Centex Homes v. Navigators Specialty Insurance Company et al
Filing
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ORDER granting 38 Motion to Dismiss for Lack of Jurisdiction without prejudice. Signed by Chief Judge Gloria M. Navarro on 9/11/2017. (Copies have been distributed pursuant to the NEF - JM)
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UNITED STATES DISTRICT COURT
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DISTRICT OF NEVADA
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CENTEX HOMES, a Nevada general
partnership,
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Plaintiff,
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vs.
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NAVIGATORS SPECIALTY INSURANCE )
COMPANY, a New York corporation;
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EVEREST NATIONAL INSURANCE
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COMPANY, a Delaware corporation;
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INTERSTATE FIRE & CASUALTY
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COMPANY, an Illinois corporation;
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LEXINGTON INSURANCE COMPANY, a )
Delaware corporation; FEDERAL
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INSURANCE COMPANY, an Indiana
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corporation; and UNDERWRITERS AT
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LLOYDS LONDON, an England corporation; )
ST. PAUL FIRE AND MARINE
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INSURANCE COMPANY, a Connecticut
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corporation,
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Defendants.
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Case No.: 2:16-cv-01958-GMN-CWH
ORDER
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Pending before the Court is the Motion to Dismiss, (ECF No. 38), filed by Defendant St.
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Paul Fire and Marine Insurance Company (“St. Paul”). Defendant Federal Insurance Company
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(“Federal Insurance”) joined the Motion, (ECF No. 40). Plaintiff Centex Homes (“Plaintiff”)
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filed a Response, (ECF No. 48), and St. Paul filed a Reply, (ECF No. 53). For the reasons
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discussed below, the Court GRANTS St. Paul’s Motion.
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I.
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BACKGROUND
This case arises out of a separate lawsuit in which homeowners from developments built
by Plaintiff filed a construction defect action against Plaintiff in state court. See Christopher &
Phyllis Kachnik, et al. v. Centex Homes, et al., District Court, Clark County, Nevada, Case No.
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A-15-726385-D (the “Kachnik case”). Specifically, the Kachnik case alleges that Plaintiff, a
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homebuilder, built homes in various developments that contained “defective and negligent
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engineering and construction” for which the homeowners want to hold Plaintiff liable. (Compl.
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¶ 60, ECF No. 1). Plaintiff asserts that due to the Kachnik case, Plaintiff “has incurred and will
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continue to incur significant costs, including, but not limited to, forensic, investigative, and
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repair costs, attorneys’ fees and other expenses.” (Id. ¶ 62).
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Because of the Kachnik case, Plaintiff filed the present action on August 17, 2016,
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against Defendants Navigators Specialty Insurance Company, Everest National Insurance
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Company, Interstate Fire & Casualty Company, Lexington Insurance Company, Federal
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Insurance, Underwriters at Lloyd’s London, and St. Paul (collectively “Defendants”).
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Plaintiff’s Complaint seeking indemnity alleges the following causes of action: (1) breach of
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contract; (2) breach of the implied covenant of good faith and fair dealing; (3) violations of
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Nevada’s Unfair Claims Settlement Practices Action; and (4) declaratory relief. (Compl. ¶¶ 98–
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119).
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On December 30, 2016, St. Paul filed the instant Motion to Dismiss for Lack of
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Jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1). St. Paul alleges that the
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Court does not have jurisdiction over this case because Plaintiff failed to allege complete
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diversity of Defendants. (Mot. to Dismiss (“MTD”) 3:3–5).
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II.
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LEGAL STANDARD
Federal Rule of Civil Procedure 12(b)(1) provides for dismissal of an action for lack of
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subject matter jurisdiction. “A party invoking the federal court’s jurisdiction has the burden of
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proving the actual existence of subject matter jurisdiction.” Thompson v. McCombe, 99 F.3d
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352, 353 (9th Cir. 1996). A motion to dismiss for lack of subject matter jurisdiction pursuant to
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Rule 12(b)(1) may take one of two forms. Thornhill Publ’g Co. v. General Tel. & Elec. Corp.,
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594 F.2d 730, 733 (9th Cir. 1979). It may be a “facial” challenge or it may be a “factual”
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challenge. Id. “In a facial attack, the challenger asserts that the allegations contained in a
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complaint are insufficient on their face to invoke federal jurisdiction.” Safe Air for Everyone v.
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Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004).
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Alternatively, “[a] factual challenge relies on affidavits or any other evidence properly
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before the court to contest the truth of the complaint’s allegations.” Courthouse News Serv. v.
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Planet, 750 F.3d 776, 780 (9th Cir. 2014). When a factual challenge is asserted, the Court need
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not presume the truthfulness of the allegations in the complaint. See Meyer, 373 F.3d at 1039;
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White v. Lee, 227 F.3d 1214, 1242 (9th Cir. 2000). “Once the moving party has converted the
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motion to dismiss into a factual motion by presenting affidavits or other evidence properly
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brought before the court, the party opposing the motion must furnish affidavits or other
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evidence necessary to satisfy its burden of establishing subject matter jurisdiction.” Savage v.
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Glendale Union High Sch., 343 F.3d 1036, 1040 (9th Cir. 2003).
“District courts have jurisdiction in civil actions where there is complete diversity of
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citizenship among the parties and the amount in controversy exceeds $75,000, exclusive of
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interest and costs.” See Crum v. Circus Circus Enterprises, 231 F.3d 1129, 1131 (9th Cir. 2000)
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(citing 28 U.S.C. § 1332(a)).
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III.
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DISCUSSION
St. Paul alleges that this Court does not have jurisdiction because Plaintiff “fails to
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allege properly the citizenship of Defendant Certain Underwriters at Lloyd’s, London”
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(“Lloyd’s”). (MTD 3:7–9). Specifically, St. Paul alleges that “Lloyd’s is not a traditional
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insurance company, but rather a uniquely structured marketplace” where members are called
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“Names” and “each Name invests in a percentage of an insurance policy risk.” (Id. 5:1–3).
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Together, these Names “comprise ‘Syndicates,’ or groups of hundreds to thousands of Names,”
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and these Syndicates are treated as “unincorporated associations or groups for jurisdictional
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purposes.” (Id. 5:4–8). St. Paul seeks dismissal because Plaintiff fails to “allege the citizenship
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of any Name in the Syndicate that purchased the insurance risk at issue,” and Plaintiff fails to
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“identify the citizenship of the lead underwriters assigned the Syndicate.” (MTD 6:8–10).
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In its Complaint, Plaintiff alleges that Lloyd’s is “an England corporation with its
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principal place of business in London, England.” (Compl. ¶ 11). Moreover, Plaintiff contends
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that “Lloyd’s is no longer comprised of individual members with unlimited personal liability
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and now has a central corporate fund to meet liabilities.” (Resp. 2:8–10). Plaintiff asserts that
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“Lloyd’s is a corporation organized under the laws of England with its principal place of
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business in England—this should end the inquiry regarding diversity.” (Id. 4:20–21).
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A corporation, even if a foreign one, is a citizen of the state of its incorporation and the
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state where it has its principal place of business. 28 U.S.C. § 1332(c)(1); Danjaq, S.A. v. Pathe
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Communications Corp., 979 F.2d 772, 774 (9th Cir. 1992) (holding that § 1332(c) makes “no
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distinction [ ] between those corporations incorporated in a state of the United States and those
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incorporated in a foreign country”). Unincorporated entities, such as partnerships, however,
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have the citizenship of all of their members. Carden v. Arkoma Associates, 494 U.S. 185, 195–
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96 (1990); Johnson v. Columbia Properties Anchorage, LP, 437 F.3d 894, 899 (9th Cir. 2006)
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(“In cases where entities rather than individuals are litigants, diversity jurisdiction depends on
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the form of the entity. For example, an unincorporated association such as a partnership has the
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citizenships of all of its members”).
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Although the Ninth Circuit has not addressed diversity requirements involving Names in
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the Lloyd’s insurance market, district courts within the Circuit have repeatedly held that “the
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citizenship of each Name must be considered for purposes of determining whether complete
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diversity exists.” Certain Underwriters at Lloyd’s of London Syndicates v. Travelers Indem.
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Co., 2006 WL 1896341, at *6 n.2 (W.D. Wash. July 7, 2006); see Parse v. Those Certain
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Underwriters At Lloyd’s London, 2014 WL 12561586, at *3 (C.D. Cal. Mar. 4, 2014); Majestic
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Ins. Co. v. Allianz Int’l Ins. Co., 133 F. Supp. 2d 1218, 1223 (N.D. Cal. 2001) (“[E]ach Name
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must be diverse from Plaintiff to satisfy diversity jurisdiction requirements.”); Certain
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Underwriters at Lloyd’s London v. Raytheon Co., 2001 WL 1836268, at *3 (N.D. Cal. Dec. 4,
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2001) (“[T]his order holds that for federal jurisdiction to exist, there must be complete diversity
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between [the plaintiff] and every Name.”); Genstar Container Corp. v. Certain Underwriters at
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Lloyd’s, 2000 WL 1897299, at *3 (N.D. Cal. Dec. 22, 2000) (finding lack of subject matter
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jurisdiction where plaintiff failed to show complete diversity as to each Name under the
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policy); Queen Victoria Corp. v. Ins. Specialists of Haw., Inc., 711 F. Supp. 553, 554 (D. Haw.
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1989) (“[C]itizenship [of the Lloyd’s policy underwriters] is determined by the citizenship of
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all of its members.”).
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The Court agrees with the other districts in this Circuit. Accordingly, Plaintiff has failed
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to adequately allege complete diversity between Plaintiff and the relevant Names at Lloyd’s, as
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the current allegations are insufficient. The Court is therefore unable to determine whether the
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complete diversity requirement of § 1332 has been satisfied and does not have jurisdiction over
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this case.
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IV.
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CONCLUSION
IT IS HEREBY ORDERED that St. Paul’s Motion to Dismiss, (ECF No. 38), is
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GRANTED. The Court does not have jurisdiction in this case and therefore all claims are
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DISMISSED without prejudice.
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The Clerk of the Court shall enter judgment accordingly and close the case.
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DATED this _____ day of September, 2017.
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___________________________________
Gloria M. Navarro, Chief Judge
United States District Judge
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