Court Opinion

ID: 4171520
Source: CourtListenerOpinion
Date Created: 2017-05-24 20:04:11.67071+00
Date Added: 2024-06-11T07:47:05.340480
License: Public Domain

FILED
                           NOT FOR PUBLICATION
                                                                           MAY 24 2017
                    UNITED STATES COURT OF APPEALS                      MOLLY C. DWYER, CLERK
                                                                         U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

CENTURY SURETY COMPANY, an                       No.   14-36002
Ohio corporation,
                                                 D.C. No. 2:12-cv-00823-MJP
              Plaintiff-Appellee,

 v.                                              MEMORANDUM*

BELMONT SEATTLE, LLC, a California
limited liability company,

              Defendant-Appellant.

                   Appeal from the United States District Court
                     for the Western District of Washington
                Marsha J. Pechman, Senior District Judge, Presiding

                             Submitted May 18, 2017**
                                Seattle, Washington

Before: GOULD and PAEZ, Circuit Judges, and LEMELLE,*** District Judge.

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
      **
             The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
      ***
             The Honorable Ivan L.R. Lemelle, United States Senior District Judge
for the Eastern District of Louisiana, sitting by designation.
      Belmont Seattle appeals the district court’s judgment in favor of Century Surety

Company. The district court found that summary judgment was appropriate because

the exception to the alienated premises exclusion did not apply and Century Surety

never insured Belmont Seattle. Belmont Seattle argued in its appeal that the district

court erred on four grounds: (1) it refused to dismiss Century Surety’s declaratory

judgment cause of action for lack of subject matter jurisdiction; (2) it refused to

award Belmont Seattle Olympic Steamship attorney’s fees under Washington state

law; (3) it ruled that the exception to the alienated premises exclusion did not apply

on the basis of an erroneous definition of premises and interpretation of rental income;

and (4) it concluded that Belmont Seattle was never insured under the policy with

Century Surety.

          We find that the district court erred when it exercised subject matter

jurisdiction over Century Surety’s declaratory judgment action.1 Nonetheless, the

district court correctly decided that Belmont Seattle is not entitled to Olympic

Steamship attorney’s fees. We reverse in part and affirm in part.

      1
         Coverage issues will not be discussed given that subject matter jurisdiction
is not present.
                                           2
      We review de novo a district court’s grant of a motion for summary

judgment. Bergt v. Ret. Plan for Pilots Employed by MarkAir, Inc., 293 F.3d 1139,

1142 (9th Cir. 2002) (citing Lang v. Long-Term Disability Plan of Sponsor Applied

Remote Tech., 125 F.3d 794, 797 (9th Cir. 1997)). We also review de novo a

district court’s decision on subject-matter jurisdiction, including questions of

mootness. Sample v. Johnson, 771 F.2d 1335, 1338 (9th Cir. 1985). Finally, the

district court’s denial of attorney’s fees is reviewed for an abuse of discretion. K.C.

v. Torlakson, 762 F.3d 963, 966 (9th Cir. 2014).

      Under the Declaratory Judgment Act federal courts are empowered, “[i]n a case

of actual controversy within its jurisdiction,” to “declare the rights and other legal

relations” of parties. 28 U.S.C. § 2201(a). This refers to matters that are justiciable

under Article III of the United States Constitution. MedImmune, Inc. v. Genentech,

Inc., 549 U.S. 118, 126-127 (2007). A case is not justiciable if it is moot. Campbell

v. Wood, 18 F.3d 662, 680 (9th Cir. 1994). In the instant controversy, the underlying

action that gave rise to the declaratory judgment action found resolution while the

parties in this matter were first on appeal before this Court. The declaratory judgment

action became moot after third parties settled Belmont Seattle’s claims regarding the

duty to defend that Century Surety contested in the separate action.

                                           3
      The lower court relied on Washington law to find Belmont Seattle’s claim

for attorney’s fees prevented the declaratory judgment action from being dismissed

as moot. See Allstate Ins. Co. v. Bowen, 91 P.3d 897 (Wash. Ct. App. 2004).

Nonetheless, subject matter jurisdiction in federal court is determined by the

narrow standards delineated in Article III of the United States Constitution.

“Federal courts are courts of limited jurisdiction. They possess only that power

authorized by Constitution and statute. . .” Kokkonen v. Guardian Life Ins. Co. of

Am., 511 U.S. 375, 377 (1994). Conversely, Washington superior courts are

“courts of general jurisdiction and are not constrained by subject matter

jurisdiction under Article III.” To-Ro Trade Shows v. Collins, 997 P.2d 960, 963

(Wash. Ct. App. 2000), aff’d, 27 P.3d 1149 (Wash. 2001). Jurisdictional analyses

regarding federal subject matter jurisdiction by state appellate courts interpreting

state constitutions are not instructive for this Court. Furthermore, attorney’s fees

do not jurisdictionally preserve a case that otherwise has become moot on appeal.

As the Supreme Court has explained, an “interest in attorney’s fees is, of course,

insufficient to create an Article III case or controversy where none exists on the

merits of the underlying claim.” Lewis v. Cont’l Bank Corp., 494 U.S. 472, 480

(1990).

                                           4
      However, attorney’s fees, though ancillary to the underlying action, survive

independently under the Court’s equitable jurisdiction. United States v. Ford, 650

F.2d 1141, 1143-1144 (9th Cir. 1981). The lower court determined that Belmont

Seattle was not entitled to attorney’s fees and we affirm on different grounds.

Attorney’s fees in insurance disputes under Washington state law, Olympic

Steamship fees, are only available to the prevailing party. McRory v. Northern Ins.

Co. of N.Y., 980 P.2d 736, 738 (Wash. 1999). Belmont Seattle contends that the

loss of subject matter jurisdiction renders them the prevailing party and therefore

entitles them to attorney’s fees. The fact that other parties settled the claims that

formed the basis for Century Surety’s declaratory judgment action does not

establish whether the underlying coverage action was meritorious. Settlement

agreements by third parties do not make Belmont Seattle the prevailing party

against Century Surety in an independent declaratory action. Given the disposition

of the coverage action this Court does not find it appropriate to award attorney’s

fees to Belmont Seattle and therefore affirms the district court decision on other

grounds.

                                           5
REVERSE IN PART AND AFFIRM IN PART.

                         6