Weekly Law Resume: Insurance Coverage–Right to Jury Trial on Declaratory Relief

by Low, Ball & Lynch
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[author: David Blinn]


Allen M. Entin v. The Superior Court of Los Angeles
Court of Appeal, Second District (August 20, 2012)

Courts have frequently characterized declaratory relief actions as being equitable in nature. Despite this, cases diverge on whether either party has a right to a jury trial in such an action. This case considered whether an insured had a right to a jury trial in a declaratory relief action over disability benefits where the carrier disputed coverage but continued to pay the benefits.

Allen Entin (“Entin”) was an OB/GYN physician. In 1991, he purchased a disability income policy from Provident Life and Accident Insurance Company (“Provident”) providing benefits of $20,000 per month in the event he became totally disabled. He also purchased an “overhead expense” disability policy from the same carrier providing benefits of up to $360,000 in the event he became totally disabled. Both the Provident policies defined the term “totally disabled” to mean “(1) [the insured is] not able to perform the substantial and material duties of [his] occupation; and  (2) [the insured is] receiving care by a physician which is appropriate for the condition causing the disability.”

On September 3, 2009, Entin filed a claim alleging that migraine headaches rendered him incapable of performing the substantial and material duties of his occupation. Provident reviewed the claim and began paying him benefits under a reservation of rights. Provident conducted a medical examination of Entin, reviewed his medical records and interviewed his physicians, and came to the conclusion that he was not totally disabled within the meaning of the policies and also that there were “substantial questions” as to whether Entin was receiving “appropriate care” for his condition as contractually required under the policies. Provident filed a complaint for declaratory relief over those issues, and clarified that it would continue to pay on the claim until the declaratory relief claim was resolved, and that it would not attempt to recoup any sums paid prior to entry of judgment.

In February of 2012, after the parties had briefed the issue, the trial court ruled that Entin did not have a right to a trial by jury “in light of the fact that payments [under the policies] are ongoing.” Entin filed a petition for writ of mandate to overturn the trial court ruling on the jury trial issue.

The Court of Appeal granted the petition for writ of mandate. It held that Entin was entitled to a jury trial on the declaratory relief dispute over the coverage under Provident’s policies. Initially, the Court noted that in determining whether an action was one triable by a jury at common law, the court is not bound by the form of the action, but rather by the nature of the rights involved, and the facts of the particular case – the gist of the action. A jury trial must be granted where the gist of the action is legal, where the action is one at law. On the other hand, where the action is essentially one in equity, and the relief sought depends upon the application of equitable doctrines, the parties are not entitled to a jury trial.

The Court next noted that although declaratory relief actions are often characterized as “equitable” in nature, they may in fact raise either legal or equitable issues. Here, Provident’s complaint did not raise any dispute regarding the proper construction of the parties’ insurance policies. Instead, it sought a determination as to whether Entin was “totally disabled” within the meaning of those policies. To resolve this issue, the trier of fact would have to decide whether Entin’s migraine headaches rendered him “unable to perform the substantial and material duties of his occupation,” and whether he was receiving “appropriate care for the condition.”

The Court held that the rights involved were legal in nature, and did not depend upon the application of equitable doctrines. The court also noted that normally, the question of whether a person was totally disabled, under the rule and terms of a policy, is a question of fact for a jury to decide.

The Court disagreed with Provident that because it was continuing to pay benefits and no monetary damages were being sought (or could be sought by Entin), there was no right to a jury trial. The Court noted that while mode of relief is a “factor” in assessing whether there is a right to a jury trial, it is not “determinative.” Provident’s declaratory relief action involved the resolution of disputed factual issues regarding Entin’s entitlement to contract benefits. Entin was entitled to have these “pure issues of fact” determined by a jury.

The Court of Appeal granted the petition for writ of mandate, and directed the trial court to vacate the order denying the request for a jury trial and to issue a new order granting the request.

COMMENT

This case offers a good explanation of the determination courts make as to whether a party is entitled to a jury trial over issues raised in a declaratory relief action. Ultimately, the courts will look to the gist of the action, to determine if there is a right to jury trial. Where, as here, there are pure issues of fact in dispute, a right to trial by jury will exist.

For a copy of the complete decision see:

http://www.courts.ca.gov/opinions/documents/B239642.PDF

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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