Zurich American Insurance Company, et al. v. Chevron U.S.A. Inc., et al.

Background

This insurance-coverage dispute arose after the Iranian military seized Chevron’s Advantage Sweet vessel in April 2023 while it was carrying Chevron crude oil valued at approximately $51 million. The Primary Insurers sought a declaration that the insurance policies did not cover Chevron’s loss. Chevron asserted counterclaims against the Primary Insurers and joined the Excess Insurers as counterclaim defendants.

Chevron’s amended counterclaims sought a declaration that the policies covered its losses, damages for breach of contract, and damages for bad-faith breach of contract. Chevron demanded a jury trial. The insurers opposed Chevron’s motion to preserve that jury demand.

Legal Standard

The Seventh Amendment preserves jury trials in suits based on common-law claims, but it does not require a jury trial in cases proceeding under admiralty jurisdiction, which is federal jurisdiction over maritime matters. A party may preserve a jury right when an independent non-maritime basis for jurisdiction—such as diversity jurisdiction—also exists. Diversity jurisdiction requires complete diversity, meaning that each plaintiff must be diverse from each defendant, and the party invoking that jurisdiction must plead and prove it.

Discussion

The court held that Chevron had not established diversity jurisdiction over its counterclaims. Chevron’s operative counterclaims alleged maritime jurisdiction over the entire action and diversity jurisdiction only over its claims against the Primary Insurers. They did not allege the citizenship of the Excess Insurers or establish that Chevron was diverse from them. Chevron also offered no evidence proving the Excess Insurers’ citizenship.

The court further noted that Chevron acknowledged at oral argument that diversity jurisdiction would not exist if the dispute involved ordinary non-maritime insurance contracts, because Chevron had not shown complete diversity. The court therefore concluded that Chevron was not entitled to a jury trial based on diversity jurisdiction.

The court rejected Chevron’s argument that its claims against the Primary Insurers could receive jury treatment because they were intertwined with claims against the Excess Insurers. The court explained that the cases Chevron relied on involved an independent jurisdictional basis, such as diversity or federal-question jurisdiction. Here, the court found no jurisdictional basis other than admiralty jurisdiction. The court declined to follow the Fourth Circuit’s reasoning in Vodusek because it conflicted with the complete-diversity requirement.

Disposition

Judge Jacqueline Scott Corley denied Chevron’s motion to preserve jury trial rights. The order states that all claims will be decided by a bench trial and disposes of Docket No. 172.