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Stark v. Markel American Insurance Co.

United States District Court, W.D. Washington, Seattle

November 7, 2017

GREGORY J. STARK, a Canadian citizen and Washington resident, Plaintiff,
MARKEL AMERICAN INSURANCE COMPANY, a Virginia corporation; and DMA & ASSOCIATES, INC., a Washington corporation, Defendants.




         This matter comes before the Court on Plaintiff Gregory Stark's Motion for Remand, Dkt. #7. Plaintiff moves the Court for an order remanding this action to King County Superior Court and for an award of fees and costs under 28 U.S.C. § 1447(c). Id. Defendant Degginger McIntosh & Associates (“DMA”) joins in requesting remand. Dkts. #9 and #17. Defendant Markel American Insurance Company opposes remand and fees. Dkt. #14. The Court has determined that oral argument is unnecessary. For the reasons below, the Court agrees with Mr. Stark, GRANTS his Motion, REMANDS this case to King County Superior Court, and awards fees.


         In 2015, Mr. Stark purchased a 1960 66-foot long Chris Craft vessel. See Dkt. #1-2 at 3, ¶9. He renamed the boat the GRACE. Id. at 4, ¶11. Mr. Stark contacted DMA, his previous insurance broker, and sought to increase the amount of insurance. He later informed DMA that he had found a boathouse to moor the GRACE. Id. at 4-5, ¶¶12-16. DMA then sent Mr. Stark an application for an insurance quote from Defendant insurance company Markel and Mr. Stark completed the form. Id. at 6, ¶¶23-24. Mr. Stark alleges that, late in the underwriting process, Markel made a change to the policy eliminating coverage for the GRACE if it was afloat on the water, and that this was not clearly communicated to Mr. Stark.

         On May 21, 2017, approximately six months after the Policy was finalized, an accidental fire broke out at the boathouse, completely destroying the GRACE. Id. at 11, ¶54. Markel later sent Mr. Stark a reservation of rights letter, reserving the right to deny coverage on the basis that GRACE was afloat on the water.

         On September 5, 2017, Mr. Stark initiated a state court action in King County Superior Court against the instant Defendants for reformation of the Markel Policy on the basis that Markel had operated under a mistake of fact regarding the GRACE's seaworthiness when it issued the Markel Policy. See id. Mr. Stark also asserted a claim against Markel for violation of the Washington Consumer Protection Act for its misleading and deceptive conduct in the underwriting and issuance of the Markel Policy. Id. Finally, he asserted claims against DMA for breaching its professional and fiduciary duties by failing to procure the insurance appropriate to cover the GRACE. Id.

         Two days after Mr. Stark filed suit in state court, Markel filed an action in this court, seeking declaratory judgment that there is no coverage under the Markel Policy and that the policy should not be equitably reformed. See Case No. 2:17-cv-1345-RSM. On October 5, 2017, Markel also removed Mr. Stark's state court action to this Court in the instant matter. Dkt. #1. Mr. Stark filed the instant Motion to Remand on October 12, 2017. Dkt. #7.


         A. Legal Standard

         When a case is filed in state court, removal is typically proper if the complaint raises a federal question or where there is diversity of citizenship between the parties and the amount in controversy exceeds $75, 000. 28 U.S.C. §§ 1331, 1332(a). Typically it is presumed “‘that a cause lies outside [the] limited jurisdiction [of the federal courts] and the burden of establishing the contrary rests upon the party asserting jurisdiction.'” Hunter v. Philip Morris USA, 582 F.3d 1039, 1042 (9th Cir. 2009). Courts “strictly construe the removal statute against removal jurisdiction.” Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). “The ‘strong presumption' against removal jurisdiction means that the defendant always has the burden of establishing that removal is proper.” Id. (quoting St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288-290, 58 S.Ct. 586, 82 L.Ed. 845 (1938)). An order remanding the case may require payment of just costs and any actual expenses, including attorney fees, incurred as a result of the removal. 28 U.S.C. § 1447(c). “Absent unusual circumstances, courts may award attorney's fees under § 1447(c) only where the removing party lacked an objectively reasonable basis for seeking removal.” Martin v. Franklin Capital Corp., 546 U.S. 132, 141 (2005).

         B. Analysis

         1. Remand

         In this case, Defendant Markel presents two bases for removal: (1) that this Court has admiralty and maritime jurisdiction over Mr. Stark's reformation claim against Markel because the Markel Policy is a marine insurance policy; and (2) that the Court will have diversity jurisdiction once Markel files a ...

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