The opinion of the court was delivered by: Anthony W. Ishii Chief United States District Judge
ORDER ON MOTION TO DISMISS OR STRIKE THIRD- PARTY COMPLAINT Doc. # 8
This action and third-party action arise out of a construction defect action called Figueroa et al. v. Workman Bros. Development, et al. 03CECG02705, which was filed and settled in Fresno County Superior court (the "Underlying Action"). Plaintiff Clarendon America Insurance Company ("Clarendon") brought the instant action against defendant ProBuilders Specialty Insurance Company ("ProBuilders") for an equitable portion of the costs of settlement and defense as to Terry Tuell Concrete, Inc. ("Tuell Concrete"), a defendant in the Underlying Action that was insured by both Clarendon and ProBuilders. The instant action, which was originally filed in Fresno County Superior Court, was removed to this court October 30, 2008, under diversity jurisdiction. After removal, ProBuilders filed a third-party complaint on November 7, 2008, against Tuell Concrete for declaratory relief, breach, and damages, alleging that Tuell Concrete has failed to pay policy deductibles of $10,000 for each of seven claims that ProBuilders paid to settle in the Underlying Action.
On December 10, 2008, third-party defendant Tuell Concrete filed the instant motion to dismiss the third-party complaint for lack of subject matter jurisdiction pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure; or, in the alternative, to strike the third-party complaint in its entirety. The court's jurisdiction is challenged in the instant motion. Venue is proper in this court.
FACTUAL BACKGROUND AND PROCEDURAL HISTORY
When Tuell Concrete was sued for construction defects in the Underlying Action, it tendered its defense and indemnity to Clarendon pursuant to a general construction liability insurance policy issued by Clarendon. Clarendon defended in the Underlying Action and made payments for the defense of Tuell Concrete. The defense in the Underlying Action was also tendered to ProBuilders pursuant to an insurance policy issued by ProBuilders. ProBuilders did not participate in the defense based on certain exclusions in the policy. In their complaint against ProBuilders, Clarendon seeks declaratory relief as to ProBuilders' duty to defend and seeks equitable contribution for defense fees and costs as well as equitable contribution to indemnification costs in the Underlying Action. In removing the case to this court, ProBuilders alleges the total damages claimed by Clarendonagainst ProBuilders for equitable contributions for both defense and indemnity is greater than $75,000.00.
ProBuilders filed their third-party complaint against Tuell Concrete on November 7, 2008. The third-party complaint alleges ProBuilders indemnified Tuell in the amount of $72,727.28 to settle eight individual homeowner claims against Tuell. ProBuilders alleges Tuell is obliged by the terms of its insurance policy to pay deductibles of $10,000.00 for any costs for defense or indemnification as to each individual claimant, whether the claims were presented individually or whether they were aggregated in a single action. Because Thuell Concrete only paid the $10,000.00 deductible for the whole action, rather than for each individual homeowner claim, ProBuilders' third-party claim seeks damages equal to the $10,000.00 deductible for each of the remaining 7 individual homeowner claims that were indemnified by ProBuilders but for which no deductible was paid. The total of damages claimed by ProBuliders in their third-party complaint, exclusive of costs, fees or interest, is therefore $70,000.00.
Tuell Concrete filed the instant motion to dismiss, or in the alternative to strike the third-party complaint, on December 10, 2008. ProBuilders filed their opposition on December 23, 2008, and Tuell Concrete filed their reply on January 5, 2009.
Rule 12(b)(1) of the Federal Rules of Civil Procedure allows a motion to dismiss for lack of subject matter jurisdiction. It is a fundamental precept that federal courts are courts of limited jurisdiction. Limits upon federal jurisdiction must not be disregarded or evaded. Owen Equipment & Erection Co. v. Kroger, 437 U.S. 365, 374 (1978). The plaintiff has the burden to establish that subject matter jurisdiction is proper. Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 377 (1994). This burden, at the pleading stage, must be met by pleading sufficient allegations to show a proper basis for the court to assert subject matter jurisdiction over the action. McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 189 (1936); Fed. R. Civ. P. 8(a)(1). When a defendant challenges jurisdiction "facially," all material allegations in the complaint are assumed true, and the question for the court is whether the lack of federal jurisdiction appears from the face of the pleading itself. Thornhill Publishing Co. v. General Telephone Electronics, 594 F.2d 730, 733 (9th Cir. 1979); Mortensen v. First Fed. Sav. & Loan Ass'n, 549 F. 2d 884, 891 (3d Cir.1977); Cervantez v. Sullivan, 719 F. Supp. 899, 903 (E.D. Cal.1989), rev'd on other grounds, 963 F. 2d 229 (9th Cir.1992).
A defendant may also attack the existence of subject matter jurisdiction apart from the pleadings. Mortensen, 549 F. 2d at 891. In such a case, the court may rely on evidence extrinsic to the pleadings and resolve factual disputes relating to jurisdiction. St. Clair v. City of Chico, 880 F. 2d 199, 201 (9th Cir.1989); Roberts v. Corrothers, 812 F.2d 1173, 1177 (9th Cir.1987); Augustine v. United States, 704 F.2d 1074, 1077 (9th Cir.1983). "No presumptive truthfulness attaches to plaintiff's allegations, and the existence of disputed material facts will not preclude the trial court from evaluating for itself the merits of jurisdictional claims." Thornhill Publishing, 594 F.2d at 733 (quoting Mortensen, 549 F.2d at 891).
Tuell Concrete seeks dismissal of the third-party complaint on the ground the amount in controversy with respect to ProBuilders' claim against Tuell Concrete -- $70,000 -- is not sufficient to satisfy the jurisdictional amount for purposes of diversity jurisdiction. In the alternative, Tuell Concrete requests the court strike the third-party complaint on the ground the requirement set forth in Rule 14 of the Federal Rules of Civil Procedure that there be pass-through liability from the plaintiff in the main case to the third-party defendant is not satisfied in this case.
I. Subject Matter Jurisdiction Over ...