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Water's Edge v. Affiliated FM Insurance Co.

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

January 8, 2020





         Before the court is Plaintiff Water's Edge, a Condominium Owners Association's (“Water's Edge”) motion to remand or set a scheduling conference. (Mot. (Dkt. # 17); see also Reply (Dkt. # 24).) Defendant Affiliated FM Insurance Company (“AFM”) filed a response to the motion. (Resp. (Dkt. # 22).) Defendant Country Mutual Insurance Company (“CMIC”) (together with AFM, the “Insurers”)-who alleges that it was improperly named as “MiddleOak Specialty” in the complaint (see Answer (Dkt. # 14) at 1)-did not respond to Water's Edge's motion or join AFM's response to that motion. (See generally Dkt.) The court has considered the parties' submissions, the relevant portions of the record, and the applicable law.[1] Being fully advised, the court DENIES Water's Edge's motion.


         Water's Edge is the unit owners' association for the Water's Edge Condominium located in Kirkland, Washington (the “Condominium”). (Am. Compl. (Dkt. # 1-2) ¶ 1.) Water's Edge filed its complaint in King County Superior Court on June 7, 2019 (see Verification of Records (Dkt. # 1-3) at 1-4), and then amended its complaint on August 28, 2019 (Am. Compl. at 1-4). Water's Edge alleges that it “[r]ecently” became aware of water-intrusion damage at the Condominium that Water's Edge believes is covered by insurance policies provided to Water's Edge by the Insurers. (See Id. ¶¶ 7-8, 12-13.) On June 7, 2019, the same date that Water's Edge filed its initial complaint, Water's Edge notified the Insurers in writing of the losses at the Condominium and of its claim for insurance coverage and benefits. (See Id. ¶ 10.) Water's Edge seeks declaratory relief from this court stating that Water's Edge is entitled to coverage for the damage suffered at the Condominium. (See Id. ¶¶ 12-13.)

         With CMIC's consent, AFM removed this case from King County Superior Court to this court on September 27, 2019. (See Not. of Removal (Dkt. # 1).) AFM removed on the basis of diversity jurisdiction under 28 U.S.C. § 1332(a). (See Id. ¶ 6.) AFM alleges that Water's Edge is a citizen of Washington, AFM is a citizen of Rhode Island, and CMIC is a citizen of Connecticut for purposes of diversity jurisdiction. (See Id. ¶ 7.) Although the complaint is silent on the amount in controversy (see generally Am. Compl.), AFM claims that it has conducted a preliminary investigation into Water's Edge's claim and determined that more than $75, 000 is in controversy (see Not. of Removal ¶ 8). Specifically, AFM alleges that the insurance policies at issue provide between $31, 070, 000 and $37, 290, 000 in maximum coverage limits; that the Condominium where the water damage occurred includes 13 individual units that range in value from $4, 721, 000 to $5, 538, 000; and that Water's Edge commissioned a report that indicated that the water-damage at issue “exists at some, if not all[, ] of the window installations” at the Condominium. (See Id. ¶¶ 7(a)-(g); see also Webber Decl. (Dkt. # 2) ¶ 3, Ex. B (Water's Edge's investigation report); Sekits Decl. (Dkt. # 3) ¶¶ 2-3, Exs. A-B (insurance policy declaration pages); id. ¶ 4, Ex. C (property values).) Based on this information, AFM concluded that if coverage is awarded in this case, the cost to repair the damage will exceed $75, 000. (See Not. of Removal ¶ 7(g); Webber Decl. ¶ 4.)

         The Insurers were not notified of Water's Edge's claim until June 7, 2019-the date that Water's Edge filed its original complaint-and have not yet completed their investigation into Water's Edge's insurance claim or issued a final coverage determination. (See Am. Compl. ¶ 10; Miller Decl. (Dkt. # 18) ¶ 9.) Water's Edge claims that it filed this lawsuit before the Insurers had a chance to investigate the insurance claim “out of an abundance of caution” due to concerns that the Insurers would argue that the claim was time-barred if Water's Edge did not file it immediately. (See Mot. at 1; Am. Compl. ¶ 11.) Water's Edge attempted to negotiate a tolling agreement with the Insurers to resolve concerns about the timeliness of Water's Edge's claim, but the parties were unable to reach agreement. (See Miller Decl. ¶¶ 5-6, Exs. C-D.)

         III. ANALYSIS

         Water's Edge argues that this case should be remanded because AFM failed to satisfy its burden to establish that there is at least $75, 000 in controversy. (See Mot. at 3.) In the alternative, Water's Edge requests a scheduling conference so that the court and the parties can “discuss how best to plan out this case.” (Id. at 11.) AFM rejects Water's Edge's amount in controversy argument, but argues that if the court agrees with Water's Edge that the court cannot yet determine “if anything” is in dispute between the parties, then this case is not yet ripe for adjudication and should be dismissed. (See Resp. at 2-3.) Thus, the parties' briefing presents questions regarding diversity jurisdiction and the constitutional justiciability of this dispute. The court addresses the applicable legal standards before considering the parties' arguments.

         A. Legal Standards

         1. Amount in Controversy

         “Jurisdiction founded on 28 U.S.C. § 1332 requires that the parties be in complete diversity and the amount in controversy exceed $75, 000.” Matheson v. Progressive Specialty Ins. Co., 319 F.3d 1089, 1090 (9th Cir. 2003). “Where it is not facially evident from the complaint that more than $75, 000 is in controversy, the removing party must prove, by a preponderance of the evidence, that the amount in controversy meets the jurisdictional threshold.” Id.; see also 28 U.S.C. § 1446(c)(2). In determining whether jurisdiction has been established, courts may consider facts “presented in the removal petition as well as ‘any summary-judgment-type evidence relevant to the amount in controversy at the time of removal.'” Matheson, 319 F.3d at 1090 (quoting Singer v. State Farm Mut. Auto. Ins. Co., 116 F.3d 373, 377 (9th Cir. 1997)).

         2. Justiciability

         The concept of justiciability “expresses the jurisdictional limitations imposed upon federal courts by the ‘case or controversy' requirement” of Article III of the United States Constitution. See Corrie v. Caterpillar, Inc., 503 F.3d 974, 980 (9th Cir. 2007) (citation omitted); U.S. Const., art. III, § 2. Justiciability is a threshold matter that courts have an independent obligation to evaluate, sua sponte, if necessary, before reaching the merits of a case. See, e.g., Am. Civil Liberties Union of Nev. v. Lomax, 471 F.3d 1010, 1015 (9th Cir. 2006); see also Toumajian v. Frailey,135 F.3d 648, 652 (9th Cir. 1998) (“In this action, as in all actions before a ...

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