No Right to Jury In Bad Faith Cases

The bad faith statute is silent on the right to a jury trial. The statute, found in the Judicial Code, reads as follows:

“In an action arising under an insurance policy, if the court finds that the insurer has acted in bad faith toward the insured, the court may take all of the following actions: (1) Award interest on the amount of the claim from the date the claim was made by the insured in an amount equal to the prime rate of interest plus 3 percent. (2) Award punitive damages against the insurer. (3) Assess court costs and attorney fees against the insurer.”

On remand, the court first used a statutory construction analysis in addressing the jury trial issue.

Mishoe and Hamer argued that under such an analysis, the word “court” as used in the statute did not limit the determination to a judge and that the Legislature’s intent was to allow a jury to decide such cases.

The court turned to the high court’s statutory construction analysis in Wertz. In Wertz, the Supreme Court said that the Legislature’s use of the word “court” was “strong evidence” that “it is a tribunal, rather than a jury, that is to make findings and provide relief.”

Unlike Wertz, however, the court in Mishoe had the privilege of a definitional section in the statute defining the terms “court” and “judge.” The term “court” under the statute “includes any one or more of the judges of the court who are authorized by general rule or rule of court, or by law or usage, to exercise the powers of the court in the name of the court.”

The insurers argued that a strict interpretation of the word “court” means only “trial judge,” not jury. The plaintiffs, on the other hand, argued that definition of “court” is “unduly restrictive” and should include both a judge and a jury.

The court said although it had the definitions to rely on, the definitions did not “concretely define” the terms but merely provided an “exemplary guidance.”

“While appellants are correct that the Legislature could have used the term ‘judge’ in place of the word ‘court’ in Section 8371 if it did not intend a jury trial to be available thereunder, close examination of the statute under the principles in Wertz leads us to reject their argument,” Brosky wrote. “As in Wertz, the Legislature chose to use the term ‘court’ rather than include the word ‘jury.’”

The court then concluded that under Wertz, persons seeking remedy under the bad faith statute do not have a right to a jury trial.

Mishoe and Hamer further argued that allowing a trial by jury in bad faith cases would “favor public interest.” The court, however, said even if it believed it to be in the public’s best interest, the court was bound by the statutory analysis.

Constitutional Issues

After rendering its opinion based on a statutory analysis, the court then turned to the constitutional issues. Mishoe and Hamer argued that the state constitution provided a common law right to a trial by jury.

The court said that because the cause of action under 8371 did not exist in 1790, there is no common law right to a jury trial in bad faith cases.

The plaintiffs urged the court to look at the nature of the relief requested by the bad faith statute, i.e. punitive damages, but the court said the Supreme Court clearly rejected such an approach in Wertz.

“The underlying cases in this appeal are not simply actions on an insurance policy,” Brosky wrote. “Rather, these are actions filed pursuant to the statutorily created remedy set forth in Section 8371 of the Judicial Code, which was not cognizable until its 1990 enactment.”

The middle appeals court also rejected a similar argument under the Seventh Amendment to the U.S. Constitution.

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