United States District Court, E.D. California
MARYLAND CASUALTY COMPANY and NORTHERN INSURANCE COMPANY OF NEW YORK, Plaintiffs,
v.
IRONSHORE SPECIALTY INSURANCE COMPANY and DOES 1-20 inclusive, Defendants.
MEMORANDUM AND ORDER
MORRISON C. ENGLAND, JR. JUDGE
This is
a dispute between insurance carriers involving their
obligation to defend and indemnify a common insured, 3rd
Generation, in an underlying construction defect action where
126 homeowners allege defects in excess of $7.5 million.
Defendant Ironshore Specialty Insurance Company
(“Ironshore”) insured 3rd Generation through a
policy of commercial general liability insurance, and
Plaintiffs Maryland Casualty Company and Northern Insurance
Company of New York (collectively “Zurich”) also
provided coverage to 3rd Generation in connection with the
construction project which spawned the claimed defects.
According to Zurich, while it provided a defense to 3rd
Generation, Ironshore, for its part, has wrongfully refused
to defend and/or indemnify 3rd Generation in the underlying
lawsuit.
Zurich’s
lawsuit was initially filed in state court on November 30,
2015. On January 29, 2016, Ironshore removed Zurich’s
lawsuit to this Court on diversity of citizenship grounds
pursuant to 28 U.S.C. §§ 1332, 1441(a) and 1446.
According to the Notice of Removal, the $75, 000 amount in
controversy requirement is met given the construction defects
alleged by the homeowners’ association and its 126
members, as well as the fact that Ironshore owed a duty to
defend one of the implicated subcontractors, 3rd Generation,
because the general liability policy Ironshore issued to 3rd
Generation had coverage limits of $1, 000, 000. In now
removing to remand, Zurich argues that the requisite amount
in controversy requirement has in fact not been established.
Ironshore argues that because the underlying complaint seeks
100 times that required $75, 000 amount, there is no question
that the jurisdictional limit has been
satisfied.[1]
For the
reasons set forth below, Zurich’s Motion to Remand will
be DENIED.[2]
STANDARD
When a
case “of which the district courts of the United States
have original jurisdiction” is initially brought in
state court, the defendant may remove it to federal court
“embracing the place where such action is
pending.” 28 U.S.C. § 1441(a). There are two bases
for federal subject matter jurisdiction: (1) federal question
jurisdiction under 28 U.S.C. § 1331, and (2) diversity
jurisdiction under 28 U.S.C. § 1332. A district court
has federal question jurisdiction in “all civil actions
arising under the Constitution, laws, or treaties of the
United States.” Id. § 1331. A district
court has diversity jurisdiction “where the matter in
controversy exceeds the sum or value of $75, 000, . . . and
is between citizens of different states, or citizens of a
State and citizens or subjects of a foreign state . . .
.” Id. § 1332(a)(1)-(2).
A
defendant may remove any civil action from state court to
federal district court if the district court has original
jurisdiction over the matter. 28 U.S.C. § 1441(a).
“The party invoking the removal statute bears the
burden of establishing federal jurisdiction.”
Ethridge v. Harbor House Rest., 861 F.2d 1389, 1393
(9th Cir. 1988) (citing Williams v. Caterpillar Tractor
Co., 786 F.2d 928, 940 (9th Cir. 1986)). Courts
“strictly construe the removal statute against removal
jurisdiction.” Gaus v. Miles, Inc., 980 F.2d
564, 566 (9th Cir. 1992) (internal citations omitted).
“[I]f there is any doubt as to the right of removal in
the first instance, ” the motion for remand must be
granted. Id. Therefore, “[i]f at any time
before final judgment it appears that the district court
lacks subject matter jurisdiction, the case shall be
remanded” to state court. 28 U.S.C. § 1447(c).
ANALYSIS
In
moving to remand, Zurich argues that Ironshore makes no
contention to support its argument that the amount in
controversy exceeds $75, 000 aside from contending that
Zurich’s coverage limits are $1, 000, 000. Zurich goes
on to contend that the coverage limit “is of no
import” in establishing the amount at issue, and that
Ironshore has accordingly not met its burden of proof in
establishing that removal jurisdiction is proper. Pls.’
Mot., ECF No. 6-1, 3:15-17. Zurich is wrong.
First,
as Ironshore points out, policy limits are unquestionably a
factor relevant in determining whether the amount in
controversy requirement for diversity jurisdiction has been
met in insurance coverage actions like this one. St. Paul
Reinsurance Co. v. Greenberg, 134 F.3d 1250, 1253 (5th
Cir. 1998) (“policy limits and potential
attorney’s fees [are] items to be considered in
determining the amount in controversy”). Second,
Ironshore’s Notice of Removal goes on to specifically
describe the underlying action triggering potential coverage
as “a construction defect action in which a homeowners
association consisting of 126 individuals sued the alleged
owner and developer of a condominium project” which
produced, in turn, a cross-complaint “against numerous
subcontractors and others for indemnity, negligence, and
other causes of action.” Notice of Removal, ECF No. 1,
1:27-2:2. Third, as indicated above, the allegations of the
underlying Complaint show that the homeowners association
seeks more than $7.5 million in compensatory and special
damages. Taken together, these circumstances show that the
requisite amount in controversy requirement has been amply
satisfied.
CONCLUSION
For the
foregoing reasons, Plaintiffs’ Motion to Remand (ECF
No. 6) is DENIED.
IT IS
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