United States District Court, W.D. Washington, Seattle
ORDER REMANDING ACTION TO KING COUNTY SUPERIOR
Honorable Richard A. Jones United States District Judge
Honorable Richard A. Jones This matter comes before the Court
on Defendants' Motion to Dismiss (Dkt. # 129). For the
reasons stated below, the Court concludes that it does not
have subject matter jurisdiction under 28 U.S.C. § 1332.
Defendants' Motion to Dismiss (Dkt. # 129) is therefore
terminated and this matter is remanded to King County
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
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.
claims that he had his own insurance policy with 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.
to Plaintiff, Nationstar and the insurance companies operate
a kickback scheme that results in inflated premiums for
borrowers who have force-placed insurance on their property.
. Dkt. # 43 (Amended Complaint) at ¶ 9. 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.
Id. When a borrower's coverage lapses, SGIC and
ASIC work with Nationstar's broker, Harwood Service
Company (“Harwood”), to place the proper
insurance policy. Id. at ¶ 10. 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
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. On June 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.
2, 2015, Plaintiff sued ASIC, SGIC, Assurant, Nationstar, and
Harwood Service Company in King County Superior Court,
alleging claims for breach of contract, breach of the implied
covenant of good faith and fair dealing, unjust enrichment,
violation of the Washington Consumer Protection Act
(“CPA”), violation of the Truth in Lending Act
(“TILA”), tortious interference, breach of
fiduciary duty, and violations of the Racketeer Influenced
and Corruption Act (“RICO”). Dkt. # 1-1.
Defendants removed to this Court. Dkt. # 1.
moved to dismiss in August 2015. Dkt. ## 17-23. While these
motions were pending, Plaintiff moved to amend his Complaint.
Dkt. # 34. The Court granted Plaintiff's motion to amend
and dismissed the motions to dismiss filed by the Defendants.
Dkt. # 42. On March 3, 2016, Plaintiff filed his Amended
Complaint, asserting thirteen claims. Dkt. # 43. Defendants
again moved to dismiss arguing that Plaintiff's claims
were barred by the Filed-Rate Doctrine. Dkt. ## 46-48. The
Court dismissed all but three of Plaintiff's claims:
Count 11 (breach of contract), Count 12 (CPA), and Count 13
(breach of contract). Dkt. # 58.
1, 2018, Defendants Nationstar and Harwood moved for summary
judgment, which Plaintiff countered by cross-moving for
summary judgment. Dkt. ## 96, 101. On March 14, 2019, this
Court entered an order granting Defendants' Motion for
Summary Judgment as to Counts 12 and 13 and denying
Defendants' Motion as to Count 11. Dkt. # 123. The Court
denied Plaintiff's Motion for Summary Judgment.
Id. Plaintiff's remaining breach of contract
claim, Count 11, alleges that Nationstar breached the deed of
trust when it “artificially selected an inflated
value” of the Property which, in turn, allowed
Nationstar to “charge higher premiums than it could
have charged if it had correctly valued the
[Property]”. Dkt. # 43, ¶¶ 131-39.
Nationstar and Hardwood now move to dismiss Plaintiff's
Amended Complaint for lack of subject matter jurisdiction.
Dkt. # 129. Specifically, Defendants argue that the Court no
longer has jurisdiction over this matter because the one
remaining claim is a state law claim and diversity