Marie James v. Pennsylvania General Insurance Company

371 F.2d 736, 125 U.S. App. D.C. 271, 10 Fed. R. Serv. 2d 1092, 1966 U.S. App. LEXIS 4292

• Court: Court of Appeals for the D.C. Circuit
• Decided: November 22, 1966
• Docket: 19834_1
• Status: Published

Opinions

PER CURIAM:

On this appeal we hold that on the remand following James v. Pennsylvania General Insurance Co., 121 U.S.App.D.C. 251, 349 F.2d 228 (1965) the District Court did not comply with the instructions of this court.

Briefly appellee sought a declaratory judgment that it was not liable to appellants under an automobile liability insurance policy. The issue tendered by the complaint was the existence of fraud on the part of the insured in the procurement of the renewal of the policy, which had lapsed prior to the accident. A claim had arisen on the policy and appellee was handling the defense on the underlying negligence action against the insured when it withdrew to bring this action.

The action was tried to the court without a jury, notwithstanding appellant’s jury demand, and the court found fraud. The judgment for appellee was reversed on appeal by a division of this court, one judge dissenting. In the opinion, cited above, the court stated: Appellants are entitled to a jury trial on the issue of fraud unless the declaratory judgment was simply the counterpart of a suit in equity. Suit in equity was permitted, for lack of an adequate remedy at law, if presenting the fraud defense in an action at law on the contract, would involve delay that would be prejudicial. But such prejudice was not deemed to inhere where an insurance claim had already arisen and a suit on the policy was pending or threatened. The adequacy of appellee’s legal remedy depends on the nature of its proof of fraud, whether, e. g., resting on witnesses not available generally and who might have disappeared prior to trial of the law action. Appellee’s case seems to turn on documentary proof, and on its own employees, whose testimony would seem to be available and/or subject to perpetuation under Rule 27, Fed.R.Civ.P. However, factors not now in the record may show that “delay in adjudicating the fraud issue likely would have prejudiced appellee’s case seriously.” Appellee is entitled to a trial court determination on the adequacy of its law remedies, and the case is remanded “with directions to hold a hearing to determine whether appel-lee’s legal remedy was adequate at the time this suit was filed.”

On remand the case came before a different district judge. He entered an order finding that appellee did not have an adequate remedy at law at the time suit was filed and could have brought a similar action in equity. The only other finding was: “Delay in presenting the defense fraud would be prejudicial to the plaintiff.”

When appellee’s counsel inquired whether the judge wished to hear testimony, the judge replied: “I don’t know what the Court wanted, but I am not going to take testimony on a question of law. That would be stultification.” In the opinion dictated at the conclusion of argument the judge stated that equity invariably took cognizance of actions to rescind a document for fraud, and that there was no adequate remedy at law because at the time appellee filed its action no legal action had yet been begun against appellee insurer.

We are not called upon to consider whether we would agree with the legal principles stated by the district judge. It is manifest that they are different from the law of the ease as set forth in the opinion of this court on the first appeal and that the case must be remanded in order that if appellee continues to oppose the jury demand, a district judge may hold the kind of hearing and determination contemplated by that opinion.

Reversed and remanded.