United States District Court, W.D. Washington, Seattle
RICHARD A. JONES, United States District Judge
matter comes before the Court on Defendants' motions to
dismiss. Dkt. ## 46, 47, 48. Plaintiff opposes the motions.
Dkt. ## 49, 50, 51. For the reasons that follow, the Court
GRANTS in part and DENIES in part the motions.
case is about force-placed insurance. In 2006, Plaintiff
obtained a mortgage loan. Dkt. # 43 (Amended Complaint) at
¶ 39. Aurora Bank (“Aurora”) was an early
servicer of the loan until 2012, at which time Nationstar
Mortgage LLC (“Nationstar”) took over as the loan
servicer. Id. at ¶ 42. Plaintiff's mortgage
agreement included a Property Insurance provision that
required Plaintiff to maintain a certain level of insurance.
Id. at 40. If Plaintiff's coverage lapsed, then
the agreement authorized Nationstar to obtain the proper
amount of coverage. Id. The agreement provided, in
If Borrower fails to maintain any of the coverages described
above, Lender may obtain insurance coverage, at Lender's
option and Borrower's expense. Lender is under no
obligation to purchase any particular type or amount of
coverage. Therefore, such coverage shall cover Lender, but
might or not protect Borrower, Borrower's equity in the
Property, or the contents of the Property, against any risk,
hazard or liability, and might provide greater or lesser
coverage than was previously in effect. Borrower acknowledges
that the cost of insurance coverage so obtained might
significantly exceed the cost of insurance that Borrower
could have obtained.
Id. The agreement further provided that, “[i]f
(a) Borrower fails to perform the covenants and agreements
contained in this Security instrument . . . then Lender may
do and pay for whatever is reasonable and appropriate to
protect the Lender's interest in the Property . . .,
including protecting and/or assessing the value of the
Property . . . .” Id. at ¶ 41; see
also Dkt. # 28 at p. 16.
claims that he had his own insurance policy through Safeco
Insurance Company (“Safeco”) through July 2013,
which Aurora can verify. Dkt. # 43 (Amended Complaint) at
¶ 42. Nonetheless, Nationstar force-placed insurance on
his property beginning in July 2012. Plaintiff contests the
force-placed policy from July 2012 to July 2013, but concedes
that “[a]t some time, ” his voluntary insurance
policy indeed lapsed. Id. at ¶ 42.
avers that Nationstar and the insurance companies operate a
kickback scheme that results in inflated premiums for
borrowers who have force-placed insurance on their property.
In his Amended Complaint, Plaintiff explains that Assurant
Inc. (“Assurant”) operates through its
subsidiaries, American Security Insurance Company (ASIC) and
Standard Guaranty Insurance Company (SGIC), to monitor loans.
Dkt. # 43 (Amended Complaint) at ¶ 9. When a
borrower's coverage lapses, SGIC and ASIC work with
Nationstar's broker, Harwood Service Company
(“Harwood”), to place the proper insurance
policy. Once the policy is placed, Nationstar pays the
associated premiums to the insurers and charges that premium
to the borrower. Id. at ¶ 26. Plaintiff alleges
that SGIC and ASIC would then pay commissions to Harwood
and/or Nationstar, but these commissions were actually
kickbacks used to secure an exclusive relationship.
Id. at ¶ 9. Moreover, Plaintiff asserts that
Nationstar maintains an “umbrella policy” with
the insurers such that Harwood's services are
unnecessary. Id. at ¶ 24.
claims that the premiums include an extra amount designated
for the kickbacks, as well as extra amounts for potential
costs and charges associated with servicing. Id. at
¶ 30. This amount is paid back to Nationstar but not to
the borrowers. Therefore, Plaintiff alleges that he paid
“hyper-inflated premiums” for his force-placed
insurance policy. Id. at ¶ 30.
with the issue of inflated premiums, Plaintiff also alleges
that the Defendants overvalued his property such that it
would qualify for higher premiums. Id. at
¶¶ 133, 134. Plaintiff claims this pattern of
overvaluation is a widespread and common practice for
Defendants. Id. at ¶ 147.
10, 2015, Plaintiff “obtained a quote for standard
insurance on his home from Commerce West Insurance Company,
” and found that this premium was less than his current
force-placed insurance premium. Id. at ¶ 48. He
also noticed that the quote from Commerce West Insurance
Company was “similar to what he was previously paying
to Safeco.” Id. He subsequently served
Defendants with a complaint on July 2, 2015, and Defendants
removed to this Court. Dkt. # 1. Plaintiff then amended his
complaint, and Defendants responded with the instant motions
courts are tribunals of limited jurisdiction and may only
hear cases authorized by the Constitution or a statutory
grant. Kokkonen v. Guardian Life Ins. Co. of Am.,
511 U.S. 375, 377 (1994). The burden of establishing
subject-matter jurisdiction rests upon the party seeking to
invoke federal jurisdiction. Id. Once it is
determined that a federal court lacks subject-matter
jurisdiction, the court has no choice but to dismiss the
suit. Arbaugh v. Y & H Corp., 546 U.S. 500, 514
(2006); Fed.R.Civ.P. ...