Opinion ID: 686425
Heading Depth: 1
Heading Rank: 7

Heading: jury trial on damages

Text: 190
191 The Arsenal appellants challenge the judgment entered against them on the ground that they were denied a jury trial on damages in violation of the Seventh Amendment guarantee of the right to a jury trial upon a timely demand. Fed.R.Civ.P. 38. Appellants demanded a jury trial and agreed to a bifurcation of liability issues and damages. Following the jury trial and jury verdict on the issues of liability, the district court properly determined that no genuine disputes of material fact remained with respect to damages. 192 The appellants' challenge fails because, after the jury verdict, damages could be determined purely as a matter of law, in the sense that reasonable factfinders applying the correct legal standard could come to but one determination as to the amount of damages to be awarded under the jury's findings on liability. 193 Precedents regarding summary judgment provide useful guidance on issues arising after jury verdict in the first phase of a phased trial such as occurred in this case. 194 In the pretrial context, regardless of any jury demand made by the parties, summary judgment is warranted when no triable fact issues have been identified. 195 See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) (summary judgment is appropriate when there are no disputed issues of material fact); 196 see also Plaisance v. Phelps, 845 F.2d 107 (5th Cir.1988) (plaintiff did not have an absolute right to a jury trial where there was no genuine issue of material fact, since the function of a jury is to try disputed material facts); 197 Bloomgarden v. Coyer, 479 F.2d 201, 206 (D.C.Cir.1973) (The summary judgment procedure is properly and wholesomely invoked when it eliminates a useless trial....). 198 In addition, under Federal Rule of Civil Procedure 16, the court may take action to formulate and simplify the issues including the elimination of frivolous claims or defenses. Fed.R.Civ.P. 16. Rule 16 also authorizes courts to take action with respect to the appropriateness and timing of summary adjudication under Rule 56. Id. Moreover, Rule 16 was intended to confirm the power of the court to identify [ ] litigable issues without awaiting a formal motion for summary judgment. Advisory Committee Notes, 1983 Amendment. 199 In this case, the trial judge's determination regarding the damages to be awarded was made after the jury trial on liability. At the conference on damages held after trial, the court stated its intention to enter a judgment without another trial if no genuine dispute of fact material to the damages determination remained. In a conference with counsel, the court stated, [u]nder Rule 16, I have the power to narrow the issues for trial ... I can in effect talk through a proceeding akin to a motion for summary judgment. 200 This court has held that a district court may grant summary judgment sua sponte as long as two requirements are met. Stella v. Town of Tewksbury, 4 F.3d 53, 55 (1st Cir.1993). First the discovery phase must be sufficiently advanced that the court can make an accurate determination of whether a genuine issue of material fact [exists]. Id. (citation omitted). Second, the target must have been on notice to bring forth all of its evidence. Id.  'Notice' in this context means that the losing party ... received a fair opportunity to put its best foot forward. Jardines Bacata, Ltd. v. Diaz-Marquez, 878 F.2d 1555, 1560 (1st Cir.1989). 201 These two requirements were met. The discovery phase was not merely sufficiently advanced. It was complete. And a trial on the liability issues had been completed. The appellants received notice and an opportunity to be heard. The district judge, before entering judgment, allowed the parties an opportunity to file written submissions on the issues that were raised at the conference. 202 In their post-trial memorandum, the appellants made substantially the same argument as they make before this court (discussed below), and in both instances without any proffer that they would be able to offer at a damages-phase trial any evidence that would raise a genuine dispute of fact that might be resolved by a factfinder in their favor.
203 The appellants argue that a jury trial on damages was necessary to determine how much of each fraudulent claim was legitimate, that reported losses were merely exaggerated, and that Aetna's damages should be limited to the difference between the payment made by Aetna and the actual loss to the appellant. Each of these arguments fails because, as a matter of law, Aetna is entitled to damages equal to the entire amount of its payments on fraudulent claims, regardless of any portion of the claims that might have been shown to be supportable if no fraudulent enlargement of the claims had occurred. 204 We put aside Aetna's argument that appellants violated the cooperation clause of the various policies under which claims were made. In part that clause provides: 205 After an accident or loss, you or anyone else covered under this policy must cooperate with us in the investigation, settlement and defense of any claim or lawsuit.... 206 (App. 4800) (emphasis added). Earlier automobile insurance policy forms, from which this language in the Aetna policies at issue descended, contained an Assistance and Cooperation Clause, as it was then called. That clause initially appeared among conditions that applied only to liability coverages. The claims at issue here were made under collision coverage. No Massachusetts precedent has explicitly determined that this clause in policy forms like those at issue here applies to collision coverage. In these circumstances, any prediction about whether the Supreme Judicial Court will hold that this clause applies to collision coverage is speculative, but we need not make any prediction on this matter in order to decide this case. We assume in appellants' favor, without deciding, that the cooperation clause in these Aetna policies does not apply to claims under collision coverage. 207 The cooperation clause, of course, is not the only provision concerning the obligations of insureds and claimants after an accident or loss. Other provisions concern giving notice and filing a proof of loss. 208 Appellants contend that one or another of various preclusion doctrines of insurance law bars Aetna from asserting that making a fraudulent claim is a violation of any of the provisions of the policy under which the claim is made. One reason all of the appellants' preclusion arguments fail is that on the facts of this case, as determined by supportable findings of the jury, every claim included in the trial court's calculation of the damages award has been found to be a fraudulent claim. In addition, every claim for which the Arsenal defendants were held liable was made within the scope of a RICO substantive violation and a RICO conspiracy, and every claim for which appellant Arhaggelidis was held liable was within the finding against her on the ground of civil conspiracy. 209 A claimant, in making a fraudulent claim, was committing a material breach--indeed, a most fundamental breach--of the contract between Aetna and its policyholder. This is true, of course, not only of a claim by the policyholder but also of any claim under the policy by any other person entitled by the terms of the policy to make a claim under the policy. 210 A breach as fundamental as this is a bar to the assertion of any further rights under the contract by the party guilty of the breach. This is a basic rule of contract law. See E. Allan Farnsworth, Contracts 632-38 (2d ed. 1990). It applies to insurance contracts as well as other contracts. 211 Appellants contend that one or another of various preclusion doctrines developed distinctively in insurance law nevertheless bars Aetna from asserting fraud by the appellants in this case. This contention fails because the jury findings in this case have negated at least one of the essential elements of each preclusion theory appellants attempt to invoke. 212 The jury's findings negate the voluntary relinquishment of known rights that is characteristic of waiver in the classic sense, the detrimental reliance by a claimant that is characteristic of estoppel in the classic sense, the voluntary choice of an option that is characteristic of election in the classic sense, and insurer overreaching of a less informed and unequal bargainer that is characteristic of cases in which precedents have stretched doctrines of waiver, estoppel, and election beyond their classic meaning to favor a disadvantaged insured. 213 See generally id. at 92-102, 319-23, 586-92; 214 John S. Ewart, Waiver Distributed Among the Departments: Election, Estoppel, Contract, Release, 7-9, 84-87 (1917); 215 John S. Ewart, Waiver or Election, 29 Harv.L.Rev. 724 (1916). 216 Appellants have not cited any precedent, in Massachusetts law or elsewhere, that supports application to any part of the verdict and judgment in this case of any preclusion doctrine establishing rights in favor of insurance claimants beyond those provided by the terms of the contract of insurance. These terms include the limitations, conditions, and exceptions as well as its clauses granting and defining the scope of coverage. Indeed, in view of the jury finding of a RICO substantive violation with Aetna as victim, if there were any need or occasion to invoke principles of preclusion rather than ordinary contract doctrine to decide this case, the record would be more congenial to preclusion against a fraudulent claimant than to preclusion of any of Aetna's defenses. 217 Although the parties have not cited and we are not aware of any Massachusetts precedent directly determining the effect of fraudulent claims and RICO violations upon the measure of recovery to which the insurer is entitled, Massachusetts decisions on analogous issues support the judgment entered in this case. For example, Massachusetts courts have held in a number of different contexts that an insured who committed fraud either in obtaining a policy or in making a claim was precluded from recovering on a claim under the policy. 218 See Airway Underwriters v. Perry, 362 Mass. 164, 284 N.E.2d 604 (1972) (holding that an attempt to defraud the insurer was a violation of the policy's cooperation clause and a clause stating that the policy was void in case of fraud, and therefore insurer was relieved of its obligation to indemnify the insured or defend on the insured's behalf); 219 Bockser v. Dorchester Mutual Fire Ins. Co., 327 Mass. 473, 99 N.E.2d 640 (1951) (holding that an insured, whose property was destroyed by fire and whose agent attempted to defraud the insurance company by exaggerating the losses was precluded from recovery under the policy in light of a provision of the policy rendering the policy void if the insured attempted to defraud the company either before or after a loss). 220 In addition, fraud on the part of a party to a contract has been determined to be a breach of the covenant of good faith and fair dealing. Glaz v. Ralston Purina Co., 24 Mass.App.Ct. 386, 509 N.E.2d 297 (1987). 221 The appellants do not contend that the amounts that Aetna paid out on the policies were ever in dispute. These amounts were the only facts, in addition to the facts determined by the jury in the liability phase, that were material to the court's judgment. Although there may have been some dispute as to the existence and extent of any actual losses by the defendants, any dispute about these facts was not material to the judgment because the appellants' fraud (by either exaggerating or completely fabricating losses) precluded them from asserting any right to recover for actual losses under the insurance contracts. Since no triable fact disputes remained, the appellants were not denied their right to a jury trial. The court's determinations of the sums certain to be awarded against the defendants were properly made as matters of law--that is, by the judge without submission to a jury.