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Elevation Builders, Inc. v. Companion Specialty Insurance Co.

United States District Court, D. Colorado

July 8, 2015

ELEVATION BUILDERS, INC., Plaintiff,
v.
COMPANION SPECIALTY INSURANCE COMPANY, Defendant.

ORDER

PHILIP A. BRIMMER, District Judge.

This matter is before the Court on the Motion for Remand [Docket No. 14] filed by plaintiff Elevation Builders, Inc.

On February 6, 2015, plaintiff filed this case in the District Court for the City and County of Denver, Colorado. Docket No. 3 at 2. Plaintiff brings claims against defendant Companion Specialty Insurance Company for breach of contract, bad faith breach of an insurance contract, violations of Colo. Rev. Stat. §§ 10-3-1115(1)(a) and 10-3-1116, and declaratory judgment pursuant to Colorado's Declaratory Judgment Relief Act, Colo. Rev. Stat. § 13-51-106. Id. at 3-7, ¶¶ 14-42. On March 9, 2015, defendant removed the case to this Court, claiming that the Court has subject-matter jurisdiction based on diversity of citizenship under 28 U.S.C. § 1332. Docket No. 1.

In the present motion, plaintiff requests that the Court remand the case because defendant has waived its right to removal based on the insurance policy's "service of suit endorsement." Docket No. 14 at 1-2. Defendant opposes plaintiff's motion. Docket No. 17.

I. ANALYSIS

A. Service of Suit Endorsement

Because the right to remove is a statutory right, 28 U.S.C. § 1441, a party's waiver of its ability to remove a case from state to federal court must be "clear and unequivocal." Milk N' More, Inc. v. Beavert, 963 F.2d 1342, 1346 (10th Cir. 1992) (quoting Regis Assocs. v. Rank Hotels (Mgmt.) Ltd., 894 F.2d 193, 195 (6th Cir. 1990)); see also Waters v. Browning-Ferris Indus., Inc., 252 F.3d 796, 797 (5th Cir. 2001) ("[A] waiver of [defendant's] removal rights does not have to include explicit words, such as waiver of right of removal.'").

Plaintiff contends that the "service of suit endorsement" forecloses removal by defendant. The first paragraph states:

It is agreed that in the event of the failure of the Company to pay any amount claimed to be due hereunder, the Company, at the request of the insured, will submit to the jurisdiction of any court of competent jurisdiction within the United States of America or Canada where the Company is incorporated or maintains a principal place of business, where the Named Insured is incorporated or maintains a principal place of business or where the cause of action arises.

Docket No. 14-1 at 42.

Under Colorado law, ordinary principles of contract interpretation apply to the interpretation of insurance policies. See, e.g., DISH Network Corp. v. Arch Specialty Ins. Co., 659 F.3d 1010, 1016 (10th Cir. 2011) (citing Cyprus Amax Minerals Co. v. Lexington Ins. Co., 74 P.3d 294, 299 (Colo. 2003) (en banc)); Cotter Corp. v. Am. Empire Surplus Lines Ins. Co., 90 P.3d 814, 819-20 (Colo. 2004). A court must give the words of the policy their "plain and ordinary meaning." Cyprus Amax Minerals, 74 P.3d at 299.

As a general matter, the first paragraph of the service of suit endorsement grants a benefit or concession to the insured: if the insurance company fails to pay a claim, the insurance company will submit to the jurisdiction of various courts in which the insured may file suit. The language does not identify one court where the insured must file a lawsuit. Rather, the language indicates that the insurance company will submit to several alternatives: (a) where the insurance company is incorporated or has its principal place of business; (b) where the named insured is incorporated or has its principal place of business; or (c) where the cause of action arose. The language of the first paragraph states that the insurer will submit to a "court"; it does not state that the insurer will submit to being sued in a given state or in courts of a given state. In fact, the language goes one step further by indicating that the insurer "will submit to the jurisdiction of any court of competent jurisdiction" that meets the three qualifications noted above.

One question that arises is what the term "will submit" means. Given that the context of the paragraph is to grant the insured a benefit or concession, the plain meaning of the term "submit" appears to be "to yield oneself to the authority or will of another" or "to permit oneself to be subjected to something." Submit, Merriam-Webster's Dictionary Online, http://www.merriam-webster.com/dictionary/submit (last visited July 6, 2015). Moreover, the insurer agrees that it "will" submit as opposed to agreeing that it "may" submit. Thus, based on this interpretation of "submit, " the language of the first paragraph contains an agreement by the insurer that the insured's choice of court will resolve the failure to pay dispute.

This interpretation of the first paragraph is strengthened by language in the second paragraph, wherein the insurer agrees that, "in any suit instituted against the Company upon this policy, the Company will abide by the final decision of such Court or by the final decision of the Appellate Court in the event of any appeal." Docket No. 14-1 at 42. The term "such Court" refers back to "any court" in the first paragraph, i.e. the court chosen by the insured. Not only is this language consistent with the insurer's agreement to submit to the ...


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