

directly contrary to the findings of fact set forth in this Court’s opinion in the first

appeal vacating the district court’s entry of summary judgment in favor of

defendant. The statement to which Mega refers in this Court’s earlier opinion is

“Mrs. Pieniozek told [Ahmed] Waliagha[, a Mega agent,] that she was earning

$700 per week.” Mega Life & Health Ins. Co. v. Pieniozek, 516 F.3d at 987.

First, the Court finds that the above-referenced statement does not constitute

the “law of the case.” This Court’s prior ruling on appeal vacated the district

court’s grant of summary judgment in favor of Pieniozek and remanded the case

for a fact-finder to determine whether Mega had an underwriting policy tying the

amount of life insurance coverage to annual income, “and whether it would have,

in good faith, declined to issue the policy or reduced the amount of Mrs.

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Pieniozek’s coverage if it had known her true income.” Id. at 990-91. If and how

Ms. Pieniozek misrepresented her income to Mega’s agent, Ahmed Waliagha, is

one of the relevant questions of fact to be determined by the fact-finder on remand

from this Court as to whether Mega would have in good faith declined to issue the

policy or reduced the amount of coverage.

Second, this Circuit recognizes an exception to the “law of the case”

doctrine when a subsequent trial produces substantially different evidence. See

Heathcoat, 905 F.2d at 371. The district court conducted a bench trial and heard

testimony regarding the facts surrounding Ms. Pieniozek’s life insurance

application. After hearing all the testimony and taking into account all of the

evidence, the district court did not find the testimony of Mega’s agent credible and

found that Ms. Pieniozek did not tell Mega’s agent that her income was $700 per

week. Therefore, even if the Court’s language could be construed as establishing

the “law of the case,” the subsequent bench trial and substantially different finding

of fact by the district court on that issue would fall within this exception to the

doctrine. 

Accordingly, the Court finds that the district court did not err with respect to

the “law of the case” doctrine as to the statement of Ms. Pieniozek’s income on the

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life insurance application.

C. No Error In Conclusion That “Annual Income” Was Ambiguous

Mega further claims on appeal that it was unfairly prejudiced by the district

court’s consideration on remand of whether the term “annual income” in Ms.

Pieniozek’s life insurance application was ambiguous, and further that the district

court erred in concluding the term “annual income” was ambiguous. The Court

finds that no error occurred.

First, Mega was not unfairly prejudiced by the district court’s consideration

of whether the term “annual income” in the life insurance application was

ambiguous. This Court’s charge to the district court on remand to determine

Mega’s obligation and Pieniozek’s entitlement under the policy revolved around

the issue of “annual income.” The district court sought to determine the meaning

of that term in resolving the parties’ relative obligations and entitlements under the

policy, and considering the ambiguity of that term as the first step in that analysis

was not prejudicial to Mega. 

Second, the term “annual income” is not defined by Mega in its insurance

application. We find, like the district court, that the term is susceptible to two or

more constructions and there was confusion as to its meaning and method of

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calculation in the context of the life insurance policy. When a term is susceptible

to multiple constructions, or there is reasonable doubt or confusion as to its

meaning, the term is ambiguous as a matter of law. Mega Life & Health Ins. Co.,

516 F.3d at 992 (“‘The terms of an insurance policy are ambiguous only if the

policy’s provisions are reasonably susceptible to two or more constructions or

there is reasonable doubt or confusion as to their meaning.’” (quoting State Farm

Fire & Cas. Co. v. Slade, 747 So. 2d 293, 308-09 (Ala. 1999))). We hold that the

district court properly determined that the term “annual income” was ambiguous

as a matter of law.

After determining an ambiguity exists, a district court should attempt to

resolve the ambiguity by applying the well-settled rules of contract construction. 

Id. Ambiguity in an insurance contract is to be strictly construed against the

drafter and liberally in favor of the insured. Id. at 992-93. If application of the

rules of construction is insufficient to resolve the ambiguity, the resolution of the

ambiguity becomes a task for the fact-finder. Id. at 992. 

In this case the district court, acting as both judge and fact-finder, engaged

in an extensive analysis regarding the meaning of the term “annual income.” We

find no error in the district court’s determination that the term was ambiguous or

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its resolution.

D. No Error In Interest Rate 

Mega also argues on appeal that the district court erred in determining that

the pre-judgment interest owed on the judgment entered by the district court

should be awarded at a rate of 6% under Ala. Code §§ 8-8-1 and 8-8-8. Mega

claims that the policy limited the interest rate to 3.5%. 

Based on the Alabama Code, the Supreme Court of Alabama has held that

when “no written contract controls the interest rate . . . the legal rate of prejudgment interest is 6 percent per annum.” Rhoden v. Miller, 495 So. 2d 54, 58

(Ala. 1986). 

The relevant life insurance policy provision at issue in this case provides as

follows:

We will figure the interest rate from the date of the Insured Person’s

death until the date of Our Payment. The interest rate will be 3.5% per 

year, or greater, if the interest rate, if any, [sic] required by law where 

this Policy is issued.

The Court notes that Mega’s argument that the proper rate of interest to be

applied was 3.5%, not 6%, was also the subject of Mega’s Rule 59 motion below. 

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In denying Mega’s Rule 59 motion regarding the applicable interest rate, the

district court concluded that policy language regarding the applicable insurance

rate was poorly worded and confusing. Construing this policy language together

with the Alabama statute and case law regarding pre-judgment interest rates

results in conclusions susceptible to more than one result. As a consequence, the

district court concluded that the policy language regarding the applicable interest

was ambiguous, construed the language in favor of the insured, and concluded that

the policy language provided for the higher interest rate —6%—available under

Alabama law.

For the reasons discussed above in section III(C) regarding ambiguous

contract language, the Court finds no error in the district court’s determination of

the applicable interest rate. 

IV. Conclusion

For the foregoing reasons, we find Mega’s appeal to be without merit and

affirm the judgment of the district court. Based on this ruling, Pieniozek’s appeal

regarding his amended cross-claim is moot and requires no consideration.

AFFIRMED.

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