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Century Surety Co. v. J Quinn Construction

January 20, 2010

CENTURY SURETY COMPANY, PLAINTIFF,
v.
J QUINN CONSTRUCTION, DEFENDANT.



The opinion of the court was delivered by: Dean D. Pregerson United States District Judge

Order Dismissing Plaintiff's Claim for Declaratory Relief [Motion filed on December 3, 2009]

Presently before the Court is Defendant J. Quinn Construction ("Quinn")'s motion to dismiss for lack of subject matter jurisdiction, or in the alternative, for judgment on the pleadings. Having reviewed the parties' moving papers, and the arguments advanced therein, the Court abstains from exercising jurisdiction over this case.

I. Background

Christopher and Michele Crocker ("Crockers") own a home located in Palos Verdes Estates. (Compl. ¶ 6.) John and Kathryn McLaughlin ("McLaughlins") own a home adjacent to the Crocker home. (Id.) In March 2008, the Crockers undertook a renovation project, adding a second story and a subterranean garage to their home. (Id. ¶ 7.) The Crockers hired John Simich Construction ("Simich") to act as the general contractor for the renovation project and hired Quinn to install a swimming pool. (Id.)

On March 2, 2009, the McLaughlins filed a complaint against the Crockers and Simich in Los Angeles County Superior Court, case No. YC059196 ("State Action"). (Id. ¶ 8.) The complaint in the State Action alleges that, as the Crockers' renovation project progressed, the construction activity jarred and shook the McLaughlin home, causing it to subside, settle, and lose its lateral and subjacent support. (Id.) The McLaughlins allege that the instability resulted in cracks in their driveway, front porch, pool area, rear patio, kitchen, bedrooms, living room, and office room. (Id.) The complaint pleads causes of action for negligence, removal of lateral support, nuisance, and trespass. (Id.)

On May 19, 2009, Simich cross-claimed against Quinn. (Id. ¶ 9.) The crosscomplaint alleges that Quinn negligently performed its work, causing damage to the McLaughlin home, and pleads causes of action for negligence, comparative indemnity and apportionment of fault, declaratory relief, and total equitable indemnity. (Id.)

Plaintiff Century Surety ("Century") issued a Swimming Pool Contractors Commercial General Liability Policy ("Policy") to Quinn. (Id. ¶ 10.) The Policy provides a limit of $1,000,000 per occurrence and $2,000,000 in the aggregate, subject to a $2,500 per claim deductible. (Mayer First Decl. ¶ 6.) Quinn tendered defense of Simich's cross-claim to Century. (Id.) Century accepted Quinn's defense pursuant to a reservation of rights, including the right to recoup defense costs. (Compl., Ex. D.)

Century brought the present action for declaratory relief, pursuant to the Federal Declaratory Judgment Act, 28 U.S.C. § 2201, on August 20, 2009. It seeks a declaration that the Policy excludes coverage for the property damage at issue in the State Action. Specifically, Plaintiff contends that two of the Policy's exclusions relieve it of any duty to indemnify Quinn for damage it may have caused to the McLaughlin home.

First, Plaintiff notes that the Policy does not cover "'bodily injury' or 'property damage,' which would not have occurred in whole or part but for the 'subsidence of land,' including 'subsidence of land' caused in whole or in part by the operations of any insured or any subcontractor(s)." (Compl. ¶ 11.) The Policy defines the term "subsidence of land" as "movement of earth or land, including movement to a higher or lower level, landslide, mud flow, mudslide, or the rising, settling, shifting or sinking of earth." (Id.) Next, Plaintiff relies on the Policy's exclusion of coverage for damage caused by "[t]he transportation of 'mobile equipment' by an 'auto' owned or operated by or rented or loaned to any insured." (Id.)

Quinn, for its part, contends that federal subject matter jurisdiction is lacking, and alternatively, that this Court should exercise its discretion to abstain from ruling on Century's affirmative claims pending resolution of the underlying State Action.

II. Subject Matter Jurisdiction

The Court begins its analysis with Quinn's contention that Century has failed to establish subject matter jurisdiction. If subject matter jurisdiction is lacking, then the Court is powerless to consider the merits of the abstention issues raised in Quinn's motion. See Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 94-95 (1998).

A. Legal Standard

A district court has diversity jurisdiction over any civil action between citizens of different states as long as the amount in controversy exceeds $75,000, excluding interest and costs. 28 U.S.C. § 1332. In actions brought in federal court in which the plaintiff has filed a complaint alleging, in good faith, damages in excess of $75,000, it "must appear to a legal certainty that the claim is really for less than the jurisdictional amount to justify dismissal." St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288-89 (1938). In cases where a defendant removes a case from state to federal court, and the plaintiff challenges jurisdiction, however, the standard is different. See Lowdermilk v. U.S. Bank Nat'l Ass'n, 479 F.3d 994 (9th Cir. 2007) ("[W]hen the plaintiff fails to plead a specific amount of damages, the defendant ...


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