St. Paul Fire & Marine Ins. Co. v. Centex Homes, 2014 U.S. Dist. LEXIS 145882 (C.D. Cal. Oct. 7, 2014)
In St. Paul Fire, the Central District of California held that it lacked subject matter jurisdiction to adjudicate the insurers' claims for declaratory relief and breach of contract based on the insureds' alleged breach of the cooperation clause because the case was filed before the insurers' reservation of rights letters were issued.
St. Paul Fire arose out of an underlying construction defect action brought against Centex Homes. Centex was covered as an additional insured under several general liability policies issued by three separate insurers. Centex tendered the underlying action to the insurers, and the insurers allegedly agreed to defend Centex so long as Centex agreed to the insurers' choice of counsel. Centex, however, allegedly refused to accept counsel appointed by the insurers and demanded independent counsel to defend it in the underlying action. Based on the foregoing, the insurers brought an action asserting causes of action for, inter alia, declaratory relief and breach of contract. Centex brought a motion to dismiss, which the St. Paul court granted.
With respect to the insurers' claims for declaratory relief and breach of contract, the court held that it lacked subject matter jurisdiction to adjudicate the claims because the insurers' claims were not ripe at the time they were filed. In dismissing these claims without prejudice, the court noted that because it was undisputed that the insurers did not send their reservation of rights before bringing the coverage action, Centex could not have refused to cooperate, refused the insurers' choice of counsel, or asserted a right to independent counsel prior to the filing of the action.
Originally published in California Insurance Law Quarterly - Winter 2014-15 Newsletter - 03.12.15
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