Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_16-cv-00186/USCOURTS-caed-2_16-cv-00186-0/pdf.json

Parties Involved:
Ironshore Specialty Insurance Company
Defendant
Maryland Casualty Company
Plaintiff
Northern Insurance Company of New York
Plaintiff

Document Text:

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

1

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

MARYLAND CASUALTY COMPANY 

and NORTHERN INSURANCE 

COMPANY OF NEW YORK,

Plaintiffs,

v.

IRONSHORE SPECIALTY 

INSURANCE COMPANY and DOES 1-

20 inclusive,

Defendants.

No. 2:16-cv-00186-MCE-AC

MEMORANDUM AND ORDER

This is a dispute between insurance carriers involving their obligation to defend 

and indemnify a common insured, 3rd Generation, in an underlying construction defect 

action where 126 homeowners allege defects in excess of $7.5 million. Defendant 

Ironshore Specialty Insurance Company (“Ironshore”) insured 3rd Generation through a 

policy of commercial general liability insurance, and Plaintiffs Maryland Casualty 

Company and Northern Insurance Company of New York (collectively “Zurich”) also 

provided coverage to 3rd Generation in connection with the construction project which 

spawned the claimed defects. According to Zurich, while it provided a defense to 3rd 

Generation, Ironshore, for its part, has wrongfully refused to defend and/or indemnify 3rd 

Generation in the underlying lawsuit.

Case 2:16-cv-00186-MCE-AC Document 12 Filed 08/01/16 Page 1 of 4
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

2

Zurich’s lawsuit was initially filed in state court on November 30, 2015. On 

January 29, 2016, Ironshore removed Zurich’s lawsuit to this Court on diversity of 

citizenship grounds pursuant to 28 U.S.C. §§ 1332, 1441(a) and 1446. According to the 

Notice of Removal, the $75,000 amount in controversy requirement is met given the 

construction defects alleged by the homeowners’ association and its 126 members, as 

well as the fact that Ironshore owed a duty to defend one of the implicated 

subcontractors, 3rd Generation, because the general liability policy Ironshore issued to 

3rd Generation had coverage limits of $1,000,000. In now removing to remand, Zurich 

argues that the requisite amount in controversy requirement has in fact not been 

established. Ironshore argues that because the underlying complaint seeks 100 times 

that required $75,000 amount, there is no question that the jurisdictional limit has been 

satisfied.1

For the reasons set forth below, Zurich’s Motion to Remand will be DENIED.2

STANDARD

When a case “of which the district courts of the United States have original

jurisdiction” is initially brought in state court, the defendant may remove it to federal court 

“embracing the place where such action is pending.” 28 U.S.C. § 1441(a). There are 

two bases for federal subject matter jurisdiction: (1) federal question jurisdiction under 

28 U.S.C. § 1331, and (2) diversity jurisdiction under 28 U.S.C. § 1332. A district court 

has federal question jurisdiction in “all civil actions arising under the Constitution, laws, 

or treaties of the United States.” Id. § 1331. A district court has diversity jurisdiction 

 1 Ironshore has requested that the Court take judicial notice of the allegations in the underlying 

complaint, as well as a Cross-Complaint for Indemnity filed with respect to that complaint, pursuant to 

Federal Rule of Evidence 201. The Complaint’s allegations include a prayer for compensatory and special 

damages in excess of $7.5 million. Defendant’s Request for Judicial Notice (ECF No. 7-1) is unopposed 

and is consequently GRANTED.

2 Because oral argument would not have been of material assistance, the Court submitted this 

matter on the briefing in accordance with Eastern District Local Rule 230(g).

Case 2:16-cv-00186-MCE-AC Document 12 Filed 08/01/16 Page 2 of 4
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

3

“where the matter in controversy exceeds the sum or value of $75,000, . . . and is 

between citizens of different states, or citizens of a State and citizens or subjects of a 

foreign state . . . .” Id. § 1332(a)(1)-(2).

A defendant may remove any civil action from state court to federal district court if 

the district court has original jurisdiction over the matter. 28 U.S.C. § 1441(a). “The 

party invoking the removal statute bears the burden of establishing federal jurisdiction.” 

Ethridge v. Harbor House Rest., 861 F.2d 1389, 1393 (9th Cir. 1988) (citing Williams v. 

Caterpillar Tractor Co., 786 F.2d 928, 940 (9th Cir. 1986)). Courts “strictly construe the 

removal statute against removal jurisdiction.” Gaus v. Miles, Inc., 980 F.2d 564, 566 

(9th Cir. 1992) (internal citations omitted). “[I]f there is any doubt as to the right of 

removal in the first instance,” the motion for remand must be granted. Id. Therefore, “[i]f 

at any time before final judgment it appears that the district court lacks subject matter 

jurisdiction, the case shall be remanded” to state court. 28 U.S.C. § 1447(c).

ANALYSIS

In moving to remand, Zurich argues that Ironshore makes no contention to 

support its argument that the amount in controversy exceeds $75,000 aside from 

contending that Zurich’s coverage limits are $1,000,000. Zurich goes on to contend that 

the coverage limit “is of no import” in establishing the amount at issue, and that 

Ironshore has accordingly not met its burden of proof in establishing that removal 

jurisdiction is proper. Pls.’ Mot., ECF No. 6-1, 3:15-17. Zurich is wrong. 

First, as Ironshore points out, policy limits are unquestionably a factor relevant in 

determining whether the amount in controversy requirement for diversity jurisdiction has 

been met in insurance coverage actions like this one. St. Paul Reinsurance Co. v. 

Greenberg, 134 F.3d 1250, 1253 (5th Cir. 1998) (“policy limits and potential attorney’s 

fees [are] items to be considered in determining the amount in controversy”). Second, 

Ironshore’s Notice of Removal goes on to specifically describe the underlying action 

Case 2:16-cv-00186-MCE-AC Document 12 Filed 08/01/16 Page 3 of 4
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

4

triggering potential coverage as “a construction defect action in which a homeowners 

association consisting of 126 individuals sued the alleged owner and developer of a 

condominium project” which produced, in turn, a cross-complaint “against numerous 

subcontractors and others for indemnity, negligence, and other causes of action.” Notice 

of Removal, ECF No. 1, 1:27-2:2. Third, as indicated above, the allegations of the 

underlying Complaint show that the homeowners association seeks more than $7.5 

million in compensatory and special damages. Taken together, these circumstances 

show that the requisite amount in controversy requirement has been amply satisfied.

CONCLUSION

For the foregoing reasons, Plaintiffs’ Motion to Remand (ECF No. 6) is DENIED.

IT IS SO ORDERED.

Dated: July 29, 2016

Case 2:16-cv-00186-MCE-AC Document 12 Filed 08/01/16 Page 4 of 4